Adams?v.?Murakami?(1991)?54?Cal.3d?105?,?284?Cal.Rptr.?318;?813?P.2d?1348
[No.?S003530.?Aug?15,?1991.]MYRETTA?ADAMS,?as?Conservator,?etc.,?Plaintiff?and?Respondent,?v.?CLIFFORD?MURAKAMI,?Defendant?and?Appellant.
(Superior?Court?of?Los?Angeles?County,?No.?C418409,?Leon?S.?Kaplan,?Judge.)
(Opinion?by?Baxter,?J.,?with?Lucas,?C.?J.,?Panelli?and?Arabian,?JJ.,?concurring.?Separate?concurring?opinion?by?Kennard,?J.,?concurring?in?the?judgment.?Separate?dissenting?opinion?by?Mosk,?J.,?with?Stone?(Steven?J.),?J.,fn.?*?concurring.)
COUNSEL
Kirtland?&?Packard,?Horvitz,?Levy?&?Amerian,?Horvitz?&?Levy,?Barry?R.?Levy,?Ellis?J.?Horvitz,?S.?Thomas?Todd,?Loren?Homer?Kraus,?Greines,?Martin,?Stein?&?Richland,?Irving?H.?Greines,?Alan?G.?Martin,?J.?Richard?Jennings,?Thelen,?Marrin,?Johnson?&?Bridges,?Curtis?A.?Cole,?Patricia?H.?Wirth?and?Steven?J.?Bernheim?for?Defendant?and?Appellant.
Fred?J.?Hiestand,?Haight,?Brown?&?Bonesteel?and?Roy?G.?Weatherup?as?Amici?Curiae?on?behalf?of?Defendant?and?Appellant.
Kaufler?&?Scott,?Kaufler,?Bailey?&?Scott,?Philip?Kaufler,?Lawrence?W.?Scott?and?Gary?H.?Amsterdam?for?Plaintiff?and?Respondent.
Ian?Herzog,?Douglas?Devries,?Leonard?Sachs,?Bruce?Broillet,?David?Harney,?Laurence?Drivon,?Robert?Steinberg,?Roland?Wrinkle,?Harvey?R.?Levine,?Leonard?Esquina?and?Evan?D.?Marshall?as?Amici?Curiae?on?behalf?of?Plaintiff?and?Respondent.
OPINION
BAXTER,?J.
The?question?in?this?personal?injury?action?is?twofold:?(1)?Is?evidence?of?a?defendant’s?financial?condition?a?prerequisite?to?an?award?of?punitive?damages??(2)?If?so,?is?the?burden?on?the?plaintiff?rather?than?on?the?[54?Cal.3d?109]?defendant?to?introduce?evidence?of?the?defendant’s?financial?condition??We?answer?both?questions?in?the?affirmative.?Our?prior?decisions,?constitutional?considerations,?and?the?importance?of?appellate?review?indicate?that?an?award?of?punitive?damages?cannot?be?sustained?on?appeal?unless?the?trial?record?contains?meaningful?evidence?of?the?defendant’s?financial?condition.?The?absence?of?this?evidence?thwarts?effective?appellate?review?of?a?claim?that?punitive?damages?are?excessive.?As?to?the?second?question,?we?conclude?that?Evidence?Code?section?500,?the?traditional?allocation?of?burden?of?proof,?and?fundamental?fairness?require?the?plaintiff?rather?than?the?defendant?to?introduce?this?evidence.
Facts
A?39-year-old?female?(hereafter?patient),?a?diagnosed?chronic?schizophrenic?of?low?intelligence,?was?a?resident?of?View?Heights?Convalescent?Hospital.?Clifford?Murakami,?M.D.,?was?her?attending?physician.?Through?her?conservator,?patient?brought?this?action?against?the?hospital?and?Dr.?Murakami?for?medical?malpractice,?battery,?and?intentional?infliction?of?emotional?distress.?Patient?alleged?that,?as?a?result?of?wrongful?acts?and?omissions?of?the?hospital?and?Dr.?Murakami,?she?became?pregnant?by?another?patient?while?she?was?hospitalized?and?gave?birth?to?a?son?who?was?diagnosed?as?mentally?retarded?and?autistic.?Patient’s?claims?against?the?hospital?were?settled.
Patient’s?claims?against?Dr.?Murakami?proceeded?to?a?jury?trial.?Neither?patient?nor?Dr.?Murakami?introduced?at?trial?any?evidence?of?Dr.?Murakami’s?financial?condition.?The?jury?returned?a?verdict?for?patient?on?her?causes?of?action?for?medical?malpractice?and?intentional?infliction?of?emotional?distress.?After?adjustments?by?the?trial?court,?she?was?awarded?a?total?of?$1,024,266,?including?$750,000?in?punitive?damages.
Dr.?Murakami?appealed,?contending?in?part?that?the?punitive?damages?award?was?improper?because?patient?had?not?introduced?evidence?of?Dr.?Murakami’s?financial?condition.?The?Court?of?Appeal?rejected?the?argument?without?discussion?and?affirmed?the?judgment.
Discussion
- Necessity?of?evidence?of?defendant’s?finances
- Prior?California?decisions
Because?the?quintessence?of?punitive?damages?is?to?deter?future?misconduct?by?the?defendant,?the?key?question?before?the?reviewing?court?is?whether?the?amount?of?damages?”exceeds?the?level?necessary?to?properly?punish?and?deter.”?(Neal,?supra,?21?Cal.3d?at?p.?928;?Merlo?v.?Standard?Life?&?Acc.?Ins.?Co.?(1976)?59?Cal.App.3d?5,?18?[130?Cal.Rptr.?416].)?The?question?cannot?be?answered?in?the?abstract.?The?reviewing?court?must?consider?the?amount?of?the?award?in?light?of?the?relevant?facts.?The?nature?of?the?inquiry?is?a?comparative?one.?Deciding?in?the?abstract?whether?an?award?is?”excessive”?is?like?deciding?whether?it?is?”bigger,”?without?asking?”Bigger?than?what?”
A?reviewing?court?cannot?make?a?fully?informed?determination?of?whether?an?award?of?punitive?damages?is?excessive?unless?the?record?contains?evidence?of?the?defendant’s?financial?condition.?Since?Neal,?supra,?21?Cal.3d?910,?we?have?repeatedly?examined?punitive?damage?awards?in?light?of?the?defendant’s?financial?condition.?(Wyatt?v.?Union?Mortgage?Co.?(1979)?24?[54?Cal.3d?111]?Cal.3d?773,?790-791?[157?Cal.Rptr.?392,?598?P.2d?45];?Egan?v.?Mutual?of?Omaha?Ins.?Co.?(1979)24?Cal.3d?809,?823-824?[169?Cal.Rptr.?691,?620?P.2d?141].)?This?simple?principle?is?well?understood?by?the?bench.?The?standard?jury?instruction?on?punitive?damages?given?in?this?case?expressly?directed?the?jury?to?consider?the?”defendant’s?financial?condition.”?(BAJI?No.?14.71?(7th?ed.?1986?bound?vol.)?p.?205.)?The?Use?Note?to?this?instruction?explained?that?consideration?of?this?factor?was?necessary?under?Neal,?supra,?21?Cal.3d?910.?(BAJI?No.?14.71,?supra,?at?p.?207.)?The?principle?is?also?axiomatic?to?the?bar.?For?example,?a?recent?practice?guide?for?attorneys?lists?”The?Ten?Essential?Steps?To?A?Proper?Punitive?Damage?Award.”?(Riley,?Proving?Punitive?Damages:?The?Complete?Handbook?(1981)?p.?6.)?The?guide?states,?”RULE?9:?Show?the?defendant’s?wealth.”?(Id.,?at?p.?7,?emphasis?in?original.)
