California Civil Jury Instructions (CACI)

3942. Punitive Damages - Individual Defendant—Bifurcated Trial (Second Phase)

You must now decide the amount, if any, that you should award [name of plaintiff] in punitive damages. The purposes of punitive damages are to punish a wrongdoer for the conduct that harmed the plaintiff and to discourage similar conduct in the future.

There is no fixed standard for determining the amount of punitive damages, and you are not required to award any punitive damages. If you decide to award punitive damages, you should consider all of the following in determining the amount:

(a) How reprehensible was [name of defendant]'s conduct?

(b) Is there a reasonable relationship between the amount of punitive damages and [name of plaintiff]'s harm?

(c) In view of [name of defendant]'s financial condition, what amount is necessary to punish [him/her] and discourage future wrongful conduct? You may not increase the punitive award above an amount that is otherwise appropriate merely because [name of defendant] has substantial financial resources. [Any award you impose may not exceed [name of defendant]'s ability to pay.]

Directions for Use

Read the bracketed language in subdivision (c) only if the defendant has presented relevant evidence regarding this issue.

"A jury must be instructed . . . that it may not use evidence of out-of-state conduct to punish a defendant for action that was lawful in the jurisdiction where it occurred." (State Farm Mutual Automobile Insurance Co. v. Campbell (2003) 538 U.S. 408, 422 [123 S.Ct. 1513, 155 L.Ed.2d 585].) An instruction on this point should be included within this instruction if appropriate to the facts.

In June 2003, the United States Supreme Court restated the due process principles limiting awards of punitive damages in State Farm Mutual Automobile Insurance Co., supra, 538 U.S. at p. 418. Several subsequent California Court of Appeal cases have responded to various aspects of the United States Supreme Court's reasoning. (See, e.g., Romo v. Ford Motor Co. (2003) 113 Cal.App.4th 738 [6 Cal.Rptr.3d 793] [in light of Campbell, it is error to give BAJI 14.71].)

The California Supreme Court recently granted review in three appellate decisions that involve post-Campbell punitive damages awards. (Henley v. Philip Morris, Inc. (2004) 114 Cal.App.4th 1429 [9 Cal.Rptr.3d 29], review granted Apr. 28, 2004, S123023; Simon v. San Paolo U.S. Holding Co. (2003) 113 Cal.App.4th 1137 [7 Cal.Rptr.3d 367], review granted Mar. 24, 2004, S121933; Johnson v. Ford Motor Co., review granted Mar. 24, 2004, S121723.) At this time, because of the recent and rapidly developing state of California law, the Advisory Committee has elected not to make substantive modifications to the CACI instructions on punitive damages in response to these holdings. Because state and federal law in this area is evolving, the court should assess whether changes to the instruction are appropriate based on any recent decisions.

Courts have stated that "[p]unitive damages previously imposed for the same conduct are relevant in determining the amount of punitive damages required to sufficiently punish and deter. The likelihood of future punitive damage awards may also be considered, although it is entitled to considerably less weight." (Stevens v. Owens-Corning Fiberglas Corp. (1996) 49 Cal.App.4th 1645, 1661 [57 Cal.Rptr.2d 525], internal citations omitted.) The court in Stevens suggested that the following instruction be given if evidence of other punitive damage awards is introduced into evidence:

If you determine that a defendant has already been assessed with punitive damages based on the same conduct for which punitive damages are requested in this case, you may consider whether punitive damages awarded in other cases have sufficiently punished and made an example of the defendant. You must not use the amount of punitive damages awarded in other cases to determine the amount of the punitive damage award in this case, except to the extent you determine that a lesser award, or no award at all, is justified in light of the penalties already imposed. (Stevens, supra, 49 Cal.App.4th at p. 1663, fn. 7.)

Regarding the relationship between punitive and compensatory damages, case law suggests that a jury may consider harm that could have been caused by the defendant's conduct, even if that harm did not come to pass: "The high court in TXO [TXO Production Corp. v. Alliance Resources Corp. (1993) 509 U.S. 443 [113 S.Ct. 2711, 125 L.Ed.2d 366]] and BMW [BMW of North America, Inc. v. Gore (1996) 517 U.S. 559 [116 S.Ct. 1589, 134 L.Ed.2d 809]] has refined the disparity analysis to take into account the potential loss to the plaintiffs, as where a scheme worthy of punitive damages does not fully succeed. In such cases, the proper ratio would be the ratio of punitive damages to the potential harm to plaintiff." (Sierra Club Foundation v. Graham (1999) 72 Cal.App.4th 1135, 1162, fn. 15 [85 Cal.Rptr.2d 726], internal citations omitted.)

