California Punitives by Horvitz & Levy

  • California Supreme Court Oral Argument in Case with $200 Million Punitive Damages Award Will Be Televised Tuesday Afternoon

    For those of you who have access to the California Channel, you can watch the oral argument in City of Hope v. Genentech on Tuesday afternoon at 2:00 p.m. PST. The case, which has been pending before the Supreme Court for three years (see the Supreme Court’s on-line docket here), involves a $300 million compensatory damages award and a $200 million punitive damages award.

    The issue presented (from the news release issued by the Public Information Office of the Administrative Office of the Courts) is “When an inventor or researcher entrusts a new idea or discovery to another under an arrangement providing for the other party to develop, patent, and commercially exploit the idea or discovery in return for royalties to be paid to the inventor or researcher, does a fiduciary relationship arise between the two parties, a breach of which may support tort, and in an appropriate case punitive, damages, or should the arrangement be treated like an ordinary contractual agreement, a breach of which supports only contract and not punitive damages?”

    Full disclosure: Horvitz & Levy is counsel of record in this case, representing City of Hope.

  • Will the Oregon Supreme Court Learn About Summary Reversals?

    The blogosphere is filled with rather colorful metaphors and descriptions for what the Oregon Supreme Court was saying to the United States Supreme Court in its recent opinion in Philp Morris v. Williams. See here, here, and here. But, of course, the United States Supreme Court can still have the last word. The Oregon Supreme Court based its holding on the asserted ground of an adequate and independent state law ground to overcome the due process violation found by the United States Supreme Court. However, there are exceptions to that doctrine. The United States Supreme Court has explained that the right of state courts to assert independent state law grounds is not unlimited: “It therefore is within our province to inquire not only whether the right was denied in express terms, but also whether it was denied in substance and effect, as by putting forward nonfederal grounds of decision that were without any fair or substantial support . . . [for] if non-federal grounds, plainly untenable, may be thus put forward successfully, our power to review easily may be avoided.” Thus, it is possible that the United States Supreme Court could reverse (even by summary reversal) the recent Oregon opinion on the basis that the independent state law ground regarding evaluating proposed jury instructions cannot be used as a shield to overcome a plainly unconstitutional trial. In the alternative, the court could grant certiorari and then consider the excessiveness of the award under the Due Process Clause.

  • “AGs Whip up Plaintiff Support in Exxon Valdez Suit”

    Legalnewsline features an article describing the efforts of Washington Attorney General Rob McKenna and Maryland Attorney General Doug Gansler to persuade other AGs to sign on to an amicus brief supporting the plaintiffs in the Exxon Valdez case. The article says they have convinced eighteen other states to join their cause.

  • Chemerinsky Article About Impact of Upcoming Exxon Valdez Decision

    Professor Erwin Chemerinsky has an article on the pending Exxon Valdez case in the January 2008 edition of Trial, a publication of the American Association for Justice. Not to be confused with the Justice League of America, the American Association of Justice is the group most recently known as the Association of Trial Lawyers of America.

    Professor Chemerinsky’s article predicts this case may result in a 4-4 split, since Justice Alito has recused himself from this case. He notes that Justices Scalia, Thomas, and Ginsberg have consistently dissented from the Court’s prior decisions involving due process limitations on punitive damages awards. He also notes, however, that those prior dissents may have little relevance in Exxon Valdez because the Court declined to review the due process issue presented by Exxon’s cert. petition.

    We previously blogged about the possible impact of the Exxon Valdez opinion here. And we blogged about the surprising disparity between the number of plaintiffs’ amicus briefs versus the number of defense amicus briefs here.

  • Petition for Review Pending in California Supreme Court re Certifying Punitive Class: Lewis v. Robinson Ford

    The CA Supreme Court recently granted itself an extra 30 days to rule on a petition for review raising the question whether a class action can properly be certified where punitive damages are sought. Here’s the docket in case you want to follow progress in the matter. Oh, and by the way, it’s our petition for review.

  • Proposed Revisions to CACI Jury Instructions Available Soon

    Bruce Greenlee, staff attorney for the California Judicial Council’s Advisory Committee on Civil Jury Instructions, has advised us that the committee has prepared a set of proposed revisions which they plan to release for public comment today or tomorrow. The revisions will appear here.

    The proposed revisions will include changes to the insurance litigation series, but we do not yet know if the committee will be proposing any revisions to the punitive damages series. Obviously, it’s too soon for the proposed revisions to reflect the suggestions made by the Court of Appeal in Bullock (described here).

    UPDATE (2/1/08 AT 3:14 pm): The proposed CACI revisions are now online, and they do not include any proposed revisions to the punitive damages series.

  • Gnesda v. UPS—California Court of Appeal Vacates Punitive Damages Award in Unpublished Opinion

    This opinion is unpublished, but notable for a few reasons.

    First, the punitive damages verdict was a big one – $20 million. Compared to roughly $750,000 in compensatory damages, that’s a ratio of about 27 to one. The trial court reduced the punitive damages to $3.5 million (a ratio of 4.7 to one) and both sides appealed.