[2a]?Plaintiff?would?dispense?with?the?need?for?evidence?of?a?defendant’s?financial?condition?because?such?evidence?was?only?one?of?the?three?factors?set?forth?in?Neal,?supra,?21?Cal.3d?910,?928.?Apparently,?plaintiff?contends?that,?because?the?Neal?court?listed?three?criteria,?less?than?three?are?sufficient.?We?find?no?logical?premise?for?this?conclusion.?The?effect?of?such?approach?would?be?to?eliminate?a?three-pronged?analysis?in?favor?of?a?two-pronged?analysis.?The?Neal?court?set?forth?three?factors,?explaining?the?importance?of?each.?Nothing?in?Neal?suggests?that?any?of?the?three?is?dispensable.fn.?2 [3a]?To?the?contrary,?the?most?important?question?is?whether?the?amount?of?the?punitive?damages?award?will?have?deterrent?effect-without?being?excessive.?Even?if?an?award?is?entirely?reasonable?in?light?of?the?other?two?factors?in?Neal,?supra,?21?Cal.3d?910?(nature?of?the?misconduct?and?amount?of?compensatory?damages),?the?award?can?be?so?disproportionate?to?the?defendant’s?ability?to?pay?that?the?award?is?excessive?for?that?reason?alone.?For?example,?in?Burnett?v.?National?Enquirer,?Inc.?(1983)?144?Cal.App.3d?991?[193?Cal.Rptr.?206,?49?A.L.R.4th?1125],?the?court?reiterated?the?Neal?factors?(supra,?21?Cal.3d?910)?and?concluded?that,?although?the?defendant’s?misconduct?was?”reprehensible,”?the?punitive?damages?award?had?to?be?reduced?solely?because?it?constituted?too?great?a?portion?of?the?defendant’s?net?worth?and?income.?(Burnett?v.?National?Enquirer,?Inc.,?supra,?144?Cal.App.3d?at?p.?1012.)?The?court?explained?that?it?could?”find?acceptable?[54?Cal.3d?112]?only?that?balance?between?the?gravity?of?a?defendant’s?illegal?act?and?a?penalty?necessary?to?properly?punish?and?deter?….”?(Ibid.)?This?balance?cannot?be?made?absent?evidence?of?the?defendant’s?financial?condition.?Similarly,?in?Zhadan?v.?Downtown?L.?A.?Motors?(1976)?66?Cal.App.3d?481?[136?Cal.Rptr.?132],?the?court?concluded?that?substantial?punitive?damages?were?warranted?in?light?of?the?defendant’s?serious?misconduct?(id.,?at?p.?497)?and?that?the?ratio?between?compensatory?and?punitive?damages?was?not?objectionable?(id.,?at?p.?499),?but?nevertheless?reversed?the?judgment?because?the?punitive?damages?were?excessive?in?light?of?the?defendant’s?financial?condition.?(Id.,?at?p.?500?[award?exceeded?one-third?of?the?defendant’s?net?worth].)The?determination?of?whether?an?award?is?excessive?is?admittedly?more?art?than?science.?”The?channeling?of?just?the?correct?quantum?of?bile?to?reach?the?correct?level?of?punitive?damages?is,?to?put?it?mildly,?an?unscientific?process?complicated?by?personality?differences.”?(Devlin?v.?Kearney?Mesa?AMC/Jeep/Renault,?Inc.?(1984)?155?Cal.App.3d?381,?388?[202?Cal.Rptr.?204].)?[2b]?However,?when?provided?with?evidence?of?a?defendant’s?financial?condition,?the?reviewing?court?can?at?least?reach?a?reasonably?informed?decision.?Without?such?evidence,?a?reviewing?court?can?only?speculate?as?to?whether?the?award?is?appropriate?or?excessive.?Plaintiff?offers?no?justification?for?imposing?such?a?burden?on?reviewing?courts?or?for?encouraging?ill-informed?decisions.?Sound?judicial?policy?weighs?in?favor?of?fully?informed?decisions,?especially?when?a?public?interest?is?at?stake.?One?state’s?high?court?explained,?”Indeed?the?public?policy?nature?of?the?award?places?in?question?the?jurisdiction?of?the?district?court?to?award?relief?in?the?form?of?punitive?damages?in?the?absence?of?proof?of?the?wealth?or?financial?condition?of?the?defendant.”?(Adel?v.?Parkhurst?(Wyo.?1984)?681?P.2d?886,?892.)
An?example?demonstrates?the?wisdom?of?Neal,?supra,?21?Cal.3d?910.?Assume?that?no?evidence?of?a?defendant’s?financial?condition?is?introduced.?A?jury?renders?an?award?of?$2?million.?The?defendant’s?financial?condition,?however,?is?limited?so?as?to?preclude?payment?of?punitive?damages?in?excess?of?$10,000.?Neal?recognized?that?the?purpose?of?punitive?damages?is?not?served?by?financially?destroying?a?defendant.?The?purpose?is?to?deter,?not?to?destroy.?Under?plaintiff’s?approach,?however,?the?reviewing?court?will?be?rendered?unable?to?consider?the?effect?of?the?award?because?the?record?will?contain?no?evidence?of?the?defendant’s?financial?condition.?Such?result?is?contrary?to?the?well-established?rule?that?a?punitive?damages?award?is?excessive?if?it?is?disproportionate?to?the?defendant’s?ability?to?pay.?(Egan?v.?Mutual?of?Omaha?Ins.?Co.,?supra,24?Cal.3d?809,?824?[punitive?damages?award?reversed?because?it?exceeded?more?than?two?and?one-half?months?of?defendant’s?annual?net?income];?Merlo?v.?Standard?Life?&?Acc.?Ins.?Co.,?[54?Cal.3d?113]?supra,?59?Cal.App.3d?5,?18?[award?of?punitive?damages?excessive?because?it?was?more?than?30?percent?of?defendant’s?net?worth];?Little?v.?Stuyvesant?Life?Ins.?Co.?(1977)?67?Cal.App.3d?451,?469-470?[136?Cal.Rptr.?653]?[award?greater?than?15?percent?of?net?worth?reversed];?Zhadan?v.?Downtown?L.?A.?Motors,?supra,?66?Cal.App.3d?481,?500?[award?excessive?because?it?was?one-third?of?the?net?worth].)fn.?3
The?principle?that?a?punitive?award?must?be?considered?in?light?of?the?defendant’s?financial?condition?is?ancient.?After?the?Norman?conquest?in?1066,?there?arose?in?English?law?a?system?of?civil?sanctions?known?as?”amercements.”?(Browning-Ferris?Industries?v.?Kelco?Disposal?(1989)?492?U.S.?257,?287-289?[106?L.Ed.2d?219,?246-247,?109?S.Ct.?2909,?2927]?[conc.?and?dis.?opn.?of?O’Connor,?J.].)?Because?of?the?sometimes?abusive?nature?of?amercements,?the?Magna?Carta?prohibited?those?that?were?disproportionate?to?the?offense?or?that?would?deprive?the?wrongdoer?of?his?means?of?livelihood:?”A?freeman?shall?only?be?amerced?for?a?small?offence?according?to?the?measure?of?that?offence.?And?for?a?great?offence?he?shall?be?amerced?according?to?the?magnitude?of?the?offence,?saving?his?contenement;?and?a?merchant,?in?the?same?way,?saving?his?merchandize.?[4,?5]?(See?fn.?4.)?And?a?villein,?in?the?same?way,?if?he?fall?under?our?mercy,?shall?be?amerced?saving?his?wainnage.”?(Magna?Carta?(1215)?ch.?20,?italics?added.)fn.?4?Absent?evidence?of?a?defendant’s?financial?condition,?a?punitive?damages?award?can?financially?annihilate?the?defendant.?We?see?no?reason?why?a?modern-day?civil?defendant?should?be?entitled?to?less?consideration?than?one?was?given?800?years?ago.
[2c]?Plaintiff?attempts?to?justify?discarding?the?defendant’s?financial?condition?from?the?analysis?under?Neal,?supra,?21?Cal.3d?910,?by?claiming?that?a?reviewing?court?will?be?able?to?consider?the?other?two?Neal?factors-the?nature?of?the?misconduct?and?the?amount?of?compensatory?damages.?[54?Cal.3d?114]?Those?two?factors?standing?alone,?however,?will?not?enable?a?reviewing?court?to?make?an?informed?determination?of?whether?an?award?is?excessive.?As?explained?above?(maj.?opn.,?ante,?pp.?111-112),?an?award?might?seem?to?be?warranted?under?those?factors,?but?nevertheless?be?excessive?in?light?of?the?defendant’s?financial?condition.The?better?reasoned?line?of?Court?of?Appeal?decisions?requires?evidence?of?the?defendant’s?financial?condition.?In?Forte?v.?Nolfi?(1972)?25?Cal.App.3d?656?[102?Cal.Rptr.?455],?the?court?reversed?a?punitive?damages?award,?primarily?because?the?trial?court?entered?judgment?”without?taking?any?evidence?of?the?resources?of?the?alleged?wrongdoers?which?it?sought?to?punish.”?(Id.,?at?p.?689.)?More?recently,?in?Dumas?v.?Stocker?(1989)?213?Cal.App.3d?1262?[262?Cal.Rptr.?311]?(Dumas),?the?court?fully?considered?our?decision?in?Neal,?supra,?21?Cal.3d?910,?and?explained?that?the?absence?of?evidence?as?to?financial?condition?”frustrates?meaningful?appellate?review?of?punitive?damage?awards?(i.e.,?of?whether?the?award?was?’grossly?disproportionate’),?since?the?absence?of?evidence?of?net?worth?precludes?an?appellate?court?from?deciding?whether?an?award?might,?for?example,?bankrupt?the?defendant.”?(Dumas,?supra,?213?Cal.App.3d?at?p.?1269.)
The?Dumas?court,?supra,?213?Cal.App.3d?1262,?also?correctly?observed?that,?absent?financial?evidence,?a?jury?will?be?encouraged?(indeed,?required)?to?speculate?as?to?a?defendant’s?net?worth?in?seeking?to?return?a?verdict?that?will?appropriately?punish?the?defendant.?The?present?case?bears?out?that?concern.?At?plaintiff’s?request,?the?jury?was?given?BAJI?No.?14.71?(7th?ed.?1986?bound?vol.),?which?stated,?”In?arriving?at?any?award?of?punitive?damages,?you?are?to?consider?the?following:?…?[?]?The?amount?of?punitive?damages?which?will?have?a?deterrent?effect?on?the?defendant?in?the?light?of?defendant’s?financial?condition?….”?(Italics?added.)?Plaintiff’s?present?argument?that?financial?evidence?is?not?necessary?rings?hollow?in?light?of?her?own?decision?to?request?that?the?jury?be?instructed?to?base?its?punitive?damages?award?on?defendant’s?financial?condition.?More?important,?the?jury?was?told?to?base?its?award?on?a?factor?as?to?which?there?was?no?evidence.?Faced?with?such?a?dilemma,?the?jury?was?forced?to?speculate?as?to?defendant’s?financial?condition.?Sound?public?policy?should?preclude?awards?based?on?mere?speculation.?[6]?The?traditional?rule?is?that?compensatory?damages?must?not?be?based?on?speculation.?(Dumas,?supra,?213?Cal.App.3d?at?p.?1269.)?There?is?no?reason?for?a?different?standard?for?punitive?damages.?Dumas?states?the?correct?rule.?(See?also?Storage?Services?v.?Oosterbaan?(1989)?214?Cal.App.3d?498,?516?[262?Cal.Rptr.?689]?[expressly?following?Dumas?rule].)
