June 15, 2018

Court of Appeal reduces $70 million punitive damages award to $19.6 million (Kuhlman v. Ethicon Endo-Surgery)

Back in 2015 we reported on an Oakland jury's award of $70 million in punitive damages in this products liability case involving an allegedly defective hemorrhoid stapler.  We noted that given the substantial compensatory damages award ($9.8 million), an excessiveness challenge was likely.

This week the California Court of Appeal (First District, Division Five) issued this unpublished opinion reversing the punitive damages award as excessive.

The court found that the evidence, when viewed in the light most favorable to the plaintiff, could support a punitive damages award in some amount, because there was evidence that the defendant failed to take adequate precautions against a known risk to patient safety.

But when addressing the issue of excessiveness, the court the defendant's conduct was only moderately reprehensible when compared to other punishable conduct.  The defendant did not intend to cause harm, and acted responsibly after receiving reports of injuries caused by its product.

The ratio of punitive damages to compensatory damages awarded by the jury was roughly seven to one. The court observed that, while double-digit ratios are presumptively unconstitutional, that does not mean that single-digit ratios are presumptively valid.  Both the U.S. and California Supreme Courts have emphasized that the maximum permissible ratio is much lower in cases involving substantial compensatory damages.  The court concluded that in this case, any ratio in excess of two to one would violate due process.  Accordingly, the court ordered a reduction of the award to $19.6 million. 


Uber drivers denied punitive damages in class action over safe rides fee

Law 360 reports (subscription required) that U.S. District Judge Yvonne Gonzalez Rogers in the Northern District of California has ruled that a class of Uber drivers cannot seek punitive damages in their lawsuit over the company's imposition of a $1 "safe rides fee." Judge Rogers ruled that the plaintiffs, having insisted throughout the case that their claims arise from a contract with Uber, cannot pursue punitive damages because Civil Code section 3294 permits punitive damages only in an action "for the breach of an obligation not arising from contract."

June 13, 2018

Reggie Bush wins $7.5 million punitive damages award against Los Angeles Rams

Law 360 reports (subscription required) that a jury in Missouri state court has awarded $4.95 million in compensatory damages and $7.5 million in punitive damages to former NFL player Reggie Bush in a lawsuit against the Los Angeles Rams. 

The suit stems from an injury that occurred in 2015 when the Rams were located in St. Louis.  Bush was returning a punt during the game, ran out of bounds, and slipped on a concrete surface beyond the edge of the field.  He missed the rest of the reason due to injury. 

Bush's legal team persuaded the Missouri court that this case is not governed by the terms of the NFL's collective bargaining agreement and that Bush is not limited to workers' compensation remedies.  The case proceeded to trial as an ordinary slip-and-fall case.  The article does not explain the theory behind the punitive damages claim.

If the punitive damages award survives post-trial and appellate review, half of the award will go to a tort victims' compensation fund under Missouri's split-recovery statute.

May 25, 2018

Court of Appeal reverses $300,000 punitive damages award for lack of financial condition evidence (B.C. v. Cottone)

This unpublished opinion is the latest in the long line of California decisions reversing a punitive damages award because the plaintiff failed to present meaningful evidence of the defendant's financial condition.

The plaintiff here presented evidence of the defendant's assets, but no evidence of debts or liabilities. Although the assets included real estate with a value exceeding $3.4 million, the jury could not determine the defendant's financial condition (and ability to pay punitive damages) without knowing the other side of the balance sheet.  Accordingly, the Court of Appeal (Fourth District, Division Three) reversed the jury's award of $300,000 in punitive damages.

The plaintiff argued that once she presented evidence of the defendant's assets, the burden shifted to the defendant to prove his inability to pay.  The Court of Appeal disagreed, explaining that when a plaintiff presents a complete picture of the defendant's financial condition, only then does the burden shifts to the defendant to show an inability to pay.  But when a plaintiff presents only information about assets, the burden does not shift to the defendant or present evidence of liabilities.

The plaintiff also tried to blame the defendant for the lack of evidence.  She said he was evasive and nonresponsive when answering questions about his financial condition during trial. The Court of Appeal, however, blamed the plaintiff for not introducing into evidence the financial documents she received from the defendant.  The court also noted that the plaintiff failed to call other available witnesses (like the defendant's wife), and did not object in the trial court that the defendant failed to produce information that was requested. 

Ordinarily, when a plaintiff fails to meet his or her burden of proof on this issue, the appropriate remedy is to enter judgment for the defendant on the issue of punitive damages.  The plaintiff does not get a second bite at the apple.  But in this case, the Court of Appeal took the unusual step of ordering a new trial on punitive damages, based on the following considerations: (1) the defendant "bears some responsibility for the evidentiary shortcomings" due to his evasive and nonresponsive answers, (2) the evidence in the record shows that the defendant possessed substantial assets, and (3) the conduct that led to the punitive damages award was extremely reprehensible.


May 24, 2018

Los Angeles jury awards $4 million in punitive damages against Johnson & Johnson

Bloomberg reports that today a jury awarded $4 million in punitive damages, on top of $21.7 million in compensatory damages, to a 68-year-old woman who claims she developed mesothelioma from exposure to asbestos in Johnson & Johnson's baby powder.

Last year, a similar California case ended in a defense verdict, but Johnson & Johnson was hit for $417 million in another case in which the plaintiff alleged that talc itself (not contaminated by asbestos) causes ovarian cancer.  The trial court vacated that award due to jury misconduct and other problems. 

