[CERTIFIED FOR PARTIAL PUBLICATION
Union Carbide Corporation appeals from a judgment entered in favor of plaintiffs Bobbie Izell and Helen Izell (Plaintiffs) on claims for personal injuries and loss of consortium stemming from Mr. Izell's alleged exposure to Union Carbide asbestos and subsequent diagnosis with mesothelioma. After a four-week trial the jury returned special verdicts finding Union Carbide 65 percent comparatively at fault for Plaintiffs' injuries and awarding Plaintiffs $30 million in compensatory damages plus $18 million in punitive damages against Union Carbide. By remittitur, which Plaintiffs accepted, the trial court reduced the compensatory damage award to $6 million, but declined to disturb the punitive damages.
On appeal, Union Carbide contends the evidence was insufficient to support the liability finding, apportionment of comparative fault, and the remitted compensatory damage award. Union Carbide also challenges the punitive damage award as excessive. We conclude the evidence was sufficient to support the verdict, as well as the compensatory and punitive damage awards. Accordingly, we affirm.
FACTS AND PROCEDURAL BACKGROUND
Union Carbide purchased an asbestos mine near Coalinga, California, in 1963. Until 1985, Union Carbide supplied asbestos to companies that manufactured and marketed products for the construction industry.
Mr. Izell owned a construction business that built approximately 200 homes in Southern California from 1964 until 1994. Mr. Izell did not work as a laborer or supervisor on these projects, but he regularly visited and walked through the construction jobsites. All the homes were constructed with
Mr. Izell's workers also used gun plastic cement to apply stucco to the homes' exteriors. Mr. Izell was present when his workers tore open bags of gun plastic cement, and he breathed the dust from those products as well.
Mr. Izell recalled seeing four different brands of joint compound on his jobsites and two brands of gun plastic cement. Of the joint compound brands, Mr. Izell believed Georgia Pacific was the most common brand because it was the "dominate seller in those days," followed by Hamilton Red Dot, Kaiser Gypsum, and Kelly-Moore's Paco brand. Mr. Izell also saw his workers use Riverside and Colton gun plastic cement. At varying times from 1970 to 1978, Union Carbide supplied asbestos to each of the four joint compound manufacturers and to Riverside for use in its gun plastic cement.
In July 2011, at the age of 85, Mr. Izell was diagnosed with mesothelioma. Initially, Plaintiffs sued more than 20 defendants who were allegedly responsible for the asbestos-containing products to which he claimed he was exposed. By trial, only five defendants remained, including Union Carbide, one joint compound manufacturer (Kaiser Gypsum), one stucco manufacturer (La Habra) and two gun plastic cement manufacturers (Colton and Riverside).
After hearing percipient witness and expert medical and scientific testimony, the jury returned a special verdict finding all defendants liable on all theories of strict product liability and negligence. The jury awarded Plaintiffs a total of $30 million in compensatory damages, consisting of $5 million in past and $10 million in future non-economic damages to Mr. Izell and $5 million in past and $10 million in future loss of consortium damages to Mrs. Izell.
The special verdict form also asked the jury to apportion comparative fault among the defendants, Mr. Izell, and six other entities, consisting of three joint compound manufacturers (Georgia Pacific, Hamilton, and Kelly-Moore), two asbestos suppliers (Carey Canadian and Johns-Manville), and an unnamed asbestos-cement pipe manufacturer. The jury apportioned 95 percent of the fault to the five defendants, assigning 65 percent to Union Carbide, 20 percent to Kaiser Gypsum, and a total of 10 percent to the three stucco and
The jury also found Union Carbide and Kaiser Gypsum acted with "malice, oppression or fraud." (Boldface omitted.) Kaiser Gypsum settled before the jury was asked to decide the amount of punitive damages.
For the punitive damage phase, Union Carbide stipulated that it had a present net worth of $4.2 billion. The court instructed the jury that it should consider a variety of factors in deciding the amount, if any, of punitive damages to award, including a "reasonable relationship between the amount of punitive damages" and the harm to Mr. Izell. The jury also was instructed that it could consider evidence of harm caused to others for purposes of assessing reprehensibility, but not for purposes of "punishing the defendant directly for harm caused to others."
