California Punitives by Horvitz & Levy
  • Exxon Valdez Victims Receive First Payments of Punitive Damages Award

    From today’s LA Times: Exxon Valdez victims receive first payments. The theme of the article, like many other similar articles recently, is that the checks being mailed out are inadequate to compensate for the plaintiffs for the economic hardships they suffered as a result of the Valdez spill. Most reporters in the nonlegal press seem to overlook the fact that these are payments of punitive damages, which by their nature are not designed to compensate the plaintiffs. The compensatory damages were paid years ago. If those payments were inadequate to prevent the plaintiffs from suffering financial ruin as a result of the spill, then the flaw in the justice system occurred during the compensatory damages phase, not during the subsequent years of litigation over the punitive damages. To the credit of LA Times reporter Kim Murphy, she at least mentions the compensatory damages award, which is more than can be said of most recent press accounts.

  • Further Thoughts on Brewer and Punitive Damages in Wage and Hour Cases

    Our colleague Felix Shafir has additional thoughts on the recent Brewer opinion. Take it away, Felix:

    Wage Law, run by Michael and Mark Walsh of Walsh & Walsh, P.C, has a thoughtful post about the Brewer case we blogged about two days ago, in which the Court of Appeal recently held that punitive damages were unavailable for violations of the California laws governing meal and rest breaks, minimum wages, and pay stubs.

    Wage Law describes the arguments some employers and employees advanced prior to Brewer over whether the new right-exclusive remedy rule applied to preclude punitive damages in certain wage and hour cases. Interestingly, in setting out the arguments that employees would occasionally make on this issue, Wage Law mentions Bender v. Darden Restaurants, Inc. (9th Cir. 2002) 26 Fed.Appx. 726, where a jury previously awarded punitive damages in a wage and hour case involving meal and rest break violations.

    If the California Supreme Court were to take up the issue of whether the new-right, exclusive remedy rule barred the recovery of punitive damages in certain wage and hour cases (for example, by granting review in Brewer or Savaglio v. Wal-Mart, a case we blogged about several months ago that is currently pending before the Court of Appeal and in which the parties are arguing over a similar punitive damages issue), we suspect Bender would offer little guidance. In Bender, the Ninth Circuit’s opinion (which the court did not even select for publication) never once mentioned the new right-exclusive remedy rule, much less offered any substantive analysis addressing whether that rule bars punitive damages sought for violations of California’s Labor Code. As the Supreme Court has explained, a court’s “‘opinion is not authority for a proposition not therein considered.’” (Elisa B. v. Superior Court (2005) 37 Cal.4th 108, 118.)

    For the same reason, another case mentioned by Wage Law, Bureerong v. Uvawas (C.D. Cal. 1996) 922 F.Supp. 1450, is equally unlikely to provide the Supreme Court with any legal guidance about the new right-exclusive remedy rule. In Bureerong, a district court declined to strike a claim for punitive damages in a lawsuit alleging many causes of action, including several for violations of the Labor Code. Id. at pp. 1461, 1480-1481. Like the Ninth Circuit in Bender, the district court in Bureerong never examined whether the new right-exclusive remedy rule barred punitive damages in the case. In fact, the plaintiffs in Bureerong “did not tie their punitive damages claim . . . to any particular cause of action” (id. at p. 1480) and, given that those plaintiffs also asserted negligence causes of action for which punitive damages would ordinarily be available (see id. at p. 1461), there is no way to determine whether the plaintiffs were attempting to recover punitive damages solely on their tort causes of action or whether they were also pursuing punitive damages for alleged violations of the Labor Code.

    Interestingly, although the new right-exclusive remedy rule has been a staple of California jurisprudence for over 150 years (see, e.g., Russell v. Pacific Railway Co. (1896) 113 Cal. 258, 261; Ward v. Severance (1857) 7 Cal. 126, 129), our research indicates that California federal or state courts primarily began examining how this rule applies in wage and hour cases relatively recently (i.e., within the past 20 years). Perhaps this is because the marked increased in the number of wage and hour lawsuits, especially wage and hour class actions, is an almost equally recent phenomenon. (See, e.g., Time is Big Bucks, Class-Action Wage Lawsuits Show [noting recent growth in wage and hour class actions filed in federal court].) Simply put, the issue of whether punitive damages are barred by the new right-exclusive remedy rule may be arising far more often than it ever did in the past because many more employees are pursuing wage and hour claims today.

