Model Answer: 2008
1. The jury awarded
$25,000 for the clock. Any damages must be supported by evidence
presented at trial. Although Mrs. Gomez testified that the clock
was priceless to her, we cannot consider sentimental value. Thus,
the highest award that the evidence supports is the $15,000 replacement
value. Yet even this amount would be too high.
The rule for
valuing household goods like clothes and furniture is the actual value
to the owner. You consider the original cost ($10,000), replacement
cost ($15,000), the fair market value ($8000), and factor in
depreciation and wear and tear. Typically, the award is an amount
between the replacement cost and the FMV, depending on the amount of
depreciation and the condition of the item. Because there was
little depreciation or wear and tear, a proper award might be around
$12,000 or $13,000.
2. As to the wall, the relevant rules are those
for real property, since the wall attached to the land. We
first need to decide if the injury is temporary or permanent. It
is temporary if the nuisance is continuous or can be abated. An injury
is permanent if it is fixed and the land will always be subject to
it. Here the injury is fixed---it will not go away by itself.
With a permanent
injury the damages are normally measured by the reduction in value of
the real estate. Here, the reduction in value is $3000, which is
apparently why the trial court lowered the jury's verdict to this
amount.
However, in
California a plaintiff can get the cost to repair real property if she
has a genuine desire to repair for personal reasons and the cost is
reasonable (similar to the Archdiocese of New Orleans case).
Here, the Gomez fit the test. They are fastidious and therefore
seem to have a personal reason to repair the wall, and they seem to
have a genuine desire to actually do so. It also seems that the
cost of $10,000 is reasonable, although this might be a closer question
because it is over three times the reduction in value. I
recommend reversing the trial judge and reinstating the original
$10,000 award.
3. The standard for awarding punitive damages
in the State of Loyola is that the plaintiff must prove by clear and
convincing evidence that the defendant was guilty of oppression, fraud,
or malice. "Oppression" is defined in the statute as despicable
conduct that subjects the plaintiff to crue or unjust hardship.
It does not seem that the Gomez were subjected to cruel or unjust
hardship--the injury was mostly to their property. The injury to
Mr. Gomez's leg seems to have been fairly minor and was not cruel or
unjust. Fraud is defined as misrepresentation or concealment of a
material fact with an intent to deprive a person of property or cause
some other injury. There is no evidence here that PE lied or
concealed information.
The most likely
option is malice, which has two prongs. One is when the defendant
intends to cause injury to the plaintiff. There is no evidence
here that PE intended to cause injury to anyone. The other prong
involves despicable conduct that is carried on with a willful and
conscious disregard of the rights or safety of others. Although
the matter is debatable, a reasonable jury could decide that requiring
drivers to use cell phones was despicable conduct in light of the fact
that a much safer alternative--the larger displays--was available and
had
apparently been used by PE for some time. PE also knew that since
instituting this new policy, its accident rate had doubled. A
jury could properly decide that by continuing this policy, PE knowingly
disregarded the safety of the Gomez and other people who were almost
certain to be injured by the policy.
PE's only defense
is that it prohibited drivers from using cell phones while the vehicle
was moving. But they apparently did nothing to enforce this
policy, and they arguably encouraged drivers to violate the policy by
refusing to pay for the extra time it would take drivers to comply with
the rule.
Under Loyola State
law, the jury's imposition of punitive damages was within its power.
4. We still need to consider whether the award
violates the Due Process clause of the federal constitution (DP).
Substantive DP requires that the amount of punitive damages not be
"grossly excessive." According to the BMW case, one factor to
consider is reprehensibility. The jury is allowed to consider
out-of-state conduct on this issue, but cannot punish a defendant for
acts that occurred outside of the jurisdiction. Because PE knew
that accidents had increased throughout the country, it was clear that
their new policy was causing the higher accident rate (it was not a
fluke that occurred only in Loyola). And PE was trying to save
money by a method it knew would lead to greater injuries of innocent
bystanders. And those injuries were likely to be physical, not
just monetary. This supports the argument that the policy was
reprehensible. On the other hand, the personal injuries to Mr.
Gomez were minor, there is no evidence that the Gomez were financially
vulnerable, and PE's policy was not intended to cause harm (see State
Farm case), so the reprehensibility was not extreme.
In addition, the
award of $3.8 million strongly suggests that the jury was punishing PE
for out-of-state conduct. which is not proper under the State Farm
case. It seems to be the result of multiplying the projected
savings of PE in each state ($100,000) by the number of states in which
PE operated (38). We are not told if the Gomez's lawyers
suggested this calculation to the jury, but if they did so, the award
should be reversed. Even if they did not, the amount is very
suspicious because the amount strongly suggests the jury was punishing
PE for conduct outside the jurisdiction.
Another factor is
the ratio of compensatory to punitive damages. According to the
State Farm case, that ratio should usually be in the single
digits. Here, the compensatory damages (wall and clock) are
roughly $23,000. If we include the $2,000 that Mr. Gomez got in
settlement, the total compensatory damages is $25,000. The
highest single digit is 9, meaning that the most the Gomez could get in
punitive damages would be $225,000.
We saw in the
bedbug case that a higher ratio might be acceptable if compensatory
damages are low and a higher punitive damage award is necessary for the
Gomez to attract a lawyer willing to take the case on a contingent fee
basis. Yet total damages of around $250,000 will attract plenty
of lawyers, since the case is factually fairly simple.
The final Gore
factor is the civil or criminal penalties for this conduct. We
have no information on this point.
I recommend
ordering a new trial on the amount, or reducing the punitive damages to
approximately $225,000.