When punitive damages are awarded against a group of defendants, are the defendants jointly and severally liable for the punitive damages award?
Punitive damages may be visited only upon the actual wrongdoer in proportion to their guilt. (Evans v. Gibson, 220 Cal. 476, 31 P.2d 389, 1934 Cal. LEXIS 559 (Cal. March 30, 1934))
Exemplary damages may be awarded against several defendants in different amounts, depending upon their degree of culpability. (Thomson v. Catalina, 205 Cal. 402, 271 P. 198, 1928 Cal. LEXIS 544, 62 A.L.R. 235 (Cal. October 24, 1928), Wyatt v. Union Mortgage Co., 24 Cal.3d 773, 157 Cal.Rptr. 392, 598 P.2d 45 (Cal. 1979), Browand v. Scott Lumber Co., 125 Cal.App.2d 68, 269 P.2d 891 (Cal. App. 1954))
However, apportionment of punitive damages is not required and punitive damages may be awarded jointly and severally against the defendants. (Emde v. San Joaquin County Cent. Labor Council, 132 P.2d 279, 1942 Cal. App. LEXIS 1168 (Cal. App. December 5, 1942), Jackson v. Yarbray, 179 Cal.App.4th 75, 101 Cal. Rptr. 3d 303 (Cal. App. 2009), George v. International Society for Krishna Consciousness, 262 Cal. Rptr. 217, 1989 Cal. App. LEXIS 894, 213 Cal. App. 3d 729 (Cal. App. 4th Dist. August 30, 1989))
In Evans v. Gibson, 220 Cal. 476, 31 P.2d 389, 1934 Cal. LEXIS 559 (Cal. March 30, 1934), the Supreme Court of California noted that punitive damages may be visited only upon the actual wrongdoer in proportion to his guilt and that exemplary damages may be awarded against several joint tortfeasors in different amounts, depending upon their degree of culpability (at 490):
There are other applications of the rule that punitive damages may be visited only upon the actual wrongdoer in proportion to his guilt. A principal, although liable to make compensation for injuries done by his agent within the scope of his employment, cannot be held for exemplary damages unless he is personally implicated. (Warner v. Southern Pacific Co., 113 Cal. 105 [45 Pac. 187, 54 Am. St. Rep. 327]; 8 Cal. Jur. 870.) Exemplary damages may be awarded against several joint tort-feasors in different amounts, depending upon the degree of culpability, but compensatory damages cannot be thus apportioned. (Thomson [*491] v. Catalina, 205 Cal. 402 [271 Pac. 198, 62 A. L. R. 235].) In Lane v. Schilling, 130 Or. 119 [279 Pac. 267, 65 A. L. R. 1042], it is held that the receiver of an insolvent bank is not liable in punitive damages for malicious acts of officers committed before he assumed [***26] control.
In Thomson v. Catalina, 205 Cal. 402, 271 P. 198, 1928 Cal. LEXIS 544, 62 A.L.R. 235 (Cal. October 24, 1928), the Supreme Court of California, Department Two, held that jury instructions directing the jury that it could make awards for exemplary damages in different amounts against each of the defendants, depending upon the defendants' differing degrees of culpability, were not improper (at 406-408):
[...] This very case furnishes a most apt example of the justice of such a rule, since the evidence sufficiently showed that the defendant Mike Catalina was merely the tool of his co-defendants Winburn and Edwards, the first of whom was the judge of the recorder's court and who instigated the prosecution of the plaintiff in his said court, while the latter was the city marshal of the city of Watts, who actively promoted said prosecution and sought to have the same returned to and tried before his co-conspirator in said court. It was upon a showing of these facts that the trial court, upon the inquiry of the jurors, made during their consideration as to the amount of their verdict with reference to whether punitive damages could be apportioned among the several defendants, gave the following instruction: "You are instructed that it is not necessary; the punitive [***8] damages may be found in different amounts against different defendants, if you so find." The reasoning indulged in by this court in the case of Davis v. Hearst, supra, when that decision is read as a whole, fully justifies the application of this rule of reason to the several joint tort-feasors having different degrees of culpability and accordingly deserving different penalties in the way of exemplary damages in cases of this character; and while the direct question has not heretofore been decided in this state, the decisions of the courts in other jurisdictions are persuasive. In Sedgwick on Damages, 9th ed., sec. 352, the author quotes approvingly from the case of Day v. Woodworth, 13 How. (U.S.) 363 [14 L. Ed. 181, see, also, Rose's U. S. Notes], wherein it was said: "In actions of trespass, where the injury has been wanton and malicious, or gross and outrageous, courts permit juries to add to the measured compensation of the plaintiff, which he would have been entitled to recover had the injury been inflicted without design or intent, something farther by way of punishment [*407] or example, which has sometimes been called 'smart money.' This has always [***9] been left to the discretion