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.
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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
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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
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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.
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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
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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.
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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.
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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.
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Assemblyman Introduces Bill to Cap Punitive Damages in California
Assemblyman Roger Niello (R-Fair Oaks) has introduced a bill to cap punitive damages in California. Assembly Bill X8 40 would limit punitive damages to three times the amount of compensatory damages. It would also preclude punitive damages in product defect cases if the product complied with applicable regulatory standards, and it would limit non-economic damages to $250,000 in all negligence cases.
Many other states have adopted similar restrictions on punitive damages, but the idea hasn’t caught on in California. A similar bill was introduced in the California Senate two years ago and never got past the Senate Judiciary Committee. This proposal is not likely to fare any better. The Civil Justice Association of California (CJAC), which sponsored this bill, is probably using it more as an opportunity to spread its message about the problem of excessive punitive damages in California.
The proposed $250,000 cap on non-economic damages will draw heavy criticism from the Consumer Attorneys of California, who have been mounting an attack on the existing $250,000 cap on non-economic damages in medical negligence cases, a cap that was adopted as part of the Medical Injury compensation Reform Act of 1975 (MICRA). The MICRA cap has already withstood several legal challenges.
Hat tip: CJAC