Jim Beck at Drug and Device Law has an interesting post about choice of law issues in mass tort cases involving claims for punitive damages. Beck suggests that the law of the defendant’s home state should govern the punitive damages issues, even if the law of a different forum (e.g., the place of injury) governs the plaintiff’s entitlement to compensatory damages. It’s an interesting concept that I have not seen explored elsewhere. Beck cites an Indiana opinion that rejected the concept, but that shouldn’t stop parties from raising this issue in other jurisdictions.
-
Goldstein v. Beck: Unpublished Opinion Affirms $4 Million in Punitive Damages
The California Court of Appeal (Second Appellate District, Division Seven) issued this unpublished opinion last week, affirming a $2 million compensatory damages award and a $4 million punitive damages award. The court rejected the appellant’s argument that the record contained no substantial evidence of malice, oppression, or fraud. I won’t comment further about this one, since my firm represents the appellant and the litigation is ongoing.
-
A Quiet Year for Blockbuster Punitive Damages in California
Bruce Nye at Cal Biz Lit has prepared a chart showing a breakdown of the compensatory damages and punitive damages awarded in the top ten verdicts in California in 2009 (as reported by the Recorder’s Legal Pad). As Bruce notes, only three of the top 10 verdicts included punitive damages, and none of them include a “blockbuster” award (i.e., an award in excess of $100 million).
As we observed in this post, a recent study shows that California leads the nation with 25 blockbuster punitive damages verdicts since 1985. That works out to roughly one per year, so a single year without such an award isn’t all that surprising. We’ll have to see what the next few years bring. Even if turns out that California juries have stopped dishing out blockbuster punitive awards, we’ll still have those “garden variety” 8-digit punitive damages awards to blog about. (Though we won’t be blogging much about the $50 million punitive damages award on top of the 2009 list, since our firm is representing the defendant in that case.)
-
“The Supremes and Punitive Damages”
Judge Rex Heeseman of the Los Angeles Superior Court has an essay entitled “The Supremes and Punitive Damages” in today’s Daily Journal (subscription required). The essay gives a brief overview of the recent punitive damages decisions from the U.S. Supreme Court and the California Supreme Court, particularly last month’s decision in Roby v. McKesson, which we summarized here.
-
Texas Jury Awards $100 Million in Punitive Damages Against BP
I will go out on a limb and predict that this award won’t hold up. As reported by the Associated Press, a jury in federal district court in Texas has awarded $100 million in punitive damages to 10 workers at a BP plant who claimed they were exposed to toxic fumes.
Why do I say the award won’t hold up? Because the jury awarded $10 million in punitive damages to each plaintiff, but awarded only $5,000 to $10,000 in compensatory damages to nine of the ten plaintiffs, and $240,000 or so to the remaining plaintiff. That means the ratio of punitive damages to compensatory damages is somewhere between 10,000 to 1 and 20,000 to 1 for nine of the plaintiffs, and 42 to 1 for the other plaintiff.
-
“The Need for Enforcement of U.S. Punitive Damages by the European Union”
The Minnesota Journal of International Law has an article by Jessica J. Berch in its Winter 2010 edition entitled “The Need for Enforcement of U.S. Punitive Damages by the European Union.” For those of you with access to Westlaw or Lexis, the citation is 19 Minn. J. Int’l L. 55.
As Adam Liptak of the New York Times noted in a story last year, many European nations refuse to enforce U.S. punitive damages awards because they believe that compensation should be the only goal of civil litigation, and punishment should be reserved for criminal proceedings. Ms. Berch would like that to change, as summarized in the article’s conclusion: “In a world with increasing amounts of cross-border transactions, it is imperative that judgments can be enforced in countries other than the one handing down the judgments. If another round of negotiations begins over the provisions of the Hague Convention, this author hopes that both sides will be more informed about the trends in punitive damages and will use that information to grant reciprocal, uniform, and liberal enforcement to all foreign judgments.”
UPDATE: (1/11/10: Donna Bader comments on this post at her blog, An Appeal to Reason.)
-
North Carolina Supreme Court Applies “Clear and Convincing” Standard to Appellate Review of Punitive Damages
The North Carolina Supreme Court’s decision last week in Scarborough v. Dillard’s addresses an issue that has divided California appellate courts for quite some time.
