California Punitives by Horvitz & Levy
  • William Lerach Sentenced to Maximum Term

    Although not directly relevant to punitive damages, since William Lerach has been responsible for seeking major punitive damage awards in the past, his recent sentence and conviction (as well as the information on how he found certain clients) is noteworthy. As reported in the Recorder:

    “After criticizing a plea deal, Los Angeles federal Judge John Walter accepted it, but sentenced star plaintiff attorney William Lerach to the highest term under the agreement — 24 months in federal prison.

    Walter hammered prosecutors in court Monday about why they cut the deal with Lerach, who pleaded guilty in connection with kickbacks to lead plaintiffs of his former law firm, now known as Milberg Weiss. Lerach pleaded guilty to a single count of giving an improper payment to a plaintiff.

    Checking his famous bravado at the courtroom door, the former securities class action king expressed humble regret as Walter reluctantly accepted the deal hashed out between Lerach and federal prosecutors.

    Lerach’s lawyer, John Keker of San Francisco’s Keker & Van Nest, had asked that Lerach serve six months in prison and six months’ home confinement, while the government wanted 24 months behind bars.”

  • Law Review Article Explores Constitutional Limits on Punitive Damages in Wrongful Death Cases

    Professor Mark A. Geistfeld has an article entitled “Punitive Damages, Retribution and Due Process” in the January 2008 edition of the Southern California Law Review. The article calls for a new method of analyzing the excessiveness of punitive damages in cases involving serious bodily injury and death. He posits that punitive damages should serve to vindicate the social cost of a premature death. Relying on government statistics to compute those costs, he concludes that the $79.5 million punitive damages award approved by the Oregon Supreme Court in Philip Morris v. Williams was not excessive.

    Click here to see the abstract.

    Hat tip to How Appealing.

  • “Punitive Damages are Needed to Keep Big Oil Accountable”

    In an op-ed in the Anchorage Daily News (subscription required) John Devens of the citizens’ councils for Prince William Sound and Cook Inlet explains why those groups filed an amicus brief in support of the plaintiffs in the Exxon Valdez case. Devens argues that Exxon Mobil relies on outdated maritime law principles that no longer reflect today’s realities, and he argues that punitive damages must be available in maritime law cases to deter irresponsible corporate behavior. Devens faults Exxon most for its underfunding of Alyeska Pipeline: “Alyeska Pipeline, tasked with initial cleanup efforts after a spill, was utterly unprepared for what it faced on March 24, 1989. Exxon was (and is) one of the owners of Alyeska. It helped determine Alyeska’s budget, how much equipment Alyeska had on hand, and how Alyeska’s people were trained to clean up oil. Alyeska’s unpreparedness and the inadequate response that resulted were due in large measure to deliberate actions by Exxon itself.”

  • Lessons from Philip Morris v. Williams for Drafting Jury Instructions

    Howard Bashman’s essay on Law.com, Not Even U.S. Supreme Court Victory Can Vanquish $75.9 Million Punitive Award Against Philip Morris, views the Oregon Supreme Court’s decision in Williams as a cautionary tale for associates. As Bashman notes, the Oregon court held that the trial court properly refused Philip Morris’s proposed punitive damages instruction, even though it correctly stated that the jury should not punish for harm to nonparties, because it also included some language that was erroneous under Oregon state law. Bashman draws the following moral from this story: “The next time young litigation associates are pondering how far to twist the law in the client’s favor in proposed jury instructions, it’s best if they remember: Attempting to gain your client some subtle, modest advantage could backfire and eventually cause your client to lose its ability to overturn a nearly $80 million punitive damages award.”

    On the other hand, if the lawyers drafting the jury instructions hadn’t been aggressive, they never would have requested the language about harm to others, and they would have faced an insurmountable waiver problem on appeal. The Oregon Supreme Court’s approach seems to create an almost impossible situation for litigants.

    In any event, the lessons to be drawn from Williams will depend greatly on the rules of a particular jurisdiction. As I noted in an earlier post, in California a trial court could not properly reject a proposed instruction on a fundamental due process issue, even if the instruction was defective in some way, without providing some sort of alternate instruction to protect the defendant’s due process rights.

    UPDATE (by Curt Cutting on 2/10/08 at 10:16 am): Although the article refers to a “$75.9 million punitive award,” the actual amount of the award was $79.5 million. What’s $3.6 million between friends?

  • 2008 Election, the Supreme Court and Punitive Damages

    One of the issues that the major presidential candidates will argue about in the general election is what type of judges should be appointed to the federal courts, especially to the Supreme Court. Many observers predict that the next president will have at least two or three nominees to the United States Supreme Court. Recently, Senator McCain, as part of his outreach to conservatives, issued a statement on judicial nominees: “I believe that one of the greatest threats to our liberty and the Constitutional framework that safeguards our freedoms are willful judges who usurp the role of the people and their representatives and legislate from the bench. As President, I will nominate judges who understand that their role is to faithfully apply the law as written, not impose their opinions through judicial fiat. . . . When applying the law, the role of the judge is not to impose their own view as to the best policy choices for society but to faithfully and accurately determine the policy choices already made by the people and embodied in the law. The judicial role is necessarily limited and one that requires restraint and humility.”

    Senator Clinton and Senator Obama have argued for a more expanded role for federal courts in general, and the United States Supreme Court in particular, especially in the area of ensuring due process in a wide range of cases.

