Imposing Punitive Damages On An Entity

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					             Imposing Punitive Damages On An Entity

                                   A Corporation That Is Not Guilty
                                       Should Not Be Punished
                                                       By Limor Lehavi

        unitive damage awards have been     priate amount of punitive damages that      by the entity’s leadership group: its offi-
        receiving a lot of attention from   can pass constitutional muster, there is    cers, directors, and managing agents.
        the courts lately. Following the    a danger that available challenges to the        In the following paragraphs, I will
seminal United States Supreme Court         liability underlying the penalty might      discuss the requirements for imposing
opinion in State Farm v. Campbell           get lost. This article takes the punitive   punitive damages in California with a
(2003) 538 U.S. 408, most challenges        damages issue a step back, to remind        focus on entity punitive damage liabil-
to punitive damages are based on due        defense practitioners that the require-     ity, and conclude with some general
process violations and focus on the         ments of California Civil Code §3294        practical advice for defense of such
excessive amount of punitive damages        subd. (b) can provide strong challenges     cases.
awarded. The most recent example is         to liability for punitive damages when
Philip Morris USA, v. Williams (2007)       defending an entity, in addition to due     Punitive Damages Are An
127 S.Ct. 1057, where the Supreme           process challenges to the amount.
Court accepted a due process chal-                                                      Anomaly Where Criminal
                                                 Entities are creations of law. They
lenge and remanded the case back to         do not have minds and cannot form
                                                                                        Law Crosses Over Into Tort
Oregon because the Oregon trial court       malicious intentions. Any attempt to        Law, Requiring Heightened
failed to instruct the jury that harm       punish an entity must by necessity rest     Safeguards
to nonparties could not be considered       on its employees and agents, natural        Torts represent a body of law directed
when determining the proper amount          people who have minds that are often        toward compensation of individuals for
of punitive damages against the tobacco     capable of forming evil intents. But        losses which they have suffered within
company.                                    unlike vicarious liability, which can be    the scope of their legally recognized
     No doubt about it, in the current      imposed on an entity simply by autho-       interests. Crimes, on the other hand,
litigation climate challenges to the        rizing a person to act on its behalf, an    are offenses against the public at large.
amount of punitive damages awarded          entity’s liability for punitive damages     For that reason crimes are prosecuted
can be a very powerful tool for defense     must rest on severely wrongful conduct      by the government. Punishment of the
attorneys. But in focusing on the appro-                                                offender vindicates the interests of the

                                                                                                 1st quarter 2007 verdict      29
Imposing Punitive Damages, (continued)

