January 7, 2015

Court of Appeal vacates $405,000 punitive damages award in discrimination case, finding it duplictative of statutory penalty (Paletz v. Adaya)

This unpublished opinion contains an unusually lengthy discussion of an issue that rarely arises in California punitive damages cases: whether punitive damages can be awarded in a case in which the plaintiff has already recovered a statutory penalty.

The general rule on this issue is well established: if a defendant is liable for a statutory penalty (such as treble damages) for a particular act of misconduct, the defendant cannot be subjected to punitive damages for the same act.  Allowing both a statutory penalty and punitive damages would be duplicative, so the plaintiff must choose one or the other.

Notwithstanding this general rule, courts sometimes permit both statutory penalties and punitive damages in the same case, either because (a) the particular statutory language in question shows that the Legislature intended to authorize duplicative penalties, or (2) the case involves separate acts of misconduct that merit separate punishment.

In this case, the plaintiff alleged that the defendant hotel discriminated against her because she is Jewish.  She recovered compensatory damages and statutory penalties under California's Unruh Civil Rights Act, and she also recovered $405,000 in punitive damages.

The Court of Appeal (Second Appellate District, Division Three) vacated the punitive damages, finding that this case did not fit within either of the exceptions to the general rule against duplicative punishment.  The court first concluded that the provision of the Unruh Act that authorizes treble damages is punitive in nature, and that nothing in the statute indicates that the Legislature intended to permit duplicative damages.  The court also went on to say that the statutory penalty and the punitive damages were awarded for the same misconduct, and therefore the defendant could be subjected only to one punishment.  The plaintiff gets to keep the statutory penalties, but not the punitive damages.