August 16, 2018

WSJ editorial blames Roundup verdict on junk science

The Wall Street Journal ran an editorial yesterday entitled Round Up the Usual Lawyers, about the huge San Francisco jury verdict against Monsanto.  The editorial discusses the scientific evidence that Roundup does not cause cancer, and notes that the trial judge described the plaintiffs' punitive damages case as "thin."  Perhaps that means she will be inclined to grant Monsanto's post-trial motions and vacate the punitive award.

August 10, 2018

San Francisco jury awards $250 million in punitive damages against Monsanto

Law 360 reports that a jury today awarded $39 million in compensatory damages and $250 million in punitive damages to a man who alleged he developed cancer as a result of exposure to Monsanto's  weedkillers, Roundup and Ranger Pro.

This is a hugely significant verdict.  As the article mentions, Roundup and Ranger Pro contain glyphosate, one of the most popular herbicides used around the world (over 290 million pounds were used in 2012).  The link between glyphosate and cancer was hotly disputed at trial.  Monsanto presented evidence that multiple epidemiological studies show no correlation between glyphosate and cancer, but the plaintiffs presented expert witnesses who testified that glyphosate can cause lymphoma.

Under California law, punitive damages are supposed to be awarded only when a defendant has consciously disregarded a "known" risk.  That means that punitive damages should not be imposed on a defendant for disregarding a speculative, theoretical risk.  If published peer-reviewed epidemiology  shows that a product does not cause cancer, and a defendant acts in reliance on those studies, that conduct does not meet the definition of malice under California.  But our courts have not always been consistent in applying this principles.  This case may prove to be a major indicator of the direction in which our courts are heading.

August 8, 2018

$4 billion punitive damages award against JPMorgan Chase reduced to $945,000

When we reported on the jury's $4 billion punitive damages award in this Texas probate case, we noted that the wildly excessive award could not survive judicial review.  Sure enough, the trial judge reduced the punitive damages from $4 billion to $945,000, per Courthouse News Service

Even the plaintiff's attorney recognized that the jury went overboard, and voluntarily asked the trial judge to cut the punitive award to $7.8 million. In comments to to Courthouse News, the plaintiff's attorney said that he and his client completely respect the judge's decision to reduce the award. 

August 7, 2018

North Carolina awards $450 million in punitive damages, but award is capped under state law

Associated Press reports (via that a North Carolina jury last week awarded $23.5 million in compensatory damages and $450 million punitive damages in a nuisance case against Smithfield Foods, which operates a major hog farming operation near the plaintiffs' property.

If that sounds familiar, it's because we blogged about a very similar case a few months ago.

The $450 million number will be reduced under North Carolina law, which caps punitive damages at the greater of $250,000 or three times the amount of compensatory damages.  The plaintiffs in the prior case challenged the constitutionality of that statute, but lost that argument

Tennessee appellate court vacates $28 million punitive damages award

The Daily News of Memphis reports that the Tennessee Court of Appeals has vacated a $28 million punitive damages award based on allegedly negligent care provided by a nursing home.

This case involved multiple defendants who got whacked for a collective award of $1.9 million in compensatory damages and $28 million in punitive damages. The Court of Appeals affirmed the finding of liability against one of the defendants, but found insufficient evidence to support liability as to the others.  The court then concluded that the punitive damages must be retried even as to the one defendant that was properly held liable, because the amount of the award was based partly on the conduct of the other defendants. 

August 3, 2018

Proposal to enhance punitive damages for sex trafficking moving forward in California Legislature (AB 2105)

I previously reported on this bill, which would authorize enhanced penalties against those who participate in sex trafficking and other related crimes involving minors. The Senate has approved the bill with minor amendments, and it has returned to the Assembly for approval of the amended version.  The bill appears likely to pass.

August 1, 2018

Court of Appeal affirms $1 million punitive damages award in fraud case (Melvin v. Harkey)

In this unpublished opinion the Fourth Appellate District, Division Three, rejects a defendant's argument that a jury award of $1 million in punitive damages should be reversed because the plaintiffs failed to prove malice, oppression, or fraud.  The court finds sufficient evidence in the record that the defendant, the owner of an investment firm, engaged in a Ponzi scheme and maliciously disregarded the rights of his investors.

In the process, the Court of Appeal makes some unfortunate comments about the role of the clear and convincing evidence standard of proof in punitive damages cases, and how it impacts appellate review.

As we have noted in the past, published opinions have repeatedly held that the clear and convincing evidence standard applies both on appeal and in the trial court, and requires appellate courts to decide whether a reasonable jury could find that the plaintiff's evidence met the clear and convincing standard.  (See, for example, this recent opinion and this one.)  This opinion, however, perpetuates the contrary (and outdated) view that the clear and convincing standard applies solely to the trier of fact, and does not play any role on appeal.

North Carolina jury awards $6.6 million in punitive damages against man who had an affair with a married woman

The Washington Post reports here on a North Carolina verdict awarding $2.2 million in compensatory damages and $6.6 million in punitive damages for alienation of affection and "criminal conversation."