public as a whole. In contrast, a civil         The punishable acts which fall            ity...   requiring that the evidence be
action for a tort is commenced and          under the “oppression” “fraud” and            so clear as to leave no substantial doubt
maintained by the injured party. Its pri-   “malice” categories are strictly defined by   [and] sufficiently strong to command
mary purpose is to provide the injured      subd. (c). Each involves “intentional,”       the unhesitating assent of every reason-
party a sum of money, at the expense of     “willful,” or “conscious” wrongdoing of       able mind.” In re Angelia P. (1981) 28
the wrongdoer, for the damage suffered.     a “despicable” or “injur[ious]” nature.       Cal.3d 908, 919 (citations omitted);
Prosser & Keeton, On The Law of Torts,      College Hospital, Inc. v. Superior Court,     Shade Foods Inc. v. Innovative Products
5th Ed. West 1984 (Hornbook Ser.            supra, 8 Cal.4th at 721. See also Cruz v.     Sales & Marketing, Inc. (2000) 78 Cal.
Student Ed.) pp. 5-7.                       HomeBase (2000) 83 Cal.App.4th 160,           App.4th 847, 891.
     Exemplary (punitive) damages are       167.                                               In overabbreviated language, CACI
the one anomalous aspect in which the           Under Civ. Code §3294 subd. (c):          201 explains that “clear and convinc-
ideas underlying the criminal justice         (1) “Malice” means conduct which is         ing evidence” means that the plain-
system invade the field of torts. Id. at      intended by the defendant to cause injury   tiff must persuade the jury “that it is
p.9. Punitive damages pose an acute           to the plaintiff or despicable conduct      highly probable that the fact is true.”
danger of arbitrary deprivation of prop-      which is carried on by the defendant with   The prior approved jury instruction
erty because they are akin to criminal        a willful and conscious disregard of the    of BAJI 2.62 used a similar definition:
penalties. Yet civil defendants are not       rights or safety of others.                 “Clear and convincing evidence means
accorded the protections afforded crimi-      (2) “Oppression” means despicable con-      evidence of such convincing force that
nal defendants. State Farm Mut. Auto.         duct that subjects a person to cruel and    it demonstrates, in contrast to oppos-
Ins. Co. v. Campbell, supra, 538 U.S.         unjust hardship in conscious disregard of   ing evidence, a high probability of the
at 417. Because compensatory dam-             that person’s rights.                       truth of the facts for which it is offered
ages are designed to make the plaintiff       (3) “Fraud” means an intentional mis-       as proof.” This instruction was criti-
“whole,” punitive damages are consid-         representation, deceit, or concealment of   cized by the Second Appellate District
ered to be a “windfall” form of recovery.     a material fact known to the defendant      in In re Marriage of Weaver (1990)
College Hospital, Inc. v. Superior Court      with the intention on the part of the       224 Cal.App.3d 478, 487, but the
(1994) 8 Cal.4th 704, 721.                    defendant of thereby depriving a person     First Appellate District held that a jury
                                              of property or legal rights or otherwise
     Although not as strong as the pro-                                                   instruction based on the overabbrevi-
                                              causing injury.
tections given to criminal defendants,                                                    ated language did not require reversal.
the California punitive damages statute,         The Judicial Council of California       Weeks v. Baker & McKenzie (1998) 63
Civil Code §3294, includes important        Civil Jury Instructions (“CACI”)              Cal.App.4th 1128, 1164-65.
heightened safeguards to ensure that        include a series of instructions regarding
a defendant will not be improperly          punitive damages. CACI 3940-3948.             Punitive Damages Against An
“punished” for the mere commission of       These instructions add regarding “mal-        Entity Can Only Be Awarded
a tort. See e.g. Taylor v. Superior Court   ice” that “[a] person acts with knowing
                                                                                          For Wrongful Conduct By
(1979) 24 Cal.3d 890, 894 [something        disregard when he or she is aware of the
more than mere commission of a tort         probable dangerous consequences of            The Entity
is always required for punitive damage      his or her conduct and deliberately fails     The danger of arbitrary deprivation
liability.] Thus, in addition to proving    to avoid those consequences.” These           of property is particularly acute when
an underlying tort, a plaintiff suing any   instructions also define “despicable          imposing punitive damages upon enti-
defendant for punitive damages need         conduct” in the context of the punitive       ties. California courts hold that puni-
also prove, by “clear and convincing        damages statute as “conduct that is so        tive damages against an employer may
evidence” that defendant is “guilty of      vile, base, or contemptible that it would     only be awarded “for the employer’s
oppression, fraud, or malice”. Then,        be looked down on and despised by rea-        own wrongful conduct.” Weeks v. Baker
and only then, can a plaintiff recover      sonable people.” Strong words indeed.         & McKenzie, supra, 63 Cal.App.4th
“damages for the sake of example and                                                      at 1154. (Italics in the original.) That
                                                 Plaintiff must prove this horren-
by way of punishing the defendant” in                                                     being said, as everybody knows, corpo-
                                            dous conduct by the highest possible
addition to actual (compensatory) dam-                                                    rations can only act through individu-
                                            burden of proof which exists in the
ages. Civ. Code §3294 subd. (a).                                                          als:
                                            civil system: “clear and convincing evi-
                                            dence.” “Clear and convincing evidence          Corporations are legal entities which do
                                            requires a finding of high probabil-            not have minds capable of recklessness,

