October 17, 2017

Missouri appellate court reverses $62 million punitive damages award in talc case, finding no jurisdiction (Fox v. Johnson & Johnson)

The St. Louis Post-Dispatch reports that the Missouri Court of Appeals has reversed a judgment awarding $62 million in punitive damages and $10 million in compensatory damages against Johnson & Johnson, in a case in which the plaintiffs claimed that the company's talc products cause ovarian cancer.

The opinion is a mere six pages.  The court notes that Missouri courts previously had a practice of allowing out-of-state plaintiffs to pursue claims in Missouri, including products liability cases involving products purchased outside Missouri.  The U.S. Supreme Court's opinion in Bristol-Myers Squibb disapproved that practice (reversing the California Supreme Court) so . . . case dismissed.  Presumably, the other three Missouri talc verdicts against Johnson & Johnson will see a similar fate.

Related posts:

L.A. jury awards $347 million in punitive damages against Johnson & Johnson in talc case

Johnson & Johnson gets hit again for punitive damages in Missouri talc litigation

Johnson & Johnson hit for $65 million in punitive damages in third big talc verdict

Johnson & Johnson hit with another big punitive damages award in Missouri over talc-based powder products

Johnson & Johnson vows to appeal $1 billion punitive damages award in hip implant case 

October 12, 2017

Ninth Circuit affirms $2 million punitive damages award in employment case (Flores v. City of Westminster)

The Ninth Circuit issued this published opinion yesterday, affirming punitive damages in excess of $2 million and compensatory damages of $855,000.  The plaintiffs were three Latino police officers who alleged that the City of Westminster discriminated against them.

The case actually involved nine separate punitive damages awards, because each of the three plaintiffs recovered punitive damages from each of the three defendants.  The ratios of punitive damages to compensatory damages ranged from a low of 1:8 to a high of 8:1.  The court found that none of these ratios violated due process, in light of the highly reprehensible nature of the defendants' conduct.

One interesting wrinkle is that one of the defendants died before trial. California law governs the question whether the punitive damages claim against that defendant survived his death, and the general rule is that punitive damages are not available against a decedent's estate.  However, the Ninth Circuit observed that defense counsel agreed to submit the punitive damages claim to the jury despite the defendant's death.  The court seems to be suggesting that the defense might have forfeited the issue, but instead of addressing that question squarely, the Ninth Circuit remanded the case to the district court to decide the recoverability of punitive damages from the decedent's estate.


October 4, 2017

Governor Brown vetoes bill to lower standard of proof for punitive damages claims in some Elder Abuse cases (AB 859)

We previously reported that the Legislature approved Assembly Bill 859, which would have lowered the burden of proof for plaintiffs seeking punitive damages in certain Elder Abuse cases, but only after a finding that the defendant had engaged in spoliation of evidence.  Governor Brown vetoed that bill this week.  His veto statement explains that the bill is unnecessary because existing law already provides remedies for spoliation of evidence. 

September 28, 2017

Dallas jury awards $4 billion in punitive damages against JPMorgan Chase

The Dallas Business Journal reports that a jury has awarded $4.6 million in compensatory damages and $4 billion in punitive damages against JPMorgan Chase in a probate case.  According to the story, the plaintiffs claimed that JPMorgan fraudulently and maliciously mishandled the estate of American Airlines executive Max Hopper.

This wildly excessive award cannot possibly survive post-trial and appellate review.  An 870-to-one ratio of punitive damages to compensatory damages raises obvious constitutional excessiveness problems.  Aside from that, a Texas statute caps punitive damages at the greater of (1) $200,000 or (2) two times the amount of economic damages; plus an amount equal to any noneconomic damages found by the jury, not to exceed $750,000.

September 22, 2017

California Legislature passes bill to relax burden of proof for punitive damages in narrow category of cases

Although California juries are known to hand out hefty punitive damages, California law actually contains quite a few safeguards against arbitrary and irrational punitive damages awards. That's why many of the headline-grabbing awards are later reduced or vacated by the courts.  Perhaps, however, our Legislature is starting to chip away at those safeguards.

Both houses of the Legislature have voted to approve AB-859, which now heads to the governor for signature.  The bill lowers the burden of proof for punitive damages claims in a limited category cases: Elder Abuse claims against skilled nursing facilities that have engaged in spoliation of evidence.  If the governor signs the bill, punitive damages in such cases will now be governed by the "preponderance of the evidence" standard of proof, instead of the more stringent "clear and convincing evidence" standard.

On its face, this modification may seem insignificant.  It only applies to skilled nursing facilities, only in Elder Abuse cases, and only where spoliation of evidence has been established.  How many cases like that can there be?  Some might call this bill a nothingburger.  On the other hand, any step towards eroding the safeguards in California punitive damages law is cause for alarm for all defendants.

August 30, 2017

Court of Appeal reduces compensatory damages and orders matching reduction in punitives (Pulte Home v. American Safety Indemnity)

This published opinion issued today addresses a recurring issue in California punitive damages litigation: when an appellate court significantly reduces a compensatory damages award, what should the court do with a punitive damages award?

The best way to handle this situation is to order a re-evaluation of the punitive damages in the trial court. That means a new trial is necessary if the punitive damages were awarded by a jury.  If the punitive damages were awarded by the trial court, the Court of Appeal should send the case back to the trial judge for reconsideration.  That approach preserves the defendant's right to have the trier-of-fact assess punitive damages based on actual harm caused to the plaintiff.  Some California appellate decisions, like this one, have followed that approach.

