Cal Biz Lit

SCOTUS Denies Cert in Ford Punitive Damages Case

    CBL first declared Ford's hopes for reversal of the Buell-Wilson punitive damage award (as reduced in multiple post-verdict proceedings) dead in a post on March 28, 2008.  Wrong.  Ford soldiered on for nearly another two years.

    But it's over now.  The US Supreme Court says ixnay on ertsay.  The compensatory damages ($30M+) have already been paid.  The $55 million punitive judgment is up to $87 million including interest, says plaintiff's counsel.  And it looks like there's nothing left but to pay it.

    The one thing that came out of Ford's appeals over the last two years?  A very plaintiff friendly Court of Appeal decision got wiped off the books when the Cal Supremes granted review -- a grant they later dismissed.

SF Chron Reports On The Personal Injury Reduced Medical Specials Issue

    Cal Biz Lit has been following the trail of cases addressing what happens when a successful personal injury plaintiff had his or her medical bills paid by insurance, and the insurer has a deal with the providers to reduce fees to a pre-negotiated rate.  As CBL has posted here and here, the question is whether the plaintiff recovers the amounts the providers accept as full payment, or the amounts they initially billed before the write-offs. 

    This morning's San Francisco Chronicle has coverage of the issue, and the new decision in Howell v. Hamilton Meats & Provisions, Inc. (November 23, 2009) ___ Cal.App.4th ___ (Fourth Dist., D053620), here.

    As the Chron points out, Howell was the result of an aggressive campaign by the California plaintiff bar to find suitable cases and attack this issue in the Courts of Appeal.  There are three other cases on this issue pending in appellate courts.  And the Chron also quotes predictions, accurate in CBL's view, that this issue is headed to the Cal Supremes.

Can A Personal Injury Plaintiff Recover For $3 Aspirins? For $75 Booties? Issue Now Joined In California

    It's been more than  year since Cal Biz Lit posted about the whole Hanif / Nishihama / Olsen question.  That question, specifically, is this:   "Just what does a personal injury plaintiff get when her medical bills are $200,000 but the hospitals and doctors have deals with the insurance companies, Medicaid (or MediCal as we Californians call it) or Medicare to take a whole bunch less as payment in full?"   Anybody who's working in the product liability or personal injury law world knows the drill.  So does anybody who's ever been in a hospital.  The plaintiff gets hurt.  The hospital fills up her bill with $5 Q-tips, and $10 bandages, and $3 aspirin tablets and  $75 disposable slippers, not to mention Ritz-Carlton-like room charges. 

    Then it's time for the public agency or insurance company to settle up.  And under a pre-existing deal between the insurer and the hospital, the hospital takes something like twenty cents on the dollar and writes off the rest.  So almost nobody ever pays all those $10 charges for razors and $30 for disposable IV bottles full of salt water.  Or whatever.

    So, now our plaintiff is discharged from the hospital, feeling fit as a fiddle (or so we hope) and ready to proceed with her lawsuit.  Assume liability is established, does she get what the hospital and the doctors billed?  Or does she get what they accepted from the insurance company? 

    For some years now, the answer has been pretty clear:  she can put on evidence of the large amount of her bills so the jury will think she must have had a pretty significant injury.  But after the jury awards all those medicals and goes home to their families, the judge will reduce them down to what the providers actually accepted.  That's the ruling by the Courts of Appeal in Hanif v. Housing Authority (1988) 200 Cal.App.3d 635 and Nishihama v. City and County of San Francisco (2001) 93 Cal.App.4th 298.

    Well, in July of last year, another Court of Appeal came out with a decision in Olsen v. Reid (2008) 164 Cal.App.4th 200.  That Court didn't have to decide whether or not Hanif and Nishihama were correct, because the defendant in that case didn't meet his burden of showing what the reduced medical bills were.  But in a gratuitous concurring opinion, Justice Moore of that Court let loose with a lengthy argument that Hanif and Nishihama had been wrongly decided, and the plaintiff should be entitled to recover for the entire amount billed, even if nobody was ever going to pay it.