30    verdict 1st quarter 2007
  wickedness, or intent to injure or deceive.        Subd. (b) thus requires a multi-             possess the requisite ‘advance knowledge’
  An award of punitive damages against a        tiered analysis regarding entity employ-          and ‘authorize or ratify’ the conduct at
  corporation therefore must rest on the        ers. First, the status of the employees           issue before punitive damages can be
  malice of the corporation’s employees.        involved must be analyzed to determine            assessed against the corporation. The
  But the law does not impute every                                                               term ‘managing agent’ is, of course, a
                                                whether any of them is an “officer,
  employee’s malice to the corporation.                                                           term of art that refers to a function,
                                                director or managing agent” of the                and not a mere title. It remains for the
  Instead, the punitive damage statute          defendant entity. If that hurdle is
  requires proof of malice among cor-                                                             ‘judiciary’ to flesh out a meaning for
                                                cleared, a determination must be made             ‘managing agent’ in the factual context
  porate leaders.” Cruz, supra, 83 Cal.
                                                whether that “officer, director or man-           of each case before it. Weeks v. Baker &
  App.4th at 167. (Emphasis added.)
                                                aging agent” committed, ratified, or              McKenzie, supra, 63 Cal.App.4th at 1151.
     The California punitive damages            authorized any conduct constituting               (Emphasis added.)
statute references those corporate lead-        “oppression, malice or fraud” or wheth-
                                                er that “officer, director or managing               Following the 1980 amendments
ers by the terms “officer[s], director[s],
                                                agent” had advance knowledge of the             of SB 1989, the judiciary proceeded
and managing agent[s]”. Civ. Code
                                                unfitness of a fraudulent, malicious or         to “flesh out” the meaning of the term
§3294, subd. (b). “This is the group
                                                oppressive employee and employed him            “managing agent.” One line of cases
whose intentions guide corporate
                                                or her with a knowing disregard of the          concluded that the mere ability to hire
conduct. By so confining liability, the
                                                rights or safety of others.                     and fire employees renders a supervi-
statute avoids punishing the corpora-
                                                                                                sory employee a managing agent under
tion for malice of low-level employees
                                                Who Is a Managing Agent?                        section 3294, subdivision (b). See e.g.
which does not reflect the corporate
                                                                                                Stephens v. Coldwell Banker Commercial
‘state of mind’ or the intentions of cor-       The terms “officer” and “director” are
                                                                                                Group, Inc. (1988) 199 Cal.App.3d
porate leaders. This assures that punish-       titles of corporate functionaries which
                                                                                                1394, 1404. A second line of cases held
ment is imposed only if the corporation         have a clear meaning in corporate jar-
                                                                                                that even when employees have author-
can be fairly viewed as guilty of the evil      gon. As a result, the status of someone
                                                                                                ity to hire and fire others, employees
intent sought to be punished.” Cruz,            as a director or officer of a corporation
                                                                                                are not managing agents under §3294,
supra. (Bold emphasis added, italics in         is typically not a fact that is disputed
                                                                                                subd. (b), unless they in fact exercise
original.) “To award [punitive] damages         in litigation. The same cannot be said
                                                                                                substantial discretion in their decision
against the master for the criminality          regarding the term “managing agent”.
                                                                                                making capability. See e.g. Kelly-Zurian
of the servant is to punish a man for                The legislative history of the term        v. Wohl Shoe Co. (1994) 22 Cal.App.4th
that of which he is not guilty.’” White v.      “managing agent” in §3294 is detailed           397, 421.
Ultramar, Inc. (1999) 21 Cal.4th 563,           in Weeks v. Baker & McKenzie, supra, 63
569, quoting Warner v. Southern Pacific                                                              In White v. Ultramar, Inc., supra,
                                                Cal.App.4th at 1148-1152. The term
Co. (1896) 113 Cal. 105, 112.                                                                   the California Supreme Court was
                                                was added to the punitive damages
                                                                                                called upon to resolve these conflicting
    Under section 3294, subd. (b),              statute by Senate Bill No. 1989 (“SB
                                                                                                lines of authority. The Supreme Court
punitive damages can be imposed                 1989”), which was adopted in 1980 fol-
                                                                                                rejected the broad definition of the first
against an entity employer only when            lowing lobbying efforts by proponents
                                                                                                line of cases (which was the definition
the plaintiff proves, again by clear and        of tort reform, trying to make it harder
                                                                                                adopted by the lower court). Instead,
convincing evidence, that an “officer,          for plaintiffs to obtain punitive dam-
                                                                                                the Supreme Court adopted the nar-
director or managing agent” of the              ages. (Because of this legislative history,
                                                                                                row definition of the second line of
entity employer either:                         pre-1980 cases imposing punitive dam-
                                                                                                cases. In reaching its conclusion, the
(1) had advance knowledge of the unfit-         ages on corporations should be used
                                                                                                Supreme Court relied on the legisla-
ness of the fraudulent, malicious or            with caution).
                                                                                                tive history analysis performed by the
oppressive employee and employed him                 Senator Kenneth L. Maddy, who              court in Weeks, supra. In addition, the
or her with a knowing disregard of the          introduced SB 1989, explained the               Supreme Court found that by placing
rights or safety of others; or                  addition of the term “managing agent”           the term “managing agent” in the same
(2) committed, ratified, or authorized          in this context:                                category as “officer” and “director”, the
the fraudulent, malicious or oppressive           [T]he term ‘managing agent’ is used to        Legislature intended to limit the class of
conduct.                                          describe the lowest level person within       employees whose exercise of discretion
                                                  a corporation who must be ‘personally         could result in a corporate employer’s
                                                  guilty of oppression, fraud [or] malice’ or

