California Punitives by Horvitz & Levy

  • Bullock v. Philip Morris—California Court of Appeal Reverses $28 Million Punitive Damages Award

    We blogged here about this pending appeal involving the intersection of California law and the U.S. Supreme Court’s decision in Philip Morris v. Williams. This afternoon, the Court of Appeal (the Second Appellate District, Division Three) issued a published opinion reversing the $28 million punitive damages award and remanding the case for a new trial on the amount of punitive damages. The same court had previously approved the $28 million award, but the U.S. Supreme Court vacated that decision and remanded for reconsideration in light of Williams.

    We’ll post further about this opinion after we’ve had a chance to digest it. For now, here’s the Court of Appeal’s summary of its disposition:

    “We conclude that Philip Morris has shown no error with respect to its liability for fraud and products liability, but that the refusal of Philip Morris’s proposed instruction not to impose punishment for harm caused to nonparties to the litigation was error. We therefore affirm the judgment as to the finding of liability, the award of compensatory damages, and the finding that Philip Morris was guilty of oppression, fraud, or malice, and reverse the judgment as to the amount of punitive damages, with directions to conduct a new trial limited to determining that issue.”

  • Thanks for the Links

    Thanks to the following blogs for adding California Punitive Damages to their blogroll:

    The California Blog of Appeal

    UCL Practitioner

    Lowering the Bar

    The Volokh Conspiracy

    And a special thanks to Greg May at the California Blog of Appeal for this post and for his helpful advice on our foray into the blogosphere.

    UPDATE (1/30/08 at 1:46 pm): Additional thanks to Rick Hasen at Election Law Blog for this post.

  • Dueling Op-Eds on Punitive Damages

    We previously blogged (here and here) about the California Chamber of Commerce’s (unsuccessful) sponsorship of a bill to impose a ratio-based cap on punitive damages. In support of that bill, Kyla Christofferson, a Policy Advocate with the Chamber, submitted a letter to the editor of the Daily Journal (subscription required).

    Last week, the Consumer Attorneys of California responded with their own Daily Journal letter to the editor. The letter, authored by Don Ernst, president of the Consumer Attorneys, 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.

  • More Punitive Damages Scholarship

    David Bernstein at the Volokh Conspiracy has an interesting post on a recent law review article critical of the Philip Morris v. Williams opinion. The article begins: “The history of the Fourteenth Amendment is one of hierarchy and capitalism. In the Amendment’s first 139 years, courts have consistently used it to perpetuate dominant notions of class and culture–to maintain deeply rooted inequality and resist meaningful changes in the areas of poverty, race, and gender. While the Amendment’s beautiful language and spirit could have been used to ensure quality and meaningful participation in all aspects of a civil community, its words have instead been employed as a tool for just the opposite.”

  • Punitive Damages and the Election

    A survey of the official campaign websites for the six major party candidates for president shows only three that mention punitive damages as an issue in the campaign.

    Governor Romney and Mayor Giuliani indicate they support some form of cap or limitation on punitive damages and Senator Edwards contends that efforts to roll back or limit punitive damages are dangerous. From a search of their official websites, it does not appear that Senator McCain, Senator Clinton, or Senator Obama have taken an official campaign position on punitive damages. None of the candidates seem to provide any detailed legislation they would support regarding the issue of punitive damages.

  • Recent Punitive Damages Scholarship

    California’s appellate courts will soon begin issuing opinions helping to formulate the required jury instructions that will need to be given in light of Philip Morris v. Williams. (See here for a discussion of three pending CA cases on this issue.) A recent article by two Duke Law Professors discusses the nationwide question of how to elucidate specific jury instructions from that opinion: Vidmar, Neil and Wolfe, Matthew W., “Fairness Through Guidance: Jury Instruction on Punitive Damages After Philip Morris v. Williams” . Charleston Law Review, Vol. 2, 2007 Available at SSRN: http://ssrn.com/abstract=1025997

    Abstract:
    Punitive damages present a significant issue in American law. Phillip Morris v. Williams – the United States Supreme Court’s most recent foray into punitive damages litigation – has once again raised procedural and substantive due process matters regarding fairness to defendants and reawakened debate in this area. Proponents of punitive damages argue that the awarding of punitive damages protects the community from wanton or predatory acts – or other behavior that violates social norms – by sanctioning the defendant and sending a general message that the actions are reprehensible and will not be tolerated. Opponents argue that the punitive damage awards by juries have gotten out of hand, and that in addition to being unfair to defendants, they have the potential to put a company out of business or substantially hinder a company’s viability. With so much at stake on both sides, and with the Supreme Court’s frequent intervention in this arena, punitive damage doctrine is primed for clarity and guidance. The purpose of this Article is to provide this clarity and guidance by proposing model jury instructions on punitive damages in light of Phillip Morris and its immediate predecessors.

    The Article proceeds in four parts. Part I introduces the Supreme Court’s debate in Phillip Morris v. Williams, borrowing liberally from the Court’s opinion to establish the current doctrine on punitive damage awards. Part II then analyzes the problem that drafters face in the wake of Phillip Morris in revising model jury instructions. Part III offers some criteria to solve this dilemma, including offering juries written instructions, detailing the Court’s requirements, and defining fairness. Part IV presents a first take on what model jury instructions that meet these criteria might look like. In conclusion, we articulate the next steps in providing jurors with the guidance necessary to make informed and fair decisionmaking vis-à-vis punitive damage awards.

