California Punitives by Horvitz & Levy

  • Stahl v. Acuna: CA Court of Appeal Vacates Another Punitive Damages Award Because Plaintiff Failed to Present Evidence of the Defendant’s Net Worth

    In this unpublished decision, the California Court of Appeal (Second Appellate District, Division Four) reversed two $40,000 punitive damages awards because the plaintiffs failed to present evidence of the defendants’ financial condition. As we observed in a previous post, California has a unique requirement that a plaintiff must introduce evidence of the defendant’s financial condition in order to recover punitive damages. The California Supreme Court announced this rule in 1991, but as we said in our prior post, “every year there are a few appellate decisions reversing a punitive damages award on this basis.” Perhaps we underestimated, since this is already the second such decision this year.

    The Stahl opinion also illustrates the operation of procedural forfeiture rules that may be surprising to those who are unfamiliar with this area of litigation. The plaintiffs argued that the defendants forfeited their objection to the lack of financial condition evidence by not raising that point in the trial court. The court rejected the plaintiff’s forfeiture argument because this particular issue need not be raised in the trial court to preserve it for appeal. On the other hand, the court agreed with the defendants’ argument that the plaintiffs had forfeited their counter-argument that their failure to present financial condition evidence was due to the defendant’s noncompliance with subpoenas for the information. In other words, the defendants did not need to raise their argument in the trial court, but the plaintiffs needed to anticipate the argument and make their counter-arguments in the trial court.

    While these forfeiture rules may seem counterintuitive at first, they flow logically from the rule that the plaintiff has the burden of introducing financial condition evidence, and the rule that a defendant can always challenge a plaintiff’s failure to present substantial evidence, even if that issue wasn’t raised below. On appeal, the plaintiff is not in a position to complain about the belated challenge to the sufficiency of the evidence, since the plaintiff was on notice all along that it had to prove the elements of its claim. Nevertheless, this is an area of the law where the forfeiture rules can present a trap for the unwary plaintiff.

  • Williams Cert. Petition Moved to May 29 Conference

    Yesterday we reported that the U.S. Supreme Court did not rule on the second cert. petition in Philip Morris v. Williams at its May 22 conference, even though the court’s online docket indicated that the petition was on the May 22 conference list. Today the court’s docket has been updated to reflect that the Williams petition has been moved to the court’s May 29 conference.

  • Medical Blog Criticizes “Regulation by Lightning Bolt”

    A post at the medical blog Kevin M.D. criticizes the use of punitive damages in medical device litigation. The author of the blog post is Mark Herriman, a Jones Day lawyer who blogs at the Drug and Device Law Blog. He contends that “[r]andomly imposing breathtaking damages is regulation by lightning bolt, not a carefully calibrated regulatory policy. . . . Zeus should dispense justice only in ancient Greek myths, not in modern American courts.”

  • No Ruling Yet on Second Cert. Petition in Philip Morris v. Williams

    As we noted in a prior post, the second cert. petition in Philip Morris v. Williams was distributed for consideration at the Supreme Court’s May 22 conference. (See the online docket.) Today the Supreme Court has released its Order List showing the rulings made at the May 22 conference. The list makes no mention of Williams. Apparently, the court has deferred consideration of that petition to a later conference.

  • West Virginia Supreme Court Declines to Hear Case Involving $270 Million in Punitive Damages

    Legal Newsline reports that the West Virginia Supreme Court declined to consider a case involving a $404 million verdict against NiSource Inc., an Indiana-based energy company. The case involves NiSource’s alleged failure to make royalty payments to property owners who had leased gas rights to the utility. NiSource says it will seek a stay of the judgment so it can petition the U.S. Supreme Court for certiorari.

  • Will the Exxon Valdez Case Produce a Unanimous Opinion?

    Linda Greenhouse has an interesting article, “At Supreme Court, 5-to-4 Rulings Fade, but Why?” noting the substantial decline in 5-4 opinions from the United States Supreme Court this term. So far this term, only one of 35 opinions has been decided 5-4, whereas at this point last term, 13 out of 41 had been decided 5-4. Greenhouse posits that the reasons for this are “liberals using their limited leverage to exact some modest concessions as the price of helping the conservatives avoid another parade of 5-to-4 decisions.” As Greenhouse points out, three recent cases resulted in majority opinions with 6 or 7 justices in cases that might have been thought of as candidates for 5-4 decisions (the Indiana voter id law, the Kentucky lethal injection case, and the federal law on child pornography). This trend limits the influence of Justice Kennedy who last term was in the majority in all 24 5-4 decisions and only dissented in 2 of the 68 cases decided. This term, Justice Kennedy has already dissented 5 times.

