May 19, 2015

Supreme Court declines to review Fifth Circuit decision that disallowed punitive damages in unseaworthiness cases (McBride v. Estis Well Service)

Last year we reported on this en banc Fifth Circuit opinion, which held that punitive damages are not available under the Jones Act or general maritime law for a defendant's failure to maintain a seaworthy vessel.

Yesterday, the Supreme Court denied the cert. petition filed on behalf of the injured seamen in that case.  You can view the Court's online docket here.

Bloomberg BNA has full coverage.

May 14, 2015

Ninth Circuit wipes out $75 million punitive damages award against defense contractor

A few years ago we reported on this $75 million punitive damages award against defense contractor Kellog Brown & Root for conduct that took place in Iraq.  Today, the Ninth Circuit vacated that award in its entirety.
Members of the Oregon National Guard sued KBR in federal district court in Oregon, seeking recovery under Oregon law.  The plaintiffs blamed KBR for causing them to be exposed to hexavalent chromium in Iraq.  A jury awarded over $80 million in damages, including $75 million in punitive damages.  KBR appealed to the Ninth Circuit and our firm filed an amicus brief, arguing that the Constitution prohibits imposition of punitive damages under state law for conduct that occurred solely in a foreign country.

Today the Ninth Circuit issued a memorandum disposition reversing the judgment.  The Ninth Circuit didn't reach the question of extraterritorial punishment.  Instead, it reversed the judgment on the ground that KBR is not subject to personal jurisdiction in Oregon because KBR did not engage in any acts expressly aimed at Oregon.  The fact that KBR engaged in conduct towards members of the Oregon National Guard was not sufficient to create jurisdiction in Oregon.

May 4, 2015

Amicus briefs support SCOTUS review of West Virginia punitive damages award (Quicken Loans v. Brown)

Last week the U.S. Chamber of Commerce and the Washington Legal Foundation filed amicus briefs asking the Supreme Court to once again provide guidance on issues that arise when a court reviews (or in this case, declines to review) a punitive damages award for excessiveness.
In the case of Quicken Loans v. Brown, the plaintiff sued Quicken Loans for fraud, claiming it lent her more money than her house was worth.  A jury awarded $2.17 million in punitive damages and $17,500 in compensatory damages, a ratio of 124 to 1.  The plaintiff also recovered over $596,000 in fees and costs, which the trial court cited during post-trial proceedings as a basis for upholding the punitive damages award.  

Quicken Loans appealed to the West Virginia Supreme Court, raising a constitutional challenge to the size of the punitive damages award.  The court never reached that issue because it reversed the judgment on other grounds.  The case went back to the trial court, which entered a new judgment that increased both the compensatory and punitive damages. 

Quicken Loans appealed again, and the West Virginia Supreme Court invalidated the part of the trial court's order that increased the damages.  The Supreme Court ordered the original amounts reinstated, but declined (by a 3-2 vote) to review the amount of the punitive damages.  The majority said Quicken Loans had waived the issue by not raising it in the first appeal.  The dissenting opinion pointed out, however, that the "one of the petitioner's most significant assignments of error [in the first appeal] was that the punitive damages award was 'grossly excessive.'"  For whatever reason, the justices in the majority did not see it that way.

Quicken Loans has now petitioned for certiorari, raising these two issues:

1.  Whether a state court may evade its obligation to apply the United States Constitution and this Court's cases by asserting that expressly and pervasively raised federal constitutional claims were purported waived.

2.  Whether, in applying the punitive to compensatory damages ratio of State Farm v. Campbell [citation], court awarded attorney's fees are properly included as compensatory damages?

The Supreme Court has had many opportunities to delve back into this area in recent years, including other cases raising the second issue presented here (treatment of attorney's fees as compensatory damages for ratio purposes), but the justices haven't seemed interested.  Perhaps the unusual procedural history of this case will grab their attention.

WLF's amicus brief is available at this link.


April 28, 2015

Ninth Circuit affirms punitive damages award against UPS; verdict was the fifth largest in California in 2012 (Marlo v. UPS)

By our count, the $15.9 million punitive damages award in Marlo v. UPS was the fifth largest punitive damages verdict in California in 2012.  The district court reduced that award to $6.6 million, which was still three times the amount of compensatory damages.

The Ninth Circuit has affirmed the reduced award in this memorandum disposition, by a vote of two to one.  The memorandum is short on analysis, as such dispositions typically are.  It doesn't explain what sort of conduct warranted such a large award.  It does explain, however, that the UPS vice president who committed the misconduct had sufficient policymaking authority that he qualified as a "managing agent" under Civil Code section 3294.

