In 2012 we reported on a $100 million punitive damages award against ConAgra Foods, Inc. arising out of a fire in a grain elevator. According to Reuters, the U.S. Court of Appeals for the Seventh Circuit has reversed that punitive damages award in its entirety, finding that ConAgra was not liable for the fire. Read the opinion here.
September 16, 2014
September 15, 2014
I'm catching up on punitive damages news after being out of the office last week. While I was out, the AP reported that a jury in New Mexico awarded $2.3 million in compensatory damages and $65 million in punitive damages in a lawsuit alleging that the plaintiff was given a pacemaker he didn't need. That's a ratio in excess of 28 to one, which should not survive post-trial and appellate review.
Also last week, Crain's Cleveland Business reported that a jury in Texas awarded $3.6 million in compensatory damages and $15 million in punitive damages in a mesothelioma case against the Goodyear Tire & Rubber Company. By statute, punitive damages in Texas are capped at the greater of (1) $200,000 or (2) two-times the economic damages, plus an amount equal to the non-economic damages, not to exceed $750,000. So unless the plaintiffs can persuade the Texas courts that the cap is unconstitutional (see the post below), that award won't survive either.
Posted by Curt Cutting at 7:34 PM
Last week, Missouri's high court issued a unanimous published opinion holding that a statutory cap on punitive damages violates the Missouri Constitution.
The statute in question provides that a punitive damages award against a single defendant cannot exceed $5,000 or five times the amount of actual damages, whichever is greater. The Missouri Supreme Court, relying on an earlier decision in which it invalidated a cap on noneconomic damages, struck down the punitive damages cap based on the provision in the Missouri constitution guaranteeing the right to a jury trial.
The opinion rests on the premise that, prior to the adoption of the Missouri constitution in 1820, juries in Missouri had discretion to award punitive damages. When the state constitution was adopted, the clause preserving the right to a jury trial was intended to guarantee the then-existing common law jury trial rights. Therefore, according to the court, the punitive damages statute is unconstitutional because it takes away a plaintiff's right to have a jury award an uncapped amount of punitive damages.
As we have noted in prior posts, most state courts have rejected arguments like this in cases challenging the legality of statutory caps on punitive damages. Typically, courts rule that caps do not violate the right to a jury trial because such a right does not include unlimited punitive damages---the right only ensures that a jury must resolve any underlying factual disputes.
For a list of other states that have disagreed with the approach of the Missouri Supreme Court, see this post by Mark Behrens on the WLF Legal Pulse blog.
August 13, 2014
Court of Appeal holds that defendant's conservators must pay punitive damages award even if wipes out assets of conservatorship (Conservatorship of Parker)
In 2010 we reported on the unpublished opinion in Boothby v. Parker, which affirmed a $350,000 punitive damages award. Four years later, the same litigation has now generated a published opinion.
The new opinion reveals that defendant Parker never paid the punitive damages award against him in the prior proceedings, because a conservatorship was established for him during that litigation. The conservators took the position that, under the Probate Code, the decision to pay the punitive damages award against their conservatee was entirely discretionary, and that they should not be forced to pay a debt that would deprive Parker of funds needed for the necessities of life. The trial court disagreed and ordered the conservators to pay the award.
The conservators appealed and the California Court of Appeal (Second Appellate District, Division Two) affirmed the trial court's order. The court rejected the conservators' reliance on a provision of Probate Code section 2430, which provides that debts occurring during a conservatorship need not be paid if doing so would impair the ability to provide for the necessaries of life. The court concluded that provision was inapplicable because Parker's liability for punitive damages "occurred" when he committed the underlying tort, not when the punitive damages were awarded or affirmed on appeal. Thus, the payment of the debt was mandatory and not discretionary, regardless of whether paying the debt means that the conservators will no longer be able to provide for Parker's basic needs.
It's a harsh result, one that hardly seems consistent with the California cases stating that punitive damages should only punish a defendant, not destroy him financially. The lesson appears to be that attorneys defending a conservatee against a punitive damages claim must demonstrate during the underlying tort litigation the punitive damages award will be financially ruinous to the defendant. Otherwise, the conservators will be bound to pay the award in the future regardless of whatever financial impact it may have.
August 12, 2014
The folks over at Mayer Brown's Guideposts have a new post entitled "To Bifurcate or Not to Bifurcate," discussing whether it is strategically wise for defendants to take advantage of the bifurcation procedure that exists for punitive damages trials in many states, including California. (See Civil Code section 3295(d).)
The post observes that many defense lawyers prefer not to bifurcate the issue of punitive damages into a separate phase of trial. Many defense trial lawyers prefer to avoid a second round of closing arguments before a jury that has already rejected the defendant's arguments on liability and found that the defendant acted with malice.
As Guideposts points out, however, the second phase of trial presents an opportunity for a defense to present evidence that cuts against the need for punitive damages. Such evidence may not have been relevant to the issues of liability, but may become relevant during the second phase. For example, evidence of subsequent remedial measures, changes in corporate culture, or penalties already imposed for the same conduct may persuade the jury that punishment is unnecessary, or that only a small punishment is warranted.
