California Punitive Damages

Court of Appeal affirms $40,000 in punitive damages after reversing $3.8 million in compensatory damages (Corenbaum v. Lampkin)

2013-05-13T11:29:00.000-07:00

Our report on this case is a bit tardy, because I was traveling abroad when the decision was issued. The main issue in this case has nothing to do with punitive damages, but it merits a brief mention here because the court’s treatment of the punitive damages award is somewhat unusual.

The primary question in this appeal was whether, in light of the California Supreme Court’s opinion in Howell v. Hamilton Meats, personal injury plaintiffs can present evidence of the amounts their medical providers billed for services, even though the providers agreed to accept lesser amounts as payment in full for their services. Howell held that a plaintiff’s damages are properly measured by the amount paid, not the amount billed. The question here was whether the amount billed was nonetheless admissible as relevant on the issues of future medical expenses and noneconomic damages.

The trial court allowed the plaintiffs to introduce evidence of the amount billed, but the California Court of Appeal (Second Appellate District, Division Three) held, in a published opinion, that the evidence was inadmissible. Accordingly, the Court of Appeal reversed the jury's $3.8 million compensatory damages award for a new trial. Interestingly, the court chose not to reverse the jury’s award of $40,000 in punitive damages. Ordinarily, when an appellate court reverses a compensatory damages award for a new trial, reversal of the punitive damages is virtually automatic. But perhaps the court in this case thought that the small amount of punitive damages awarded here dictated a different result.

Full disclosure: Horvitz & Levy represented the defendant in this appeal, although we did not brief or argue the punitive damages issues. We associated into the case after the initial briefing, submitting a supplemental brief and presenting oral argument for the defendant. The Court of Appeal inadvertently omitted our firm’s name from the slip opinion (presumably because we were not the initial counsel of record).

$4.8M punitive damages award reversed for lack of evidence that corporate management participated in wrongdoing (Martinez v. Rite Aid)

2013-04-24T10:41:00.000-07:00

In October 2010 we reported about this $4.8 million punitive damages award against Rite Aid in a disability discrimination case. Yesterday, the California Court of Appeal (Second Appellate District, Division Seven) vacated that award in an unpublished opinion.

The Court of Appeal based its decision on Civil Code section 3294, subdivision (b), which provides that a corporation cannot be liable for punitive damages based on the acts of an employee unless a corporate officer, director, or managing agent committed, authorized, or ratified those acts. The Supreme Court has defined a managing agent as a person who has the authority to determine corporate policy, meaning formal policies that affect a substantial portion of the company and are likely to come to the attention of corporate leadership.

The Court of Appeal held that none of the three different corporate employees who allegedly discriminated against the plaintiff qualified as managing agents within the meaning of section 3294. One was a "human resources manager," one was a "store district manager," and the third was a "pharmacy district manager." The court found that, although all of them had "manager" in their title, none of them had any real authority to establish formal company policies for a substantial portion of the company. As a result, the court reversed the punitive damages award, entitling Rite Aid to judgment in its favor on that issue. (For unrelated reasons, the court also reversed the jury's $3.4 million compensatory damages award and ordered a new trial on that issue.)

Supreme Court of India affirms $18.4 million punitive damages award

2013-04-23T20:55:00.001-07:00

An editorial in Business Standard reports on a case in which the Supreme Court of India has affirmed a punitive damages award of "Rs 100 crone" in a contamination case against the operator of a copper smelting plant. That works out to $18.4 million, according to an on-line currency converter.

The editorial says India's Supreme Court has traditionally been hostile to punitive damages. The author, who is apparently a student at Stanford law school, worries that the decision does not clearly explain the basis for the punitive damages award, possibly opening the door to expansion of punitive damages claims in future environmental litigation in India.