  • Guessing How the Justices Will Vote in Williams III

    Now that I’ve had a chance to read the oral argument transcript from Philip Morris v. Williams (Williams III), I’m going to offer a few predictions guesses about how the Justices might vote. I don’t purport to have any inside knowledge of the Supreme Court or this particular case, and I didn’t attend the argument. My guesses are based purely on my review of the transcript and some of the briefing, and my familiarity with the Supreme Court’s previous decisions in this area.

    Although the $79.5 million punitive damages award is the engine that’s propelling this litigation, the case is not really a punitive damages case at this point. It’s an appellate procedure case. And the issue presented is peculiar to the U.S. Supreme Court. In that sense, this post is somewhat off-topic for this blog. Nevertheless, for whatever its worth, I humbly offer my guesses about how the justices might vote on this case:

    Justices Ginsburg and Stevens: It seems pretty clear from the transcript that these two are not particularly troubled by the Oregon Supreme Court’s decision on remand. I don’t think I’m going out on a limb by guessing they’ll vote to affirm. I envision them ruling that a state court is free to rely on an independent state law ground for avoiding the constitutional issue in this case, so long as there is no indication that the court came to the independent state law determination in bad faith.

    Justice Breyer: He said he initially viewed the Oregon Supreme Court’s decision as a “run around,” but now he isn’t so sure. He seems to have come around to the view that the decision was a legitimate application of established Oregon precedent, even though he did not find that precedent quite as clear-cut as Williams’ briefs described it. My guess is that Justice Breyer will join Justices Ginsburg and Stevens in voting to affirm on the ground that the Oregon Supreme Court did not act in bad faith by relying on state law to avoid the constitutional issue.

    Justice Souter
    : He seems to be deeply troubled by two countervailing policy concerns arising from the possible outcomes of this case: an affirmance could signal to lower courts that they are free to ignore the Supreme Court’s mandates, but a reversal could improperly interfere with state courts’ discretion by requiring them to consider all state law issues before addressing federal constitutional questions. Justice Souter is also troubled by the unfairness that would result if a party like Williams is barred from asserting a state law argument on remand, even though she asserted that argument throughout the lower court proceedings and had no control over the Oregon Supreme Court’s decision to avoid that issue the first time around. Ultimately, I’m guessing that this fairness concern will cause Justice Souter to vote in favor of affirmance.

    Chief Justice Roberts and Justices Scalia and Kennedy: These three seem prepared to reverse the Oregon Supreme Court’s opinion on the ground that it violated the mandate of Williams II. Justice Kennedy made it clear that he does not share Justice Souter’s concern about interfering with the lower courts’ discretion to decide issues in a certain order. Justice Scalia’s viewpoint is particularly interesting, given that he dissented from Williams II. Presumably, he believes that although Williams II was wrongly decided, the Oregon Supreme Court was bound to follow it.

    Justices Alito and Thomas: These two are wildcards, since they asked no questions at argument. Based on typical voting patterns, I’m tempted to predict that they will vote with the Chief and with Justices Scalia and Kennedy. Justice Thomas, however, has a limited view of the stare decisis doctrine. Based on that view, and the fact that he dissented in Williams II, it is conceivable that he might vote for affirmance. But my instincts say he won’t.

    So the bottom line is, I’m guessing the court will vote 5-4 to reverse the Oregon Supreme Court’s opinion and remand the case with instructions to conduct a new trial with a proper jury instruction along the lines set forth in Williams II.

    Many news reports about the argument have focused on Chief Justice Roberts’ suggestion that the court could avoid the procedural quagmire by deciding on the merits whether the amount of the award violates due process. While an opinion on that issue would be a lot more interesting for purposes of this blog, I think it’s more likely that the Court will limit its opinion to the issue presented. They had two previous chances to decide the merits of the excessiveness issue in this case and they avoided the issue both times. (My co-blogger Jeremy Rosen disagrees with me on this point, and predicts that the Supreme Court will grant cert. on the excessiveness issue.)

