California Punitives by Horvitz & Levy

  • Exxon Valdez Plaintiffs Ask Supreme Court to Confirm Their Entitlement to Interest on the $500 Million Punitive Damages Award

    The plaintiffs in Exxon Shipping Co. v. Baker have filed a “submission” with the Supreme Court, seeking clarification of their entitlement to interest on the reduced punitive damages award, dating back to the date of the original judgment.

    Supreme Court Rule 42.1 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, however, the Supreme Court’s opinion did not contain any instructions regarding interest. The plaintiffs seek interest at the rate of 5.9 percent, compounded annually, dating back to Sept. 24, 1996, for a total of $488 million. Not exactly chump change.

    SCOTUSblog has full coverage of this issue.

  • Forthcoming Yale Law Journal Article: “Clearing the Smoke from Philip Morris v. Wiliams . . .”

    Professor Thomas Colby of George Washington University Law School has posted his forthcoming Yale Law Journal article entitled “Clearing the Smoke from Philip Morris v. Williams: The Past Present, and Future of Punitive Damages” on SSRN. I haven’t had a chance to read it, but here’s the abstract:

    In Philip Morris v. Williams, the Supreme Court held that the Constitution does not permit the imposition of punitive damages to punish a defendant for harm caused to third parties. This Article critiques the reasoning, but seeks ultimately to vindicate the result, of this landmark decision. It argues that, although the Court’s procedural due process analysis does not stand up to scrutiny, punitive damages as punishment for third-party harm do indeed violate procedural due process, but for reasons far more profound than those offered by the Court. To reach that conclusion, the Article confronts the most basic and fundamental questions about punitive damages – questions that the Supreme Court has studiously avoided for more than a century: what, exactly, is the purpose of punitive damages, and how is it constitutional to impose them as a form of punishment in a judicial proceeding without affording the defendant the protection of the Constitution’s criminal procedural safeguards?

    The Article argues that punitive damages are properly conceived of a form of punishment for private wrongs: judicially sanctioned private revenge. As such, the Article explains, it makes both theoretical and doctrinal sense to impose them without affording the defendant criminal procedural protections, which are necessitated only for the punishment of public wrongs on behalf of society. When, however, courts employ punitive damages as a form of punishment for public wrongs, they become a substitute for the criminal law and thus make an intolerable end run around the Bill of Rights. For that reason, Williams was ultimately correct that punitive damages must be limited to punishment for the harm done to the individual plaintiff, not the harm done to the general public.

    The Article concludes by considering the future of punitive damages in light of the Williams decision. It concludes that, contrary to the emerging conventional wisdom, Williams does not stand in the way of the imposition of substantial extra-compensatory damages of the type favored by law and economics scholars as a means of forcing the defendant to internalize the costs of its behavior in order to achieve optimal deterrence. It is the fact that punitive damages punish, and that they do so in order to vindicate the interests of the state, that precludes their use to address third-party harms. Once the element of punishment is eliminated from the remedy, the constitutional infirmity at issue in Williams is ameliorated.

    Hat tip: Legal Theory Blog.

  • Where Does the Exxon Valdez Punitive Damages Award Rank on the List of Largest Punitive Damages Awards to Survive Appeal?

    Wall Street Journal reporter Russell Gold emailed us with the following question: “If the full $507.5 million is upheld by the lower court, where does the Exxon Valdez award rank among largest punitive damage awards upheld by appeals courts?”

    As far as we can tell, the Exxon Valdez award is third on the list, behind these two:

    1. The $1.2 billion award against the estate of Ferdinand Marcos for human rights violations, affirmed in Hilao v. Estate of Marcos (9th Cir. 1996) 103 F.3d 767.

    2. The $1 billion award affirmed by the Second Circuit last year in Motorola Credit Corp. v. Uzan (2d Cir. 2007) 509 F.3d 74.