[2d]?The?decision?most?commonly?cited?for?the?contrary?view?is?Vossler?v.?Richards?Manufacturing?Co.?(1983)?143?Cal.App.3d?952?[192?Cal.Rptr.?[54?Cal.3d?115]?219]?(Vossler).?As?the?court?explained,?however,?in?Dumas,?supra,?213?Cal.App.3d?1262,?all?of?the?decisions?relied?on?by?the?Vossler?court,?supra,?143?Cal.App.3d?952,?were?themselves?based?on?a?single?decision-Hanley?v.?Lund?(1963)?218?Cal.App.2d?633?[32?Cal.Rptr.?733]?(Hanley).?Hanley?is?unpersuasive?in?several?respects.?First,?the?court’s?consideration?of?the?issue?was?minimal,?two?short?paragraphs.?The?court?noted?only?that?the?defendant?had?cited?no?authority?directly?in?support?of?his?position.?(Id.,?at?p.?645.)?The?court,?however,?cited?no?contrary?authority.?Without?any?support?one?way?or?the?other?and?without?any?meaningful?discussion?of?the?issue,?Hanley?provides?slender?support?for?the?subsequent?cases?that?have?relied?on?it.Second,?as?a?later?court?put?it,?Hanley,?supra,?218?Cal.App.2d?633,?”reached?its?conclusion?on?a?unique?rationale.”?(Dumas,?supra,?213?Cal.App.3d?at?p.?1268.)?The?defendant?in?Hanley,?supra,?218?Cal.App.2d?633,?”did?not?contend,?either?in?the?trial?court?or?here?[on?appeal],?that?in?fact?the?award?made?was?excessive?in?the?light?of?his?financial?status.”?(Id.,?at?p.?646.)?As?the?Dumas?court,?supra,?213?Cal.App.3d?1262,?explained,?”In?effect,?Hanley?held?that?under?the?circumstances?of?that?case,?and?in?light?of?the?failure?to?raise?the?issue?of?excessiveness,?the?parties?inferentially?stipulated?away?the?issue?of?[the?defendant’s]?net?worth,?rendering?evidence?by?the?plaintiff?unnecessary.”?(Id.,?at?p.?1268.)?Petitioner?in?this?case,?however,?has?contended?that?the?punitive?damages?are?excessive.fn.?5
Third?and?most?important,?Hanley,?supra,?218?Cal.App.2d?633,?was?decided?long?before?our?decision?in?Neal,?supra,?21?Cal.3d?910,?in?which?we?emphasized?the?importance?of?considering?a?defendant’s?financial?condition?in?order?to?determine?whether?an?award?of?punitive?damages?is?excessive.
A?Court?of?Appeal?recently?faced?with?the?conflict?on?this?issue?concluded:?”We?have?reviewed?Dumas?[supra,?213?Cal.App.3d?1262,]?and?Vossler?[supra,?143?Cal.App.3d?952,?961-965,]?and?the?California?cases?upon?which?they?rely,?and?we?are?persuaded?that?Dumas?states?the?better?rule.?There?is?no?basis?for?meaningful?appellate?review?of?a?punitive?damage?award?without?evidence?of?the?defendant’s?financial?condition.”?(Storage?Services?v.?Oosterbaan,?supra,?214?Cal.App.3d?498,?516.)?We?agree.?We?affirm?the?rule?[54?Cal.3d?116]?stated?in?Dumas,?supra,?213?Cal.App.3d?1262,?and?disapprove?of?Hanley,?supra,?218?Cal.App.2d?633,?and?its?progeny.?(See,?e.g.,?Fenlon?v.?Block?(1989)?216?Cal.App.3d?1174,?1178-1183?[265?Cal.Rptr.?324];?Pat?Rose?Associates?v.?Coombe?(1990)?225?Cal.App.3d?9,?23?[275?Cal.Rptr.?1];?Liberty?Transport,?Inc.?v.?Harry?W.?Gorst?Co.?(1991)?229?Cal.App.3d?417,?438?[280?Cal.Rptr.?159].)fn.?6
Our?decision?in?Neal,?supra,?21?Cal.3d?910,?reflected?sound?considerations?of?fairness?and?a?concern?for?rationality?in?the?awarding?of?punitive?damages.?We?decline?to?eviscerate?that?decision?by?eliminating?the?need?for?evidence?of?the?defendant’s?financial?condition.?Without?such?evidence,?reviewing?courts?will?be?unduly?restricted?in?their?attempts?to?assess?whether?awards?of?punitive?damages?are?excessive.fn.?7
- Constitutional?considerations
The?question?before?us?is?one?of?state?law,?but?it?has?recently?acquired?a?federal?constitutional?dimension,?which?although?not?dispositive,?weighs?strongly?in?favor?of?requiring?evidence?of?a?defendant’s?financial?condition.?In?Pacific?Mut.?Life?Ins.?Co.?v.?Haslip?(1991)?499?U.S.?___?[113?L.Ed.2d?1,?111?S.Ct.?1032]?(Haslip),?the?high?court?rejected?a?due?process?challenge?to?a?punitive?damages?award?under?Alabama?law,?holding?that?the?long-entrenched?common?law?method?for?assessing?punitive?damages?is?not?”per?se?unconstitutional.”?(Id.,?at?p.?___?[113?L.Ed.2d?at?p.?19,?111?S.Ct.?at?p.?1043],?italics?in?original.)?More?important?for?the?issue?before?us,?however,?the?court?also?made?clear?that,?”It?would?be?just?as?inappropriate?to?say?that,?because?punitive?damages?have?been?recognized?for?so?long,?their?imposition?is?never?unconstitutional.?…?We?note?once?again?our?concern?about?punitive?damages?that?’run?wild.’?…?[?]?One?must?concede?that?unlimited?jury?discretion-or?unlimited?judicial?discretion?for?that?matter-in?the?fixing?of?[54?Cal.3d?117]?punitive?damages?may?invite?extreme?results?that?jar?one’s?constitutional?sensibilities.”?(499?U.S.?at?p.?___?[113?L.Ed.2d?at?p.?20,?111?S.Ct.?at?p.?1043].)
To?determine?if?the?constitutional?line?had?been?crossed?in?that?case,?the?court?carefully?examined?the?Alabama?law?governing?punitive?damages.?In?upholding?the?award,?the?court?noted?the?state’s?”post-trial?procedures?for?scrutinizing?punitive?awards.”?(Haslip,?supra,?499?U.S.?at?p.?___?[113?L.Ed.2d?at?p.?21,?111?S.Ct.?at?p.?1044].)?The?trial?court?was?required?”?’to?reflect?in?the?record?the?reasons?for?interfering?with?a?jury?verdict,?or?refusing?to?do?so,?on?grounds?of?excessiveness?of?the?damages.’?”?(Ibid.?[113?L.Ed.2d?at?p.21,?111?S.Ct.?at?p.?1044],?quoting?Hammond?v.?City?of?Gadsden?(Ala.?1986)?493?So.2d?1374,?1379.)?The?factors?deemed?appropriate?for?the?trial?court?to?consider?included?”?’the?impact?upon?the?parties.’?”?(Haslip,?supra,?499?U.S.?at?p.?___?[113?L.Ed.2d?at?p.?21,?111?S.Ct.?at?p.?1044].)?Obviously,?this?factor?would?encompass?consideration?of?the?defendant’s?financial?condition.?Otherwise,?effect?on?the?defendant?could?not?be?considered.
Most?important,?the?high?court?emphasized?the?”detailed?substantive?standards”?the?Alabama?Supreme?Court?uses?in?evaluating?punitive?awards?on?appeal.?(Haslip,?supra,?499?U.S.?at?p.?___?[113?L.Ed.2d?at?p.?22,?111?S.Ct.?at?p.?1045].)?The?Alabama?court?had?made?clear?that?the?defendant’s?financial?condition?is?”a?consideration?essential?to?a?post-judgment?critique?of?a?punitive?damages?award.”?(Green?Oil?Co.?v.?Hornsby?(Ala.?1989)?539?So.2d?218,?222,?italics?added.)?The?high?court?explained,?that?”The?[Alabama]?standards?provide?for?a?rational?relationship?in?determining?whether?a?particular?award?is?greater?than?reasonably?necessary?to?punish?and?deter.”?(Haslip,?supra,?499?U.S.?at?p.?___?[113?L.Ed.2d?at?p.?23,?111?S.Ct.?at?pp.?1045-?1046].)?Absent?a?consideration?of?a?defendant’s?financial?condition,?a?court?(whether?at?the?trial?or?appellate?level)?simply?cannot?make?an?informed?decision?whether,?as?the?high?court?put?it,?”a?particular?award?is?greater?than?reasonably?necessary.”?(Ibid.?[113?L.Ed.2d?at?p.?23,?111?S.Ct.?at?p.?1046])?Or,?as?the?Alabama?high?court?phrased?it,?”What?(i.e.,?how?much)?will?it?take?to?punish?this?Defendant??…?[?]?The?gravity?of?the?wrong?may?be?the?same,?whether?the?defendant?is?a?salaried?employee?or?a?multimillion?dollar?corporation,?but,?in?the?case?of?the?former,?the?$220,000?verdict?would?be?far?out?of?proportion?to?its?intended?purpose.?What?it?takes?to?punish?the?one?bears?no?relationship?to?what?it?takes?to?punish?the?other.”?(Green?Oil?Co.?v.?Hornsby,?supra,?539?So.2d?218,?223,?italics?in?opinion,?quoting?Ridout’s-Brown?Service,?Inc.?v.?Holloway?(Ala.?1981)?397?So.2d?125,?127-128?(conc.?opn.?of?Jones,?J.).)fn.?8?[54?Cal.3d?118]?We?need?not?decide,?and?do?not?decide,?whether?evidence?of?a?defendant’s?financial?condition?is?a?constitutional?prerequisite?under?Haslip,?supra,?499?U.S.?___,?to?an?award?of?punitive?damages.?[7]?At?a?minimum,?however,?the?high?court?has?made?clear?a?constitutional?mandate?for?meaningful?judicial?scrutiny?of?punitive?damages?awards.?This?requirement?weighs?heavily?in?favor?of?evidence?of?a?defendant’s?financial?condition.?Absent?such?evidence,?a?reviewing?court?cannot?make?an?informed?decision?whether?the?amount?of?punitive?damages?is?excessive?as?a?matter?of?law.?That?commonsense?concern?is?itself?sufficient?to?require?such?evidence?as?a?matter?of?state?law.?Moreover,?in?light?of?Haslip,?the?absence?of?such?evidence?raises?doubt?as?to?the?constitutionality?of?a?punitive?damages?award.fn.?9?[54?Cal.3d?119]
- Allocation?of?the?burden?of?proof
Evidence?Code?section?500?states,?”Except?as?otherwise?provided?by?law,?a?party?has?the?burden?of?proof?as?to?each?fact?the?existence?or?nonexistence?of?which?is?essential?to?the?claim?for?relief?or?defense?that?he?is?asserting.”?(Italics?added.)?As?the?California?Law?Revision?Commission?explained,?”The?facts?that?must?be?shown?to?establish?a?cause?of?action?or?a?defense?are?determined?by?the?substantive?law,?not?the?law?of?evidence.”?(Cal.?Law?Revision?Com.?com.,?29B?West’s?Ann.?Evid.?Code?(1966?ed.)???500,?at?p.?431?[Deering’s?Ann.?Evid.?Code,?(1986?ed.)???500,?p.?215].)?In?light?of?our?holding?that?evidence?of?a?defendant’s?financial?condition?is?essential?to?support?an?award?of?punitive?damages,?Evidence?Code?section?500?mandates?that?the?plaintiff?bear?the?burden?of?proof?on?the?issue.?A?plaintiff?seeking?punitive?damages?is?not?seeking?a?mere?declaration?by?the?jury?that?the?plaintiff?is?entitled?to?punitive?damages?in?the?abstract.?The?plaintiff?is?seeking?an?award?of?real?money?in?a?specific?amount?to?be?set?by?the?jury.?Because?the?award,?whatever?its?amount,?cannot?be?sustained?absent?evidence?of?the?defendant’s?financial?condition,?such?evidence?is?”essential?to?the?claim?for?relief.”?(Evid.?Code,???500.)
