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Quote of the Day - The mathematics is not there till we put it there. - Sir Arthur Eddington

California Punitives: A Win or A Loss?

Remember math class? Think back to those word problems: if $5,000 is to $1.7 million, then what is $53,435 to $10 million?

No matter how I do the math, I can't make those calculations match. On Thursday, however, Justice Kathryn Mickle Werdegar did. The first two links above are cases she wrote that deal with the way that California will be treating punitive damage awards in light of the U.S. Supreme Court's decisions in State Farm Mutual Automobile Insurance v. Campbell and BMW v. Gore.

One of those Supreme Court cases limited punitive damage awards to a multiple less than 10 (the BMW case), and another proposed a three-prong test: (1) the degree of reprehensibility of misconduct; (2) the disparity between the actual or potential harm suffered and the punitive damages award; and, (3) the difference between the punitive damages awarded by the jury and civil penalties (the State Farm case). But those decisions also left states some wiggle room, and wiggle California has done.

In response to the pair of California cases on punitive damages, Plaintiffs' lawyers claim it's a win and Defense lawyers claim it's a win. Yes, I know the last two links are exactly the same; that's my point.

Nobody's quite sure yet.

Do we still have some more wiggling to do? Here's how Justice Werdegar put it: "California law has long endorsed the use of punitive damages to deter continuation or imitation of a corporation's course of wrongful conduct, and hence allowed consideration of that conduct's scale and profitability," she said in the Johnson case. "We do not read the high court's decisions, which specifically acknowledge that states may use punitive damages for punishment and deterrence, as mandating the abandonment of that principle."

So, punitives can still punish, and maybe the single-digit/three-prong test limitation is out the window when a jury wants to punish a corporation. In Simon, however, she wrote: "uncompensated or potential harm may in some circumstances be properly considered in assessing the constitutionality of a punitive damages award."

My read on the two decisions places California within the boundaries of the Supreme Court's three-prong State Farm test. Sure, each case can be evaluated on its merits, but within the high court's guidelines.

Posted by J. Craig Williams on 6/19/2005 at 23:23 Comments (0)


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