Anthony Sebok has an article on FindLaw which analyzes the Oregon Supreme Court’s recent opinion in Philip Morris v. Williams. He looks to a number of justifications that have been given to defend the Oregon Supreme Court’s opinion. Ultimately, he opines that “the Oregon Supreme Court could have read the [sic] Philip Morris’s cert petition, or Breyer’s conclusion, or the 2002 appellate decision for their substance, as opposed as to a counterintuitive formal or literal meaning. And had it done so, its interpretation would have been much more persuasive. But a substantive interpretation would have meant giving a victory to a hated tobacco-company defendant–one that had forced the United States Supreme Court to twice intervene in Oregon’s own local search for justice on behalf of an Oregonian whom a jury had found was defrauded by the company and killed by its product.” His bottom line is that “I would like the United States Supreme Court to take some time out of its busy schedule to vacate the recent Oregon decision, and to remand with instructions that the jury verdict be retried with instructions that do not violate the Constitution. That would be a fitting response to a state court that seems to think that winning is the only thing that matters.”
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A $500,000 Punitive Damage Award in Canada is Considered to Be Extremely High and Newsworthy
The Supreme Court of Canada is about to hear argument in an appeal from the lower appellate court’s reversal of a $500,000 punitive damage award in a wrongful termination case. That $500,000 award is apparently the highest punitive damage award ever awarded in an employment case in Canada. Perhaps we could learn something from our neighbor to the north.
UPDATE (by Curt Cutting on 2/14/08 at 9:50 pm): A few years ago, that award would have amounted to less than $350,000 in U.S. dollars, but today the exchange rate is roughly even. God help us if the exchange rate ever gets bad enough to bring this award into the realm of the mega awards we see in California.
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Changing Views on Punitive Damages in Europe
Historically, European countries did not permit the award of punitive damages. A new article by John Gotanda, Charting Developments Concerning Punitive Damages: Is The Tide Changing?, suggests that change is in the works.
Here is an abstract of the article which can be found in the Columbia Journal of Transnational Law:
This essay discusses a number of developments outside of the United States concerning punitive damages, which may ultimately signal a change in the way other countries view American awards of such damages.
To date, courts in many countries have refused to recognize and enforce American punitive damages awards on the ground that they violate the host country’s public policy. In most civil law countries, such as France and Germany, penal damages can only be ordered in criminal proceedings; a civil award of such damages has been viewed as contrary to ordre public. In common law countries, while punitive damages generally may be awarded in civil suits, there is no agreement on the circumstances warranting punitive damages, and courts differ on the appropriate amount of such an award.
While traditionally American awards of punitive damages have been difficult to enforce abroad, this practice may be about to change. Recently developments in France, Germany and the European Union, as well as decisions in Australia, Canada and Spain point toward greater receptivity to punitive damages and enforcement of foreign awards of these damages. In France, proposed revisions to the French Civil Code call for awarding punitive damages in certain cases. In Germany, a study by a prominent scholar finds that German courts are beginning to award penal damages in civil actions. In the European Union, a European Commission Green Paper raises the possibility of allowing the doubling of damages in certain antitrust cases. In Australia, a recent decision by the Supreme Court of South Australia opines that Australian courts would enforce large punitive damages awards ordered by American courts. Moreover, in Canada and Spain, appellate courts affirm decisions to enforce American judgments that included punitive damages. While these developments do not point toward clear sailing for American punitive damages abroad, when viewed together they may foreshadow a change in the wind that may ultimately lead to greater enforcement of these damages.
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Flow Chart Illustrates History of Exxon Valdez Punitive Damages Award
For those of you who haven’t followed all the twists and turns of the litigation over the multi-billion dollar punitive damages award in the Exxon Valdez litigation, you can catch up using this flow chart.
