Why Defendants In Punitive Damages Cases Have A Due Process Right To Bifurcation

Concept_Split Coin_14927417MediumThere are substantial tactical questions whether or when it is in the defendant’s interest to seek bifurcation of the amount of punitive damages from other trial issues and whether the defendant should in some circumstances seek bifurcation of all punitive damages issues from compensatory damages issues or trifurcation so that punitive liability and punitive amount are each tried in separate second and third phases, respectively (if necessary).

Those are subjects for another post.  This post concerns the defendant’s right to have a separate proceeding to determine punitive amount, which is the most common form of bifurcation.

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West Virginia Supreme Court Of Appeals Upholds $32 Million Punitive Damages Award Against Nursing Home

We recently posted about the decision by the West Virginia Supreme Court of Appeals in Manor Care Inc. v. Douglas, — S.E.2d —-, 2014 WL 2835831 (W. Va. June 18, 2014), to cut a multimillion-dollar punitive award by more than half in a case against a Charleston nursing home.  In our prior post, which is available here, we commented on the court’s decision to reduce the punitive  damages proportionately (from $80 million to about $32 million) after it reduced the compensatory damages from $11.5 million to $4.6 million.

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The West Virginia court’s decision to afford a proportionate reduction of the punitive damages after vacating part of the compensatory damages raises is noteworthy, but it may be even more striking that the court refused to reduce the $32 million punishment any further.  In an opinion that shows little inclination to follow the U.S. Supreme Court’s guidance that high awards of compensatory damages require lower ratios, the West Virginia Supreme held that the 7:1 ratio between punitive and compensatory damages was not excessive.  The decision suggests that large companies hit with very large verdicts in West Virginia state court may have difficulty obtaining any reduction of the punitive damages as long as the ratio is lower than 10:1 and the court deems the conduct to be highly reprehensible.

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Bryan Garner Releases New Edition Of Black’s Law Dictionary

I was excited to receive in the mail yesterday a complimentary copy of the tenth edition of Black’s Law Dictionary, which is edited by Bryan Garner, an acquaintance of many years with whom I have long enjoyed discussing the craft of legal writing.

Garner bobbleheadThere is something about Black’s that brings me back to the early days of law school when virtually every legal term I encountered in the cases we read for class was mysterious.  Back then, I was using the fifth edition, which I still keep on my shelf for handy reference.  Now, I am pleased to bookend it with the tenth edition.

Like prior versions edited by Bryan, the tenth edition is low on jargon and uses more modern language to describe even hoary doctrines.

What does any of this have to do with punitive damages?  Not much, except that a comparison of the definitions of punitive damages from the two editions—published 35 years apart—is illuminating.

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Mayer Brown Submits Amicus Brief On Behalf Of The Chamber Of Commerce In California Supreme Court Punitive Damages Case

fraction (1)As readers doubtlessly are aware, in State Farm v. Campbell the U.S. Supreme Court provided lower courts with substantial guidance on the constitutionally permissible ratio between the punitive damages and the harm to the plaintiff.  In particular, the Court admonished that generally the ratio should not exceed the single-digit range and stated that, when compensatory damages are “substantial,” often a 1:1 ratio will mark the constitutional line.  As a result of that guidance, the calculation of the denominator of the ratio of punitive damages to harm has become increasingly important, presenting courts with a range of interesting issues.

Nickerson v. Stonebridge Life Insurance Co., which is currently pending in the California Supreme Court, involves one such issue.  In California, an insured who can persuade a jury that an insurer denied his claim for policy benefits in bad faith is entitled to recover as “compensatory damages” the amount of attorneys’ fees he incurred in pursuing payment of the policy benefits (but not in pursuing the bad-faith claim or punitive damages).  Generally, the amount of attorneys’ fees is set by the court after trial, though nothing precludes the parties from agreeing to allow the jury to set the fees.

