Punitive Damages Reduced to 10 to 1

Punitive Damages Reduced to 10 to 1

Nickerson v. Stonebridge Life Ins. Co.(2012) 219 Cal.App.4th 188.

Plaintiff won a jury verdict including $19 million in punitive damages. The trial court reduced the award to $350,000, which is ten times the $35,000 awarded for emotional distress. The Court of Appeal confirmed the trial court calculation, saying that under present constitutional due process law, a ratio of 10 to 1 punitive/tort damages is “the maximum constitutionally defensible ratio” under the facts of this case. This was even though the trial court acknowledged the small amount of punitive damages was not likely to alter the insurance company’s conduct in the future.

The plaintiff argued that the trial court should have included other items of damages, such as policy benefits, uncompensated potential harm and attorney fees. The Court of Appeal disagreed. “The trial court properly included all of the relevant damages in the denominator of its ratio.”

The lesson here is, the law remains out of balance in favor of insurance companies and powerful bad-actors. A system that pretends to punish for bad conduct, but actually makes it economic to break the rules, isn’t a fair justice system.

Bill Daniels is a trial lawyer and shareholder with the law firm of DANIELS LAW in Sherman Oaks, CA.  A graduate of Loyola Law School of Los Angeles, he is a former member of the Consumer Attorneys Association of Los Angeles Board of Governors, a founding member of Loyola’s Civil Justice Program and a past president of the Encino Lawyers Association.  Since 2007, he has been named a Southern California “Super Lawyer” by Los Angeles Magazine.  Mr. Daniels focuses his practice on serious personal injury, insurance and employment. For information, visit our website at www.daniels.legal or contact us through e-mail: Info@danielslaw.com.