US Supreme Court Agrees to Revisit Punitive Damage Awards

In State Farm v. Campbell, the United States Supreme Court suggested that, absent extraordinary circumstances, due process requires that punitive damages be limited to a “single digit multiplier” of actual or compensatory damages (that is, no more than 9 times actual).

On October 28, 2007, the Supreme Court agreed to decide whether Exxon Mobil should pay $2.5 billion in punitive damages in connection with the Exxon Valdez oil spill that fouled hundreds of miles of Alaska’s coastline. Among the questions certified was this: “Is this $2.5 billion punitive damages award, which is larger than the total of all punitive damages awards affirmed by all federal appellate courts in our history, within the limits allowed by (1) federal maritime law or (2) if maritime law could permit such an award, constitutional due process?”

Exxon Shipping Co. v. Baker will afford the high court an opportunity to address again just what sort of circumstances permit a departure from the “single digit multiplier” rule in State Farm v. Campbell. That very issue has been the focus of virtually all punitive damage interests since State Farm v. Campbell.

NY’s First Department examines occurrences in the popcorn lung context.

In the case of International Flavors & Fragrances, Inc. v. Royal Insurance, et al., the plaintiffs sought coverage for personal injury claims filed by its workers who were exposed to butter flavoring containing diacetyl and other volatile organic compounds at a microwave popcorn packaging plant in Jasper County, Missouri. The workers alleged that the exposure resulted in lung impairment and other respiratory system injuries. The defendant insurers accepted coverage but sought to employ multiple deductibles — deductibles that were quite high. The plaintiffs objected and filed suit. In affirming the lower court’s grant of summary judgment, the First Department held that under the policies’ definition of occurrence, “the exposure of numerous persons to a hazardous condition cannot be deemed a single “occurrence” in the absence of any identifiable precipitating event or accident.”

Don’t E-mail your (Personal) Lawyer From Work

Dr. Scott recently learned this lesson, as you can see in the attached decision. He sued Beth Israel hospital and later asked for the return of any e-mail he previously sent to his attorney using Beth Israel’s system.

But a trial-level court in New York held that in an employment action, e-mails between a former employee and his attorney using his former employer’s e-mail service were not shielded by attorney-client privilege based on the terms of the employer’s e-mail policy.

NY’s First Department examines “arising out of” additional insured requirement.

The First Department overruled a Bronx trial court’s decision and dismissed the claims against the defendant insurers. The court held that the NYCHA, a would-be additional insured, was not entitled to AI coverage because the underlying claims (involving a man who was shot on the Housing Authority’s premises as a result of a faulty electromagnetic locking system) did not arise out of the work of the named insureds which had completed their work before the shooting occurred.

A Shutout for the NHL’s Insurers in NJ.

In the case of Fetisov v. Vigilant Insurance Co., several members of the Detroit Red Wings were hurt in a 1997 limousine crash after a party celebrating their team’s Stanley Cup victory. Serious injuries (including disabling brain injuries) resulted to some of the players. The limousine company paid its policy limits and the players won an arbitration award for $200,000,000.

To collect that judgment, the players went after the NHL’s insurer and held that its policy covered the loss. The insurer disclaimed and held that its policy only provided coverage if the driver’s permissive use came from the NHL team — which was not the case here. The trial court disagreed and sided with the insurer. After several appeals, NJ’s Supreme Court has again refused to reconsider the trial court’s ruling.

Bambi does Artisia — Porn and emotional distress in CA.

In the case of McCombs v. Value Lodge Enterprises, a California jury found a Value Lodge Motel in Artisa, CA liable for $85,000 in emotional distress damages for failing to block pornography from its in-room entertainment system. In this case, a family checked into the defendant’s hotel. While their mother was in the bathroom, two girls aged 8 and 9 switched channels from a children’s program to a hard core pornography channel. They alleged that the hotel was negligent in that it failed to equip its televisions with a blocking system and the viewing caused them emotional distress. The jury agreed.

Spoliation Not a Tort in NY

New York’s highest court has ruled that negligent spoliation of evidence is not an independent tort. Thus, a plaintiff cannot file a separate cause of action for negligent spoliation, but traditional remedies of striking pleadings or imposing other sanctions within the context of pending litigation remain available to aggrieved parties.