In his argument to the jury, Plaintiffs' counsel commented there was probably no amount of money that could deter Union Carbide, given its $4.2 billion net worth. Thus, counsel suggested the jury award something in the range of $8.6 million ($100,000 for each year of Mr. Izell's life) and $18 million ($1 million for each year Union Carbide sold asbestos after it knew its product caused cancer). The jury returned a verdict awarding Plaintiffs $18 million in punitive damages.
Union Carbide moved for judgment notwithstanding the verdict (JNOV) and a new trial on all issues, including punitive damages. The trial court denied the JNOV motion, but conditionally granted a new trial "on the ground of excessive compensatory damages only," unless Plaintiffs consented to a remittitur reducing the compensatory damage award from $30 million to $6 million. The court declined to disturb the punitive damage award, concluding Union Carbide's stipulated $4.2 billion net worth and the evidence concerning the reprehensibility of its conduct supported the amount of the award, notwithstanding the substantial reduction in compensatory damages. Plaintiffs accepted the remittitur and the court entered judgment against Union Carbide.
1. Substantial Evidence Supports the Jury's Causation Finding
Union Carbide contends the jury necessarily speculated in finding Mr. Izell was exposed to Union Carbide asbestos and that the exposure contributed to his risk of developing mesothelioma. We conclude the evidence of causation was sufficient.
a. Substantial evidence supports the finding that Mr. Izell was exposed to asbestos supplied by Union Carbide
"A threshold issue in asbestos litigation is exposure to the defendant's product." (McGonnell v. Kaiser Gypsum Co. (2002) 98 Cal.App.4th 1098, 1103 [120 Cal.Rptr.2d 23] (McGonnell); see Rutherford, supra, 16 Cal.4th at p. 982.) It is axiomatic that, "[i]f there has been no exposure, there is no causation." (McGonnell, at p. 1103.) Further, "[t]he mere `possibility' of exposure" is insufficient to establish causation. (Andrews v. Foster Wheeler LLC (2006) 138 Cal.App.4th 96, 108 [41 Cal.Rptr.3d 229]; see Dumin v. Owens-Corning Fiberglas Corp. (1994) 28 Cal.App.4th 650, 654-656 [33 Cal.Rptr.2d 702] (Dumin).) "[P]roof that raises mere speculation, suspicion, surmise, guess or conjecture is not enough to sustain [the plaintiff's] burden" of persuasion. (Ulwelling v. Crown Coach Corp. (1962) 206 Cal.App.2d 96, 104-105 [23 Cal.Rptr. 631].)
In McGonnell, the court affirmed summary judgment in favor of the defendant, concluding the plaintiffs' limited circumstantial evidence was insufficient to establish more than the mere possibility that the decedent had been exposed to the defendant's asbestos-containing joint compound. In opposing summary judgment, the plaintiffs in McGonnell offered "invoices showing the sale of [the defendant's] joint compound to a contractor in 1972," which indicated the materials were purchased for a project at the decedent's workplace. (McGonnell, supra, 98 Cal.App.4th at p. 1105.) Based
Union Carbide contends the evidence in this case, as in McGonnell, established only the mere possibility that Mr. Izell was exposed to Union Carbide asbestos at some unspecified time during the 20-year period in question. In support of this contention, Union Carbide cites evidence indicating there were multiple asbestos suppliers for the joint compound and gun plastic cement products that Mr. Izell remembers encountering at his jobsites. Thus, while Union Carbide concedes it supplied asbestos that could have been in one or all of these products, it argues the jury necessarily speculated in concluding Mr. Izell was more likely than not exposed to Union Carbide asbestos, as opposed to asbestos from one of the other suppliers.
As we shall explain, though we agree the evidence allowed only speculation with respect to the products manufactured by Kelly-Moore, Georgia Pacific, Kaiser Gypsum and Riverside, with respect to the Hamilton joint compound, we conclude the evidence was sufficient to permit a reasonable inference that Mr. Izell was exposed to Union Carbide asbestos.
