April 23, 2021

Court of Appeal affirms $500,000 in punitive damages where plaintiff recovered only $15,000 in compensatory damages but defendant caused over $100,000 in actual harm (Rubio v. CIA Wheel Group)

At first glance, this published opinion appears to affirm a punitive damages award that is 33 times greater than the plaintiff's actual harm.

The appeal arose from a bench trial on a claim for wrongful termination.  The trial judge awarded the plaintiffs $15,000 in economic damages and $500,000 in punitive damages.  In the process, the trial court made a finding that the wrongfully terminated employee, who died while the litigation was pending, suffered non-economic damages between $100,000 and $150,000.  That amount was not included in the judgment because Code of Civil Procedure section 377.34 precludes recovery for a decedent's pain and suffering.

The defendant appealed, arguing that the 33-to-1 ratio of punitive damages was excessive.  The Court of Appeal (Second District, Division Eight) disagreed.  Citing the California Supreme Court's opinion in Simon v. San Paolo U.S. Holding Co., the court held that the decedent's nonrecoverable emotional distress damages should be treated as part of the actual harm caused by the defendant, when calculating the ratio between the punitive damages and the actual harm.  With those damages included, the ratio was only 3.5 to 1.

The court went on to conclude that the 3.5-to-1 ratio was not excessive because the defendant acted with a "medium high" degree of reprehensibility when it fired an employee who was seriously ill with cancer, under the false pretense of poor job performance.  The court also found that the defendant had forfeited various other challenges to the punitive damages award by failing to procure an adequate record on appeal.