California Punitives by Horvitz & Levy

  • Exxon Opposes Plaintiffs’ Request for Interest on $500 Million Punitive Damages Award

    Last week, the plaintiffs in Exxon Shipping Co. v. Baker asked the Supreme Court to clarify whether they are entitled to interest on their punitive damages award. The plaintiffs were concerned that they might be denied interest under Supreme Court Rule 42.1, which provides: “If a judgment is modified or reversed with a direction that a judgment for money be entered below, the mandate will contain instructions with respect to the allowance of interest.” In this case, the Supreme Court’s opinion did not contain any instructions regarding interest. The plaintiffs claim they are entitled to about $488 million in interest.

    Exxon has now filed a response. Exxon agrees that the Supreme Court should resolve the interest issue, but Exxon contends the plaintiffs are not entitled to any interest. Exxon argues that the purpose of awarding postjudgment interest is to compensate a plaintiff for the lost use of their money during the time between the ascertainment of the damages and the payment of the judgment. But Exxon contends that the plaintiffs in this case have no right to compensation of any kind, because they have already been fully compensated by the compensatory damages award. The punitive damages were awarded purely for the public purposes of punishment and deterrence, and those purposes will be served regardless of whether interest is added to the award. Exxon also argues that the extraordinary delay between the date of the original judgment and the Supreme Court’s decision was caused by the plaintiffs, who repeatedly persuaded the district court to ignore the decisions of the Ninth Circuit and the Supreme Court.

    Hat tip: SCOTUSblog.

  • Miller v. Mercury: Unpublished Opinion Affirms Order Granting Motion to Strike Punitive Damages Claim

    The California Court of Appeal (Second Appellate District, Division Seven) issued an unpublished opinion yesterday that highlights an underutilized defense strategy. The defendant in this case successfully moved to strike a punitive damages claim from the plaintiffs’ complaint on the ground that the plaintiffs failed to plead that claim with specificity. The Court of Appeal affirmed. Here’s the relevant portion of the Court of Appeal’s opinion:

    It is settled law that in order to state a claim for punitive damages the pleadings require specificity and not generalities. This means pleading the “facts” with certainty and specificity. Miller’s SAC is simply wanting in this regard. In essence, it merely alleges that Mercury disagreed that there was a potential for coverage under the policy and simply refused to provide a defense as requested. As the cases point out, even a mistaken belief as to lack of coverage and denial thereof does not warrant imposition of punitive damages. We further note that the plaintiff’s burden of proof with respect to punitive damages, as well as the requirement of specificity in pleading, is that of “clear and convincing evidence” which is an elevated standard over the usual civil burden of proof by a preponderance of the evidence. Additionally, it has been historically held in appellate decisions that punitive damages are generally disfavored in the law. This decisional attitude is an additional reason for requiring specificity in pleading facts to warrant punitive damages. The Millers have simply failed in their effort to convince this court that punitive damages should be allowed under the facts and status of the pleadings in this case.

    UPDATE (7/16/07): Spencer Kook at Cal Insurance Regulation has a post about this case, in which he links to our post. In response to our observation that this defense strategy is underutilized, Spencer notes that his firm (Barger & Wolen) employs this strategy and he has seen it used regularly by others as well.

  • CQ Politics Emphasizes Supreme Court’s Observation that Punitive Damages Are Not “Out of Control”

    CQ Politics has a post by columnist Kenneth Jost entitled “Courts & the Law: Damage Controlled.” Jost writes that most commentators on Exxon Shipping Co. v. Baker have overlooked a fundamental premise of the Court’s reasoning, namely, that most punitive damages awards are infrequent, have not increased in recent years, and are generally lower than the amount of compensatory damages.

    Personally, I find this aspect of the Supreme Court’s opinion very ironic. For years, a contingent of lawyers who oppose restrictions on punitive damages have written articles and published studies showing that punitive damages are rarely awarded, and when they are, the awards are usually modest. (See, e.g., the writings of Neil Vidmar and Michael Rustad.) I have always thought that such studies are effective in countering the perception that punitive damages are “out of control,” but they really don’t support the argument that the monster awards, rare as they may be, shouldn’t be reined in.

    Justice Souter, in his opinion in Exxon Shipping Co., actually turned these stats against the people who have long been touting them. He pointed to these stats as evidence that plaintiffs’ advocates have no basis for complaining about a 1-to-1 ratio limit, because it will only affect a small subset of all punitive damages cases.

  • PrawfsBlawg: Supreme Court Punitive Damages Cases Illustrates Folly of Attempting to Predict Outcomes Based on Political Labels

    Prof. Rick Hills at PrawfsBlawg has a post entitled “Spatial Attitudinalism & Philip Morris v. Williams.” Hill criticizes the approach of political scientists who attempt to predict or explain the outcomes of legal cases by focusing on the political ideology of the judge (often based on the party of the President who appointed the judge.) Hill points out that the voting patterns of Supreme Court Justices in punitive damages cases illustrates the shortcomings of such an approach:

    Could any attitudinalist model predict that these two conservative Republicans would be making a stand against the National Association of Manufacturers in favor of state power over punitive damages? Loyalty to federalism and hostility to judicial discretion in interpreting the due process clause surely explain their votes more than any constitutionally irrelevant “attitude.” Likewise, Breyer’s championing restrictions on juries surely rests on his love of technocracy over decentralized juries more than any fealty to the values of the Democratic Party or love of Big Tobacco.