                                                                                                        1st quarter 2007 verdict       31
Imposing Punitive Damages, (continued)

liability for punitive damages. White,          mendations regarding such matters, he       employees, and had authority only over
supra at 571-573. The Supreme Court             could not set the plaintiff ’s salary or    one narrow area (security) of the store’s
held:                                           give her a raise without authority from     multifaceted operations. The court held
     [T]he Legislature intended the term        St. Louis. Id at 422. The court stressed    that under these facts, the supervisor
     ‘managing agent’ to include only those     that to be considered a managing            was not a managing agent as a matter
     corporate employees who exercise           agent, the employee must be in a policy     of law. Id.
     independent authority and judg-            making (as opposed to implementing)              Fine tuning White’s definition of
     ment over decisions that ultimately        position. Ibid.                             “managing agents” as employees who
     determine corporate policy. White v.
     Ultramar, Inc., supra 21 Cal.4th at 566-        The facts described in Cruz are        “exercise substantial discretionary
     567. (Emphasis added).                     quite dreadful. Cruz was accused by         authority over decisions that ultimately
                                                a security guard of stealing a sheet of     determine corporate policy”, Cruz
     In White, the California Supreme           plywood, although he had a receipt          clarified that “’corporate policy’ is the
Court found that a regional direc-              and offered to display it. The security     general principles which guide a corpo-
tor of eight stores who supervised 65           guard and his supervisor detained           ration, or rules intended to be followed
employees and had “most if not all”             Cruz, handcuffed him, kicked him,           consistently over time in corporate
responsibility for running those eight          pushed him into a bench and a wall,         operations. A ‘managing agent’ is one
stores, represented a significant aspect        spilled his wallet and its contents on      with substantial authority over deci-
of the corporate defendant’s business.          the floor, called him derogatory names      sions that set these general principles
The regional director exercised substan-        and caused him to arrested and jailed.      and rules.” Cruz, supra, 83 Cal.App.4th
tial discretionary authority over vital         83 Cal.App.4th at 163.                      at 167-168 ( internal citation omitted.)
aspects of the business that included                Cruz successfully sued the guard,           CACI defines “managing agent” as
managing numerous stores on a daily             supervisor, and HomeBase for battery,       an employee who “exercises substantial
basis and making significant decisions          false imprisonment and malicious pros-      independent authority and judgment
affecting both store and company                ecution. The jury also awarded punitive     in his or her corporate decision making
policy. Viewing the facts in favor of the       damages against all the defendants. The     so that his or her decisions ultimately
trial court judgment which imposed              question for the court’s determination      determine corporate policy.” CACI
liability, the court affirmed the finding       was whether the supervisor was a “man-      3943-3947. The appropriate CACI
that the regional director was a “man-          aging agent” of HomeBase for purposes       instruction should be read to the jury
aging agent”. As a result, the regional         of imposing punitive damages against        in any case involving a determination
