April 24, 2008

City of Hope v. Genentech: California Supreme Court Affirms $300 Million Compensatory Damages Award, Reverses $200 Million Punitive Damages Award

The California Supreme Court's opinion in City of Hope v. Genentech is available here. We haven't yet had time to digest the opinion, but here's the crux of the court's holding:

In this complex case, which has 25,567 pages of reporter’s transcript plus 12,267 pages of clerk’s transcript and has generated 18 friend-of-the-court briefs, the primary issue is whether, as the jury found, a fiduciary relationship necessarily arose when City of Hope, in return for royalties, entrusted a secret scientific discovery to Genentech to develop, to patent, and to commercially exploit. Our answer is “no.” That conclusion invalidates the jury’s punitive damages award, which was based on City of Hope’s tort claim for breach of fiduciary duty.

. . . We affirm that part of the judgment awarding City of Hope $300,164,030
in damages for Genentech’s breach of contract. Because punitive damages cannot be awarded for breaching a contract, however, our conclusion that there was no fiduciary relationship requires us to set aside the jury’s award of $200 million in punitive damages to City of Hope.