California Civil Jury Instructions (CACI) (2017)

3947. Punitive Damages - Individual and Entity Defendants—Trial Not Bifurcated

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3947.Punitive Damages—Individual and Entity Defendants—Trial
Not Bifurcated
If you decide that [name of individual defendant]’s or [name of entity
defendant]’s conduct caused [name of plaintiff] harm, you must decide
whether that conduct justifie an award of 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.
You may award punitive damages against [name of individual defendant]
only if [name of plaintiff] proves by clear and convincing evidence that
[name of individual defendant] engaged in that conduct with malice,
oppression, or fraud.
You may award punitive damages against [name of entity defendant] only
if [name of plaintiff] proves that [name of entity defendant] acted 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 malice, oppression, or fraud was conduct of one or
more officers, directors, or managing agents of [name of entity
defendant], who acted on behalf of [name of entity defendant]; [or]]
2. [That an officer, a director, or a managing agent of [name of
entity defendant] had advance knowledge of the unfitnes of [name
of individual defendant] and employed [him/her] with a knowing
disregard of the rights or safety of others; [or]]
3. [That the conduct constituting malice, oppression, or fraud was
authorized by one or more officers, directors, or managing
agents of [name of entity defendant]; [or]]
4. [That one or more officers, directors, or managing agents of
[name of entity defendant] knew of the conduct constituting
malice, oppression, or fraud and adopted or approved that
conduct after it occurred.]
“Malice” means that a defendant acted with intent to cause injury or
that a 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 [his/her/its] conduct and
deliberately fails to avoid those consequences.
“Oppression” means that a defendant’s conduct was despicable and
subjected [name of plaintiff] to cruel and unjust hardship in knowing
disregard of [his/her] rights.
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“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 a defendant intentionally misrepresented or
concealed a material fact and did so intending to harm [name of
plaintiff].
An employee is a “managing agent” if he or she exercises substantial
independent authority and judgment in his or her corporate
decisionmaking such that his or her decisions ultimately determine
corporate policy.
There is no fixe formula 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 factors separately for each defendant in determining the
amount:
(a) How reprehensible was that defendant’s conduct? In deciding
how reprehensible a defendant’s conduct was, you may consider,
among other factors:
1. Whether the conduct caused physical harm;
2. Whether the defendant disregarded the health or safety of
others;
3. Whether [name of plaintiff] was financiall weak or vulnerable
and the defendant knew [name of plaintiff] was financiall
weak or vulnerable and took advantage of [him/her];
4. Whether the defendant’s conduct involved a pattern or
practice; and
5. Whether the defendant acted with trickery or deceit.
(b) Is there a reasonable relationship between the amount of
punitive damages and [name of plaintiff]’s harm [or between the
amount of punitive damages and potential harm to [name of
plaintiff] that the defendant knew was likely to occur because of
[his/her/its] conduct]?
(c) In view of that defendant’s financia condition, what amount is
necessary to punish [him/her/it] and discourage future wrongful
conduct? You may not increase the punitive award above an
amount that is otherwise appropriate merely because a
defendant has substantial financia resources. [Any award you
impose may not exceed that defendant’s ability to pay.]
[Punitive damages may not be used to punish a defendant for the
impact of [his/her/its] alleged misconduct on persons other than [name
of plaintiff].]
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New September 2003; Revised April 2004, October 2004, December 2005, June
2006, April 2007, August 2007, October 2008
Directions for Use
This instruction is intended to apply if punitive damages are sought against both an
individual person and a corporate defendant. When punitive damages are sought
only against corporate defendants, use CACI No. 3943, Punitive Damages Against
Employer or Principal for Conduct of a Specifi Agent or Employee—Trial Not
Bifurcated, or CACI No. 3945, Punitive Damages—Entity Defendant—Trial Not
Bifurcated. When punitive damages are sought against an individual defendant, use
CACI No. 3940, Punitive Damages—Individual Defendant—Trial Not Bifurcated.
For an instruction explaining “clear and convincing evidence,” see CACI No. 201,
More Likely True—Clear and Convincing Proof.
Read the bracketed language at the end of the firs sentence of factor (b) only if
there is evidence that the conduct of defendant that allegedly gives rise to liability
and punitive damages either caused or foreseeably threatened to cause harm to
plaintiff that would not be included in an award of compensatory damages. (Simon
v. San Paolo U.S. Holding Co., Inc. (2005) 35 Cal.4th 1159 [29 Cal.Rptr.3d 379,
113 P.3d 63].) The bracketed phrase concerning “potential harm” might be
appropriate, for example, if damages actually caused by the defendant’s acts are not
recoverable because they are barred by statute (id. at p. 1176, citing Neal v.