of the jury; as the degree of punishment to be thus inflicted must depend upon the peculiar circumstances of each case." In the case of Nelson v. Halvorson, 117 Minn. 255 [Ann. Cas. 1913D, 104, 135 N. W. 818], also cited with approval by the above author, which was an action against two defendants for alleged false imprisonment wherein the question directly arose, the court held that a verdict in different amounts as to punitive damages against each of the defendants, depending upon their degree of culpability, should be upheld, the court saying: "The practice of rendering verdicts against the several defendants in an action in different amounts, where their participation in the wrong sought to be redressed has not been the same in kind and motive, is not unknown in this state." In the case of Mauk v. Brundage, 68 Ohio St. 89 [62 L. R. A. 478, 482, 67 N. E. 152], it was held that a jury might properly allow a recovery in an identical amount against all of the joint tort-feasors as compensatory damages, and a further amount against some as exemplary damages, depending upon the state of the evidence. In the case of St. Louis Southwestern [***10] Ry. Co. of Texas v. Thompson, 102 Tex. 89 [19 Ann. Cas. 1250, 113 S. W. 144], which was a case wherein Thompson sued a number of defendants for damages for an alleged conspiracy resulting in the wrongful expulsion of plaintiff from a labor organization, it was held that if the jury should find that the defendants were actuated by malice in making the charges against Thompson and in wrongly procuring his expulsion, the plaintiff would be entitled, in the discretion of the jury, to recover exemplary damages against either or all of the defendants in such sum as the jury may believe should be assessed against the defendants or either of them, and that it was not necessary, as in the case of actual damages recovered, that all of the defendants should be subjected to the same verdict by way of exemplary damages.
Upon the foregoing authorities we are constrained to hold that there was no error in the instruction or in the action of the jury in relation to the making of awards for exemplary damages in different amounts in this [**201] action, depending upon what the evidence showed and the jury found to [*408] be a differing degree of culpability among these several defendants.
In Browand v. Scott Lumber Co., 125 Cal.App.2d 68, 269 P.2d 891 (Cal. App. 1954), the California Court of Appeal for the Third District noted that given the fact that the purpose of exemplary damages is to punish each particular defendant according to the measure of their offending, juries should be allowed to apportion exemplary damages so as to make the punishment fit the offense (at 73-74):
It is the general rule that a plaintiff is never entitled, as a matter of right, to punitive damages. Brewer v. Second Baptist Church, 32 Cal.2d 791, 197 P.2d 713. Such damages are but incidents to the cause of action, and can never constitute the basis thereof. It is also true that '* * * since exemplary damages are, under the terms of section 3294 [125 Cal.App.2d 74] of the Civil Code, to be awarded in addition to the actual damages and as damages 'for the sake of example and by way of punishing the defendant,' it would seem to be a rule of reason that, where the defendants, though joint tort-feasors, in an action for malicious prosecution, as well as in other actions, have been guilty of different degrees of oppression, fraud, or malice so as to justify a verdict or verdicts for exemplary damages under the above-quoted section of the Code, and where such damages under said section are to be awarded 'for the sake of example and by way of punishing' each particular defendant according to the measure of his offending, juries should be allowed so to admeasure and apportion such exemplary damages as to make the example as well as the punishment fit the offense.' Thomson v. Catalina, 205 Cal. 402, at pages 405 and 406, 271 P. 198, at page 200, 62 A.L.R. 235.
In Wyatt v. Union Mortgage Co., 24 Cal.3d 773, 157 Cal.Rptr. 392, 598 P.2d 45 (Cal. 1979), the Supreme Court of California affirmed the decision of the California Court of Appeal for the Third District in Wyatt v. Union Mortg. Co., 141 Cal.Rptr. 361, 74 Cal.App.3d 104 (Cal. App. 1977) affirming the trial court's punitive damages award of $200,000 spread among eight defendants in varying amounts (at 790-791):
Nor can this court agree that the amount of punitive damages was excessive as a matter of law. As a recent case makes clear, the purpose of punitive damages is to penalize wrongdoers in a way that will deter them and others from repeating the wrongful conduct in the future. (Neal v. Farmers Ins. Exchange (1978) 21 Cal.3d 910, 928, fn. 13, 148 Cal.Rptr. 389, 582 P.2d 980.) "How much" in punitive damages is enough to accomplish this purpose in a particular case is not susceptible of mathematical definition. (Finney v. Lockhart (1950) 35 Cal.2d 161, 164, 217 P.2d 19.)