In Nickerson, the California Court of Appeal declined to include the attorneys’ fees in the denominator of the ratio of punitive damages to actual or potential harm for the simple reason that the jury was not aware of the fees, which accordingly played no affirmative role in its determination of the amount of punitive damages.  The California Supreme Court granted review to consider whether attorneys’ fees set by a court post-verdict may be added to the denominator of the ratio of punitive damages to actual or potential harm.

On behalf of the Chamber of Commerce of the United States, my colleagues Don Falk, C.J. Summers, and I recently submitted an amicus brief in support of the respondent insurer.

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The threat of large punitive damages awards is particularly acute for businesses, large and small.  Like many of its counterparts in other states, the Montana legislature sought to relieve businesses of the unpredictability and hydraulic pressure to settle created by the risk of uncabined punitive awards by imposing a cap on such awards: the lesser of $10 million or 3% of a defendant’s net worth.

615px-Flag_of_Montana.svgThough similar restrictions have generally, but not always, withstood state constitutional challenge, a Montana state trial court judge struck down the cap as unconstitutional a little over three months ago.  The defendant, with support from the Montana Attorney General as intervenor and two Montana business organizations as amici, has urged the Montana Supreme Court to reverse the lower court and uphold the constitutionality of the cap.  (For copies of their briefs, click here and search for case DA 14-0113).  Continue Reading

California Punitive Damages Blog Reports On Recent West Virginia Supreme Court Decision

Our friends at the California Punitive Damages Blog recently issued this post on a decision of the West Virginia Supreme Court of Appeals reducing an $80 million punitive award against a nursing home to $32 million. The post focuses on the court’s conclusion that a reduction of the compensatory damages from $11.5 million to $4.6 million necessitated a proportionate reduction in the punitive damages.  The post points out that courts in California have been divided as to whether that kind of automatic proportionate reduction is appropriate.

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California Supreme Court Holds That Retailers Owe No Duty To Maintain Automatic External Defibrillators On Premises

Object-DefribillatorAny time a state supreme court is asked to recognize a new tort duty, its decision necessarily will affect the potential availability of punitive damages.  Hence, I consider it newsworthy that in a decision issued on June 23 the California Supreme Court declined to impose on retailers a duty to maintain automatic external defibrillators on their premises for use in the event customers experience sudden cardiac arrest.  Congratulations to my colleagues Donald Falk and Richard Caldarone, who represented Target, the prevailing party, in the case.

A Report On The Ninth Circuit Oral Argument In Arizona v. ASARCO

Earlier this month, our colleague Evan Tager posted about Arizona v. ASARCO, in which the Ninth Circuit granted rehearing en banc to consider how courts should review punitive damages for excessiveness in Title VII cases.  Evan’s prior posts on the case are here and here.  On June 18, the en banc panel heard oral argument.

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Why The Ninth Circuit Should Hold That The Punitive Damages Award In Arizona v. ASARCO Is Excessive

Concept_Check-Too Much_11462441LargeIn a prior post, I explained why the proper approach in Arizona v. ASARCO is to compare ASARCO’s conduct to conduct in other Title VII cases and then select a punishment—from zero to $299,999—commensurate with where ASARCO’s conduct stands on the spectrum of punishable conduct.

In this post, I will undertake to show why the Ninth Circuit panel and district court were mistaken in concluding that ASARCO’s conduct was reprehensible enough to warrant either (i) the highest punitive award ever imposed when compensatory damages were $1—$125,000—as the panel majority held, or (ii) the maximum permissible under Title VII—$299,999—as the dissenting member of the panel and the district court held.

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Ninth Circuit To Hear Title VII Punitive Damages Case En Banc

Ninth Circuit SealIt’s not often that federal courts of appeals agree to decide punitive damages cases en banc, so Arizona v. ASARCO, which the Ninth Circuit will rehear en banc on June 18, strikes us as worthy of attention.  In fact, because the case potentially implicates a number of very important issues in the law of punitive damages, my colleagues and I plan to do a series of posts on the case.

So as not to bury the lead, let me say at the outset that I think that the parties and the original Ninth Circuit panel are looking at the issues in this case through the wrong lens.  I’ll explain what I mean later in the post.

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