California Punitives by Horvitz & Levy

  • Dole Accuses Attorneys of Fraud In Banana Litigation

    The Associated Press (via the Sacramento Bee) is reporting on hearings that took place today in an ongoing punitive damages case in Los Angeles. The plaintiffs claim they became sterile when they were exposed to pesticide on a Nicaraguan banana farm. The defendant, Dole Fresh Fruit Co., is accusing the plaintiffs’ attorneys of recruiting clients to make false claims.

    As we noted in a prior post, some of the plaintiffs in this litigation won a $2.5 million punitive damages award back in 2007, but the victory was short-lived. Judge Victoria Chaney of the Los Angeles Superior Court vacated the punitive damages award, ruling that Dole couldn’t be punished for injuries that incurred in a foreign country. Last month Judge Chaney threatened to dismiss other similar cases.

    Now things have gotten even worse, with Judge Chaney holding hearings to determine whether the two attorneys for the plaintiffs knowingly brought false claims. According to the AP Story, Dole alleges that the two attorneys paid witnesses and cajoled plaintiffs into saying they had worked on banana plantations and been rendered sterile. Dole says the attorneys showed videos to the men depicting life on the plantations to help them tell their stories, falsified sterility documents, and hid evidence that some of the men went on to sire children.

    UPDATE: Cal. Biz Lit blogs about this story here.

  • Cal. Supreme Court Requests Supplemental Briefing in Roby v. McKesson

    The California Supreme Court has asked the parties in Roby v. McKesson to address the following question:

    Are the jury’s compensatory damages verdicts so ambiguous as to
    whether there is overlapping recovery as to require a remand to the trial
    court for a new trial limited to determining the amount of compensatory and
    punitive damages?

    Roby has been pending before the California Supreme Court since April 2007. The issues before the court are primarily questions of employment law, but they also include a punitive damages issue. Specifically, the petitioner contends that the Court of Appeal erred when it determined that a $15 million punitive damages award was excessive and ordered the award reduced to $2 million, roughly 1.4 times the compensatory damages. The question that the Supreme Court is now posing suggests that the court may order a new trial in that case without deciding the punitive damages issue.

    A very similar issue is also before the California Supreme Court in Buell-Wilson v. Ford. In that case, the Court of Appeal took the opposite approach from Roby; the court refused to reduce a punitive damages award to a 1-to-1 ratio, notwithstanding the U.S. Supreme Court’s admonition in State Farm v. Campbell that a 1-to-1 ratio may be the outer limit in cases involving substantial compensatory damages. The defendant petitioned for review on that issue.

    There is a chance, however, the California Supreme Court won’t address this issue in Buell-Wilson either. As we have noted, the plaintiff in Buell-Wilson has moved to dismiss review based on the U.S. Supreme Court’s decision to dismiss certiorari in Williams III.

    Interestingly, the lawyer who represents the defendant in Roby also represents the plaintiff in Buell-Wilson. He may find himself on opposite sides of the same issue if the Supreme Court actually hears both cases on the merits. He will probably have to argue that, even though both cases involve substantial compensatory damages, the facts of Buell-Wilson permit a ratio in excess of 1-to-1 while the facts of Roby do not.

  • $1 Million in Punitive Damages Against Blogger

    Overlawyered has this story about a South Carolina blogger who was hit with a $1.8 million judgment, including $1 million in punitive damages, for making defamatory blog posts.

    Yikes! Be careful what you say, fellow bloggers. The award isn’t quite as scary as it sounds, however, because the defendant apparently didn’t bother to show up to defend himself. As some commenters to the Overlawyered post have pointed out, it’s not all that surprising for an unopposed lawsuit to result in a large judgment.

  • California Supreme Court Denies Review in Food Pro v. Farmers

    Last December we blogged about the Court of Appeal’s published opinion in Food Pro v. Farmers, which rejected a plaintiff’s claim for punitive damages in an insurance bad faith case.

    The insurance company petitioned for review to the California Supreme Court (see the court’s online docket here). Obviously they weren’t challenging the opinion’s punitive damages analysis; they were challenging the portion of the opinion in which the Court of Appeal concluded (contrary to the trial court’s ruling) that the insurer had a duty to defend its insured from a third party lawsuit. The Supreme Court denied review yesterday, according to the Supreme Court’s conference results.

    Although the petition for review did not address the punitive damages issue, the denial of review is relevant to this blog. If the Supreme Court had granted review, the entire opinion, including the punitive damages discussion, would have been vacated (and therefore not citeable in California courts).

  • Another Editorial Criticizing Dismissal of Cert in Williams III

    Today’s LA Times contains an editorial entitled The Supreme Court and Law Left Hanging. The editorial makes the same point as this editorial we blogged about last week, namely, that the Supreme Court should have used Williams III as a vehicle for clarifying and strengthening the limits on excessive punitive damages. Neither editorial mentions that the excessiveness issue was not before the court in Williams III because the Supreme Court declined to consider that issue when it granted certiorari last June.

  • Sukumar v. Sukumar: Court of Appeal Reaffirms Rule that Punitive Damages Cannot Exceed 10 Percent of Defendant’s Net Worth

    The Fourth Appellate District, Division One, issued this unpublished opinion last week affirming a trial court order that reduced a $5 million punitive damages award to $1.4 million.

    The trial court reduced the punitive damages based on California’s longstanding rule that punitive damages generally cannot exceed 10 percent of the defendant’s net worth. (See Michelson v. Hamada (1994) 29 Cal.App.4th 1566, 1593.) On appeal, the plaintiff challenged that ruling on several grounds.

