California Punitives by Horvitz & Levy

  • Defendants Win Latest Round of Florida Tobacco Litigation

    As we’ve noted in prior posts, a series of individual trials are taking place in Florida in which smokers and their families are seeking punitive damages from tobacco companies. These trials are the fallout from the Florida Supreme Court’s reversal of a $145 billion punitive damages award in a tobacco class action. The plaintiffs won the first two individual trials, but according to AmLaw Litigation Daily, round three has gone to the defendants.

    Point of Law has commentary about this litigation here.

  • How Will the California Supreme Court React to the Williams III Cert. Dismissal?

    As we noted below, the U.S. Supreme Court today dismissed certiorari in Philip Morris v. Williams (Williams III). Among the many questions raised by the dismissal is what will happen in Buell-Wilson v. Ford, currently pending before the California Supreme Court.

    The Cal. Supremes granted review in Buell-Wilson last summer, but deferred briefing pending the disposition of Williams III. Now that the U.S. Supreme Court has dismissed Williams III without a decision , the Cal. Supreme Court will either have to order briefing in Buell-Wilson and address the issue that was unaddressed in Williams III, or dismiss review in that case as well. As my co-blogger Jeremy Rosen pointed out, two of the three issues raised in the Buell-Wilson petition for review are not dependent on the outcome of Williams III, so even if the court decides not to address the Williams III issue, it may decide to resolve these issues.

  • Cert. Dismissed in Williams III

    The U.S. Supreme Court has issued an order dismissing certiorari as improvidently granted in Philip Morris v. Williams (Williams III), which was argued last December (click here to view the transcript). As readers of this blog will recall, the issue before the court was:

    Whether, after this Court has adjudicated the merits of a party’s federal claim
    and remanded the case to state court with instructions to “apply” the correct constitutional standard, the state court may interpose–for the first time in the litigation–a state-law procedural bar that is neither firmly established nor regularly followed.

    I certainly didn’t see this dismissal coming. It was apparent from the oral argument transcript that the court was sharply divided, but I guessed that the result would be a 5-4 reversal. Looking back at the transcript, I suppose this comment by Justice Breyer might have been a hint that dismissal was possible: “When I read that petition for cert, I thought this is a run-around, and I’m not sure that I think that now.”

    No one really knows why the court dismissed review (and we may never know), but one of my colleagues, John Querio, has offered this assessment, which makes sense to me:

    It means they realized this issue was tangled up with state law issues that they
    didn’t anticipate (but could have), meaning there was a very good argument that the Oregon S.Ct.’s rationale represented an adequate and independent state ground for the decision, which deprives the USSCT of jurisdiction. I’m guessing the liberals and at least some of the conservatives agreed on this – the liberals because they wanted to preserve the award, and the conservatives because they favor the AISG doctrine in the criminal context and didn’t want to make new and harmful precedent cutting back on that ground to get to the merits of the punitive damages issue here. Such an opinion could have been cited by criminal defense lawyers in the future.

    You can read more about the dismissal at:

    WSJ Law Blog

    Reuters

    Bloomberg

    SCOTUSblog (Observing that, with interest, Philip Morris will now owe over $150 million, but noting that Philip Morris plans to keep the Williams litigation going by challenging the state of Oregon’s claim to 60 percent of the punitive damages award)

  • Taxation of Punitive Damages

    As April 15 approaches, this is an appropriate time to observe that punitive damages are subject to federal income tax, even if they are awarded in connection with a personal injury award that is not otherwise taxable. Don’t take my word for it; take it from TaxGirl.

  • Rich v. Koi Restaurant: Plaintiff Not Entitled to Retrial on Punitive Damages When Jury Ignores Defendant’s Admission

    Last Friday, the California Court of Appeal (Second District, Division Four) issued this unpublished opinion affirming the trial court’s denial of the plaintiff’s motion for new trial after a jury declined to award punitive damages.

    In this sexual harassment case, the corporate defendant admitted before trial (in response to a request for admissions) that the alleged harasser was a managing agent of the corporation within the meaning of Civil Code section 3294. The jury was informed of this admission and told to accept it. Defense counsel also conceded the point in closing argument.

    When the case was submitted to the jury, the jury found in favor of the plaintiff and awarded compensatory and punitive damages against the alleged harasser. But when the jury was asked to decide whether the alleged harasser was a managing agent, the jury answered “no,” and therefore awarded no punitive damages against the corporation.

    The plaintiff moved for a new trial, arguing that the jury’s answer to the managing agent question was improper. The trial court denied the motion, finding that the jury’s answer was “a technical error at most,” and that the denial of punitive damages against the corporation represented “a measured and calculating or calculated decision to punish the truly culpable and to treat the less culpable with a lighter touch.”

    The Court of Appeal affirmed, finding that the trial court did not abuse its discretion in denying the new trial motion. The Court of Appeal cited the California Supreme Court’s decision in Brewer v. Second Baptist Church (1948) 32 Cal.2d 791 and Sumpter v. Matteson (2008) 158 Cal.App.4th 928 (which we blogged about here in one of our earliest posts), both of which held that a plaintiff has no right to punitive damages even when the statutory prerequisites for awarding punitive damages are established.

    For what it’s worth, I think the Court of Appeal correctly deferred to the trial court’s discretion, but I’m not sure I would have decided this issue the same way the trial court did. It seems possible that the jury’s response on the verdict form was just a mistake, and not a measured or calculated decision. At the same time, I have to wonder why plaintiffs’ counsel did not object to the inclusion of the managing agent question on the verdict form, given that the defense had already conceded the issue.

