CACI No. 3946. Punitive Damages - Entity Defendant - Bifurcated Trial (First Phase)

Judicial Council of California Civil Jury Instructions (2020 edition)

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3946.Punitive Damages - Entity Defendant - Bifurcated Trial (First
Phase)
If you decide that [name of defendant]’s conduct caused [name of plaintiff]
harm, you must decide whether that conduct justifies an award of
punitive damages. The amount, if any, of punitive damages will be an
issue decided later.
At this time, you must decide whether [name of plaintiff] has proved that
[name of defendant] engaged in that conduct with malice, oppression, or
fraud. To do this, [name of plaintiff] must prove [one of] the following by
clear and convincing evidence:
1. [That the conduct constituting malice, oppression, or fraud was
committed by one or more officers, directors, or managing agents
of [name of defendant] who acted on behalf of [name of defendant];
[or]]
2. [That the conduct constituting malice, oppression, or fraud was
authorized by one or more officers, directors, or managing agents
of [name of defendant]; [or]]
3. [That one or more officers, directors, or managing agents of
[name of defendant] knew of the conduct constituting malice,
oppression, or fraud and adopted or approved that conduct after
it occurred.]
“Malice” means that [name of defendant] acted with intent to cause
injury or that [name of defendant]’s conduct was despicable and was done
with a willful and knowing disregard of the rights or safety of another. A
defendant acts with knowing disregard when the defendant is aware of
the probable dangerous consequences of the defendant’s conduct and
deliberately fails to avoid those consequences.
“Oppression” means that [name of defendant]’s conduct was despicable
and subjected [name of plaintiff] to cruel and unjust hardship in knowing
disregard of [his/her/nonbinary pronoun] rights.
“Despicable conduct” is conduct that is so vile, base, or contemptible
that it would be looked down on and despised by reasonable people.
“Fraud” means that [name of defendant] intentionally misrepresented or
concealed a material fact and did so intending to harm [name of
plaintiff].
An employee is a “managing agent” if the employee exercises substantial
independent authority and judgment in corporate decisionmaking such
that the employee’s decisions ultimately determine corporate policy.
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New September 2003; Revised April 2004, December 2005, May 2020
Directions for Use
CACI No. 3942, Punitive Damages - Individual Defendant - Bifurcated Trial
(Second Phase) may be used for the second phase of a bifurcated trial.
This instruction is intended for use when the plaintiff is seeking punitive damages
against a corporation or other entity for the conduct of its directors, officers, and
managing agents. When the plaintiff is seeking to hold an employer or principal
liable for the conduct of a specific employee or agent, use CACI No. 3944, Punitive
Damages Against Employer or Principal For Conduct of a Specific Agent or
Employee - Bifurcated Trial (First Phase). When the plaintiff is seeking punitive
damages from both the employer/principal and the employee/agent, use CACI
No. 3948, Punitive Damages - Individual and Corporate Defendants (Corporate
Liability Based on Acts of Named Individual) - Bifurcated Trial (First Phase).
For an instruction explaining “clear and convincing evidence,” see CACI No. 201,
Highly Probable - Clear and Convincing Proof.
If any of the alternative grounds for seeking punitive damages are inapplicable to
the facts of the case, they may be omitted.
In an appropriate case, the jury may be instructed that a false promise or a
suggestion of a fact known to be false may constitute a misrepresentation as the
word “misrepresentation” is used in the instruction’s definition of “fraud.”
Sources and Authority
• When Punitive Damages Permitted. Civil Code section 3294.
• “[E]vidence of ratification of [agent’s] actions by Hamilton, and any other
findings made under Civil Code section 3294, subdivision (b), must be made by
clear and convincing evidence.” (Barton v. Alexander Hamilton Life Ins. Co. of
America (2003) 110 Cal.App.4th 1640, 1644 [3 Cal.Rptr.3d 258].)
• “[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.)
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• “Under the statute, ‘malice does not require actual intent to harm. [Citation.]
Conscious disregard for the safety of another may be sufficient where the
defendant is aware of the probable dangerous consequences of his or her conduct
and he or she willfully fails to avoid such consequences. [Citation.] Malice may
be proved either expressly through direct evidence or by implication through
indirect evidence from which the jury draws inferences. [Citation.]’ ” (Pfeifer v.
John Crane, Inc. (2013) 220 Cal.App.4th 1270, 1299 [164 Cal.Rptr.3d 112].)
• “Used in its ordinary sense, the adjective ‘despicable’ is a powerful term that
refers to circumstances that are ‘base,’ ‘vile,’ or ‘contemptible.’ As amended to
include this word, the statute plainly indicates that absent an intent to injure the
plaintiff, ‘malice’ requires more than a ‘willful and conscious’ disregard of the
plaintiffs’ interests. The additional component of ‘despicable conduct’ must be
found.” (College Hospital, Inc. v. Superior Court (1994) 8 Cal.4th 704, 725 [34
Cal.Rptr.2d 898, 882 P.2d 894], internal citations omitted.)
