California Punitives by Horvitz & Levy

  • 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

  • Fourth Circuit Reverses $10 Million Punitive Damages Award

    The U.S. Court of Appeals issued a non-precedential opinion today reversing a $10 million punitive damages award in a lawsuit by a minority-owned tech company against a major defense contractor. The plaintiff, Worldwide Network Services, alleged that defense contractor DynCorp. terminated its subcontract with Worldwide based on racial animus. A jury awarded $5 million in compensatory damages and $10 million in punitive damages for tortious interference with contract and racial discrimination in violation of section 42 U.S.C. section 1981.

    The Fourth Circuit affirmed the jury’s liability findings and compensatory damages award, but reversed the punitive damages award because the court found no evidence that the defendant knew it was acting in violation of the plaintiff’s federally protected rights, as required for a punitive damages award for a violation of section 1981. The court noted, however, that the plaintiff also sought punitive damages based on tortious interference with contract. The jury’s verdict did not indicate whether the jury intended to award punitive damages for the section 1981 violation, the tortious interference claim, or both. Accordingly, the court remanded for a retrial limited to the question of punitive damages on the tortious interference claim.

    Procedurally, the analysis would be very different in California. Under California’s “general verdict rule,” when two theories are presented to a jury, only one of which is supported by substantial evidence, and a general verdict is returned in favor of the plaintiff, it is presumed that the jury based its verdict on the theory that is supported by the evidence. (See Lundy v. Ford Motor Co. (2002) 87 Cal.App.4th 472, 480.) If that rule had been applied here, the court would have presumed that the jury awarded punitive damages based on the tortious interference claim, and not the section 1981 claim.

    (The Fourth Circuit also found a separate instructional error that would have required a new trial on punitive damages anyway, but I am focusing on the court’s discussion of the sufficiency of the evidence on the section 1981 claim to highlight the procedural distinction discussed above.)

  • California Supreme Court Denies Rehearing in Roby v. McKesson

    The California Supreme Court has denied rehearing in Roby v. McKesson and issued an order modifying its opinion. Both parties sought rehearing, and an additional rehearing petition was filed by the Consumer Attorneys of California as amicus curiae.

    The Consumer Attorneys’ petition raised an interesting issue. It asked the court to delete language from the opinion stating that the need for deterrence in the form of punitive damages is lower in cases involving emotional distress damages, because emotional distress damages already include a punitive component. The California Supreme Court borrowed that statement from the U.S. Supreme Court’s opinion in State Farm v. Campbell. But the Consumer Attorneys argued that the principle should not be extended to California law because in California, emotional distress damages are strictly limited to compensation and cannot include any punitive component. The Supreme Court rejected that argument without comment.

    The order modifying the opinion addresses a different issue. The modification is apparently intended to clarify that punitive damages will not necessarily be available in every FEHA case involving the sort of attendance policy used by the defendant in this case.

  • California Supreme Court Grants Review in Case Involving Assignability of Punitive Damages

    Last November we discussed the Court of Appeal’s decision in Nelson v. Exxon Mobil, holding that claims for punitive damages are assingable, at least when those claims arise from harm to real property. We observed that the case “could be headed to the California Supreme Court,” because the Court of Appeal’s opinion seems to conflict with other opinions indicating that punitive damages claims are categorically unassignable. Sure enough, the California Supreme Court has granted review. (See the court’s online docket.)

    Justices Chin and Baxter recused themselves, presumably because they own Exxon stock. That means the outcome in this case may be depend in large part on the identify of the two Court of Appeal justices who get assigned to replace them.

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

    The Daily Business Review (via Law.com) reports that a Florida trial judge has stated his intention to overturn a $244 million punitive damages award to an individual smoker. The judge said the award was “shocking” and was the result of passion and anger by the jury. He did not issue a formal ruling, nor did he say what amount of punitive damages he would allow.

