February 15, 2019

"Philip Morris Seeks New Trial after 'Grossly Excessive' Verdict"

Law 360 reports on the latest skirmish over punitive damages in the long-running Florida smoker litigation. 

After a jury awarded $6 million in compensatory damages and $21 million in punitive damages, the trial court vacated the punitive damages award because, although the plaintiff alleged fraudulent conduct, she presented no evidence of reliance on any of the alleged misinformation.  The Eleventh Circuit reversed, ruling that Florida law does not require smokers to prove reliance on any specific fraudulent statement.  So now Philip Morris is back in the district court, arguing that the punitive damages award is excessive.  Either way the court rules, the case is likely to end up back before the Eleventh Circuit.

February 14, 2019

"Courts split on Punitive Damages Recovery in Legal Malpractice Cases"

ABA Litigation News has this article about whether plaintiffs in legal malpractice actions can seek lost punitive damages, i.e., the punitive damages they claim they would have been awarded if not for the lawyer's malpractice.  The California Supreme Court answered "no" to that question in Ferguson v. Lieff Cabraser, but the article notes that courts in other jurisdictions have disagreed.

February 1, 2019

January 31, 2019

Las Vegas jury awards $32.4 million in punitive damages against hospital

The Seymour Tribute reports on a Las Vegas jury verdict awarding $10.5 million in compensatory damages and $32.4 million in punitive damages against Centennial Hills Hospital.  The plaintiffs claimed that the hospital caused the death of a 29-year-old woman by administering a drug in excess of the manufacturer's recommended dose.

January 18, 2019

"Dishwasher awarded $21M after being forced to work on Sundays"

WGN reports on a Miami verdict awarding $536,000 in compensatory damages and $21 million in punitive damages against the Conrad hotel for firing a dishwasher who failed to report to work on Sundays. 

The plaintiff argued that the hotel discriminated against her by failing to accommodate her religious practices, which preclude her from working on Sundays.  As the story notes, however, the punitive damages will be capped at $300,000 (the maximum amount permitted under Title VII of the Civil Rights Act of 1964).

January 17, 2019

"Sixth Circuit Rules that Cap on Punitive Damages is Unconstitutional"

The National Law Review reports on a recent Sixth Circuit opinion striking down a Tennessee statute that limited punitive damages to the greater of $500,000 or two times compensatory damages. The Sixth Circuit's opinion holds that the Tennessee constitution guarantees a right to a jury trial on the amount of punitive damages, and that a cap on the amount is inconsistent with that right. 

Courts around the country have reached different results on this issue.  For example, a 2018 federal district court decision rejected the same argument under North Carolina law

January 4, 2019

Court of Appeal reduces punitive damages award from $1 million to $11,800 (Rinehart v. Bank Card Consultants)

This unpublished opinion holds that a $1 million punitive damages award is excessive in light of the defendant's financial condition.

A jury found the defendant liable for wrongful termination and awarded $500,000 in compensatory damages and $1 million in punitive damages.  The defendant appealed, arguing that the punitive damages award was excessive because it was disproportionate to the defendant's ability to pay.

The Court of Appeal (Fourth District, Division Three) agreed.  The only evidence of the defendant's financial condition showed an annual net income of $180,000 and a net worth of $86,000.  The Court of Appeal said the punitive damages award was "clearly excessive" because it represented five times the defendant's annual net income and more then 10 times its net worth. The court explained that an award of one month of net income, or 10 percent of net worth, "would approximate the maximum award that would pass muster."  Ten percent of net worth would be $8,600, and one month of net income would be $15,000, so the court averaged those two amounts and concluded that the maximum permissible award would be $11,800.

The Court of Appeal should have ended the proceedings by ordering the trial court to reduce the punitive damages to the maximum amount.  (See Simon v. San Paolo U.S. Holding Co.)  As some courts put it, the plaintiff should not get a "second bite at the apple" after having failed to present sufficient financial condition evidence to support the punitive damages award the first time around.  (See Kelly v. Haag.)  Here, however, the Court of Appeal did exactly that.  It let the plaintiff choose between a new trial or a reduction of the punitive damages to $11,800.


