December 11, 2013

California Supreme Court grants review in Nickerson v. Stonebridge

Today the California Supreme Court granted review in Nickerson v. Stonebridge, according to the court's online docket.  The issues raised by the petition for review are:

1. In calculating the 10:1 ratio between punitive and compensatory damages, the Court of Appeal held that the policy proceeds must be excluded. Two other published California decisions follow this approach; and one published opinion rejects it. Does due process require that the policy proceeds be excluded from the compensatory damages used to compute the ratio between punitive and compensatory damages?

2. In Brandt v. Superior Court (1985) 37 Cal.3d 818, this Court held that a policyholder's damages in an insurance bad-faith case included the attorney's fees incurred to recover the policy proceeds. In calculating the 10:1 ratio between punitive and compensatory damages, the Court of Appeal excluded the Brandt fees because they were awarded by the trial court in post-trial proceedings, and not by the jury. The court followed another  published opinion that took this approach. But there is also a published opinion that, without comment, included post-judgment Brandt fees in the ratio. Does due process require that Brandt fees must be awarded by the jury in order for them to be factored into the ratio between punitive and compensatory damages? 
3. Both the trial court and the Court of Appeal stated that the $350,000 punitive-damage award in this case was too low to deter Stonebridge from engaging in the same misconduct. Yet both courts felt “constrained” by due process to award no more than 10 times the compensatory award. If the courts determine that punitive damages reduced on the basis of a 10:1 ratio to compensatory damages will not deter a defendant from repeating its misconduct, can they permit substantially higher ratios without offending due process?

Related posts:

Court of Appeal orders reduction of $19M punitive damages award to $350,000 (Nickerson v. Stonebridge) - PART II

Court of Appeal orders reduction of $19M punitive damages award to $350,000 (Nickerson v. Stonebridge) - PART I

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