April 14, 2015

Court of Appeal affirms reduction of punitive damages to a 1-to-1 ratio (Banks v. General Atomics)

A few years ago, we observed a mini-trend of California courts reducing punitive damages to match the amount of the compensatory damages, at least in cases involving substantial compensatory damages awards.  That trend reached its peak in 2009 when the California Supreme Court imposed a 1-to-1 ratio in Roby v. McKesson.

Ironically, we haven't seen many 1-to-1 ratios from the California Court of Appeal in the years since Roby.  But in this unpublished opinion, the Court of Appeal (Fourth District, Division One) affirms a trial court's decision that ordered a remittitur of a punitive damages award from $5.8 million to $2.9 million, resulting in a 1-to-1 ratio.

The plaintiff argued on appeal that the trial court went too far in imposing a 1-to-1 ratio.  The plaintiff pointed to provisions in the Labor Code authorizing double damages for comparable misconduct, and cited the U.S. Supreme Court's statements that courts should defer to legislative judgments regarding the appropriate level of punishment (see State Farm v. Campbell at p. 528). According to the plaintiff, "[Labor Code] section 972's penalty of double damages contemplates the precise 2-to-1 ratio of punitive to compensatory damages the jury originally awarded."

That argument backfired.  The Court of Appeal agreed with plaintiff that Labor Code section 972 offers an appropriate analogy, but the court observed that the plaintiff's math was wrong.  Double damages result in a 1-to-1 ratio, not a 2-to-1 ratio.  Therefore, the Court of Appeal concluded that the Labor Code only provided further support for the trial court's imposition of a 1-to-1 ratio.

April 13, 2015

Breaking news: Court of Appeal reverses $21 million punitive damages award in published opinion (Doe v. The Watchtower Bible and Tract Society)

A few years ago we reported on a $21 million punitive damages award in a sexual abuse case against a congregation of Jehovah's Witnesses and that group's nationwide organization.  The Court of Appeal's online docket indicates that the court (First Appellate District, Division Three) has reversed the award in a published opinion.  The court hasn't yet released its opinion.  Stay tuned.

UPDATE (3:45 pm): the opinion is now available here.  More details to follow.

APRIL 14 UPDATE:  The opinion reveals that the Court of Appeal vacated the punitive damages award because the award rested entirely on a failure-to-warn theory, and the court ruled that the defendants owed no duty to warn.  So the court never reached the question of whether the award was supported by evidence of malice, nor did the court have any occasion to address the size of the award (which had already been reduced from $21 million to $8.6 million as the result of the defendant's post-trial motions in the trial court).

March 31, 2015

Philadelphia jury awards $38.5 million in punitive damages against security firm for inaction of security guards

The Philadelphia Inquirer reports that a jury has awarded $38.5 million in punitive damages and $8 million in compensatory damages (a 4.81-to-1 ratio) to the families of two women who were shot and killed by a disgruntled employee at a Kraft Foods plant. 

The defendant, U.S. Security Associates, Inc., provided security guards for the plant.  According to the Inquirer story, the plaintiffs presented evidence that the company's two unarmed security guards ran away from the armed gunman and failed to alert the plant workers to the danger. 

The jury awarded punitive damages not against the individual security guards, but against their employer.  The company says it will appeal.  Based on my very limited knowledge of the case (and even more limited knowledge of Pennsylvania law), I expect the company to argue that punitive damages cannot be imposed against an employer for the misconduct of low-level employees, without some evidence of wrongdoing by corporate management.  If the plaintiffs presented evidence that this incident was the result of corporate policy, as opposed to just the rogue acts of a couple of security guards, the article doesn't mention it.

March 19, 2015

Big punitive damages awards that will never be paid

Yesterday, Courthouse News reported on an award of $14 million in punitive damages against the government of Sudan for its role in the terrorist bombing of the USS Cole.

Today, Arkansas Online reported a $105 million punitive damages award against a doctor who injured the former chairman of the Arkansas State Medical Board in a bomb attack.

These awards express strong condemnation of the conduct at issue, but they are largely symbolic. The defendant in the Arkansas case is in jail and probably can't pay much of the $17.5 million compensatory damages award against him, let alone $100 million in punitive damages.  And good luck collecting anything from Sudan.  We have reported on many big punitive damages verdicts against foreign governments in cases involving terrorism, including a $6 billion award for the September 11 attacks, but we have yet to see any indication that the defendants in these cases ever pay a penny.  If anyone knows of a plaintiff who was able to collect on such an award, we'd love to hear about it.

March 18, 2015

Court of Appeal affirms trial court order that vacated $15 million punitive damages award against Donald Sterling

A few years ago we blogged about this case in which actress Robyn Cohen won a $17.3 million judgment against Donald Sterling, former owner of the Los Angeles Clippers.

The plaintiff, who is best known for appearing with Bill Murray in The Life Aquatic with Steve Zissou, claimed that a fire in her Sterling-owned apartment building caused her emotional distress and derailed her acting career. As noted in our prior post, the trial court ruled that one of the plaintiff's substantive claims was not supported by the evidence, and the court ordered a complete new trial on all the remaining claims because he could not determine the extent to which the unsupported claim influenced the jury.

Yesterday the California Court of Appeal (Second Appellate District, Division Five) issued an unpublished opinion affirming the trial court's order.  The opinion illustrates how difficult it is to overturn a new trial order.  The Court of Appeal explained that the plaintiff had to show that the record provided no possible basis for granting a new trial.  She could not meet that burden because the jury's verdict did not reveal what conduct was the basis for the jury's punitive damages award.  The trial court properly ordered a complete new trial on all issues, rather than a retrial limited to punitive damages, because a second jury could not properly assess punitive damages without knowing what specific conduct the first jury thought supported liability, or what specific conduct the first jury thought was punishable.