  • Upcoming Exxon Valdez Decision May Have Little Impact Outside Maritime Law

    When the U.S. Supreme Court agreed to review the Ninth Circuit’s latest decision in the Exxon Valdez litigation, the grant of certiorari grabbed headlines mostly because of the $2.5 billion punitive damages award (which was actually a reduction from the $5 billion in punitive damages originally awarded by the jury). But a closer look at the issues and the briefing suggests that the case (scheduled for oral argument on Wednesday, Feb. 27) may have only a limited impact on punitive damages litigation outside the context of maritime law. Exxon’s brief on the merits is focused exclusively on maritime law issues, as are some of the amicus briefs filed in support of Exxon.

    Two of the amicus briefs, one filed by the Washington Legal Foundation and one by the Products Liability Advisory Committee, urge the Supreme Court to take a broader approach and impose limits on punitive damages under federal common law. Even that proposal would have a limited impact, however, as it would not apply to punitive damages imposed under state law.

    One amicus brief, filed by the American Petroleum Institute and others, advocates an even more expansive approach; it asks the court to articulate a universal test for excessiveness that applies not only to maritime cases but to any case posing an excessiveness issue. That approach, if the Supreme Court adopted it, would obviously have a tremendous impact on all punitive damages cases. But recent history, particularly Philip Morris v. Williams, suggests the Roberts Court is more likely to confine its decision to the maritime issues addressed in Exxon’s brief.

  • Senate Committee Rejects Proposed Cap on Punitive Damages

    The Judiciary Committee of the California State Senate held a brief hearing yesterday on SB423 (which we blogged about previously here), a proposal to limit punitive damages to no more than three times compensatory damages. At the conclusion of the hearing, the committee voted 3-2 not to refer the bill to the full Senate.

    Kyla Christofferson, a policy advocate for the California Chamber of Commerce, spoke in favor of the proposal. Also testifying in support of the bill was a former colleague of ours, Jason Weintraub, who is now vice president and general counsel for DRI Companies.

    Testifying against the bill was Christine Spagnoli, president elect of the Consumer Attorneys of California.

  • Article Mulls Practical Effect of Philip Morris v. Williams

    In an article titled “Punitive Damages Shrink as High Court Reins in Trial Lawyers,” Ellis Horvitz predicts that, after Williams, “We will not see the wildly excessive punitive damages sustained at the appellate level, and many will be cut down at the trial level.”

  • Three Pending Cases Involving Application of Philip Morris v. Williams

    Readers of this blog are no doubt aware of the United States Supreme Court’s decision, roughly one year ago, in Philip Morris v. Williams. In a nutshell, the Court held that juries must be instructed not to punish a defendant for conduct towards nonparties. The Court allowed juries to consider harm to nonparties for the limited purpose of evaluating the reprehensibility of the defendant’s conduct, but the Court held that if such evidence is admitted at trial, the court must give a limiting instruction explaining that harm to others is relevant only to reprehensibility and should not be used as a basis for imposing punishment.

    Many commentators complained that the Williams opinion was confusing. The primary complaint was that two aspects of the Court’s holding are fundamentally inconsistent; critics complained that a jury cannot consider harm to others for reprehensibility purposes (which is part of determining the proper degree of punishment) without running afoul of the court’s prohibition against punishing a defendant for harm to others. In our view, the two aspects of Williams are easily reconciled. A jury can consider harm to others in determining whether the defendant’s conduct was reprehensible enough to support a three-to-one ratio versus a one-to-one ratio, but the denominator in the ratio must be the harm to the plaintiff, and cannot include harm to others. For example, if the plaintiff presents evidence that the defendant caused the plaintiff to suffer $100,000 in actual harm, and also presents evidence that the defendant caused similar harm to 9 nonparties, the jury could properly consider the evidence of harm to others in determining that the ratio should be three-to-one instead of one-to-one, but the jury could apply the three-to-one ratio multiplier only to the plaintiff’s actual harm ($100,000), not the total harm allegedly caused to the plaintiff and all the nonparties ($1 million).

    In the near future, the California Court of Appeal may clarify the proper application of Williams. We are aware of three pending appeals in which the defendants are seeking reversal based on Williams. Holdgrafer v. Unocal is pending in the Second Appellate District, Division Six (Ventura). It was argued on May 23, 2007, but the court subsequently accepted two rounds of supplemental briefing and resubmitted the case on December 21, 2007. Buell-Wilson v. Ford Motor Co. is pending in the Fourth Appellate District, Division One (San Diego). It was argued on December 11, 2007. Bullock v. Philip Morris is pending in the Second Appellate District, Division Three (Los Angeles). It was argued December 12, the day after the Buell-Wilson argument. Under the California rule requiring courts to issue an opinion within 90 days after submission, we should see opinions in all three cases by the end of March.

    In Bullock, the court of appeal took the unusual step of inviting the parties to submit names of amici who might be interested in submitting briefs. After receiving lists from both parties, the court invited and received a wide range of amicus briefs on the effect of Williams. Copies of the briefing can be found at this link.

    In the interests of full disclosure, we should mention that the authors of this blog are counsel of record for Unocal in the Holdgrafer appeal and we have an attorney-client relationship with Philip Morris.