    The United States Supreme Court’s jurisprudence on the constitutional limits on state court punitive damage awards has created some interesting coalitions. In BMW v. Gore and Campbell v. State Farm, the majority who found that the due process clause imposed a significant limitation on state jury awards of punitive damages included Justices Stevens, Souter, Breyer, Kennedy, O’Connor and Chief Justice Rehnquist. The dissenting justices Scalia, Thomas and Ginsberg argued that the Due Process Clause did not provide such a substantive limitation on punitive damages. In the more recent Philip Morris v. Williams case, Chief Justice Roberts and Justice Alito joined the majority in reversing a state-court punitive damages award on the basis that the lack of a jury instruction violated due process. Justice Stevens joined the earlier dissenters (Scalia, Thomas and Ginsberg) while Souter, Breyer and Kennedy remained in the majority.

    Thus, will a President McCain, who says he wants to appoint justices who will show judicial restraint, appoint justices like Scalia and Thomas who find no federal due process right implicated by state-court punitive damage awards, or will he appoint justices like Roberts, Alito, and Rehnquist who do? Conversely, will a President Clinton or President Obama appoint justices who have an active view of due process in punitive damage cases like Justices Breyer, Souter, and Stevens or one with a view like Justice Ginsberg? The analysis of constitutional limits on punitive damages does not fit into the usual 5-4 box into which many controversial cases seem to fit.

    This is a question that deserves to be contemplated over the next many months as the future of the Supreme Court is debated.

  • Punitive Damages Op-Ed by the California Chamber of Commerce Now Available Online

    This op-ed by Kyla Christofferson at the California Chamber of Commerce was published in the Daily Journal on January 7, but is now available on-line without a subscription on the Chamber’s website. The op-ed supported a bill that would have capped punitive damages at no more than three times compensatory damages. (See our posts about that bill here and here.)

    Don Ernst, president of the Consumer Attorneys of California, submitted a letter to the editor in response to the Chamber’s op-ed. Here’s what I said previously about Ernst’s letter:

    The letter . . . describes the Chamber of Commerce as a dishonest “front group for corporations seeking to avoid accountability for wrongdoing and negligence.” Aside from attacking the Chamber’s credibility, Ernst’s main argument is that reform is unnecessary because disproportionate punitive damage awards are rare.

    I am puzzled by the argument about the rarity of excessive punitive awards. Why should our justice system tolerate any excessive awards, even if they are rare? I doubt that the defendants who get hit with excessive punitive awards find much solace in the notion that such awards are uncommon. And if excessive punitive damages are so rare, why are the Consumer Attorneys so opposed to limiting such awards? What difference would it make, except to the defendants who are unlucky enough to be on the wrong end of those rare awards?

    Ernst supports his argument by listing cases in which punitive damages motivated manufacturers to remove dangerous products from the market. Interestingly, he doesn’t mention whether the awards in those cases would have been subject to the cap proposed by the Chamber. Out of curiousity, I looked up one of the awards he mentions – -the $125 million punitive damage award in Grimshaw v. Ford Motor Co., the infamous Ford Pinto case. Ernst cites Grimshaw as an example of an award that changed corporate behavior, but he doesn’t mention that the punitive damages award in Grimshaw was reduced to $3.5 million (by the trial court), compared to compensatory damages of $2 million. If a ratio of 1.75-to-one was sufficient to change Ford’s conduct in Grimshaw, that case hardly supports Ernst’s argument against the three-to-one cap proposed by the Chamber.

  • “Should There Be a Limit on Punitive Damages?”

    Helium is featuring a series of short essays debating the merits of unlimited punitive damage awards. Currently, the site contains four essays in favor of unlimited awards and four essays opposing unlimited awards. Visitors to the site can cast their vote.

    What is Helium, you ask? The site bills itself as “a community of writers who are revolutionizing publishing.” It is not “a blog or a collection of edited encyclopedic listings.”

  • New Mexico Jury Awards $33 Million in Punitive Damages

    The Albuquerque Journal reports that a jury has awarded $33 million in punitive damages in an abuse-of-process lawsuit by one attorney against another. The jury awarded $165,000 in compensatory damages, which makes for a ratio of exactly 200 to 1. The losing party says he plans to appeal. I hope the winner isn’t making plans to spend the $33 million quite yet.

    Hat tip to Howard Bashman.

    UPDATE (By Jeremy Rosen on 2/7/08 at 3:45 pm): On the other hand, the plaintiff may take comfort in the fact that the New Mexico appellate courts have been named as “dishonorable mention judicial hellholes” by ATRA.

  • Daily Journal Article on City of Hope Argument in California Supreme Court

    Laura Ernde, the California Supreme Court reporter for the Daily Journal, reports on the City of Hope v. Genentech oral argument in the California Supreme Court here [subscription required]. Unlike this article, which states that the justices asked tough questions “without tipping their hands about who would prevail,” Ernde’s article states that the Supreme Court “appeared sympathetic to [Genentech]’s arguments why it should get out of paying part of a $500 million jury verdict.”

    Earlier posts on City of Hope v. Genentech appear here, here, and here.

  • Illegal Aliens and Punitive Damages

    In this political year, illegal immigration has been a hot topic. In some cases debates over the immigration issue have intersected with punitive damages issues. In Arizona, voters passed an initiative in 2006 that prohibits illegal aliens from being able to receive punitive damages in any lawsuit they bring. In Iowa, a proposed new law would call for employers who continue to hire illegal aliens as employees to be subject to punitive damages in addition to other civil fines.