California Appellate Court Reverses $3.6M Punitive Damages Award Court of Appeal of California, Second Appellate District, Division One, February 15, 2017

In November 2005, after William Saller was diagnosed with mesothelioma, the plaintiffs filed suit naming 22 defendants, including the manufacturers of various asbestos products. After Saller passed away in February 2006, his wife and daughters added a wrongful death claim and continued the lawsuit.

In 2007, the plaintiffs proceeded to trial against two remaining defendants: Crown Cork and Bondex International, Inc. The jury returned a defense verdict, rejecting the plaintiffs’ strict liability design defect claim and their negligent failure-to-warn claim. The plaintiffs appealed and the appellate court ordered a new trial, ruling that the trial court erroneously refused to instruct the jury on two of the plaintiffs’ theories of liability — the “consumer expectations” theory of design defect and strict liability for failure to warn. Bondex filed for bankruptcy protection while this appeal was pending, leaving Crown Cork as the only defendant remaining for the retrial.

The retrial, which began on November 19, 2013, was bifurcated into a liability phase and a punitive damages phase. The jury now returned a verdict in favor of plaintiff on all claims:

  • Design defect by Crown Cork (11-1 vote) and that defect was a substantial factor in causing Saller’s mesothelioma (12-0 vote);
  • Failure to warn by Crown Cork (11-1 vote) and that failure to warn was a substantial factor in causing Saller’s mesothelioma (12-0 vote);
  • Negligence by Crown Cork (9-3 vote) and that negligence was a substantial factor in causing Saller’s mesothelioma (10-2 vote);
  • The jury also found by clear and convincing evidence (by a 10-2 vote) that Crown Cork was guilty of malice.

The punitive damages phase was tried on December 16, 2013, and the jury, by a vote of 9-3, returned a punitive damages award of $3.6M. After taking into consideration liability allocation and set-offs, the trial court entered judgment in favor of the plaintiffs against Crown Cork for $1.365 million in noneconomic damages, $131,543.22 in economic damages and $3.6 million in punitive damages. Crown Cork’s post-verdict motions were denied and they timely appealed.

On appeal, Crown Cork challenged the judgment in two ways. First, Crown Cork contended, as to liability, that the trial court erroneously refused to instruct the jury on the sophisticated intermediary defense and the jury’s finding against Crown Cork on the consumer expectation theory of design defect was unsupported by substantial evidence. Second, Crown Cork argued that the punitive damages award was flawed both legally and factually.

On February 15, 2017, the Court of Appeal of California, Second Appellate District, Division One reviewed arguments on appeal, and found (1) the trial court properly refused to instruct the jury on the sophisticated intermediary defense because there was insufficient evidence to justify such an instruction; (2) the jury’s finding on the consumer expectation theory of design defect was supported by substantial evidence; and (3) the punitive damages award was unsupported by substantial evidence because the plaintiffs’ expert could offer testimony only about the financial condition of Crown Cork’s parent, Crown Holdings. Because the plaintiff had a full and fair opportunity to developed and present their case of punitive damages and there was no evidence of an ability of to pay by the actual defendant (Crown Cork), the punitive damages award was reversed and was not remanded for a retrial. Under those circumstances, the plaintiffs do not get a second bite of the punitive damages apple.

Accordingly, the court reversed the punitive damages award and affirmed on all other counts.

Read the full decision here.

 

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