California Punitives by Horvitz & Levy

  • Red Hill Enterprises v. Gould: Defendant Who Refuses To Turn Over Requested Documents Cannot Challenge Plaintiffs’ Failure to Prove Net Worth

    Yesterday, the California Court of Appeal (Second District, Division Seven) issued this unpublished opinion reversing a nonsuit order and allowing the plaintiff to proceed with a claim for punitive damages.

    This fraud trial was bifurcated into two phases. Before the trial began, the plaintiff asked the defendant to produce certain documents regarding its financial condition, so that the plaintiff could meet its burden of proving the defendant’s net worth in the punitive damages phase of the trial. (See our prior posts about other recent opinions apply this unique rule of California appellate procedure.) After the jury ruled for the plaintiff in the first phase, the defendant said it would promptly produce the requested documents for the plaintiff’s review. A few days passed and the defendant failed to turn over the documents as promised. Instead, the defendant waited until the morning of the second phase of the trial and then turned over only some of the documents.

    The plaintiff tried to establish the defendant’s financial condition through other means, such as asking the trial court to take judicial notice of public records. The trial court shot down all of the plaintiff’s requests, and then granted nonsuit on the ground that the plaintiff had failed to present sufficient evidence of the defendant’s financial condition.

    The Court of Appeal reversed, ruling that the defendant, by failing to turn over the requested documents, forfeited its right to complain about the plaintiff’s failure of proof. In so doing, the court extended the holding of Mike Davidov Co. v. Issod (2000) 78 Cal.App.4th 597. That opinion found a forfeiture where the defendant refused to comply with a court order to turn over financial condition documents. The court here extended that ruling to situations where the is no court order, only a request by the plaintiff.

    The Court’s reasoning makes sense to me, so long as the record established that the defendant actually had additional documents that it failed to turn over. When a defendant turns over all the information in its possession, there should be no forfeiture, even if the defendant’s documents are inadequate to establish the defendant’s net worth. The defendant should not be required to create documents to satisfy the plaintiff’s burden. If the defendant does not have an adequate statement of its net worth, the plaintiff bears the burden of gathering the necessary information, by eliciting testimony from the defendant or through other means. In this case, however, it seems that trial court blocked the plaintiff from pursuing any other means, leaving the plaintiff with no way to meet its burden.

  • California Supreme Court Denies Review in Brewer v. Premier Golf

    According to the California Supreme Court’s Conference Results posted today, the court has denied review in Brewer v. Premier Golf Properties, a case we previously blogged about here and here.

    Among other things, the Court of Appeal’s opinion in Brewer held that punitive damages are unavailable in an action for violations of statutes and regulations governing pay stubs, minimum wages, and meal and rest breaks. The court concluded that, because those statutes and regulations created new rights that did not exist at common law, the statutory remedies for violations of meal/rest break, minimum wage, and pay stub laws are the exclusive remedies. Also, the court held that punitive damages are unavailable for these sorts of claims because they ultimately arise from a contractual obligation, whereas Civil Code section 3294 provides that punitive damages are only available for the breach of an obligation not arising from contract.

  • Punitive Damages, Remunerated Research, and the Legal Profession

    The December 2008 edition of the Stanford Law Review, now available on Westlaw, contains this student note entitled “Punitive Damages, Remunerated Research, and the Legal Profession.” The Westlaw citation is 61 STNLR 711.

    The note, authored by recent Stanford graduate Shireen A. Barday, explores an issue that attracted a lot of attention last summer when Justice Souter, while authoring the majority opinion in Exxon Shipping, included a footnote stating that the court would not rely on academic research that was funded by Exxon. (Footnote 17.) Adam Liptak wrote a New York times piece on that footnote, and Rick Hasen questioned the Supreme Court’s approach on his Election Law Blog.

    Barday’s note observes that medical and scientific journals require authors to disclose their sponsors, but law reviews freely publish articles without requiring any financial disclosure. Barday proposes (1) mandatory financial disclosure requirements for law review submissions, and (2) the creation of a conflicts database that would allow lawyers and judges to track industry funded research. The first proposal seems eminently reasonable, but the second may be a little too ambitious to be realistic.

  • Market Share Liability & Punitive Damages

    The Winter 2008 edition of the Columbia Journal of Law & Social Problems, now available on Westlaw, contains an article entitled “Market Share Liability: the Case for Evolution in Tort Law.” The Westlaw citation is 42 CLMJSP 225.

    The note, authored by Columbia student Andrew B. Nick, is primarily an attack on the California Court of Appeal’s opinion in Magallanes v. Superior Court (1985) 167 Cal.App.3d 878, which held that punitive damages are unavailable in lawsuits based on market-share liability. The article criticizes the reasoning of Magallanes and argues that extending punitive damages to market-share cases “would allow the benefits of punitive damages to be achieved on a truly grand scale.”