    Second, the Court of Appeal vacated the punitive damages award in its entirety because the plaintiff failed to meet his burden of proving the defendant’s financial condition. California has a unique requirement that a plaintiff must introduce evidence of the defendant’s financial condition in order to recover punitives. The evidence must provide meaningful insight on the defendant’s ability to pay, as of the time of trial. Evidence of earnings or assets, without evidence of liabilities, is not enough. The California Supreme Court announced this rule in 1991, but every year there are a few appellate decisions reversing a punitive damages award on this basis. Here, plaintiff introduced evidence of the defendant’s income a few years before trial, but did not prove the defendant’s net worth at the time of trial. Because of that, the plaintiff is out $3.5 million.

    Incidentally, this case featured two prominent California appellate lawyers: professor Erwin Chemerinsky for the plaintiff and former appellate justice Dan Kolkey for the defense.

  • Oregon Voters and the Oregon Supreme Court

    Since the Oregon Supreme Court is in the news today, I thought it would be interesting to learn more about that court. It is not every day that a state Supreme Court refuses to find error in a trial after the United States Supreme Court had held that the defendant’s due process rights were violated during the trial. A poll of Oregon voters commissioned in 2006 explored voter attitudes and knowledge of the Oregon Supreme Court. 44 percent thought the court engaged in “judicial activism” while 26 percent said the court did not, and 30 percent did not have an opinion. 70 percent said they had “trust” in the court. Only 20 percent knew how many justices (7) sit on the court. 79 percent could not name a single justice on the court, and only a bare majority realized that justices were elected by the voters. 53% thought voters should have the final say on the validity of laws in Oregon, and only 30% thought the Supreme Court should have that authority.

    The poll contains many other questions about specific cases decided before 2006 by the court. It is a very interesting snapshot of how the people who live in Oregon view the Supreme Court.

  • Rationale of Oregon Supreme Court Decision in Philip Morris v. Williams Should Not Apply in California

    The Oregon Supreme Court’s decision handed down today finding a defendant waived its due process rights to proper calculation of punitive damages (see earlier post here) is based on reasoning which, whether valid or not under Oregon law, should not apply in California. The Oregon Supreme Court concluded that the trial court had an adequate basis under state law for refusing to instruct the jury that “you are not to punish the defendant for the impact of its alleged misconduct on other persons.” The U.S. Supreme Court had held that a defendant is entitled to due process protections such as are reflected in this sort of instruction upon request, but the Oregon Supreme Court said the trial court properly refused the proposed instruction in this case because it included other language, some of which was erroneous under Oregon state law. Apparently, under Oregon law, a trial court can refuse a party’s request for an instruction that correctly sets forth relevant principles of law – even principles essential to ensuring constitutional rights – if the proposed instruction is bundled with other language that is incorrect.

    The same reasoning would not apply in California. California courts have held that, even when a proposed jury instruction is flawed, if the subject matter of the instruction is “vital” or “material” to the case and not covered by other instructions, the trial court is required to give a proper instruction that captures the substance of the law. Thus, in California, if no other jury instruction addressed the fundamental due process concerns discussed in Williams, the trial court could not properly reject a proposed instruction on that issue without providing some sort of alternate instruction to protect the defendant’s due process rights. (See, e.g., Orient Handel v. United States Fid. & Guar. Co. (1987) 192 Cal.App.3d 684, 698.)

    How Appealing has another post on Williams entitled “The cost to Philip Morris of trying to slant jury instructions too far in its favor — $79.5 million in punitive damages.”

  • More on Bullock v. Philip Morris: Curing Legal Error with a Remittitur?

    Another interesting aspect of yesterday’s opinion in Bullock (discussed in earlier posts here and here) is the court’s analysis of the conditional new trial/remittitur procedure, under which a court orders that a new trial will take place unless the plaintiff consents to a reduction of the damages award. The Bullock court outlines the usual use of a remittitur to cure an award that is flawed simply because it is just too high in light of the evidence. But the court goes on to say a remittitur can also be used in some cases to cure a defect in an award that is the result of a legal error that affected the jury’s deliberations. Specifically, “remittitur may be appropriate where instructional error resulted in an excessive award and the amount of the excess is ascertainable.” Ultimately, on the particular facts of Bullock, the court concluded, “we cannot determine how the instructional error that we have found affected the amount of the punitive damages award and we cannot substitute our own assessment of the appropriate amount of punitive damages for that of a jury (or a judge on a new trial motion). We therefore conclude that a remittitur by this court would be inappropriate.”

    This result – an unconditional new trial order – makes sense to me, but what’s a little harder to fathom is the court’s reference, without further elaboration, to Stevens v. Snow (1923) 191 Cal. 58, 68, in which the Supreme Court used a remittitur to, in the words of the Bullock court, “reduc[e] by one-half the amount of a judgment based on instructional error and error in the admission of evidence despite the Supreme Court’s express acknowledgment that it could not determine how the errors affected the amount of the judgment.” What’s a little odd here is that no subsequent court seems to have followed Stevens on this matter of using a remittitur to cure an award that is potentially inflated due to legal error, and the Supreme Court 60 years later – in Schelbauer v. Butler Manufacturing Co. (1984) 35 Cal.3d 442, 454 – exhaustively analyzed and expressly disapproved the use of a remittitur as a means to cure legal error, holding that use of remittitur is “confined to cases in which an excessive damage award [is] the only error in the jury’s verdict.” Several other courts have reached the same conclusion, but the Bullock court didn’t cite Schelbauer or any of the other decisions limiting remittitur to cases involving only pure excessiveness challenges to a damages award.

    It would appear that, if a court follows the Stevens approach in any future case, a clear conflict will be set up between Stevens and Schelbauer.