    At the time, CBL commented as follows:

As a concurring opinion, this has no binding effect, and trial courts throughout the state are still bound to follow Hanif and Nishihama.  But this looks like an invitation for a plaintiff in another case to directly attack these decisions at the Fourth District Court of Appeal when the record is better for the defendant.  In fact, it looks like an out-and-out advisory opinion that this district will, in the right case, issue a decision holding that the plaintiff recovers the amount billed, not just the amount paid.

    Well, a stopped clock is right twice a day, and CBL gets it right once in awhile as well.  Because here is the Fourth District again, in Howell v. Hamilton Meats & Provisions, Inc. (November 23, 2009) ___ Cal.App.4th ___ (Fourth Dist., D053620) squarely holding that Hanif and Nishihama were wrongly decided and declining to follow them.  In short, this court rules that if a plaintiff has health insurance, and as part of the insurer's deal with the hospital and doctors, large amounts of the bills get written off so that neither the insurer nor the plaintiff has to pay the excess amounts, that is a "benefit" to the plaintiff.   The defendant didn't pay for the benefit.  So under the collateral source rule, the defendant can't take advantage of the benefit.  And the plaintiff can recover for the full amount of the  bill, even though nobody is ever going to pay most of it.

    So now, there are directly conflicting Court of Appeal decisions.  Which means that under Auto Equity Sales, Inc. v. Superior Court of Santa Clara County (1962) 57 Cal. 2d 450 , every trial court in California can follow either rule.  Until the Cal Supremes intervene.  Which, CBL feels confident, they will.

Component Parts In Product Liability: Now It's 2 - 1 Defense (And A Blow Against Junk Science, Too)

    Cal Biz Lit has been following the evolution of the Courts of Appeals' efforts to answer this question:  if a manufacturer's product is not itself defective, but becomes defective when used in conjunction with a third-party's defective products (e.g., the defendant's valves were made of steel, but are used with asbestos gaskets and packing made by somebody else), can the manufacturer be held liable for failure to warn of the dangers posed by the component it neither manufactured nor sold? 

    The score had been 2 - 1 for the defense (based on the decisions in Taylor v. Elliott Turbomachinery Co., Inc. (2009) 171 Cal.App.4th 564, -- "no" --, O'Neil v. Crane Co. (September 21, 2009) ___Cal.App.4th___ (B208225) -- "yes" -- and Merrill v. Leslie Controls, Inc. (Reh Granted, so not citeable:  September 25, 2009) -- "no."  The the Court of Appeal granted reconsideration on Merrill, depublishing the decision and making it unciteable. 

    Well, the Court of Appeal is done with its reconsideration, and today it came back with exactly the same decision and exactly the same language as before, (with no mention of September's contrary decision from the same district in O'Neil) .  In the published part of the decision, the court rules that if you didn't manufacture or distribute the component, you have no duty to warn, and there's no failure to warn strict liability.

    So it's now 2-1 in favor of the defense on this issue.  And as readers of CBL know, every trial court in the the State can follow either Taylor and Merrill or O'Neill.  Auto Equity Sales, Inc. v. Superior Court of Santa Clara County (1962) 57 Cal. 2d 450.

    There is some other interesting language in the decision that I missed when it first came out in December.  Those in the toxic tort defense world are used to the junk scientist argument that when it comes to toxins, every molecule of exposure is dangerous, every hit is cumulative, and blah blah blah.  Well, on that subject, and in the published part of the decision, the Court of Appeal offers the following:

. . . to provide a basis for inferring that a product was a substantial factor in causing injury, a plaintiff must provide evidence of substantial exposure for a substantial period of time; minimal exposure is not sufficient . . . .

(Slip op. at p. 14.)

    I don't think I've seen quite this a definitive statement in any California case.  So much for the "one hit," "one fiber," "one molecule" sort of junk science nonsense.

Tort Plaintiffs Be Warned: Contra Costa and Santa Clara Counties Are Not Friendly Places

    To help you get your weekend off to a rousing start, here's a bunch of statistics.  Just what you were hoping for, right?

    About a year ago, Cal Biz Lit reported here on the U.S. Department of Justice's 2005 survey of state court civil jury and bench trials.  The link to that report is no longer  alive.  The report was revised in April, 2009, and is now available here.

