Chicago_State_Athletics_wordmarkThe due process review of a punitive damages award for excessiveness has a number of interconnected parts. A series of relatively small errors can quickly add up and dramatically skew the outcome of a review process that is intended to impose predictability and consistency on the largely black-box process juries use when setting the amount of punitive damages.  The Illinois Appellate Court’s decision in Crowley v. Watson illustrates the point.
Continue Reading Illinois Appellate Court Upholds $2 Million Punitive Award Against Chicago State University

The Due Process Clause of the Fourteenth Amendment requires procedural fairness in state trials, but that principle seems absent from a recent California Court of Appeal decision upholding a judgment against Kaiser Gypsum Company for almost $1.6 million in compensatory damages and close to $4 million in punitive damages.

AsbestosContinue Reading California Court Of Appeal Bends Over Backwards To Uphold Substantial Punitive Award In Asbestos Case

Seal_of_the_Supreme_Court_of_TexasOne of the biggest challenges confronting a defendant that has lost a large judgment is the need to file a supersedeas bond in order to prevent execution on the judgment during the pendency of the appeal.  There are good arguments for not requiring the defendant to bond the punitive damages part of such a judgment, but in our experience courts seldom accept them.

Recognizing the hydraulic pressure imposed on defendants by a requirement that they bond the full amount of the judgment, plus interest and costs, the Texas Legislature in 2003 enacted Section 52.006 of the Civil Practice and Remedies Code, which imposes an array of limitations on the bond requirement.

First, the Legislature limited the required bond to the amount of compensatory damages, plus the interest estimated to accrue during the appeal and any costs awarded in the judgment.  Second, the Legislature capped the amount of any bond at the lesser of $25 million or 50% of the defendant’s net worth.  And third, the Legislature gave the courts discretion to further reduce the amount of the bond if necessary to prevent the defendant from suffering “substantial economic harm.”

Earlier this year, the Texas Supreme Court provided some interesting guidance on the proper interpretation of Section 52.006. The decision in In re Longview Energy Co. may, in addition, provide useful grist for excessiveness arguments in punitive damages cases.Continue Reading Texas Supreme Court Limits Amount Of Supersedeas Bond In Decision With Possible Implications For Cases In Which Punitive Damages Are Challenged As Excessive

US-CourtOfAppeals-10thCircuit-SealAlthough the Supreme Court’s modern due process cases have given lower courts a framework for deciding whether an award of punitive damages is excessive, some lower courts have been misapplying the Supreme Court’s guidance, refusing to disturb (or inadequately reducing) punitive awards that are much larger than necessary to accomplish the legitimate retributive and deterrent purposes of punitive damages.

Lompe v. Sunridge Partners, LLC, which is currently pending before the Tenth Circuit, is illustrative.Continue Reading Mayer Brown Submits Amicus Brief For Chamber Of Commerce In Tenth Circuit Appeal Involving Excessive Punitive Damages

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

Whenever a state high court agrees to consider whether a punitive award is excessive, it is big news.  So we were pleased to see the Wisconsin Supreme Court making some good news when it reduced the punitive damages award from $1 million to $210,000 in Kimble v. Land Concepts, Inc., __ N.W.2d __, 2014 WL 1584454 (Apr. 22, 2014). 

Even better, the court correctly interpreted several aspects of the Supreme Court’s reprehensibility, ratio, and comparative-fines guideposts that often give courts trouble.  See BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (1996); State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003).

Wooden Mallet and flag Of Wisconsin (clipping path included)Kimble involved a title company that concealed the absence of an easement providing access to a parcel of land and refused to defend the owner’s title when the lack of access was discovered.  The absence of an easement contributed to the owner losing a sale, although the property later sold after the owner purchased an easement providing access for $40,000.  Following trial, the plaintiffs were awarded $29,738.49 for their legal expenses in securing the easement and $1,000,000 in punitive damages. 

After granting discretionary review, the Wisconsin Supreme Court started on the right foot by noting that a punitive award is excessive not only when it is disproportionate to the defendant’s wrongdoing but also when it “is more than necessary to serve the purposes of punitive damages.” 

We often have argued that, when a lesser award would serve the state’s interest in punishment and deterrence, then the award must be reduced to that lesser amount because anything more violates due process.  Too often courts fail to recognize this substantive limit on the amount of a punitive award.
Continue Reading Wisconsin Supreme Court Substantially Reduces $1 Million Punitive Award For Insurance Bad Faith