California Punitives by Horvitz & Levy

  • Anthony Sebok’s Criticism of the Oregon Supreme Court’s Goddard Decision Is Unwarranted

    Professor Anthony Sebok of the Benjamin N. Cardozo School of Law has a column on Findlaw.com entitled The Oregon Supreme Court’s Recent Decision on Punitive Damages: Why It Took the Wrong Approach.

    Professor Sebok criticizes the court’s recent decision in Goddard v. Farmers Insurance, which appears to be the first time the Oregon Supreme Court has ever reversed a punitive damages award as unconstitutionally excessive. Sebok’s primary criticism is that the court reduced the punitive damages award to four times the compensatory damages award. He says the four-to-one ratio was based on nothing more than an offhand remark by the U.S. Supreme Court, and that the court’s approach improperly crosses over into the realm of judicial lawmaking: “When courts are debating between whether the ratio should be 3:1, 4:1 or 9:1, they do look an awful lot like members of a legislature dickering over the terms of a statute they are drafting.”

    But that’s not really a fair criticism. The U.S. Supreme Court’s decisions in BMW v. Gore, Cooper v. Leatherman, and State Farm v. Campbell mandate that lower courts scrutinize punitive damages awards closely and, absent extraordinary circumstances, reduce those awards to single-digit ratios. The Supreme Court has left it to the discretion of the lower courts to determine which ratio is appropriate in a particular case, but they have left no doubt that courts must pick some new ratio when they find an award to be excessive. The Supreme Court’s references to a 4:1 ratio in BMW and State Farm may have been off-hand remarks with respect to that particular ratio, but there can be no serious debate that the Supreme Court has directed the lower courts to reduce excessive awards. Whenever courts follow that mandate, they will necessarily adopt a new ratio other than the ratio chosen by the jury. So to the extent Professor Sebok believes that courts have no business deciding the appropriate ratios, that criticism is more properly aimed at the U.S. Supreme Court, not the Oregon Supreme Court.

    UPDATE (by Lisa Perrochet 3/11/08 at 11:06 AM): On the other hand, there may be some cases where a complete new trial–rather than a new ratio selected by the court–is the only logical cure for an excessive punitive award because the jury’s verdict suffers from so many flaws (such as wildly excessive compensatory damages that have to be reduced by the trial court and further reduced by the Court of Appeal, incomplete or inaccurate jury instructions on punitive damages, conflicting ratio analyses by the trial court and court of appeal, for example – if this sounds like a familiar scenario, see below for yesterday’s post on the Buell-Wilson decision from the California Court of Appeal).

  • Press Coverage of Buell-Wilson Decision

    Law.com features this article from The Recorder on the Buell-Wilson decision (which we blogged about yesterday afternoon): Despite Remand, Ford Motor’s Loss Stands at $82.6 Million.

    The San Jose Mercury News website has an AP story entitled Appeals Court Reiterates $82.6 Million Award for Paralyzed Woman.

    The Daily Journal reports Panel Upholds $82 Million Rollover Judgment (subscription required).

    And the Fox television affiliate in San Diego reports Damage Award Reduced in Rollover Crash.

  • Buell-Wilson v. Ford—Court of Appeal Says Ford Waived Due Process Protections Against Excessive Punitive Damages

    Today’s opinion from the Fourth Appellate District, Division One, in San Diego holds Ford waived any claim to a new trial based on its argument that that the jury improperly imposed punitive damages to punish Ford for harm caused to nonparties.

    In the third of three recent California appellate decisions to confront the fallout from the United States Supreme Court’s opinion in Philip Morris USA v. Williams (2007) 166 L.Ed.2d 940, 127 S.Ct. 1057 (see our earlier post on Bullock v. Philip Morris and our post on Holdgrafer v. Unocal), the court summarized its views as follows in the introduction to its decision:

    “Philip Morris holds that upon request, courts must adopt procedures to ensure juries do not punish defendants for harm caused to third parties when determining the amount of punitive damages to award. The Supreme Court also reiterated, however, juries could consider harm to third parties in determining the reprehensibility of a defendant’s conduct.