At trial, Plaintiffs presented a collection of invoices showing Union Carbide supplied Kelly-Moore's San Carlos, California, plant with several hundred thousand pounds of raw asbestos from 1971 to 1976. However, the
Because the invoices show Union Carbide supplied asbestos to Kelly-Moore's San Carlos, California, plant, Plaintiffs argue a reasonable inference, beyond speculation, can be drawn that joint compound containing Union Carbide asbestos made its way to one of the Southern California jobsites where Mr. Izell inhaled dust from a Kelly-Moore product. We disagree. In view of the uncontested evidence that Kelly-Moore had multiple asbestos suppliers during the relevant time period, the fact that Union Carbide supplied asbestos to a plant in California does not remove the issue from the realm of speculation. As Union Carbide points out, Plaintiffs failed to show what percentage of the asbestos supplied to Kelly-Moore's San Carlos plant came from Union Carbide, as opposed to some other supplier, let alone that Kelly-Moore's Paco Textures division had other plants outside of San Carlos, California. Moreover, even if supplying Kelly-Moore's San Carlos plant enhanced the possibility that Union Carbide asbestos made its way to one of Mr. Izell's jobsites, this still leaves speculation about whether Mr. Izell was present when his workers sanded joint compound that might have contained Union Carbide asbestos, as opposed to asbestos from one of Kelly-Moore's other suppliers. (McGonnell, supra, 98 Cal.App.4th at p. 1105.)
(ii) Georgia Pacific
Mr. Izell testified that he inhaled dust from Georgia Pacific Ready-Mix joint compound on jobsites in Southern California during the mid to late 1970's. He identified the Georgia Pacific joint compound as "a pasty thing" — i.e., the premixed compound — that came in five-gallon buckets weighing 62.5 pounds. Plaintiffs contend the jury could have reasonably inferred that Mr. Izell was more likely than not exposed to Union Carbide asbestos from Georgia Pacific joint compound because the evidence showed that all Ready-Mix manufactured at Georgia Pacific's Acme, Texas, plant between September 1971 and May 1977 contained Union Carbide asbestos. This assertion
Because Ready-Mix was "33 percent water" and "the freight on the water would make it uncompetitive" for Georgia Pacific to ship the product from Texas to California, the undisputed evidence showed that from 1968 to 1971, Georgia Pacific had a "formal rebranding agreement in which a Paco [(Kelly-Moore)] facility in California made ... joint compounds and cements at their facility and put them in Georgia Pacific containers." After the rebranding agreement expired in 1971, Georgia Pacific's "individual distribution centers" in California were allowed to "purchase [rebranded Ready-Mix] from anybody they wanted," including Kelly-Moore. According to the uncontested testimony of a former Georgia Pacific employee, the reason for this distribution arrangement was the same as had motivated the former rebranding agreement — Georgia Pacific "couldn't get the product economically to California."
Plaintiffs argue the evidence was in conflict as to whether Ready-Mix joint compound from Georgia Pacific's Texas plant made its way to the Southern California market. They stress that, on appeal, this conflict must be resolved in favor of the jury's verdict.
(iii) Kaiser Gypsum and Riverside
For the reasons already discussed with respect to Kelly-Moore and Georgia Pacific, we also conclude the evidence was insufficient to support anything more than speculation that Mr. Izell was exposed to Union Carbide asbestos from Kaiser Gypsum joint compound or Riverside gun plastic cement.
With respect to Kaiser Gypsum, the undisputed evidence showed that Kaiser Gypsum purchased asbestos from "many different suppliers," of which Carey Canadian and Johns-Manville were the two largest. As they did with Kelly-Moore, Plaintiffs offered Union Carbide invoices showing that it supplied several hundred thousand pounds of raw asbestos to a Kaiser Gypsum plant in Southern California between 1970 and 1975 — part of the period during which Mr. Izell testified he inhaled dust from Kaiser Gypsum joint compound. Plaintiffs, however, failed to offer evidence establishing that Union Carbide was the exclusive asbestos supplier for this plant, let alone evidence showing that joint compound from this plant found its way to one of Mr. Izell's jobsites.
The evidence was even more speculative with respect to Riverside gun plastic cement. The parties stipulated that Union Carbide was a minority supplier to Riverside during only one year — 1978 — and Mr. Izell testified he saw workers dump Riverside gun plastic cement into a mixer in the "late `70s." Even if we accept as a reasonable inference from this testimony that Mr. Izell inhaled dust from Riverside gun plastic cement in 1978, there still is no evidence establishing this dust contained asbestos from Riverside's "minority supplier" — Union Carbide — as opposed to any of its larger suppliers. Any finding of exposure based on this evidence would have been speculative. (Dumin, supra, 28 Cal.App.4th at p. 656.)
