September 28, 2010

Article analyzes punitive damages decisions after Exxon Shipping v. Baker

When the Supreme Court decided Exxon Shipping v. Baker in 2008, observers wondered whether about the impact of the opinion beyond the maritime context.  This article attempts to answer that question.  The authors (Barbara A. Lukeman and Raymond Mariani at Nixon Peabody) conclude that "Exxon did not drive the lower courts to impose a 1:1 ratio more than had been occurring beforehand." 

As far as California punitive damages litigation is concerned, that statement is accurate.  The Exxon Shipping opinion itself did not launch a wave of cases imposing 1-to-1 ratios; that wave actually began a few years before Exxon Shipping

A few years ago, the idea of a court reducing an award to a 1-to-1 ratio was unheard of in California.  But in 2006 our courts, taking their cue from State Farm v. Campbell, began reducing awards to a 1-to-1 ratio, even when those awards were already in the single digits.  (See, e.g., Jet Source Charter, Inc. v. Doherty (2007) 148 Cal.App.4th 1 [ratio reduced from 4-to-1 down to 1-to-1]; Walker v. Farmers Ins. Group (2007) 153 Cal.App.4th 965 [ratio reduced from 5.6-to-1 down to 1-to-1]; Grassilli v. Barr (2006) 142 Cal.App.4th 1260 [ratios reduced from 8.4-to-1 and 7.5-to-1 down well below 1-to-1]; see also Roby v. McKesson HBOC (2006) 146 Cal.App.4th 63, review granted [ratio reduced from 10.7-to-1 down to 1.4-to-1].)

That trend continued after Exxon, with courts citing Exxon in support of reduced 1-to-1 ratios.  (See Stevens v. Vons (2009) [unpublished] [ratio reduced from 10-to-1 down to 1-to-1]; Essex Ins. v. Prof. Building Contractors [unpublished] [ratio reduced from 3.7-to-1 down to 1-to-1]; see also Roby v. McKesson (2009) 47 Cal.4th 686 [ratio reduced from 10.7-to-1 down to 1.4-to-1, further reduced to 1-to-1 by California Supreme Court].)

This wave of cases isn't exactly a flood, but compared to the state of the law a few years ago, the number of 1-to-1 ratio cases in recent years is remarkable.