(TXO Production Corp. v. Alliance Resources Corp. (1993) 509 U.S. 443, 459, 463, 113 S.Ct. 2711, 2721-2722 [125 L.Ed.2d 366]) (emphasis added). Before discussing the amount of
punitive damages that are appropriate in your case, the jury should be made aware that the object of their punitive verdict is to deter the defendant, and its industry, from putting profit interests ahead of consumers. In this regard, the deterrent effect is no different than a lengthy prison term serves to the public against committing a crime. • Arguing for an amount of punitive damages Once the jury understands the “pure-
ly public” purpose of punitive damages, it is then time to turn to the amount of punitive damages to assess. The guide- lines for the assessment of punitive dam- ages in most jurisdictions include the fol- lowing: 1) How reprehensible was the conduct? 2) Is there a reasonable rela- tionship between the amount of punitive damages and the harm? and 3) In view of the financial condition of the defendant, what amount is necessary to punish and discourage future wrongful conduct? Naturally, the evidence under each of
these guidelines will largely depend on the facts of a given case as to the repre- hensibility of the conduct, the defen- dant’s financial condition, and the plain- tiff’s actual injury. These facts must be presented in evidence and then argued specifically to the jury. In addition to these general guidelines, there are other authorities that speak more specifically to the amount of punitive damages. Take the following jury instruction: In determining the amount of puni-
tive damages to be assessed against a defendant, you may consider the fol- lowing factors: One factor is the partic- ular nature of the defendant’s conduct. Different acts may be of varying degrees of reprehensibility, and the more reprehensible the act, the greater the appropri- ate punishment. Another factor to be considered is the wealth of the defen- dant. The function of deterrence and pun- ishment will have little effect if the wealth of the defendant allows it to absorb the award with little or no discomfort.
(Neal v. Farmers Ins. Exchange (1978) 21 Cal.3d 910, 928) (emphasis added). These jury instructions convey credi-
bility to your argument on the amount of punitive damages the jury should award. In other words, the jury should be told that the law requires a greater punitive damage award where the conduct is particularly reprehensible, and that the law requires that the amount the jury awards in puni- tive damage must cause some financial “discomfort,” in order to serve the public purpose of deterrence as discussed earlier. Naturally, determining what amount will cause the appropriate “discomfort” will depend on the financial condition of the defendant. This concept is further set forth in another jury instruction: The wealthier the wrongdoing defen-
dant, the larger the award of punitive dam- ages needs to be in order to accomplish the objectives of punishment and deter- rence of such conduct in the future
(Adams v. Murakami, (1991) 54 Cal.3d 105, 110) (emphasis added). When faced with a company with a
large net worth, comparisons between a wrongdoing individual, and the company should be made. Make a point to empha- size that the insurance company, as a cor- poration, must be treated with the “same” fairness as an individual. Show the jury the CACI 104 instruction which states the following: ABC insurance company is a party to this lawsuit. ABC Insurance is entitled
to the same fair and impartial treatment that you would give to an individual. You must decide this case with the same fairness that you would use if you were deciding the case between individuals. R3(CACI 104) If the defendant has a net worth of
$500 million, that should be contrasted with an individual with a net worth of $100,000 for the jury. A punitive award of five percent of the individual’s $100,000 amounts to $5,000, which is not unreason- able. Yet, the same five percent award of the defendant’s $500 million net worth amounts to $25 million, etc. • Bifurcate the issue of attorney’s fees One of the recoverable damage items
in a bad-faith case for the plaintiff is attor- ney’s fees in the event the jury finds that the insurer breached the implied covenant of good faith and fair dealing. (Brandt v. Superior Court (1985) 37 Cal.3d 813). This is an exception to the “American Rule” that requires each party in litigation to pay his or her own attorney’s fees. The ration- ale for such an exception in an insurance bad-faith case is that the policyholder’s compensable damages include the cost to retain counsel to recover the wrongfully- withheld policy benefits. They represent damages for an economic loss suffered by the policyholder, in the same way that medical fees would be part of the damages in a personal injury action. Because the rationale of an attorney’s fee award is to compensate the policy-
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JUNE 2011 The Advocate Magazine — 25
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