In contrast to the foregoing, the evidence adduced with respect to Hamilton supported a reasonable inference that Union Carbide was Hamilton's exclusive asbestos supplier during the time period when Mr. Izell inhaled dust from Hamilton Red Dot joint compound. Hamilton's president, Willis Hamilton, testified that, from the 1960's through 1977, all of Hamilton's taping and embedding joint compound contained asbestos. Mr. Hamilton also affirmed that, during this same period, the asbestos used to make Hamilton's joint compound was "all Union Carbide." (Italics added.)
Union Carbide argues Mr. Hamilton's "memory was too faulty" to credit his testimony that Union Carbide was ever Hamilton's exclusive asbestos supplier. In support of the contention, Union Carbide cites its own records as evidence that it did not start selling asbestos to Hamilton until 1974, which it argues undisputedly refutes Mr. Hamilton's testimony that his company used "all Union Carbide" asbestos in its "joint taping compound from the 1960's through [the] 1970's." (Italics added.) Union Carbide also points out that when Mr. Hamilton was asked about these records, he conceded he could not recall when Hamilton started purchasing asbestos from Union Carbide.
Though the foregoing discrepancies suggest that Mr. Hamilton's memory was not perfect, Union Carbide's objection concerns only his credibility and the weight of his testimony — not the sufficiency of the evidence. (See Wright v. Best (1942) 19 Cal.2d 368, 379-380 [121 P.2d 702] ["inconsistencies" evidencing "a faulty memory ... do not go to the admissibility or sufficiency of the evidence, but rather to the weight of the testimony and the credibility of the witnesses, matters wholly within the exclusive province of the trier of fact, whose determination upon them will not be disturbed by an appellate court"].) While the jury could have entirely disregarded Mr. Hamilton's testimony based on these inconsistencies, it also could reasonably have inferred that he was confused about the start date, but correct in his recollection that Union Carbide became his company's exclusive supplier once it started selling asbestos to Hamilton.
Union Carbide also contends it is speculative whether Mr. Izell ever inhaled asbestos from a Hamilton product, because the evidence showed that,
Viewed in the light most favorable to the judgment, the evidence was sufficient to support a finding that Mr. Izell was exposed to Union Carbide asbestos when he inhaled dust from Hamilton Red Dot joint compound.
b. Substantial evidence supports the finding that Union Carbide's asbestos was a substantial factor in increasing Mr. Izell's risk of developing mesothelioma
Union Carbide contends Plaintiffs' medical evidence was inadequate to establish legal causation under the Rutherford test. In particular, Union Carbide emphasizes the following testimony by Plaintiffs' medical expert, Dr. Eugene Mark, which it claims improperly conflates a threshold showing of exposure with proof of legal causation:
Union Carbide asserts the foregoing testimony cannot be squared with Rutherford's two-step causation test. Under Dr. Mark's approach, Union Carbide argues, "it is only the first step — proof of exposure — that matters, because every exposure contributes to the overall increase in risk"; thus, "[t]he second step would be wholly unnecessary, since proof of exposure automatically equates with proof that the exposure constituted a `substantial factor.'" This argument does not withstand scrutiny.
To begin, the purported fallacy Union Carbide claims — that the "second step [of the Rutherford test] would be wholly unnecessary" under Dr. Mark's
In any event, Union Carbide's argument ignores the distinction Dr. Mark drew between significant exposures that contributed to Mr. Izell's risk of contracting the disease and "trivial exposures" that would not have been substantial factors increasing his risk. In particular, Dr. Mark testified that asbestos fibers had to be "respirable and put into the air" and Mr. Izell needed to have "breathed it in" for the exposure to constitute a "substantial contributing factor" toward his mesothelioma. In contrast, Dr. Mark testified that if Mr. Izell had been exposed to asbestos in a "wet slurry" this would be a "trivial exposure, and I would not be able to say that that was a contributing factor." Contrary to Union Carbide's characterization, Dr. Mark did not opine that every exposure constituted a substantial factor. Rather, he testified that only those exposures in which the asbestos-containing product was "dry enough so that asbestos fibers could be released into the air," and the asbestos became "airborne" and Mr. Izell "breathed it in" would be significant enough to contribute to his risk of contracting cancer.