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Senator Obama Won Punitive Damage Case on Appeal in the Seventh Circuit
When he was a practicing lawyer, Senator Obama successfully defended an arbitration award of punitive damages in the Seventh Circuit. According to the Sun Times, “In 1994, Obama went before the 7th Circuit to defend Ahmad Baravati, a trader blackballed by his bosses after he reported them for fraud. An arbitrator awarded Baravati $60,000 in damages plus $120,000 in punitive damages against the former bosses. They appealed, saying arbitrators don’t have the power to award punitive damages. Obama had a tough job because the same court had ruled a week earlier that an arbitrator could not award punitive damages. But Obama convinced them this case was different. ‘You’re suggesting that there’s a federal common law that likes punitive damages, but this could be preempted by a state law that says ‘no punitive damages,’ Posner told Obama. ‘I don’t think I’m saying there’s a federal law that ‘likes punitive damages,’ Obama responded, not dropping his tone of respect. ‘I think what I’m saying is that there’s a federal law that likes the notion that the same remedies that will be available in court will be available in arbitration.’ Obama won, and Baravati got to keep the extra $120,000. He still is grateful. ‘I found he’s a very smart, innovative, skilled, relentless advocate for his client,’ Baravati said. ‘When I met him, he reminded me of Abraham Lincoln.’”
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The Potential Impact of the United States Supreme Court’s Exxon Valdez Punitive Damages Opinion
The Daily Journal has an article (subscription required) previewing the February 27 oral argument in the Exxon Valdez case. The article begins: “When the Exxon Valdez oil tanker ran aground off the coast of Alaska in March 1989, the Berlin Wall had not fallen, NBC was making plans for a new sitcom called ‘Seinfeld,’ and John Roberts was a 34-year-old climber looking to make a name for himself as an appellate lawyer. Nineteen years later, Eastern Europe’s transformation and Seinfeld’s celebrated run are a part of history, but the Valdez dispute remains, as the Roberts-led Supreme Court is preparing to decide how much, if any, punitive damages Exxon owes for spilling 11 million gallons of oil into the Prince William Sound. The case, with arguments scheduled for Feb. 27, comes to the high court after three trips to the San Francisco-based 9th U.S. Circuit Court of Appeals, which settled on a $2.5 billion punitive-damages award to fishermen and other Alaskans who suffered economic harm from the massive environmental disaster. Though the figure was half the amount awarded by an Alaska jury, it was by far the largest punitive-damages award affirmed by a federal appellate court. Exxon protested that the award should be significantly lower, if not eliminated.”
The article makes the point that if the court sets forth a common law limitation on punitive damages, the case could have widespread impact, but if it simply applies maritime law, it is not likely to have much impact. The article also points out that the three primary dissenters in due process punitive damages cases (Justices Scalia, Thomas, and Ginsberg) may well be in play for Exxon in this case because the analysis under maritime law is different from the analysis under due process.
We previously blogged about the potential impact of the Exxon Valdez opinion here. And see here for a post about professor Erwin Chemerinsky’s article on the same subject.
UPDATE (by Lisa Perrochet on 2/13/08 at 9:55 a.m.): Cal Law has a similar story today [subs. req’d] regarding the imminent Exxon Valdez argument. Reporter Tony Mauro notes that Justice Alito has recused himself from the proceedings, opening the door for a 4-4 split. Mauro further observes, “Exxon supporters are hoping to win over Justices Antonin Scalia and Clarence Thomas, who have never found in their copies of the Constitution a bar against punitive damages. However, under maritime law — a form of judge-made common law — the two justices might join others who have voted to limit punitive damages in recent years.” Mauro also quotes Mayer Brown’s Andy Frey: “‘The shackles are off’ Scalia and Thomas” and, says Frey, even though the ruling may stress maritime law, it may also be “‘very important for the issue of punitive damages generally.’”
FURTHER UPDATE (by Jeremy Rosen on 2/13/08 at 1:21 pm): Some of the 32,000 class members in the case have created their own “whole truth” website. According to the BLT (the Blog of Legal Times), the class members started the website to “highlight the continuing impact on the lives and work of Native Alaskans and others in the Prince William Sound. The group also plans a candlelight vigil in D.C. around the time of the arguments.”
