Yesterday we filed our answer, on behalf of Unocal, to the plaintiffs’ petition for review in Holdgrafer v. Unocal. This is another case we’ve been blogging about for a while, in which the Court of Appeal reversed a $5 million punitive damages award against Unocal because the award was tainted by improperly admitted evidence.
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Ford Petitions California Supreme Court to Review Buell-Wilson v. Ford
Earlier this week, Ford filed a petition for review in Buell-Wilson v. Ford, which we’ve been blogging about. That’s the case in which the Court of Appeal reaffirmed a $55 million punitive damages award even after the US Supreme Court vacated their prior opinion affirming the same award. Ford’s petition for review raises the following issues:
1. What procedural protections against the risk of punishment for alleged harm to nonparties are required by the U.S. Supreme Court’s opinion in Philip Morris v. Williams, and under what circumstances can those constitutional rights be deemed forfeited?
2. As a matter of California law and federal due process, are punitive damages prohibited in product liability cases where the manufacturer’s design conformed to objective indicators of reasonable safety, including industry standards and custom, governmental safety standards and policy judgments, and the existence of a genuine debate about what the law requires?
3. Is a $55 million punitive damage award, imposed in addition to $18 million in non-economic damages, in a case involving a single accident where the vehicle’s design was objectively reasonable, unconstitutionally excessive and arbitrary?
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California Supreme Court Denies Review in Bullock v. Philip Morris
According to the California Supreme Court’s online docket, the court denied both parties’ petitions for review in Bullock v. Philip Morris. Justice Kennard voted to grant Philip Morris’s petition on the first issue presented, which involved the proper scope of retrial when a court vacates a punitive damages award and it is not possible to determine the particular conduct on which the jury based its finding of liability.
For copies of the Supreme Court briefing, see our prior posts:
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“Utah AG Calls for Punitive Damages Caps”
According to LegalNewsline.com, Utah’s attorney general is open to the idea of capping punitive damages in order to preserve the state’s favorable legal climate. As we mentioned last week, Utah ranked 5th in the recent Harris Poll/U.S. Chamber of Commerce survey of in-house corporate counsel. The State Farm v. Campbell case apparently did little to tarnish Utah’s reputation as a favorable venue for defendants, even though the Utah Supreme Court approved a $145 million punitive damages award (compared to $1 million in compensatory damages) which the U.S. Supreme Court later reversed, saying the case was “neither close nor difficult.”
UPDATE (By Jeremy Rosen on 4/29 at 4:50 pm): On remand in State Farm v. Campbell, after the United States Supreme Court had made it very clear that the case (with high compensatory damages that included a punitive component) would only permit a 1:1 ratio of punitive to compensatory damages, the Utah Supreme Court nonetheless found that a 9:1 ratio would be permitted. It must not take much for a jurisdiction to be considered a favorable legal climate for business.
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Tual v. Blake: California Court of Appeal Reduces Civil Judgment Against Actor Robert Blake From $30 Million to $15 Million
Once again we’re reporting on a celebrity punitive damages case. This time, the celebrity is Robert Blake, and the case involves his appeal from a $30 million wrongful death judgment against him in a suit brought by the estate of his deceased wife, Bonny Lee Bakley.
In this unpublished opinion, the Second Appellate District, Division Three, rejects most of his arguments, including his argument that the trial court improperly refused to instruct the jury not to award punitive damages. The jury did not actually award punitive damages per se, but apparently Blake was arguing that the jury’s $30 million compensatory damages award must have included a punitive damages component, and that the jurors would have awarded a lesser amount if they had been told that punitive damages were off the table. The court rejected that argument because the record did not indicate why the trial court failed to give Blake’s proposed instruction. The record showed that Blake requested the instruction and that the court did not give the instruction, but the Court of Appeal said it was Blake’s burden on appeal to provide a record showing why the court did not give the instruction. Because he failed to meet that burden he did not preserve the issue for appeal.
Nevertheless, the court did afford Blake some relief. It concluded that the $30 million compensatory damages award was excessive and it gave the plaintiff the option to either accept a reduced sum of $15 million or go back to the trial court for a new trial on damages.