As discussed above, Plaintiffs presented sufficient evidence for the jury to conclude that Mr. Izell was exposed to Union Carbide asbestos contained in Hamilton Red Dot joint compound. Mr. Izell testified that he not only saw his
2. Substantial Evidence Supports the Jury's Apportionment of Comparative Fault
3. Substantial Evidence Supports the Amount of Compensatory Damages After Remittitur
We next consider Union Carbide's contention that the compensatory damages award, in the remitted amount of $6 million for Mr. and Mrs. Izell's past and future noneconomic damages and loss of consortium is excessive and unsupported by the evidence. We begin with the well-settled principles that prescribe our circumscribed scope of review.
"The amount of damages is a fact question, first committed to the discretion of the jury and next to the discretion of the trial judge on a motion for new trial. They see and hear the witnesses and frequently, as in this case, see the injury and the impairment that has resulted therefrom. As a result, all presumptions are in favor of the decision of the trial court [citation]. The power of the appellate court differs materially from that of the trial court in
"`[W]here the trial court has required a remission as a condition to denying a new trial "a verdict is reviewed on appeal as if it had been returned in the first instance by the jury in the reduced amount." [Citations.]'" (West v. Johnson & Johnson Products, Inc. (1985) 174 Cal.App.3d 831, 877 [220 Cal.Rptr. 437] (West).) "If the award appears excessive as a matter of law, ... the reviewing court has a duty to act in order to correct the injustice." (Major v. Western Home Ins. Co. (2009) 169 Cal.App.4th 1197, 1213 [87 Cal.Rptr.3d 556].) "The reviewing court does not act de novo, however. As we have observed, the trial court's determination of whether damages were excessive `is entitled to great weight' because it is bound by the `more demanding test of weighing conflicting evidence than our standard of review under the substantial evidence rule ....' [Citation.] All presumptions favor the trial court's determination [citation], and we review the record in the light most favorable to the judgment [citation]." (Fortman v. Hemco, Inc. (1989) 211 Cal.App.3d 241, 259 [259 Cal.Rptr. 311].)
In the instant case, the trial court's statement of decision thoughtfully sets forth the competing evidence, the court's observations of the witnesses' demeanor, and the court's factual findings supporting its reduction of compensatory damages to $6 million. Accordingly, we quote the trial court's decision in its entirety:
In its briefs, Union Carbide largely ignores our presumption of correctness by downplaying the evidence that supports the trial court's findings, while highlighting the "countervailing" evidence the court thoughtfully considered
The trial court's statement of decision adequately resolves the conflicting evidence Union Carbide seeks to relitigate on appeal, and the court's thorough discussion of the evidence and witnesses' demeanor fully dispels any suggestion that Mr. and Mrs. Izell have not suffered significant physical and emotional anguish since learning of Mr. Izell's cancer. Though we recognize the remitted amount remains on the high end of noneconomic damage awards discussed in reported mesothelioma decisions — particularly for plaintiffs of the Izells' advanced ages — this alone is not sufficient to second-guess the trial judge, who presided over the four-week trial and personally observed "the injury and the impairment that has resulted."
4. The Punitive Damage Award Is Not Unconstitutionally Excessive
A court determining whether a punitive damages award is excessive under the due process clause must consider three guideposts: "(1) the degree of reprehensibility of the defendant's misconduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award; and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases. [Citation.]" (State Farm, supra, 538 U.S. at p. 418.) The defendant's financial condition also is a permissible consideration under the due process clause in determining the amount of punitive damages necessary to further the state's legitimate interests in punishment and deterrence. (Simon v. San Paolo U.S. Holding Co., Inc. (2005) 35 Cal.4th 1159, 1185-1186 [29 Cal.Rptr.3d 379, 113 P.3d 63] (Simon).)
