• Runaway Verdict Reined In: Top Ten "Takeaways" From Case Imposing 2-1 Limit on Punitive Damages
  • April 9, 2008 | Author: Don Willenburg
  • Law Firm: Gordon & Rees LLP - San Francisco Office
  • The latest California “runaway verdict” decision, Buell-Wilson v. Ford Motor Co. (4th Dist. March 10, 2008) 2008 WL 625016 (an Explorer rollover case), imposed limits on both punitive and non-economic damages – despite catastrophic injuries and a finding that “the reprehensibility of Ford’s conduct was high.” Ten excellent reasons to cite or remember this case:

    1. 2-1 limit on punitive damages. Buell-Wilson limited punitive damages to a multiple of about two times the compensatory damages, where the non-economic damages were high. Buell-Wilson imposed this 2-1 ratio even though (a) it found Ford’s conduct “high[ly]” reprehensible, (b) the victims were vulnerable, and (c) the injuries were not merely economic but physical as well. This is very significant. Although the United States Supreme Court has held that “few awards exceeding a single-digit ratio between punitive and compensatory damages … will satisfy due process” and that a 1-1 ratio would be appropriate in many cases (State Farm Mut. Auto. Ins. Co. v. Campbell (2003) 538 U.S. 408, 425), there has always been question about whether those limits should apply to a case involving non-economic damages. Further, courts in California and elsewhere have regularly shied away from the low end of this range. (See, e.g., Simon v. San Paolo U.S. Holding Co., Inc. (2005) 35 Cal.4th 1159 [10-1 ratio in purely economic damage case]; Johnson v. Ford Motor Co. (2005) 35 Cal.4th 1191 [3-1 ratio remanded for reconsideration as too low].) Even if the 2-1 ratio is mandated only in cases with high “pain and suffering” awards, those are just the awards for which a limit on the multiple is most valuable.

    2. Limits on non-economic damages (4-1?). Buell-Wilson limited non-economic damages to the amount requested by plaintiff’s counsel in closing argument. The jury had awarded $105 million; the trial court reduced this to $65 million; the Court of Appeal further reduced the award to $18 million. In large part, this was because plaintiffs’ counsel had requested a figure of only 3-4 times economic damages ($4.6 million), and the jury award was greatly in excess of that amount. Buell-Wilson is authority for the propositions that an award of damages greater than (a) the amount asked for by counsel or (b) four times economic damages is potentially excessive and remittable as the product of passion or prejudice.

    3-6. Do not forfeit your rights to raise arguments later. Although Ford won on the above points, it lost on others that it failed to properly preserve. “Ford has forfeited the right to assert there is a significant risk the punitive damages verdict in this case was based on improper evidence and arguments concerning third party harm because Ford (1) submitted incorrect and misleading jury instructions on third party harm; (2) did not timely object to plaintiffs’ closing argument at the punitive damages phase of the trial; (3) did not request a limiting instruction during the liability phase of the trial; and (4) did not raise instructional error as an issue on its original appeal.” The court also rejected an argument raised for the first time in Ford’s reply brief on appeal. Ouch!

    Ford’s proposed jury instruction told the jury it could not consider harm to third parties for any purpose. This misstates the law, which is that harm to third parties can be considered in determining whether a defendant’s conduct is sufficiently reprehensible to justify an award of punitive damages, but punitive damages cannot be awarded to compensate for the harms to those third parties. (State Farm, supra; Philip Morris U.S.A. v. Williams (2007) 549 U.S. ___, 127 S.Ct. 1057.) Buell-Wilson held that the trial court was not required to clean up or correct the instruction, and because the proposed instruction was wrong the court was within its authority to deny it. Lesson: propose correct and complete jury instructions, not just “advocate’s” instructions.

    As for the other grounds on which Ford was held to have forfeited its right to argue, they perhaps speak for themselves, except that it is highly unusual to object in closing argument and while most trial courts do not like it, this court required it.

    7. It is not an impermissible attempt to punish a defendant for harm done to third parties for plaintiff counsel to state in closing argument: “This is not only . . . a case involving one family here in California, but . . . they marketed to specifically, the soccer moms, the women with babies, the toddler seats, the families.” The court found that this merely argued that “the repeated nature of Ford’s actions” demonstrated “the reprehensibility of Ford’s conduct.” Further, other statements in closing argument indicated that the jury was not to award damages based on harm to third parties.

    8. What you say in some cases can come back in others. Positions Ford took in other reported decisions were quoted against Ford in this case.

    9. Buell-Wilson affirmed that CACI 3940, 3942, 3945, 3947 and 3949 correctly state the law with respect to harm to third parties and punitive damages.

    10. This decision was actually the second in this case by this court. The prior decision went up to the United States Supreme Court after the California Supreme Court denied review. The United States Supreme Court directed the California court of appeal to reconsider in light of Philip Morris U.S.A. v. Williams (2007) 549 U.S. ___, 127 S.Ct. 1057, which restricted the use of evidence regarding harm to parties other than the plaintiff. In a robust display of federalism, the California court reaffirmed its original decision. (See no. 7 above.) Wise sources speculate that the waiver and forfeiture findings were intended to potentially insulate the decision from further review.
    This decision is not yet final and may be withdrawn, depublished, or subject to review by the California Supreme Court.