In essence, the plaintiff alleged that he had a happy marriage until the defendant came along and lured his wife into an affair.  The "conversation" in question is apparently an archaic way of referring to sexual intercourse. According to the story, North Carolina is one of only six states that still permit tort claims of this nature.

July 16, 2018

The mystery of the shrinking punitive damages (Jet Source v. Doherty)

This unpublished opinion has a footnote that struck me as funny. 

The appeal involves the renewal of a judgment that includes punitive damages.  (Under California law, a judgment expires after 10 years unless it is renewed.)  The original judgment included $26 million in punitive damages against multiple defendants, but three years later the superior court reduced the punitive damages to a total of $6.5 million.  According to the Court of Appeal (Fourth District, Division One): "There is no explanation in the record why the amounts of the punitive damages were modified."

The explanation may not be in the record, but it is in the California Appellate Reports.  The trial court reduced the punitive damages because the Court of Appeal ordered it to do so.  In 2007, the Court of Appeal issued a published opinion holding that the original punitive damages award in this case was excessive and should be reduced to a total of $6.5 million.  Mystery solved.

Court of Appeal tosses punitive damages claim against PG&E in Butte fire litigation (PG&E v. Superior Court)

The Third Appellate District issued this published opinion on July 2.  I've been delayed in writing about it, but it is one of the more interesting California punitive damages decisions in recent memory.

The Court of Appeal granted writ relief, reversing the denial of the defendant's motion for summary adjudication on punitive damages.  That alone is pretty rare in California.  In the ten years of this blog's existence, we have seen only a handful of writs granted on that basis.

The case arose out of the 2015 wildfire known as the Butte Fire, which caused widespread damage in Northern California.  Contractors working for PG&E removed two trees that were too close to a power line.  Removal of those trees left a third tree exposed and unsupported, causing it to lean towards the path of the sun until it eventually toppled and hit the power lines, sparking the fire.

The plaintiffs, who suffered personal injuries and property loss in the fire, sued PG&E for negligence, trespass, nuisance, and various other claims.  They sought punitive damages on the theory that PG&E acted in conscious disregard of the risks of wildfires.  The plaintiffs acknowledged that PG&E had a wildfire management program that involved inspecting and removing trees, but the plaintiffs argued that PG&E failed to ensure that the contractors' employees were properly trained.

PG&E moved for summary adjudication on the issue of punitive damages, presenting evidence of its extensive wildfire management efforts.  The trial court denied the motion, ruling that a reasonable jury could conclude that PG&E's program was inadequate and that PG&E deliberately failed to adopt a more robust program.  PG&E petitioned the Court of Appeal for writ relief.

The Third District granted PG&E's petition and directed the trial court to dismiss the punitive damages claim.  The court said PG&E met its initial burden by presenting evidence of its extensive efforts to mitigate the risk of wildfires, at a cost of more than $190 million per year.

The burden then shifted to the plaintiffs to present sufficient evidence to demonstrate a triable issue of fact on whether PG&E acted with malice.  The court concluded that, even viewing the evidence in the light most favorable to the plaintiffs, no reasonable factfinder could find that the plaintiffs had presented clear and convincing evidence of malice.

First, the court found that many of plaintiffs' criticisms of PG&E's fire management efforts could not support an award of punitive damages because many of the asserted defects in PG&E's programs had no connection to the fire in this case.  That's an important holding.  Although California law already provides that punitive damages must be based on the same conduct that gave rise to liability in the case, this requirement is often overlooked.

Second, the court rejected plaintiffs' reliance on a case known as Romo I.  (Romo v. Ford Motor Co. (2002) 99 Cal.App.4th 1115.)  California plaintiffs often argue that, under Romo I, they need not show that any particular managing agent of a defendant corporation acted with malice, if they can show that the company as a whole acted with malice by adopting a flawed policy.  The Court of Appeal in this case agreed that a finding of malice can be based on the existence of a company policy that willfully, consciously, and despicably disregards the rights of others.  But the court refused to extrapolate the reasoning of Romo I into a rule that malice can be inferred from the existence of any company policy that fails to protect against a known risk:

Plaintiffs would have us conclude that an unsuccessful risk management policy necessarily reflects a conscious and and will decision to ignore or disregard the risk.  This we decline to do.
(The court did not address whether Romo I is even citeable precedent.  Another court recently held, in an unpublished discussion, that Romo I cannot be cited in California courts because it was vacated by the United States Supreme Court.  See footnote 16 of this opinion.)

Third, the court rejected the plaintiffs' argument that PG&E acted with malice by outsourcing its wildfire prevention program to contractors and then failing to ensure they properly trained their employees. The court noted that PG&E required contractors to hire qualified employees and train them in accordance with industry standards.  "No reasonable jury could find by clear and convincing evidence that PG&E acted with malice in failing to ensure that contractors complied with these requirements."

Finally, the court determined that PG&E's nondelegable duty to maintain its power lines in a safe condition had no bearing on the punitive damages analysis.  The court explained that the nondelegable duty rule means that PG&E may be vicariously liable for compensatory  damages arising from the contractors' negligence.  But the nondelegable duty rule does not alter the rules for imposing punitive damages.  Plaintiffs must still prove that an officer, director, or managing agent acted with malice, which they failed to do.