• Second Appellate District
• 10/22/14
• Punitive Damages

This is an asbestos related case where much of the discussion focused on aspects of the law unique to asbestos cases. Union Carbide Corporation appeals from a judgment entered in favor of Plaintiffs Bobbie Izell and Helen Izell on claims for personal injuries and loss of consortium stemming from Mr. Izell’s alleged exposure to Union Carbide asbestos and subsequent diagnosis with mesothelioma. After a four-week trial the jury returned special verdicts finding Union Carbide 65 percent comparatively at fault for Plaintiffs’ injuries and awarding Plaintiffs $30 million in compensatory damages plus $18 million in punitive damages against Union Carbide. By remittitur, which Plaintiffs accepted, the trial court reduced the compensatory damage award to $6 million, but declined to disturb the punitive damages. On appeal, Union Carbide contends the evidence was insufficient to support the liability finding, apportionment of comparative fault, and the remitted compensatory damage award. Union Carbide also challenges the punitive damage award as excessive.

The discussion on punitive damages provides a nice encapsulation of the constitutionality of punitive damages:

“Union Carbide argues the punitive damage award is unconstitutionally excessive under two of the three State Farm guideposts-the degree of reprehensibility of the defendant’s misconduct and the relationship between the punitive damage award and theharm suffered by the plaintiff.”

Degree of reprehensibility

“The degree of reprehensibility of the defendant’s conduct is the most important indicator of the reasonableness of a punitive damages award. (State Farm, supra, 538 U.S. at p. 419; Gore, supra, 517 U.S. at p. 575.) In assessing the reprehensibility of a defendant’s conduct, we are to consider whether “[(1)] the harm caused was physical as opposed to economic; [(2)] the tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others; [(3)] the target of the conduct had financial vulnerability; [(4)] the conduct involved repeated actions or was an isolated incident; and [(5)] the harm was the result of intentional malice, trickery, or deceit, or mere accident. [Citation.] The existence of any one of these factors weighing in favor of a plaintiff may not be sufficient to sustain a punitive damages award; and the absence of all of them renders any award suspect. It should be presumed a plaintiff has been made whole for his injuries by compensatory damages, so punitive damages should only be awarded if the defendant’s culpability, after having paid compensatory damages, is so reprehensible as to warrant the imposition of further sanctions to achieve punishment or deterrence.” (State Farm, at p. 419.)

Disparity between actual harm and punitive damages

“Due process requires that punitive damages bear a ” ‘reasonable relationship’ ” to the actual or potential harm to the plaintiff. (Gore, supra, 517 U.S. at p. 580.) Thus, “courts must ensure that the measure of punishment is both reasonable and proportionate to the amount of harm to the plaintiff and to the general damages recovered.” (State Farm, supra, 538 U.S. at p. 426.)

The United States Supreme Court has “consistently rejected the notion that the constitutional line is marked by a simple mathematical formula.” (Gore, supra, 517 U.S. at p. 582; State Farm, supra, 538 U.S. at pp. 424-425.) As State Farm explains, the due process limitation is elastic, rather than rigid, and depends on the circumstances:

“[B]ecause there are no rigid benchmarks that a punitive damages award may not surpass, ratios greater than those we have previously upheld may comport with due process where ‘a particularly egregious act has resulted in only a small amount of economic damages.’ [Citations.] The converse is also true, however. When compensatory damages are substantial, then a lesser ratio, perhaps only equal to compensatory damages, can reach the outermost limit of the due process guarantee. The precise award in any case, of course, must be based upon the facts and circumstances of the defendant’s conduct and the harm to the plaintiff.” (State Farm, at p. 425.)”

For California’s take, see also Roby v. McKesson Corp. (2009) 47 Cal.4th 686, in which our Supreme Court concluded a one-to-one ratio between compensatory and punitive damages was the federal constitutional limit where the defendant’s conduct involved a “relatively low degree of reprehensibility” and the compensatory verdict included a substantial award of noneconomic damages. (Id. at p. 719, italics added.)