On appeal, we defer to findings of fact if they are supported by substantial evidence, and we independently assess each of the three guideposts to determine de novo whether the punitive damages award is excessive under the due process clause. (State Farm, supra, 538 U.S. at p. 418; Cooper Industries, Inc. v. Leatherman Tool Group, Inc. (2001) 532 U.S. 424, 436 [149 L.Ed.2d 674, 121 S.Ct. 1678]; Simon, supra, 35 Cal.4th at p. 1172 & fn. 2.) The reviewing court's "constitutional mission is only to find a level higher than which an award may not go; it is not to find the `right' level in the court's own view. While we must ... assess independently the wrongfulness of a defendant's conduct, our determination of a maximum award should allow some leeway for the possibility of reasonable differences in the
a. The reduction in the compensatory award did not mandate retrial of punitive damages
Before examining the State Farm guideposts, we first will address Union Carbide's contention that, "given the dramatic reduction in compensatory damages, California law required the trial court either to grant a new trial ... or to reduce the punitive damages to the level the jury selected." In support of this argument, Union Carbide principally relies upon Frommoethelydo v. Fire Ins. Exchange (1986) 42 Cal.3d 208 [228 Cal.Rptr. 160, 721 P.2d 41] (Frommoethelydo) and Auerbach v. Great Western Bank (1999) 74 Cal.App.4th 1172 [88 Cal.Rptr.2d 718] (Auerbach).
In Frommoethelydo, the plaintiff obtained a judgment for $15,271 in general damages, $250,000 for emotional distress, and $1.25 million for punitive damages in an action for misconduct by an insurer in dealing with a claim for stolen property. (Frommoethelydo, supra, 42 Cal.3d at p. 211.) Our Supreme Court held the plaintiff could not recover emotional distress or general damages that were based on the insurer's privileged report of the plaintiff's claim to the Bureau of Fraudulent Claims, and reduced the compensatory award from $265,271 to $8,771. (Id. at pp. 211, 220.) Then, citing the rule requiring reasonable proportionality between punitive and compensatory damages (see Neal v. Farmers Ins. Exchange (1978) 21 Cal.3d 910, 928 [148 Cal.Rptr. 389, 582 P.2d 980]), the Frommoethelydo court held "[t]he award of punitive damages may not be upheld since most of the compensatory damages must be set aside." (Frommoethelydo, at p. 220.)
In Auerbach, a jury found the defendant bank liable on contract and fraud claims and awarded the plaintiff $207,155 for each, together with $2.6 million in punitive damages. (Auerbach, supra, 74 Cal.App.4th at p. 1184.) The Court of Appeal reversed the judgment on the contract claim and held the recoverable compensatory damages on the fraud claim were limited to $6,750. (Id. at pp. 1189, 1192.) The court then addressed the punitive damages award, stating, "We cannot ... simply reduce the damages and modify the award on the fraud cause of action at this stage. Because the jury was misled about the amount of compensatory damages it could award, its punitive damage award is suspect. Although there is no fixed ratio, punitive damages must be proportional to recoverable compensatory damages. [Citation.] Because the punitive damages are out of proportion to the actual damages suffered by the [plaintiffs], the punitive damage claim will have to be retried." (Id. at p. 1190.)
In Frommoethelydo, after the Supreme Court set aside most of the compensatory damages, the resulting ratio of punitive to compensatory damages was 142.5 to one. Similarly in Auerbach, after the Court of Appeal's reduction, the resulting ratio of the jury's punitive damage award to the reduced compensatory damages was 385 to one. The United States Supreme Court has held "few awards exceeding a single-digit ratio between punitive and compensatory damages ... will satisfy due process." (State Farm, supra, 538 U.S. at p. 425.) Likewise, our Supreme Court stated that ratios significantly greater than nine or 10 to one raise a "presumption" of invalidity. (Simon, supra, 35 Cal.4th at p. 1182.) Although Frommoethelydo and Auerbach did not expressly rely on constitutional standards in reversing the punitive damage awards, it is clear that such grossly disproportionate awards could not withstand constitutional scrutiny.
Here, the ratio of the jury's punitive damage award to Union Carbide's share of compensatory damages (after the trial court's reduction) is 4.62 to one. As this ratio is not presumptively invalid, we must assess Union Carbide's due process challenge under the State Farm guideposts.
b. The punitive damage award withstands constitutional scrutiny under the State Farm guideposts
Union Carbide argues the punitive damage award is unconstitutionally excessive under two of the three State Farm guideposts — the degree of reprehensibility of the defendant's misconduct and the relationship between the punitive damage award and the harm suffered by the plaintiff. We conclude the award is constitutional under each guidepost.
(i) Degree of reprehensibility
Independently assessing these factors in view of the evidence presented at trial, we must agree with the apparent findings of the jury and trial court that Union Carbide's culpability was so reprehensible as to warrant punitive damages to achieve the state's legitimate interest in deterring such conduct.
