February 12, 2008

Pending Petition for Review Challenges Appellate Decision Affirming Punitive Damages Against County Officials Mired in Bribery Scandal

On February 6, defendants in a case raising punitive damages issues filed a petition asking the California Supreme Court to grant review of an appellate court decision affirming a punitive award that the defendants claimed was unconstitutionally excessive. (Here's the Supreme Court docket info.)
The case is County of San Bernardino v. Walsh, and arises out of a bribery and corruption scandal. I haven't seen the petition but, under the facts as outlined in the Court of Appeal opinion, I'm assuming there's no traditional "ratio" challenge to the award given the relatively high compensatory damages: the trial court awarded damages of $4,242,626, comprised of various bribes, kickbacks, and fees accepted by the defendants, and further assessed $1 million in punitive damages against one defendant, plus $500,000 in punitive damages against another on breach of fiduciary duty and fraud causes of action.

It appears the individual defendants' focus has been on a comparison of the awards to the individuals' net worth and claimed inability to pay. The Court of Appeal, however, held the trial court had discretion to infer that the defendants were well able to pay the judgment, concluding that they "intentionally concealed their assets, testified falsely regarding many factual issues, and were, at best, evasive and nonresponsive in answering questions as to their financial condition. This conduct gave the court wide latitude to make inferences from the evidence unfavorable to [defendants] Mays and Walsh."
The California Supreme Court is currently due to rule on the petition by early April (within 60 days after February 6).