November 14, 2020

California Supreme Court to rule soon on Fidelity National's petition for review (Albarracin v. Fidelity National)

We previously reported on the Court of Appeals' affirmance of a $2 million punitive damages award in this employment case.  As we noted, the court concluded that a $250,000 compensatory damages award was not "substantial" for purposes of the rule that lower punitive-to-compensatory ratios are warranted in cases with substantial compensatory damages.

Fidelity National has petitioned for review, raising the following issues (quoted directly from the petition):

1.    Under Auto Equity Sales, Inc. v. Superior Court
(1962) 57 Cal.2d 450, 455 (Auto Equity Sales), this Court’s
decisions “are binding upon and must be followed by all the state
courts of California.”
     Does this stare decisis doctrine require the intermediate
appellate courts, in unpublished decisions, to either follow or
meaningfully distinguish this Court’s relevant holdings? 
2.        This Court and the U.S. Supreme Court require
reviewing courts to independently determine the constitutionality
of punitive damages awards, including whether such an award
bears a reasonable relationship to compensatory damages.
    Does the fact that a compensatory award is moderate—that
is, neither large enough to suggest an inherent punitive element
nor small and purely economic—itself justify “a much higher
ratio” of punitive damages (here, nearly 8-to-1)?

The Supreme Court has granted itself a 30-day extension of time to rule on the petition, moving the due date from November 21 to December 21.  Expect a ruling soon.

November 13, 2020

Court of Appeal affirms $6 million punitive damages award in asbestos case (Barr v. Parker-Hannifin)

This unpublished opinion affirms a punitive damages award against Parker-Hannifin, a company that sold asbestos-containing replacement brakes in the late 1970s and 1980s.

Parker-Hannifin argued on appeal that the punitive damages should be reversed because the plaintiff presented no evidence that anyone at the company knew during the relevant time that its products were harmful.  The Court of Appeal (First District, Division Three) rejected that argument, citing evidence that the company complied with OSHA regulations at its own factory, to protect its workers from asbestos exposure.  From that evidence, the court concludes that the company knew asbestos was dangerous, and therefore should have protected consumers of brakes.

The court's analysis does not confront the fact that asbestos exposures in the factory would have been orders of magnitude higher than any exposures experienced by users of the finished product, or the fact that the factory workers were potentially exposed to raw asbestos, whereas the end users could only have been exposed to heavily processed fibers with different potential for causing disease. Given those differences between the two types of exposures, many manufacturers in the 1970s took precautions in their factories without believing that any risks existed for end users.  But the Court of Appeal's opinion does not grapple with that issue, and instead concludes that substantial evidence supports the conclusion that the manufacturer acted despicably and in conscious disregard of a known risk to consumers.

Disclosure: Horvitz & Levy participated in this case, representing Parker-Hannifin's co-defendant, Standard Motor Products, which was not found liable for punitive damages. 


November 11, 2020

Supreme Court denies review in King v. US Bank

 The Supreme Court has denied US Bank's petition for review in the case discussed here.

November 9, 2020

California Supreme Court to rule soon on US Bank's petition for review (King v. U.S. Bank)

We reported in August about this decision in which the Court of Appeal partially reinstated a big punitive damages award against U.S. Bank.  As you may recall, the case involved a U.S. Bank supervisor who was accused of harassment by his subordinates. The company investigated and fired him.  He then sued the bank for wrongful termination and defamation and won a jury verdict for $24.3 million including $15.6 million in punitive damages.  The trial court reduced the amount to $2.7 million but the Court of Appeal bumped it back up to $8.5 million.

