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Punitive Damages Are Reviewed De Novo; and Effective Use of Dicta

Tim Kowal     April 26, 2021

The recent case of Rubio v. CIA Wheel Group (D2d8 Apr. 15, 2021) no. B300021, reminds that awards of punitive damages are reviewed independently by the appellate courts. Rubio also provides a nice illustration how dicta – observations made by prior courts that are not part of their holdings – may be used effectively.

In Rubio, an employee claimed she was wrongfully terminated because she had cancer. Employee died during the first trial, resulting in a mistrial. During the second trial, employer lied about having knowledge of employee's cancer. After reminding employer's witness he was under oath, the judge asked why else did he think employee, previously a top sales person who now looked pale, gaunt, and used a wig, needed medical leave "for three months? A cold?"

The court awarded employee's successors $15,000 in economic damages. While plaintiff proved $100,000 to $150,000 in noneconomic damages, the judge ruled these were nonrecoverable now employee had passed away. But the court still used this amount in fashioning an award of punitive damages of $500,000.

Employer appealed, arguing the punitives award, at 33 times the amount of recoverable damages, as unconstitutionally excessive.

Independent Standard of Review on Appeal of Punitive Damages Awards:

In affirming the award, the Second District first observed the well-known "three guideposts" for reviewing punitive damages awards under State Farm Mut. Automobile Ins. Co. v. Campbell (2003) 538 U.S. 408, 416-418 [155 L.Ed.2d 585123 S.Ct. 1513] (State Farm): (1) the degree of reprehensibility of the defendant's misconduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award; and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases.' (State Farm, supra, 538 U.S. at p. 418; see also BMW, supra, 517 U.S. at p. 575.)" (Roby v. McKesson Corp. (2009) 47 Cal.4th 686, 712.)

But less well-known is that, on appeal, these guideposts are reviewed independently, with no deference paid the trial court:

"We review a punitive damages award "de novo, making an independent assessment of the reprehensibility of the defendant's conduct, the relationship between the award and the harm done to the plaintiff, and the relationship between the award and civil penalties authorized for comparable conduct. [Citations.] This '[e]xacting appellate review' is intended to ensure punitive damages are the product of the ' " 'application of law, rather than a decisionmaker's caprice.' " ' " (Simon, supra, 35 Cal.4th at p. 1172.) "[F]indings of historical fact made in the trial court are still entitled to the ordinary measure of appellate deference." (Ibid.)"

This helps explain the lengthy analysis provided in the opinion.

Effective Use of Dicta: 

Ultimately, the court agreed it was proper to consider harm beyond recoverable economic damages. In so doing, the court relied on the California Supreme Court decision in Simon, which stated the United States Supreme Court precedents "appear to contemplate" that such reliance may be permissible.

But that is mere dicta, appellants understandably pointed out. "Perhaps," the court conceded, before ultimately finding it persuasive.

" 'Dicta consists of observations and statements unnecessary to the appellate court's resolution of the case.'" (Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1158.) The court noted that while the point in question arguably was obiter dictum, it was "not clear" that the alleged dicta in Simon "was unnecessary" to the holding in that case. The court then noted that appellants did not otherwise challenge the reasoning. Finding the alleged dicta persuasive, the Rubio court adopted it.

Held: A trial court may properly consider the noneconomic damages in the baseline for a punitive damages award. Combining economic and noneconomic damages here to make the range of harm $115,000 to $165,000, the $500,000 award of punitive damages reflected a multipler of 3.5, which the court held to be permissible.

Tim Kowal helps trial attorneys and clients win their cases and avoid error on appeal. He co-hosts the Cal. Appellate Law Podcast at www.CALPodcast.com, and publishes a newsletter of appellate tips for trial attorneys at www.tvalaw.com/articles. Contact Tim at [email protected] or (714) 641-1232.

Tim Kowal is an appellate specialist certified by the California State Bar Board of Legal Specialization. Tim helps trial attorneys and clients win their cases and avoid error on appeal. He co-hosts the Cal. Appellate Law Podcast at CALpodcast.com, and publishes summaries of cases and appellate tips for trial attorneys. Contact Tim at [email protected] or (949) 676-9989.
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