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Pending Petition for Review Challenges Appellate Decision Affirming Punitive Damages Against County Officials Mired in Bribery Scandal
On February 6, defendants in a case raising punitive damages issues filed a petition asking the California Supreme Court to grant review of an appellate court decision affirming a punitive award that the defendants claimed was unconstitutionally excessive. (Here’s the Supreme Court docket info.)The case is County of San Bernardino v. Walsh, and arises out of a bribery and corruption scandal. I haven’t seen the petition but, under the facts as outlined in the Court of Appeal opinion, I’m assuming there’s no traditional “ratio” challenge to the award given the relatively high compensatory damages: the trial court awarded damages of $4,242,626, comprised of various bribes, kickbacks, and fees accepted by the defendants, and further assessed $1 million in punitive damages against one defendant, plus $500,000 in punitive damages against another on breach of fiduciary duty and fraud causes of action.It appears the individual defendants’ focus has been on a comparison of the awards to the individuals’ net worth and claimed inability to pay. The Court of Appeal, however, held the trial court had discretion to infer that the defendants were well able to pay the judgment, concluding that they “intentionally concealed their assets, testified falsely regarding many factual issues, and were, at best, evasive and nonresponsive in answering questions as to their financial condition. This conduct gave the court wide latitude to make inferences from the evidence unfavorable to [defendants] Mays and Walsh.”
The California Supreme Court is currently due to rule on the petition by early April (within 60 days after February 6). -
Are Federal Credit Unions Immune from Punitive Damages Claims?
A few months ago, in McGee v. Tucoemas Federal Credit Union, the California Court of Appeal held federal credit unions were not entitled to sovereign immunity from punitive damages claims.
As counsel of record for the defendant, we (Horvitz & Levy LLP) are filing today a cert petition to the US Supreme Court challenging this holding. Here’s a summary from the petition outlining the question presented:
“Federal credit unions are federal instrumentalities chartered under the Federal Credit Union Act, 12 U.S.C. §§ 1751 to 1795k. Does their authority under that Act to ‘sue and be sued,’ 12 U.S.C. § 1757(2), waive their immunity as federal instrumentalities from punitive damage claims? The decision of the Court of Appeal of the State of California, which allowed the punitive damage claims here, declined to follow decisions of the Sixth, Eighth, Ninth, and Eleventh Circuits of the United States Court of Appeals.”
Stay tuned!
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Punitive Damages in Mordor?
The estate of author J.R.R. Tolkien has sued New Line Cinema for more than $150 million in compensatory damages for the alleged failure to pay the estate contractual royalties from the three Lord of the Rings movies. The lawsuit apparently also seeks punitive damages. However, whether the Tolkien estate can claim punitive damages for New Line’s alleged breach of the contract may well be determined by the City of Hope case recently argued in the California Supreme Court.
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Ninth Circuit Clarifies Rules for Accrual of Post-Judgment Interest After Appellate Reduction of Punitive Damages
The Ninth Circuit today released an opinion in Planned Parenthood v. American Coalition. The opinion was written by Judge Fisher and joined by Judges Leavy and Berson. The opinion begins:
“At what all surely must hope is the conclusion of this long running litigation, we must address an issue of some importance under Federal Rule of Appellate Procedure 37(b) relating to the award of post-judgment interest to the plaintiffs-appellees on the punitive damages judgment they obtained against the defendants-appellants. This is a cautionary tale for all whose judgments on appeal are subject to the requirements of Rule 37(b). In an earlier appeal, we reduced the punitive damages because we concluded they were excessive under the Supreme Court’s Due Process Clause jurisprudence. We accordingly directed the district court on remand to enter a judgment for the damage amounts we specified, assuming the plaintiffs opted not to have a new trial. Because our mandate did not contain instructions about the allowance of post-judgment interest as required by Rule 37(b), we are now called upon to decide whether the district court had the authority to award post-judgment interest from the date of its original judgment, as modified in its final judgment, or only from the date of that final judgment. We hold that our failure to specify the accrual date for post-judgment interest in our mandate precluded the district court’s order that interest would run from the date of the original judgment.”
The court then finds that its failure to include the post-judgment interest was inadvertent and it recalled its mandate to provide for post-judgment interest from the date of the original judgment. The court cautioned in the future that Rule 37(b)’s rules regarding mandates will be followed and adhered to. This opinion provides a caution for lawyers to make sure they clearly remind the court to include such direction for awarding of post-judgment interest in the mandate when a judgment is reversed or no interest can be awarded by the district court.