Jessica Karmasek Mar. 23, 2016, 2:02pm


WASHINGTON (Legal Newsline) - This week, a D.C.-based public-interest law firm filed a brief urging the California Supreme Court to review and reverse a state appeals court’s decision that upheld a nearly $4 million punitive-damage award against a manufacturer.

The Washington Legal Foundation filed its amicus brief with the state’s highest court Monday.

WLF’s brief in Casey v. Kaiser Gypsum Co. argues that lower courts are in “urgent need” of guidance regarding how they can conduct punitive-damages-only retrials in a manner that provides “fundamental fairness” to all litigants.

“When a tort defendant is found liable for a plaintiff’s injuries, a second jury is frequently convened to decide whether the defendant should also be required to pay punitive damages. All too often, however, the trial judge fails to provide proper guidance to the jury -- with the result that the defendant is unprotected from irrationally large awards,” WLF Chief Counsel Richard Samp said.

“Awards of punitive damages ought to be reserved for cases involving particularly reprehensible conduct, and juries need guidance regarding when those circumstances exist.”

A three-judge panel of the First Appellate District, Division Four, seemed to believe the award was warranted.

“For a 10-year period, Kaiser Gypsum took various precautions to protect its employees. By contrast, Kaiser Gypsum did nothing to inform its customers that its joint compound contained asbestos, to provide guidance for minimizing risk to the tradesmen working for them,” Justice Timothy Reardon explained in the court’s Jan. 21 decision. “As a result, tradesmen, as well as bystanders like Mr. Casey, were utterly unprotected, with no air monitoring, no respirators, and no cleanup precautions.”

Reardon was joined by Presiding Justice Ignazio Ruvolo and Associate Justice Maria Rivera.

Reardon continued, “The evidence showed that as late as 1973, Kaiser Gypsum refrained from giving its sales staff any warnings to convey to customers about the known hazards of asbestos. We conclude that the evidence was sufficient to show malice, that is, despicable conduct coupled with a conscious disregard for the safety of others.”

Kaiser Gypsum, a former manufacturer of building products, including drywall, joint compounds and cements, appealed to the First Appellate District from a judgment entered in favor of plaintiffs John Casey and Patricia Casey on claims for personal injuries and loss of consortium stemming from John Casey’s alleged bystander exposure to a Kaiser Gypsum product containing asbestos and subsequent diagnosis with mesothelioma -- a disease typically associated with asbestos exposure.

Following a two-and-a-half-month-long trial, the jury returned special verdicts finding Kaiser Gypsum 3.5 percent comparatively at fault for the plaintiffs’ injuries and awarding the plaintiffs nearly $21 million in compensatory damages.

The jury, however, could not reach a verdict with respect to whether Kaiser Gypsum acted with malice, oppression or fraud.

The trial court -- San Francisco Superior Court -- then ordered a limited retrial on the issue of malice, oppression or fraud, and, if necessary, the amount of punitive damages.

The second jury awarded the plaintiffs $20 million in punitive damages, which the trial court reduced to just under $4 million.

On appeal, Kaiser Gypsum argued reversal was required because the trial court committed evidentiary and instructional errors; improperly limited the scope of the retrial; and miscalculated the amount of settlement credits.

Kaiser Gypsum also claimed the evidence of malice or oppression was insufficient to support an award of punitive damages.

On cross-appeal, the plaintiffs challenged the trial court’s reduction of the amount of punitive damages.

The First Appellate District not only upheld the nearly $4 million in punitive damages, but also almost $1.6 million in compensatory damages.

By definition, punitive damages -- sometimes referred to as exemplary damages -- are those intended to reform or deter a defendant and others from engaging in conduct similar to that which formed the basis of the lawsuit. Punitive damages often are awarded where compensatory damages are deemed an inadequate remedy.

As WLF notes in its brief, at the retrial before the second jury limited to the punitive-damage issue, the trial judge refused to tell the jury that the first jury allocated only a 3.5 percent share of comparative fault to Kaiser Gypsum, and that John Casey was exposed to “scores” of other asbestos products.

WLF argues that “fundamental fairness” required that the second jury be provided that information; otherwise, the second jury was likely to conclude that Kaiser Gypsum was solely responsible for John Casey’s injuries.

“All awards of damages -- whether compensatory or exemplary in nature -- deter a defendant from repeating its blameworthy conduct. Indeed, such deterrence is the principal purpose of punitive damages awards,” WLF wrote in its nine-page brief. “Yet, by preventing the second jury from learning that Kaiser had already been assessed substantial compensatory damages, the trial judge deprived the second jury of information vital to its determination of whether any additional deterrence was appropriate (in the form of punitive damages) and, if so, how much.

“Indeed, this Court on several occasions has held that a second jury considering the issue of punitive damages at a limited retrial must be told the amount of compensatory damages awarded at the first trial.”

Earlier this month, the head of an industry-sponsored group that advocates for legal reform in California blasted the appeals court’s decision, saying it only cements the state’s title as the nation’s No. 1 “Judicial Hellhole.”

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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Washington Legal Foundation
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Washington, DC 20036

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