November 17, 2017

Dallas jury awards $168 million in punitive damages against Johnson & Johnson in hip implant suit

The Dallas Morning News reports that a jury yesterday awarded Johnson & Johnson to pay $247 million, including $168 million in punitive damages, for allegedly failing to warn about defects in artificial hips.

As the article notes, this is the third time a Dallas jury has whacked the company for punitive damages in hip implant litigation. Mark Lanier is the plaintiffs' lawyer in all three cases.  The company says it plans to appeal.  Presumably, Lanier will again enlist Ken Starr to defend the punitive damages on appeal.

November 15, 2017

Court of Appeal vacates $5 million punitive damages award, with an invisible dissent (Leggins v. Rite Aid)

In this unpublished opinion issued today, the California Court of Appeal reversed a $5 million punitive damages award in an employment discrimination case.  Or at least two of the justices did.  A third justice indicated that she plans to dissent.  More about that later.  First, the facts of the case.

The plaintiff, a former a Rite Aid store manager, sued Rite Aid for harassment and discrimination based on race and disability.  A jury awarded him $3.7 million in compensatory damages and $5 million in punitive damages.

Rite Aid appealed, challenging both the compensatory and punitive damages.  The Court of Appeal (Second Appellate District, Division One) affirmed the compensatory damages award but vacated the punitive damages award in its entirety, on the ground that the plaintiff failed to satisfy the "managing agent" requirement of Civil Code section 3294.

Section 3294 provides that punitive damages cannot be awarded against a corporation based on the misconduct of a low-level employee.  The plaintiff must show that an officer, director, or managing agent of the corporation was involved.  Here, the plaintiff claimed he was harassed and discriminated against by two district managers, whom he argued were managing agents within the meaning of section 3294 because they oversaw 10 to 15 stores.  But merely managing a large number of stores does not make someone a managing agent.  The Supreme Court has explained that corporate employees do not qualify as managing agents unless they exercise substantial discretionary authority over vital aspects of the company's business, and therefore have the power to create company policies that will govern the business in the future.

In this case, the plaintiff presented no evidence that the Rite Aid district managers had that sort of discretionary authority to set company policy.  To the contrary, the record showed that the managers had no discretion to deviate from Rite Aid policies and were obligated to follow them strictly.

A couple of low-level Rite Aid employees testified that they thought the managers had authority to set policies, but the Court of Appeal concluded that testimony did not satisfy plaintiff's burden of proof.  The court observed that their testimony lacked any indication that they knew anything about how Rite Aid formed its corporate policies.

The end of the opinion indicates that Justice Chaney wrote the opinion, Justice Johnson concurred, and Justice Rothschild dissented.  But no actual dissenting opinion appears.  Instead, there is a statement by Justice Rothschild that "I will be filing a dissent."  I've read a lot of California Court of Appeal opinions and I've never seen that before.

Even more odd, the opinion contains footnotes that refer to the content of the non-existent dissent.  See for example footnote 3 on page 39 ("The dissent suggests . . . ").  I'm not sure exactly what happened here, but there are sure to be further developments.  Stay tuned.

November 14, 2017

Ninth Circuit reduces $2.5 million punitive damages award to $1 million (King v. GEICO)

This unpublished memorandum disposition from the Ninth Circuit does not have much factual detail, so we can't tell exactly what GEICO did to warrant punitive damages.  But whatever it was, the Ninth Circuit found GEICO's conduct to be "of low to moderate reprehensibility."

As a result, the court concluded that the jury's $2.5 million punitive damages award was unconstitutionally excessive when compared to the $266,000 in compensatory damages (a nine to one ratio).  The court observed: "This is significantly higher than the four-to-one proxy that we apply in similar contexts."  The court then reduced the award to a little over $1 million, right at the four-to-one benchmark.

The panel consisted of Judges McKeown, Gould, and Rothstein (a district court judge for the Western District of Washington, sitting by designation).

October 25, 2017

Court of Appeal affirms $371,250 punitive damages award against San Diego Zoo (Diamond One Construction v. Zoological Society of San Diego)

There isn't much to say about this unpublished decision, but we try to report all California appellate decisions involving significant amounts of punitive damages.

A construction contractor sued the San Diego Zoo for fraud and recovered $222,741 in compensatory damages and $371,250 in punitive damages.  The zoo appealed, arguing that the punitive damages should be reversed because it was based on the conduct of a zoo employee who was not a managing agent within the meaning of Civil Code section 3294.

The Court of Appeal (Fourth Appellate District, Division One) disagreed, finding that the employee originated the idea for the construction project and made a number of discretionary decisions that influenced the scope and tenor of the project: "There can be no serious dispute he 'exercise[d] substantial discretionary authority over decisions that ultimately determine[d] corporate policy.' "

The court also rejected the zoo's argument that the ratio of 1.667-to-1 between the punitive damages and compensatory damages was constitutionally excessive.

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.