When a jury awards an excessive amount of punitive damages, the trial court has the authority to order a new trial unless the plaintiff agrees to accept a reduced amount.  That’s a well-established principle of posttrial procedure.

But are there some situations where the jury’s award is so high that the trial court should simply order a new trial, without giving the plaintiff an option of accepting a remittitur to a more reasonable number?  Logic dictates that the answer should be yes.  If an award is so high that it creates a presumption that the jury was acting out of passion and prejudice, then the defendant should be able to get a new trial before a jury that will decide the case based solely on the facts.  In that situation, it is unfair to make the defendant pay the maximum amount that a jury could properly have awarded.  Perhaps a jury that wasn’t influenced by passion and prejudice would have awarded something less than the maximum amount.  This principle finds support in the California Supreme Court’s opinion in Sabella v. Southern Pacific, which assumed there are some situations in which excessive damages resulting from passion or prejudice “cannot be cured by a remittitur.”

The Court of Appeal in this unpublished opinion didn’t buy that argument, and rejected the defendant’s bid for a new trial.  According to the court (Fourth Appellate District, Division Two), the trial court cured any problem with the jury’s $117 million punitive damages award by reducing it to $1.43 million.  The court explained that ” ‘the relevant amount for purposes of our review is not the amount awarded by the jury, but the reduced amount ordered by the remittitur.’ ”  That analysis makes sense where the defendant’s argument on appeal challenges the amount of the punitive damages.  But the court’s analysis is not responsive to the defendant’s argument that the award was so high that it showed the jury was acting out of passion and prejudice, requiring a new trial.  Here, where the jury’s verdict was more than eight times the highest amount that a reasonable jury could have awarded, there seems to be a strong argument that the jury’s verdict was based on passion and prejudice, and that the only way to cure that is to start over with a new jury.

I meant to report on this unpublished decision when it came down in late February, but it fell through the cracks.  Better late than never.

A former Dignity Health pharmacist sued the company for retaliation and wrongful discharge.  A jury awarded her $1 million in compensatory damages and $2.4 million in punitive damages, but the trial court reduced the punitive damages to $1 million. Dignity Health appealed.

On appeal, the Court of Appeal (Third Appellate District) reversed the punitive damages award for lack of substantial evidence.  The court found that, although there was evidence that a Dignity Health employee acted with malice towards the plaintiff, that employee was not a managing agent within the meaning of Civil Code section 3294 because he lacked authority to determine or change corporate policy.  Another Dignity Health employee who actually fired the plaintiff was a managing agent, but there was no evidence that he acted with malice.  Because plaintiff failed to present any evidence of malice on the part of a managing agent, the punitive damages award could not stand.

This published opinion departs from California’s usual rule that a plaintiff seeking punitive damages must present meaningful evidence of the defendant’s financial condition, including not just evidence of income and assets, but also evidence of liabilities and expenses.

A rather unique feature of California punitive damages law, discussed on this blog many times, is that a plaintiff seeking punitive damages bears the burden of presenting meaningful evidence of the defendant’s financial condition.  Our appellate courts have repeatedly held that evidence of financial condition is not meaningful if it is incomplete.  For example, Baxter v. Peterson explained that “[n]ormally, evidence of liabilities should accompany evidence of assets, and evidence of exposures should accompany evidence of income.” Similarly, Lara v. Cadag stated that where “the evidence is limited to proof of the defendant’s annual income, there is insufficient evidence to support an award of punitive damages.” And Farmers & Merchants Trust Co. v. Vanetik stated that “[w]e may not infer sufficient wealth to pay a punitive damages award from a narrow set of data points, such as ownership of valuable assets or a substantial annual income.”

The Court of Appeal in this case (Second District, Division Eight) cited all of these authorities but declined to follow them.  Instead, the court upheld punitive damages awards of $500,000 and $1 million against two individual defendants based on evidence of their income, without any evidence of their liabilities or expenses.  The court explained that because the defendants earned millions of dollars in revenues from their business, and because they made efforts to funnel these revenues through shell companies without accounting records, the evidence was sufficient to uphold the “relatively modest” awards of punitive damages.

In my opinion, this case is a prime candidate for depublication.  The result of the case is not particularly outrageous, but the court’s departure from well-settled law threatens to create confusion and uncertainty in future litigation.

In this unpublished opinion, the California Court of Appeal (Second District, Division One) upholds a jury’s award of $160,000 in compensatory damages and $50,000 in punitive damages in a case involving claims of disability discrimination, retaliation, and wrongful termination. There’s nothing particularly remarkable about the opinion, except that the amount of punitive damages is modest for a California jury.