    Related posts:

    Florida Jury Awards $244 Million in Punitive Damages to Smoker

  • “Exxon Shipping Co. v. Baker: Why the Supreme Court Missed the Boat on Punitive Damages”

    Not many law students would feel comfortable publishing an article accusing the Supreme Court of biased, results-oriented judging. But University of Akron School of Law student Maria C. Klutinoty has no such qualms. She has written an article blasting the Supreme Court for its decision last year two years ago in Exxon Shipping, which adopted a maximum 1-to1 ratio for punitive damages to compensatory damages in federal maritime cases. The article suggests that the Justice Souter’s majority opinion resulted from a bias in favor of major corporations:

    In light of the fact that the defendant here was Exxon Shipping, a major corporation, some have concluded that this decision was the product of a conservative Court that placed the interests of business above the need to punish and deter wrongful conduct. This possible bias certainly may have played a role in the Court’s decision, which appears to be much more concerned with protecting Exxon than with deterring other corporations from acting similarly.

    The article concludes that lower courts should not apply Exxon Shipping outside the maritime context because the standard adopted in that opinion “eviscerated and rendered completely meaningless and void” the deterrence objective of punitive damages. The article, entitled “Exxon Shipping Co. v. Baker: Why the Supreme Court Missed the Boat on Punitive Damages,” is available on Westlaw: at 43 AKRONLR 203.

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

    In the past two years Pfizer has been whacked with a series of large punitive damages awards in lawsuits claiming that its hormone replacement drugs cause breast cancer. One of the largest of those punitive damages awards was a $75 million award against Wyeth (which Pfizer acquired in October 2009) in a Philadelphia case involving $3.7 million in compensatory damages.

    The Legal Intelligencer reports that the trial judge reduced that punitive damages award to $5.6 million, roughly 1.5 times the amount of the compensatory damages award. The plaintiffs plan to appeal.

    So far, Pfizer’s lawyers have been pretty successful in reducing the big punitive damages awards in these cases, but they haven’t been able to knock them out entirely. They got a $27 million punitive damages award in Arkansas vacated and remanded for a new trial, and a $99 million award cut down to $35 million in Nevada.

    Related posts:

    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

  • Daily Journal Reports Decline in Punitive Damages Awards

    Those of you with an online subscription to the Los Angeles & San Francisco Daily Journal can check out an article entitled “Blockbuster Punitive Awards Fell Off in 2009” in the Jan. 27 edition.

    The article refers to a paper we blogged about last year, showing that California leads the nation in “blockbuster” punitive damages awards (awards over $100 million). The DJ article notes we had no blockbuster awards last year. In fact, the largest punitive damages award in California last year was “only” $50 million, in Auerbach v. Daily. As I noted in this post, however, we average about one blockbuster award per year, so a single year without such an award does not seem statistically significant. It hasn’t even been a year and half since our last blockbuster (a $237 million punitive damages award in October 2008), so we can’t declare the blockbuster dead just yet.

  • 11th Circuit Hears Argument in Florida Tobacco Litgation

    Law.com reports here on an oral argument before the 11th Circuit in yet another case addressing the fallout of the Florida Supreme Court’s Engle decision. As we have noted in prior posts, Engle reversed a $145 billion punitive damages award in a class action brought by smokers, but determined that certain factual findings could be “retained” for future litigation. Now the 11th Circuit is trying to figure out what effect that decision has in federal court.

    Related posts:

    Florida Jury Awards $244 Million in Punitive Damages to SmokerFlorida Jury Awards $25 Million in Punitive Damages to Smoker’s Widow

    “Smokers, tobacco, both winners in early Engle cases”

    Jury Rules For Plaintiff in First Phase of Retrial After Reversal of $145 Billion Punitive Damages Award

    After Reversal of $145 Billion Class Action Punitive Damages Award, Florida Smokers Seek Punitive Damages in Individual Suits

    Plaintiffs’ Attorneys Win $218 Million Fee Award for Helping Obtain a Punitive Damages Verdict that Was Reversed on Appeal

  • Cal. Supreme Court Denies Review in Fariba v. Dealer Services

    The California Supreme Court has denied review in a case we blogged about last October, Fariba v. Dealer Services. In that published opinion, the Court of Appeal affirmed an order granting directed verdict for the defendant on the issue of punitive damages. The court concluded that a directed verdict was appropriate because no reasonable jury could have found by clear and convincing evidence that the defendant acted in conscious disregard of the plaintiff’s rights, given that the plaintiff’s theory of liability turned on a legal issue of first impression.

    Click here to view the California Supreme Court’s online docket for this case.