California Punitives by Horvitz & Levy

  • Federal Judge Awards $300 Million In Punitive Damages Against Iran

    As reported by Bloomberg, a federal district judge in Washington D.C. has awarded $310 million, including $300 million in punitive damages, to a victim of the 1983 embassy bombing in Lebanon. The judge determined that Iran was liable because it funded the Hezbollah terrorists who launched the attack.

    The sheer size of this award and the 30-to-1 ratio would seem to raise some constitutional questions, but those questions will never be litigated because Iran is not defending itself. The Bloomberg story reports that U.S. courts have awarded $3.5 billion against Iran in the last few years. Iran has not contested any of the suits or paid any of the judgments. Like the $393 million judgment against Cuba earlier this year, this award is purely symbolic.

    Although I have no sympathy for these particular defendants, I wonder whether these “funny money” awards are contributing to a culture that views 9-digit punitive damages awards as an accepted part of our legal system.

  • No Punitive Damages in NYC Suit Against Exxon Mobil

    As reported by Bloomberg, a U.S. District Judge in Manhattan has ruled that New York City has not produced sufficient evidence to proceed with a claim for punitive damages in its lawsuit against Exxon Mobil Corp. for allegedly poisoning city wells with MTBE, a gasoline additive.

    The City is seeking $250 million in compensatory damages. It probably would have asked for that much or more in punitive damages if the court had permitted it to do so. We’ll apparently never know, because the city’s lawyers are not commenting on the ruling.

  • Fariba v. Dealer Services: No Punitive Damages Where Liability Depends on Issue of First Impression

    Here’s a case defendants can cite whenever a plaintiff seeks punitive damages in a case involving a novel legal theory.

    In this published opinion, the California Court of Appeal (Fourth Appellate District, Division One) affirmed a judgment that raised a liability issue of first impression in California.

    (It has nothing to do with the topic of this blog, but in case you’re curious, the issue of first impression was: Where a secured creditor of a business has actual knowledge that the business is substantially engaged in consignment sales, are the rights of the consignor superior to the secured creditor? Answer: yes.)

    Although the Court of Appeal affirmed the award of compensatory damages based on this previously unresolved issue, the court also affirmed an order granting a directed verdict on the plaintiff’s claim for punitive damages. Among other things, the court concluded that the plaintiff could not prove by clear and convincing evidence that the defendant acted with conscious disregard of the plaintiff’s rights when the scope of the plaintiff’s rights turned on an unsettled legal issue.

  • CBO Projects Savings from Capping Punitive Damages for Medical Malpractice

    The Congressional Budget Office estimates that a package of medical malpractice reforms, including a $500,000 cap on punitive damages, would save $54 billion, as reported here in the Washington Post. On the other hand, USA Today reports that the CBO projects a savings of $11 billion.

    I’m not sure why the two stories give different numbers, as they seem to be reporting on the same CBO projections. [UPDATE: The $54 billion figure is the CBO’s estimated savings over 10 years, and the $11 billion figure is a one-year projection.] In any event, I am skeptical that a cap on punitive damages would generate any huge savings by itself, because punitive damages awards seem to be quite rare in medical malpractice actions.

  • Ford Files Cert. Petition in Buell-Wilson

    Ford has filed a petition for certiorari in Buell-Wilson v. Ford Motor Co., a case with a long procedural history that has already included one stop at the U.S. Supreme Court. (See the long list of related posts below.)

    Ford’s petition asks the court to clarify the standard for resolving a claim that a state punitive damages statute is unconstitutionally vague as applied to the facts of a particular case. Specifically, Ford argues that California’s punitive damages statute (Civil Code section 3294) is unconstitutionally vague as applied to cases involving manufacturers whose products comply with applicable regulatory standards and industry customs.

    Ford’s approach is a bold one. The Supreme Court has never addressed an as-applied vagueness challenge to a punitive damages statute, as far as I know. But there’s a first time for everything. If Ford can get cert. in this case, it could be the same kind of game-changing event as BMW v. Gore.

    Related posts:

    California Supreme Court Denies Request to Re-Publish Buell-Wilson

    The Largest Punitive Damages Award to Survive Appeal in California?

    Cal. Supreme Court Dismisses Review in Buell-Wilson v. Ford

    Plaintiff Asks California Supreme Court to Dismiss Review in Buell-Wilson v. Ford

    Buell-Wilson v. Ford: Two of the Three Issues Raised in the Petition are Not Dependent on the United States Supreme Court’s Opinion in Williams III

    California Supreme Court Grants Review in Buell-Wilson v. Ford

    Court of Appeal May Have Been Too Quick on the Trigger in Buell-Wilson Post-Opinion Order

    Court of Appeal Denies Petition for Rehearing in Buell-Wilson v. Ford

    Buell-Wilson v. Ford—Court of Appeal Says Ford Waived Due Process Protections Against Excessive Punitive Damages

  • U.S. Supreme Court Denies Cert. in Stevens v. Vons

    The U.S. Supreme Court’s on-line docket for Stevens v. Vons indicates that the court denied the petition for certiorari yesterday. As we noted in a prior post, the petitioner was essentially arguing that state courts are not permitted to reduce punitive damages awards under state law unless those awards are excessive under the Due Process Clause. Not surprisingly, the Supreme Court declined to take up that issue.