The first reprehensibility factor — whether the harm caused was physical as opposed to economic — clearly weighs in favor of high reprehensibility. Due to his exposure to Union Carbide's asbestos, Mr. Izell has contracted a terminal cancer from which he will die in two to three years. (See Bullock v. Philip Morris USA, Inc. (2011) 198 Cal.App.4th 543, 561 [131 Cal.Rptr.3d 382] (Bullock II) ["The harm caused by Philip Morris's misconduct was physical rather than economic because the evidence shows that Bullock suffered a debilitating and terminal illness, lung cancer, as a result of Philip Morris's fraudulent scheme."].)
With respect to the second factor, the evidence also shows Union Carbide acted with a reprehensible indifference to the health and safety of others. In
The same evidence also establishes reprehensibility with regard to the fourth and fifth factors — whether the conduct involved repeated actions, and whether the harm was the result of intentional malice, trickery, or deceit. Unquestionably, Union Carbide's continued sales of asbestos for more than decade after it internally recognized low levels of exposure could cause mesothelioma establishes repeated conduct.
(ii) Disparity between actual harm and punitive damages
The United States Supreme Court has "consistently rejected the notion that the constitutional line is marked by a simple mathematical formula." (Gore, supra, 517 U.S. at p. 582; see State Farm, supra, 538 U.S. at pp. 424-425.) As State Farm explains, the due process limitation is elastic, rather than rigid, and depends on the circumstances: "[B]ecause 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.' [Citations.] 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, at p. 425.)
To begin, though Union Carbide's $3.9 million share of the reduced compensatory damage award may be substantial in the abstract, "we believe that whether the compensatory damages are `small' or `substantial' within the meaning of State Farm, supra, 538 U.S. at page 425, depends, in substantial part, on the defendant's financial condition." (Bullock II, supra, 198 Cal.App.4th at p. 565, fn. 11.) This is because "the state's legitimate interests in punishment and deterrence are not served if the amount of punitive damages is so small relative to the defendant's wealth as to constitute only a nuisance or a routine cost of doing business (Simon, supra, 35 Cal.4th at p. 1185), and because a punitive damages award violates due process only if the award is `"`grossly excessive' in relation to these interests"' (ibid., quoting Gore, supra, 517 U.S. at p. 568) ...." (Bullock II, at p. 565, fn. 11.) Here, Union Carbide stipulated to a present net worth of $4.2 billion. In view of its financial condition, and the highly reprehensible conduct discussed above, we cannot hold that punitive damages equal to less than five times Union Carbide's share of compensatory damages exceeded the amount necessary to serve the state's legitimate interest in punishment and deterrence.
Nor are we persuaded by Union Carbide's contention that a one-to-one ratio was mandated because the compensatory award here consisted entirely of noneconomic damages. To be sure, some cases have recognized that a noneconomic award may be "high enough that it appears to include a punitive component," thereby reducing the permissible ratio of punitive to compensatory damages. (Bankhead v. ArvinMeritor, Inc. (2012) 205 Cal.App.4th 68, 90 [139 Cal.Rptr.3d 849] (Bankhead), italics added; see Walker v. Farmers Ins. Exchange (2007) 153 Cal.App.4th 965, 974 [63 Cal.Rptr.3d 507] [jury's award of substantial emotional distress damages, in the court's view, contained a "punitive element" so as to support only a one-to-one ratio].) Here, however, we need not speculate from what "appears" to be included in a jury's verdict, because we have the trial court's thorough recitation of the harm suffered by Plaintiffs that it considered in setting the amount of compensatory damages. The trial court's thoughtful analysis is set forth above in its entirety; there is no appearance that the court included a punitive component in the reduced compensatory award.
Finally, Union Carbide attempts to establish equivalency with Roby v. McKesson Corp. (2009) 47 Cal.4th 686 [101 Cal.Rptr.3d 773, 219 P.3d 749], in which our Supreme Court concluded a one-to-one ratio between compensatory and punitive damages was the federal constitutional limit where the
The judgment is affirmed. Plaintiffs are entitled to their costs.
Aldrich, J., concurred.
I concur with my colleagues on all issues except the affirmance of the $18 million punitive damages award. On this issue, I respectfully dissent.