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Round-Up of Press Coverage on City of Hope v. Genentech
Bloomberg News: Genentech Must Pay $300 Million Award, Court Rules
Reuters: Calif. Court Upholds $200 Mln Genentech Settlement
Associated Press: Court Cuts $200M from Royalty Judgment Against Genentech
San Francisco Business Times: State Supreme Court Cuts Amount Genentech Must Pay in City of Hope Fight
(UPDATES):
The Recorder (via Law.com): $300 Million Award Stands Against Genentech, but $200 Million in Punitives Get Tossed
Daily Journal (subscription): High Court Cuts Punitives for Genentech
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Follow-Up on City of Hope Decision
We’ve now had a chance to read the Supreme Court’s decision in City of Hope v. Genentech, which the court issued this morning. Although the court reversed the punitive damages portion of the judgment, the opinion does not address any questions of punitive damages law per se. Instead, the reversal was based entirely on the court’s determination that the relationship between Genentech and City of Hope did not create a fiduciary relationship. Because there was no fiduciary relationship, there was no basis for tort liability and thus no basis for imposing punitive damages. Although the court affirmed the imposition of $300 million in compensatory damages against Genentech for breach of contract, punitive damages may not be awarded for breach of contract in California.At the end of the day, City of Hope will end up recovering the bulk of the amount awarded by the jury, notwithstanding the Supreme Court’s opinion. Genentech’s appeal succeeded in chopping off $200 million from the amount of the judgment, but failed to knock out the $300 million compensatory award, which has been accruing postjudgment interest at the rate of 10 percent per year since June 2002, bringing the total amount into the neighborhood of $480 million. -
Are We “Anti-Punitive Damages All Day, Every Day, Without Exception?”
As Howard Bashman observes, we are not. Since we launched this blog at the start of 2008, we’ve been discussing punitive damages cases and linking to other blogs, law review articles, and press reports about punitive damages. Sometimes we comment on those stories, and our comments are generally from a defense perspective, since our firm (and the three of us who post on this blog in particular) regularly represents defendants who are challenging large punitive damages awards on appeal. But personally, I believe that punitive damages awards can be appropriate in certain cases, so long as proper procedures are followed and the amount of the award is not unreasonable. Unfortunately, in California we have juries that are all too willing to hand out punitive damages awards that are way out of proportion to the actual harm involved or the gravity of the conduct at issue, or for some other reason just aren’t the right way to deter conduct.
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City of Hope v. Genentech: California Supreme Court Affirms $300 Million Compensatory Damages Award, Reverses $200 Million Punitive Damages Award
The California Supreme Court’s opinion in City of Hope v. Genentech is available here. We haven’t yet had time to digest the opinion, but here’s the crux of the court’s holding:
In this complex case, which has 25,567 pages of reporter’s transcript plus 12,267 pages of clerk’s transcript and has generated 18 friend-of-the-court briefs, the primary issue is whether, as the jury found, a fiduciary relationship necessarily arose when City of Hope, in return for royalties, entrusted a secret scientific discovery to Genentech to develop, to patent, and to commercially exploit. Our answer is “no.” That conclusion invalidates the jury’s punitive damages award, which was based on City of Hope’s tort claim for breach of fiduciary duty.
. . . We affirm that part of the judgment awarding City of Hope $300,164,030 in damages for Genentech’s breach of contract. Because punitive damages cannot be awarded for breaching a contract, however, our conclusion that there was no fiduciary relationship requires us to set aside the jury’s award of $200 million in punitive damages to City of Hope.
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Little Company of Mary Hospital v. Superior Court: Court of Appeal Limits Punitive Damages Claims In Elder Abuse Actions Against Religious Org.’s
The Second Appellate District, Division Seven, has issued a published opinion dealing with punitive damages in Elder Abuse cases against religious organizations.
The case involves Code of Civil Procedure section 425.14, which provides that no claim for punitive damages may be made against a religious corporation unless the trial court first concludes that the plaintiff will be able to present clear and convincing evidence of malice, oppression, or fraud as required by California’s punitive damages statute.
That seems pretty straightforward. This case involves a punitive damages claim against a religious corporation, so section 425.14 applies. End of story, right? Not quite. There’s a wrinkle. A similar statute applies to punitive damages claims against health care providers against in any action “arising out of [their] professional negligence.” (See Code of Civ. Proc., section 425.13.) But the California Supreme Court has held that this statute does not apply to professional negligence claims against health care providers if those claims involve elder abuse. (Covenant Care, Inc. v. Superior Court (2004) 32 Cal.4th 771, 777.) The Supreme Court concluded that, since elder abuse claims are are rooted in conduct far more egregious than ordinary professional medical negligence, the special pleading requirements for punitive damages in medical negligence cases don’t apply to elder abuse claims.
So this case raised the question whether the reasoning of Covenant Care applies to elder abuse claims against religious corporations. In other words, does the egregious nature of elder abuse override the statutory restrictions on claims against religious corporations? The Court of Appeal said “no”:
The plain language of section 425.14, coupled with its legislative history, reflects an unmistakable intent to afford religious organizations protection against unsubstantiated punitive damage claims without regard to the conduct giving rise to the claim. In this way, section 425.14’s protections are broader than those afforded secular health care providers by section 425.13. Because the trial court erred in concluding the pretrial mechanism provided in section 425.14 does not apply in elder abuse cases seeking exemplary damages against religious organizations, we grant the petition for writ of mandate and direct respondent Los Angeles Superior Court to vacate its order denying Little Company of Mary’s motion to strike the punitive damage claim in the underlying action.
Kudos to Justice Perluss for resolving this issue in a clear and concise 11 page opinion.