California Supreme Court Upholds $4.5 Million Punitive Damages Award

The case is Bankhead v. Arvinmeritor Inc. and it’s an asbestos personal injury and product liability action in which the plaintiff was awarded 1.85 million in compensatory damages and $4.5 million in punitive damages.

On appeal the defense raised two issues and requested that the punitive damages portion of the verdict be set aside.

1) Should net worth matter in terms of evaluating a punitive damages award?

2) Should the guidepost presented by the US Supreme Court in comparing civil and criminal penalties for punitive damages purposes be relevant in personal injury actions?

The California Supreme Court upheld the award by declining to review the appellate court’s opinion. What this did was leave in place the Califonria Court of Appeal’s (First Appellate District, Division Four) opinion, which made clear that “. . . there is no legal requirement that punitive damages be measured against a defendant’s net worth.”

On the second issue the appellate court had found the a ratio of 2.4 was with the range of comparable cases in terms of punitives.

The question left, because the California Supreme Court did not grant review, is the weight given to the US Supreme Court’s position in State Farm v. Campbell that if compensatory damages are substantial then a lesser ratio is appropriate (which to us made absolute no sense whatsoever).

Maybe in light of the harm and greater product liability issues involved $1.85 million is not clearly substantial. And maybe the ratio was fine regardless. Because the Court did not grant review both questions are moot. What is not moot, however, is that defendants should not believe that they can manipulate net worth figures in order to avoid a large punitive award or that they can rely on State Farm v. Campbell for the same relief.

The appellate court’s decision in Bankhead v. Arvinmeritor Inc. can be found here.