According to the Order List posted today, the U.S. Supreme Court has denied the petition for certiorari in Chemtall v. Stern, a case involving the constitutionality of a reverse bifurcation procedure in which punitive damages issues are resolved before liability and compensatory damages. (See prior posts here and here.)
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A New York Court Holds No Punitive Damages for Bedbugs
According to the New York Law Journal, a New York trial judge found that a lawsuit over bedbugs could not include a claim for punitive damages because the bugs were merely a nuisance. However, the court let go forward the negligence claims of two Maryland tourists for bites they sustained during a two-night stay at the theater district’s Milford Plaza. In holding that plaintiffs could not seek punitive damages, the court had to distinguish a Judge Posner 7th Circuit opinion which had upheld a significant punitive damage award for bedbugs.
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Garza v. Asbestos Corporation: Court of Appeal Affirms $10 Million Punitive Damages Award
The First Appellate District, Division Three, upheld a $10 million punitive damages award in an asbestos case. The opinion is only partially published, and the punitive damages issues are discussed in the unpublished portion of the opinion. The opinion was authored by Judge Horner, a superior court judge sitting on the Court of Appeal by temporary assignment.
The ratio of punitive-to-compensatory damages, six-to-one, is not particularly noteworthy by itself. But the court’s reasoning in upholding the award is surprising in several respects, and seems to depart from established principles of California law.
First, in upholding the jury’s finding that the defendant acted with malice and oppression, the court relied on historical studies, dating back to 1918, showing a link between asbestos and health problems. But the court cites no evidence that the defendant knew, back in the 1930’s through the 1950’s when it sold the products at issue, that those particular products would generate the sort of exposure levels that might cause health problems. That is an important element of a punitive damages claim in asbestos cases, because the scientists who prepared the early studies believed (incorrectly as it turns out) that asbestos was hazardous only in cases of prolonged exposure at high concentrations. The tragedy of asbestos is that it took decades for anyone to realize that even relatively low-level exposures could result in health problems. When that became clear, most everyone stopped using asbestos. For that reason, few asbestos cases involve punitive damages awards, because plaintiffs are ordinarily unable to show that the defendant knew about hazards that were unknown even to the scientific community at the time. Indeed, in most asbestos cases the plaintiffs do not even seek punitive damages. Yet this opinion seems to conclude that punitive damages can be obtained based on nothing more than a showing that the defendant was aware of some connection between asbestos and health risks, regardless of the exposure levels at issue.
The second surprising aspect of the court’s opinion is its discussion of the defendant’s financial condition. According to the plaintiffs’ own expert testimony, the $10 million punitive damages award represents between 28 and 77 percent of the company’s value. As the court acknowledged, California courts have repeatedly stated that punitive damages should not exceed 10 percent of the defendant’s net worth. But the court avoided this rule by stating that the plaintiffs’ evidence of net worth was “patchy and limited,” and that the defendant “could have presented evidence on these questions but chose not to do so.” According to the court, the plaintiffs “filled the evidentiary void” as best they could. There is a serious problem with that analysis: the California Supreme Court held in Adams v. Murakami that the plaintiff has the burden of introducing evidence of the defendant’s financial condition, and if the evidence is lacking the plaintiff cannot recover punitive damages. Thus, unless the plaintiff can show that the defendant wrongly refused discovery requests regarding its financial condition, the plaintiff’s failure to prove the defendant’s ability to pay the punitive damages award should be a reason to reverse the award, not affirm it. The court’s opinion does not even mention Adams.
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Girardi and Lack Face Significant Sanctions for Apparently Filing Frivolous Appeal
The Legal Pad reports on a recent recommendation made by Judge Tashima of the Ninth Circuit that famed plaintiffs’ lawyers Tom Girardi and Walter Lack should be sanctioned roughly $400,000 for filing a frivolous appeal.
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New Jersey Supreme Court Rejects “General Deterrence” Theory of Punitive Damages
The New Jersey Supreme Court decided today in Tarr v. Bob Ciasulli’s Mack Auto Mall, Inc. that the defendant was entitled to a new trial because the plaintiff’s attorney improperly invited the jury to award punitive damages on a general deterrence theory, to “send a message to deter this particular defendant and others.” The court held that, under New Jersey’s Punitive Damages Act, a jury may aim only for deterrence of the specific defendant.
The court also held that jurors deciding punitive damages can properly consider the defendant’s financial condition both at the time of the wrongdoing and at the time of trial. In so holding, the court rejected the defendant’s argument that it cannot be subjected to punitive damages because it is now a defunct organization with no assets. Based on this holding, the plaintiff’s attorney claimed victory and predicted he would obtain a larger award of punitive damages than the $85,000 he obtained in the first trial, according to this article on Law.com.
