July 16, 2019

Federal judge reduces Roundup punitive damages (Hardeman v. Monsanto)

Law 360 reports that U.S.District Judge Vince Chhabria has reduced a $75 million punitive damages award to $20 million in a Roundup-based lawsuit against Monsanto.  The compensatory damages are roughly $5.2 million.

[Disclosure: Horvitz & Levy represents Monsanto in Roundup litigation]

July 13, 2019

Court of Appeal affirms order that vacated $340 million punitive damages award against Johnston & Johnson (Echeverria v. Johnson & Johnson)

Two years ago a Los Angeles jury awarded $417 million, including $347 million in punitive damages, to a woman who claimed she developed ovarian cancer from talc in Johnson & Johnson's Baby Powder.  The trial court tossed out the punitive damages award, finding that the plaintiffs presented no clear and convincing evidence of malice, fraud, or oppression.

A few days ago, the Court of Appeal (Second District, Division Three) issued this published opinion affirming the trial court's ruling on punitive damages.  It's an important decision because it deals with a factual scenario that arises frequently in California punitive damages litigation.  The basic facts go something like this:

A manufacturer sells a product at a time when someone has posited that an ingredient in the product may increase the risk of cancer, but the issue is a question of scientific debate.  The plaintiff uses the product and develops cancer, and seeks punitive damages from the manufacturer on theory that it consciously disregarded a possible risk to human health.

The Court of Appeal explains that such evidence cannot support punitive damages, which must be based on a showing that the defendant was aware of probable dangerous consequences of its conduct.  For punitive damages purposes, it is not enough that someone somewhere identified a possible risk from the defendant's product.  If the scientific community had not reached agreement on whether there was an actual risk, then the defendant did not act with malice by selling the product.

So in this case, where the connection between talc and ovarian cancer remains under scientific investigation, the Court of Appeal said the jury could have reasonably concluded the defendant was negligent, but no reasonable jury could find by clear and convincing evidence that the defendant committed the sort of "despicable" conduct that warrants punitive damages.

Significantly, the court explained that scientific studies issued after the plaintiff's injury could not be used to prove the defendant's state of mind before the product was sold.  "Scientific evidence developed post-injury did not create a reasonable inference that [the defendant] was acting with malice, pre-injury, in failing to warn of probable dangerous consequences of the product."

While it may seem obvious that studies released in 2013 cannot shed light on a defendant's state of mind in the 1960s, California case law on this issue has been somewhat unclear.  This decision may help dispel some of that confusion.

Ventura County jury awards $10 million in punitive damages against Sriracha maker

The LA Times reports that a jury awarded $13.3 million in compensatory damages and $10 million in punitive damages against Huy Fong Foods, Inc., the maker of Sriracha sauce. 

The plaintiff is Underwood Ranches, who had supplied Huy Fong with jalapeno peppers.  Underwood claimed they suffered dramatic losses when Huy Fong abruptly terminated their contract.  The story doesn't explain the basis for punitive damages, which ordinarily aren't available in contract disputes.

July 12, 2019

Court of Appeal reverses ruling in which trial court blamed himself for plaintiffs' failure to introduce financial condition evidence (Tran v. Lam)

The California Court of Appeal commonly reverses punitive damages awards when a plaintiff fails to present meaningful evidence of the defendant's ability to pay.  This unpublished opinion falls into that category, but with an unusual wrinkle.

During trial, plaintiffs' counsel made some effort tried to introduce evidence of the individual defendants' finances, by asking them about their historic earnings.  The trial court sustained  relevance objections to those questions.  Plaintiffs' counsel thereafter made no further efforts to introduce evidence of the defendants' finances.

After the jury ruled for the plaintiffs and awarded punitive damages, the defendants moved to vacate the punitive damage award on the ground that the plaintiffs had failed to introduce any evidence of the defendants' finances.  The trial court agreed the plaintiffs had presented no such evidence, but denied the defense motion because he blamed himself for the lack of evidence. 

The judge explained that he had sustained the defendants' objections on two grounds: (1) the defendants' earnings from fifteen years earlier were too remote in time to be relevant, and (2) the court mistakenly thought that the trial had been bifurcated so that financial condition would be presented only in the second phase of trial.

The court was correct on the first ground.  For punitive damages purposes, only the defendants' finances at the time of trial are relevant.  But the court was wrong on the second ground.  The defendants had not asked for bifurcation. 

The trial court concluded that, because of his own confusion regarding bifurcation, the plaintiffs had not received a full and fair opportunity to present their case regarding the defendants' financial condition.  So the court granted the plaintiffs a new trial on the issue of punitive damages
and denied the defendants' motion for judgment notwithstanding the verdict.