    A few others have reached into the hundreds of millions. See Time Warner Entertainment v. Six Flags Over Georgia (Ga. Ct. App. 2002) 563 S.E.2d 178, cert. denied [$257 million in punitives affirmed]. Just recently, the West Virginia Supreme Court declined to review a $270 million punitive damages award against NiSource, Inc., which plans to petition for certiorari.

    So we’ll put this question to our readers: are you aware of any other punitive damages awards larger than $507 million that have survived appeal? (We’re aware of many larger awards that didn’t survive appellate scrutiny, like the $28 billion award in Bullock v. Philip Morris.) Let us know by emailing or leaving a comment.

    UPDATE (on 7/5/08): A commentor has posed the question whether any other punitive damages awards have been reduced to a one-to-one ratio by appellate review. We’re aware of quite a few awards fall into that category. In California, for example, the relatively recent opinions in 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 reduced punitive damages awards down to a one-to-one ratio. A number of cases from other jurisdictions have done the same thing. (See, e.g., Williams v. ConAgra Poultry Co. (8th Cir. 2004) 378 F.3d 790, 799; Boerner v. Brown & Williamson Tobacco Co. (8th Cir. 2005) 394 F.3d 594, 603; TVT Records v. Island Def Jam Music Group (S.D.N.Y. 2003) 279 F.Supp.2d 413, 461, revd. on other grounds (6th Cir. 2005) 412 F.3d 82.) Such decisions are not exactly commonplace, but they happen often enough not to be particularly newsworthy.

    A case in which a punitive damages award was reduced to a 1.4-to-one ratio is currently pending before the California Supreme Court in Roby v. McKesson (2006) 146 Cal.App.4th 63, review granted April 18, 2007 , S149752. The ratio issue hasn’t gotten much attention in the briefing compared to other issues, but the issue might take on an increased prominence now in light of Exxon Shipping Co. The California Supreme Court also has the opportunity to address this issue by granting the pending petition in Buell-Wilson v. Ford.

  • Ted Frank Podcast on Exxon Shipping Co. v. Baker

    Ted Frank at Overlawyered reports that he has recorded a podcast for the Federalist Society on the Supreme Court’s decision in Exxon Shipping Co. v. Baker.

  • Does West Virginia’s Lack of a Right to Appeal a Punitive Damages Award Violate Due Process?

    West Virginia is one of three states that does not afford litigants an automatic right to file an appeal. Rather, under Rule 3 of the West Virginia Rules of Appellate Procedure, the losing party must first petition the Supreme Court for permission to appeal. A full appeal only follows if the court permits it.

    The United States Supreme Court has held that defendants’ federal due process rights are violated by certain punitive damage awards. Can a state procedural rule preclude review for such federal due process violations? In 2003, the United States Supreme Court denied certiorari in Mountain Enterprises, Inc. v. Fitch et al., No. 03-1223 (U.S. Sup. Ct.), a challenge to the West Virginia Supreme Court’s refusal to hear an appeal from a punitive damage award. This may not be the final word. We previously blogged here about the West Virginia Supreme Court’s refusal to hear the appeal from a $270 million punitive damage award entered against NiSource. As reported in the PR Newswire, NiSource has now indicated it plans to file a petition for writ of certiorari raising again the issue that the refusal to be permitted to appeal from a punitive damage award is itself a violation of due process. NiSource could rely on Honda Motor Company v. Oberg, in which the Supreme Court held that Oregon’s denial of review of the size of punitive damages awards violates the Due Process Clause.

  • West Virginia Governor Files Amicus Brief Urging West Virginia Supreme Court to Review Punitive Damages Award Against DuPont

    Newsvine.com is reporting that Joe Manchin, the governor of West Virginia, has filed an amicus brief in the West Virginia Supreme Court supporting DuPont’s petition for review in a case involving a $196.2 million punitive damages award.

    The lead plaintiffs’ lawyer, Michael Papantonio, is calling the Gov. Manchin’s action unprecedented. I have to admit, I’ve never heard of a sitting governor asking his own state’s supreme court to take up a particular case.

