Metropolitan News-Enterprise


Thursday, August 3, 2006


Page 1


Sanctions Ruling Against Valley Lawyer Left Standing by S.C.


By a MetNews Staff Writer


The California Supreme Court yesterday declined to review a May 19 Fourth District Court of Appeal ruling that orders for the payment of monetary sanctions, other than in connection with discovery, in limited civil cases are immediately appealable.

No justice at the court’s weekly conference in San Francisco voted to grant Joel Drum’s petition for a hearing on his appeal of nine monetary sanction orders in the total amount of $24,750. Drum, a now-suspended Sherman Oaks attorney, argued that the Fourth District’s Div. Two erred in holding that the appeal was untimely.

In other conference action, the justices voted unanimously to review a First District Court of Appeal ruling upholding a $28 million punitive damage award against a cigarette manufacturer in favor of a longtime smoker, but delayed further action until the U.S. Supreme Court hears a similar case from Oregon.

The sanctions against Drum stemmed from a $6,000 subrogation case he filed on behalf of an insurance carrier in 1998. A year after judgment was entered in favor of the carrier, the defendants moved to quash service of the summons for lack of personal jurisdiction.

The court set a status conference for March 21, 2000, at which Drum failed to appear. The court continued the conference and issued an OSC why Drum should not be sanctioned for his failure to appear on the original conference date.

When Drum failed to appear on the continued conference date, the court continued the conference again, and sanctioned him in the amount of $250.

This began a pattern which was repeated many times over with Drum being sanctioned, in increasing amounts, a total of nine times, and having missed an additional 12 hearings at which he was not sanctioned.

The case was ordered dismissed on Sept. 29, 2004.

On Oct. 29, 2004 Drum appealed the sanction orders claiming that Riverside Superior Court Judge Lawrence W. Fry was biased and abused his discretion in imposing multiple sanctions against him.

But Presiding Justice Manuel A. Ramirez, writing for the Court of Appeal, noted that the Legislature has specifically provided that sanctions could be directly appealed in unlimited cases only if the amount exceeds $5,000, but that no similar provision exists for limited cases.

Thus, Ramirez held that the “collateral order” rule, which allows direct appeals of orders for monetary amounts which are collateral to the main issue being litigated, governs sanction orders in limited cases.

As directly appealable orders, appeals from such orders are untimely if not brought within 30 days of service or mailing of the notice of entry thereof, or within 90 days of entry, Ramirez wrote.

However, Ramirez said:

“We do not, in determining that the Legislature has not acted to alter the common law exception for monetary sanctions orders in limited civil cases, intend to suggest that such alteration would not be a good idea. On the contrary, the policy behind limiting a multiplicity of appeals of collateral monetary sanctions orders is just as strong in limited civil cases as it is in unlimited civil cases. This case provides a good example, as there would have been nine separately appealable sanctions orders to burden the appellate division of the trial court.”

Ramirez also said that the trial court did not abuse its discretion in imposing a series of increasing monetary sanctions upon Drum for failing to appear at the hearings, where the alternative would have been to dismiss the case. The trial court was acting in accord with public policy and the court rules in seeking to avoid imposition upon the client of the consequences of its attorney’s failures to appear, he wrote.

State Bar records show that Drum received a three-year actual suspension in 2005 for failing to return client files, including 175 files to an insurance company, after the clients fired him.

The case is Drum v. Superior Court, E039264.

In the tobacco case, the Court of Appeal for this district affirmed a $28 million punitive damage award against Philip Morris USA, Inc., saying the cigarette manufacturer was guilty of reprehensible conduct in its efforts to suppress knowledge of the dangers of smoking.

The award was 33 times the $850,000 in compensatory damages awarded to Betty Bullock, who died of cancer in 2003 while the case was on appeal. Her daughter Jodie Bullock was substituted as plaintiff.

A Los Angeles Superior Court jury concluded that Philip Morris should pay $28 billion in punitive damages, but the plaintiff accepted a remittitur ordered by retired Pasadena Municipal Court Judge Warren Ettinger, who tried the case on assignment, rather than face a new trial.

Justice Walter Croskey, writing for Div. Three, rejected the company’s argument that a U.S. Supreme Court case that generally limits punitive damages to less than 10 times compensatory damages should control.

“We....hold that the extreme reprehensibility of Philip Morris’s conduct justifies a ratio of punitive damages to compensatory damages significantly greater than a single-digit,” Croskey wrote.

The evidence, Croskey explained, supported the plaintiff’s contention that Philip Morris concealed the dangers of cigarettes with a widespread misinformation campaign that began in the 1950s. Bullock testified that she smoked cigarettes manufactured by Philip Morris—first Marlboros, then Benson & Hedges—for 45 years, from age 17 until she was diagnosed with lung cancer in 2001.

Philip Morris, which in prior cases had defended its sale of the product, argued at the trial of Bullock’s suit that the dangers of smoking became well enough known that the plaintiff could have avoided cancer by stopping smoking before she developed cancer.

But Croskey said the jury was entitled to find that the plaintiff reasonable relied on the defendant’s fraudulent conduct.

The justice summarized the evidence:

 “Philip Morris, individually and through agents and trade associations, discredited the studies showing that smoking was likely a cause of serious illnesses and sought to reassure smokers that Philip Morris and other cigarette manufacturers were sponsoring research to resolve the purported controversy and that the research would be overseen by disinterested scientists.

“Substantial evidence shows that contrary to those representations, Philip Morris knew that there was no valid scientific controversy concerning the adverse health effects of smoking, that it carefully avoided conducting or sponsoring research that might reveal the health hazards of smoking and concealed the results of research conducted in Germany on its behalf, and that it sought to maintain the false controversy and to make its cigarettes more addictive in order to increase sales.”

Presiding Justice Joan Dempsey Klein concurred in Croskey’s opinion, while dissenting Justice Patti Sue Kitching argued that the punitive damage award was excessive and should be reduced to no more than nine times the compensatory damages.

In the Oregon case, Philip Morris, Inc. v. Williams, the state high court relied on similar evidence in upholding a punitive damage award of $79.5 million, nearly 100 times the compensatory damages awarded. The U.S. Supreme Court granted certiorari in May.


Copyright 2006, Metropolitan News Company