director’s malicious, oppressive or             HomeBase regarding his conduct              of managing agent status for purpose of
fraudulent termination of an employee           towards Cruz.                               imposing punitive damages.
in violation of public policy, subjected
the corporation to punitive damages.                 In performing its analysis to answer
                                                this question, Cruz explained that          When Does A Corporate
Id. at 577.
                                                certainly the decisions of the supervi-     Leader Authorize Or Ratify
     Cruz, supra, and Kelly-Zurian,             sor regarding Cruz had significant
supra both found the supervisory                                                            Malicious, Fraudulent Or
                                                consequences. “But, then, every cor-
employees at issue to not be managing           porate employee’s reckless or malicious
                                                                                            Oppressive Conduct?
agents. The employer in Kelly-Zurian            conduct has the potential to cause          Ratification is the “confirmation and
was found liable for sexual harassment          serious injury. Whether the corpora-        acceptance of a previous act.” Cruz,
performed by a supervisory employee             tion will be liable for punitive dam-       supra at 168. The CACIs do not use
upon the plaintiff. The court held that         ages depends, not on the nature of the      the word “ratification”, instead using
the sexually harassing supervisor was           consequences, but rather on whether         plain language requiring a plaintiff
not a “managing agent” since he did             the malicious employee belongs to the       to prove that an “officer, director or
not have the authority to “change or            leadership group of ‘officers, directors,   managing agent” of defendant “knew
establish business policy.” That author-        and managing agents.’” 83 Cal.App.4th       of the wrongful conduct and adopted
ity rested with the St. Louis office of         at 168. The evidence showed that the        or approved the conduct after it
the company, which set the policies             supervisor at issue was subordinate to      occurred.” See e.g. CACI 3943-3944.
and guidelines, and administered sala-          a store manager in a single outlet of a         As an alternative to his argument
ries and reviews. While the supervisor          multi-store chain, supervised only a few    that the security supervisor was a man-
at issue could advise and make recom-

32      verdict 1st quarter 2007
aging agent, the plaintiff in Cruz, supra,
argued that HomeBase corporate offi-
cials ratified the conduct of the security
guard and his supervisor. No evidence
was presented that showed that the                                           ARCHER                         NORRIS
                                                                             A P R O F E S S I O N A L L A W C O R P O R AT I O N
supervisor’s superiors actually knew
that the security guard and supervisor
had committed the intentional torts
towards Cruz. Id. at 164. Rather, Cruz            INSURANCE       LITIGATION        BUSINESS          ENVIRONMENTAL                 REAL ESTATE/LAND USE

argued that the corporate apex “had an
opportunity to learn” of the misconduct
of the security guard and his supervisor                   Archer Norris is a leading California law firm with more
from written reports that were provided                    than 70 attorneys in four California offices.
to them, and ratified the conduct by
                                                           Archer Norris strives to exceed client expectations by
retaining the employees. Id. at 166. The
court rejected this argument.                              creating effective strategies that bring positive results.