After determining "the jury clearly should have reached a different verdict or decision as to compensatory damages," and reducing the award by 80 percent — from $30 million to $6 million — the trial court declined to disturb the jury's $18 million punitive damages award, concluding a "3:1 ratio of punitive to compensatory damages is reasonable." In my view, the significant reduction of the jury's compensatory damage award requires a new trial on the amount of punitive damages.
"Although a trial court's approval of the punitive damage award (by denial of a motion for new trial) is entitled to significant weight [citation], deference is not abdication. It is the duty and responsibility of an appellate court to intervene where the award is so grossly disproportionate or palpably excessive as to raise a presumption that it was the product of passion and prejudice." (Dumas v. Stocker (1989) 213 Cal.App.3d 1262, 1266 [262 Cal.Rptr. 311]; see Neal v. Farmers Ins. Exchange (1978) 21 Cal.3d 910, 928 [148 Cal.Rptr. 389, 582 P.2d 980] (Neal) ["[A]n appellate court may reverse [a punitive damages] award `only "`[w]hen the award as a matter of law appears excessive, or where the recovery is so grossly disproportionate as to raise a presumption that it is the result of passion or prejudice.'"'"].) "Appellate courts must scrutinize punitive damage verdicts because they
"`[E]xemplary damages must bear a reasonable relation to actual damages' [citation] even though no fixed ratio exists to determine the proper proportion...." (Liodas v. Sahadi (1977) 19 Cal.3d 278, 284 [137 Cal.Rptr. 635, 562 P.2d 316] (Liodas).) In assessing whether a recovery is "`grossly disproportionate,'" a "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." (Neal, supra, 21 Cal.3d at p. 928.) Because the calculation of punitive damages involves a fluid process that defies strict adherence to a rigid formula, the proper proportion that punitive damages should bear to compensatory damages is a question committed, in the first instance, to the jury's determination. (Walker v. Signal Companies, Inc. (1978) 84 Cal.App.3d 982, 998 [149 Cal.Rptr. 119]; Gagnon v. Continental Casualty Co. (1989) 211 Cal.App.3d 1598, 1602 [260 Cal.Rptr. 305] (Gagnon).) In view of these complementary principles, when a substantial reduction in compensatory damages makes the proportionality of the jury's punitive award "suspect," appellate courts have held that the cause should be remanded for a new trial on the amount of punitive damages. (Auerbach v. Great Western Bank (1999) 74 Cal.App.4th 1172, 1190 [88 Cal.Rptr.2d 718] (Auerbach); see Liodas, at p. 284 [holding, when a trial court has "granted a new trial on the issue of compensatory damages" "[e]xemplary damages must be redetermined as well ... ," because "`exemplary damages must bear a reasonable relation to actual damages ...'"].)
In Frommoethelydo v. Fire Ins. Exchange (1986) 42 Cal.3d 208 [228 Cal.Rptr. 160, 721 P.2d 41], our Supreme Court reversed a $1.25 million punitive damage award and held a new trial was required after reducing the compensatory damage award from $265,271 to $8,771. (Id. at pp. 211, 220.) The court explained that "[t]he award of punitive damages may not be upheld since most of the compensatory damages must be set aside." (Id. at p. 220.) Similarly, in Auerbach, the court remanded a $2.6 million punitive damage award after compensatory damages were reduced from $207,155 to $6,750. (Auerbach, supra, 74 Cal.App.4th at p. 1190.) Recognizing that "punitive damages must be proportional to recoverable compensatory damages," the Auerbach court concluded the substantial reduction in compensatory damages made the punitive damage award "suspect," because it indicated "the jury was misled about the amount of compensatory damages it could award ...." (Ibid. ["Because the punitive damages are out of proportion to the actual damages suffered by the Auerbachs, the punitive damage claim will have to be retried."].)
In my view, the trial court's 80 percent reduction of the compensatory damages presents two possibilities with respect to the propriety of the jury's punitive damage award. One is that the jury acted with passion or prejudice, both in awarding $24 million more in compensatory damages than was supported by the evidence, and also in awarding punitive damages almost five times greater than the remitted amount of compensatory damages apportioned to Union Carbide. The other is that the jury followed the court's instruction and, in awarding punitive damages roughly equivalent to the amount of compensatory damages apportioned to Union Carbide, chose a number bearing a "reasonable relationship" to the harm the jury believed plaintiffs suffered as a result of Union Carbide's misconduct.