It seems doubtful that this punitive damage award (at nearly a 20 to 1 ratio) can survive constitutional scrutiny.
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Mortgage Lenders Hit with $99 Million in Punitive Damages
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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.
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Yankees Fan Wins Punitive Damages Against Red Sox Fan
I’m an avid baseball fan, so this San Diego Tribune story about the intersection of baseball and punitive damages caught my eye. A Red Sox fan and a Yankees fan got into a bar fight, the Yankees fan punched the Red Sox in the face, then sued him for punitive damages because he injured his hand while beating on the guy. A San Diego jury ruled in favor of the Yankees fan and awarded him $10,000 in punitive damages, apparently reasoning that the Sox fan should be punished because he provoked the plaintiff, even though it was the plaintiff who threw the only punch.
Adding to the bizarre nature of this story, these guys got into a fight while watching a baseball game that did not even involve the Red Sox. They were watching the Yankees lose to the mighty Cleveland Indians. (Did I mention that I’m a Cleveland fan?)
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Round-Up of Press Coverage of $305 Million Award Against Payless
Wall Street Journal: Adidas Wins Suit Against Shoe Chain Over Trademark
Wall Street Journal Blogs: Adidas v. Payless: $100 Million for Every Stripe; Payless Could Pay More
ABA Journal: Adidas Award of $305M in Trademark Infringement Case May Be Record
The Oregonian: Portland Jury Orders Payless to Pay Adidas $304.6 Million
Topeka Capital Journal: Collective Brands Calls Verdict Excessive
One of the most interesting things about this case, aside from the eye-popping $137 million punitive damages award, is the full-color illustrated verdict form.
Our prior post on this case appears here.
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Washington Court Denies Post-Trial Motions in Case Involving $40 Million Verdict Against California Medical Device Manufacturer
According to this report on HeraldNet, Judge Linda Krese of the Snohomish County Superior Court denied Edwards Lifescience Inc.’s motions for relief from a $40 million verdict. The case, which was widely publicized, involved the failure of a machine that was supposed to monitor blood flow and other conditions during a heart bypass surgery. The machine overheated and “cooked” the plaintiff’s heart, requiring him to undergo a heart transplant.
The jury’s $40 million award included $8 million in punitive damages. Edwards argued in its posttrial motions that punitive damages were unwarranted, but Judge Krese concluded that Edwards had acted with “reckless disregard for the safety of others” when it failed to warn doctors that the device could overheat under certain circumstances.
As we mentioned in our original blog post about this story, the large punitive damages award is s quite unusual in Washington, where state law generally does not allow punitive damages.
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Yet Another Celebrity Punitive Damages Story
Punitive damages lawsuits must be the latest celebrity trend. In our recent posts about Keanu Reeves’s efforts to fend off a punitive damages claim, we mentioned that Reeves is represented by appellate specialist David Ozeran, who was previously in the news for representing Lindsay Lohan. It now appears that Ozeran may have to fend off another punitive damages claim for his other celebrity client.
According to this ABC News story, a Columbia University Student is threatening to sue Lohan for punitive damages because Lohan allegedly stole the student’s $11,000 fur coat at a nightclub. Apparently, on the evening in question, Lohan was photographed wearing a black coat. She then attended a birthday party at a nightclub where Masha Markova and her “blond mink” coat were in attendance. The mink coat disappeared and Lohan was allegedly photographed wearing a strikingly similar coat. (The photos are posted along with the story on the ABC News website.) Somehow, the coat was returned to Markova. While Lohan’s alleged “borrowing” of the coat sounds pretty sketchy, I’m more than a little skeptical of the claims by Markova’s lawyer that she can obtain punitive damages “in the six figure range” if she proceeds with a lawsuit.
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U.S. Supreme Court Will Consider Cert Petition in Philip Morris v. Williams at May 22 Conference
We previously blogged about Philip Morris’s petition for review from the Oregon Supreme Court’s decision on remand in Philip Morris v. Williams. The Supreme Court is set consider that petition during its May 22 conference, according to the online docket.
It will be quite interesting to see whether the Supreme Court grants this petition. Many observers viewed the Oregon Supreme Court’s opinion as a slap in the face (or more colorful metaphors) to the Supreme Court. My co-blogger Jeremy Rosen suggested that a summary reversal might be in order. On the other hand, Howard Bashman considered the case an “unattractive vehicle” for certiorari, since the Oregon Supreme Court couched its decision in terms of Oregon procedural law, rather than federal constitutional principles.
SCOTUSblog has identified this petition as one of its “Petitions to Watch,” meaning that Tom Goldstein at Akin Gump thinks the petition has a reasonable chance of being granted. SCOTUSblog also provides links to all the briefing at the petition stage, including the petition, the brief in opposition, the reply, and amicus briefs by the U.S. Chamber of Commerce, the Washington Legal Foundation, Associated Oregon Industries, and the Products Liability Advisory Council.
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Adidas wins $137 Million in Punitive Damages from Payless for Trademark Infringement
The Portland Business Journal reports that “A Portland jury awarded Adidas America Inc. nearly $305 million in a trademark infringement case late Monday. ‘It’s my understanding that, if it’s not the largest, it’s one of the largest trademark infringement verdicts ever,’ said Stephen Feldman, an attorney with Perkins Coie who helped represent Adidas. In the case, Adidas alleged that Payless infringed on its patented three-stripe design. The verdict included $30.6 million in actual damages, $137 million for willful infringement and an additional $137 million in punitive damages. ‘The company is reviewing the verdict and assessing its impact,’ Topeka, Kan.-based Collective Brands, owner of Payless, said in a statement. ‘The company believes that the verdict was excessive and unjustified.’ ‘The company will ask the court to set aside the verdict and, if it is not granted, intends to take all necessary steps to overturn it.’”
It seems likely that reduction in the punitive damage award must occur because with a substantial compensatory damage award, a one-to-one ratio of punitive to compensatory damages is the upper end that should be permitted. Arguably, the $137 million for willful infringement should further reduce the punitive damage award as that already includes a significant penalty component.
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Boston Legal Attacks Supreme Court’s Punitive Damages Jurisprudence
Tony Mauro describes a recent episode of Boston Legal which engaged in a direct attack on the United States Supreme Court. Among other things, the main character, Alan Shore, played by actor James Spader “lights into the court as he argues before look-alike justices on behalf of a Louisiana child rapist facing the death penalty. The episode aired just six days after the real court heard arguments in Kennedy v. Louisiana, an actual child rape/death penalty case. A sample of the rhetoric: Shore attacks the ‘overtly and shamelessly pro-business’ court, and takes a sharp detour from the rape case to slam Justice Antonin Scalia for his seemingly likely support for Exxon Mobil in the case – also argued recently – involving punitive damages awarded after the Exxon Valdez oil spill. ‘Nineteen years after the Valdez oil spill and the plaintiffs are still waiting to be fully compensated,’ Shore says. When the Scalia character interjects sharply, ‘You are getting so far off point,’ Shore shoots back: ‘My point is, who are you people? You’ve transformed this court from being a governmental branch devoted to civil rights and liberties into a protector of discrimination, a guardian of government, a slave to monied interests and big business and today, hallelujah, you seek to kill a mentally disabled man.’”