Fundamental?fairness?must?be?the?lodestar?for?our?analysis.?The?California?Law?Revision?Commission?comment?to?Evidence?Code?section?500?states,?[54?Cal.3d?120]?”In?determining?the?incidence?of?the?burden?of?proof,?’the?truth?is?that?there?is?not?and?cannot?be?any?one?general?solvent?for?all?cases.?It?is?merely?a?question?of?policy?and?fairness?based?on?experience?in?the?different?situations.’?”?(Cal.?Law?Revision?Com.?com.,?supra,???500,?at?p.?431?[Deering’s?Ann.?Evid.?Code,???500,?p.?215],?quoting?9?Wigmore,?Evidence?(3d?ed.?1940)???2486,?p.?275,?italics?added.)?These?bedrock?concerns-policy?and?fairness-support?placing?the?burden?on?a?plaintiff?to?prove?a?defendant’s?financial?condition.?The?very?nature?of?punitive?damages?points?to?this?conclusion.?Whatever?his?or?her?injury,?a?plaintiff?will?be?made?whole?by?the?award?of?compensatory?damages.?An?award?of?punitive?damages,?though?perhaps?justified?for?societal?reasons?of?deterrence,?is?a?boon?for?the?plaintiff.?”Such?damages?constitute?a?windfall?….”?(Rosener?v.?Sears,?Roebuck?&?Co.?(1980)?110?Cal.App.3d?740,?750?[168?Cal.Rptr.?237];?Electrical?Workers?v.?Foust?(1979)?442?U.S.?42,?50?[60?L.Ed.2d?698,?706,?99?S.Ct.?2121]?[also?referring?to?punitive?damages?as?”windfall?recoveries”].)?”[I]t?is?indeed?an?anomaly?to?find?that?in?any?case?more?than?full?compensation?may?be?awarded?him?[the?plaintiff].”?(Davis?v.?Hearst?(1911)?160?Cal.?143,?162?[116?P.?530].)?The?general?rule?has?long?been?that?”He?who?takes?the?benefit?must?bear?the?burden.”?(Civ.?Code,???3521.)?It?is?not?too?much?to?ask?of?a?plaintiff?seeking?such?a?windfall?to?require?that?he?or?she?introduce?evidence?that?will?allow?a?jury?and?a?reviewing?court?to?determine?whether?the?amount?of?the?award?is?appropriate?and,?in?particular,?whether?it?is?excessive?in?light?of?the?central?goal?of?deterrence.?As?explained?above,?evidence?of?the?defendant’s?financial?condition?is?crucial?to?that?determination.
The?potential?unfairness?of?imposing?the?burden?on?the?defendant?becomes?even?more?clear?when?considered?in?light?of?trial?practice?reality.?The?issue?is?not?merely?a?question?of?trial?strategy.?As?our?former?colleague?Justice?Peters?aptly?put?it,?”The?trial?of?a?law?suit?is?not?a?game?where?the?spoils?of?victory?go?to?the?clever?and?technical?regardless?of?the?merits,?but?a?method?devised?by?a?civilized?society?to?settle?peaceably?and?justly?disputes?between?litigants.?The?rules?of?the?contest?are?not?an?end?in?themselves.”?(Simon?v.?City?&?County?of?San?Francisco?(1947)?79?Cal.App.2d?590,?600?[180?P.2d?393].)?An?award?of?punitive?damages?can?be?a?matter?of?economic?life?or?death?for?a?defendant.?The?”game”?theory?of?litigation?is?particularly?inappropriate?when?the?public?interest?is?at?stake.
If?the?plaintiff?does?not?introduce?evidence?of?the?defendant’s?finances,?the?only?alternative?source?of?the?information?is?the?defendant.?It?is?inherently?prejudicial?to?require?a?defendant?to?introduce?evidence?of?personal?finances.?Doing?so?places?a?defendant?in?the?position?of?bidding?against?himself?or?herself.?A?defendant?in?that?position?is?forced?to?tell?the?jury?in?effect?that:?”My?conduct?doesn’t?warrant?punitive?damages.?But,?by?the?way,?if?you?disagree,?please?be?gentle,?I’m?worth?only?the?following?amount.”?Such?an?[54?Cal.3d?121]?approach?has?the?not?unexpected?effect?of?suggesting?to?the?jury?that?the?defendant?is?admitting?punitive?damages?should?be?assessed.?Put?colloquially,?the?jury?is?led?to?think,?”This?person?must?know?he?deserves?a?beating?or?else?he?would?not?be?pleading?poverty.”?Under?current?Civil?Code?section?3295,?subdivision?(d),?the?jury?is?asked?to?decide?at?the?same?time?whether?to?impose?punitive?damages?and,?if?so,?in?what?amount.?(See?also?BAJI?No.?14.72.2,?supra,?at?p.?66.)?Requiring?a?defendant?to?prove?his?or?her?own?financial?condition?may?improperly?taint?the?jury’s?decision?whether?to?impose?punitive?damages?in?the?first?instance.?The?defendant’s?only?alternative?is?to?remain?silent?as?to?personal?finances?and?run?the?risk?of?being?annihilated?financially.
It?is?simply?unfair?and?unnecessary?to?put?the?defendant?in?this?”damned?if?you?do,?damned?if?you?don’t”?position.?A?commonly?used?practice?guide?for?attorneys?(authored?in?part?by?former?Justice?Kaufman?of?this?court)?illustrates?the?problem.?”Practice?Pointer?for?Defense:?The?insurer?[defendant]?should?be?careful?about?presenting?’mitigating’?evidence?as?to?its?financial?condition.?The?jury?may?regard?it?as?a?tacit?admission?that?some?award?of?punitive?damages?is?appropriate.?Quibbles?as?to?its?finances?could?be?viewed?as?’just?one?more?instance?of?insurer?cover-up!’?”?(Kornblum,?Cal.?Practice?Guide:?Bad?Faith?(Rutter?1989)???11.236,?p.?11-66,?italics?in?original.)?We?need?not?blind?ourselves?to?this?reality?of?trial?dynamics?that?is?well?understood?by?the?bar?and?our?colleagues?on?the?trial?bench.
The?prejudice?in?this?case?was?exacerbated?because?it?was?tried?before?Civil?Code?section?3295?was?amended?to?provide?for?bifurcation.?Under?the?current?procedure,?the?jury?first?decides?whether?to?impose?liability?for?compensatory?damages?and?whether?the?defendant?acted?with?fraud,?oppression,?or?malice.?(Civ.?Code,???3295,?subd.?(d);?see?also?BAJI?No.?14.72.1?(1989?re-rev.)(7th?ed.?1991?pocket?pt.)?p.?64.)?Only?after?finding?such?misconduct,?is?the?jury?then?asked?to?decide?whether?to?impose?punitive?damages?and,?if?so,?in?what?amount.?As?explained?in?the?preceding?paragraph,?there?is?a?serious?risk?of?prejudice?to?the?defendant?under?this?scheme?if?the?defendant?is?required?to?prove?its?own?finances.?The?risk,?of?course,?was?greater?under?former?Civil?Code?section?3295?because?it?made?no?provision?for?bifurcation.?Under?plaintiff’s?view,?Dr.?Murakami?would?have?had?to?introduce?evidence?of?his?finances?even?before?the?jury?decided?whether?he?was?liable?for?compensatory?damages.?The?Association?for?California?Tort?Reform,?appearing?as?amicus?curiae?on?behalf?of?defendant,?well?states?the?point:?”According?to?plaintiff,?if?defendant?had?any?substantial?net?worth,?he?also?had?but?a?Hobson’s?choice?in?a?trial?where?liability?and?penalty?were?to?be?decided?in?the?same?hearing:?evidence?of?his?financial?condition?could?be?introduced?with?the?likely?result?that?it?would?inflame?the?passion?and?prejudice?of?the?jury?to?tip?their?judgment?in?favor?of?liability.”?[54?Cal.3d?122]?Putting?the?defendant?in?this?untenable?situation?is?analytically?similar?to?imposing?on?the?defendant?the?burden?of?contesting?liability?for?compensatory?damages?while?simultaneously?proving?the?amount?of?compensatory?damages?that?should?be?awarded.?That,?of?course,?is?not?the?law.?A?plaintiff?must?prove?the?amount?of?compensatory?damages?to?which?he?or?she?is?entitled.
