California Punitives by Horvitz & Levy

  • Predicting the Outcome in Harvey v. Sybase Based on California Supreme Court Precedent

    We have previously blogged about Harvey v. Sybase, a case in which the California Supreme Court recently granted review to address the following question:

    On review of an order granting a motion for judgment notwithstanding the verdict with respect to an award of punitive damages, must the appellate court determine whether the record contains substantial evidence to support the award by clear and convincing evidence, or is the clear and convincing standard only applicable at the trial court level?

    That answer to that question will have a broad impact. It will affect not only every punitive damages appeal, but it will affect every type of case to which the clear and convincing evidence standard applies. One would think the issue would have reached the California Supreme Court long before now. In fact, it has. But the results of those cases are in conflict, and therefore offer limited insight into how the Supreme Court might decide the issue this time around.

    Several 19th century decisions by the California Supreme Court suggested, without expressly deciding, that appellate courts should consider heightened standards of proof when deciding whether a trial court decision is supported by substantial evidence. (See, e.g., Sheehan v. Sullivan (1899) 126 Cal. 189, 193 [“the testimony must be clear, convincing, and conclusive – – something more than that modicum of evidence which appellate courts sometimes hold sufficient to warrant a finding”]; Jarnatt v. Cooper (1881) 59 Cal. 703, 706 (plur. opn.), 709 (conc. opn.) [“In our opinion the evidence was sufficiently clear to warrant the findings and judgment of the Court below”].)

    But the Supreme Court departed from that approach in Stromerson v. Averill (1943) 22 Cal.2d 808, 815, taking the position that the clear and convincing evidence standard applies only in the trial court. Justice Roger J. Traynor dissented, arguing that that reviewing courts have a duty to take the clear and convincing evidence standard into account when deciding whether substantial evidence supports a finding of fact:

    [I]it is the duty of the appellate court in reviewing the evidence to determine, not simply whether the trier of facts could reasonably conclude that it is more probable that the fact to be proven exists than that it does not, as in the ordinary civil case where only a preponderance of the evidence is required, but to determine whether the trier of facts could reasonably conclude that it is highly probable that the fact exists.

    (22 Cal.2d at pp. 817-818.)

    Justice Traynor repeated his dissent in Beeler v. American Trust Co. (1944) 24 Cal.2d 1, 33. Despite Traynor’s protestations, The majority of the Supreme Court adhered to the approach of the majority in Stromerson in subsequent decisions. (See Crail v. Blakely (1973) 8.Cal.3d 744, 750 and Nat. Auto & Cas. Co. v. Ind. Acc. Com.(1949) 34 Cal.2d 20, 25.)

    The issue lay dormant until 2001, when the Supreme Court decided Conservatorship of Wendland (2001) 26 Cal.4th 519 (Wendland). In that case, the Court did not expressly overrule Stromerson, but it took an approach inconsistent with the Stromerson majority and consistent with Justice Traynor’s dissent. The Wendland court noted that the clear and convincing evidence standard applied to the trial court’s decision, and then held, “[a]pplying that standard here, we ask whether the evidence . . . has that degree of clarity.”

    In 2004, the Supreme Court again seemed to take the position, without deciding the issue, that the clear and convincing evidence standard is relevant to appellate review:

    Mrs. Ford’s single statement to Barbara Carter was not clear and convincing evidence that Mr. Ford intended Bean to be, or be treated as, his adopted son.

    (Estate of Ford (2004) 32 Cal.4th 160, 173.)

    Thus, the Supreme Court’s shifting positions on this issue make it difficult to predict the outcome in Harvey, but the Court’s most recent opinions suggest that the modern court leans towards the views expressed by Justice Traynor in Stromerson.

  • “Punitive Damages and French Public Policy”

    Georges A. J. Cavalier, Jr. has posted a working paper on SSRN entitled “Punitive Damages and French Public Policy.” Here’s the abstract:

    When asked whether French law admits punitive damages, Professor Durry, a prominent French academic, responded: “No, No, and No!; three times No! But…” These few words seem to pretty much illustrate where French law stood several years ago regarding punitive damages.

    In French legal terminology, one generally opposes “punitive damages” to “compensatory damages.” Compensatory damages repair the victim’s injury, as if he or she had incurred no loss at all. They are sometimes just symbolic or token sums. In this school of thought, the indemnification must in no way be enrichment for the victim. Contrary to compensatory damages, punitive damages are outrageous sums awarded in excess of compensatory damages to punish a party for outrageous conduct.

