California Punitives by Horvitz & Levy

  • Findlaw Column: Anthony Sebok Analyzes Williams III Oral Argument

    In his Findlaw column, Professor Anthony Sebok summarizes the history of the Philip Morris v. Williams litigation and offers some cautious predictions about the likely result of that case’s third trip to the U.S. Supreme Court. Prof. Sebok seems to think it’s a close call, but an affirmance is the most likely outcome. His prediction differs from my guess that a 5-4 reversal is more likely.

    Prof. Sebok’s prediction seems to be based on his observation that Justice Breyer, who wrote the opinion in favor of Philip Morris in Williams II, now seems to be leaning towards the plaintiff. I agree that Justice Breyer’s seems inclined to affirm, but I don’t think that necessarily means the plaintiff will win. In my view, Justice Scalia, who dissented from Justice Breyer’s opinion in Williams II, now seems to be clearly leaning towards reversal. If Justices Breyer and Scalia switch sides and everything else stays the same, Philip Morris will prevail again. (Although I’m not as certain about this, I think some of the others, particularly Justices Souter and Thomas, may end up switching sides as well.)

  • New York High Court Reverses $17.1 Million Punitive Damages Award Against Tobacco Companies

    The New York State Court of Appeals issued an opinion today reversing a $20.5 million judgment against Brown & Williamson and Philip Morris. The judgment included $17.1 in punitive damages.

    The plaintiffs claimed that the defendants’ cigarettes were defectively designed because they should have contained lower levels of tar and nicotine. The Court of Appeals found that the plaintiffs failed to prove an element of their case:

    We agree with the Appellate Division that plaintiffs failed to prove an essential element of their case: that regular cigarettes and “light” cigarettes have the same “utility.” The only “utility” of a cigarette is to gratify smokers’ desires for a certain experience, and plaintiffs did not prove, or try to prove, that light cigarettes perform this function as well as regular cigarettes.

    This opinion comes on the heels of a decision earlier today reversing a $20 million punitive damages award against Brown & Williamson in Missouri.

  • Missouri Court of Appeals Reverses $20 Million Punitive Damages Award Against Tobacco Company

    The Kansas City Business Journal reports that the Missouri Court of Appeals has reversed a $20 million punitive damages award against Brown & Williamson Tobacco Corp. Click here to view the opinion. The plaintiffs, family members of a deceased smoker, brought a wrongful death action under Missouri law and obtained a jury award of $500,000 in compensatory damages and $20 million in punitive damages, a ratio of 40 to 1. The Court of Appeal reversed, ordering a new trial on punitive damages, on the ground that only one of the plaintiffs’ three liability theories was supported by substantial evidence. (Note: in California, punitive damages are not permitted at all in wrongful death actions.)

    This case comes on the heels of yesterday’s much less favorable decision for the tobacco industry in Altria Group Inc. v. Good, in which the U.S. Supreme Court ruled that federal law does not preempt suits by smokers who claimed they were mislead about the dangers of “light” cigarettes. As reported by Bloomberg, the ruling paves the way for smokers in various states to proceed with lawsuits seeking punitive damages.

  • Florida Bar Journal Article: Why Punitive Damages and Criminal Sentences Are Reviewed Differently

    The December 2008 edition of the Florida Bar Journal contains an article entitled “Why Punitive Damages and Criminal Sentences Are Reviewed Differently and What It Means to Your Appeal.” The article is written by Jonathan D. Colan, an assistant U.S. attorney in the Appellate Division of the U.S. Attorney’s Office for the Southern District of Florida and an adjunct professor of issues in appellate law at the University of Miami School of Law. I could not find any online link for the article, but it can be found on Westlaw at 82-DEC FLBJ 30.

    For those who are interested in further comparisons between punitive damages and criminal law, you might want to check out Professor Chris Green‘s article “Punishing Corporations: The Food Chain Schizophrenia in Punitive Damages and Criminal Law.” Prof. Green was a commenter at this site before we decided to disable the comments feature so we wouldn’t have to moderate all the crackpot comments (not from Prof. Green, of course, whose comments were always thoughtful and on point).

  • Exxon Shipping: Potential Impacts are Well Beyond Maritime Law

    William E. Thomson and Kahn A. Scolnick recently published an article entitled “The Supreme Court Sets New Damage Limits Under Federal Common Law” in the October 2008 issue of the Federalist Society’s publication, Class Action Watch. The authors make the claim that while the case arose under federal martime law, “the decision is important in several respects that may have application far beyond that narrow context.” In particular, the authors contend “there is little principled basis for refusing to extend Baker’s1:1 ratio to other areas of federal common law.” As one example, the authors point to federal civil rights cases where the 1:1 ratio might be applied. The authors also speculate that the rationale for the 1:1 ratio would also apply equally in due process challenges to punitive damage awards in light of State Farm’s statement that in cases with “substantial” compensatory damages, a 1:1 ratio “can reach the outermost limit of the due process guarantee.”