    I think Hill has a good point. As my co-blogger Jeremy Rosen has observed, however, popular commentary on the Court’s punitive damages decisions (and even some academic commentary, like this article by Erwin Chemerinsky) has often criticized the “conservative” court for the outcomes in those cases, without even seeming to notice that the most conservative justices on the court dissented from those opinions. After all, BMW v. Gore, the case that launched the Court’s foray into substantive due process restrictions for punitive damages, was authored by Justice Stevens, not usually described as a conservative. (Though he was appointed by a Republican, so I guess that would fit a primitive “spatial attitudinalism” model.)

  • Alliance For Justice Responds to Ted Frank’s WSJ Op-Ed on Exxon Shipping v. Baker

    A few days ago we linked to Ted Frank’s Wall Street Journal op-ed on Exxon Shipping Co. v. Baker. Justice Watch, a blog maintained by the Alliance for Justice, responds to that op-ed in a post entitled “WSJ Editorial Attempts to Exonerate Exxon.” The Justice Watch blog post criticizes Frank for suggesting that state legislatures should impose restrictions on punitive damages. It also criticizes the Supreme Court’s opinion in Exxon Shipping Co. for reducing the the punitive damages to the point that they no longer have any deterrent value.

  • Lu v. Qi: Another California Punitive Damages Award Reversed Because the Plaintiff Failed to Present Evidence of the Defendant’s Net Worth

    The California Court of Appeal (Second Appellate District, Division Five), issued an unpublished opinion yesterday reversing a punitive damages award because the plaintiff failed to present evidence of the defendant’s net worth. The court reversed the award with directions to enter judgment for the defendant on the punitive damages claim; the plaintiff doesn’t get a new trial, because a party who fails to present evidence on an element of its claim doesn’t get a second bite at the apple. (See Kelly v. Haag (2006) 145 Cal.App.4th 910, 914.)

    As we have observed before, it is surprising how often plaintiffs’ attorneys overlook this rule, which has been part of California law since 1991. This is the fourth opinion already this year reversing a punitive damages award on this basis.

  • Daily Journal Article: “Supreme Court Will Review Award of $55 Million in Punitive Damages”

    Today’s edition of the Daily Journal has this story (subscription required) by staff writer Laura Ernde on the California Supreme Court’s grant of review in Buell-Wilson v. Ford Motor Co.

  • Arkansas District Court Vacates $27 Million Punitive Damages Award Against Wyeth and UpJohn

    FoxNews is reporting that federal district judge William R. Wilson of the Eastern District of Arkansas has granted a motion for judgment as a matter of law, vacating the $27 million punitive damages award against Wyeth and Upjohn in a lawsuit over hormone replacement drugs Premarin and Prempro. Wyeth says it still plans to appeal the $2.75 million compensatory damages award.

  • Ted Frank Op-Ed in Wall Street Journal: “The Era of Big Punitive Damage Awards Is Not Over”

    Ted Frank, a resident fellow of the American Enterprise Institute and a frequent contributor to Overlawyered.com, has this op-ed in the Wall Street Journal.

    The op-ed says that Exxon Shipping Co. did not foreclose the possibility of mega-punitive awards in future cases. That position is not likely to be very controversial. Everyone seems to agree that Exxon Shipping Co. is not binding authority for punitive damages awards under state law. While some state court judges may be influcenced by the Supreme Court’s reasoning, they aren’t bound by it, meaning that the judges who have been inclined to approve colossal awards in the past will feel free to continue doing so in the future.

  • California Supreme Court Grants Review in Buell-Wilson v. Ford

    The California Supreme Court has granted Ford’s petition for review in Buell-Wilson v. Ford Motor Co. (See the Supreme Court’s online docket.) As you’ll recall, that’s the case in which the California Court of Appeal reaffirmed a $55 million punitive damages award even after the US Supreme Court vacated the Court of Appeal’s prior opinion affirming the same award, and remanded the case for reconsideration in light of Philip Morris v. Williams (Williams II).

    The California Supreme Court’s online docket indicates that the merits briefing will be deferred pending the disposition of another case, but it doesn’t identify the other case. We assume the other case is Philip Morris v. Williams (Williams III), currently pending before the U.S. Supreme Court, but it’s possible the other case may be Roby v. McKesson, pending in the California Supreme Court. We’ll provide an update when more information is available.

    You can view our prior posts on Buell-Wilson here. You can also read Ford’s petition for review, Buell-Wilson’s answer to the petition, Ford’s reply, and our amicus letter on behalf of the American Chemistry Council (in which we suggested that the Supreme Court should either grant review outright or grant review and hold the case pending the disposition of Roby).

    UPDATE: (at 5:59 PM): The Supreme Court’s online docket for Buell-Wilson has been updated to clarify that briefing in Buell-Wilson is deferred pending the disposition of Williams III.