U.S. Bank has filed a petition for review with the California Supreme Court raising the following issues (these are quoted directly from the petition):

1. Whether evidence of errors of judgment by human resources (“HR”) employees who repeat allegedly false statements during an internal investigation of alleged workplace misconduct is sufficient to defeat the common-interest privilege and sustain a defamation claim. 
2. Whether an employer that terminates an employee for misconduct may be held liable for wrongful termination and breach of the covenant of good faith and fair dealing based on an inference that the employer rushed the termination so that the employee would not qualify for a bonus.
3. Whether evidence that an entry-level HR employee exercised discretion when investigating alleged workplace misconduct is sufficient to support a determination that she was a “managing agent” whose conduct can subject her employer to punitive damages.
4. Whether the decision below misapplied this Court’s decision—issued the day before—requiring courts to view the evidence supporting a finding of punitive liability through the lens of the clear-and-convincing-evidence standard.
5. Whether the Court of Appeal accorded legally insufficient deference to the trial court’s order granting a new trial or remittitur. 
6. Whether the $8,469,696 punitive award approved by the Court of Appeal—six times the maximum permissible punitive award for the more severe conduct and injuries in Roby v. McKesson Corp. (2009) 47 Cal.4th 686—is unconstitutionally excessive, given the punitive and deterrent effects of the $5,000,000 in non-economic damages and USBNA’s minimal to non-existent ill-gotten gain.

Horvitz & Levy filed a letter on behalf of the Association of Southern California Defense Counsel, asking the Supreme Court to grant the petition. The CELC and the US Chamber of Commerce also submitted letters (see here and here).

The Supreme Court's original deadline to rule on the petition was November 3, but the court issued an order extending its time until December 3.  Expect a ruling soon. 

November 4, 2020

Missouri Supreme Court declines to review $1.6 billion punitive damages award against Johnson & Johnson

Reuters reports that the Missouri Supreme Court has declined to review the intermediate appellate decision that reduced a $4.14 billion punitive damages award to $1.62 billion. You can read our coverage of the Court of Appeal decision here. Not surpisingly, J&J says it plans to file a cert. petition, as reported by Law.com. With a total judgment in excess of $2 billion, how could they not?

October 28, 2020

Court of Appeal re-issues opinion vacating $16 million punitive damages award and orders reduction to $2.5 million (Tilkey v. Allstate)

In May of this year we reported on a decision affirming a $1.7 million compensatory damages award for the tort of "self-published defamation" but vacating the jury's $16 million punitive damages award as excessive.

The Court of Appeal (Fourth District, Division One) granted defendant Allstate's petition for rehearing, which identified some facts omitted from the opinion.  After accepting supplemental briefing and considering the additional facts, the Court of Appeal reached the same conclusion in its new opinion: compensatory damages affirmed, punitive damages vacated as excessive.  

The new opinion, however, adopted a different remedy with respect to the excessive punitive damages.  The first opinion simply vacated the award and sent the case back to the trial court for further proceedings, rather than reducing the punitive damages to a fixed amount.  That's because the Court of Appeal had also eliminated one element of the jury's damages award (a $1 million award for wrongful termination), and the court said it was impossible to know to what extent the jury based its punitive damages award on that claim.

In the new opinion, the court decides to reduce the punitive damages rather than ordering a new trial.  The court says "[t]here is some authority that doing so is appropriate," but no authority is cited.  The opinion reduces the punitive damages award to the amount of $2.5 million, which is about 1.5 times the amount of compensatory damages. 

That remedy seems to deprive Allstate of its right to have a jury decide in the first instance the proper  punishment for the defamation alone.  Perhaps a jury would award less than $2.5 million.  But given the relatively low ratio that the court adopted, Allstate may actually prefer to simply pay that amount rather than undergoing a new trial and risking a larger award that would generate another appeal.

October 13, 2020

Fight over punitive damages is brewing in Korea

Punitive damages are primarily an American concept.  They are permitted only to a very limited extent (if at all) in most other countries.  In recent years, South Korea started to dip its toes in the waters, permitting punitive damages for willful patent infringement and products liability cases.  Now they are proposing to expand the availability of punitive damages to all cases in which the defendant is a business.  

If adopted, the law will permit punitive damages upon a showing of intentional or grossly negligent conduct.  Korea is also considering a law to expand the use of class actions, which are currently limited to securities cases.  Both proposals are described in more detail here.

The Korea Herald reports that the Korean business community is opposing both proposals, saying they will increase expenses for businesses and benefit only lawyers and not consumers, citing the U.S. legal system as an example.

