September 14, 2019

Ninth Circuit vacates $7.9 million punitive damages award in dispute between Steinbeck heirs (Kaffaga v. Estate of Thomas Steinbeck)

This published Ninth Circuit opinion holds that a $7.9 million punitive damages award must be vacated under California law because the plaintiff failed to introduce meaningful evidence of the defendant's financial condition.

This case arises out of decades of litigation between John Steinbeck's heirs.  When Steinbeck died in 1968, he left his interests in his works to his third wife, Elaine.  He left $50,000 each to his two sons by previous marriages.  It seems that his sons were unhappy with that arrangement, resulting in decades of acrimonious litigation.

The litigation ultimately culminated in this federal lawsuit by Waverly Kaffaga (the executrix of Elaine's estate) against Gail Steinbeck (executrix of the estate Thomas Steinbeck, John's son).  Kaffaga claimed that Gail had unreasonably asserted rights in John Steinbeck's works, which caused multiple Holllywood producers to abandon negotiations with Kaffaga to develop screenplays for remakes of The Grapes of Wrath and East of Eden.

A jury ruled in favor Kaffaga and awarded $5.25 million in compensatory damages for slander of title, breach of contract, and tortious interference with economic advantage, and $7.9 million in punitive damages.

On appeal, the Ninth Circuit affirmed the judgment except for the punitive damages award.  As often happens with punitive damages appeals in California state court, the court held that the plaintiff had failed to introduce meaningful evidence of the defendant's financial condition.  Kaffaga presented evidence that Gail had various television series and films in development, but introduced no evidence about the potential income from those projects.  Nor did Kaffaga present evidence from an expert accountant to examine Gail's financial records to estimate her liabilities or net worth.

The opinion mentions that at oral argument, Kaffaga's counsel blamed Gail for the lack of evidence, arguing that she was uncooperative during discovery.  The Ninth Circuit rejected this contention because Kaffaga could not point to anything in the record showing that she moved to compel production of additional evidence, and because Kaffaga had not asked for a jury instruction seeking an adverse inference from Kaffaga's alleged failure to disclose.

The tone of the opinion strongly suggests that the court wants this opinion to be the last chapter in the Steinbeck litigation.  But the history of this litigation suggests that is unlikely.