Farmers Ins. Exchange (1978) 21 Cal.3d 910, 929 [148 Cal.Rptr. 389, 582 P.2d
980] [in a bad faith insurance case, plaintiff died before judgment, precluding her
estate’s recovery of emotional distress damages]), or if the harm caused by
defendant’s acts could have been great but by chance only slight harm was
inflicted (Simon, supra, 35 Cal.4th at p. 1177, citing TXO Production Corp. v.
Alliance Resources Corp. (1993) 509 U.S. 443, 459 [113 S.Ct. 2711, 125 L.Ed.2d
366] [considering the hypothetical of a person wildly firin a gun into a crowd but
by chance only damaging a pair of glasses].) The bracketed phrase should not be
given if an award of compensatory damages is the “true measure” of the harm or
potential harm caused by defendant’s wrongful acts. (Simon, supra, 35 Cal.4th at
pp. 1178–1179 [rejecting consideration for purposes of assessing punitive damages
of the plaintiff’s loss of the benefi of the bargain if the jury had found that there
was no binding contract].)
Read the optional fina sentence of factor (c) only if the defendant has presented
relevant evidence regarding that issue.
Read the optional fina sentence if there is a possibility that in arriving at an
amount of punitive damages, the jury might consider harm that the defendant’s
conduct may have caused to nonparties. (See Philip Morris USA v. Williams (2007)
549 U.S. 346, 353–354 [127 S.Ct. 1057, 166 L.Ed.2d 940].) Harm to others may
be relevant to determining reprehensibility based on factors (a)(2) (disregard of
health or safety of others) and (a)(4) (pattern or practice). (See State Farm Mutual
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Automobile Insurance Co. v. Campbell (2003) 538 U.S. 408, 419 [123 S.Ct. 1513,
155 L.Ed.2d 585].)
If any of the alternative grounds for seeking punitive damages are inapplicable to
the facts of the case, they may be omitted.
See CACI No. 3940, Punitive Damages—Individual Defendant—Trial Not
Bifurcated, for additional sources and authority.
“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., supra, 538 U.S. at p.
422.) An instruction on this point should be included within this instruction if
appropriate to the facts.
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 definitio of “fraud.”
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 justifie in light
of the penalties already imposed. (Stevens, supra, 49 Cal.App.4th at p. 1663,
fn. 7.)
Sources and Authority
• When Punitive Damages Permitted. Civil Code section 3294.
“[E]vidence of ratificatio of [agent’s] actions by Hamilton, and any other
finding 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].)
• “Subdivision (b) is not a model of clarity, but in light of California’s history of
employer liability for punitive damages and of the Legislature’s reasons for
enacting subdivision (b), we have no doubt that it does no more than codify and
refin existing law. Subdivision (b) thus authorizes the imposition of punitive
damages on an employer in three situations: (1) when an employee was guilty
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of oppression, fraud or malice, and the employer with advance knowledge of
the unfitnes of the employee employed him or her with a conscious disregard
of the rights or safety of others, (2) when an employee was guilty of
oppression, fraud or malice, and the employer authorized or ratifie the
wrongful conduct, or (3) when the employer was itself guilty of the oppression,
fraud or malice.” (Weeks v. Baker & McKenzie (1998) 63 Cal.App.4th 1128,
1151 [74 Cal.Rptr.2d 510].)
• “ ‘California has traditionally allowed punitive damages to be assessed against
an employer (or principal) for the acts of an employee (or agent) only where
the circumstances indicate that the employer himself was guilty of fraud,
oppression, or malice. Thus, even before section 3294, subdivision (b) was
added to the Civil Code in 1980, the courts required evidence that the employer
authorized or ratifie a malicious act, personally committed such an act, or
wrongfully hired or retained an unfi employee.’ The ‘additional’ burden on a
plaintiff seeking punitive damages from an employer is to show not only that an
employee acted with oppression, fraud or malice, but that the employer engaged
in conduct define in subdivision (b).” (Weeks, supra, 63 Cal.App.4th at p.
1154, internal citation omitted.)