     The court explained that “[a] cor-
                                                          For additional information, please contact:
poration cannot confirm and accept                        Lee A. Archer, Managing Partner
that which it does not actually know            
about.” Cruz, supra at 168, citing
College Hospital Inc., supra, at 726 [for
ratification sufficient to justify puni-                 WALNUT CREEK          SACRAMENTO    NEWPORT BEACH                           LOS ANGELES
tive damages against a corporation,
there must be proof by the plaintiff that
                                             the Use Note to BAJI No. 14.73 (9th                      standard to determine the manag-
officers, directors, or managing agents
                                             ed.2002), states: “The committee                         ing agent status or conduct alleged to
had actual knowledge of the malicious
                                             believes that there is a substantial issue               be ratification. The Court of Appeals
conduct and its outrageous character].
                                             as to whether the requirement of clear                   affirmed the non-suit, holding that any
Evidence of an opportunity to learn
                                             and convincing evidence applies to the                   of the findings required under §3294
of the misconduct is not enough. The
                                             findings required by [Civil Code section                 must be made by clear and convincing
plaintiff must prove actual knowledge.
                                             3294] subdivision (b). Therefore, the                    evidence. Id. at 1644. The CACIs now
                                             trial judge will have to make that choice                specifically state that a plaintiff must
                                             pending legislative or appellate court                   prove any applicable requirement of
Plaintiff Has The Burden                     clarification.”                                          subd. (b) by clear and convincing evi-
Of Proving The Elements                           This confusion was resolved in                      dence. See e.g. CACI 3943-3944.
of Subd. (b) By Clear And                    Barton v. Alexander Hamilton Life Ins.
Convincing Evidence                          Co. (2003) 110 Cal.App.4th 1640. The                     Using Subd. (b) In Defense
It is one of the basic rules of evidence     jury in Barton found that an insurance                   Of Entity Punitive Damages
that a plaintiff must prove all elements     broker committed a fraud. The trial                      Cases
of his or her case. Evid. Code §500;         court granted the entity defendant a
                                                                                                      Upon receipt of a case involving poten-
Roddenberry v. Roddenberry (1996)            motion for non-suit on punitive dam-
                                                                                                      tial liability for punitive damages and
44 Cal.App.4th 634, 654. As detailed         ages because plaintiff did not submit
                                                                                                      continuing through trial preparation,
above, §3294 subd. (a) specifies that        any evidence that the agent was a man-
                                                                                                      defense counsel should interview all the
the burden of proof regarding punitive       aging agent of the insurance company,
                                                                                                      employees involved. Determine facts
damages is by clear and convincing evi-      or in the alternative, that the insurance
                                                                                                      such as the hierarchy of the employees
dence.                                       company ratified the fraud. Id. at 1643-
                                                                                                      involved in the alleged misconduct, the
     Because the “clear and convinc-                                                                  level and nature of discretion provided
ing” requirement appears in subd. (a),           On appeal, plaintiff argued that                     to each involved employee, manage-
there was some confusion whether it          the trial court should have applied the                  ment duties, the number and level of
also applied to subd. (b). For example,      lower preponderance of the evidence                      employees each employee involved

                                                                                                                   1st quarter 2007 verdict                33
Imposing Punitive Damages, (continued)