Even if the law is adopted, don't expect to see news reports of California-style punitive damages awards coming out of Korea.  The proposed law would limit punitive damages to five times actual damages.

October 12, 2020

Court of Appeal vacates $725k punitive damages award due to improper expert testimony (Margeson v. Ford)

In this Lemon Law case, a jury awarded the plaintiff roughly $72,500 in compensatory damages, $142,000 in civil penalties, and $1.4 million in punitive damages (20 times the amount of compensatory damages). The trial court reduced the punitive damages to $725,000 (10 times the compensatory damages) and Ford appealed.

In an unpublished opinion, the Court of Appeal (Second District, Division Five) vacated the punitive damages award and ordered a new trial on the amount of punitive damages. The court found that the trial court had improperly allowed expert testimony from the plaintiff’s forensic accountant, who purported to advise the jury on how to properly calculate punitive damages. The Court of Appeal ruled that the expert’s testimony usurped the role of the jury in determining the amount of punitive damages and usurped the role of the trial court in instructing the jury on the law of punitive damages.
I won’t comment on the court’s analysis, because Horvitz & Levy represents Ford in this case.

 

Court of Appeal reverses $1 million punitive damages award against Chrysler (Santana v. FCA)

 I'm catching up on the unpublished opinions that came out the past few weeks.  

In this one, the plaintiff brought lemon law and fraud claims against FCA (Chrysler) in connection with alleged electrical problems in a 2012 Dodge Durango.  A jury awarded $32,000 in economic damages on the lemon law claim, $134,000 in economic damages on the fraud claim, and punitive damages of $1 million. Chrysler appealed, arguing among other things that the plaintiff failed to present any substantial evidence of fraud.

The Court of Appeal (Fourth District, Division Three) agreed and reversed all the fraud damages, including the punitive damages, in an unpublished opinion. The court said the plaintiff failed to present any evidence that Chrysler fraudulently concealed material information. The evidence showed at most that Chrysler was aware of electrical issues that had occurred different vehicles and was working on fixing the problem.  Because that evidence could not support a finding of fraudulent concealment, and that tort was the sole support for the punitive damages award, the court vacated the punitive damages.

Horvitz & Levy represents FCA in other matters, so I won't comment on the court's analysis.

Update (10/28/20): the Court of Appeal has now changed the status of the opinion from unpublished to published

September 6, 2020

Court of Appeal affirms $1.95 million punitive damages award in wrongful termination case (Albarracin v. Fidelity National Financial)

I'm catching up on some unpublished opinions from the past few weeks. In this one, the plaintiff alleged she was fired after complaining that her supervisor sexually harassed her.  A jury found defendant Fidelity National liable for intentional infliction of emotional distress, retaliation, and wrongful termination.  The jury awarded $250,000 in emotional distress damages and $1,950,000 in punitive damages.

Fidelity appealed, challenging only the punitive damages award.  Fidelity argued that the plaintiff failed to present clear and convincing evidence of malice or oppression within the meaning of Civil Code section 3294.  Fidelity argued that the evidence showed at most that Fidelity's investigation of the plaintiff's sexual harassment complaint was negligent, but not malicious.  

The Court of Appeal (Second District, Division Three) rejected that argument because Fidelity had not challenged the jury's finding that Fidelity intentionally inflicted emotional distress.  The court said that finding was inconsistent with Fidelity's appellate argument that its conduct was merely negligent, and because Fidelity had not challenged that finding on appeal, it could not characterize its conduct as mere negligence.

Next, Fidelity argued that the punitive damages award was excessive and should be reduced to no more than $250,000, the amount of the jury's emotional distress award. The court rejected that argument too, finding that Fidelity's conduct was reprehensible enough to justify a nearly eight-to-one ratio.  Fidelity relied on caselaw holding that the maximum ratio may be one-to-one in cases where the compensatory damages are substantial.  But the Court of Appeal rejected that argument on the grounds that the $250,000 award was not all that large. Your mileage may vary; other courts have found that lesser amounts qualified as "substantial."