April 8, 2009

Amended 9th Circuit Order Addresses Issue Raised on This Blog

Late last year we blogged about the Ninth Circuit's published order in Irvin v. Southern Union, in which the court held that a $4 million punitive damages award was excessive, and that any award higher than $1 million (three times compensatory damages) would violate due process.

In a follow-up post, we noted that the Ninth Circuit seems to have a created an intra-circuit split on the proper remedy for an excessive punitive damages. We observed that, in the Leatherman Tool Group opinion in 2002, the Ninth Circuit seemingly adopted the Seventh Circuit's position that a plaintiff is not entitled to a retrial when the court determines that a punitive damages is excessive. Instead, the court should simply reduce the award to the constitutional maximum and modify the judgment accordingly. We also observed, however, that the court took the opposite approach in its 2005 Planned Parenthood opinion, which afforded the plaintiff a new trial. Then in its 2006 opinion in Exxon Valdez, the court reverted to the approach of Leatherman Tool Group, before changing course again with the Irvin order in 2008.

Subsequent to our blog posts, the Ninth Circuit has now modified the order in Irvin, adding a footnote to address these seeming inconsistencies in its approach. The footnote cites the same cases discussed in our blog post - Leatherman Tool Group, Planned Parenthood, and Exxon Valdez - and attempts to reconcile these opinions by explaining that the court "decide[s] on a case-by-case basis whether to remand for a new trial or simply order a remittitur." The court did not explain exactly what criteria would lead the court to choose a particular approach in a particular case. The court said it would allow a retrial in Irvin because the plaintiff might introduce additional evidence at a new trial that could affect the calculation of the proper ratio between punitive damages and compensatory damages. But if that reasoning is valid, plaintiffs would be entitled to a retrial in virtually every case, because there is always a theoretical possibility that the plaintiff could present some new evidence at the retrial.

Perhaps the more principled approach is the one adopted by the Seventh Circuit, under which a plaintiff is never entitled to a retrial. If the plaintiff had a full and fair opportunity to present all of its evidence the first time around, why should it be given another bite at the apple? (See., e.g., Kelly v. Haag (2006) 145 Cal.App.4th 910, 919-920 [plaintiff who fails to present evidence to support punitive damages award is not entitled to a retrial].)