June 8, 2012

Cert. petition raises punitive damages issues (Icicle Seafoods v. Clausen)

Who knew maritime law would generate so many notable punitive damages cases?  After Exxon Shipping v. Baker and Atlantic Sounding v. Townsend, now we have Icicle Seafoods v. Clausen.

In Icicle Seafoods, a worker was injured on a barge and sued the barge owner for failing to provide "maintenance and cure," a no-fault remedy akin to workers' compensation for injured seamen.  A jury awarded $37,420 in compensatory damages, determined that the defendant's failure to timely pay those damages was "callous and indifferent or willful and wanton," and awarded $1.3 million in punitive damages, for a ratio of 34 to 1.  The case made its way to the Washington Supreme Court which affirmed the award in a divided opinion.  The majority concluded the award was not excessive because, if you add a $387,558 attorney's fees award to the compensatory damages, the 34 to 1 ratio turns into a 2.8 to 1 ratio.

The defendant filed a cert. petition this week, raising the following issues:

1. Whether, in determining the ratio between compensatory and punitive damages for purposes of applying federal limits on punitive damages, court awarded attorney’s fees are properly included as compensatory  damages.

2. Whether, and to what extent, punitive damages in maritime cases may exceed the 1:1 ratio between compensatory and punitive damages applied by the Court’s Exxon decision.
Our readers may recall that the first issue has already been settled in California: our courts have repeatedly held that attorney's fees may not be added to compensatory damages for purposes of the BMW/Campbell ratio calculation.  The Washington Supreme Court's contrary holding is a bit surprising, given that the plaintiffs in State Farm v. Campbell asked the U.S. Supreme Court to add the attorney's fees to the compensatory damages for ratio purposes and the Supreme Court refused to do so.  But as the petition points out, the lower courts have split on this issue, notwithstanding Campbell.  You can track the status of the petition on the Supreme Court's online docket.