California Punitives by Horvitz & Levy
  • “Judicial Preemption of Punitive Damages”

    Here’s an article suggesting that judges, as a group, tend to overstep their authority when reviewing punitive damages awards for excessiveness. The article, written by Professor Sandra Sperino of the Temple University Beasley School of Law, is entitled “Judicial Preemption of Punitive Damages.” The article was published in the University of Cincinnati’s Fall 2009 edition, which was recently uploaded onto Westlaw (78 UCINLR 227). Here’s the abstract:

    In the 1990s, the Supreme Court recognized that excessive punitive damages could violate substantive and procedural due process. In the intervening years, the public debate regarding excessive punitive damages has focused primarily on the question of whether the American judicial system should prefer the rights of injured plaintiffs or the interests of defendant corporations. More cynically, the question often becomes whether our judicial system should favor the interests of the trial attorneys’ bar or the Chamber of Commerce.

    While the scholarly debate has been broader, the literature has been insufficiently attentive to the manner in which the lower courts have implemented the Supreme Court’s standards for assessing whether punitive damages are excessive. This Article suggests that the process judges use to review punitive damages awards for substantive constitutional excessiveness results in de facto judicial preemption, where judges improperly exercise power belonging to other constitutional actors and impinge upon important interests, such as federalism, the separation of powers, and the dynamism of the common law. Whether such de facto judicial preemption is motivated by conscious or unconscious desire to manipulate damages awards or even just by sloppy or unprincipled analysis, the effects are equally serious.

    This Article describes the three problematic analytical mechanisms that cause judicial preemption and the distinct harms associated with each of them. It also demonstrates that judicial preemption is especially worrisome in the employment discrimination context, which relies on overlapping remedies regimes for full enforcement, where statutorily enacted punitive damages caps are not necessarily related to punishment and deterrence goals, and where a judge’s personal opinions about punishment and deterrence may be at odds with those of legislatures and juries.

    It then considers ways to counteract these harms. It concludes by asserting that the way in which the lower courts have implemented the Supreme Court’s standards actually directs courts away from, rather than toward, the questions they should be asking in reviewing punitive damages awards.

  • Maui Jury Awards $43 Million in Punitive Damages

    Maui is one of my favorite vacation spots. I go to enjoy the island’s natural beauty and balmy tropical weather. But this report from the Maui News suggests that other mainlanders visit Maui’s sunny shores in search of something else: punitive damages. A jury there has awarded $43 million in punitive damages (on top of $10 million in compensatory damages) to a group of investors who claim they were defrauded in connection with their investments in a lakeside development in Tennessee. The defendant is a Chicago banker who resides part-time on Maui. The story says that locals cannot remember a larger civil verdict in Maui.

  • South Carolina House Passes Cap on Punitive Damages

    It appears that South Carolina is joining the ranks of states that have a statutory cap on the amount of punitive damages. That state’s House of Representatives has passed the Comprehensive Tort Reform Bill (H. 3489) which, among other things, limits punitive damages to three times the amount of compensatory damages or $350,000 whichever is greater.

    The limitation, however, would not apply in cases where “the defendant pursued an intentional course of conduct that the defendant knew or should have known would cause injury or damage.” That exception would seem to open the door for plaintiffs in many cases to argue that the cap does not apply, given that punitive damages cannot even be awarded unless the defendant engaged in “willful, wanton, or reckless conduct.”

    The bill also provides that the limitations shall not be disclosed to the jury.

    Hat tip: South Carolina Statehouse Blog

  • Proposed Legislation Would Eliminate Tax Deduction for Punitive Damages

    Floyd Norris of the New York Times reports on the Bipartisan Tax Fairness and Simplification Act of 2010, which includes a provision that defendants who are required to pay punitive damages cannot deduct those payments as a business expense.

    The article quotes Senator Judd Gregg of New Hampshire, the top Republican on the Budget Committee: “I always thought that was pretty absurd. It is significantly less punitive if you get a deduction.” Senator Gregg has issued a press release about the bill (S3018), but the press release says nothing about punitive damages.