• “Civil Code section 3294, subdivision (b) does not authorize an award of
punitive damages against an employer for the employee’s wrongful conduct. It
authorizes an award of punitive damages against an employer for the
employer’s own wrongful conduct. Liability under subdivision (b) is vicarious
only to the extent that the employer is liable for the actions of its officer,
director or managing agent in hiring or controlling the offending employee, in
ratifying the offense or in acting with oppression, fraud or malice. It is not
vicarious in the sense that the employer is liable for the wrongful conduct of
the offending employee.” (Weeks, supra, 63 Cal.App.4th at pp. 1154–1155.)
• “ ‘[T]he most important indicium of the reasonableness of a punitive damages
award is the degree of reprehensibility of the defendant’s conduct.’ 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 financia 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.)
• “[I]n a case involving physical harm, the physical or physiological vulnerability
of the target of the defendant’s conduct is an appropriate factor to consider in
determining the degree of reprehensibility, particularly if the defendant
deliberately exploited that vulnerability.” (Bullock v. Philip Morris USA, Inc.
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(2011) 198 Cal.App.4th 543, 562 [131 Cal.Rptr.3d 382], internal citation
omitted.)
• “[W]e have been reluctant to identify concrete constitutional limits on the ratio
between harm, or potential harm, to the plaintiff and the punitive damages
award. We decline again to impose a bright-line ratio which a punitive damages
award cannot exceed. Our jurisprudence and the principles it has now
established demonstrate, however, that, in practice, few awards exceeding a
single-digit ratio between punitive and compensatory damages, to a significan
degree, will satisfy due process. . . . [A]n award of more than four times the
amount of compensatory damages might be close to the line of constitutional
impropriety. . . . While these ratios are not binding, they are instructive. They
demonstrate what should be obvious: Single-digit multipliers are more likely to
comport with due process, while still achieving the State’s goals of deterrence
and retribution, than awards with ratios in range of 500 to 1 . . . .” (State Farm
Mutual Automobile Insurance Co., supra, 538 U.S. at pp. 424–425, internal
citation omitted.)
• “Nonetheless, because there are no rigid benchmarks that a punitive damages
award may not surpass, ratios greater than those we have previously upheld
may comport with due process where ‘a particularly egregious act has resulted
in only a small amount of economic damages.’ The converse is also true,
however. When compensatory damages are substantial, then a lesser ratio,
perhaps only equal to compensatory damages, can reach the outermost limit of
the due process guarantee. The precise award in any case, of course, must be
based upon the facts and circumstances of the defendant’s conduct and the harm
to the plaintiff.” (State Farm Mutual Automobile Insurance Co., supra, 538 U.S.
at p. 425, internal citation omitted.)
• “[T]he Constitution’s Due Process Clause forbids a State to use a punitive
damages award to punish a defendant for injury that it inflict upon nonparties
or those whom they directly represent, i.e., injury that it inflict upon those who
are, essentially, strangers to the litigation.” (Philip Morris USA, supra, 549 U.S.
at p. 353.)
• “Evidence of actual harm to nonparties can help to show that the conduct that
harmed the plaintiff also posed a substantial risk of harm to the general public,
and so was particularly reprehensible—although counsel may argue in a
particular case that conduct resulting in no harm to others nonetheless posed a
grave risk to the public, or the converse. Yet for the reasons given above, a jury
may not go further than this and use a punitive damages verdict to punish a
defendant directly on account of harms it is alleged to have visited on
nonparties.” (Philip Morris USA, supra, 549 U.S. at p. 355.)
• “ ‘Due process does not permit courts, in the calculation of punitive damages,
to adjudicate the merits of other parties’ hypothetical claims against a defendant
under the guise of the reprehensibility analysis . . . . Punishment on these bases
creates the possibility of multiple punitive damages awards for the same
conduct . . . .’ This does not mean, however, that the defendant’s similar
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wrongful conduct toward others should not be considered in determining the
amount of punitive damages.” (Bullock, supra, 198 Cal.App.4th at p. 560.)