The memorandum ends with the conclusory statement that the amount of the award, as reduced, is not constitutionally excessive.  It contains no explanation of why a one-to-one ratio is not the maximum permissible ratio in this case given the substantial punitive compensatory damages award. (See State Farm v. Campbell and Roby v. McKesson.)

The dissenting opinion by James G. Carr, a senior district judge sitting with the Ninth Circuit by designation, is even more terse.  It says, in its entirety:

Respectfully, and aware of my lesser familiarity with California law relating to managing agents, I dissent.
Yes, that's the same Judge Carr who wrote the order we blogged about yesterday, vacating a $20 million punitive damages award against Philip Morris.   

April 27, 2015

Federal judge vacates smoker's $20 million punitive damages award

A federal judge in Florida has issued an order vacating a $20 million punitive damages award against Philip Morris.

In one of the many Engle-progeny cases in Florida (see links below for more stories on this ongoing saga), the plaintiff in this case sued on theories of negligence, strict liability, fraudulent concealment, and conspiracy.  A jury awarded $6.25 million in compensatory damages, plus $20 million in punitive damages based on the fraud and conspiracy claims.

Judge James G. Carr, a senior district judge from Ohio sitting by designation in the Middle District of Florida, ruled that Philip Morris is entitled to judgment as a matter of law on the fraud and conspiracy claims because the plaintiff failed to prove that she actually relied on any misrepresentations when she decided to smoke, or when she decided to switch to "light" or filtered cigarettes.  Because the fraud and conspiracy claims were the sole basis for punitive damages, Judge Carr ordered judgment for Philip Morris on that issue.

If I'm reading the order correctly, there's still a chance the judge may order a new trial on the plaintiffs' negligence and strict liability claims, based on the 11th Circuit's decision in a case called Graham v. R.J. Reynolds.  I won't get into that here, because Graham raises preemption issues that are beyond the scope of this blog.

Related posts:

Another large verdict in Florida smoker litigation

Florida jury awards $14 million in punitive damages to smoker's family

 Florida jury awards smoker's family $22.5M in punitive damages

Florida appellate court reverses $79 million judgment in tobacco case
Florida appellate court reverses $40 million punitive damages award in tobacco case

Philip Morris wins sixth straight trial in Florida smoker litigation

Florida jury awards relatively modest punitive damages in smoker lawsuit

Another punitive damages award in Florida tobacco litigation

Florida jury awards $20 million in punitive damages to smoker's widow

Smoker's widow wins $12.5 million in punitive damages

Florida trial judge cuts $244 million punitive damages award

Florida jury awards $25 million in punitive damages to smoker's widow

"Smokers, tobacco, both winners in early Engle cases"

Jury rules for plaintiff in first phase of retrial after reversal of $145 billion punitive damages award

After reversal of $145 billion class action punitive damages award, Florida smokers seek punitive damages in individual suits

April 14, 2015

Court of Appeal affirms reduction of punitive damages to a 1-to-1 ratio (Banks v. General Atomics)

A few years ago, we observed a mini-trend of California courts reducing punitive damages to match the amount of the compensatory damages, at least in cases involving substantial compensatory damages awards.  That trend reached its peak in 2009 when the California Supreme Court imposed a 1-to-1 ratio in Roby v. McKesson.

Ironically, we haven't seen many 1-to-1 ratios from the California Court of Appeal in the years since Roby.  But in this unpublished opinion, the Court of Appeal (Fourth District, Division One) affirms a trial court's decision that ordered a remittitur of a punitive damages award from $5.8 million to $2.9 million, resulting in a 1-to-1 ratio.

The plaintiff argued on appeal that the trial court went too far in imposing a 1-to-1 ratio.  The plaintiff pointed to provisions in the Labor Code authorizing double damages for comparable misconduct, and cited the U.S. Supreme Court's statements that courts should defer to legislative judgments regarding the appropriate level of punishment (see State Farm v. Campbell at p. 528). According to the plaintiff, "[Labor Code] section 972's penalty of double damages contemplates the precise 2-to-1 ratio of punitive to compensatory damages the jury originally awarded."

That argument backfired.  The Court of Appeal agreed with plaintiff that Labor Code section 972 offers an appropriate analogy, but the court observed that the plaintiff's math was wrong.  Double damages result in a 1-to-1 ratio, not a 2-to-1 ratio.  Therefore, the Court of Appeal concluded that the Labor Code only provided further support for the trial court's imposition of a 1-to-1 ratio.