Consideration?of?the?question?from?the?plaintiff’s?perspective?also?leads?to?the?conclusion?that?the?burden?is?properly?hers.?Unlike?the?defendant,?the?plaintiff?faces?no?risk.?As?one?practice?guide?for?attorneys?explains?in?plain?language,?”Plaintiff’s?counsel?has?everything?to?gain?and?nothing?to?lose?by?utilizing?the?rule?that?permits?(and?if?the?verdict?is?high)?compels?introduction?of?the?defendant’s?wealth.”?(Riley,?Proving?Punitive?Damages:?The?Complete?Handbook,?supra,???9.15,?pp.?6-7;?see?also?Kornblum,?Cal.?Practice?Guide:?Bad?Faith,?supra,???11.235,?p.?11-66?[explaining?benefit?to?plaintiff?of?introducing?the?evidence].)?Perhaps?a?plaintiff?might?want?to?keep?from?a?jury?the?evidence?of?a?defendant’s?financial?resources?if?they?were?meager?and?thus?might?lead?to?a?small?punitive?damages?award.?In?that?circumstance,?however,?the?plaintiff?would?be?deliberately?seeking?an?award?disproportionate?(or?at?least?unrelated)?to?the?defendant’s?ability?to?pay.?That?result,?of?course,?is?contrary?to?the?public?purpose?of?punitive?damages.
Moreover,?under?Civil?Code?section?3295,?subdivision?(c),?the?plaintiff?is?allowed,?on?a?proper?showing,?to?”subpoena?documents?or?witnesses?to?be?available?at?the?trial?for?the?purpose?of?establishing?the?profits?or?financial?condition”?of?the?defendant.?The?plaintiff?may?also?obtain?pretrial?discovery?of?that?information.?”Like?the?Colt?revolver?made?all?men?in?the?west?the?same?size,?discovery?procedures?reduce?the?advantage?the?giant?corporations?[or?any?other?defendant]?otherwise?have?over?the?individual?plaintiff?in?litigation,?and?if?the?goal?is?a?large?verdict,?such?discovery?procedures?should?not?be?used?sparingly.”?(Riley,?Proving?Punitive?Damages:?The?Complete?Handbook,?supra,???9.16,?at?p.?102.)?We?see?no?reason?why?it?is?even?slightly?unfair?to?require?a?plaintiff?to?use?the?procedures?available.
The?apparent?legislative?intent?underlying?the?punitive?damages?statutes?is?also?consonant?with?having?plaintiff?assume?this?responsibility.?At?the?time?this?case?was?tried?(July?1987),?Civil?Code?section?3295,?subdivision?(a)?provided?that?the?trial?court?could?grant?a?defendant?a?protective?order?requiring?the?plaintiff?to?prove?a?prima?facie?case?of?punitive?damages?liability?before?being?allowed?to?introduce?evidence?of?the?defendant’s?profits?or?financial?condition.?This?provision,?though?not?directly?on?point,?reflects?a?legislative?awareness?that?the?plaintiff?is?the?party?who?must?introduce?such?evidence.?By?setting?forth?the?procedure?for?the?plaintiff?to?do?so,?the?Legislature?acknowledged?that?the?orthodox?practice?had?long?been?[54?Cal.3d?123]?for?plaintiffs,?not?defendants,?to?prove?a?defendant’s?financial?condition.?Indeed,?the?Legislature’s?awareness?of?this?reality?is?reflected?in?the?1980?amendments?to?Civil?Code?section?3295?regarding?introduction?of?evidence?of?a?defendant’s?financial?condition.?The?Legislative?Counsel’s?Digest?to?Senate?Bill?No.?227?(1979-1980?Reg.?Sess.),?which?gave?rise?to?the?amendments,?stated,?”In?general,?the?application?of?this?provision?is?governed?by?case?law?which?generally?provides?that?the?plaintiff?has?the?burden?of?proof?….”?(Legis.?Counsel’s?Dig.,?Sen.?Bill?No.?227,?4?Stats.?1979?(Reg.?Sess.)?Summary?Dig.,?p.?227,?italics?added.)?It?seems?clear?enough?that,?to?the?extent?the?Legislature?gave?any?thought?to?the?burden?of?proof,?the?assumption?was?that?the?burden?always?had?belonged?to?plaintiffs?and?would?remain?theirs.
Subsequent?amendments?to?Civil?Code?section?3295,?though?not?applicable?to?this?case,?reinforce?the?conclusion?that?the?Legislature?was?aware?of?the?traditional?allocation?of?burden?of?proof.?Subdivision?(d)?was?added?to?section?3295?effective?January?1,?1988.?It?states,?”The?court?shall,?on?application?of?any?defendant,?preclude?the?admission?of?evidence?of?that?defendant’s?profits?or?financial?condition?until?after?the?trier?of?fact?returns?a?verdict?for?plaintiff?awarding?actual?damages?and?finds?that?a?defendant?is?guilty?of?malice,?oppression,?or?fraud?in?accordance?with?Section?3294.”?(Stats.?1987,?ch.?1498,???6,?pp.?5781-5782.)?On?its?face,?this?amendment?does?not?purport?to?address?the?precise?question?before?us.?The?provision,?however,?does?clearly?illustrate?the?Legislature’s?awareness?that?plaintiffs,?rather?than?defendants,?seek?to?introduce?financial?evidence.?More?important,?Civil?Code?section?3295?offers?no?support,?not?even?a?suggestion,?for?the?view?that?defendants?bear?the?burden?of?introducing?such?evidence.?If?defendants?had?that?burden,?the?provisions?regulating?plaintiffs’?introduction?of?the?evidence?would?be?meaningless.?[9]?We?do?not?presume?that?the?Legislature?engages?in?idle?acts.?(Shoemaker?v.?Myers?(1990)?52?Cal.3d?1,?22?[276?Cal.Rptr.?303,?801?P.2d?1054].)
[2e]?,?[8b]?In?summary,?Evidence?Code?section?500?and?consideration?of?fundamental?fairness?lead?to?the?conclusion?that?a?plaintiff?who?seeks?to?recover?punitive?damages?must?bear?the?burden?of?establishing?the?defendant’s?financial?condition.?A?defendant?should?not?be?required?to?justify?the?amount?of?the?award?he?or?she?is?seeking?to?avoid.Disposition
The?judgment?of?the?Court?of?Appeal?is?reversed?to?the?extent?that?it?affirmed?the?award?of?punitive?damages.?The?Court?of?Appeal?is?directed?to?[54?Cal.3d?124]?remand?this?action?to?the?trial?court?for?further?proceedings?in?accord?with?this?opinion.?Defendant?is?awarded?his?costs?on?appeal.?Lucas,?C.?J.,?Panelli,?J.,?and?Arabian,?J.,?concurred.
KENNARD,?J.,
Concurring.
I?concur?in?the?judgment.?I?agree?that?evidence?of?a?defendant’s?financial?condition?is?a?prerequisite?to?an?award?of?punitive?damages,?and?that?the?burden?is?on?the?plaintiff?to?introduce?such?evidence.
In?my?view,?however,?we?should?not?address?any?constitutional?questions?in?this?case.?I?write?separately,?therefore,?to?emphasize?that?I?do?not?join?in?the?majority’s?unnecessary?discussion?of?the?United?States?Supreme?Court’s?decision?in?Pacific?Mut.?Life?Ins.?Co.?v.?Haslip?(1991)?499?U.S.?___?[113?L.Ed.2d?1,?111?S.Ct.?1032].
California?courts?have?long?adhered?to?the?policy?that?constitutional?questions?ordinarily?should?be?reached?only?if?the?matter?at?hand?cannot?otherwise?reasonably?be?resolved.?(Estate?of?Johnson?(1903)?139?Cal.?532,?534?[73?P.?424];?accord,?e.g.,?People?v.?Stankewitz?(1990)?51?Cal.3d?72,?90?[270?Cal.Rptr.?817,?793?P.2d?23].)?Because?the?power?of?the?courts?to?declare?a?law?or?practice?unconstitutional?is?an?”ultimate?power,”?resort?to?decision?on?constitutional?grounds?when?other?bases?for?decision?are?present?generally?should?be?avoided?in?the?exercise?of?appropriate?judicial?self-?restraint.?(E.g.,?Syrek?v.?California?Unemployment?Ins.?Appeals?Bd.?(1960)?54?Cal.2d?519,?526?[7?Cal.Rptr.?97,?354?P.2d?625].)?This?prudent?judicial?policy?also?counsels?against?judicial?explications?of?constitutional?issues?that?do?not?amount?to?separate?bases?for?decision.
The?majority’s?discussion?of?the?nonconstitutional?grounds?for?holding?that?a?plaintiff?must?introduce?evidence?of?a?defendant’s?financial?condition?as?a?prerequisite?to?an?award?of?punitive?damages?adequately?resolves?the?issue?here.?Any?analysis?by?this?court?of?the?effect?of?Pacific?Mut.?Life?Ins.?Co.?v.?Haslip,?supra,?499?U.S.?___,?on?California?law?should?await?a?case?in?which?that?decision’s?constitutional?ramifications?for?California?law?are?plainly?at?issue,?and?have?been?raised,?briefed?and?determined?in?the?trial?and?appellate?courts.
MOSK,?J.
I?dissent.
