Reuters is reporting that a federal court jury in Santa Ana awarded DISH Network $1,500 in its piracy suit against NDS, a division of News Corp. DISH claimed that NDS employed a rogue software engineer who systematically broke into DISH’s network, stole software code, and posted information on the Internet to let users unscramble DISH’s signals and receive satellite television for free. DISH asked for $900 million in compensatory damages and another $700 million in punitive damages. The trial lasted a month but the jury deliberated for a single day before awarding $1,500. Missed it by that much.
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Will the California Supreme Court’s Gay Marriage Opinion Lead to a Lawsuit Seeking Punitive Damages?
This is not an idle question. After the Massachusetts Supreme Court ruled in favor of gay marriage in 2003, there was an effort to overturn that decision by amending the state constitution through the referendum process. The Legislature blocked the effort to put the measure on the ballot for submission to the voters. Individual members of the Legislature were then sued by voters seeking, among other remedies, punitive damages.
It does seem likely that there will be numerous legal challenges to the ballot efforts already underway to seek an amendment to California’s constitution to essentially overrule the Supreme Court’s opinion. We will, of course, monitor those challenges to see if any involve claims for punitive damages.
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Saunders v. Branch Banking & Trust: Fourth Circuit Affirms 80-to-1 Ratio
The U.S. Court of Appeals for the Fourth Circuit issued an opinion today affirming a punitive damages award that is eighty times larger than the compensatory damages award. Despite the eye-popping ratio, the court’s punitive damages analysis is not really a departure from recent U.S. Supreme Court precedent. In State Farm v. Campbell the Supreme Court held that ratios above single digits can be appropriate in cases involving very small compensatory damages. The compensatory award here was only $1,000.
Hat tip to Howard Bashman.
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Merck & Co. v. Garza: Texas Court of Appeals Overturns Judgment In Vioxx Case Involving $25M Punitive Damages Verdict
The New York Times is reporting that the Fourth Court of Appeals in Texas has reversed a judgment against Merck & Co. arising out of its painkiller Vioxx. The jury in this case had awarded $25 million in punitive damages and $7M in compensatory damages, but the punitive damages award was reduced to $750,000 pursuant to a statutory cap. You can view the full opinion here. (As an aside, I can’t recall another published appellate opinion that cites only one case in the entire opinion.)
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Plaintiffs File Reply in Support of Petition for Review in Holdgrafer v. Unocal
For your reading pleasure, here is a copy of the plaintiffs’ reply in support of their petition for review to the California Supreme Court in Holdgrafer v. Unocal. As you may recall, this is the case in which the 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. We have previously linked to the petition for review, and the answer to the petition for review.
The Supreme Court has until June 16 to rule on the petition. The court normally holds its case conferences every Wednesday, but the court will not conference on May 28 or June 4 due to oral arguments. That means the court will either rule on this petition May 21 or June 11.
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Economists’ Paper Contends that Caps on Punitive Damages Cause Doctors to Behave Less Carefully
Whenever a state contemplates passing a bill to place restrictions on punitive damages, people on both sides line up with predictions about what will happen if the bill does or does not pass. The proponents usually say the reforms will address unfairness and abuses in the current system, draw business to the state, lower insurance premiums, etc. Opponents argue that the reforms will allow corporations and bad actors to run amok in the state without fear of consequences. Rarely does anyone ever attempt to back up their predictions with studies about what has happened in states that have already passed similar reforms.
For this reason, this report from Healthcare Economist about a recent study on the effects of tort reform in the medical malpractice arena is very interesting. The paper, First Do No Harm? Tort Reform and Birth Outcomes, examined the effect of tort reforms (including, but not limited to, caps on punitive damages) on the the number of Caesarean sections performed compared to “regular” births.
The Healthcare Economist report says doctors prefer to use C-sections because they receive additional compensation compared to a “regular” birth. (I suspect that doctors might also prefer C-sections because they can be scheduled, as opposed to the unpredictable alternative.) But performing a C-section exposes the mother to additional risks.
The authors of study found that different types of tort reform had different impacts on the incidence of C-sections. Reforms to the joint and several liability rule, such as requiring allocation of fault to co-defendants based on culpability and preventing plaintiffs from holding a minor contributor responsible for the entire judgment, reduced C-sections and complications of labor and delivery. The authors of the study say this shows that doctors behave more carefully when they fear that an injured plaintiff may go after them and not just a deep-pocket co-defendant such as a hospital. But caps on damages were found to increase the use of the C-section procedure. The authors suggest that damages caps make doctors less cautious because they are less fearful of litigation.
The article does not attempt to examine all the possible impacts of punitive damages reforms – – it only examines one small corner of the big picture. But perhaps this study represents the first step in an effort to raise the level of debate about punitive damages reforms by studying empirical results.
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Payless (Collective Brands Inc.) Letter to Shareholders Outlines Arguments Against $137 Million Punitive Award
Last week we blogged about Adidas’s $305 million verdict against Payless for trademark infringement. Today, Payless (actually Collective Brands Inc.) has issued this letter to its shareholders regarding the verdict. The letter sets forth Collective’s various arguments for attacking the verdict, including the fact that the total verdict is roughly 15 times the profits that Payless made on the offending shoes.
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Mortgage Lenders Hit with $99 Million in Punitive Damages
It seems doubtful that this punitive damage award (at nearly a 20 to 1 ratio) can survive constitutional scrutiny.
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Civil Penalties and Punitive Damages: SEC Backdating Fines Could Provide Some Useful Comparison
As we all know, one of the “guideposts” for evaluating the constitutionality of a punitive damages award is “the disparity between the punitive damages award and the ‘civil penalties authorized or imposed in comparable cases.’” (State Farm Mut. Auto. Ins. Co. v. Campbell (2003) 538 U.S. 408, 428.) “[A] reviewing court engaged in determining whether an award of punitive damages is excessive should ‘accord “substantial deference” to legislative judgments concerning appropriate sanctions for the conduct at issue.’” (BMW of North America, Inc. v. Gore (1996) 517 U.S. 559, 583.)A Cal Law article, Marvell Slapped: $10 Million Fine for Backdating, is potentially relevant to this sometimes overlooked “comparable fines” guidepost. The piece describes a $10 million SEC fine against the Marvell Technology Group as “unusually pricey” in a case involving charges that the company ” regularly backdated options from 2001 to 2004″ and the CEO “picked the dates in hindsight and signed faked meeting minutes to cover her tracks.” The article further notes that other companies with similar backdating problems paid much less than Marvell, and “[o]nly two other companies, Mercury Interactive and Broadcom Corp., have paid higher fines: $28 million and $12 million, respectively.”
When that’s the kind of penalty you get for the kind of conscious, corporate-wide policies of dishonesty at the highest levels of a company, one would think that some of the transgressions made in one-shot transactions or sporadically committed at lower levels of management shouldn’t readily garner the eight-figure punitive awards that juries so commonly return. -
Whittier Law Review Publishes “A Tale of Two Liberals: Departure at Supreme Court Review of Punitive Damages”
The Spring 2008 edition of the Whittier Law Review includes an article by Jenni Khuu Katzer, an attorney with Newmeyer and Dillion, comparing the punitive damages jurisprudence of Justices Breyer and Ginsburg. The article points out that Justice Breyer has consistently supported the imposition of constitutional limits on the amount of punitive damages, while Justice Ginsburg has consistently sided with Justices Scalia and Thomas in opposing such limits. I don’t have a link to the article, but the citation is 29 Whittier L. Rev. 625.