April 13, 2015

Breaking news: Court of Appeal reverses $21 million punitive damages award in published opinion (Doe v. The Watchtower Bible and Tract Society)

A few years ago we reported on a $21 million punitive damages award in a sexual abuse case against a congregation of Jehovah's Witnesses and that group's nationwide organization.  The Court of Appeal's online docket indicates that the court (First Appellate District, Division Three) has reversed the award in a published opinion.  The court hasn't yet released its opinion.  Stay tuned.

UPDATE (3:45 pm): the opinion is now available here.  More details to follow.

APRIL 14 UPDATE:  The opinion reveals that the Court of Appeal vacated the punitive damages award because the award rested entirely on a failure-to-warn theory, and the court ruled that the defendants owed no duty to warn.  So the court never reached the question of whether the award was supported by evidence of malice, nor did the court have any occasion to address the size of the award (which had already been reduced from $21 million to $8.6 million as the result of the defendant's post-trial motions in the trial court).

March 31, 2015

Philadelphia jury awards $38.5 million in punitive damages against security firm for inaction of security guards

The Philadelphia Inquirer reports that a jury has awarded $38.5 million in punitive damages and $8 million in compensatory damages (a 4.81-to-1 ratio) to the families of two women who were shot and killed by a disgruntled employee at a Kraft Foods plant. 

The defendant, U.S. Security Associates, Inc., provided security guards for the plant.  According to the Inquirer story, the plaintiffs presented evidence that the company's two unarmed security guards ran away from the armed gunman and failed to alert the plant workers to the danger. 

The jury awarded punitive damages not against the individual security guards, but against their employer.  The company says it will appeal.  Based on my very limited knowledge of the case (and even more limited knowledge of Pennsylvania law), I expect the company to argue that punitive damages cannot be imposed against an employer for the misconduct of low-level employees, without some evidence of wrongdoing by corporate management.  If the plaintiffs presented evidence that this incident was the result of corporate policy, as opposed to just the rogue acts of a couple of security guards, the article doesn't mention it.

March 19, 2015

Big punitive damages awards that will never be paid

Yesterday, Courthouse News reported on an award of $14 million in punitive damages against the government of Sudan for its role in the terrorist bombing of the USS Cole.

Today, Arkansas Online reported a $105 million punitive damages award against a doctor who injured the former chairman of the Arkansas State Medical Board in a bomb attack.

These awards express strong condemnation of the conduct at issue, but they are largely symbolic. The defendant in the Arkansas case is in jail and probably can't pay much of the $17.5 million compensatory damages award against him, let alone $100 million in punitive damages.  And good luck collecting anything from Sudan.  We have reported on many big punitive damages verdicts against foreign governments in cases involving terrorism, including a $6 billion award for the September 11 attacks, but we have yet to see any indication that the defendants in these cases ever pay a penny.  If anyone knows of a plaintiff who was able to collect on such an award, we'd love to hear about it.

March 18, 2015

Court of Appeal affirms trial court order that vacated $15 million punitive damages award against Donald Sterling

A few years ago we blogged about this case in which actress Robyn Cohen won a $17.3 million judgment against Donald Sterling, former owner of the Los Angeles Clippers.

The plaintiff, who is best known for appearing with Bill Murray in The Life Aquatic with Steve Zissou, claimed that a fire in her Sterling-owned apartment building caused her emotional distress and derailed her acting career. As noted in our prior post, the trial court ruled that one of the plaintiff's substantive claims was not supported by the evidence, and the court ordered a complete new trial on all the remaining claims because he could not determine the extent to which the unsupported claim influenced the jury.

Yesterday the California Court of Appeal (Second Appellate District, Division Five) issued an unpublished opinion affirming the trial court's order.  The opinion illustrates how difficult it is to overturn a new trial order.  The Court of Appeal explained that the plaintiff had to show that the record provided no possible basis for granting a new trial.  She could not meet that burden because the jury's verdict did not reveal what conduct was the basis for the jury's punitive damages award.  The trial court properly ordered a complete new trial on all issues, rather than a retrial limited to punitive damages, because a second jury could not properly assess punitive damages without knowing what specific conduct the first jury thought supported liability, or what specific conduct the first jury thought was punishable.

Full disclosure: Horvitz & Levy represented Sterling in the post-trial motions and on appeal.