When we touched on this issue in one of our early posts back in 2008, we noted that some California lawyers take the position that when a trial is bifurcated pursuant to section 3295(d), the only relevant evidence for the second phase of trial is evidence of the defendant's financial condition. That argument doesn't make much sense, given that the jury's task in the second phase is to evaluate the reprehensibility of the defendant's conduct. The jury should be able to consider any evidence relevant to the issue of reprehensibility, even if such evidence was not relevant to any issue during the first phase of trial.
Unfortunately, California cases have never squarely addressed that issue. The unpublished opinion we discussed back in 2008 discussed the fact that the defendant presented mitigating evidence during the second phase of a bifurcated trial. But we're still waiting for a published California opinion to address this issue and put to rest the notion that the second phase should focus entirely on the defendant's financial condition.
July 22, 2014
We're saddened to report that law professor Dan Markel, who wrote frequently on the subject of punitive damages, was shot to death in his Florida home last Friday. He was only 41 years old. Apparently, the local police are treating the shooting as a homicide but have not yet identified any suspects. Above the Law has more details.
Prof. Markel wrote a variety of thought-provoking pieces, many of which were discussed on this blog. Indeed, this blog devoted far more attention to his writings than the work of any other legal academic. See posts linked below. He was a terrific legal scholar who will be sorely missed.
Yet more from Prof. Markel on taxing and deducting punitive damages awards
Two new law review articles on taxation of punitive damages
More from Prof. Markel on tax policy and punitive damages
NYT Op-Ed on taxing punitive damages
Prof. Dan Markel responds to criticism of law review article
"Taxing Punitive Damages"
New law review articles on punitive damages
Prof. Dan Markel previews article: "Taxing Punitive Damages"
"Through the Looking Glass: A Respose to Professor Dan Markel's Retributive Damages"
Commentary on Prof. Dan Markel's punitive damages theory
Forthcoming law review article: "How Should Punitive Damages Work?"
Dan Markel invites feedback on retributive damages article
Dan Markel's article on retributive damages
Posted by Curt Cutting at 7:00 AM
July 21, 2014
Surprise, surprise: RJ Reynolds plans to challenge Florida jury's $23.6 billion punitive damages award
Our readers have probably already seen the many news reports about a Florida' jury's award of $23.6 billion in punitive damages to a smoker's widow. Not surprisingly, the Associated Press reports that defendant R.J. Reynolds plans to file posttrial motions and an appeal, if necessary, to fight the award as excessive and unconstitutional.
Also not surprising is that legal pundits are predicting the award is unlikely to stand. "Unlikely" is a bit of an understatement. There is no way that award can survive. The more important question is whether the trial judge will reduce the award or order a new trial. Some commentators are speculating about whether the trial judge or the appellate court will reduce the award to a single-digit multiplier of the compensatory damages award of $16.9 million. Given the enormous size of the award, however, R.J. Reynolds would seem to have a good argument for a complete new trial. I expect they'll be arguing that the jury was obviously influenced by passion and prejudice, and that they are entitled to a new trial before an unbiased jury.
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
Posted by Curt Cutting at 4:14 PM
June 26, 2014
Pennsylvania judge awards $18 million in punitive damages to punish insurer for spending too much in defense fees
The Legal Intelligencer reports that a Pennsylvania judge has awarded $18 million in punitive damages in a long-running insurance bad faith case. According to the article, the plaintiffs sued Nationwide for failing to properly repair their vehicle after an auto accident.
It sounds like the actual damages were slight and the harm was purely economic, but the judge apparently concluded that Nationwide acted in bad faith and engaged in malice by paying $1 million or more in attorney fees to its defense counsel, instead of just paying this small claim. That doesn't seem like a proper basis for liability or punitive damages. The question should be whether Nationwide's handling of the claim was reasonable, not how much Nationwide spent defending the subsequent litigation. In California, case law prevents courts from imposing punitive damages based on a defendant's litigation conduct.
Posted by Curt Cutting at 5:16 PM
June 25, 2014
The Missouri Court of Appeals last week issued an opinion addressing a $320 punitive damages verdict, one of the largest we have seen in recent years. The opinion affirms $80 million in punitive damages against two defendants, while reversing a $240 million punitive damages award against a third defendant. The compensatory damages totaled $38.5 million.
The opinion is 180 pages long, but in a nutshell, the court affirmed the two punitive damages awards based on its conclusion that the defendants, who operated a smelter, acted with extreme reprehensibility when they knowingly disregarded the risk that the smelter would cause lead poisoning to the children nearby residents. The court reversed the punitive damages against the third defendant due to an error in the jury instructions on issue of Missouri partnership law. So the plaintiffs will have an opportunity to re-try that punitive damages claim, and they say they plan to do so.
Posted by Curt Cutting at 6:21 PM
Interested in punitive damages in maritime cases? If so, check out this article by the folks at Blank Rome. It summaries how the U.S. Supreme Court's 2009 decision in Atlantic Sounding v. Townsend has created uncertainty about the availability of punitive damages in various types of maritime cases.
Fifth Circuit grants rehearing to address availability of punitive damages in seaworthiness cases
Icicle Seafoods: cert. denied
Posted by Curt Cutting at 3:57 PM