The issue is whether the “clear and convincing evidence” standard has any role in appellate review of punitive damages awards. In most jurisdictions, plaintiffs are not entitled to punitive damages unless they can prove by clear and convincing evidence that the defendant acted with malice. But what happens when a defendant challenges a jury’s award of punitive damages, arguing that the award is not supported by substantial evidence? Should the reviewing court (either an appellate court or a trial court ruling on a JNOV motion) apply the usual “substantial evidence” rules without regard to the heightened standard of proof, and uphold the award if there is any slight amount of evidence supporting a finding of malice? Or should the reviewing court take the heightened standard of proof into account?
As we have reported in prior posts, California courts are all over the map on this issue. There is published case authority expressly holding that reviewing courts should take the “clear and convincing” standard into account. (See Shade Foods, Inc. v. Innovative Products Sales & Marketing, Inc. (2000) 78 Cal.App.4th 847 [“since the jury’s findings were subject to a heightened burden of proof, [this court] must review the record . . . in light of that burden. In other words, [this court] must inquire whether the record contains ‘substantial evidence to support a determination by clear and convincing evidence’”].) But there are other cases outside the punitive damages context holding that the clear and convincing evidence standard does not apply on appellate review. We occasionally see unpublished opinions (like this one and this one) applying this analysis to punitive damages decisions without even mentioning Shade Foods.
California Supreme Court opinions spanning a century or more leave the question up in the air, as we noted here. Last year the California Supreme Court granted review on this issue, but later dismissed review because the parties settled the case. Sooner or later, the court is likely to take this issue up again, but for now California law is in limbo.
In North Carolina, however, it is now clear that reviewing courts should take the clear and convincing standard into account:
[W]e hold that in reviewing a trial court’s ruling on a motion for judgment
notwithstanding the verdict on punitive damages, our appellate courts must
determine whether the nonmovant produced clear and convincing evidence from
which a jury could reasonably find one or more of the statutory aggravating
factors required by N.C.G.S. § 1D-15(a) and that that aggravating factor was
related to the injury for which compensatory damages were awarded. Reviewing the trial court’s ruling under the “more than a scintilla of evidence” standard does
not give proper deference to the statutory mandate that the aggravating factor
be proved by clear and convincing evidence. Evidence that is only more than a
scintilla cannot as a matter of law satisfy the nonmoving party’s threshold
statutory burden of clear and convincing evidence.Hat tip: North Carolina Business Litigation Report
Related post:
Interesting North Carolina Punitive Damages Decision on the Standard of Review
-
Alvarado v. Cajun Operating Co.: Punitive Damages Are Unavailable for a Retaliation Claim Under the ADA
The U.S. Court of Appeals for the Ninth Circuit issued a new opinion today holding that compensatory damages and punitive damages are not available for a retaliation claim brought under the Americans with Disabilities Act (ADA).
According to the plaintiff in this case, the defendant retaliated against him for complaining that his manager had discriminated against him on the basis of his disability. Subsequently, the plaintiff sued his former employer for, among things, retaliation under the ADA. Prior to trial, the federal district court barred the plaintiff from seeking compensatory damages and punitive damages for his ADA retaliation claim on the grounds that only equitable relief was available for such claims.
The Ninth Circuit agreed to hear an interlocutory appeal on this issue and affirmed the trial court’s determination. The appellate court noted that other federal courts had previously reached differing conclusions on the issue. On reviewing the case law and 42 U.S.C. section 1981a (the statute governing the availability of compensatory and punitive damages for certain types of ADA claims), the Ninth Circuit determined that the plain language of “section 1981a limits its remedial reach to ADA discrimination claims, and does not incorporate ADA retaliation claims . . . .” While the Ninth Circuit acknowledged that “a convoluted analytical path exists to concluding that punitive and compensatory damages are available for ADA retaliation claims,” the court rejected this convoluted approach because it was contrary to “the basic tenets of statutory construction” calling for a court to look to a statute’s plain language. Since the “plain and unambiguous provisions of 42 U.S.C [section] 1981a limit the availability of compensatory and punitive damages to” specific claims that did not include ADA retaliation claims, the Ninth Circuit held that “ADA retaliation claims are redressable only by equitable relief . . . .”