    First, the plaintiff argued that trial court failed to consider whether factors other than the defendant’s net worth, such as future dividend income, made it possible for the defendant to pay the judgment. The Court of Appeal ruled that, although the Supreme Court has declined to adopt a rigid rule that net worth is the only appropriate measure of a defendant’s ability to pay punitive damages, net worth is the appropriate measure in the vast majority of cases. The few cases where courts looked to other measures involved exceptional circumstances. (See Zaxis Wireless Communications, Inc. v. Motor Sound Corp. (2001) 89 Cal.App.4th 577, 582-583 [defendant’s negative net worth was due primarily to accumulated depreciation and a note to its sole shareholder, while it had annual sales exceeding $250,000,000, cash of $19,000,000, and a $50,000,000 line of credit, evidencing its ability to pay punitive damages award of $300,000]; Rufo v. Simpson (2001) 86 Cal.App.4th 573, 579, 621, 623-624 [reprehensibility of defendant’s conduct (i.e., two deliberate, vicious murders) provided exceptional circumstances].)

    Second, the plaintiff argued that the trial court should have viewed the defendant’s testimony about his own net worth with suspicion. The Court of Appeal rejected that argument on the ground that the plaintiff bore the burden of proving that the defendant had a greater net worth, and she failed to carry that burden. For example, while defendant owned an apartment, plaintiff failed to rebut defendant’s evidence that defendant owed more money on the apartment than it was worth.

    Third, the plaintiff argued that the 10 percent rule should not apply when the defendant’s conduct is especially reprehensible. The Court of Appeal rejected that argument as a matter of law:

    [Plaintiff] does not cite any apposite case showing, or otherwise persuade us,
    such conduct is so reprehensible that the general rule limiting punitive
    damages to 10 percent of a defendant’s net worth should not apply. In any
    event, as the California Supreme Court stated, a punitive damages “award can
    be so disproportionate to the defendant’s ability to pay that the award is
    excessive for that reason alone” regardless of the reprehensibility
    of the defendant’s conduct. (Adams v. Murakami [(1991)] 54 Cal.3d [105,] 111.)

    Full disclosure: Horvitz & Levy participated in this case, representing one of the defendants on appeal (the defendant who was subject to the punitive damages award).

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

    The plaintiff in Buell-Wilson has asked the California Supreme Court to dismiss review in that case. (See the court’s online docket.)

    The court agreed to review Buell-Wilson last year but deferred briefing pending the U.S. Supreme Court’s decision in Williams III. As we noted last week, the U.S. Supreme Court’s decision to dismiss certiorari in Williams III without deciding the case could cause the California Supreme Court to dimiss review in Buell-Wilson as well. On the other hand, the petition in Buell-Wilson raises recurring issues that are not related to Williams III, so perhaps the court will call for briefing on the merits in Buell-Wilson notwithstanding the dismissal in Williams III.

  • Amended 9th Circuit Order Addresses Issue Raised on This Blog

    Late last year we blogged about the Ninth Circuit’s published order in Irvin v. Southern Union, in which the court held that a $4 million punitive damages award was excessive, and that any award higher than $1 million (three times compensatory damages) would violate due process.

    In a follow-up post, we noted that the Ninth Circuit seems to have a created an intra-circuit split on the proper remedy for an excessive punitive damages. We observed that, in the Leatherman Tool Group opinion in 2002, the Ninth Circuit seemingly adopted the Seventh Circuit’s position that a plaintiff is not entitled to a retrial when the court determines that a punitive damages is excessive. Instead, the court should simply reduce the award to the constitutional maximum and modify the judgment accordingly. We also observed, however, that the court took the opposite approach in its 2005 Planned Parenthood opinion, which afforded the plaintiff a new trial. Then in its 2006 opinion in Exxon Valdez, the court reverted to the approach of Leatherman Tool Group, before changing course again with the Irvin order in 2008.

    Subsequent to our blog posts, the Ninth Circuit has now modified the order in Irvin, adding a footnote to address these seeming inconsistencies in its approach. The footnote cites the same cases discussed in our blog post – Leatherman Tool Group, Planned Parenthood, and Exxon Valdez – and attempts to reconcile these opinions by explaining that the court “decide[s] on a case-by-case basis whether to remand for a new trial or simply order a remittitur.” The court did not explain exactly what criteria would lead the court to choose a particular approach in a particular case. The court said it would allow a retrial in Irvin because the plaintiff might introduce additional evidence at a new trial that could affect the calculation of the proper ratio between punitive damages and compensatory damages. But if that reasoning is valid, plaintiffs would be entitled to a retrial in virtually every case, because there is always a theoretical possibility that the plaintiff could present some new evidence at the retrial.

    Perhaps the more principled approach is the one adopted by the Seventh Circuit, under which a plaintiff is never entitled to a retrial. If the plaintiff had a full and fair opportunity to present all of its evidence the first time around, why should it be given another bite at the apple? (See., e.g., Kelly v. Haag (2006) 145 Cal.App.4th 910, 919-920 [plaintiff who fails to present evidence to support punitive damages award is not entitled to a retrial].)

  • Shakespeare, the Supreme Court, and Punitive Damages

    Legal Times (via Law.com) has this amusing report about a theater production that took place this evening involving Justices Ginsburg, Alito, and Breyer. Those three, and five lower court judges, presided over a mock argument in a production called Malvolio’s Revenge, based on Twelfth Night. The premise is that Malvolio has won a $10 million punitive damages verdict for false imprisonment and the judges must decide if the award is constitutional.

    Click here for the event’s official website.

    UPDATE: The BLT (blog of Legal Times) reports that the court ruled against Malvolio and vacated his $10 million punitive damages award.

  • “Court Missed Opportunity to Limit Punitive Damages”

    So says this Reading Eagle editorial about the Supreme Court’s dismissal of cert. in Williams III.