    “Ford asserts that based on Philip Morris it is entitled to a new trial (or at least a further reduction in the punitive damages award) because there is a “significant risk” the punitive damages verdict in this case was based on improper evidence and arguments concerning third party harm. Ford also asserts that we should reconsider our original decision’s rejection of its arguments that (1) California’s punitive damages statute (Civil Code section 3294) is unconstitutionally vague as applied to this case, and (2) the trial court erred in excluding its industry custom and practice evidence.
    ….
    “Based on our analysis of Philip Morris and our review of our original decision and the proceedings in the trial court, we conclude Philip Morris does not compel a reversal or a further reduction of the punitive damages awarded in this case. Ford has forfeited the right to assert there is a significant risk the punitive damages verdict in this case was based on improper evidence and arguments concerning third party harm because Ford (1) submitted incorrect and misleading jury instructions on third party harm; (2) did not timely object to plaintiffs’ closing argument at the punitive damages phase of the trial; (3) did not request a limiting instruction during the liability phase of the trial; and (4) did not raise instructional error as an issue on its original appeal. We also conclude our original decision reduced the punitive damages award to a constitutionally permissible amount that does not punish Ford for harm to third parties. We hold there was no evidence or argument at trial that created a significant risk that the jury, in deciding the amount of punitive damages to award, punished Ford for harm it caused to third parties.”
    ___________

    One reason the court gave for holding Ford could and should have proposed a better jury instruction during the 2004 trial in this product liability case is kind of interesting: in an earlier case (White v. Ford Motor Co. (9th Cir. 2007) 500 F.3d 963), the company offered an instruction that the court believed more accurately presaged the 2007 Philip Morris v. Williams decision. From this, the court in Buell-Wilson concluded:

    “Here, counsel for Ford was aware during the 2004 trial that United States Supreme Court and California precedent provided that, in determining the reprehensibility of a defendant’s conduct, juries could consider (1) whether the defendant’s conduct demonstrated an indifference or reckless disregard for the health or safety of others; and (2) whether a defendant’s actions were repeated or an isolated act that only impacted the plaintiff, both factors relating to third party harm. (State Farm, supra, 538 U.S. at p. 419; Simon, supra, 35 Cal.4th at p. 1180.) As discussed, ante, Ford argued against giving such an instruction to the jury and instead proposed a jury instruction that would have forbidden the jury from considering these factors.”
    ____________________

    One other interesting note is that the court did not see any need for a retrial on punitives even though both the trial court and the court of appeal found both compensatory and punitive elements of the jury’s verdict to be excessive – by tens of millions of dollars. Finding that plaintiff’s Ford Explorer was defectively unstable, that it lacked sufficient roof strength, and that Ford failed to warn plaintiff of these defects, the jury awarded plaintiff over $109 million in compensatory damages, including $105 million in noneconomic damages. The jury also awarded plaintiff’s husband $5 million for loss of consortium. The jury further found that Ford acted with oppression, fraud, or malice, and awarded $246 million in punitive damages. The trial court reduced plaintiff’s noneconomic damages award to $65,393,996 and reduced the punitive damages to $75 million, a one-to-one ratio to the total compensatory damages. On appeal, the court further reduced the damages, concluding that the jury’s compensatory award resulted from passion and prejudice, and ordering a remittitur of the noneconomic damages to $18 million, roughly four times the economic damages. Finally, the court reduced the punitive damages to $55 million, which represents about twice the amount of compensatory damages awarded, after reduction by the trial and appellate courts. It’s notable that, with the jury’s damages findings so thoroughly discredited, the court decided to come up with a new number on its own rather than sending the whole thing back for a retrial untainted by legal error, passion and prejudice, and so forth.

    The net result? A total reduced award to the Wilsons of $82,606,004 ($4,606,004 in economic damages + $18 million in noneconomic damages + $5 million in loss of consortium + $55 million in punitive damages).

  • Trial Court Dismisses Punitive Damages Award Against Dole in Case Involving Nicaraguan Farm Workers

    Dole Food Company announced today that Los Angeles Superior Court Judge Victoria Chaney has dismissed the $2.5 million in punitive damages that a jury awarded against Dole last November.

    In Tellez v. Dole, a group of Nicaraguan farm works claimed that Dole acted with malice against them in the use of the agricultural chemical DBCP on contracted banana farms in Nicaragua nearly 30 years ago. The punitive damages claim raised some interesting constitutional issues, since the plaintiffs were foreign nationals seeking punitive damages under California law for acts that occurred in a foreign country. Dole complained that the punitive damages ran afoul of the U.S. Supreme Court’s holding in BMW v. Gore that punitive damages cannot be based on acts that were lawful where they occurred. Apparently, Judge Chaney agreed.

  • Is This the First Time the Oregon Supreme Court Has Reduced a Punitive Damages Award as Unconstitutionally Excessive?

