August 29, 2012

Unpublished opinion drastically cuts compensatory damages, but leaves punitive damages award intact (Moran v. Quest Communications)

This unpublished opinion furthers the continuing split of authority in California appellate courts about what a reviewing court should do with a punitive damages award when it reduces the amount of compensatory damages on appeal.

As mentioned in prior posts, our courts are all over the map on this issue.  When a compensatory damages award is reduced on appeal, some courts will order a new trial on punitive damages, some will reduce the punitive damages to maintain the punitive-to-compensatory ratio set by the jury, some courts will send the case back to the trial court to determine whether the punitive damages should be reduced, and some courts do nothing, simply leaving the punitive damages untouched.  This unpublished opinion in this case (Moran v. Qwest Communications), falls into the "do nothing" category.  The court rules that the jury's award of $2.8 million in noneconomic damages is excessive, and that a new trial should be conducted unless the plaintiff  accepts a reduction of that award to $750,000.  If the plaintiff agrees to the reduction, the judgment is affirmed in full.  In other words, the $1 million punitive damages award will stand even if the compensatory damages are reduced by over $2 million.

In my view, the "do nothing" approach is the least defensible.  Juries are instructed to award punitive damages based on the amount of harm suffered by the plaintiff.  If a Court of Appeal later concludes that the amount of harm was actually less than the jury thought it was, the court should not affirm a punitive damages award that was based on the erroneous compensatory award.  I hope the California Supreme Court will sort this issue out soon, even though it passed on the opportunity to do so last year.