This unpublished opinion from the California Court of Appeal (Second Appellate District, Division Seven) is mostly unremarkable. It addresses the sufficiency of the evidence to support a $500,000 punitive damages award, and finds ample evidence that the defendant committed fraud within the meaning of Civil Code section 3294.
Yet one aspect of the court's reasoning is a bit peculiar. In a footnote, the court states that the "clear and convincing" evidence standard, which governs California punitive damages claims, does not apply in the Court of Appeal:
Although the heightened “clear and convincing evidence” standard of proof applied to the trial court's findings on punitive damages (see Civil Code, § 3294), that does not affect our standard of review on appeal in determining whether there is substantial evidence to support the court's findings.
This is not the first time we have seen this. When another unpublished opinion did this in 2008, the Supreme Court of California granted review on the issue. That case was later dismissed when the parties settled, and we have since seen other unpublished opinions take the same approach. Nevertheless, we continue to believe that if courts are not going to follow existing law on this issue, they should publish their opinions and explain the basis for their differing view. It is not as if the Court of Appeal in this case was unaware of the Shade Foods decision---the court cited Shade Foods on another point.
The court's footnote cites a 1973 Supreme Court opinion to support the notion that the clear and convincing evidence standard disappears when a case goes up on appeal. But that opinion no longer reflects the Supreme Court's view. The modern Supreme Court has taken the clear and convincing evidence standard into account when reviewing factual findings subject to that standard. (See Conservatorship of Wendland (2001) ["The 'clear and convincing evidence' test requires a finding of high probability . . . we ask whether the evidence [on the issue before the court] has that degree of clarity"]; Estate of Ford (2004) [finding that certain testimony "was not clear and convincing evidence" on the issue of equitable adoption].)
If the defendant in this case petitions for review on this issue, it will be interesting to see if the California Supreme Court decides to take it up once again.