Written by Attorneys Claudia D. McCarron and Sheryl Berman
Note: This article is an interpretation of current law and is offered for informational purposes only. This material is not legal advice and should not be construed or used as a substitute for the advice of an attorney.
In Romo v. Ford Motor Co., 2003 WL 22784959 (Cal. Ct. App. Nov. 25, 2003), California’s intermediate appellate court determined that punitive damages can be awarded only in relation to the harm to the plaintiff in a particular case, and not based on the defendant’s wealth or general pattern and practice of wrongdoing. The decision represents a retreat from California’s long and influential history of plaintiff-oriented standards for punitive damage awards. It is also expected to be an oft-cited application of the United States Supreme Court’s decision in Campbell v. State Farm.
Romo is a products liability action arising from an automobile rollover accident that caused deaths and serious injuries. The jury returned a verdict against Ford Motor Company for nearly $5 million in compensatory damages and $290 million in punitive damages (58:1 ratio). The trial court granted Ford’s motion for a new trial of the punitive damages issue. On appeal, the California Fifth District Court of Appeals reinstated the jury verdict. After the California Supreme Court denied Ford’s petition for review, Ford filed a petition for certiorari in the United States Supreme Court. On May 19, 2003, the United States Supreme Court granted the petition, vacated the judgment, and remanded the case back to the California Fifth District Court of Appeals for further consideration in light of Campbell.
On remand, the California court reexamined the purpose of punitive damages under California statutory and case law, which had authorized the imposition of punitive damages to deter a broad course of conduct. The Romo court held that Campbell no longer permits an award of punitive damages unless it is directly related to the harm caused to the plaintiff, as opposed to an award premised upon the defendant’s wealth or wrongful conduct, generally. In so holding, the Court of Appeals recognized that Campbell compels courts to retreat from an expansive view of punitive damages. Post Campbell, the size of a punitive damage award in an individual case should be limited by the degree of harm actually suffered by the plaintiff, rather then the potential harm to other hypothetical injured parties.
Applying the principles of Campbell to the $290 million award before it, the Romo court noted that its prior opinion affirming the award was only supported by a broad view of punitive damages. The Court of Appeals realized that the “massive award” “was justified only as a means to actually punish and deter an entire course of conduct that harmed not only plaintiffs but, potentially, untold others.” Id. at *6. This is precisely the approach that the Romo court finds Campbell held to be impermissible.
In light of the narrow view of punitive damages outlined in Campbell, the Romo court concluded that the jury was fundamentally misinstructed concerning the amount of punitive damages it could award in the present case. In particular, the jury was instructed that in addition to other factors, it should consider “[t]he amount of punitive damages which will have a deterrent effect on the defendant in light of defendant’s financial condition.” Id. at *8. The court stated. “[a]s we have discussed above, this view of “actual” deterrence, while clearly supported by California law under Grimshaw, fails to restrict the jury to punishment and deterrence based solely on the harm to the plaintiffs, as apparently required by federal due process.” Id.
In holding that Campbell fundamentally alters the broad view of punitive damages adopted by the California legislature and prior appellate case law, the Romo court significantly limited punitive damage awards. Under Romo, punitive damages can be awarded only in relation to the harm to the plaintiffs in a particular case – not as a weapon to deter similar acts in the future or to other potential plaintiffs. As California jurisprudence has so often influenced the development of legal principles across the country, the Romo court’s application of Campbell can be expected to impact the ongoing debate on Campbell’s significance.