The defendants appealed and the Fourth Appellate District, Division Three, reversed. It found that the trial court did nothing to prevent the plaintiffs from meeting their burden of presenting financial condition evidence.  The court correctly sustained objections to questions that did not seek current financial condition, and the matter never came up again.  Although the court may have believed that the trial was bifurcated, and based on that mistake the court would have sustained objections to other questions about financial condition, the court never explained that to plaintiffs' counsel, who simply failed to ask any further questions on the issue. 

So in the end, the Court of Appeal concluded that the lack of evidence was the plaintiffs' own fault.  The court reversed the order granting a new trial and directed the trial court to enter a new judgment in favor of the defendants on the issue of punitive damages.

July 6, 2019

Ohio trial court reduces punitive damages against Oberlin from $33 million to $18.8 million

We previously reported on the punitive damages awarded against Oberlin college for libel, and the fight between the parties on how to apply Ohio's cap on punitive damages.  The trial court appears to have adopted the plaintiffs' argument that the cap, which limits punitive damages to twice the amount of compensatory damages, applies to the amount of compensatory damages awarded by the jury, not the amount of compensatory damages after reduction of those damages due to a separate cap on noneconomic damages.

As a result, the court has entered a judgment in the amount of $25 million.  The jury awarded $44.2 million and the college was seeking to have it reduced to $14.2 million.

View the judgment here (link courtesy of Legal Insurrection).

June 28, 2019

Supreme Court grants cert. to decide whether $4.3 billion punitive damages award should be reinstated (Opati v. Republic of Sudan)

We have reported several times about huge punitive damages awards against foreign governments based on acts of state-sponsored terrorism.  (See here, here, and here.)  These awards are typically entered by default, because the defendant countries usually do not appear to defend themselves.  And to my knowledge the plaintiffs have not had any success on collecting on these judgments.

Once such award occurred in this case: a federal district court awarded $6 billion in compensatory damages and $4.3 billion in punitive damages against the government of Sudan for its complicity in the 1998 attacks on the U.S. embassies in Kenya and Tanzania that killed 224 people.  Sudan eventually appeared in the case and appealed the judgment.

In 2017 the D.C. Circuit upheld Sudan's liability but vacated the punitive damages.  The court ruled that the plaintiffs could not recover punitive damages under the 1976 Foreign Sovereign Immunities Act (FSIA), because when Congress amended the statute to permit claims against state sponsors of terrorism, it did not expressly authorize recovery of punitive damages in lawsuits over conduct that predated the amendment.

The plaintiffs filed a cert. petition, which the Supreme Court granted today.  The Court's order limits review to the second issue raised in the petition: whether the FSIA applies retroactively, permitting punitive damages against foreign states for terrorist activities occurring prior to the passage of the current version of the act.

The decision in this case will obviously have an impact on the various other punitive damages cases involving state-sponsored terrorism, but it may not have much application outside that context.

June 26, 2019

Oberlin College case triggers fight about Ohio's cap on punitive damages

We haven't yet written about the Ohio jury verdict awarding $33 million in punitive damages against Oberlin College, in a defamation case brought by a family-owned bakery.

For those who haven't heard about this case, The ABA Journal summarizes the basic facts: the bakery owners "sued the college and the dean of students after a shoplifting incident led to allegations the business practiced racial profiling. The allegations prompted student protests, which the family said was supported by the college."

We're not going to get into the political ramifications of that case.  You can find plenty of that elsewhere.  Rather, we're going to focus on a more nuts-and-bolts legal issue, namely, how Ohio's legislative cap on punitive damages will apply to the case.

First, a little background.  Ohio passed a cap on punitive damages back in the 1990s, but the Ohio Supreme Court struck that cap down as unconstitutional.  The state legislature tried again in 2004 and this time, after some change in personnel on the Supreme Court, the statute was upheld.

The statute limits non-economic damages to $350,000 and limits punitive damages to three times the amount of compensatory damages.  In this case, the parties dispute whether the punitive damages cap should be applied to the jury's full award of compensatory damages, or to the compensatory damages award after it has been reduced to comply with the cap.  They also dispute whether the caps apply to each individual cause of action for which relief was granted, or to the aggregate damages awarded.

The answers to these questions make a big difference in the ultimate outcome of the case.  According to Oberlin College's brief (link courtesy of Legal Insurrection), proper application of the caps results in a total award of just over $14.3 million.  According to the plaintiffs' brief, they are entitled to $25 million after the caps are applied.

However the trial judge resolves the issue, the case seems destined for appellate review.