No?doubt?there?are?those?whose?high?hopes?of?ridding?the?world?of?what?they?apparently?perceive?to?be?a?social?menace?were?dashed?when?the?Supreme?Court?recently?upheld?the?constitutionality?of?punitive?damages?in?Pacific?Mut.?Life?Ins.?Co.?v.?Haslip?(1991)?499?U.S.?___?[113?L.Ed.2d?1,?111?S.Ct.?1032]?(hereafter?Haslip).?However,?the?majority’s?alternate?route?to?[54?Cal.3d?125]?impede?a?plaintiff’s?access?to?such?damages?ignores?California’s?present?system?for?ordering?and?reviewing?punitive?damage?awards.?A?brief?review?of?our?system?may?be?helpful.
Punitive?damage?awards?have?been?statutorily?authorized?in?California?since?1872.?At?the?time?of?trial,?Civil?Code?section?3294,?subdivision?(a),?provided:?”In?an?action?for?the?breach?of?an?obligation?not?arising?from?contract,?where?the?defendant?has?been?guilty?of?oppression,?fraud,?or?malice,?the?plaintiff,?in?addition?to?the?actual?damages,?may?recover?damages?for?the?sake?of?example?and?by?way?of?punishing?the?defendant.”fn.?1?Section?3295?provided,?”(a)?The?court?may,?for?good?cause,?grant?any?defendant?a?protective?order?requiring?the?plaintiff?to?produce?evidence?of?a?prima?facie?case?of?liability?for?damages?pursuant?to?Section?3294,?prior?to?the?introduction?of?evidence?of:?[?]?(1)?The?profits?the?defendant?has?gained?by?virtue?of?the?wrongful?course?of?conduct?of?the?nature?and?type?shown?by?the?evidence.?[?]?(2)?The?financial?condition?of?the?defendant.?[?]?…?[?]?(c)?No?pretrial?discovery?by?the?plaintiff?shall?be?permitted?with?respect?to?the?evidence?referred?to?in?paragraphs?(1)?and?(2)?of?subdivision?(a)?unless?the?court?enters?an?order?permitting?such?discovery?pursuant?to?this?subdivision.?…?Upon?motion?by?the?plaintiff?supported?by?appropriate?affidavits?and?after?a?hearing,?if?the?court?deems?a?hearing?to?be?necessary,?the?court?may?at?any?time?enter?an?order?permitting?the?discovery?otherwise?prohibited?by?this?subdivision?if?the?court?finds,?on?the?basis?of?the?supporting?and?opposing?affidavits?presented,?that?the?plaintiff?has?established?that?there?is?a?substantial?probability?that?the?plaintiff?will?prevail?on?the?claim?pursuant?to?Section?3294.?…”
The?Legislative?Counsel’s?Digest?to?Senate?Bill?No.?227?(1979-1980?Reg.?Sess.),?adding?section?3295,?stated?that?the?application?of?section?3294?was?at?that?time?governed?by?case?law?providing,?”the?plaintiff?has?the?burden?of?proof,?that?proof?is?by?a?preponderance?of?the?evidence,?and?permits?the?consideration?of?various?factors?in?determining?the?amount?of?the?award.”?(Italics?added.)?It?appears?from?this?statement?that?the?Legislature?recognized?that?a?plaintiff?was?permitted,?but?not?compelled,?to?introduce?evidence?of?the?defendant’s?profits?and?financial?condition,?and?attempted?to?protect?defendants?by?limiting?the?plaintiff’s?pretrial?discovery?of?such?information.?(See?Rawnsley?v.?Superior?Court?(1986)?183?Cal.App.3d?86,?91?[227?Cal.Rptr.?806]?[“These?safeguards?were?designed?to?protect?the?defendant?from?a?specific?type?of?discovery?abuse:?a?situation?in?which?the?plaintiff?puts?forth?an?easily?alleged?cause?of?action?for?punitive?damages,?thus?requiring?a?[54?Cal.3d?126]?defendant?to?expend?the?time?and?money?’necessary?to?the?compilation?of?a?complex?mass?of?information?unrelated?to?the?substantive?claim?involved?in?the?lawsuit?and?relevant?only?to?the?subject?matter?of?a?measure?of?damages?which?may?never?be?awarded.’?”].)
In?California,?whether?punitive?damages?should?be?awarded?and?the?amount?of?such?an?award?are?issues?left?to?the?jury’s?discretion.?Under?our?statutes?the?plaintiff?introduces?evidence?proving?that?the?defendant?is?guilty?of?oppression,?fraud,?or?malice.?The?plaintiff?may?also?introduce?evidence?bearing?on?the?amount?of?the?award.?The?jury?is?then?instructed?that?it?may?award?punitive?damages?against?the?defendant?”for?the?sake?of?example?and?by?way?of?punishment”?if?”you?find?by?a?preponderance?of?the?evidence?that?said?defendant?was?guilty?of?oppression,?fraud?or?malice?in?the?conduct?on?which?you?base?your?finding?of?liability.”?(BAJI?No.?14.71?(6th?ed.?1984?pocket?pt.).)?The?jury?is?also?instructed?that?the?amount?of?the?award?is?left?to?its?sound?discretion,?exercised?without?passion?or?prejudice,?and?in?fixing?that?amount?it?is?to?consider?the?following:?”(1)?The?reprehensibility?of?the?conduct?of?the?defendant;?(2)?The?amount?of?punitive?damages?which?will?have?a?deterrent?effect?on?the?defendant?in?the?light?of?defendant’s?financial?condition;?and?(3)?That?the?punitive?damages?must?bear?a?reasonable?relation?to?the?actual?damages.”?(Ibid.)
A?reviewing?court?will?reverse?an?award?of?punitive?damages?as?excessive?only?if?”?’the?entire?record,?when?viewed?most?favorably?to?the?judgment,?indicates?[it?was]?rendered?as?the?result?of?passion?and?prejudice.’?”?(Neal?v.?Farmers?Ins.?Exchange?(1978)?21?Cal.3d?910,?927?[148?Cal.Rptr.?389,?582?P.2d?980]?[hereafter?Neal].)?Three?factors,?each?grounded?in?the?purpose?and?function?of?punitive?damages,?guide?this?determination:?”One?factor?is?the?particular?nature?of?the?defendant’s?acts?in?light?of?the?whole?record;?clearly,?different?acts?may?be?of?varying?degrees?of?reprehensibility,?and?the?more?reprehensible?the?act,?the?greater?the?appropriate?punishment,?assuming?all?other?factors?are?equal.?[Citations.]?Another?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.?[Citation.]?Also?to?be?considered?is?the?wealth?of?the?particular?defendant;?obviously,?the?function?of?deterrence?…?will?not?be?served?if?the?wealth?of?the?defendant?allows?him?to?absorb?the?award?with?little?or?no?discomfort.?[Citations.]?By?the?same?token,?of?course,?the?function?of?punitive?damages?is?not?served?by?an?award?which,?in?light?of?the?defendant’s?wealth?and?the?gravity?of?the?particular?act,?exceeds?the?level?necessary?to?properly?punish?and?deter.”?(Id.?at?p.?928.)
Clearly?our?system?permits?but?does?not?compel?the?plaintiff?to?introduce?evidence?of?the?defendant’s?financial?condition?to?sustain?a?punitive?damages?[54?Cal.3d?127]?award.?This?was?the?Legislature’s?choice.?The?majority?focus?on?the?effectiveness?of?the?appellate?review?process,?but?ignore?the?fact?that?punitive?damages?issues?must?be?decided?in?the?first?instance?by?the?jury?and?its?award?is?presumed?correct.?I?remain?unconvinced?of?the?need?to?reform?this?system?by?judicial?fiat.
First,?I?disagree?at?the?outset?with?the?majority’s?characterization?of?our?decision?in?Neal.?There?we?concluded?that?an?award?of?punitive?damages?was?not?excessive?as?a?matter?of?law.?In?so?doing,?we?recognized?and?took?guidance?from?”certain?established?principles.”?(21?Cal.3d?at?p.?928.)?Contrary?to?the?majority’s?reading?of?Neal,?we?did?not?set?forth?”criteria”?that?must?be?examined?to?determine?whether?punitive?damages?should?be?awarded;?instead,?we?simply?recognized?factors?to?guide?an?appellate’s?court?determination?of?whether?the?jury’s?award?was?a?result?of?passion?and?prejudice.?The?distinction?is?clear.?To?determine?(1)?whether?the?jury?should?have?awarded?punitive?damages,?the?reviewing?court?inquires?whether?there?was?sufficient?evidence?to?show?that?the?defendant?acted?with?malice,?oppression,?or?fraud.?(See?id.?at?pp.?922-923.)?But?to?determine?(2)?whether?the?jury’s?award?of?punitive?damages?was?excessive,?the?reviewing?court?inquires?whether?the?award?was?the?result?of?passion?and?prejudice.?Although?Neal?declares?that?evidence?of?the?defendant’s?financial?condition?may?be?relevant?to?the?latter?determination,?it?does?not?declare?either?expressly?or?impliedly?that?it?is?relevant?to?the?former,?nor?does?the?opinion?place?the?burden?on?the?plaintiff.?Indeed,?the?Neal?court?upheld?substantial?punitive?damages.
Nor?do?the?other?cases?cited?by?the?majority?suggest?that?evidence?of?the?defendant’s?financial?condition?must?be?introduced?to?sustain?an?award?of?punitive?damages.?The?dispositive?issue?in?those?cases?was?not?whether?evidence?of?the?defendant’s?financial?condition?was?essential?and?by?whom?it?had?to?be?offered,?but?rather?whether?the?award?was?objectively?excessive.