Sources and Authority

Civil Code section 3294 provides, in part: "In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant."

Civil Code section 3295(d) provides: "The court shall, on application of any defendant, preclude the admission of evidence of that defendant's profits or financial condition until after the trier of fact returns a verdict for plaintiff awarding actual damages and finds that a defendant is guilty of malice, oppression, or fraud in accordance with Section 3294. Evidence of profit and financial condition shall be admissible only as to the defendant or defendants found to be liable to the plaintiff and to be guilty of malice, oppression, or fraud. Evidence of profit and financial condition shall be presented to the same trier of fact that found for the plaintiff and found one or more defendants guilty of malice, oppression, or fraud."

"[Section 3295(d)] affects the order of proof at trial, precluding the admission of evidence of defendants' financial condition until after the jury has returned a verdict for plaintiffs awarding actual damages and found that one or more defendants were guilty of 'oppression, fraud or malice,' in accordance with Civil Code section 3294." (City of El Monte v. Superior Court (1994) 29 Cal.App.4th 272, 274-275 [34 Cal.Rptr.2d 490], internal citations omitted.)

"Evidence of the defendant's financial condition is a prerequisite to an award of punitive damages. In order to protect defendants from the premature disclosure of their financial position when punitive damages are sought, the Legislature enacted Civil Code section 3295." (City of El Monte, supra, 29 Cal.App.4th at p. 276, internal citations omitted.)

"[C]ourts have held it is reversible error to try the punitive damages issue to a new jury after the jury which found liability has been excused." (Rivera v. Sassoon (1995) 39 Cal.App.4th 1045, 1048 [46 Cal.Rptr.2d 144], internal citations omitted.)

"The purpose of punitive damages is to punish wrongdoers and thereby deter the commission of wrongful acts." (Neal v. Farmers Insurance Exchange (1978) 21 Cal.3d 910, 928, fn. 13 [148 Cal.Rptr. 389, 582 P.2d 980].)

"Punitive damages are to be assessed in an amount which, depending upon the defendant's financial worth and other factors, will deter him and others from committing similar misdeeds. Because compensatory damages are designed to make the plaintiff 'whole,' punitive damages are a 'windfall' form of recovery." (College Hospital, Inc. v. Superior Court (1994) 8 Cal.4th 704, 712 [34 Cal.Rptr.2d 898, 882 P.2d 894], internal citations omitted.)

"It follows that the wealthier the wrongdoing defendant, the larger the award of exemplary damages need be in order to accomplish the statutory objective." (Bertero v. National General Corp. (1974) 13 Cal.3d 43, 65 [118 Cal.Rptr. 184, 529 P.2d 608].)

" 'A plaintiff, upon establishing his case, is always entitled of right to compensatory damages. But even after establishing a case where punitive damages are permissible, he is never entitled to them. The granting or withholding of the award of punitive damages is wholly within the control of the jury, and may not legally be influenced by any direction of the court that in any case a plaintiff is entitled to them. Upon the clearest proof of malice in fact, it is still the exclusive province of the jury to say whether or not punitive damages shall be awarded. A plaintiff is entitled to such damages only after the jury, in the exercise of its untrammeled discretion, has made the award.' " (Brewer v. Second Baptist Church of Los Angeles (1948) 32 Cal.2d 791, 801 [197 P.2d 713], internal citation omitted.)

"In light of our holding that evidence of a defendant's financial condition is essential to support an award of punitive damages, Evidence Code section 500 mandates that the plaintiff bear the burden of proof on the issue. A plaintiff seeking punitive damages is not seeking a mere declaration by the jury that he is entitled to punitive damages in the abstract. The plaintiff is seeking an award of real money in a specific amount to be set by the jury. Because the award, whatever its amount, cannot be sustained absent evidence of the efendant's financial condition, such evidence is 'essential to the claim for relief.' " (Adams v. Murakami (1991) 54 Cal.3d 105, 119 [284 Cal.Rptr. 318, 813 P.2d 1348], internal citation omitted.)