    As far as I can tell, the Oregon Supreme Court’s decision yesterday in Goddard v. Farmers Insurance may be the first time the Oregon Supreme Court has ever reduced a punitive damages award as unconstitutionally excessive in the 12 years since the U.S. Supreme Court established the due process constraints on punitive damages in BMW v. Gore. This is quite a surprising turn of events from the court that recently affirmed a $79.5 million punitive damages award after a reversal by the U.S. Supreme Court.

    In addition to Williams, here are some other cases in which the Oregon high court has rejected excessiveness arguments:

    Parrott v. Carr Chevrolet, Inc., 17 P.3d 473, 487-90 (Or. 2001) (applying BMW v. Gore, but approving an 87:1 ratio in light of the defendant’s “particularly egregious acts”);

    Lakin v. Senco Prods., Inc., 987 P.2d 463, 476 (Or. 1999) (affirming $4 million punitive damage award in product liability action)

    Oberg v. Honda Motor Co., Ltd., 888 P.2d 8, 14 (Or. 1995) (affirming punitive damages award after U.S. Supreme Court had reversed and remanded for excessiveness review).

    Is anyone aware of a case, prior to Goddard, in which the Oregon Supreme Court found a punitive damages award to be unconstitutionally excessive?

  • Oregon Supreme Court Holds Punitive Damages Award Excessive

    The Oregon Supreme Court held yesterday in Goddard v. Farmers Insurance Co. that a $20.7 million punitive damage award against Farmers Insurance was excessive because it was 24 times the compensatory award. The Supreme Court found that a 4 to 1 ratio was the constitutional limit.

  • More Punitive Damages Against Wyeth

    We previously blogged here about a Nevada jury’s punitive damage award against Wyeth arising out of one of its drugs. Wyeth has now been hit with a $27 million punitive damage award in Arkansas arising from risks allegedly associated with the same hormone replacement drugs at issue in the Nevada case. The compensatory award was $2.75 million, which seems to put this case on the very high end of the scale of the permitted ratio. Wyeth says it will appeal.

  • Dan Markel’s Article on Retributive Damages

    Professor Dan Markel has posted an abstract of his Retributive Damages article on PrawfsBlawg. Based on the abstract, the article promises to be interesting, especially the part in which he “makes sense of the Supreme Court’s recent and somewhat puzzling holding in Philip Morris USA v. Williams.” In a previous post about Williams, we offered our own attempt to make sense of the Supreme Court’s holding.

  • Punitive Damages Based on Litigation Conduct

    The recent decision in Holdgrafer v. Unocal primarily addressed the impropriety of using the defendant’s dissimilar acts towards nonparties as the basis for punitive damages. But the decision also contained an interesting footnote regarding another type of evidence that cannot be used to support a punitive award: evidence of the defendant’s litigation conduct. In footnote 17 on page 30 of the opinion, the court states that plaintiff’s counsel improperly urged the jury to punish Unocal for its assertion of a statute of limitations defense. The court’s statement is significant because, in our experience, plaintiffs often ask juries to punish defendants not only for their tortious conduct, but also for having the nerve to defend themselves. This opinion rejects that sort of insidious attack on a defendant’s right to have his day in court.

  • Commentary on Holdgrafer v. Unocal Opinion

    The Cal Biz Lit Blog has a post analyzing our recent win in Holdgrafer v. Unocal, summarizing the central holding as follows: “State Farm held that dissimilar incidents were not admissible to prove the amount of punitive damages. The California court held that dissimilar incidents are inadmissible to prove the entitlement to punitive damages.” The Metropolitan News makes the same point: “Reversing a $5 million dollar punitive damage award against the Unocal Corporation, Div. Six held that the due process proscription against the introduction of ‘dissimilar acts’ in punitive damages cases must apply to both the jury’s predicate determination of whether a defendant is liable for punitive damages as well as its assessment of the amount of damages to be awarded.”

    I have one quibble with the Cal Biz Lit Law post; it suggests that the fact that the trial court reduced the punitive damage award from $10,000,000.76 to $5,000,000 shows that the San Luis Obisbo courts are “conservative.” Considering the Court of Appeal’s conclusion that the entire award was invalid for failure to comport with due process, I am not sure that the trial court’s reduction by half constitutes a “conservative” result. On the other hand, as I have blogged about previously, considering that two of the most “conservative” justices on the United States Supreme Court do not believe that there is any due process limitation on punitive damages, perhaps it is “conservative” to affirm high punitive damage awards.

    The local San Luis Obispo paper describes the opinion here.