The New Jersey Supreme Court’s opinion is contrary to California law on both issues. In California, numerous opinions have recognized the legitimacy of a general deterrence theory. (See, e.g., Ferguson v. Lieff, Cabraser, Heimann & Bernstein (2003) 30 Cal.4th 1037 [“Punitive damages by definition are not intended to compensate the injured party, but rather to punish the tortfeasor whose wrongful action was intentional or malicious, and to deter him and others from similar extreme conduct”].) And California courts have repeatedly held that juries can consider the defendant’s financial condition only as of the time of trial. (See, e.g., Kelly v. Haag (2006) 145 Cal.App.4th 910, 915 [“A punitive damages award is based on the defendant’s financial condition at the time of trial”].)
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Cal Chamber Posts Video Clips from Hearing on Bill to Cap Punitive Damages
The California Chamber of Commerce has posted a video on its website with clips from the hearing on SB 423, which would have imposed a cap on punitive damages in California. The bill was rejected by the judiciary committee of the California State Senate, as we reported in our previous coverage of the bill. Yes, this is somewhat old news, but hey, it isn’t often that we can link to a video about punitive damages.
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Charleston Law Review Article on Punitive Damages Jury Instructions
In September 2007, the Charleston School of Law held a symposium on punitive damages entitled “Punitive Damages, Due Process, and Deterrence.”
One of the papers from that conference, published in the Spring 2008 edition of the Charleston Law Review, has just become available on Westlaw. (We previously blogged about another paper from that conference, available on SSRN.)
The paper is entitled “Clinging to Federalism: How Reluctance to Amend State Law-Based Punitive Damages Procedures Impedes Due Process,” authored by Anthony J. Franze, Counsel with Arnold & Porter’s DC office. The citation is 2 Charleston L. Rev. 297. Here is the introduction, with the footnotes omitted:
Over a decade ago, when a majority of the Supreme Court first recognized substantive due process limits on punitive damages, Justice Scalia lamented that “[t]he Constitution provides no warrant for federalizing yet another aspect of our Nation’s legal culture.” Justice Ginsburg similarly echoed that the Court “unwisely venture[d] into territory traditionally within the States’ domain.” Those sentiments, while not carrying the day, have not died. From judicial complaints that the tort process has been improperly federalized, to academics’ arguments that the Supreme Court is “serving as a punitive damages puppeteer who interferes with the ability of the states to constrain corporate wrongdoing,” criticism of the so-called federalization of punitive damages lingers. While I disagree with these views on a number of grounds, in this short essay I focus on a practical concern: the extent to which clinging to federalism has impeded needed procedural reform at the trial level. In particular, I focus on model jury instructions. Despite calls for reform, the punitive damages model instructions relied on by litigants and courts across the country continue to reflect state law standards notwithstanding that, more often than not, those standards ignore or facially conflict with the Supreme Court’s federal constitutional benchmarks. Though there may be any number of reasons for the slow pace of legislative and instructional reform, this essay argues that it is time to cast aside any federalism-based resistance to conducting the needed overhaul of model punitive damages instructions. To this end, I provide three reasons why I believe the time for instructional reform is now.
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“Foreign Courts Wary of U.S. Punitive Damages”
Adam Liptak of the New York Times has a story today about the attitudes of other Western nations towards U.S. punitive damages awards. The story discusses a ruling by the Italian Supreme Court refusing to enforce a $1 million judgment issued by Alabama’s state courts against an Italian helmet manufacturer: “The court said that a peculiarity of American law — punitive damages — was so offensive to Italian notions of justice that it would not enforce the Alabama judgment.” The court refused to enforce any portion of the judgment because it could not tell how much of the judgment was attributable to punitive damages and how much was intended to function as compensation. (I believe this is because, in Alabama, punitive damages are the only form of damages recoverable in wrongful death actions.)
The story also mentions, however, that punitive damages have made some inroads in certain jurisdictions, such as Spain and Canada. We have previously blogged about the availability of punitive damages in Canada and the changing views on punitive damages in Europe.
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Supreme Court to Rule on Chemtall Cert. Petition on March 28
The cert. petition in Chemtall v. Stern, which we have discussed in prior posts, is on the Supreme Court’s conference list for March 28, according to the Supreme Court’s online docket.
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Another Celebrity Punitive Damages Award on Its Way? Kid Rock Is Sued for Exemplary Damages
We recently reminded readers about the $25 million punitive damages award against OJ Simpson in the civil action (Rufo v. Simpson) (registration required) in which OJ was found liable for wrongful death. According to an Access Hollywood article about Kid Rock (don’t ask how I came to be reading Access Hollywood), the celebrity otherwise known as Robert Ritchie allegedly got rough back in March 2006 with some autograph seeking fans outside Teddy’s Nightclub at the Hollywood Roosevelt hotel. The plaintiffs have sued the nightclub and the hotel on premises liability grounds as well, and are reportedly seeking over $15 million in damages.
Who says we don’t bring you hard news in this blog?