    The interesting question for purposes of this blog is how this potential trend toward greater agreement among the justices will play out in the Exxon Valdez case. By not focusing on the constitutional limits on punitive damages, Justices Scalia, Thomas and Ginsberg will not need to adhere to their prior dissents finding no due process limit on punitive damages. This potentially opens up a larger coalition to reverse the award. There is also a suggestion by Greenhouse that the recent cases that one might have expected to be 5-4 were more fact-driven opinions that did not rely on broad rules, which potentially enabled more justices to sign on. However, as we posted earlier, the oral argument in the Exxon case suggested a divided court. The question is how divided? Stay tuned to this blog to find out.

  • California Courts Number One?

    We previously blogged here about the Chamber of Commerce rankings which placed the California courts in 44th place nationwide for having a reasonable and balanced tort liability system for U.S. business. A new article by Stephen J. Choi, G. Mitu Gulati, and Eric A. Posner, “Which States Have the Best (and Worst) High Courts?” concludes, contrary to the Chamber of Commerce rankings, that the top five state court systems in the nation are California, Arkansas, North Dakota, Montana, and Ohio.

    Hat Tip: How Appealing.

    UPDATE: (by Curt Cutting): The two studies aren’t quite as inconsistent as they might seem at first glance. The Choi, Gulati & Posner article ranks only the highest courts of each state, not the state’s court system as a whole. Also, the Choi, Gulati & Posner rankings are based on three objective criteria: influence, independence, and productivity. By contrast, the study sponsored by the U.S. Chamber surveyed corporate counsel about their perceptions of the fairness of each state’s judicial system. It’s not hard to imagine how a state could excel under the Choi et al. criteria but still fare poorly in the Chamber survey.

  • Philadelphia Jury Awards $20.5 Million, Including $15 Million in Punitive Damages, For Fatal Liposuction

    According to this report from the Legal Intelligencer (via Law.com), a Philadelphia jury returned a verdict yesterday awarding $20.5 million, including $15 million in punitive damages, to the parents of an 18-year-old college student who allegedly died from a botched liposuction procedure.

  • Trial Court Declines to Overturn $350 Million Verdict Against Dow and Rockwell In “Rocky Flats” Case

    According to this report from the Chicago Tribune, Judge John Kane of the federal district court in Denver has denied the post-trial motions filed by Dow Chemical Co. and Rockwell International Corp. in a case involving a $350 million verdict. Judge Kane also ordered the defendants to pay 8 percent interest dating back to 1990, when the suit was filed. The plaintiffs’ attorney says that brings the total to more than $900 million.

    The defendants operated a nuclear weapons facility known as “Rocky Flats,” and the plaintiffs are neighboring landowners who claim that contamination from the plant lowered their property values. Earlier press reports indicated that the verdict included $110.8 million in punitive damages against Dow and $89.4 million in punitive damages against Rockwell. Not surprisingly, the Chicago Tribune report says both defendants plan to appeal.

  • Guardado v. Superior Court: Court of Appeal Holds That a Determination of Plaintiff’s Ability to Seek Punitive Damages Is Not a Ruling on the Merits

    This published opinion involves the intersection of two California procedural rules in the context of punitive damages litigation.

    The first rule is Code of Civil Procedure (section 170.6), which allows parties to assert one peremptory challenge to a trial judge without a showing of cause, but requires parties to assert the challenge before the judge makes a “determination of contested fact issues relating to the merits.”

    The second rule is Civil Code (section 3295(c)), which provides that a plaintiff cannot conduct discovery of the defendant’s financial condition for the purposes of seeking punitive damages unless the plaintiff first demonstrates a substantial probability that he or she will prevail on a claim for punitive damages.

    The question presented in this case was whether a finding by the trial court that a plaintiff has a substantial probability of prevailing on a claim for punitive damages is a “determination of contested fact issues relating to the merits” under section 170.6. The trial court concluded that it was not such a determination, and the Court of Appeal (Second District, Division Eight) agreed. The Court of Appeal relied on the statutory language of Sec. 3295(c), which expressly states that a pretrial punitive damage discovery determination “shall not be considered to be a determination on the merits of the claim.” The court concluded that a decision that is not on the “merits” for the purpose of section 3295(c) is also not on the “merits” for the purpose of section 170.6.