UPDATE: (6/27/19): The plaintiffs have now filed a brief (link courtesy of Legal Insurrection again) arguing that application of the punitive damages cap in this case would be unconstitutional.  As noted, the Ohio Supreme Court already rejected a constitutional challenge to the statute, but the plaintiffs here argue that the Supreme Court's decision in that prior case held only that the statute was constitutional on its face, and left open the possibility that the statute might be still be unconstitutional as applied to a particular case.   

June 25, 2019

Supreme Court reverses Ninth Circuit, holds that punitive damages are unavailable under maritime law for claims of unseaworthiness (Dutra Group v. Batterton)

The Ninth Circuit created a circuit split last year when it held that punitive damages are available under general maritime law for personal-injury unseaworthiness claims (i.e., claims that a vessel owner willfully and wantonly failed to provide a vessel reasonably fit for its intended purpose, resulting in personal injury).

Yesterday, the Supreme Court reversed the Ninth Circuit in a 6-3 decision written by Justice Alito (with Justices Ginsburg, Breyer, and Sotomayor dissenting).   

Justice Alito based his majority opinion on two grounds: (1) "overwhelming historical evidence" indicating that punitive damages have not been available for personal-injury unseaworthiness claims, and (2) the need to preserve a parallelism between maritime common law and maritime statutory law (the Jones Act), which generally limits a seaman's damages to pecuniary losses.

Justice Alito had to distinguish the Court's 2009 in Atlantic Sounding v. Townsend, which allowed recovery of punitive damages under the Jones Act and general maritime law for willful and wanton failure to provide "maintenance and cure" (a term of art referring to a vessel owner's obligation to provide food, lodging, and medical services to injured seamen).  The majority opinion in Atlantic Sounding relied on historical evidence that punitive damages were traditionally available in maintenance and cure cases.  Justice Alito found no such evidence supporting recovery of punitive damages for unseaworthiness.  Interestingly, Justice Thomas, who wrote the majority opinion in Atlantic Sounding, signed on to Justice Alito's opinion in Dutra.

The opinion is not likely to have any impact outside the maritime context. 

June 1, 2019

New York jury awards $300 million in punitive damages against Johnson & Johnson in talc case

The Wall Street journal reports that a New York jury has awarded $300 million in punitive damages, on top of $25 million in compensatory damages, to a woman who claimed she developed mesothelioma from using Johnson & Johnson's baby powder, which she alleges contained asbestos-contaminated talc.

May 22, 2019

Court of Appeal affirms $1M in punitive damages and furthers split of authority on clear-and-convincing standard of proof (Mazik v. Geico)

This published opinion is a likely candidate for California Supreme Court review.

This is an insurance bad faith case in which a jury awarded compensatory damages of $313,508 and punitive damages of $4 million against GEICO for unreasonably failing to pay its policyholder the policy limits of $50,000 under an underinsured motorist policy.  The trial court reduced the punitive damages to $1 million.  GEICO appealed only the punitive damages award.

GEICO argued that evidence was insufficient to to show that any managing agent of GEICO participated in or authorized an act of malice, fraud, or oppression, as required by Civil Code section 3294.

The Court of Appeal (Second District, Division Two) began its analysis by considering whether the clear-and-convincing standard of proof affects appellate review of the sufficiency of the evidence.  As we have noted, California's appellate courts have split on this issue and the California Supreme Court recently granted review to resolve the split

The Court of Appeal here decided to disregard the clear-and-convincing standard for purposes of  appellate review.  In so doing, the court cited a 1973 Supreme Court opinion (Crail v. Blakely), but did not discuss some of the more recent cases or acknowledge that the issue is currently pending before the Supreme Court.

The court's decision on the standard of review issue appears to be pivotal to its analysis of the merits.  The court concluded that the plaintiff's evidence was sufficient, based in large part on inferences that the jury might have drawn from equivocal evidence.  For example, the court discussed evidence that claims adjusters at GEICO, who were not managing agents, cherry-picked evidence from the plaintiff's medical files to justify their decision not to pay his claim.  They prepared evaluations that minimized the plaintiff's injuries, while ignoring evidence to the contrary.  There was no direct evidence, however, that GEICO's managing agent (a regional liability administrator) knew about the information that the adjusters omitted from their reports.  The Court of Appeal concluded, however, that the jury could have inferred the managing agent's knowledge of that information based on evidence that he had "more than a passing familiarity" with the claim. 

Had the Court of Appeal taken the clear-and-convincing evidence requirement into account, it might have reached a different conclusion.  Cases applying that standard have held that equivocal evidence is not sufficient to qualify as clear and convincing---when the evidence is equally consistent with ordinary negligence as with malice, the plaintiff has failed to show malice by clear and convincing evidence.

There's a good chance that if GEICO petitions the California Supreme Court for review, the court will grant review and decide it along with the currently pending case on this issue (or hold this case pending the resolution of the other case).