California’s appellate courts can’t make up their mind about whether a punitive damages award is excessive when it exceeds 10 percent of the defendant’s net worth.
Many cases have said the answer is yes. For example, in 2017 Division One of the Fourth Appellate district said in Bigler-Engler v. Breg that punitive damages “ ‘generally are not allowed to exceed 10 percent of the net worth of the defendant.’ ” But occasionally our courts have denied the existence of this general rule. See, e.g., the 2012 decision in Bankhead v. Arvinmeritor.
This unpublished decision, issued last week by Division Three of the Fourth Appellate District, adopts the Bankhead side of this split. It holds that an award is not presumptively excessive when it exceeds 10 percent of net worth. And it holds that the award in this case is not “qualitative[ly]” excessive in light of the defendant’s financial condition, given evidence of substantial assets owned by the defendant.
Typically, California courts require a plaintiff seeking punitive damages to present evidence not only of the defendant’s assets and income, but also of the defendant’s liabilities and expenses. This opinion makes no mention of any such evidence—it says nothing about the defendant’s liabilities or expenses. Perhaps the plaintiff presented that kind of evidence but the Court of Appeal thought it unnecessary to recite all of it in an unpublished opinion. Or maybe the defendant didn’t raise the issue, so the court had no occasion to address whether there was sufficient evidence on both sides of the balance sheet. But without more, it seems that this opinion affirms a very large punitive damages award that would not survive appellate review in other California appellate courts.
