December 23, 2019

Court of Appeal sets forth appropriate post-trial remedies for excessive punitive damages (ENA North Beach v. 524 Union Street)

This published opinion provides an overview of the proper remedies that a trial court can use to correct an an excessive award of punitive damages.  The opinion doesn't contain anything new or surprising, but it provides a good overview of existing law:

1.  If a trial court finds that a punitive damages award is constitutionally excessive (i.e., the award exceeds the maximum amount permitted by due process), the trial court should grant judgment notwithstanding the verdict and reduce the award to the constitutional maximum. 

2.  If a trial court finds that a punitive damages award is excessive under state law (i.e., the award appears to be the product of passion and prejudice, or is disproportionate to the defendant's financial condition), the trial court should grant a new trial.  The new trial can be conditional, subject to the plaintiff's acceptance of a remittitur of the award to a lesser amount.

The trial court in this case used the wrong procedure.  The court found the award was excessive under state law, but instead of granting a new trial, the court granted judgment notwithstanding the verdict.  The Court of Appeal (First District, Division Two) agreed that the award was excessive, but faulted the trial court for employing the wrong remedy.  The Court of Appeal nevertheless affirmed the judgment, because the plaintiff's counsel stipulated at oral argument that he would prefer to accept the reduced amount rather than undergoing a new trial.  Thus, if the trial court had ordered a conditional new trial subject to a remittitur, the plaintiff would have accepted the remittitur.  So in the end, the trial court's procedural error was harmless.