In the present case, the concealment from borrowers of the company policy regarding "late charges" comprised the core of appellants' wrongful conduct. At trial respondents introduced direct evidence showing that the "late charge" policy was the income-generating motor for Secured and Western, bringing in millions of dollars during the years respondents' loans were being serviced by one of the two companies. 7 The structure of the corporations
was such that the jury could reasonably infer that the individual appellants (shareholders, officers or directors of [24 Cal.3d 791] Secured or Western or one of its affiliates) had personally profited from the wrongful conduct. Therefore, an award of $200,000, apportioned[598 P.2d 56] among eight corporate and individual appellants, was not excessive. Indeed, the trial judge, in denying appellants' motion for new trial, thought the award showed remarkable restraint. This court agrees. The uncontested evidence shows that the award was much less than the income directly generated by appellants' wrongful conduct.
The judgment is affirmed.
However, in the unpublished decision of George v. International Society for Krishna Consciousness, 262 Cal. Rptr. 217, 1989 Cal. App. LEXIS 894, 213 Cal. App. 3d 729 (Cal. App. 4th Dist. August 30, 1989) the California Court of Appeal for the Fourth District held that although punitive damages may be apportioned among joint tortfeasors in various amounts according to their individual culpability, apportionment is not required (at 258):
Defendants claim the court erred in awarding the $2.5 million in punitive damages against all defendants on a joint and several basis. Although punitive damages may be apportioned among joint tortfeasors in various amounts according to their individual culpability (Thompson v. Catalina (1928) 205 Cal. 402, 407-408 [271 P. 198, 62 A.L.R. 235]), apportionment is not required. Here the facts argue against apportionment. The jury specifically found that each of the individual corporations was dominated and controlled by the individuals and other corporations in the case, and that adherence to the fiction of separate corporate existence would sanction a fraud or promote injustice in the circumstances of this case. The court concurred that there was substantial evidence to support the notion that "defendants were in fact interlocking corporations or a monolith controlled by the Governing Body Commission such that additional assets should be brought in from other ISKCON corporations throughout the United States and/or the world for purposes of considering the net worth of the defendants." We conclude the court [**122] properly awarded punitive damages against the defendants on a joint and several basis.
This approach appears to have been taken in Jackson v. Yarbray, 179 Cal.App.4th 75, 101 Cal. Rptr. 3d 303 (Cal. App. 2009). In that case, a defendant appealed a decision that awarded a joint and several punitive damages award against him and several co-defendants. The California Court of Appeal for the Second District affirmed the punitive damages award (at 79-80, 88, 100):
Following a bifurcated bench trial the court found ComputerXpress.com, Inc. (ComputerXpress), Robert T. Yarbray, Wayne Nichols, Franklin Scivally and James L. Rather liable for the malicious prosecution of a civil action in Riverside County and awarded $700,000 in general damages for emotional distress and $2.41 million dollars in punitive damages in favor of Lee Jackson, Barbara Jackson, John Fecteau, Carol Fecteau and Thomas Mitchell, individually, and Thomas Mitchell, as the personal representative of the Estate of Doran Mitchell (collectively Jackson parties).1 The Jackson parties appeal, contending the trial court erred in concluding they failed to prove Best Best & Krieger LLP (BB&K), counsel
[179 Cal.App.4th 80]
for ComputerXpress for part of the time the Riverside action was pending, had acted with malice and, therefore, was not liable for malicious prosecution. They also contend the court erred in denying any recovery as special damages for attorney fees and expenses incurred in defending the Riverside action because those fees were recoverable in connection with the Jackson parties' partially successful special motion to strike the complaint pursuant to Code of Civil Procedure section 425.16.2 Yarbray also appeals from the judgment, contending the trial court erred in finding him the alter ego of ComputerXpress and the joint and several punitive damage award against him is improper and excessive. In addition, Yarbray challenges the court's liability finding on several grounds. We affirm the judgment in favor of BB&K. We affirm the balance of the judgment as it relates to liability, but reverse the compensatory damage award in part and remand the matter to the trial court to determine the amount of attorney fees and costs properly recoverable as special damages by the Jackson parties.
In the statement of decision the court explained its method of evaluating the defendants' financial condition and ability to pay and observed with respect to Yarbray that his credibility had been and remained an issue throughout the trials. The court awarded a total of $2.4 million in punitive damages—$400,000 to each of the six Jackson parties—against ComputerXpress, Yarbray, Scivally and Rather, explaining the punitive damage award to each of the six plaintiffs "is on the low end of any percentage of compensatory damage measurement," when compared to the compensatory damages suffered by that individual. The court also noted Nichols had settled this aspect of the case and was not part of the court's punitive damage award.7
The judgment as to Best Best & Krieger LLP is affirmed in its entirety. The portion of the judgment awarding compensatory damages against ComputerXpress.com, Inc., Robert T. Yarbray, Wayne Nichols, Franklin Scivally and James L. Rather is reversed in part, and the matter remanded to the trial court for further proceedings not inconsistent with this opinion. In all other respects the judgment is affirmed.