    P.S. The name of the Magallanes opinion is misspelled throughout the article. Aren’t law review editors supposed to catch that sort of thing?

  • No Punitive Damages in Exxon Gas-Leak Lawsuit

    The Baltimore Sun reports that the jury in the Maryland gas-leak lawsuit against Exxon Mobil ruled for the plaintiffs, awarding $150 million in compensatory damages but no punitive damages. The plaintiffs had asked for billions, but they’ll have to make do with $150 million. It seems entirely likely that their outlandish request was nothing more than a strategic ploy designed to make a sum like $150 million seem modest by comparison.

    The Baltimore Sun story reports that Exxon had already agreed to pay $38 million to clean up the spill, and agreed to pay a $4 million penalty to the state of Maryland, the largest environmental penalty ever paid to the state.

  • Plaintiffs Seek “Several Billion Dollars” from Exxon; Verdict to be Announced Tomorrow

    The Baltimore Sun reports that the jury has reached a verdict in a Baltimore lawsuit in which the plaintiffs are seeking “several billion dollars” in compensatory and punitive damages from Exxon Mobil Corp. The verdict will be read at 9 am tomorrow.

    The plaintiffs are 300 residents of Jacksonville Maryland who allege that 26,000 gallons of gasoline seeped into that city’s groundwater from a leaking pipe in 2006. They contend that Exxon officials knew leak-detection equipment was inadequate. Exxon says it accepts responsibility for cleaning up the spill but did not commit fraud or act with intentional malice or negligence. The jury began deliberating February 27 after a 19-week trial.

  • More Celebrity Punitive Damages News

    After a dearth of celebrity-related punitive damages news, we have two stories today:

    Bruce Willis is suing two producers at Foresight Unlimited, claiming they lied to him about the financing they had obtained for Three Stories About Joan, a film Willis was supposed to direct. He wants punitive damages for fraud.

    “Joe the Plumber” (is he still a celebrity?) is seeking punitive damages from three former Ohio officials for allegedly violating his privacy when they gathered his personal information in a records search.

  • Spinks v. Equity Residential: Court of Appeal Reverses Summary Judgment on Punitive Damages for Wrongful Eviction

    The California Court of Appeal (Sixth District) issued this published opinion ruling that a trial court erred in dismissing a plaintiff’s punitive damages claims on summary judgment.

    The primary issue in this case–whether the plaintiff had a viable claim for breach of contract on a third-party beneficiary theory–is outside the scope of this blog. But the opinion also contains a brief discussion of some punitive damages issues.

    First, the opinion concludes that the trial court properly rejected the plaintiff’s claim for punitive damages for breach of the covenant of good faith and fair dealing. The court noted that in California, insurers are the only defendants who can be liable for tort damages for bad faith breach of contract.

    Second, the opinion concludes that the trial court erred in dismissing plaintiffs’ claims for punitive damages for wrongful eviction, trespass, invasion of privacy, and intentional infliction of emotional distress. The court said plaintiff should be able to seek punitive damages on those claims because she presented evidence that the defendant landlord evicted her despite concerns about the legality of the eviction and the impact on the plaintiff. The court said that evidence could support a finding that the defendant acted in “conscious disregard” of the plaintiff’s rights within the meaning of California’s punitive damages statute, Civil Code section 3294.

  • Indiana Judge Finds Punitive Damages Cap Unconstitutional

    Indystar.com reports that an Indiana trial court has ruled that the Indiana legislature violated that state’s constitution by adopting a cap on punitive damages. Professor Andrew Klein of the Indiana University School of Law-Indianapolis says the ruling is well-researched and “reflects serious analysis that courts in other states have used to strike down similar laws.”

  • Enriquez v. Amerifirst: Court of Appeal Affirms Nonsuit on Punitive Damages

    The California Court of Appeal (Fourth District, Division Three) issued this unpublished opinion affirming a trial court order granting nonsuit on a claim for punitive damages.

    Plaintiff, a homeowner who lost her home through foreclosure, sued the lender (Amerifirst) that had refinanced her initial mortgage. She presented evidence that Amerifirst had overstated her income on a mortgage application and forged her signature. The trial court ruled, however, that the plaintiff failed to present sufficient evidence of intentional misconduct by Amerifirst.

    The Court of Appeal affirmed, but on a different ground. It relied on Civil Code section 3294, subdivision (b), which provides that a corporation cannot be liable for punitive damages unless an officer, director, or managing agent of the corporation authorized or ratified the misconduct at issue. In this case, the evidence suggested that the person who prepared the loan application was an employee in the processing department. She was not an officer or a director of Amerifirst, and she did not qualify as a managing agent because she did not have authority to set corporate policy. Accordingly, the plaintiff’s evidence was insufficient to support the findings required by Civil Code section 3294, subdivision (b)