Two late 2013 California decisions threaten to expose more defendants to punitive damages. They dilute the ordinarily stiff barriers disfavoring punitive damages, particularly as to asbestos defendants, but in ways that threaten other civil defendants as well. This is particularly dangerous because punitive damages can be awarded in amounts untethered to any specific formula, and because they frequently reflect a multiple of the compensatory damages awarded.
As we previously reported, Pfeifer v. John Crane, Inc. (2013) 220 Cal.App.4th 1270 held that punitive damages ($14.5 million against compensatory damages of $6.23 million) could be imposed for reasons including that the manufacturer did not independently test a product everyone at the time thought was safe. “During Pfeifer’s period of service, the Navy studies appear to have classified JCI’s gaskets and packing as ‘nondusty.’ ” This was tantamount to saying that gaskets and packing were not hazardous, because no one had more knowledge about asbestos than the Navy, and because it is the inhaling of asbestos dust that makes it dangerous. Not warning about the uses of a product that experts in the field determined to be nonhazardous does not fit the usual elements or descriptions of punitive damages – malice, intent to harm, or conduct that is “vile” or “reprehensible.”
Pfeifer offered other questionable rationales for punitive damages. For example, Pfeifer held that “the OSHA regulations effectively obliged JCI to determine whether its products were exempt from the OSHA warning requirement.” This threatens to elevate OSHA into a prima facie basis for awarding punitive damages. Further, while OSHA applies to workplace safety, Pfeifer was not a JCI employee, but a product user.
JCI petitioned for California Supreme Court review of this decision, then withdrew its petition. JCI and two defense counsel organizations have requested that the California Supreme Court “depublish” the appellate decision, which would make it uncitable to, and not precedent-binding on, California courts. Gordon & Rees partner Don Willenburg authored one of the depublication requests on behalf of the defense counsel organizations. Depublication requests are, however, rarely granted.
In late December 2013, shortly after Pfeifer, a Los Angeles trial court approved punitive damages on a showing much like what plaintiffs mount in many asbestos and other toxic tort cases. “It was not a single event that happened. It was a long-standing rejection of the reality after many years thereby needlessly exposing unknowing persons to the risks involved. Defendants’ corporate benign beliefs about the product were not necessarily projected by evil persons –– they just let the fiction flounder on and on, needlessly infecting thousands of innocents. It was the effect of their lackadaisical approach to the evidence of harm that makes their lack of conduct reprehensible.” (Medina v. Borg-Warner Corp., No. BC432930.) Medina awarded $32.5 million in punitives on just over $6 million in compensatory damages. A “benign” belief is ordinarily not the stuff of “malice” as required for punitive damages, almost by definition.
While the Medina trial court decision is not citable precedent in California, it is a troubling ruling for defendants, and may be an indication that California trial courts are trending toward lowering bars against punitive damages.