November 28, 2018

Published opinion exacerbates split over application of clear-and-convincing evidence standard on appeal (Morgan v. Davidson)

This published opinion may cause the California Supreme Court to finally settle a long-simmering split of authority.

The issue in question is whether appellate courts should consider the clear-and-convincing evidence standard of proof when reviewing the sufficiency of the evidence to support a punitive damages award.

By statute, California plaintiffs must prove all the prerequisites for a punitive damages award by clear and convincing evidence.  When a defendant challenges a punitive damages award on appeal, arguing that the plaintiff failed to meet the burden of proof, appellate courts often take the heightened standard of proof into account, and ask whether a reasonable factfinder could have found that plaintiff's evidence amounted to clear and convincing proof of malice, oppression, or fraud. (See, e.g. Shade Foods v. Innovative Products ["since the jury’s findings were subject to a heightened burden of proof, we must review the record in support of these findings in light of that burden . . . . we must inquire whether the record contains substantial evidence to support a determination by clear and convincing evidence' "]; Pfeifer v. John Crane ["we review the evidence in the light most favorable to the Pfeifers, give them the benefit of every reasonable inference, and resolve all conflicts in their favor, with due attention to the heightened standard of proof"].)

Some courts have concluded, however, that the clear-and-convincing standard applies only in the trial court and "disappears" in the Court of Appeal.  As we have observed, that view is supported by some older opinions and continues to pop up in unpublished decisions.

Earlier this year, Division Four of the First Appellate District attempted to put and end to the notion that the clear-and-convincing evidence standard disappears on appeal.  T.J. v. Superior Court explained why it is important for appellate courts to take the heightened standard of proof into account:

If the clear and convincing evidence standard "disappears" on appellate review, that means the distinction between the preponderance standard and the clear and convincing standard imposed by statute is utterly lost on appeal, an outcome we believe undermines the legislative intent as well as the integrity of the review process. . . . If that standard is ignored on appeal, the heightened standard of proof . . . loses much of its force, or at least the ability of the appellate court to correct error is unacceptably weakened.
We hoped that would put an end to the debate, but yesterday Division Two of the Fourth Appellate District reached the opposite conclusion and embraced the older cases holding that the higher standard of proof disappears.  The court did not cite the T.J. v. Superior Court opinion, but did acknowledge some of the other recent decisions that applied the clear-and-convincing standard on appeal.  The court rejected these cases as inconsistent with Supreme Court precedent, citing Crail v. Blakely, a 1973 decision in which the Supreme Court indicated outside the punitive damages context that the clear and convincing standard was adopted only "for the edification and guidance of the trial court." 

The court failed to recognize, however, that the Supreme Court has held otherwise, more recently, in the punitive damages context.  The Supreme Court's decision in In re Angelia P. adopted the view that the clear and convincing evidence standard is incorporated into the substantial evidence standard on appeal.  And the Supreme Court has continued to follow that approach in more recent decisions in other contexts.  (See Conservatorship of Wendland (2001) ["The 'clear and convincing evidence' test requires a finding of high probability . . . we ask whether the evidence [on the issue before the court] has that degree of clarity"]; Estate of Ford (2004) [finding that certain testimony "was not clear and convincing evidence" on the issue of equitable adoption].)

We can only hope that the Supreme Court will grant review to sort this out.  The Supreme Court actually attempted to do that a decade ago.  In an unpublished decision, Harvey v. Sybase, the Court of Appeal took the same position as the Court of Appeal here (i.e., that the clear-and-convincing standard disappears on appeal), and the Supreme Court granted review to address that issue.  But the parties settled that case and the issue became moot.  Perhaps the defendant in this case will seek review, providing the Supreme Court with another opportunity to take up the issue.

Los Angeles jury awards $34 million in punitive damages against owner of mobile home park

Law 360 (subscription required) reports on a jury verdict awarding $34 million in punitive damages, on top of $5.56 million in compensatory damages, to the residents of a Long Beach mobile home park.  The plaintiffs alleging that the park was built on top of a former landfill, and that the shifting ground released noxious odors and damaged their homes.