"[W]e are afforded guidance by certain established principles, all of which are grounded in the purpose and function of punitive damages. One factor is the particular nature of the defendant's acts in light of the whole record; clearly, different acts may be of varying degrees of reprehensibility, and the more reprehensible the act, the greater the appropriate punishment, assuming all other factors are equal. Another relevant yardstick is the amount of compensatory damages awarded; in general, even an act of considerable reprehensibility will not be seen to justify a proportionally high amount of punitive damages if the actual harm suffered thereby is small. Also to be considered is the wealth of the particular defendant; obviously, the function of deterrence will not be served if the wealth of the defendant allows him to absorb the award with little or no discomfort. By the same token, of course, the function of punitive damages is not served by an award which, in light of the defendant's wealth and the gravity of the particular act, exceeds the level necessary to properly punish and deter." (Neal, supra, 21 Cal.3d at p. 928, internal citations and footnote omitted.)

"We have instructed courts to determine the reprehensibility of a defendant by considering whether: the harm caused was physical as opposed to economic; the tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others; the target of the conduct had financial vulnerability; the conduct involved repeated actions or was an isolated incident; and the harm was the result of intentional malice, trickery, or deceit, or mere accident. The existence of any one of these factors weighing in favor of a plaintiff may not be sufficient to sustain a punitive damages award; and the absence of all of them renders any award suspect." (State Farm Mutual Automobile Insurance Co., supra, 538 U.S. at p. 419, internal citation omitted.)

"The decision to award punitive damages is exclusively the function of the trier of fact. So too is the amount of any punitive damage award. The relevant considerations are the nature of the defendant's conduct, the defendant's wealth, and the plaintiff's actual damages." (Gagnon v. Continental Casualty Co. (1989) 211 Cal.App.3d 1598, 1602 [260 Cal.Rptr. 305], internal citations omitted.)

"The wealth of a defendant cannot justify an otherwise unconstitutional punitive damages award." (State Farm Mutual Automobile Insurance Co., supra, 538 U.S. at p. 427, internal citation omitted.)

"[T]he purpose of punitive damages is not served by financially destroying a defendant. The purpose is to deter, not to destroy." (Adams, supra, 54 Cal.3d at p. 112.)

"[A] punitive damages award is excessive if it is disproportionate to the defendant's ability to pay." (Adams, supra, 54 Cal.3d at p. 112, internal citations omitted.)

"It has been recognized that punitive damages awards generally are not permitted to exceed 10 percent of the defendant's net worth." (Weeks v. Baker & McKenzie (1998) 63 Cal.App.4th 1128, 1166 [74 Cal.Rptr.2d 510].)

"In light of our discussion, we conclude that even where, as here, punitive but not compensatory damages are available to the plaintiff, the defendant is entitled to an instruction that punitive damages must bear a reasonable relation to the injury, harm, or damage actually suffered by the plaintiff and proved at trial. Consequently, the trial court erred in failing to so instruct the jury." (Gagnon, supra, 211 Cal.App.3d at p. 1605.)

"We conclude that the rule . . . that an award of exemplary damages must be accompanied by an award of compensatory damages [or its equivalent] is still sound. That rule cannot be deemed satisfied where the jury has made an express determination not to award compensatory damages." (Cheung v. Daley (1995) 35 Cal.App.4th 1673, 1677 [42 Cal.Rptr.2d 164], footnote omitted.)

"With the focus on the plaintiff's injury rather than the amount of compensatory damages, the ["reasonable relation"] rule can be applied even in cases where only equitable relief is obtained or where nominal damages are awarded or, as here, where compensatory damages are unavailable." (Gagnon, supra, 211 Cal.App.3d at p. 1605.)

Secondary Sources

6 Witkin, Summary of California Law (9th ed. 1988) Torts, §§ 1327, pp.

784-786, 1369-1381, pp. 836-852

4 Levy et al., California Torts, Ch. 54, Punitive Damages, §§ 54.20-54.25, 54.24[4][d] (Matthew Bender)

California Tort Damages (Cont.Ed.Bar 1988) Punitive Damages, §§ 14.1- 14.8, 14.23

15 California Forms of Pleading and Practice, Ch. 177, Damages (Matthew Bender)

6 California Points and Authorities, Ch. 65, Damages (Matthew Bender)

(Revised October 2004)