California Punitives by Horvitz & Levy

  • 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.

  • Philip Morris v. Accord: Cert Petition on Punitive Damages Issue Will Be Considered on February 15

    The Supreme Court will consider the petition for certiorari in Philip Morris USA, Inc. v. Accord at next week’s conference. The issue presented is whether, under the Due Process Clause, defendants’ liability for punitive damages in a mass tort trial may be adjudicated prior to a finding of compensatory liability.

    The cert. petition is available on SCOTUSblog here, along with the brief in opposition, the petitioner’s reply, and amicus briefs by the U.S. Chamber of Commerce and Ciba corporation.
    SCOTUSblog flags this petition as one of several that have a reasonable chance of being granted.

    This is a recurring issue in California mass tort litigation. In addition to the due process issues raised in this cert petition, California law adds a further wrinkle: Civil Code section 3295 requires that punitive damages issues be tried “by the same trier of fact that found for the plaintiff,” which seems to preclude trial of punitive damages before liability issues.

  • AMA Study Shows that Caps on Punitive Damages Improve Access to Health Care, or Do They?

    This article discusses a new American Medical Association study, which “proves that capping punitive damages in medical malpractice cases both reduces doctors’ malpractice insurance premiums and increases the number of physicians available to care for patients.” According to the article, the AMA claims that placing a $250,000 cap on punitive damages in states that don’t have effective reforms in place could reduce medical malpractice premiums by $1.4 billion nationwide.

    The author of the article may have misinterpreted this AMA press release, issued yesterday. The press release discusses a study about the impact of caps on noneconomic damages, not punitive damages. (As most readers of this blog probably know, California has a cap of $250,000 on noneconomic damages in medical malpractice cases, but no statutory cap on punitive damages.)

  • Interesting North Carolina Punitive Damages Decision on the Standard of Review

    Yesterday, in Scarborough v. Dillard’s Inc., the North Carolina Court of Appeals reinstated a $77,000 punitive damages award in a malicious prosecution case, addressing a procedural issue that has split California courts.

    The trial court had found insufficient evidence supported the award. The majority opinion disagreed, taking the position that the punitive damages should be reinstated if a scintilla of evidence existed to support the award. A dissenting opinion argued that the majority failed to take into account the requirement, under North Carolina law, that punitive damages are available only if the plaintiff proves the prerequisites for punitive damages by clear and convincing evidence. Given that higher burden of proof, the dissent would have affirmed the trial court’s order granting JNOV.

    From a California lawyer’s perspective, this opinion is interesting because California’s appellate courts have split on the same issue. California law also requires proof by clear and convincing evidence for punitive damages issues. Some appellate courts have held that the clear and convincing evidence standard must be taken into account on appeal, but others have disagreed. The California Supreme Court has issued conflicting opinions on this issue. Eventually the Supreme Court will need to revisit the issue and sort out this mess.

    Hat tip to Sean Andrussier at North Carolina Appellate Blog.

    UPDATE (By Jeremy Rosen on 2/6/2008 at 11:37 am): North Carolina is one of the many states which by statute have set limits on punitive damages. North Carolina law limits punitive damages to three times compensatory damages or $250,000, whichever is greater. (Exception is for harm caused by driving while impaired.)