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Attacking Punitive Damages at the Outset: A Primer

Author: Alla Policastro

Guest Editors: Wendy Skillman, Ashley Kaye

January 11, 2021 9:00am

Background

More and more often, we are seeing plaintiffs seeking punitive damages in their lawsuits.  These plaintiffs throw around buzzwords such as “malicious,” “vile,” “reprehensible,” and “fraudulent” in support of their punitive damages allegations. These allegations can expose defendants to liability not covered by their insurance policies. It can expose corporate defendants to fishing expeditions into their business records and proprietary materials. If not immediately addressed, it can provide plaintiffs with leverage during settlement negotiations. This is why it is crucial to address the punitive damages allegations at the outset to have them struck from the pleadings.

The following is a primer on attacking punitive damages at the pleading stage through a motion to strike to ensure threats of punitive damages do not hang over your client’s head throughout the case.

Punitive Damages Must Be Specifically Pled

Defendant may plead punitive damages when alleged actions are malicious, oppressive, or fraudulent. Code of Civil Procedure Sec. 3294 defines the type of behavior that constitutes malicious, oppressive, or fraudulent actions and plaintiffs often draw from the definition to support their allegations for punitive damages by quoting the “buzz words” found in the Code. Words such as “despicable conduct” or “conscious disregard of rights” or “intention to deprive” pepper the pleadings as support for punitive damages allegations.  However, although most causes of action in California have general pleading standard, punitive damages must be pled with specificity. (G.D. Searle & CO. v. Superior Court (1975) 49 Cal.App.3d 22, 32-33.)  Conclusory allegations relying on nothing but the type of buzzwords found above and within the Code will be insufficient to withstand against a motion to strike such punitive damages.  Plaintiffs are expected to support these allegations with facts to show the nefarious intentions behind defendants’ actions.  (Smith v. Superior Court (1992) 10 Cal.App.4th 1033, 1041-1042.)

Punitive Damages Are (Usually) Not Recoverable in Connection with Negligence Based Causes of Action

In the insurance defense sphere, most punitive damages allegations are presented in connection with negligence based causes of action and, in the case of corporate defendants, occasionally in connection with affirmative torts of their employees.  However, negligence, even gross negligence, is (usually) insufficient to justify an award for punitive damages.  (Ebaugh v. Rabkin (1972) 22 Cal.App.3d 891, 894.)

In premises liability cases, punitive damages are often sought in connection with allegations that a defendant who controlled the property had knowledge of a potentially dangerous property condition.  However, even when such failure to warn of a condition is willful in nature, courts have held this conduct is not de facto classified as malicious or oppressive and is (usually) insufficient to uphold a plea for punitive damages.   (McDonnell v. American Trust Co. (1955) 130 Cal.App. 2d 296)

Meanwhile, in transportation cases, punitive damages are often alleged in connection with incidents of driving under the influence.  Yet again, California Courts have routinely found, absent a specifically pled intent to inflict harm or deprive plaintiff of their rights, this type of grossly negligent action is insufficient to support punitive damages at the pleading phase.  (Taylor v. Superior Court (1979) 24 Cal.3d 890, 894-895).

Punitive Damages Against Corporate Entities Must Be Pled With Specificity

When it comes to punitive damages allegations against corporate entities, plaintiffs must plead with specificity the acts of employees of a corporation they allege were done with the knowledge, or under the express direction or ratification of an officer, director, or managing agent of the corporation. (Scannell v. Riverside County (1994) 152 Cal.App. 3d 596.)  Plaintiffs often summarily plead the officers of the corporation approve, ratify, or instruct specific actions which form the basis for punitive damages. However, California Courts have found these conclusory allegations insufficient to form a basis for punitive damages.  Instead, for a plea for punitive damages to survive the pleading stage, Court has held they expect plaintiffs to identify the specific actions, when the actions were carried out, by whom, and the specific officers or directors who approved or ratified those actions.  (Scannell v. Riverside County (1994) 152 Cal.App. 3d 596; Civil Code § 3294(b).)

Takeaway

Failure to attack and remove punitive damages allegations at the pleading stage could have far-reaching and lasting impacts on your client and the strength of your case and negotiating power.  Protect your clients and take a magnifying glass to the punitive damages allegations with intent to move to strike if they are not alleged with specificity and clarity.

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