California Punitives by Horvitz & Levy

  • Ford Files Reply in Support of Petition for Review in Buell-Wilson

    Ford has filed a reply in support of its petition for review to the California Supreme Court in Buell-Wilson v. Ford. 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 remanding the case for reconsideration in light of Philip Morris v. Williams (Williams II).

    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, and our amicus letter on behalf of the American Chemistry Council.

    The Supreme Court’s ruling on the petition is due by June 27. The court holds its case conferences on Wednesdays, so we can expect the court to issue a ruling on June 18th or June 25th. You can track the status of the case on the court’s online docket.

  • California Supreme Court Extends Time to Grant Review in Holdgrafer v. Unocal

    The California Supreme Court has given itself an additional 30 days to decide whether to grant review in Holdgrafer v. Unocal. (See the order posted on the court’s online docket.)

    This is the case in which the California Court of Appeal reversed a $5 million punitive damages award and ordered a retrial on punitive damages because the plaintiffs improperly presented the jury with evidence of Unocal’s dissimilar conduct towards nonparties, in violation of State Farm v. Campbell. You can view our prior posts on Holdgrafer (in which we represent Unocal) here.

  • Louisiana Law Review Article: “Punitive Damages: A European Perspective”

    The Spring 2008 edition of the Louisiana Law Review contains an article by Helmut Koziol, a retired law professor of the University of Vienna, director of the Research Unit for European Tort Law under the Austrian Academy of Sciences, and Managing Director of the European Centre of Tort and Insurance Law. The article, entitled “Punitive Damages: A European Perspective,” is an extend version of a lecture at Louisiana State University. No link is available but the citation is 68 La. L. Rev. 741.
    Professor Koziol’s article explores some of the reasons why the American system of punitive damages “cause[s] continental Europeans to shake their heads.” (We previously linked to an Adam Liptak article in the New York Times regarding foreign attitudes towards American punitive damages awards.) First, Professor Koziol says that punitive damages are often awarded to redress public outrage at conduct that damages society, but they are awarded to an individual who has neither suffered damage to that amount, nor has a claim for unjust enrichment against the defendant. “Even if there are very strong arguments for imposing a sanction on the defendant, these arguments alone cannot justify awarding the plaintiff an advantage when he has suffered no corresponding damage and has no unjust enrichment claim against the defendant.”

    Koziol also states that deterrence, one of the two goals of punitive damages (the other being punishment) can be reached only imperfectly through punitive damages. To acheive optimal deterrence, defendants would have to be subject to punishment for attempted misconduct, and not only to the occurrence of damage. But that would be contrary to other settled principles of private tort law. Koziol also points out that imposing punishment through tort law is contrary to the separation of criminal law and private law, “which is thought to be an achievement of modern legal culture.”

    Koziol concludes with the assertion that the American legal system should strive to acheive punishment and deterrence not through private tort law but through the development of criminal and administrative procedures. Under this approach, all fundamental principles of criminal law would be observed, including the principle that the punishment should be laid down in the law. In response to the criticism that prosecutors and criminal courts would be overwhelmed, he says, “I am no expert in this field, but I think that this problem could be reduced by a system of private prosecution. Granted, the suggested approach may lead to criminal courts being overburdened by a flood of cases, but the adjudication of criminal cases is the job of criminal courts, and a failure to do this would result in the civil courts being overloaded and civil rules being manipulated to accommodate the aims of criminal law.”

  • Legal Themed Dinner Plates: The Punitive Damages Collection

    No, I’m not kidding. Jose Klein, a Harvard law student who makes decorative dinner plates in his spare time, is selling a set of plates commemorating six famous punitive damages decisions:

    Day v. Woodworth (the U.S. Supreme Court’s 1851 decision validating the concept of punitive damages in a trespass action)

    Grimshaw v. Ford Motor Co. (the Ford Pinto case, which is near and dear to our hearts not just because its a California decision, but because Horvitz & Levy founding partner Ellis Horvitz represented the plaintiff on appeal)

    BMW v. Gore (who knew that Dr. Ira Gore’s repainted BMW would lead to the recognition of constitutional restrictions on the amount of punitive damages?)

    Kemezy v. Peters (Judge Posner’s rejection of the California rule that requires plaintiffs to present evidence of the defendant’s net worth in order to obtain punitive damages)

    Romo v. Ford Motor Co. (another California punitive damages case involving Ford, 22 years after Grimshaw; instead of representing the plaintiffs, this time our firm represented amici for the defense in the California Court of Appeal, the Cal. Supreme Court, and the U.S. Supreme Court)

    Philip Morris v. Williams (the ongoing saga of an Oregon punitive damages award that made its way back onto the U.S. Supreme Court docket just this week)

    You can collect all six punitive damages plates (part of the “Learned Handmade Plates” line) for the low low price of $100.00. Act now while supplies last!

    Hat tip: Above the Law.