supervised, the amount of layers               ent sufficiently clear and convincing              If the motion for nonsuit or direct-
between each involved employee and             evidence to permit the jury to find a         ed verdict fails and the issue of liability
the corporate apex, and the ability to         corporate decision-maker was involved         for punitive damages does go to the
set company policy.                            in rescinding his job offer.” Id. at 63.      jury, remember to include the relevant
     Once the personnel involved and           The highest employee involved was a           components of Civ. Code §3294 subd.
their hierarchy is clear, for each employ-     Lockheed vice-president, MacPherson,          (b) in your jury instructions as well as
ee involved, determine whether he or           who did not testify at trial. Plaintiff did   your special verdict form.
she (1) committed “oppression, malice          not introduce any evidence to establish            Jury instructions should include:
or fraud”; (2) authorized “oppression,         MacPherson’s position in Lockheed’s           (1) the heightened burden of proof; (2)
malice or fraud”; (3) knew of the unfit-       corporate hierarchy. Plaintiff did not        the definitions of “malice,” “oppres-
ness of an employee who committed              introduce any evidence regarding              sion,” “fraud” and “despicable conduct”;
“oppression, malice or fraud” and              MacPherson’s duties or authority, let         (3) the requirement that the malice,
employed the employee with a knowing           alone substantial evidence that he exer-      oppression or fraud must be found, by
disregard of the rights or safety of oth-      cised substantial discretionary authority     clear and convincing evidence, to have
ers; (4) learned of the “oppression, mal-      over decisions that ultimately determine      been committed, ratified, or authorized
ice of fraud” and adopted or approved          corporate policy. Ibid, citing White,         by a director, officer or managing agent
it after it occurred.                          supra.                                        of the defendant; and (4) the defini-
    Defense counsel should also ensure                The plaintiff argued that the issue    tions of “managing agent,” and “rati-
that the information found through             of managing agent is an issue of fact for     fied”.
such interviews is consistent, supported,      the jury, and that the trial court invad-          The special verdict form should
and not contradicted by written docu-          ed the jury’s province by granting the        include questions specifically requiring
mentation. Prepare responses to written        motion for a directed verdict. The court      the jury to answer whether it finds, by
discovery and testimony at depositions         agreed, quoting White that “[w]hether         clear and convincing evidence, that an
accordingly.                                   an employee is a managing agent               officer, director or managing agent of
                                               must be made on a case-by-case basis.         the defendant entity committed, autho-
     Issues like whether or not someone        [Citation.] However, where insufficient
is a managing agent, or whether mis-                                                         rized or ratified malice, fraud or oppres-
                                               evidence supports a verdict in the plain-     sion.
conduct was ratified or not are typically      tiff ’s favor, no factual issue remains for
issues of fact, and can rarely support a       the jury to decide. Ibid. Were this not            Of course, if the jury still returns a
summary judgment. But they do lend             the case, motions for directed verdict        supported verdict for punitive damages
themselves nicely to nonsuit or direct         and nonsuit would not exist. Viewing          against the defendant, you can always
verdict motions (or judgment as a mat-         the evidence in the light most favor-         challenge for being excessive under
ter of law in federal court) once plain-       able to [plaintiff ], we similarly con-       State Farm v. Campbell!
tiff has presented its case.                   clude no substantial evidence showed
     Most attorneys defending an entity        MacPherson was a managing agent.”             Limor Lehavi is a partner at the Newport
in a case where punitive damages are           Ibid. See also Kelly-Zurian, supra at         Beach office of Archer Norris. Her prac-
sought will move for nonsuit or direct-        421-422 [no evidence in the record to         tice focuses on insurance related litigation,
ed verdict at the close of plaintiff ’s case   show supervisor was in policymaking           including insurance coverage, insurance
regarding the elements of §3294(a) –           position, and substantial evidence was        bad faith, E & O, in-house counsel issues
failure to provide clear and convincing        presented to the contrary].                   and unfair business practice cases. Many
proof of oppression, malice or fraud.                                                        of her cases involve litigation of punitive
Subd. (b) is not used quite as often for                                                     damage claims.
this purpose. That is unfortunate, as it
can be just as effective.
    Consider the recent case of Gelfo
v. Lockheed Martin Corp. (2006) 140
Cal.App.4th 34. The court granted
directed verdict for defendant Lockheed
on the punitive damages claim on the
ground that plaintiff “failed to pres-

34     verdict 1st quarter 2007