-
Paper Contains a Wealth of Statistics on Blockbuster Punitive Damages Awards
Alison F. Del Rossi and W. Kip Viscusi have posted a paper on SSRN entitled “The Changing Landscape of Blockbuster Punitive Damages Awards.”
The authors note that since the State Farm decision in 2004, the number of blockbuster decisions has tapered off, and the magnitude of the relationship between aggregate punitive damages and compensatory damages in recent blockbuster cases is almost half of what it was before State Farm. Interestingly, the paper indicates that levels of punitive damages awards are more strongly correlated to the type of industry involved, rather than the amount of compensatory damages.
Attached to the paper is a table listing every punitive damage award of at least $100 million awarded since 1985. Another table categorizes those awards by industry. The results may surprise you. The “Energy, Chemical” industry has generated the largest number of blockbuster awards with 25. The “Finance, Investment, Insurance” industry is a close second with 23. The “Pharmaceuticals, Health Care” industry is third with 16. The auto industry is fourth with 9. And the tobacco industry is a distant fifth, with only 5 blockbuster awards.It comes as no surprise that California has generated the most blockbuster punitive damages awards – – 21 in total. Texas is right on our heels with 20, and no other state is even in the same neighborhood.
-
Personalized Workout of La Jolla v. Ravet: Unpublished Opinion from San Diego Conflicts with Earlier Unpublished Opinion from San Diego
The jury in this malicious prosecution case awarded $74,000 in compensatory damages and $5 million in punitive damages, for a ratio of 67.5 to one. Not surprisingly, the trial court reduced the punitive damages award (to $296,000, for a ratio of four to one). And not surprisingly, the Court of Appeal (Fourth Appellate District, Division One) affirmed that reduction in this unpublished opinion.
Both sides had appealed from the trial court’s posttrial ruling. The defendant appealed, arguing that the plaintiff failed to provide evidence of his net worth. As we have seen, California punitive damages awards are often reversed on that basis. But not this time. The Court of Appeal concluded that the defendant waived his right to assert that argument, because he failed to comply with a court order requiring him to turn over various financial documents. The defendant prepared a “statement of total assets,” in which he claimed that his total assets were approximately $50,000 and his total debts were approximately $1 million. The Court of Appeal agreed with the trial court that the defendant’s claims lacked credibility, because his own trial testimony referred to various substantial assets, such as a $4 million home, an expensive car, and beneficiary interests in trusts, none of which were disclosed on the defendant’s statement. By failing to comply with a court order to produce documents relating to these assets, the defendant waived his right to complain about the absence of evidence of his net worth.
The plaintiff filed a cross-appeal, arguing that the trial court should have ordered a new trial instead of reducing the punitive damages award outright in a ruling on the defendant’s JNOV motion. The Court of Appeal rejected that argument, citing its earlier opinion in Gober v. Ralph’s Grocery, which held that a trial court has authority to grant a JNOV on the grounds that a punitive damages award is constitutionally excessive. Under Gober, a trial court can reduce the award to the constitutional maximum without ordering a new trial. The plaintiff tried to distinguish Gober on the ground that the defendant in Gober had waived its own right to a new trial. The Court of Appeal rejected that argument, saying that a defendant need not expressly waive its right to a new trial to take advantage of the Gober rule.
On the latter point, this opinion is in direct conflict with a decision earlier this year from the same court in Leeper-Johnson v. Prudential, which held that the Gober rule could only be applied if the defendant expressly waived its right to a new trial due excessive punitive damages. Apparently, Justice McIntyre (who wrote Leeper-Johnson) and Justice O’Rourke (who wrote this opinion) are not quite on the same page regarding this issue.
From my perspective, Justice O’Rourke’s view makes a lot more sense. If a punitive damages award is unconstitutionally excessive, and the defendant asks the court to reduce the award to its constitutional maximum, the defendant is entitled to that relief, regardless of whether the defendant expressly waives its to a new trial.
In some cases involving excessive punitive damages, the defendant might have a right to a new trial if the defendant can prove a trial error, like an evidentiary or instructional error, that may have caused the jury to award a higher amount of punitive damages. But I see no reason why the plaintiff would ever have any right to a new trial as a result of an excessive punitive damages award, because the plaintiff could not possibly obtain any greater relief than the constitutional maximum. And I don’t understand why a plaintiff would obtain a right to a new trial that would not otherwise exist, simply because the defendant did not expressly waive its own rights to a new trial.