  • “Punishment Defanged: How the United States Supreme Court Has Undermined the Legitimacy and Effectiveness of Punitive Damages”

    Heather R. Klaassen, a law student at Washburn University School of Law, has written this Comment on Philip Morris v. Williams (Williams II) for the Washburn Law Journal: “Punishment Defanged: How the United States Supreme Court Has Undermined the Legitimacy and Effectiveness of Punitive Damages.” (No link is available but the citation is 47 Washburn L.J. 551.)

    The comment blasts the U.S. Supreme Court’s punitive damages decisions as misguided, and calls on the Court to abandon this line of caselaw entirely. Klaassen says the Court has undermined the traditional fact-finding role of the jury; has adopted guideposts for evaluating the excessiveness of punitive damages that “have little relationship to the facts of the case;” has undermined the power of state courts to punish and deter; and, in Williams, adopted a “semantic distinction between punishment-for-harm and punishment-for-reprehensibility that has no substantive or evidentiary value.” She blames the Supreme Court’s mistakes on the Justices’ “desire to shape political decisions.” Other than that, she thinks the Supreme Court is doing a great job!

    UPDATE (on 6/17/08): An anonymous reader left a comment informing us that the article is now available on the Washburn University School of Law’s website. Thanks for the tip!

  • Hastings Law Professor Rory Little Appointed As Special Prosecutor in Disciplinary Proceeding Against Tommy Girardi and Walter Lack

    Yesterday we blogged about the Ninth Circuit’s order appointing a special prosecutor to pursue disciplinary sanctions against prominent plaintiffs’ lawyers Tommy Girardi and Walter Lack. Today the Ninth Circuit has issued a further order appointing UC Hastings Law professor Rory K. Little as the special prosecutor. Hat tip to Legal Pad.

    UPDATE: You can view Professor Little’s bio here. He has prior experience as a prosecutor and has served on the ABA’s Standing Committee on Legal Ethics, so he appears particularly qualified for this assignment.

  • Price v. Gingrich: Unpublished CA Court of Appeal Opinion Reinstates $500,000 Punitive Damages Award

    In this unpublished opinion, the California Court of Appeal (Fourth District, Division Two) reinstated a $500,000 punitive damages award that had been declared void by the trial court.

    This is a fraud case in which the defendant was accused of running a Ponzi scheme and defrauding the plaintiff of $500,000. The jury awarded $500,000 in compensatory damages and $500,000 in punitive damages. Over a year later, the defendant moved to vacate the judgment, arguing that the plaintiff had failed to meet his burden of presenting evidence of the defendant’s financial condition. The trial court agreed and vacated the award on the ground that the trial court did not have jurisdiction to award punitive damages in the absence of evidence of the defendant’s financial condition.

    The Court of Appeal reversed. While acknowledging that a party can move to vacate a void judgment at any time, the court concluded that this particular judgment was not void. A plaintiff’s failure to present evidence of the defendant’s financial condition is not a jurisdictional issue – – it is a collateral attack on the judgment that must be raised either by a timely posttrial motion or on a direct appeal. Accordingly, the court erred in granting the motion to vacate. The Court of Appeal went on to say that, aside from the procedural problem, the trial court’s ruling was substantively erroneous because the plaintiff did in fact present sufficient evidence of the defendant’s financial condition to demonstrate that the award was not excessive.

    The Court of Appeal’s procedural analysis seems correct, but the analysis of the substantive issue is a little troubling. The court focuses on evidence that the defendant had sufficient unencumbered assets to pay a $500,000 punitive damages award. The court’s analysis suggests that a $500,000 is not excessive so long as the defendant has $500,000 in liquid assets. But California courts have traditionally applied a different standard. The California Supreme Court has said that courts should consider whether the award is disproportionate to the defendant’s ability to pay, not merely whether the award exceeds the defendant’s ability to pay. (See Adams v. Murakami (1991) 54 Cal.3d 105, 112.) Applying that standard, the lower courts have adopted a 10 percent “rule of thumb” – – an award is disproportionate to the defendant’s ability to pay if the award exceeds 10 percent of the defendant’s net worth. (See Michelson v. Hamada (1994) 29 Cal.App.4th 1566, 1596 [“Punitive damages constitute a windfall. [Citation.] Such awards generally are not allowed to exceed 10 percent of the net worth of the defendant”].)

    Under the 10 percent rule, the award in this case appears to be excessive, since the opinion indicates that the defendant had a net worth of $1.8 million. That wouldn’t make any difference to the ultimate outcome of this appeal because the defendant failed to raise the issue in a timely fashion. Nevertheless, it is a little troubling to see the Court of Appeal departing from traditional principles of California punitive damages law, even if the entire discussion is dictum in an unpublished opinion.

