February 28, 2008

Kuist v. Hodge—Unpublished Decision Demonstrates the Use of Reprehensibility Evidence in the Second Phase of a Punitive Damages Trial

In a case arising out of a partnership dispute, the Court of Appeal issued an unpublished opinion yesterday that's not earth shattering, but prompts a note about the scope of second-phase evidence in a bifurcated punitive trial. The jury in this case awarded two attorneys about $4.5 million and $4 million respectively in compensatory damages against their former law partner. And, after finding malice, oppression or fraud, the jury heard evidence from the defendants in the "amount" phase of trial concerning their claimed good faith actions, but still awarded punitive damages totalling almost $2 million.

While the propriety of introducing mitigation evidence during the amount phase of trial was not apparently directly at issue in the case, the court's discussion of defendant's challenge to the sufficiency of evidence to support punitive liability suggests there's nothing suspect about such a procedure (even if it may not always be tactically advisable). The court explained that the mitigation evidence "was not revealed to the jury when it was asked to decide whether appellants had engaged in conduct tantamount to oppression, fraud or malice. . . . Appellants may not assert that the jury failed to consider evidence they chose not to present to nullify its conclusion." What's somewhat interesting about this is that we've heard arguments by some counsel in other cases that no evidence may be introduced during the second phase of a bifurcated punitive trial aside from information about the defendant's financial condition, which seems plainly wrong if the jury's task is to evaluate reprehensibility - anything relevant to that specific task should, presumably, come in from either side.

One last aside---whatever one might think of California's rules allowing "unpublished" opinions, this case provides an example of an opinion that seems to have been written without any intent to provide guidance to litigants other than the parties before the court. Responding to the defendant's challenge that no evidence supported punitive liability (i.e., that there was no evidence of conduct that harmed the plaintiffs and was undertaken with malice, oppression or fraud), the court offered this rather unsatisfying description: "The record amply supports the jury’s findings and trial court’s conclusion that appellants engaged in conduct warranting imposition of punitive damages. Specifically, in denying appellants’ motion for judgment notwithstanding the verdict, the trial court noted that substantial evidence permitted the jury to find 'the partnership was never concluded properly,' and Hodge 'motivated by . . . any one of the factors that are taken into consideration for punitive damages, took advantage of the situation for his own benefit,” in “a conscious, deliberative manner.'”