The?majority’s?reliance?on?a?handful?of?cases?that?decide?to?the?contrary?fails?to?persuade.?Rather,?I?agree?with?the?more?recent?decision,?Fenlon?v.?Brock?(1989)?216?Cal.App.3d?1174?[265?Cal.Rptr.?324],?in?which?the?court?expressly?rejected?Dumas?v.?Stocker?(1989)?213?Cal.App.3d?1262?[262?Cal.Rptr.?311],?on?a?number?of?grounds.?(Fenlon?v.?Brock,?supra,?216?Cal.App.3d?at?pp.?1180-1182.)?Included?in?these?grounds?was?the?court’s?apt?observation?that?to?require?the?plaintiff?to?introduce?evidence?of?the?defendant’s?financial?condition?to?preserve?meaningful?appellate?review?for?the?defendant?is?unprecedented:?”It?is?not?the?duty?of?a?litigant?to?create?a?record?for?an?opponent’s?potential?appeal.”?(Id.?at?p.?1182.)?Curiously,?that?is?precisely?what?the?majority?order?in?the?instant?case.?[54?Cal.3d?128]
Moreover,?I?cannot?so?easily?dismiss?the?multitude?of?California?cases?reaching?a?conclusion?contrary?to?Dumas.?The?majority?attempt?to?do?so?by?criticizing?the?seminal?decision?on?which?these?cases?are?based,?Hanley?v.?Lund?(1963)?218?Cal.App.2d?633?[32?Cal.Rptr.?733].?Their?criticism,?however,?proves?hollow.
The?majority?first?state?that?the?Hanley?court’s?consideration?of?the?issue?was?minimal.?Yet?the?court?gave?the?issue?the?limited?attention?it?deserved?and?failed?to?cite?contrary?authority?only?because?no?contrary?authority?apparently?existed?at?the?time.?(See?Hanley?v.?Lund,?supra,?218?Cal.App.2d?at?p.?646?[“Since?no?authority,?anywhere,?expressly?directs?that?the?plaintiff?must?introduce?evidence?of?defendant’s?wealth?when?seeking?exemplary?damages,?we?find?no?merit?in?defendant’s?contention?in?this?regard.”].)?The?majority?also?try?to?distinguish?the?case?on?the?ground?of?its?”unique?rationale,”?i.e.,?that?the?parties?had?inferentially?stipulated?away?the?issue?of?the?defendant’s?net?worth.?However,?our?case?is?in?precisely?the?same?posture:?defendant?did?not?raise?the?issue?of?the?excessiveness?of?the?award?in?light?of?his?financial?condition?either?in?the?trial?or?the?appellate?court.fn.?2?Finally,?the?majority?imply?that?Neal?in?effect?overruled?Hanley.?As?explained?above,?Neal?did?no?such?thing.
Contrary?to?the?majority’s?further?implication,?the?vast?majority?of?our?sister?jurisdictions?are?in?accord?with?Hanley?and?its?progeny.?(See,?e.g.,?Smith?v.?Lightning?Bolt?Productions,?Inc.?(2d?Cir.?1988)?861?F.2d?363,?373;?Tolliver?v.?Amici?(7th?Cir.?1986)?800?F.2d?149,?151;?Anderson?v.?Latham?Trucking?Co.?(Tenn.?1987)?728?S.W.2d?752,?754;?Fahrenberg?v.?Tengel?(1980)?96?Wis.2d?211?[291?N.W.2d?516,?527];?Rinaldi?v.?Aaron?(Fla.?1975)?314?So.2d?762,?765?[79?A.L.R.3d?1132];?Poeta?v.?Sheridan?Point?Shopping?Plaza?(1990)?195?Ill.App.3d?852?[552?N.E.2d?1248,?1251];?Elam?v.?Alcolac,?Inc.?(Mo.Ct.App.?1988)?765?S.W.2d?42,?223,?fn.?102.)?There?is?no?persuasive?reason?for?California?to?depart?from?this?impressive?company.
The?majority?engage?in?creative?lawyering?when?they?attempt?to?employ?the?recent?United?States?Supreme?Court?opinion?upholding?punitive?damages?in?Haslip?to?support?their?position;?it?lacks?all?relevance.?First,?the?dispositive?issue?in?that?case?was?the?constitutionality?of?Alabama’s?system?for?the?award?and?review?of?punitive?damages.?That?scheme?significantly?differs?from?the?procedure?in?California.?Although?the?purpose?of?punitive?damages-to?punish?and?deter-is?the?same,?in?Alabama?the?jury?is?not?allowed?to?[54?Cal.3d?129]?consider?the?defendant’s?financial?condition;?rather,?the?information?is?introduced?at?a?postjudgment?”critique”?of?the?award.?(Green?Oil?Co.?v.?Hornsby?(Ala.?1989)?539?So.2d?218,?222.)?Implicit?in?the?Alabama?system?is?a?recognition?that?the?jury’s?knowledge?of?the?defendant’s?financial?condition?is?not?a?prerequisite?to?a?valid?award?of?punitive?damages,?i.e,?an?award?that?is?appropriate?to?punish?and?deter.
Second,?the?defendant?in?Haslip?argued?that?its?financial?condition?should?not?be?considered?even?on?postjudgment?review.?(See?Arguments?Before?the?Court?(Oct.?30,?1990)?59?U.S.L.?Week?3315,?3316?[defendant?argues?that?to?consider?its?wealth?”only?insures?that?multi-million?dollar?awards?will?happen”].)?The?Supreme?Court?appeared?to?be?sympathetic?to?this?argument:?”While?punitive?damages?in?Alabama?may?embrace?such?factors?as?the?heinousness?of?the?civil?wrong,?its?effect?upon?the?victim,?the?likelihood?of?its?recurrence,?and?the?extent?of?defendant’s?wrongful?gain,?the?fact?finder?must?be?guided?by?more?than?the?defendant’s?net?worth.?Alabama?plaintiffs?do?not?enjoy?a?windfall?because?they?have?the?good?fortune?to?have?a?defendant?with?a?deep?pocket.”?(Haslip,?supra,?499?U.S.?at?p.?___?[113?L.Ed.2d?at?p.?22,?111?S.Ct.?at?p.?1045,?italics?added.)?This?statement?implies?the?court’s?belief?that?the?issue?of?the?defendant’s?financial?condition?should?be?deemphasized.
In?summary,?neither?California’s?statutory?scheme?involving?punitive?damages,?nor?case?law,?nor?the?Supreme?Court’s?opinion?in?Haslip?supports?the?majority’s?position?that?the?introduction?of?evidence?of?the?defendant’s?financial?condition?is?necessary?to?sustain?an?award?of?punitive?damages.?It?follows?that?neither?party?bears?a?burden?to?introduce?this?evidence.?I?will,?nevertheless,?briefly?state?my?objections?to?placing?the?burden?of?proof?on?the?plaintiff.
First,?the?concept?of?”burden?of?proof”?is?not?relevant?in?considering?the?relationship?between?a?defendant’s?financial?condition?and?the?amount?of?the?punitive?damages?award.?The?governing?statutes?and?case?law?make?clear?that?a?plaintiff?has?the?burden?of?proof?only?on?the?elements?of?the?plaintiff’s?own?cause?of?action;?thus?to?support?an?award?of?punitive?damages?the?plaintiff?need?prove?only?that?the?defendant?acted?with?oppression,?fraud,?or?malice.?(??3294,?subd.?(a).)
The?majority’s?arguments?that?the?legislative?history?and?wording?support?their?position?are?disingenuous.?It?is?first?claimed?that?section?3295,?subdivision?(a),?reflects?a?legislative?awareness?that?the?plaintiff?is?the?party?who?must?introduce?evidence?of?the?defendant’s?financial?condition.?As?stated?previously,?however,?the?cited?provision?is?more?correctly?interpreted?as?an?effort?to?protect?defendants?by?limiting?the?plaintiff’s?pretrial?discovery?of?[54?Cal.3d?130]?such?information.?In?addition,?the?majority?quote?the?Legislative?Counsel’s?Digest?statement?that?”the?plaintiff?has?the?burden?of?proof”?completely?out?of?its?context.?The?digest?in?fact?states?that?the?application?of?section?3294?was?at?the?time?governed?by?case?law?providing?that?”the?plaintiff?has?the?burden?of?proof,?that?proof?is?by?a?preponderance?of?the?evidence,?and?permits?the?consideration?of?various?factors?in?determining?the?amount?of?the?award.”?The?Legislature?was?obviously?referring?to?the?plaintiff’s?burden?of?proving?oppression,?fraud?or?malice,?rather?than?any?burden?of?proving?the?defendant’s?financial?condition.
As?a?last?resort,?the?majority?assert?that?”fundamental?fairness”?requires?the?plaintiff?to?introduce?evidence?of?the?defendant’s?financial?condition.?In?placing?this?burden?on?the?plaintiff,?presumably?the?majority?believe?they?are?being?fundamentally?fair?to?defendants.?Indeed,?in?their?opinion?they?rely?on?a?defense-oriented?practice?guide?(maj.?opn.,?ante,?at?p.?121).
But?is?it?fundamentally?fair?not?merely?to?permit,?but?actually?to?compel,?the?plaintiff?to?probe?into?and?to?expose?to?the?world?the?finances?of?the?defendant:?bank?accounts?and?their?balance,?loans,?real?property?and?its?value,?stocks,?bonds?and?other?investments,?and?any?other?assets?the?defendant?has?or?anticipates??If?this?requirement,?this?compulsory?invasion?of?privacy,?is?being?fundamentally?fair?to?defendants,?one?wonders?what?the?majority?would?consider?to?be?unfair.
To?compel?the?plaintiff?to?introduce?evidence?of?the?financial?condition?of?the?defendant?would?surely?result?in?increased?pretrial?discovery?of?the?defendant’s?finances,?with?all?its?attendant?burdens?on?the?defendant.?(See?Rawnsley?v.?Superior?Court,?supra,?183?Cal.App.3d?86,?91?[section?3295?was?”designed?to?protect?the?defendant?from?a?specific?type?of?discovery?abuse:?a?situation?in?which?the?plaintiff?puts?forth?an?easily?alleged?cause?of?action?for?punitive?damages,?thus?requiring?a?defendant?to?expend?the?time?and?money?’necessary?to?the?compilation?of?a?complex?mass?of?information?unrelated?to?the?substantive?claim?involved?in?the?lawsuit?and?relevant?only?to?the?subject?matter?of?a?measure?of?damages?which?may?never?be?awarded.’?”].)