    For a long time now, punitive damages have been a common law specialty. The US Supreme Court repeats again and again that the US Constitution imposes certain limits, limits that forbid only “grossly excessive” punitive damages. Let us give you a recent example: in a case tried on February 20, 2007, the representative of a certain Jesse Williams, who died from smoking cigarettes manufactured by Phillip Morris, was awarded $821,000 in compensatory damages, and $79,5 million in punitive damages. One major question that could have been debated in court was whether this 100-to-1 ratio constituted a “grossly excessive” amount.

    Hat tip: TortsProf Blog.

  • Trio of Punitive Damages Law Review Articles

    Three recent law review articles address punitive damages issues:

    Frank A. Perrecone and Lisa Fabiano have an article in the Northern Illinois University Law Review entitled “The Federalization of Punitive Damages and the Effect on Illinois Law.”

    Paul Edgar Harold and Tracy L. Cole have an article in the University of Arkansas at Little Rock Law Review entitled “Darned if You Due Process, Darned if You Don’t Understanding the Due Process Dilemma for Punitive Damages in Title VII Class Actions.” (No link available but the cite is 30 U. Ark. Little Rock L. Rev. 453.)

    Maren P. Schroeder has an article in the Wyoming Law Review entitled “Damage Control? Unraveling the New Due Process Standard Prohibiting the Use of Nonparty Harm to Calculate Punitive Damages, Philip Morris USA v. Williams.” (No link available but the cite is 8 Wyo. L. Rev. 607.)

  • House Passes Bill Authorizing Un-Capped Punitive Damages For Pay Discrimination

    Workforce.com is reporting that the U.S. House of Representatives passed a bill last week that would authorize “unlimited” punitive damages for women who are victims of pay discrimination. According to the story, punitive damages awarded under this law would not be subject to the $300,000 cap of Title VII of the Civil Rights Act. The White House is threatening to veto the proposal if it makes it out of the Senate.

  • “Johnson v. Allstate Insurance Co.: Drunk Driving for Profit”

    Ted Frank has this post at Overlawyered.com, discussing a case in which a drunk driver caused a head-on collision and then managed to parlay that into a $16 million judgment against his insurance company, including $10.5 million in punitive damages. Earlier this week, the Mississippi Court of Appeals affirmed the judgment.

  • CAOC Amicus Brief in California Supreme Court Covers Punitive Damages Issues in Roby v. McKesson

    The Consumer Attorneys of California (CAOC) has filed an amicus brief in the California Supreme Court in Roby v. McKesson. As we mentioned in a prior post, the Court of Appeal in Roby reduced the ratio of punitive damages to compensatory damages down to 1.4-to-1. The plaintiff’s petition for review attacked the Court of Appeal’s ratio analysis, but the parties briefs on the merits have focused primarily on other issues.

    Now CAOC has filed a brief devoted exclusively to the punitive damages issue. The main theme of the brief is that California Supreme Court review is necessary to provide guidance to the lower courts regarding the maximum permissible ratio in cases with substantial compensatory damages awards. That theme seems a bit odd to us. Why argue that “review is necessary” when the Supreme Court has already granted review? That’s the sort of argument one would expect to see at the petition stage, not the merits stage.

    In fairness, the CAOC brief touches on the merits as well. CAOC argues that California appellate courts have gone too far in adhering to the U.S. Supreme Court’s statement in State Farm v. Campbell that “[w]hen compensatory damages are substantial, then a lesser ratio, perhaps only equal to compensatory damages, can reach the outermost limit of the due process clause.”

    CAOC says that statement in Campbell was dicta, but according to CAOC some lower courts have taken it as a license to substitute their view of the appropriate amount of punitive damages in place of the jury’s decision. The brief doesn’t identify the courts that have done this (other than the Court of Appeal in Roby itself), but we suspect the brief’s author probably had in mind cases like Jet Source Charter, Inc. v. Doherty (2007) 148 Cal.App.4th 1, 11 and Walker v. Fire Ins. Exchange (2007) 153 Cal.App.4th 965, 975, both of which reduced punitive damages awards down to a one-to-one ratio. The courts in those cases probably did not think they were imposing their own view of the appropriate amount of punitive damages. They probably thought they were determining the constitutional maximum ratio, regardless of whatever amount they might otherwise deem appropriate. At least that’s what they said they were doing.

    CAOC’s brief also argues that the California Supreme Court should clarify the circumstances in which a Court of Appeal should order a new trial on punitive damages rather than granting a remittitur. Ironically, on this issue CAOC is aligned with Philip Morris, which has previously asked the California Supreme Court to provide guidance on the same issue. (See Philip Morris’s petition for review in Boeken v. Philip Morris Inc.)