  • English Tribunal Awards First Ever Punitive Damage Award

    This news is a few weeks old, but of interest to anyone who follows punitive damages. As reported by the Daily Express, “A lesbian soldier was awarded £186,000 compensation yesterday after she was sexually harassed by a male sergeant who then tried to wreck her career. . . . The payout included £50,000 in exemplary damages, £20,000 in aggravated damages and £30,000 for hurt feelings.” The paper reports that this is the first time an English employment tribunal has awarded exemplary damages.

    Update: This article indicates an appeal has been filed challenging the award. [1/8/09 – LP]

  • Radiologist Who Asked for $1 Billion Gets $7.5 Million

    Yesterday we blogged about a radiologist’s request for $1 billion in punitive damages. The Associated Press reports (via the San Francisco Chronicle) that the jury awarded $7.5 million in punitive damages, on top of $3.9 in compensatory damages already awarded.

    While the plaintiffs’ attorney may be disappointed that he didn’t get the $1 billion, this two-to-one ratio will be easier to defend on appeal. Nevertheless, given the size of the award, I would expect Kaiser to appeal and argue that its conduct did not warrant punitive damages and/or that the punitive damages award is excessive in light of the already substantial compensatory damages award. Given the recent trend of California courts reducing punitive damages awards to a one-to-one ratio when compensatory damages are substantial, Kaiser might be able to shave $3.6 million off the award, if nothing else.

    Update: For those who want to track this case on the Los Angeles County Superior Court’s website, the case number is BC365398. A hearing on post-trial motions is set for March 11, 2009.

  • Atallah v. Equilon: Court of Appeal Reinstates Punitive Damages Claim in Unpublished Opinion

    The California Court of Appeal (Second Appellate District, Division 8), issued an unpublished opinion yesterday reinstating a claim for punitive damages. The jury in this case had ruled for the plaintiff on liability, awarded compensatory damages, and found that the defendant acted with malice, oppression, or fraud. But the trial court did not allow the punitive damages claim to go to the jury because the plaintiff failed to present evidence of the defendant’s net worth. The Court of Appeal reversed, concluding that the trial court should have granted plaintiffs’ counsel a continuance in order to marshal evidence regarding the defendant’s financial condition.

    The plaintiff in this case fared better than the plaintiffs in these opinions from earlier this year, all of which reversed a punitive damages award because the plaintiffs failed to present adequate evidence of the defendants’ financial condition. The Court of Appeal was merciful to the plaintiff here because the trial court had, over the plaintiff’s objection, excused a witness who could have testified to the defendant’s financial condition. Although the Court of Appeal did not actually rule that the trial court erred in excusing the witness, the Court of Appeal concluded that the trial court should have given plaintiff’s counsel a short continuance to marshal his remaining evidence in light of that witnesses’ unavailability.

  • Radiologist Asks for $1 Billion in Punitive Damages Against Kaiser

    The Los Angeles Independent reports that plaintiffs’ attorney Charles T. Mathews has asked a jury to award $1 billion in punitive damages against Kaiser Foundation Health Plan and Southern California Permanente Medical Group. The defendants are accused of trying to silence the plaintiff, a radiologist, who complained about the performance of staff at the Kaiser Sunset hospital in Hollywood. The jury has already ruled for the plaintiff on the issue of liability and awarded $3.9 million in compensatory damages.

    If the jury accepted the invitation to award $1 billion in punitive damages, that award would be roughly 260 times the compensatory damages (and possibly higher if the compensatory damages will be further reduced based on an allocation of fault). Savvy plaintiffs’ lawyers generally don’t invite juries to award ratios like this, because a ratio that high would be closely scrutinized on appeal and would almost certainly be reversed. By contrast, a modest punitive damages award in the low single-digit range would not draw the same sort of immediate skepticism from appellate justices.

  • Los Angeles Times Compares Oregon Supreme Court to Brown v. Board of Education Foes in the 1950s

    The Los Angeles Times ran an interesting editorial yesterday on the recent oral argument in Williams III. The editorial discussed the tortured procedural history of this case and commented that the Oregon Supreme Court’s recent opinion was problematic: “When the defendant is a much-reviled tobacco company, such an end run might not seem so outrageous. But suppose lower courts in the 1950’s had succeeded in frustrating the implementation of the Supreme Court’s Brown vs. Board of Education decision outlawing segregated public schools? The court forestalled such subversion of its mandate in a 1958 decision emphasizing that ‘the federal judiciary is supreme in the exposition of the law of the Constitution.’”

    The editorial went on to make an even broader point that many state courts are not following the Supreme Court’s guidance on limiting the size of punitive damage awards: “The primary issue in this third round of litigation is whether Oregon’s highest court circumvented last year’s U.S. Supreme Court ruling. But that obscures another important element in this case: the continuing refusal of state courts to take seriously a series of U.S. Supreme Court decisions warning that punitive damage awards may not be ‘grossly excessive.’ That line of cases began in 1996 with a decision striking down a $4-million award to a physician who sued BMW for not disclosing that a ‘new’ car he had purchased had been repainted. His actual damages were only $4,000. Unfortunately, the Supreme Court hasn’t established a clear rule to determine when punitive damages become disproportionate to compensatory damages. At Wednesday’s argument, Chief Justice John G. Roberts Jr. suggested that using the Oregon case to make a clear statement about the limits of punitive damages might be the best way to reassert the court’s authority. We agree.”