Presenting a live 90-minute webinar with interactive Q&A Punitive Damages in Commercial Litigation: Pursuing and Defending Claims Leveraging Pre-trial Motions, Discovery and Trial Strategies, Navigating Constitutional Restraints TUES DAY, APRIL 22, 2014 1pm East ern | 12pm Cent ral | 11am Mount ain | 10am Pacific Today’s faculty features: Derek E. Diaz, Partner, Hahn Loeser , Cleveland John Zavitsanos, AZA , Houston Robert B. Port, Partner, Hahn Loeser , Cleveland The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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Derek E. Diaz ddiaz@hahnlaw.com April 22, 2014
PUNITIVE DAMAGES ● With us since 1763 ● Early cases involved trespass ● To punish and deter 6
PUNITIVE DAMAGES “. . . the question will not adm it of argum ent.” Da y v . W ood w orth , 54 U.S. (13 How.) 363, 371 (18 51). 7
PUNITIVE DAMAGES ● Banned by state? ● Split with state? ● Capped by statute? 8
PUNITIVES RUN WILD ● Risk of arbitrariness ● Uncertainty ● Lack of notice 9
WHERE NOT TO LOOK ● Excessive Fines Clause (8th Amendment) ● Double Jeopardy (5th Amendment) 10
WHERE TO LOOK ● Due Process Clause (14th Amendment) 11
DUE PROCESS (1) Procedural due process (2) Substantive due process 12
PROCEDURAL DUE PROCESS (1) Properly instructed jury (2) Judicial review for excessiveness (3) Appellate review (4) Harm to non-parties 13
SUBSTANTIVE DUE PROCESS Protects against “grossly excessive” awards 14
GROSSLY EXCESSIVE (1) Reprehensibility (2) Compensatory/ Punitive Ratio (3) Comparable Civil or Criminal Penalties 15
REPREHENSIBILITY (1) Economic or physical harm (2) Reckless disregard for health or safety (3) Financial vulnerability (4) Repeated actions or isolated incident (5) Malice, trickery, or deceit 16
REPREHENSIBILITY “The existence of any one of these factors weighing in favor of a plaintiff may not be sufficient to sustain a punitive damages award; and the absence of all of them renders any award suspect.” State Farm v. Cam pbell , 538 U.S. 408, 419 (2003) 17
AWARD RATIO (1) Potential vs. actual harm (2) Single-digit ratio (3) Substantial compensatories 18
COMPARABLE PENALTIES (1) Of Limited use in commercial cases (2) Be creative 19
APPELLATE CONSIDERATIONS 20
Considerations (1) Remittitur (2) Due-Process Review 21
Pursuing Punitive Damages Awards John Zavitsanos and Neal Sarkar jzavitsanos@azalaw.com
INITIAL CONSIDERATIONS Pleading Issues More Evidence May Be Required State Farm Mut. Auto. Ins. Co. v. Campbell (2003) Insurance Defendants Will Fight! 23
TYPES OF CONDUCT Knowing Violation of Safety Standards Falsifying Test Results Management Knowledge of the Likelihood of Injury Ignoring Previous Complaints or Lawsuits Refusing to Take Corrective Measures Availability of a Safer, More Economical and Technically Feasible Alternative Course of Conduct Evidence of Cover-up Ongoing Pattern of Misconduct Failing to Warn of Known Dangers Which Are Not Obvious Lacking Corporate Policies and Procedures in the Face of Obvious Risks Departing from Standards in the Industry Where the Magnitude of the Potential Harm Flowing from the Misconduct is Great 24
PLEADING The Original Complaint Federal Court – Federal Pleading Standard vs. State Pleading Standard 25
INVESTIGATION Investigate Punitive Damages Claims Early in Litigation Investigation Should Not Stop After Filing Use Various Sources Resource Intensive 26
DISCOVERY Facts Demonstrating Basis for Punitive Damages Corporations– Demonstrating Authorization or Ratification Supporting the Verdict on Appeal 27
TRIAL – A PERSUASIVE THEORY Does the theory “[a]ccount for or explain all of …the undeniable facts”? Does the theory “explain away in a plausible manner as many unfavorable facts a it can”? Does the theory “[e]xplain why people acted in the way they did”? Is the theory “supported by the details”? Does the theory have a solid basis in law? Is the theory “consistent with common sense and…plausible”?* 28
TRIAL – GET IN THE JUROR’S MIND “Empathy by itself…is ethically neutral. A good sadist or torturer has to be highly empathetic, to understanding what would cause his or her victim maximal pain.”** Explanation–Based Decision Making*** Use Metaphors! 29
EXAMPLE - VIOXX 30
TRIAL - WITNESS CREDIBILITY Antithesis Inference**** BMW of North America, Inc. v. Gore ( 1996) – “The degree of reprehensibility of the defendant’s conduct” as “[p]erhaps the most important indicium of the of the reasonableness of a punitive damages award.” 31
REFERENCES * Ian Gallacher, Thinking Like Nonlawyers: Why Empathy is a Core Lawyering Skill and Why Legal Education Should Change to Reflect its Importance , 8 Legal Comm. & Rhetoric 109, 120 (2011). ** Martha Nussbaum, Reply to Amnon Reichman , 56 J. Leg. Educ. 320, 325 (2006). **** See Nancy Pennington & Reid Hastie, A Theory of Explanation- Based Decision Making , chapter 11 in Decision Making in Action: Models and Methods 188 (Gary A. Klein et al. eds., Greenwood Publg. Group, Inc. 1993). ***** See generally Andrew S. Polis, The Death of Inference , 55 B.C. L. Rev. 435 (2014). 32
PUNITIVE DAMAGES: Defend ing Punitiv e Da m a ges Cla im s Robert B. Port rport@hahnlaw.com April 22, 2014
Pre-Trial Tactics: Know the Law—States Handle Punitive Damages Differently • Burden of Proof—Clear and Convincing vs. Preponderance • Standard for Liability • Limitations on Discovery • Pleading Requirements • Predicate Claims • Bifurcation 34
Some States Partially Abrogated Liability for Punitive Damages NH, MI : Only when explicitly provided by statute IL, OR : None for Legal or Medical Malpractice AL, KS : Employer liability only under specific circumstances 35
Defenses—All Defenses Applicable to Predicate Causes of Action Apply to Punitive Damages Punitive damages is not a claim General Defenses to Consider • Statute of limitations, privilege, failure to state a cause of action • No viable claim for relief • No monetary damages • Nominal damages only 36
Mitigation of Exposure “Partial Defenses” • Provocation • Advice of counsel • No intent to harm—control the narrative on motive • Subsequent remedial measures 37
Florida Requires a Prima Facie Case Before Plaintiff Can Even Plead Punitive Damages In any civil action, no claim for punitive damages shall be permitted unless there is a reasonable showing by evidence in the record or proffered by the claimant which would provide a reasonable basis for recovery of such damages. The claimant may move to amend her or his complaint to assert a claim for punitive damages as allowed by the rules of civil procedure. Fla. Stat. Ann. § 768.762.72 38
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