The company says that its talc products do not contain asbestos or cause cancer, and it plans to appeal in this case (assuming that the trial court does not toss this award too).

May 23, 2018

California Court of Appeal affirms trial court's reduction of punitive damages from $7 million to $1 million (Torres v. B/E Aerospace)

This unpublished opinion demonstrates that, under the right circumstances, California courts can find a punitive damages award excessive even when it is less than ten times the amount of compensatory damages.

A jury in this employment discrimination case awarded $1.5 million in compensatory damages and $7 million in punitive damages.  The trial court ordered a new trial conditioned on the plaintiff's acceptance of a reduction in the punitive damages to $1 million.  The plaintiff accepted the remittitur and both sides appealed.

The Court of Appeal (Second District, Division Four) affirmed across the board.  First, it rejected the defendant's argument that the plaintiff failed to prove malice on the part of an officer, director, or managing agent.  In the process, the court held that the defendant's adoption of an anti-discrimination policy did not act as a shield against punitive damages, because although the company adopted the policy in good faith, it did not implement the policy in good faith.

Second, the Court of Appeal rejected the plaintiff's argument that the trial court erred by ordering the remittitur from $7 million to $1 million.  The court noted that single-digit punitive-to-compensatory ratios are not presumptively valid, especially when the compensatory damages itself is substantial or contains a punitive element.  The court noted that the compensatory damages award here was 19 times more than the plaintiff's annual salary, and included a large emotional distress component, which has both a punitive aspect and a deterrent effect.  Accordingly, the Court of Appeal concluded that the trial court properly reduced the award to a 1-to-1 ratio.

May 22, 2018

Oregon jury awards $20 million in punitive damages against California landlord

Oregon Live reports that a jury in Portland has awarded $295,000 in compensatory damages and $20 million in punitive damages against a California landlord for failing to maintain an apartment complex in Portland.  The plaintiff is a man who claimed he fell through a rotting second-story walkway at the complex.

Under Oregon's split-recovery statute, 70 percent of the punitive damages award will go to the state if the award is upheld.  With a punitive-to-compensatory ratio of 68-to-1, the award will almost certainly be reduced.

California Court of Appeal affirms $784,000 punitive damages award (Burlingame Investments)

This unpublished opinion involves a complicated set of facts, but the upshot is that a jury awarded roughly $784,000 in compensatory damages and $784,000 in punitive damages against an attorney who allegedly participated in an illegal scheme to take over a group of closely-held businesses.

The defendant attorney argued on appeal that the Court of Appeal should reverse the punitive damages award entirely because the plaintiffs presented no evidence that he acted with malice, oppression, or fraud as required for a punitive damages award under Civil Code section 3294.  The Court of Appeal (First District, Division One), however, had no trouble concluding that the record supported the jury's finding that the defendant knew what he was doing was illegal.

The Court of Appeal also rejected the defendant's challenge to the amount of the punitive damages. The court agreed with the defendant that his conduct did not implicate most of the reprehensibility factors that the Supreme Court set forth in BMW v. Gore as indicators of highly reprehensible conduct.  But the court found that the reprehensibility of the conduct was "severe" because it implicated one of those factors---the harm was the result of intentional malice, not mere accident.

That analysis is interesting.  In California, punitive damages can never be awarded for "mere accident."  If that factor alone were enough for a court to deem conduct severely reprehensible, then the vast majority of punitive damages case in California would qualify.  Compare that approach to the Supreme Court of California's analysis in Roby v. McKesson, which held that the reprehensibility of the defendant's conduct implicated four of the five BMW reprehensibility factors but was nevertheless "at the low end of the range of wrongdoing that can support an award of punitive damages."

In any event, it probably wouldn't have made any difference whether the court characterized the defendant's conduct as severe or mild in this case, given the one-to-one ratio of punitive damages to compensatory damages.  California courts would rarely find such a ratio excessive, especially where the punitive damages are less than $1 million.

May 9, 2018

District court rejects constitutional challenge to North Carolina cap on punitive damages

Last week we blogged about a nuisance lawsuit in which 10 plaintiffs each won $5 million in punitive damages against a hog farm. WRAL.com reports that the trial judge, U.S. District Judge W. Earl Britt, has reduced each award to $250,000 under North Carolina's cap, rejecting the plaintiffs' argument that the cap is unconstitutional.   

May 5, 2018

San Diego jury awards $16 million in punitive damages against Allstate in employment case

The San Diego Union Tribune reports that a jury this week awarded $2.6 million in compensatory damages and $16 million in punitive damages against Allstate Insurance in an employment case involving some unusual facts.   

According to the story, Michael Tilkey, a longtime Allstate employee, was arrested on domestic violence charges after an argument with his then-girlfriend.  Prosecutors dismissed he charges after Tilkey entered into a plea deal requiring him to attend anger-management classes. His ex-girlfriend, however, sent an email to Allstate accusing Tilkey of threatening her.  She demanded that the company investigate Tilkey's conduct. Allstate fired him three months later, after concluding that he violated company policy by engaging in threatening behavior.

Tilkey's lawsuit accused Allstate of violating state law by firing him for an arrest that did not result in a conviction.  Apparently the jury not only agreed with that theory, but was sufficiently outraged by Allstate's misconduct that they awarded a huge amount of punitive damages.  Allstate says it will appeal.