The second-best approach is to direct the trial court to reduce the punitive damages to match the original ratio of compensatory to punitive damages.  That's the approach taken by the Court of Appeal (Fourth Appellate District, Division One) in today's Pulte Home case.  It determined that the trial court erred in calculating the compensatory damages, so it sent the case back to the trial court to recalculate the compensatory damages and then reduce the punitive damages to preserve the 1-to-1 ratio of the original award.  Although that approach maintains the original ratio, it deprives the defendant of the right to have the jury (or judge) determine whether a lesser ratio is more appropriate, in light of the fact that the harm was not as severe as originally thought.

By far the worst approach is for the Court of Appeal to simply affirm the punitive damages, without respecting the original ratio or giving the trier of fact the opportunity to determine whether a different punishment is appropriate. Unfortunately, our courts have sometimes adopted that approach, both in published and unpublished opinions.

Some day the California Supreme Court will sort this out.  We hope.  

August 21, 2017

L.A. jury awards $347 million in punitive damages against Johnson & Johnson in talc case

Reuters reports that a jury in Los Angeles today awarded $417 million in damages, including $347 million in punitive damages, against Johnson & Johnson.

This verdict follows on the heels of four other large verdicts against Johnson & Johnson in Missouri, all based on claims that the company's talc products cause ovarian cancer.  A fifth case ended in a defense verdict.

This verdict is the third-largest verdict of the year nationwide, according to Bloomberg.

Related posts:

Johnson & Johnson gets hit again for punitive damages in Missouri talc litigation

Johnson & Johnson hit for $65 million in punitive damages in third big talc verdict

Johnson & Johnson hit with another big punitive damages award in Missouri over talc-based powder products

Johnson & Johnson vows to appeal $1 billion punitive damages award in hip implant case 

July 2, 2017

California Supreme Court will decide availability of punitive damages under nursing home statute (Jarman v. HCR Manor Care)

The California Supreme Court has granted review in Jarman v. HCR ManorCare, a case involving the availability of punitive damages under Health & Safety Code section 1430, subdivision (b).  That statute gives nursing home residents the right to bring a lawsuit for violations of their rights, but authorizes only limited remedies: injunctive relief, attorneys' fees and costs, and a penalty of up to $500.

Here are the questions presented, as framed by the defendant's petition for review:

  1. Does Section 1430(b) authorize a maximum award of $500 per "cause of action" in a lawsuit, as held below, or $500 per lawsuit, as held in [two previous Court of Appeal decisions] Nevarrez and Lemaire
  2. Does Section 1430(b) authorize an award of punitive damages?
Although the statute applies only to skilled nursing facilities, it could potentially have a broader impact because the statute is similar to statutes governing other types of facilities, including hospitals.

And there's another issue lurking in the case, having to do with California's "managing agent" requirement.  As we have discussed before, Civil Code section 3294 provides that corporations cannot be liable for punitive damages based on the acts of low-level corporate employees.  A corporation can be punished only if the wrongdoing was committed (or authorized or ratified) by an officer, director, or managing agent.  The Court of Appeal in Jarman concluded that the defendant's director of nursing qualified as a managing agent because she had direct responsibility for ensuring patient care at the facility.  But the Supreme Court has held that a corporate employee does not qualify as a managing agent unless he or she has the authority to create company policy, not just implement company policy.  Because Jarman seems to be a significant departure from that precedent, it is possible that the Supreme Court may address the managing agent issue in the course of its punitive damages analysis.

Click here to view the online docket in Jarman and track ongoing developments.

Disclosure: Horvitz & Levy LLP filed an amicus letter in support of the defendant's petition for review.

June 17, 2017

Trial court improperly weighed evidence when granting JNOV on punitive damages (Swendrak v. Urode)

The case involves an odd set of facts.  The plaintiff claimed that his landlords invaded his privacy by posting a notice in his apartment complex informing all the tenants that the police had placed him under a psychiatric hold.  A jury awarded him $200,000 in compensatory damages and $650,000 in punitive damages.

The defendants moved for judgment notwithstanding the verdict (JNOV), arguing that the evidence did not support the jury's finding that they acted with malice. The trial court agreed, finding that "the weight of the evidence did not support a finding of malice by clear and convincing evidence."

The Court of Appeal (Second Appellate District, Division Three) reversed in an unpublished opinion, finding that the trial court applied the wrong standard when reviewing the evidence.  When a trial court rules on a JNOV motion, the court is not permitted to re-weigh the evidence.  The court must draw every reasonable inference in favor of the party who won at trial, and can grant JNOV only if there is no substantial evidence to support the verdict.

Here, because the trial court's JNOV order referred to the "weight" of the evidence, the Court of Appeal concluded that the trial court must have impermissibly re-weighed the evidence.  That alone might not have been enough to justify reversal, if there were no substantial evidence of malice.  But the Court of Appeal, reviewing the entire record, concluded that a jury could infer that the defendants acted with malice, and that they posted the notice about the plaintiff with intent to force him out so  they could rent his unit at a higher price.  Accordingly, the court reversed the trial court's JNOV ruling and reinstated the jury's award of punitive damages.