    In the earlier post, CBL expressed surprise at the small number of cases tried to completion in some California courts.  Santa Clara County, with 89 judges or commissioners, tried a grand total of 54 cases to verdict or judgment (that's .606 trials per judicial officer). Contra Costa, Northern California's largest suburban county with over a million residents and 59 judges, had 29 civil trials go to verdict or judgment, about half a trial per judicial officer.

    Well, now the DOB has massaged the same data some more in a new report
available here, and it looks like some plaintiffs will wish fewer tort cases went to verdict.  'Cuz the outcomes weren't so hot for them. Nationwide in 2005, plaintiffs won their tort trials about half the time.  The median tort damage award when they won was $31,000.  But in Contra Costa County, with twelve tort cases tried to conclusion in 2005, plaintiffs won twice -- that's 12%.  And while the win / loss record in Santa Clara County was near the national norm, the median damage award in the fourteen cases the plaintiffs won was a piddling $19,000.  That's right, folks, Santa Clara County jurors in 2005 awarded a thumping total of about $266,000 in tort damages to all plaintiffs against all defendants!

    Here are the plaintiff win rates in some of the other major California counties:  Los Angeles, 42.8%;  Alameda, 56.2%;  San Francisco, 53.2%;  Orange, 41.9%.  This is not particularly surprising.

    Nor are the average plaintiff verdict amounts much of a surprise:  Alameda is right near the national average, $30,000.  San Francisco is higher at $43,000.  And Los Angeles County, the largest in the state, had an average plaintiff tort verdict in 58 cases of $106,000.  CBL suspects this may be heavily skewed by a number of eight figure asbestos verdicts.

    And speaking of asbestos, the DOJ reports that out of 16,359 nation-wide state court tort trials in 2005, 2.2% were product liability trials, and about one in four of those were asbestos cases.  On the other hand, 58% were automobile accident cases -- obviously the largest number by far.  A distant second was medical malpractice, at about 15%.

   

Joint & Several Liability For Punitive Damages

    One of the more peculiar features of California tort law is the interplay between several liability and joint and several liability.  Under California's Proposition 51 (Civil Code section 1431.2), when there is more than one tortfeasor, a defendant's liability for "economic damages" -- e.g., earnings loss, medical bills, etc. -- is "joint and several, 
meaning that a single judgment for those amounts is entered against all liable defendants, and the plaintiff can enforce the entire amount against any of them without need for apportionment.  A defendant's liability for compensation for pain and suffering and other "non-economic damages," on the other hand, is several.  The defendant is only liable for these amounts based on his percentage of fault. 

    This tort reform measure from 1986 has all kinds of ramifications for settlements, set-offs, and enforcement of judgments, all of which will make for an excellent white paper one of these  days if CBL or one of his partners ever gets around to writing and posting it.  But here's today's question:  what about a punitive damage award?  Joint and several, or several?

    Let's think about this.  Under Civil Code section 3294(a), punitive damages are to be set at an amount sufficient to punish a defendant's conduct and make an example of him.  And under California law, a plaintiff seeking punitive damages has to prove the financial condition of the defendant, since whether and to what extent the defendant will be punished depends on the relationship between the award and how much money the defendant has and/or earns.  Adams v. Murakami (1991) 54 Cal.3d 105

    Well, yesterday, the Court of Appeal for the Second District decided Jackson v. Yarbray (November 10,2009) ___Cal.App.4th___ (B204321).  Acknowledging that "there is no published decision expressly authorizing a joint and several award of punitive damages," (Slip Op. at 36) the court nonetheless interpreted 1928 Supreme Court dicta in Thomson v. Catalina (1928) 205 Cal. 402, 407-408 (too old for a link) as "plainly suggest[ing] such an award is permissible in appropriate circumstances."  According to the Court of Appeal, Thomson "certainly implies that punitive damages do not have to be apportioned when the finder of fact determines the defendants acted jointly to commit a single wrong and each acted with essentially the same degree of culpability."

    One of the defendants did raise the question of whether the total amount of punitive damages "when considered as to a single defendant who is jointly and severally liable for that sum, is excessive, either in relation to the compensatory damages awarded or his or her financial condition."  (Slip Op. at 37.)  However, the Court of Appeal dodged the question, noting that (a)  this defendant  did not raise compensatory / punitive  proportionality on appeal, and (b) under the substantial evidence rule, there was sufficient evidence of that defendant's financial condition to support the entire amount as to him.