June 15, 2018

Court of Appeal reduces $70 million punitive damages award to $19.6 million (Kuhlman v. Ethicon Endo-Surgery)

Back in 2015 we reported on an Oakland jury's award of $70 million in punitive damages in this products liability case involving an allegedly defective hemorrhoid stapler.  We noted that given the substantial compensatory damages award ($9.8 million), an excessiveness challenge was likely.

This week the California Court of Appeal (First District, Division Five) issued this unpublished opinion reversing the punitive damages award as excessive.

The court found that the evidence, when viewed in the light most favorable to the plaintiff, could support a punitive damages award in some amount, because there was evidence that the defendant failed to take adequate precautions against a known risk to patient safety.

But when addressing the issue of excessiveness, the court the defendant's conduct was only moderately reprehensible when compared to other punishable conduct.  The defendant did not intend to cause harm, and acted responsibly after receiving reports of injuries caused by its product.

The ratio of punitive damages to compensatory damages awarded by the jury was roughly seven to one. The court observed that, while double-digit ratios are presumptively unconstitutional, that does not mean that single-digit ratios are presumptively valid.  Both the U.S. and California Supreme Courts have emphasized that the maximum permissible ratio is much lower in cases involving substantial compensatory damages.  The court concluded that in this case, any ratio in excess of two to one would violate due process.  Accordingly, the court ordered a reduction of the award to $19.6 million.