Best Best & Krieger LLP is to recover its costs on appeal. Lee Jackson, Barbara Jackson, John Fecteau, Carol Fecteau and Thomas Mitchell, individually and as personal representative of the Estate of Doran Mitchell, are to recover their costs on appeal with respect to the issues raised by the appeal of Robert T. Yarbray.
In Emde v. San Joaquin County Cent. Labor Council, 132 P.2d 279, 1942 Cal. App. LEXIS 1168 (Cal. App. December 5, 1942), the defendants appealed from a joint and several judgment for special and punitive damages. The California Court of Appeal for the Third District upheld the punitive damages award (except as against one defendant who was neither served nor appeared at trial) and noted that punitive damages were properly awarded (at 283, 288):
The San Joaquin County Central Labor Council, Teamsters Local No. 439 and two of its officers, and a newspaper copartnership and its members, which own and publish the Stockton Labor Journal in San Joaquin County, have separately appealed from a joint and several judgment for special and punitive damages, which was rendered pursuant to the verdict of a jury in a suit for libel growing out of a labor dispute over an alleged violation of an agreement with Teamsters Local No. 439 regarding membership in the union, hours and wages of the drivers of respondents' milk trucks; and have also appealed [**2] from the orders denying defendants' motions for judgment notwithstanding the verdict.
The respondents own and operate a dairy in San Joaquin County under the name of Happyholme Dairy. They had always employed union drivers for their routes and had otherwise conformed to the agreement with the union in that regard. After the agreement was made, the dairy copartnership sold its milk routes to independent contractors who thereafter operated them. The chief issue in this case involved the validity and genuineness of those sales, and incidentally the question as to whether the purchasers were employees of the dairy company or independent contractors.
The labor council procured the publication of an article in the Stockton Labor Journal charging the respondents with violating their agreement by hiring non-union drivers and by compelling them to furnish their own vehicles and to work for commissions in lieu of agreed minimum wages. The suit was based on these and other alleged false statements. Finally, the published article urged all friends of union labor to boycott respondents' dairy products and to cease patronizing that enterprise. The published article resulted in a loss of many customers [**3] and great damage to the business. The libel suit was tried with a jury which returned a verdict for actual and punitive damages against each and all of the defendants. A joint and several judgment was accordingly rendered against them. From that judgment the defendants have separately appealed.
The [**21] law presumes that actual damages result from the publication of a false and unprivileged article which is slanderous per se. The proof of such facts conclusively establishes a cause authorizing the jury in the exercise of sound judgment to award actual or compensatory damages in sums which are justified by the evidence. Clark v. McClurg, 215 Cal. 279, 91 P.2d 505, 81 A.L.R. 908; 16 Cal.Jur. 127, § 94. Exemplary damages may be allowed only when actual damages have been suffered. Mother Cobb's Chicken Turnovers, Inc., v. Fox, 10 Cal.2d 203, 73 P.2d 1185. In a suit for libel an award for compensatory damages may be supplemented by an allowance of punitive damages when it appears that the defendant acted with malice. Clark v. McClurg, supra; Lewis v. Hayes, 165 Cal. 527, 132 P. 1022, Ann.Cas.1914D, 148. Exemplary damages may be allowed in an action not arising from contract when the defendant is guilty of "oppression, fraud, or malice, express or implied." (Italics ours.) § 3294, Civ. Code. Punitive damages are not recoverable under any circumstances as a matter of right. The award of punitive damages in a proper case is solely within the discretion of the trial judge or the jury. Lewis v. Hayes, supra; [**22] Davis v. Hearst, 160 Cal. 143, 116 P. 530. While it is true that punitive damages may be allowed only in cases where it appears that the defendant is guilty of oppression, fraud or malice, those elements may be inferred or implied from the language of the challenged publication if it be libelous per se, or from the conduct and declarations of the accused person. 16 Cal.Jur. 134, § 101. It has been held that when the published language is not libelous per se it is necessary to allege and prove special damages before punitive damages may be allowed. 33 Am.Jur. 191, § 202. When special damages are alleged and proved in a suit for libel, whether the published language is libelous per se or not, punitive damages may be allowed in the sound discretion of the jury.
In the present case special damages were alleged and proved. Punitive damages were therefore properly awarded in this case.