Thursday, August 6, 2015
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Appeals Court Scraps $32.5 Million Punitive Damages Award
Says Expert Testimony Only Reflected Defendant’s Assets, Not Liabilities
By a MetNews Staff Writer
The Court of Appeal for this district, in an opinion certified for publication yesterday, snipped a $32.5 million award of punitive damages from a judgment in favor of an estate because its expert witness only looked at the defendant’s assets, not its liabilities.
Through extrapolation of figures, the expert testified that the parent corporation of defendant BorgWarner Morse TEC Inc. (“BWMT”) had revenues exceeding $1.3 billion. He also provided testimony as to the assets of BWMT, itself, but only in connection with turbo chargers, one of the products it manufactures.
“The problem is that this evidence,” Justice Audrey Collins of Div. Four wrote, “was, at best, pertinent to only half of BWMT’s balance sheet and therefore was not, standing alone, meaningful evidence of BWMT’s financial condition.”
She said the testimony of expert Robert Johnson—which she characterized as “somewhat muddled—“did not shed any light on BWMT’s liabilities or expenses, with respect to either the turbo charger line or BWMT’s business as a whole.”
Collins noted:
“Indeed, Johnson acknowledged on cross-examination that revenue “doesn’t tell you anything about” profits, losses, debts, or available credit. In other words, revenue alone provides little information about a defendant’s ability to pay punitive damages.”
The jurist termed the evidence a “partial showing” of the defendant’s net worth which, she said, was insufficient to shift the burden to the defendant to present contrary evidence.
Quotes Trial Judge
She quoted, with approval, comments by the trial judge—retired Los Angeles Superior Court Judge Robert O’Brien, sitting on assignment—at the conclusion of Johnson’s testimony:
“I believe that the approach of the punitive damage thing should have been a lot different. There should have been information discovered with a protective order. There should have been...a reasonable notice to produce somebody from Borg-Warner, the defendant Borg-Warner. It wasn’t done.”
Collins declared:
“By all indications, plaintiffs had a full and fair opportunity to engage in discovery but elected to take the wait-and-see approach. They must bear the consequences of the resultant evidentiary shortfall….
“On the record as it stands, we must conclude that there was insufficient evidence of BWMT’s financial condition to enable the jury to make an intelligent assessment of BWMT’s ability to pay a punitive damages award. Accordingly, we reverse the award of punitive damages. No retrial is required.”
$2 Million Awards
The opinion affirms a $2 million award of noneconomic damages to each of the three daughters of Secundino Medina, who died at 79 of asbestos-related mesothelioma. The jury found that asbestos-containing products manufactured by BWMT were 35 percent responsible for his death.
BWMT argued that the awards were excessive. Collins responded:
“Factors such as the closeness of a family unit, the depth of their love and affection, and the character of the decedent as kind, attentive, and loving are proper considerations for a jury assessing noneconomic damages…, and evidence of those factors was abundant in this case. The record reflects that Medina was an exceptionally generous, kind, and compassionate man who cared deeply for his family. Each of his daughters – the recipients of the challenged awards – provided compelling testimony about her close bond with Medina and the profound effect that his death had on her.”
She said that in light of these relationships, “relationships that likely would have continued throughout his statistical life expectancy of approximately eight more years,” the awards were appropriate.
Nonsuit Affirmed
Also affirmed was O’Brien’s grant of nonsuit on a claim on behalf of Medina’s great-grandson Eli Canett. His action was brought under Code of Civil Procedure §377.60(c), which authorizes a wrongful death action by a minor who is not the decedent’s child or other family member “if, at the time of the decedent’s death, the minor resided for the previous 180 days in the decedent’s household and was dependent on the decedent for one-half or more of the minor’s support.”
Collins said the testimony showed that “Medina’s largesse toward Eli and his parents was laudable and improved their station in life, but it did not render Eli financially dependent upon him.”
The jury awarded $60,000 in economic damages to the estate and $130,455.70 each in economic damages to each of the daughters. Those awards were not appealed.
Collins found that substantial evidence supported the allocation of fault.
The case is Soto v. BorgWarner Morse TEC INC., B252995. The opinion was initially filed July 15, not certified for publication.
Sharon J. Arkin and Simona A. Farrise were appellate counsel for the plaintiffs. Farrise Firm, for Plaintiffs and Appellants. Jerry C. Popovich of Selman Breitman and Theodore J. Boutrous, Jr., Joshua S. Lipshutz, and Joseph C. Hansen of Gibson, Dunn & Crutcher represented BWMT. Fred J. Hiestand, of Civil Justice Association of California, acted as amicus curiae for BWMT.
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