Full disclosure: Horvitz & Levy represented Sterling in the post-trial motions and on appeal.

March 17, 2015

Court of Appeal publishes two previously unpublished opinions; topics include discovery of financial information and premature entry of judgment

In the past two days the California Court of Appeal ordered publication of two punitive damages opinions that were previously designated as unpublished.

We described the first case, I-CA v. Palram, in some detail here.  The opinion has a fairly lengthy discussion of the procedures that govern discovery of a defendant's financial condition.

We haven't previously discussed the other case, Baker v. Castaldi.  There, the trial court purported to enter judgment after the first phase of a bifurcated trial.  The judgment awarded compensatory damages to the plaintiff but left the issue of punitive damages unresolved.  The trial court apparently intended to enter a second judgment after the second phase of trial.  The defendant appealed from the judgment but the Court of Appeal dismissed the appeal on the ground that there was no final judgment.  Under California's "one final judgment" rule, a purported judgment that does not resolve all the issues in the case is not truly a judgment and is therefore not appealable.

It may seem obvious that a trial court should not enter judgment until the case is over. But in our experience, the problem of premature judgments is a recurring one in California.  Some of our trial judges mistakenly believe that they should immediately enter judgment after a jury verdict, even if the final rights of the parties have not yet been decided.

Premature entry of judgment is a big problem for defendants, because California judgments are immediately enforceable when entered.  For that reason, the defendant may be forced to file an appeal and post an appeal bond in order to stay enforcement of the so-called judgment (and incur substantial expense in the form of bond premiums and attorneys' fees), even though the defendant fully expects the Court of Appeal to dismiss the appeal.

Full disclosure: Horvitz & Levy LLP requested publication of both opinions.

March 11, 2015

"Second Circuit Issues Important Decision on Punitive Damages in Class Actions"

A new post on Mayer Brown's punitive damages blog discusses an interesting decision from the Second Circuit on the subject of punitive damages in class actions.

In a nutshell, the Second Circuit said that the district court should not have adopted a trial plan that called for the jury to decide the appropriate ratio of punitive damages to compensatory damages before the jury had determined the amount of compensatory damages.

This issue---how to resolve punitive damages claims in class actions---has been simmering for years.  Appellate decisions in other jurisdictions have approved so-called reverse bifurcation trial plans that permit a jury to decide punitive damages before compensatory damages, and sometimes even before deciding the question of liability.  The Supreme Court has had several opportunities to address the constitutionality of that practice, but so far has declined to wade into this area.

Related posts:

Cert. Denied in Chemtall v. Stern

Reverse Bifurcation of Punitive Damages Trials—"Why Not? It's No Worse Than How We Handle Asbestos Cases?"

Cert. Denied in Philip Morris v. Accord; Petition in Chemtall v. Stern Raises the Same Issue

Philip Morris v. Accord: Cert Petition on Punitive Damages Issue Will Be Considered on February 15

March 4, 2015

Trial judge in AutoZone case hears arguments on post-trial motions

Last year we blogged about the $185 million punitive damages verdict that a San Diego federal jury awarded to a single plaintiff in an employment case (Juarez v. AutoZone).  We predicted, along with pretty much everyone else, that the award would not survive judicial review.  Even the Consumer Attorneys of California, who ordinarily advocate for big punitive damage awards, went on record saying that this award is obviously excessive

ABC10News in San Diego reported this morning that the trial judge in that case was set to hear arguments on AutoZone's post-trial motions.

For those interested in digging into this a little further, here are links to the parties' primary briefs on the post-trial motions:

AutoZone's new trial motion
AutoZone's motion for judgment as a matter of law
Plaintiff's opposition to new trial motion
Plaintiff's opposition to motion for judgment as a matter of law
AutoZone's reply in support of new trial motion
AutoZone's reply in support of motion for judgment as a matter of law

February 19, 2015

Supreme Court declines to resolve split in authority on recurring issue (Izell v. Union Carbide)

I thought Izell v. Union Carbide was going to be the case in which the Supreme Court of California finally resolved a longstanding split in authority in California.

The case was perfectly teed up for the Supreme Court to decide what an appellate court should do with a punitive damages award when the court sharply reduces the amount of compensatory damages on appeal.  Some courts have held that a retrial of punitive damages is necessary.  Other courts have said that the punitive damages should be reduced to preserve the same ratio as the jury's original award.  But the Izell court held that no action was required, because the punitive damages in that case were not constitutionally excessive when compared to the reduced amount of compensatory damages.

Izell had all the hallmarks of a great vehicle for Supreme Court review: a published opinion with a dissent, a recurring issue that has generated a split of authority, hundreds of millions of dollars riding on the outcome of the issue, and lots of parties writing the Supreme Court to support review.  Despite the long odds against review, I said here that the chances of review in Izell were high.

The Supreme Court denied review yesterday.  The docket doesn't indicate a single vote in favor of the petition.  Go figure.

West Virginia senate passes bill capping punitive damages

The Register-Herald of Beckley West Virginia is reporting this morning that the West Virginia state senate has passed a bill that would cap punitive damages at four times compensatory damages or $500,000, whichever is greater.

The bill enjoyed broad bipartisan support, with all but a handful of Democrats voting in favor of the proposal.  An earlier proposal that would have placed the cap a little lower, at three times compensatory damages, failed by a narrow vote yesterday.

If this bill becomes law, it would be a major change to the civil litigation climate in West Virginia.  That state has dished out some colossal punitive damages awards in recent years, reaching into the hundreds of millions of dollars.