  • Three Strikes For Linda Greenhouse: Her Commentary on Williams III Misses the Mark

    Linda Greenhouse reported here on the United States Supreme Court’s recent cert grant in Williams III. As we pointed out here, the court granted cert only on the question regarding the independent state law ground and declined to review the award for excessiveness. Greenhouse writes that “the justices denied review on the first question, which would have had broad application to all punitive damages cases. In earlier rulings, the Supreme Court has suggested that punitive damages should be no more than nine times the compensatory damages, and perhaps a good deal less than that, but there is evidently not a clear majority to convert the suggestion into a firm rule. Instead, they will hear Philip Morris’s appeal only on the second question, which applies to this convoluted case, now in its ninth post-verdict year, and to no other. The justices, in other words, appeared less concerned with making law than with asserting their own authority over that of state courts on the issue of punitive damages.”

    Greenhouse’s analysis ignores the current state of punitive damages jurisprudence. First, the Supreme Court has not “suggested” that the ratio of punitive damages to compensatory damages must be in the single digits and perhaps the very low single digits; it has held that such an outcome is mandated by federal due process (subject to a few narrow exceptions, e.g., where the compensatory damages are very small). Second, there plainly is a clear majority for this holding and a firm rule that is required to be applied nationwide. Indeed, the State Farm v. Campbell case was a 6-3 opinion and is controlling authority on this point. Third, the issue raised by the second question is not unique only to this case. It is the question squarely presented by the petition for review to the California Supreme Court in Buell-Wilson v. Ford.

  • Ninth Circuit Appoints Special Prosecutor to Pursue Disciplinary Action Against Tommy Girardi and Walter Lack

    Prominent plaintiffs’ lawyers Tommy Girardi and Walter Lack have been successful in obtaining some eye-popping punitive damages awards in California. For example, in the Lockheed Litigation cases in the late 1990’s, Girardi won a jury verdict for $760 million in punitive damages. The award was later vacated on appeal, but it helped solidify Girardi’s reputation as a hugely successful trial lawyer.

    Now it seems that Girardi and Lack themselves are in need of a good advocate. As we noted in a prior post, the Ninth Circuit appointed Judge Wallace Tashima to investigate whether Girardi, Lack, and others should be sanctioned or disbarred (the Ninth Circuit’s order actually used that term) for their involvement in pursuing a frivolous case against Dole Food Company and Shell Chemical Company.

    In March, Judge Tashima issued a scathing report, recommending that the Ninth Circuit impose sanctions of $250,000 against Lack and his firm, $125,000 against Girardi and his firm, $10,000 against Paul A. Traina, and $5,000 against Sean A. Topp. Judge Tashima also recommended disciplinary actions against the lawyers involved, but that part of the order was filed under seal.

    The Ninth Circuit has now issued this order (certified for publication), which explains that the lawyers involved did not object to Judge Tashima’s recommended monetary sanctions, but they objected to Judge Tashima’s disciplinary recommendations. Accordingly, the Ninth Circuit has decided to appoint an independent prosecutor to present evidence against the attorneys involved and make a recommendation regarding disciplinary sanctions. The monetary sanctions will be held in abeyance until the disciplinary issues are resolved.

    This story has been largely ignored by the media, despite the fact that it involves some very high profile attorneys. Girardi hosts his own radio show and is a current member of the California Judicial Council.

  • U.S. Supreme Court Grants Certiorari in Williams III

    The U.S. Supreme Court has granted cert. yet again in Philip Morris v. Williams. The Court’s order limits the grant of certiorari to Question 1 presented by the opinion, which involves the Oregon Supreme Court’s use of a state-law procedural rule to find that Philip Morris forfeited its right to complain about the due process violation that the Supreme Court found in its earlier opinion:

    “Whether, after this Court has adjudicated the merits of a party’s federal claim and remanded the case to state court with instructions to “apply” the correct constitutional standard, the state court may interpose–for the first time in the litigation–a state-law procedural bar that is neither firmly established nor regularly followed.”

    The Court declined to review the second issue presented, which was the constitutional excessiveness of the award. The Court’s limited grant of review is interesting because the Court granted review on the excessiveness issue last time around, although the Court never reached that issue given its disposition of the case. The limited grant of review will probably lead to a lot of speculation about whether the Court’s views on excessiveness have shifted after the addition of Justices Roberts and Alito, who may share the view of Justices Scalia and Thomas that the Constitution does not impose restrictions on the amount of punitive damages. On the other hand, the Court’s decision not to review the second issue may simply reflect an understanding among the members of the Court that they are likely to reverse the Oregon Supreme Court on the procedural issue (again) and therefore won’t need to reach the excessiveness issue. Or perhaps the justices feel that they said all that needs to be said about excessiveness in BMW v. Gore and State Farm v. Campbell.

    In any event, the Supreme Court’s grant of certiorari in this case will come as a bit of surprise to some. Howard Bashman, for example, predicted that the Court would not be interested in the procedural issue. My co-blogger Jeremy Rosen, on the other hand, was highly confident that the Court would reverse the Oregon Supreme Court on the procedural issue. Jeremy predicted a summary reversal, which obviously didn’t happen, but a reversal seems likely nevertheless.

    SCOTUSblog has links to the opinion below, petition, the brief in opposition, the reply, and the amicus briefs at the petition stage (by the US Chamber, Washington Legal Foundation, Associated Oregon Industries, and the Products Liability Advisory Council).