    Papatonio is probably overstating his case a bit, however, when he says that Gov. Manchin’s action shows how much the deck is stacked against the little guys in West Virginia who are trying to take on corporate America. Perhaps Papantanio, a Florida lawyer, is unaware of the history of punitive damages litigation in West Virginia. This is the state that brought us the TXO case ($19,000 in compensatory damages and $10 million in punitive damages), the state whose litigation climate is consistently ranked last or second-to-last in surveys of corporate counsel, the state that leads the nation in high jury verdicts and punitive damages awards, the state whose Supreme Court recently declined to even review a case involving a $270 million punitive damages award, and the state that recently allowed a reverse-bifurcation procedure in two separate cases, under which a jury will decide punitive damages before even deciding liability or compensatory damages. If anything, the deck seems stacked in favor of plaintiffs’ lawyers, not against them.

  • Anthony Sebok Findlaw Essay: “The Lessons of the Supreme Court’s Recent Decision Granting a Huge Victory to Exxon in the Exxon Valdez Oil Spill Case”

    Findlaw.com features this essay by Anthony Sebok, a law professor at the Benjamin N. Cardozo School of Law.

    In light of Sebok’s prior writings, it is not surprising that he finds fault with the Court’s adoption of a one-to-one ratio in Exxon Shipping Co. Unlike the dissenters in that case, however, Sebok does not criticize the majority for improperly delving into substantively law. He views the majority opinion as an appropriate exercise of common law rulemaking; he just thinks the opinion’s reasoning is misguided because it rests on a misunderstanding of the historical purpose of punitive damages.

    Sebok concludes by making one of the same observations that we made about the Exxon Shipping Co. decision: that the unusual circumstances of this case yielded a five-justice voting alignment that’s not likely to be repeated if the Supreme Court takes on another punitive damages case.

  • Mississippi Judge Rejects Punitive Damages Claim in Closely Watched Hurricane Katrina Lawsuit Against USAA

    Last week a jury awarded $910,000 to a Mississippi couple suing USAA for wrongfully denying their claim for damage to their home caused by Hurricane Katrina. According to the SunHerald’s coverage of the case, USAA took the position that the damage was caused by water, which was not covered the the insured’s policy. The insureds claimed the damage was caused by wind, which was covered. Describing the impact of the case on other Katrina-related insurance disputes, the plaintiffs’ attorney announced, “It’s going to help plaintiffs everywhere.”

    The judge, however, has now dismissed the plaintiffs’ punitive damages claim, prompting the plaintiffs to file an emergency motion to hold the jury until the plaintiffs can seek appellate review.

    A blog called “Slabbed” has a nice collection of links to the media coverage on this case.

  • ALI-ABA Will Hold July 17 Webcast on Exxon Shipping Co. v. Baker

    On Thursday July 17th from noon to 1 pm. EST, ALI-ABA is presenting a webcast/telephone seminar entitled Exxon: The Supreme Court Rules on Preemption and Punitive Damages. The panelists will include Andy Frey of Mayer Brown (who argued BMW v. Gore and Philip Morris v. Wililams and filed an amicus brief in Exxon Valdez), University of Minnesota Law Professor Alexandra Klass, and UNLV Law Professor Jeffrey Stempel.

    Hat tip: TortsProf Blog.

  • Honda Canada v. Keays: Supreme Court of Canada Vacates $500,000 Punitive Damages Award

    The Supreme Court of Canada issued an opinion today striking down a $500,000 punitive damages award in a wrongful-dismissal lawsuit. By a vote of 7-2, the court said Honda’s conduct “was not sufficiently egregious or outrageous to warrant an award of punitive damages.”

    As we noted in an earlier post about this case, the punitive damages award was considered large by Canadian standards, and was the largest punitive damages award ever in a Canadian employment-law case.