• “Section 3294 is no longer silent on who may be responsible for imputing
punitive damages to a corporate employer. For corporate punitive damages
liability, section 3294, subdivision (b), requires that the wrongful act giving rise
to the exemplary damages be committed by an ‘officer, director, or managing
agent.’ ” (White v. Ultramar, Inc. (1999) 21 Cal.4th 563, 572 [88 Cal.Rptr.2d 19,
981 P.2d 944].)
• “[I]n performing, ratifying, or approving the malicious conduct, the agent must
be acting as the organization’s representative, not in some other capacity.”
(College Hospital, Inc., supra, 8 Cal.4th at p. 723.)
• “[T]he concept [of managing agent] assumes that such individual was acting in a
corporate or employment capacity when the conduct giving rise to the punitive
damages claim against the employer occurred.” (College Hospital, Inc., supra, 8
Cal.4th at p. 723.)
• “No purpose would be served by punishing the employer for an employee’s
conduct that is wholly unrelated to its business or to the employee’s duties
therein.” (College Hospital, Inc., supra, 8 Cal.4th at pp. 723-724.)
• “[T]he determination of whether certain employees are managing agents ‘ “does
not necessarily hinge on their ‘level’ in the corporate hierarchy. Rather, the
critical inquiry is the degree of discretion the employees possess in making
decisions . . . .” ’ ” (Powerhouse Motorsports Group, Inc. v. Yamaha Motor
Corp., U.S.A. (2013) 221 Cal.App.4th 867, 886 [164 Cal.Rptr.3d 811].)
• “Although it is generally true . . . that an employee’s hierarchy in a corporation
is not necessarily determinative of his or her status as a managing agent of a
corporation, evidence showing an employee’s hierarchy and job duties,
responsibilities, and authority may be sufficient, absent conclusive proof to the
contrary, to support a reasonable inference by a trier of fact that the employee is
a managing agent of a corporation.” (Davis v. Kiewit Pacific Co. (2013) 220
Cal.App.4th 358, 370 [162 Cal.Rptr.3d 805].)
• “[W]e conclude the Legislature intended the term ‘managing agent’ to include
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only those corporate employees who exercise substantial independent authority
and judgment in their corporate decisionmaking so that their decisions ultimately
determine corporate policy. The scope of a corporate employee’s discretion and
authority under our test is therefore a question of fact for decision on a case-by-
case basis.” (White, supra, 21 Cal.4th at pp. 566-567.)
• “In order to demonstrate that an employee is a true managing agent under
section 3294, subdivision (b), a plaintiff seeking punitive damages would have to
show that the employee exercised substantial discretionary authority over
significant aspects of a corporation’s business.” (White, supra, 21 Cal.4th at p.
577.)
• “ ‘[C]orporate policy’ is the general principles which guide a corporation, or
rules intended to be followed consistently over time in corporate operations. A
‘managing agent’ is one with substantial authority over decisions that set these
general principles and rules.” (Cruz v. Homebase (2000) 83 Cal.App.4th 160,
167-168 [99 Cal.Rptr.2d 435].)
• “The key inquiry thus concerns the employee’s authority to change or establish
corporate policy. The fact that an employee has a supervisory position with the
power to terminate employees under his or her control does not, by itself, render
the employee a managing agent. Nor does the fact that an employee supervises a
large number of employees necessarily establish that status.” (CRST, Inc. v.
Superior Court (2017) 11 Cal.App.5th 1255, 1273 [218 Cal.Rptr.3d 664].)
• “ ‘[R]atification’ is the ‘[c]onfirmation and acceptance of a previous act.’ A
corporation cannot confirm and accept that which it does not actually know
about.” (Cruz, supra, 83 Cal.App.4th at p. 168.)
• “For purposes of determining an employer’s liability for punitive damages,
ratification generally occurs where, under the particular circumstances, the
employer demonstrates an intent to adopt or approve oppressive, fraudulent, or
malicious behavior by an employee in the performance of his job duties.”
(College Hospital, Inc., supra, 8 Cal.4th at p. 726.)
• “Corporate ratification in the punitive damages context requires actual
knowledge of the conduct and its outrageous nature.” (College Hospital, Inc.,
supra, 8 Cal.4th at p. 726.)
Secondary Sources
9 Witkin, Summary of California Law (11th ed. 2017) Torts, §§ 1752-1756
California Tort Damages (Cont.Ed.Bar) Punitive Damages, §§ 14.13-14.14, 14.23
4 Levy et al., California Torts, Ch. 54, Punitive Damages, §§ 54.07, 54.24[4][d]
(Matthew Bender)
15 California Forms of Pleading and Practice, Ch. 177, Damages, § 177.51[17]
(Matthew Bender)
6 California Points and Authorities, Ch. 64, Damages: Tort, § 64.24 et seq.
(Matthew Bender)
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