May 12, 2009

Tort Reform, Appeal Bonds, and Punitive Damages

The Journal Record reports here on the Oklahoma legislature's approval of a civil justice reform bill which, among other things, will eliminate the requirement of posting an appeal bond in punitive damages cases. Other jurisdictions have adopted similar reforms, eliminating or relaxing the bonding requirements in punitive damages cases. Such reforms acknowledge the reality that a defendant's right to appellate review of punitive damages is impaired if the punitive award is so large that the defendant cannot afford to post a bond. Although the defendant can appeal without a bond, it will be exposed to enforcement of the punitive damages throughout the appeals process, which could destroy the defendant's business before the appeal is decided.

No such reform has been adopted in California. Defendants here are required to post a bond equal to 1.5 times the amount of the judgment (including punitive damages) if they want to prevent the plaintiff from enforcing the judgment while the appeal is pending. A defendant who cannot afford to post a bond to cover a punitive damages award can petition the Court of Appeal for a writ of supersedeas, asking the court to exercise its discretionary authority to stay enforcement of the judgment without a bond. But in our experience, the Court of Appeal has little sympathy for defendants in this situation, and is generally unwilling to issue a stay on this basis, even when the defendant shows that its business will be destroyed by the enforcement of the punitive damages award while the appeal is pending.