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Punitive Damages Take Big Hit In California


— November 25, 2003

A panel of California’s Court of Appeal today rewrote the book on punitive damages Romo v. Ford Motor Co. ( No. F034241, Nov. 25, 2003). Early in the opinion, the court explains that it had been instructed by the U.S. Supreme Court to “reexamine the purpose and nature of punitive damages” in California in light of State Farm Mutual Automobile Ins. Co. v. Campbell (2003) ___ U.S. ___ (123 S.Ct. 1513). The court then says: “We attempt to report the results of the reexamination in as summary a fashion as the subject permits and not to write a treatise on the subject of punitive damages.” But the thirty pages that follow are nothing if not “a treatise on the subject of punitive damages.”

California’s The Recorder reports it as follows:

A state appeals court stunned California plaintiffs lawyers Tuesday by issuing a bombshell ruling that completely alters the long-established process judges and juries use to determine punitive damages. Lawyers on both sides of the issue say the ruling — which reduced the largest punitive damage judgment ever upheld by a California appellate court from $290 million to about $23.7 million — could eliminate most multimillion-dollar punitive awards.

“It’s a huge loss for the people of California,” said Erwin Chemerinsky, the University of Southern California Law School professor who argued the plaintiffs’ appeal, “because it’s going to allow companies that intentionally market products, knowing they will kill, to avoid liability and responsibility.” . . .

[But] Theodore Boutrous Jr., the attorney at Los Angeles’ Gibson, Dunn & Crutcher who represented Ford, called the court’s overall ruling a “very strong statement and a thoughtful opinion.”

“The court correctly interpreted State Farm to require a whole new approach to punitive damages in product liability cases, by requiring the focus to remain on the particular plaintiffs before the court, and to preclude use of the defendants’ wealth and profits — as a general matter — as a basis for punishment,” he said.

Either way, it is a big change. The Recorder‘s article is here, and the opinion itself is here.


A panel of California’s Court of Appeal today rewrote the book on punitive damages Romo v. Ford Motor Co. ( No. F034241, Nov. 25, 2003). Early in the opinion, the court explains that it had been instructed by the U.S. Supreme Court to “reexamine the purpose and nature of punitive damages” in California in light of State Farm Mutual Automobile Ins. Co. v. Campbell (2003) ___ U.S. ___ (123 S.Ct. 1513). The court then says: “We attempt to report the results of the reexamination in as summary a fashion as the subject permits and not to write a treatise on the subject of punitive damages.” But the thirty pages that follow are nothing if not “a treatise on the subject of punitive damages.”

California’s The Recorder reports it as follows:

A state appeals court stunned California plaintiffs lawyers Tuesday by issuing a bombshell ruling that completely alters the long-established process judges and juries use to determine punitive damages. Lawyers on both sides of the issue say the ruling — which reduced the largest punitive damage judgment ever upheld by a California appellate court from $290 million to about $23.7 million — could eliminate most multimillion-dollar punitive awards.

“It’s a huge loss for the people of California,” said Erwin Chemerinsky, the University of Southern California Law School professor who argued the plaintiffs’ appeal, “because it’s going to allow companies that intentionally market products, knowing they will kill, to avoid liability and responsibility.” . . .

[But] Theodore Boutrous Jr., the attorney at Los Angeles’ Gibson, Dunn & Crutcher who represented Ford, called the court’s overall ruling a “very strong statement and a thoughtful opinion.”

“The court correctly interpreted State Farm to require a whole new approach to punitive damages in product liability cases, by requiring the focus to remain on the particular plaintiffs before the court, and to preclude use of the defendants’ wealth and profits — as a general matter — as a basis for punishment,” he said.

Either way, it is a big change. The Recorder‘s article is here, and the opinion itself is here.

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