    In any event, CAOC should be pleased that the Supreme Court accepted the brief, unlike the amicus brief in Taylor v. Crane Co. et al. The online docket in that case indicates that the court rejected CAOC’s brief because of multiple procedural defects.

  • Hilao v. Marcos: Plaintiff Waited Too Long to Enforce $1.2 Billion Punitive Damages Award

    The Ninth Circuit issued an opinion yesterday holding that the plaintiff in Hilao v. Estate of Ferdinand Marcos waited too long (over 10 years) before attempting to enforce the judgment against a particular nonparty.

    The district court (Judge Real, presiding) granted the plaintiff’s motion to extend the judgment, but the Ninth Circuit (Judges Rymer, Goodwin, and Ikuta) reversed. The Ninth Circuit’s opinion says the district court clearly violated a state statute which provides that judgments expire within ten years unless they are extended before expiration. Because more than ten years had passed before the plaintiff sought an extension, Judge Real had no authority to extend the judgment.

    As we noted last month, the $1.2 billion punitive damages award in this case is the largest punitive damages award ever affirmed by a U.S. appellate court, as far as we are aware. If anyone knows of a larger one we’d love to hear about it.

  • Plaintiff Can Obtain Discovery of Defendant’s Finances Without Establishing Prima Facie Case for Punitive Damages, Federal Judge Rules

    Law.com is reporting that U.S. District Judge James M. Munley of the Middle District of Pennsylvania has ruled that a plaintiff seeking punitive damages can obtain discovery of a defendant’s financial condition without making a prima facie showing that the punitive damages claim is bona fide. Judge Munley recognized that the defendant’s financial documents could contain “sensitive” information, but he nonetheless concluded that the defendant had not established good cause to prevent discovery of those documents. (The case is Grosek v. Panther Transportation Inc. You can view the opinion here.)

    In California, this issue is resolved by statute. Civil Code section 3295, subdivision (c), precludes discovery of the defendant’s financial condition unless the plaintiff can establish “a substantial probability that the plaintiff will prevail on the claim” for punitive damages.

  • Proposed Revisions to California Punitive Damages Jury Instructions

    The California Judicial Council’s advisory committee on civil jury instructions (aka the “CACI committee”) has circulated a set of proposed revisions to the CACI instructions, including proposed changes to the instructions dealing with the amount of punitive damages.

    The proposed changes to the text of the punitive damages instructions are minor – – the committee proposes taking language that already appears in the instructions (instructing the jury under Philip Morris v. Williams not to punish the defendant for harm to nonparties), and moving that language to the end of each instruction as a stand alone sentence.

    The committee also proposes adding additional authorities to the “Sources and Authority” section that follows each punitive damages instruction. The committee proposes: (1) adding a quote from footnote 21 in Bullock v. Philip Morris regarding the proper and improper uses of evidence of harm to others, and (2) adding several quotes from State Farm v. Campbell, including the point that the ratio of punitive damages to compensatory damages should not exceed single digits, and the point that one-to-one may be the maximum ratio in cases with substantial compensatory damages.

    Given the minor nature of these revisions (rearranging existing text in the instructions and adding quotes from authorities), they shouldn’t generate much controversy. The deadline for public comments is August 29.

  • Buell-Wilson v. Ford: Two of the Three Issues Raised in the Petition are Not Dependent on the United States Supreme Court’s Opinion in Williams III

    A few weeks ago we blogged about the California Supreme Court’s grant of review in Buell-Wilson v. Ford, and we noted that case is on hold pending the U.S. Supreme Court’s decision in Philip Morris v. Williams (Williams III). As we noted here, however, Ford’s petition raised three issues, two of which are independent of the issue presented in Williams III. Those issues are: (1) As a matter of California law and federal due process, are punitive damages prohibited in product liability cases where the manufacturer’s design conformed to objective indicators of reasonable safety, including industry standards and custom, governmental safety standards and policy judgments, and the existence of a genuine debate about what the law requires? and (2) Is a $55 million punitive damage award, imposed in addition to $18 million in non-economic damages, in a case involving a single accident where the vehicle’s design was objectively reasonable, unconstitutionally excessive and arbitrary?

    The California Supreme Court’s online docket confirms that the court granted review on each of the three issues, and did not limit review to the Williams III issue. After the decision in Williams III comes out, the California Supreme Court could then move forward to decide the other two issues raised in the petition, or the court could remand the case back to the Court of Appeal for a further opinion in light of Williams III. Thus, this case could end up deciding far more than simply the narrow Williams III issue.