• “Though due process does not permit courts or juries, in the calculation of
punitive damages, to adjudicate the merits of other parties’ hypothetical claims
against a defendant under the guise of the reprehensibility analysis, this does
not mean that the defendant’s similar wrongful conduct toward others should
not be considered in determining the amount of punitive damages. . . . ‘[T]o
consider the defendant’s entire course of conduct in setting or reviewing a
punitive damages award, even in an individual plaintiff’s lawsuit, is not to
punish the defendant for its conduct toward others. An enhanced punishment for
recidivism does not directly punish the earlier offense; it is, rather, “ ‘ “a
stiffened penalty for the last crime, which is considered to be an aggravated
offense because a repetitive one.” ’ ” . . . By placing the defendant’s conduct
on one occasion into the context of a business practice or policy, an individual
plaintiff can demonstrate that the conduct toward him or her was more
blameworthy and warrants a stronger penalty to deter continued or repeated
conduct of the same nature.’ ” (Izell v. Union Carbide Corp. (2014) 231
Cal.App.4th 962, 986, fn. 10 [180 Cal.Rptr.3d 382], internal citations omitted.)
• “[A] specifi instruction encompassing both the permitted and prohibited uses of
evidence of harm caused to others would be appropriate in the new trial if
requested by the parties. We believe that an instruction on these issues should
clearly distinguish between the permitted and prohibited uses of such evidence
and thus make clear to the jury the purposes for which it can and cannot
consider that evidence. A jury may consider evidence of harm caused to others
for the purpose of determining the degree of reprehensibility of a defendant’s
conduct toward the plaintiff in deciding the amount of punitive damages, but it
may not consider that evidence for the purpose of punishing the defendant
directly for harm caused to others. In our view, Judicial Council of California
Civil Jury Instructions (Aug. 2007 rev.) CACI Nos. 3940, 3942, 3943, 3945,
3947, and 3949 could convey this distinction better by stating more explicitly
that evidence of harm caused to others may be considered for the one purpose
but not for the other, and by providing that explanation together with the
reprehensibility factors rather than in connection with the reasonable
relationship issue.” (Bullock v. Philip Morris USA, Inc. (2008) 159 Cal.App.4th
655, 695, fn. 21 [71 Cal.Rptr.3d 775], internal citation omitted.)
• “An award of punitive damages is not supported by a verdict based on breach
of contract, even where the defendant’s conduct in breaching the contract was
wilful, fraudulent, or malicious. Even in those cases in which a separate tort
action is alleged, if there is ‘but one verdict based upon contract’ a punitive
damage award is improper.” (Myers Building Industries, Ltd. v. Interface
Technology, Inc. (1993) 13 Cal.App.4th 949, 960 [17 Cal.Rptr.2d 242], internal
citations omitted.)
• “[P]unitive damages are not assessed against employers on a pure respondeat
superior basis. Some evidence of fault by the employer itself is also required.”
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(College Hospital, Inc. v. Superior Court (1994) 8 Cal.4th 704, 724, fn. 11 [34
Cal.Rptr.2d 898, 882 P.2d 894].)
• “Subdivision (b) . . . governs awards of punitive damages against employers,
and permits an award for the conduct described there without an additional
findin that the employer engaged in oppression, fraud or malice.” (Weeks,
supra, 63 Cal.App.4th at p. 1137.)
• “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 Pacifi 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
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
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to show that the employee exercised substantial discretionary authority over
significan 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].)
• “ ‘[R]atification is the ‘[c]onfirmatio and acceptance of a previous act.’ A
corporation cannot confir 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,
ratificatio 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 ratificatio 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.)
• “The high court in TXO [TXO Production Corp., supra] and BMW [BMW of
North America, Inc. v. Gore (1996) 517 U.S. 559 [116 S.Ct. 1589, 134 L.Ed.2d
809]] has refine the disparity analysis to take into account the potential loss to
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 Found. v. Graham (1999) 72
Cal.App.4th 1135, 1162, fn. 15 [85 Cal.Rptr.2d 726], original italics.)
Secondary Sources
6 Witkin, Summary of California Law (10th ed. 2005) Torts, §§ 1581–1585
Hanning et al., California Practice Guide: Personal Injury, Ch. 3-E, Punitive
Damages, ¶¶ 3:255–3:281.15 (The Rutter Group)
California Tort Damages (Cont.Ed.Bar 2d ed.) Punitive Damages, §§ 14.1–14.12,
14.18–14.31, 14.39
4 Levy et al., California Torts, Ch. 54, Punitive Damages, § 54.07 (Matthew
Bender)
15 California Forms of Pleading and Practice, Ch. 177, Damages, § 177.51
(Matthew Bender)
6 California Points and Authorities, Ch. 64, Damages: Tort, §§ 64.141 et seq.,
64.174 et seq. (Matthew Bender)
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