    Related posts:

    Stevens v. Vons: $16.7M in Punitive Damages Reduced to $1.2M, Ratio of 1-to-1

    Stevens v. Vons: Unpublished Opinion Addresses Controversial Issue Regarding Punitive Damages Standard of Review

  • Florida Jury Awards $275 Million in Punitive Damages

    According to the St. Petersberg Times, a jury has awarded $55 million in compensatory damages and $275 million in punitive damages against a drunk driver who killed a 13-year-old girl. The award seems largely symbolic, since the defendant could never possibly pay it. But if this award survives appeal, it would be the fourth largest punitive damages award ever affirmed in the U.S., as far as we are aware. (The current top five awards are listed in this post.)

  • “Predicting the Constitutionality of Punitive Damages”

    When a jury awards a large punitive damages awards, one of the first question for the lawyers on both sides is: Will this award survive posttrial and appellate review? A new paper posted on SSRN may help answer that question. Profesors Edward K. Cheng and Albert Yoon have written an essay entitled “Predicting the Constitutionality of Punitive Damages.” Here’s the abstract:

    The constitutional doctrine governing punitive damages captivates legal scholars and jurists in part because it is both complex and evolving. The unpredictability, however, presents difficulties for attorneys and their clients, who need greater certainty to make practical decisions about litigation and settlement. In this Essay, we offer a statistical approach for predicting court decisions on the constitutionality of punitives. As it turns out, basic logisitic regression methods with appropriate model selection can be quite effective, although we make further gains using a Bayesian hierarchical approach. Using a new dataset of cases challenging punitive damage constitutionality from 1989 to 2008, our hierarchical model can predict out-of-sample outcomes with 76-85 percent accuracy. These results suggest that while constitutionality may not be subject to a deterministic formula, it can be effectively modeled statistically. Beyond the punitive damages context, our work additionally offers a glimpse of the potential of statistical models for predicting a wide variety of legal questions.

    Hat tip: Torts Prof Blog.

  • $8.5 Million In Punitive Damages for Erectile Dysfunction

    I swear I’m not making this up. According to this story on Law.com, a Georgia jury has awarded $750,000 in compensatory damages and $8.5 million in punitive damages to a man who allegedly suffered permanent damage to his penis as a result of a botched treatment for erectile dysfunction.

    The plaintiff responded to an ad by the Boston Medical Group promising “sex for life.” The company’s clinic gave him its “secret formula” to inject into his penis. After he gave himself the first injection, he experienced “the best erection he’s ever had in his life.” Unfortunately, it proved to be a little too good. Two days later, he still had the erection. He went back to the clinic for treatment, but the clinic couldn’t help him and he ended up in a hospital emergency room. Ultimately, he suffered permanent damage to his penis and is now unable to have an erection without the use of Viagra or Cyalis.

    It certainly sounds like an unpleasant experience (especially the part about the plaintiff sticking a needle into his penis), but if the guy already had an erectile problem when he visited the clinic, isn’t he now in exactly the same position he was in before he went there? Does that really merit an $8.5 million punitive damages award, on top of $750,000 in compensatory damages? Something tells me this verdict is not going to withstand review.

    I can’t wait to hear what Lowering the Bar has to say about this one.

  • Hodge v. Guarantee Real Estate: Defendant Entitled to Fees for Defending Meritless Punitive Damages Claim

    Can a plaintiff who pursues a meritless punitive damages claim be forced to pay the defendant’s attorney fees for defending that claim? Yes, according to this unpublished opinion from the California Court of Appeal (Fifth Appellate District).

    Under California Code of Civil Procedure section 2033.420, if a party serves a proper request for admission (RFA) and the opposing party fails to admit the truth of a matter contained in the RFA, the party that served the request can recover its attorney fees for proving the truth of that matter at trial.

    In this case, the plaintiffs’ complaint included a claim for punitive damages. The defendants served RFAs on the plaintiffs, asking them to admit that the defendants did not act with malice, oppression, or fraud (the prerequisites for recovering punitive damages under Civil Code section 3294). The plaintiffs denied the RFAs. At trial, the plaintiffs were unable to present any evidence of malice, oppression, or fraud, so the trial court granted a nonsuit on punitive damages.

    The defendants then moved for attorney fees under section 2033.420. The trial court agreed that the conditions for awarding fees under section 2033.420 were met, but the court denied the defendants’ motion on the ground that the plaintiffs’ punitive damages allegations did not increase the overall fees incurred by the defense.

    The Court of Appeal reversed. It held that the trial court erred by refusing to award any attorneys’ fees. At the least, the defendants should have been awarded the fees they incurred in bringing their nonsuit motion on punitive damages.

    UPDATE: The California Attorney’s Fees blog has a post about this opinion here.