    As we noted last year, the Obama administration has also proposed to make punitive damages non-deductible.
  • Florida Trial Judge Cuts $244 Million Punitive Damages Award

    Bloomberg is reporting that a trial judge in Florida has reduced a $300 million verdict against Philip Morris to $38.9 million. The jury’s original award consisted of $56.6 million in compensatory damages and $244 in punitive damages. I haven’t yet seen any breakdown of the reduced award in terms of compensatory damages versus punitive damages.

    Related posts:

    Florida Judge Says $244M Punitive Damages Award Will Be Overturned

  • New Law Review Articles on Punitive Damages

    TortsProf Blog has posted the abstracts of two law review articles critquing Professor Dan Markel’s recent article, “How Punitive Damages Should Work.” Markel’s article, along with both responsive articles, can be found at PENNumbra, the on-line companion of the University of Pennsylvania Law Review.

  • Pfizer/Wyeth Gets Hit With Yet Another Punitive Damages Award

    Bloomberg reports that a Philadelphia jury has awarded $6 million in punitive damages against Wyeth (which is now owned by Pfizer) for injuries allegedly caused by its hormone replacement drugs. For those of you scoring at home, this is the fifth punitive damages award against Pfizer/Wyeth/Upjohn arising out of hormone replacement drugs. Three of those have been in Philadelphia, and a fourth Philadelphia lawsuit on the same issue is already underway.

    Related posts:

    Trial Judge Reduces $75M Punitive Damages Award to $5.6M in Pfizer Litigation

    More Punitive Damages Against Pfizer in Prempro Litigation: Philadelphia Jury Awards $28 million

    A Mixed Bag For Pfizer On Prempro Punitive Damages

    Jury Awards Undisclosed Amount of Punitive Damages Against Pfizer in Prempro Litigation

    Arkansas District Court Vacates $27 Million Punitive Damages Award Against Wyeth and UpJohn

    Nevada Judge Cuts $99 Million Punitive Damages Award Against Wyeth

  • Barnes v. Morales: Punitive Damages Can Be Awarded for Purely Economic Harm

    This unpublished opinion isn’t exactly earth-shattering, but we mention it as part of our ongoing effort to catalog all of the California appellate opinions on punitive damages.

    The defendant in this fraud case challenged a $56,000 punitive damages award, arguing that punitive damages could not be awarded in this case because the plaintiff’s $295,000 compensatory damages award was purely economic. The Court of Appeal easily disposed of that argument, noting that Civil Code section 3294 expressly authorizes punitive damages for fraud and does not require an award of non-economic damages.

  • Suh v. Superior Court: Arbitration Agreement that Precludes Punitive Damages is Unenforceable

    In this published opinion, the Second Appellate District, Division Five, invalidates an arbitration agreement which, among other things, eliminated the right to recover punitive damages:

    To the extent the damage limitation clause applies to statutorily imposed remedies, such as punitive damages, it is “contrary to public policy and unlawful.” (Amendariz [v. Foundation Health Pscyhcare Services, Inc. (2000) 24 Cal.4th 83,] 104.)

    So California plaintiffs have a right to seek punitive damages through arbitration, but questions remain about the application of federal due process standards to any such awards.

  • Senator Introduces Bill to Reform Postjudgment Interest in California

    Earlier today I blogged about a proposed bill that would change California punitive damages law. Here’s a proposed bill that doesn’t directly address punitive damages, but would also have a significant effect on punitive damages litigation in California.

    Senator Mimi Walters (R-Laguna Niguel) has introduced a bill to change the rate of postjudgment interest in California. Currently, the postjudgment interest rate in California is fixed at 10 percent. Unlike in federal court, the rate is not tied to any market rate. As a result, judgment creditors have been able to earn a greater return than they could get by investing their money almost anywhere else. SB 1117 would change that, reducing the rate to the federal short-term rate plus 2%.

    The accrual of postjudgment interest can play a huge rule in punitive damages litigation. In City of Hope v. Genentech, for example, a lengthy appeal culiminated with the California Supreme Court eliminating a $200 million punitive damages award, but the $300 million compensatory damages award accrued roughly $180 million in postjudgment interest during the appellate process, nearly offsetting the benefit of appealing the punitive damages.

    As noted by CJAC, which is sponsoring the bill, a similar bill introduced last year was not adopted.