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California’s biggest verdicts of 2003 is a slightly more modest list compared with the year before, thanks in large part to a U.S. Supreme Court ruling setting conditions for punitive damages. Attorneys for both plaintiffs and defendants agreed that State Farm Automobile Insurance Co. v. Campbell, 123 S.Ct. 1513 — an April 2003 ruling that limits punitive damages to nine times compensatories in most cases — had a chilling effect on many of the year’s blowout verdicts. The awards overall were smaller than in recent years, and gone were the gargantuan multibillion-dollar verdicts at the top of the 2002 list that had drawn nationwide attention. That year, for instance, a Los Angeles solo attorney snagged an eye-popping $28 billion verdict in the tobacco suit Bullock v. Philip Morris, BC 249 171. (Most of that award was slashed by the trial judge.) Such verdicts were hard to justify in light of the Campbell ruling, which also said that punitive damages could not be based on how wealthy or “unsavory” a defendant is, but should be based solely on the specific conduct that harmed the plaintiff. Even the biggest verdict of 2003, $934.4 million in a breach of contract case, was reached in the shadow of Campbell. In Beckman Coulter v. Dovatron International Inc., a maker of medical instruments charged one of its suppliers with extortion after the supplier decided it would break the contract and cease building a circuit board used in hospital equipment. The plaintiff’s attorney, Daniel Callahan of Callahan & Blaine in Santa Ana, said his client lost no more than $1 million in tort damages in the dispute; a literal interpretation of Campbell would therefore cap punitives in the case at about $10 million. So Callahan argued that punitives should be calculated against his client’s potential economic loss. He then asked the jury what that potential damage should be, and “they filled in the blank,” he said, arriving at about $340.7 million. Callahan noted that this number brought the verdict well within Campbell‘s guidelines. In the end, the case settled for $23 million, a fraction of the original judgment. But Callahan pointed out that the largest punitive award ever sustained on appeal in the state was the $25 million in the civil suit against O.J. Simpson. The next highest was $23.7 million in Romo v. Ford Motor Co., 113 Cal.App.4th 738, in which three people died. Compared to those, he said, $23 million for potential economic loss looked pretty good to him and his client. “It was far more than we ever expected to receive. It also is more than we ever would have escaped with from the appellate courts,” he said. Other plaintiffs attorneys were more direct in their deference to Campbell. Arnold Levinson, of Pillsbury & Levinson in San Francisco, saw his client’s $31.7 million verdict — No. 10 on the list — cut by the trial judge to just over $6.1 million. “We felt that given the U.S. Supreme Court’s ruling in the Campbell v. State Farm case, that we needed to accept the remittitur. But we felt that even under the Campbell case the original award ought to be reinstated.” Levinson’s Marin County case, Chapman v. UnumProvident Corp., was brought by an eye surgeon who developed a phobia to surgery, causing him panic attacks, diarrhea, vomiting and hand tremors, Levinson said. When Dr. Chapman’s insurance company denied his disability claim, the surgeon sued. The insurance company has appealed the verdict, and the plaintiff has counter-appealed. Levinson, who said he believes “the courts have gone overboard, overreacted to Campbell,” is not the only trial lawyer unhappy with the fallout from the high court ruling. Stuart Chandler, a solo attorney in Fresno, saw one client’s punitive award slashed from $25 million to $710,000 in direct response to Campbell. His case, Perez v. Fire Insurance Exchange, pitted an injured truck driver against Farmers Insurance, which had denied his claims. Compensatory damages were about $1 million, and although Chandler had suggested a punitive damages award within the single-digit ratio, the jury took matters into its own hands and “went ballistic; they hated this insurance company,” he said. The resulting verdict, nearly $25.9 million, was the 13th highest of the year. After the judge slashed the punitive award, however, the total judgment was deflated to about $1.8 million. The plaintiff accepted that judgment, but nonetheless, “the insurance company refused to pay anything,” Chandler said. The case is now on appeal. “There’s no doubt in my mind Campbell is putting a sort of a damper on punitive damages,” Chandler said. “However, various courts take varying perspectives on Campbell. � There are circumstances under which it is appropriate, and the court will uphold multipliers well above” Campbell‘s single-digit guidelines, he said. Varying perspectives on the ruling are indeed being provided by state appeal courts. In late 2003, the Fifth District Court of Appeal cited Campbell as the reason for knocking down Romo‘s previously upheld $290 million verdict to $23.7 million. Only a few days later, however, the Second District Court of Appeal ruled in Simon v. San Paolo U.S. Holding Co. Inc. that a $1.7 million punitive award was fair despite only $5,000 in compensatory damages. In that ruling, Justice Gary Hastings wrote that Campbell “was not intended to dispossess the states of their discretion over the imposition of punitive damages.” Not only were the verdicts of 2003 smaller than in previous years, the suits themselves were often on a smaller scale. While corporate malfeasance dominated in 2002 — with several class actions and other large-scale suits topping the list — 2003 featured more personal grievances. Of the top 20 verdicts, four were against insurers for bad faith. Two of the verdicts were from medical malpractice suits, and two were from on-the-job accidents. Two suits charged a competitor with stealing technology — in one case a needle-free intravenous device, in another a new type of car differential. Four suits charged companies with selling dangerous products after someone was injured or killed. In Shropshire v. City of Walnut Creek, that East Bay city was hit for premises liability after a young man was paralyzed while diving into a city-owned swimming pool. Scotty Shropshire, now living in the Fresno area with his parents, was 20 years old when he hit a swimmer and broke his neck, becoming a quadriplegic, said his lawyer, William Smith of Abramson Smith Waldsmith in San Francisco. The jury found Walnut Creek at fault for allowing dangerous conditions at the pool and awarded Shropshire $23.25 million. The verdict was the 12th largest of the year. A few cases of 2003 were a bit more unusual. One stand-out was Oakland Raiders v. Oakland Alameda County Coliseum, in which Al Davis’ Raiders football team sued a collection of entities — including the city of Oakland, Alameda County and the Oakland Coliseum — on charges of negligent representation in their dealings with the football team. The $34.2 million verdict — the eighth largest of the year — is the latest chapter in an ongoing court battle involving the Raiders. Who is really on the hook for the judgment, and how would payments be made? “Those are things being argued right now,” said Jonathan Hughes of Howard, Rice, Nemerovski, Canady, Falk & Rabkin, who represented the Raiders in Sacramento County Superior Court. Ultimately, the Coliseum’s relationships with the city and county “may or may not obligate” taxpayers to help pay the verdict, Hughes said. Appeals have been filed by both sides in the case. Another unique case is Darling v. McDonald’s Corp. — unique if for no other reason than McDonald’s rarely loses. In this case, the company was sued by franchisee Sandra Darling, who accused it of fraudulently trying to muscle in on her highly successful Fontana (San Bernardino County) restaurant. The $16.5 million verdict in the case made it No. 17 on the list. At the time of the verdict, industry watchers worried that it would inspire a host of similar lawsuits against large franchisers. But the defendant’s attorney in the case, Michael Pappas of Sonnenschein Nath & Rosenthal in Los Angeles, says it hasn’t emboldened other franchisees against McDonald’s. “I’m not aware of any cases that were filed as a result of this case,” he said. “Right now things are fairly quiet on the McDonald’s litigation front.”

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