  • Brewer v. Premier Golf Properties: California Court of Appeal Reverses Punitive Damages Award in Wage & Hour Case

    When it rains, it pours. While the blogosphere was already buzzing about today’s oral argument in Williams III (see below), the California Court of Appeal (Fourth District, Division One) issued a significant punitive damages decision of its own, dealing with the availability of punitive damages for alleged violations of the California statutes and regulations governing meal and rest breaks, minimum wages, and pay stubs. My colleague Felix Shafir provides this summary:

    In Brewer v. Premier Golf Properties, a former waitress sued her employer for, among other things, denying her meal and rest breaks mandated by law, failing to pay her wages for the hours she worked, and not providing her with accurate itemized wage statements. A jury found in her favor on these allegations and awarded the plaintiff $195,000 in punitive damages (among other relief). The Court of Appeal reversed the punitive damages award based on two rationales. First, the court held that the “new right-exclusive remedy” rule (whose effect on punitive damages awards we blogged about several months ago – – here here and here) precluded an award of punitive damages. As the court explained, under that rule, “‘[w]here a statute creates new rights and obligations not previously existing in the common law, the express statutory remedy is deemed to be the exclusive remedy for statutory violations, unless it is deemed inadequate.’” The court determined that the Labor Code statutes regulating pay stubs and minimum wages, as well as the statute and regulations governing meal and rest breaks, created new rights that did not previously exist in the common law. The court then held that those statutes provided the express and exclusive remedy for violations of meal/rest break, minimum wage, and pay stub laws.

    The court also held punitive damages would be unavailable in the case even if the Labor Code statutory scheme did not provide the exclusive remedy. The court explained that punitive damages “are ordinarily recoverable only in ‘an action for the breach of an obligation not arising from contract.’” Applying this rule, the court decided that “the Labor Code provisions governing meal and rest breaks, minimum wages, and accurate pay stubs constitute statutory obligations imposed only when the parties have entered into an employment contract and are obligations arising from the employment contract,” and thus held that punitive damages could not be recovered for violations of these provisions.

    UPDATE: The Complex Litigator weighs in on Brewer. And Wage Law too.

  • SCOTUSblog Previews Tomorrow’s Oral Argument in Williams III

    Click here to read SCOTUSblog’s preview of the Williams III oral argument. We will post a link to the transcript of the oral argument as soon as we can.

  • After Reversal of $145 Billion Class Action Punitive Damages Award, Florida Smokers Seek Punitive Damages in Individual Suits

    The Miami Herald reports that the first trial is underway in a series of 8,000 individual lawsuits by Florida smokers against tobacco manufacturers. These cases are the result of the failed Engle class action, in which Florida smokers collectively obtained an award of $145 billion in punitive damages, the largest civil award in U.S. history. In 2006, the Florida Supreme Court overturned that award, ruling that the plaintiffs had to prove individually that cigarettes caused their illnesses.

    It will be interesting to see if these individual lawsuits generate the sort of enormous punitive damages that California juries have rendered in tobacco lawsuits (e.g., the $28 billion awarded in Bullock v. Philip Morris), and if so, whether those awards will survive appellate review under the Supreme Court’s recent series of punitive damages decisions (unlike the award in Bullock, which was remanded for a new trial in light of Williams II).

  • No Punitive Damages Against Chevron in Human Rights Suit

    The Recorder is reporting that a jury has returned a defense verdict in a lawsuit against Chevron involving alleged human rights violations in Nigeria. We previously posted about potential issues that might have arisen in this case had the jury awarded punitive damages. Those issues will have to wait for some other lawsuit seeking punitive damages based on extraterritorial acts.

  • SCOTUS Declines to Review $100 Million Punitive Damages Award

    The Associated Press is reporting (via The Wall Street Journal) that the U.S. Supreme Court has denied Massey Energy Co.’s cert. petition in a case involving a $260 million jury verdict, including $100 million in punitive damages. The case involved a contract dispute between Massey Energy and Wheeling-Pittsburgh Steel Co. According to the story, Massey’s cert. petition raised an issue regarding the failure of a West Virginia Supreme Court justice to recuse himself after making derogatory comments about Massey’s CEO.

    Ironically, the Supreme Court recently granted a cert. petition involving judicial disqualification and the West Virginia Supreme Court. Can you guess the name of the party who opposed cert. in that case? The party who allegedly benefited from a West Virginia Supreme Court justice’s failure to recuse himself? You guessed it: Massey Energy.