  • Vermont Supreme Court Considers Punitive Damages Against Diocese for Abuse by Priest

    As reported by the Burlington Free Press, the Vermont Supreme Court heard oral arguments yesterday in an appeal by the state’s Roman Catholic Diocese from a judgment awarding $8.7 million to a former altar boy who was molested by a priest in the 1970’s. The judgment included $7.75 million in punitive damages.

    According to the story, the diocese is arguing that the trial court committed instructional error by allowing the jury to award punitive damages without making a finding of “bad motive” on the part of the diocese. The plaintiff contends that the trial court correctly instructed the jury that they could award punitive damages for “reckless” conduct.

    As we mentioned in a previous post, the Vermont diocese is also facing a separate award of $3.4 million in another case involving the same priest. At the time of that verdict, there were 19 other pending abuse cases involving the same priest, who has not yet been stripped of his priesthood.

  • UCL Practitioner Reports on Dukes Oral Argument

    Kim Kralowec has a detailed post on her UCL Practitioner blog describing yesterday’s Ninth Circuit en banc oral argument in Dukes v. Walmart. As we noted in a prior post, Dukes raises questions about the propriety of classwide determination of punitive damages for Title VII claims. Kim concludes her post by agreeing with The Recorder’s assessment that the outcome of the case is difficult to predict.

  • Banana Litigation Losing Its Appeal?

    Sorry about the bad pun. I just couldn’t help myself.

    This post relates to Tellez v. Dole, a case we blogged about last year. In Tellez, Nicaraguan banana workers sued Dole Food Company in California state court, seeking punitive damages because they allegedly became sterile when they were exposed to the agricultural chemical DBCP on Nicaraguan banana farms nearly 30 years ago. A jury awarded nearly $6 million to the plaintiffs, including $2.5 million in punitive damages. L.A. Superior Court judge Victoria Chaney vacated the punitive damages award and the Dole appealed from the remainder of the award. (See the court of appeal’s on-line docket here.)

    The National Law Journal is now reporting that Judge Chaney is threatening to dismiss other similar cases brought by the same plaintiffs’ lawyers, amid allegations of fraud by the plaintiffs and their counsel. Judge Chaney’s order refers to evidence that some plaintiffs never even worked on a banana farm, employment documents that were falsified, and a Nicaraguan radio broadcast on which the lead plaintiffs’ lawyer told listeners not to cooperate in the case.

    This isn’t the first time that banana litigation has backfired for plaintiffs’ lawyers here in L.A. As readers of this blog will recall, prominent L.A. trial lawyers Tommy Girardi and Walter Lack got themselves into hot water for their ethical lapses in related litigation, resulting in the Ninth Circuit’s appointment of a special prosecutor to pursue disciplinary action against them.

  • Obama Administration Endorses Broad Application of Punitive Damages in Employment Class Actions Without Need for Individual Determinations

    The EEOC has recently reversed course and decided to get involved in Dukes v. Wal-Mart Stores, Inc., currently set for oral argument before an en banc panel of the 9th Circuit on March 24. The district court and a divided panel of the Ninth Circuit have previously held that a class of 2 million potential plaintiffs in a gender discrmination lawsuit could be certified and that claims for punitive damages would not be tried on a case-by-case basis. The EEOC had decided not to get involved in this case as it worked its way up through the courts. According to the Recorder, Brad Seligman of the Impact Fund said that the recent amicus brief filing does not represent “a radical new EEOC making this decision.” Robin Conrad of the U.S. Chamber of Commerce disagrees, telling the Recorder, “It’s very troubling that the Obama administration thinks it might be appropriate to impose massive punitive damages on companies without ever giving them their day in court.”

    In its amicus brief, the EEOC argues that “Punitive damages lend themselves to classwide determination in a Title VII pattern-or-practice case since neither the claim nor the damages focuses on individual victims of discrimination. The focus of a claim under a pattern-or-practice theory is not on individual employment decisions but rather on an overall ‘pattern of discriminatory decisionmaking.’”

    Wal-Mart’s lawyer, Theodore Boutrous Jr. at Gibson, Dunn & Crutcher, called the EEOC’s position “fundamentally incorrect.”

    The composition of the en banc panel suggests that this could be a closely divided opinion. The panel members include Chief Judge Kozinski, and Circuit Judges Reinhardt, Rymer, Hawkins, Silverman, Graber, Fisher, Paez, Berzon, Bea and Ikuta.

  • Korean Pop Star Rain Gets Hit With $4.8 Million Punitive Damages Award In Hawaii

    The Associated Press is reporting that a jury in federal district court in Hawaii has awarded $4.8 million in punitive damages against Korean pop star Rain, aka Jung Ji-hoon.

    The plaintiff, a Hawaii concert promoter, sued Rain for breach of contract and fraud in connection with Rain’s decision to back out of a concert at the last minute. The jury awarded compensatory damages of $1 million for fraud and $2.3 million for breach of contract.

    Rain cancelled his Hawaii concert just days before the scheduled date. The plaintiffs argued that Rain never intended to perform in Hawaii, saying his crew never applied for proper visas or shipped their equipment. A similar lawsuit was recently filed here in L.A., where Rain’s concert at the Staples Center was canceled a few hours before show time.