October 13, 2011

Unpublished opinion affirms $7 million in punitive damages while misstating the standard of review (Trealoff v. Forest River)

In this unpublished opinion issued last week, the California Court of Appeal (Fourth District, Division Two) seems to have misstated the applicable standard of review.

The jury in this case awarded a total of $2.55 million in compensatory damages and $15 million in punitive damages against two defendants.  The trial court ruled that the punitive damages were unconstitutionally excessive and reduced them to $7 million.  Both sides appealed.  The defendants argued that $7 million was still excessive, and the plaintiff argued that the trial court was wrong in finding the original $15 million excessive.

The Court of Appeal's opinion leaves the $7 million award in place.  The court's analysis of the amount isn't particularly noteworthy except for the court's statements about the appropriate standard of review, which seem incorrect to me.

When analyzing the defendants' appeal, the Court of Appeal states that the de novo standard of review governs the issue of whether the $7 million is unconstitutionallly excessive.  Nothing wrong with that. But when analyzing the plaintiff's appeal, the court applies the more deferential abuse-of-discretion standard of review to the trial court's determination that the $15 million was excessive.  Now we have a problem.  The court cites Boeken v. Philip Morris, but Boeken clearly holds that the abuse-of-discretion standard applies only to the extent a trial court finds a punitive award excessive under state law.  Boeken makes clear that the de novo standard of review applies to a trial court's ruling on excessiveness as a matter of federal constitutional law.  In this case, the trial court found the award excessive as a matter of federal constitutional law, so the court should have reviewed that ruling de novo, both under Boeken and the U.S. Supreme Court's opinion in Cooper v. Leatherman.  Perhaps the court will correct itself before the opinion becomes final, though the change in standard of review might not affect the outcome.