April 19, 2011

Miller v. Faiz: California Court of Appeal considers an excessiveness argument not raised below, and cuts $250,000 punitive damages award in half

This unpublished opinion from the California Court of Appeal (Fourth District, Division Three) addresses a recurring procedural question: can an appellate court consider a defendant's argument that a punitive damages award is excessive even if the defendant did not raise that argument in a new trial motion?

Ordinarily, a defendant who wants to argue excessive damages must do so in a new trial motion, or waive the right to make the argument on appeal.  The idea is that the trial court is in the best position to evaluate any factual disputes regarding the appropriate amount of damages.

The plaintiff tried to invoke that rule here, to argue that the defendant had waived any right to challenge the amount of punitive damages appeal by not raising that argument in a new trial motion.  The Court of Appeal disagreed, holding that a constitutional challenge to the amount of a punitive damages award is a purely legal issue that the Court of Appeal reviews de novo, and therefore can be considered for the first time on appeal.  (That seems entirely correct to me, but I'm not sure any published California opinion says so.)

The court's ruling on that procedural issue turned out to be important for the parties to this case, because the court went on to determine that the jury's $250,000 punitive damages award (ratio of 8.3 to 1) was excessive, and that any award in excess of $125,000 (ratio of 4.2 to 1) would be unconstitutional.

Justice Aronson dissented, disagreeing with the court's decision to reduce the award. In his view, the defendant's conduct (fraudulently promising to take care of the plaintiff's elderly father, and then neglecting him) was sufficient to support the jury's award.  The dissenting opinion also cites the defendant's wealth as a basis for affirming a higher award, which seems inconsistent with the U.S. Supreme Court's statement in State Farm v. Campbell that "[t]he wealth of a defendant cannot justify an otherwise unconstitutional punitive damages award."