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August 19th, 2011

Punitive Damages Ruling All But Guarantees California Will Repeat As a ‘Judicial Hellhole’

Brushing aside precedents from both the U.S. Supreme Court and its own state supreme court, a California appeals court has affirmed a trial court’s punitive damages award that is 16 times larger than the compensatory damages awarded in a tobacco case.

As reported by the San Francisco Chronicle, a Los Angeles County jury had originally awarded a now deceased smoker “$850,000 in 2002 for medical costs, pain and suffering, and $28 billion in punitive damages for fraudulent conduct, the largest individual verdict in the nation’s history. The trial judge cut the punitive award to $28 million and it was further reduced in a retrial” to $13.8 million, “after the U.S. Supreme Court set constitutional limits on punitive awards against businesses.”

With a 2-1 ruling Wednesday, the Second District Court of Appeal in Los Angeles upheld that disproportionate puntive damages award.  But citing Supreme Court precedent, dissenting Justice Patti Kitching wrote that the punitive damages should be no more than nine times the amount $850,000 award for compensatory damages, or $7.65 million.
And Californians wonder why businesses are fleeing their once Golden State in droves, and why it’s an almost certain bet the state will again be cited as a Judicial Hellhole later this year. 
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