According to the Sacramento Bee, “A federal jury deliberated 30 minutes Thursday, then awarded a woman more than $4.1 million in punitive damages after finding that her former employer acted with ‘malice, oppression or with reckless indifference’ in failing to protect her from aggravated sexual assault by a state worker. The jury of five women and three men awarded Sharon Paterson $827,500 in general damages three weeks ago against Inter-Con Security Systems Inc., a private firm that contracts with the state Department of General Services for guards at state facilities in Sacramento. . . . In a hallway interview, Inter-Con trial attorney Matthew Ruggles pointed out Thursday’s award was made under that part of the federal civil code dealing with workplace discrimination and hostility, and it caps punitive damages at $300,000. ‘We don’t think punitive damages should have been awarded at all, but it’s kind of academic,’ Ruggles said. Paterson attorney Lawrence King said he will oppose a motion to reduce the award on the ground that U.S. District Judge Morrison C. England Jr. erred in not detailing for the jury the elements of punitive damages under comparable state law, which has no cap. As to Thursday’s award, King said, ‘I’m gratified the jury understood that, to get the attention of a company like Inter-Con, the verdict must be substantial, so something like this won’t happen again.’ . . . ‘It didn’t seem like they really took sexual harassment seriously, and there was nothing we saw to show that things changed’ after Paterson’s lawsuit was filed in 2005, one juror said.”

It will be interesting to see if this analysis works in California and other jurisdictions. There is certainly support for the argument in United States Supreme Court cases and California cases. (Cf. State Farm Mut. Auto. Ins. Co. v. Campbell (2003) 538 U.S. 408, 426 [123 S. Ct. 1513, 155 L.Ed.2d 585] [emotional distress damages include a punitive component]; Simon v. San Paolo U.S. Holding Co., Inc. (2005) 35 Cal.4th 1159, 1189 [same]; Gober v. Ralphs Grocery Co. (2006) 137 Cal.App.4th 204, 222-223 [same].) One case, though, seems to have rejected such an approach. (See Westphal v. Wal-Mart Stores, Inc. (1998) 68 Cal.App.4th 1071, 1080-1083 [sanctioning appellant for bringing a frivolous appeal by arguing that a noneconomic damage award was excessive in light of the modest amount of economic damages awarded].)

An intermediate appellate court in New York overturned a tobacco verdict yesterday in the case of Norma Rose v. Philip Morris USA. The jury had awarded $3.4 million in compensatory damages and $17.1 million in punitive damages based on claimed negligence in the design of cigarettes with higher levels of tar and nicotine than so-called “light cigarettes.” As has been reported by the NY Law Journal (“Tobacco Companies Win Upset of Damages Award“) the three-judge majority threw out the entire verdict for failure to prove the elements of the negligence claim. Two judges dissented, arguing that negligence liability could be found even if, as the majority put it, “plaintiffs offered no evidence of consumer acceptability of light cigarettes — which was the only way to prove that light cigarettes were a feasible alternative design.”

What may be most interesting to readers of this blog is that, despite the dissenters’ view that the plaintiffs’ tort claim was viable, they asserted that the punitive damages claim was not:

To warrant an award of punitive damages, there must be proof of recklessness, or a conscious disregard of the rights of others. [Citation] It is also well settled that punitive damages may not be premised upon mere negligence. [Citations] . . . [T]here was evidence to suggest that the defendant consciously disregarded the health risks posed to billions of consumers.

Nevertheless, Philip Morris’s conduct in marketing different cigarette brands with a range of tar and nicotine yields cannot subject it to punishment under New York law. As a matter of due process, an award of punitive damages cannot be based upon conduct – such as that at issue here – that the defendant could reasonably have believed to be lawful. In BMW of N. Am., Inc. v. Gore (517 U.S. 599, 574, 116 S.Ct 1589, 1598, 134 L.Ed.2d 809, 826 (1996)), the Supreme Court explained that “[e]lementary notions of fairness enshrined in our constitutional jurisprudence dictate that a person receive fair notice… of the conduct that will subject him to punishment.” See also Bouie v. City of Columbia, 378 U.S. 347, 355, 84 S.Ct. 1697, 1703, 12 L.Ed.2d 894, 900 (1964)(when punishment is imposed based on novel construction of statute, “the effect is to deprive [defendant] of due process of law in the sense of fair warning that his contemplated conduct constitutes a crime”).

Philip Morris did not have “fair notice” that the conduct at issue in this case might result in severe punishment. Indeed, the verdict in this case is novel. Congress not only has made a purposeful choice to regulate sales and advertising rather than to bar the sales of regular cigarettes, but has also blocked attempts to regulate tar and nicotine levels. The Surgeon General has never recommended removing regular-yield cigarettes from the market. No state or federal legislator or regulator has ever adopted a rule banning or restricting full-flavored cigarettes. And until this case, no court had ever held any tobacco manufacturer liable simply for continuing to sell regular brands, much less suggested that such conduct was punishable. In my view, punitive damages may not be imposed under such circumstances.
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This question of punitives may go up to the next level—the article linked above reports that plaintiffs’ counsel intend to appeal to New York’s high court, and the fact that there’s a two-judge dissent means they get to do this as a matter of right.

Today’s LA Times has this story about a $3.5 million punitive damages award against USAA, an insurer that provides coverage for military personnel. The plaintiff, a Marine captain serving in Iraq, claims USAA mishandled a claim for damage to his home. The plaintiff deployed for his third tour in Iraq a few days before the verdict. After the verdict he thanked the jurors by phone.

The compensatory damages in this case are apparently only $134,000, which means the punitive-to-compensatory damages ratio exceeds 26 to 1. That would seem difficult for the plaintiff to justify on appeal. This doesn’t seem like the sort of case where the compensatory damage award is so small that a higher ratio is justified. Indeed, the defendant may argue that, because the compensatory damage award is substantial and already includes a punitive component in the form of emotional distress damages, anything but a very low ratio would violate due process.

It’s a slow news day. At least as far as punitive damages news is concerned. So lacking any real substantive news to report, we bring you this story about a woman who is seeking punitive damages over a wardrobe malfunction. No, not that woman or that wardrobe malfunction. Hat tip to Jonathan Turley.