July 16, 2018

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. 

July 12, 2018

Missouri jury awards $4.14 billion in punitive damages against Johnson & Johnson in talc case

Harris Martin (subscription required) reports that a jury in St. Louis has awarded $550 million in compensatory damages and $4.14 billion in punitive damages against Johnson & Johnson in a multi-plaintiff trial.  The 22 plaintiffs claim they developed ovarian cancer as a result of using J&J's Baby Powder and Shower-to-Shower products.

Unlike this verdict we blogged about back in April, which involved claims of asbestos contamination, the theory in this case is that talc itself causes ovarian cancer.  A $62 million punitive damages award in a similar case was reversed by the Missouri Court of Appeals late last year on jurisdictional grounds.

The plaintiffs in this latest case are represented by Mark Lanier, who seems to be on something of a crusade against Johnson & Johnson.  He also represented the plaintiffs in the Texas hip-implant case against Johnson & Johnson that generated a $360 million punitive damages award, but was reversed by the Fifth Circuit due to Lanier's misconduct at trial.

June 27, 2018

Los Angeles jury awards $28 million in punitive damages for age discrimination

Mynewsla.com reports that an L.A. Superior Court jury awarded $28 million in punitive damages, on top of $3 million in compensatory damages, in an age discrimination lawsuit against Sybron Dental Specialities, Inc. and KaVo Kerr Group. 

A story yesterday reported that plaintiff's counsel Carney Shegarian asked for an award of $73 million in punitive damages.  The jury may have thought they were compromising by awarding "only" $28 million.  As we have noted before, research has shown that the most significant predictor for a large punitive damages award is a large request.  (See Sunstein, Punitive Damages: How Juries Decide.)  That is part of the reason why some courts prohibit plaintiffs from "anchoring" a punitive damages award by requesting a specific number. Clearly the trial court in this case didn't follow that approach.

The story quotes Mr. Shegarian as stating that the award in this case may be the largest of its kind in Los Angeles legal history.  The defendants may try to use those quotes against him if they challenge the award in posttrial motions or on appeal.

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.