California Civil Jury Instructions (CACI) (2017)

3949. Punitive Damages - Individual and Corporate Defendants (Corporate Liability Based on Acts of Named Individual)—Bifurcated Trial (Second Phase)

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3949.Punitive Damages—Individual and Corporate Defendants
(Corporate Liability Based on Acts of Named
Individual)—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 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/it];
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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0164
New September 2003; Revised April 2004, October 2004, June 2006, April 2007,
August 2007, October 2008
Directions for Use
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
Automobile Insurance Co. v. Campbell (2003) 538 U.S. 408, 419 [123 S.Ct. 1513,
155 L.Ed.2d 585].)
“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.
Courts have stated that “[p]unitive damages previously imposed for the same
conduct are relevant in determining the amount of punitive damages required to
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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.
Evidence of Profit or Financial Condition. Civil Code section 3295(d).
• “[Section 3295(d)] affects the order of proof at trial, precluding the admission
of evidence of defendants’ financia 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 financia condition is a prerequisite to an award of
punitive damages. In order to protect defendants from the premature disclosure
of their financia 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, supra, 21 Cal.3d at p. 928, fn. 13.)
• “Punitive damages are to be assessed in an amount which, depending upon the
defendant’s financia 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
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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 influence 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 citations omitted.)
• “In light of our holding that evidence of a defendant’s financia 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 specifi amount to be set by the jury. Because the award,
whatever its amount, cannot be sustained absent evidence of the defendant’s
financia 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.)
• “[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.)
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• “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
wrongful conduct toward others should not be considered in determining the
amount of punitive damages.” (Bullock v. Philip Morris USA, Inc. (2011) 198
Cal.App.4th 543, 560 [131 Cal.Rptr.3d 382].)
• “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
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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.)
• “ ‘[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, supra, 198 Cal.App.4th at p.
562, 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
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to the plaintiff.” (State Farm Mutual Automobile Insurance Co., supra, 538 U.S.
at p. 425, 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 financiall 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].)
• “[N]et worth is not the only measure of a defendant’s wealth for punitive
damages purposes that is recognized by the California courts. ‘Indeed, it is
likely that blind adherence to any one standard [of determining wealth] could
sometimes result in awards which neither deter nor punish or which deter or
punish too much.’ ” (Bankhead v. ArvinMeritor, Inc. (2012) 205 Cal.App.4th 68,
79 [139 Cal.Rptr.3d 849].)
• “Evidence of the defendant’s net worth is the most commonly used, but that
metric is too susceptible to manipulation to be the sole standard for measuring a
defendant’s ability to pay. Yet the ‘net’ concept of the net worth metric remains
critical. ‘In most cases, evidence of earnings or profi alone are not sufficient
“without examining the liabilities side of the balance sheet.” [Citations.]’ ”
(Soto v. BorgWarner Morse TEC Inc. (2015) 239 Cal.App.4th 165, 194 [191
Cal.Rptr.3d 263], internal citations omitted.)
• “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 satisfie where the jury has made an express
determination not to award compensatory damages.” (Cheung v. Daley (1995)
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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.)
• “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,
14.21, 14.39
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
(Matthew Bender)
6 California Points and Authorities, Ch. 64, Damages: Tort, §§ 64.141 et seq.,
64.174 et seq. (Matthew Bender)
3950–3959. Reserved for Future Use
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