March 4, 2019

Court of Appeal affirms punitive damages award, rejects defendant's complaint about alternate juror participating in punitive damages phase (Nolasco v. Scantibodies)

This unpublished opinion addresses an issue we haven't seen in a while.

A jury awarded a total of $932,000 in compensatory damages and $750,000 in punitive damages to two plaintiffs who claimed their employer retailed against them after they disclosed information to the FDA about the company's practices.  (The defendant produces medical diagnostic tests and components.)

The trial was bifurcated under Civil Code section 3295: in phase one the jury decided the issue of liability and whether the defendant acted with malice, oppression, or fraud; in phase two the jury decided the amount of punitive damages.

On appeal, the defendant argued it was entitled to a new trial on punitive damages because the trial court seated an alternate juror during the second phase of trial.  The defendant argued that the use of the alternate juror violated section 3295's requirement that both phases of trial be decided by the "same trier of fact."

The Court of Appeal (Fourth District, Division One) rejected that argument, citing an earlier decision in Rivera v. SassoonRivera held that the use of an alternative juror in phase two does not violate the "same trier of fact" rule because alternate jurors hear the same evidence and are subject to the same admonitions as the regular jurors.

That reasoning is a little unsatisfying, because whatever instructions and evidence the alternate jurors may hear, they do not actually get to vote in phase one.  So when an alternative juror is seated for phase two, the two phases of trial are not literally being decided by the same trier of fact.  No other cases have followed Rivera's reasoning on this issue, but as the Court of Appeal pointed out, no cases have challenged that reasoning either.  So Rivera remains good law, at least for now.


March 1, 2019

"Awarding Punitive Damages Against Foreign States Is Dangerous and Counterproductive"

It is not unusual for U.S. Courts to award large sums of punitive damages against state sponsors of terrorism.  Iran in particular has been hit with many such awards.  These awards are not contested by the foreign states and, to my knowledge, have never been enforced.  They seem purely symbolic. 

This Lawfare article argues that such awards are bad public policy and "pose[] a threat to the peaceful international legal order" by placing the United States in a position of primacy over all other nations.  The author argues that Congress should amend the Foreign Sovereign Immunities Act to disallow punitive damages against foreign states.

February 28, 2019

Court of Appeal reverses $3.25 million punitive damages award (F&M Trust v. Vanetik)

Here's yet another unpublished opinion reversing a punitive damages award because the plaintiff failed to present meaningful evidence of the defendants' financial condition.

This case involves breach of contract and fraud claims against two individuals who own companies involved in oil exploration in Russia.  The plaintiff entered into an agreement to invest in those companies, but later found out the defendants used the investment to pay off their debts.  The plaintiff won a jury verdict for $750,000 in compensatory damages, plus $2 million in punitive damages  against one defendant and $1.25 million in punitive damages against another defendant.

The Court of Appeal (Fourth District, Division Three) reversed both punitive damages awards because the plaintiff failed to present evidence of the defendants' net worth.  The plaintiff had an expert witness who testified to the net worth of the defendants, but the Court of Appeal concluded that the expert's opinions were not based on reliable information.  Although the expert purported to consider the defendants' net worth, in reality he considered only their assets, without taking into account their liabilities.  The expert also relied on information from four years before trial, which failed to satisfy the plaintiff's burden of proving the defendants' net worth at the time of trial.

The court rejected the plaintiff's attempt to blame the defendants for the lack of financial evidence.  The plaintiff never filed a motion under Code of Civil Procedure section 3295(c) for pretrial discovery of the defendant's financial condition.  Nor did the plaintiff file any discovery requests in the second phase of trial, after the jury found that the defendants acted with malice, oppression, or fraud.  Thus, the plaintiff had only himself to blame for the lack of evidence on this issue.

The Court of Appeal reversed the punitive damages award without giving the plaintiffs a new trial on that issue.  That's the correct result under California law, because a plaintiff who fails to present evidence is not entitled to a do-over.  But as we have seen, California courts sometimes overlook that rule (this court did a few years ago.)

February 27, 2019

Arbitrator awards $128 million in punitive damages against 21st Century Fox

The Hollywood Reporter reports that an arbitrator has awarded $179 million, including $128 million in punitive damages, against 21st Century Fox in a lawsuit over profits from the television show Bones.

The plaintiffs are the two stars of the show (Emily Deschanel and David Boreanaz), the show's executive producer (Barry Josephson) and the author whose works inspired the show (Kathy Reichs).  At the core of the dispute is the plaintiffs' claim that Fox cheated them out of a share of the profits from the show by undercharging licensing fees to its sister companies, including Hulu, in which Fox had a 30 percent stake.

The plaintiffs have filed a petition to have the arbitration award confirmed by the California superior court.  Fox has hired Dan Petrocelli, who is no stranger to cases involving high-profile punitive damages awards, to oppose the petition.

A decade ago we expressed our view that the due process restrictions on excessive punitive damages should apply to arbitration awards, notwithstanding the limitations on judicial review of arbitration awards.  Division Eight of the Second Appellate District disagreed in Shahinian v. Cedars-Sinai.  Perhaps Fox will take another run at that issue in this case.

February 18, 2019

Alabama jury awards $100 million against Ford

Reuters reports on an Alabama verdict awarding $51.8 million in compensatory damages and $100 million in punitive damages to a man paralyzed in a 2015 rollover accident involving a Ford explorer.  This verdict comes roughly 25 years after another noteworthy punitive damages award by an Alabama jury against an automaker: the $4 million award against BMW that led to the Supreme Court's landmark decision in BMW v. Gore.

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).