Moreover,?to?require?the?plaintiff?to?introduce?evidence?of?the?defendant’s?financial?condition?would?increase?the?danger?that?the?jury?will?focus?on?this?information?rather?than?on?the?issue?of?the?defendant’s?liability?for?oppression,?fraud?or?malice.?A?wealthy?defendant?would?likely?be?prejudiced?as?a?result.?(See?Farmy?v.?College?Housing,?Inc.?(1975)?48?Cal.App.3d?166?[121?Cal.Rptr.?658]?[judgment?awarding?compensatory?and?punitive?damages?reversed?because?evidence?of?defendant’s?wealth?introduced?by?plaintiff?prejudiced?jury?on?compensatory?damages?issue];?West?v.?Johnson?&?Johnson?[54?Cal.3d?131]?Products,?Inc.?(1985)?174?Cal.App.3d?831?[220?Cal.Rptr.?437,?59?A.L.R.4th?1]?[defendant?challenged?punitive?damages?award?on?ground?that?evidence?of?parent?corporation’s?financial?status?was?admitted].)
As?the?law?stood?until?today,?a?defendant?of?substantial?means?could?sit?back?and?hope?that?the?jury,?even?though?it?finds?him?guilty?of?oppression,?fraud?or?malice,?will?not?emphasize?the?extent?of?his?resources.?On?the?other?hand,?a?defendant?of?lesser?means?could?safely?listen?to?the?testimony,?assess?how?well?the?plaintiff’s?case?was?proceeding,?and?make?a?reasoned?determination?whether?to?introduce?evidence?of?his?modest?financial?circumstances?in?order?to?minimize?the?amount?of?any?potential?award.?Now,?however,?this?court?gives?a?defendant?no?choice?in?the?matter:?the?plaintiff?is?required?to?make?the?defendant’s?wealth?a?major?issue?in?the?trial.
Thus,?to?spare?defendant?in?this?case?a?punitive?damages?award?that?was?deemed?appropriate?by?a?trial?jury,?a?trial?judge?and?a?Court?of?Appeal,?this?court?now?indulges?in?judicial?legislating?that?will?inevitably?inure?to?the?detriment?of?countless?future?defendants.
I?would?affirm?the?judgment?of?the?Court?of?Appeal.
Stone?(Steven?J.),?J.,fn.?*?concurred.
FN?*.?Presiding?Justice,?Court?of?Appeal,?Second?Appellate?District,?Division?Six,?assigned?by?the?Chairperson?of?the?Judicial?Council.
FN?1.?By?acknowledging?the?commonly?accepted?purpose?of?punitive?damages,?we?express?no?view?as?to?the?efficacy?of?punitive?damages?in?deterring?misconduct.?To?our?knowledge,?no?empirical?data?exists?on?that?question.?(1?Ghiardi,?Punitive?Damages?Law?&?Practice?(1985)???2.06,?p.?14.)?There?is,?however,?a?continuing?debate?on?the?issue.?(Id.,????2.07-2.13,?pp.?15-29.)
FN?2.?The?selective?approach?to?the?factors?in?Neal,?supra,?21?Cal.3d?910,?is?troublesome?in?general.?If?the?defendant’s?financial?condition?were?dispensable,?so?would?be?the?other?two?factors?stated?in?Neal.?Under?the?selective?approach,?a?reviewing?court?could?refuse?to?consider?whether?a?punitive?damages?award?has?any?rational?relationship?to?either?the?nature?of?the?defendant’s?misconduct?or?the?amount?of?compensatory?damages.?Even?if?the?misconduct?were?relatively?minor?(in?light?of?the?types?of?misconduct?that?will?support?punitive?damages)?and?the?compensatory?damages?were?nominal,?the?reviewing?court?could?uphold?a?multimillion?dollar?award?solely?because?the?defendant?had?enough?resources?to?pay?the?award.?Such?result?would?stand?Neal?on?its?head.
FN?3.?The?absence?of?financial?evidence?would?lead?to?an?even?more?egregious?result?in?the?common?situation?in?which?a?punitive?damages?claim?is?asserted?against?multiple?defendants.?Assume?a?simple?case?in?which?two?defendants?are?found?jointly?and?severally?liable?for?beating?a?plaintiff.?As?to?each?of?them,?the?reprehensibility?of?the?misconduct?and?the?amount?of?the?plaintiff’s?compensatory?damages?will?be?the?same?or?similar.?Under?plaintiff’s?view,?the?jury?could?properly?impose?equal?punitive?damages?awards?against?each?defendant,?even?if?they?had?widely?differing?abilities?to?pay,?i.e.,?one?could?pay?the?award?with?little?discomfort,?but?the?other?would?be?destroyed.?A?reviewing?court,?however,?would?be?unable?to?differentiate?between?them.?Such?a?result?would?have?little?rationality?or?fairness.?Nor?would?it?further?the?public?interest?in?punitive?damages?awards?that?are?sufficient?to?deter?misconduct?without?being?excessive.
FN?4.?”Contenement”?referred?to?a?freehold?or,?in?a?broader?sense,?property?of?any?kind?necessary?for?a?freeman?to?maintain?his?position.?(3?Oxford?English?Dict.?(2d?ed.?1989)?p.?815,?col.?2.)?A?”villein”?was?a?peasant?occupier?of?land?who?was?subject?to?a?lord.?(19?Oxford?English?Dict.,?supra,?at?p.?637,?col.?2;?see?also?1?Pollock?&?Maitland,?History?of?English?Law?(2d?ed.?1909)?ch.?1,???12,?pp.?356-383.)?The?villein’s?”wainnage,”?also?referred?to?as?”gainage,”?signified?his?necessary?implements?of?cultivation?and?husbandry.?(6?Oxford?English?Dict.,?supra,?at?p.?314,?col.?1.)
FN?5.?Plaintiff?disputes?whether?defendant?properly?preserved?his?argument?on?this?point.?We?have,?as?a?practical?matter,?decided?this?question?in?defendant’s?favor?by?granting?review?solely?on?this?issue.?Moreover,?a?reviewing?court?has?discretion?to?decide?such?an?issue?if?it?presents?a?pure?question?of?law?arising?on?undisputed?facts,?particularly?when?the?issue?is?a?matter?of?important?public?policy.?(Sea?&?Sage?Audubon?Society,?Inc.?v.?Planning?Com.?(1983)?34?Cal.3d?412,?417?[194?Cal.Rptr.?357,?668?P.2d?664].)?Most?important,?as?we?have?explained?above,?the?primary?interest?that?must?be?protected?is?the?public?interest?in?punitive?damage?awards?in?appropriate?amounts.?We?cannot?allow?the?public?interest?to?be?thwarted?by?a?defendant’s?oversight?or?trial?tactics.
FN?6.?This?result?seems?to?have?been?implicitly?approved?by?the?drafters?of?the?current?California?Jury?Instructions,?Civil.?The?Comment?to?the?punitive?damages?instruction?notes?the?two?conflicting?lines?of?Court?of?Appeal?decisions.?(BAJI?No.?14.72.2?(1989?re-rev.)(7th?ed.?1991?pocket?pt.)?com.,?p.?67.)?The?instruction?itself,?however,?continues?to?state?that?the?jury?must?consider?evidence?of?the?defendant’s?financial?condition.?(BAJI?No.?14.72.2,?supra,?at?p.?66.)
FN?7.?Various?measures?of?a?defendant’s?ability?to?pay?a?punitive?damages?award?have?been?suggested.?Defendant?in?this?case?contends?the?best?measure?of?his?ability?to?pay?is?his?net?worth.?The?Association?for?California?Tort?Reform,?appearing?as?amicus?curiae?on?behalf?of?defendant,?advocates?the?profitability?of?the?defendant’s?misconduct?as?the?proper?measure.?We?decline?at?present,?however,?to?prescribe?any?rigid?standard?for?measuring?a?defendant’s?ability?to?pay.?No?financial?evidence?of?any?kind?was?introduced,?and?the?issue?has?not?been?fully?developed?by?the?parties.?We?cannot?conclude?on?the?record?before?us?that?any?particular?measure?of?ability?to?pay?is?superior?to?all?others?or?that?a?single?standard?is?appropriate?in?all?cases.
FN?8.?Alabama’s?punitive?damages?law?differs?from?California’s?in?a?procedural?respect.?An?Alabama?jury?is?not?allowed?to?consider?the?financial?position?of?the?defendant.?(Green?Oil?Co.?v.?Hornsby,?supra,?539?So.2d?218,?222.)?This?difference?does?not?support?the?view?that?evidence?of?a?defendant’s?financial?condition?is?unnecessary.?Although?the?evidence?is?withheld?from?an?Alabama?jury,?it?is?deemed?”essential?to?a?post-judgment?critique”?by?the?trial?and?appellate?courts.?(Ibid.)?Shortly?after?the?high?court?decided?Haslip,?supra,?499?U.S.?___,?the?Alabama?Supreme?court?reiterated?that,?”A?trial?judge,?in?reviewing?a?punitive?damages?award?by?a?jury,?must?likewise?consider?the?effect?of?the?verdict?on?the?defendant’s?financial?condition?….”?(Fuller?v.?Preferred?Risk?Life?Ins.?Co.?(Ala.?1991)?577?So.2d?878,?884,?italics?added.)?Alabama?law?is?therefore?consistent?with?our?decision?that?evidence?of?a?defendant’s?financial?condition?is?essential.
Other?states?also?require?evidence?of?a?defendant’s?financial?condition?to?sustain?a?punitive?damages?award.?(Adel?v.?Parkhurst,?supra,?681?P.2d?886,?892;?Nelson?v.?Jacobsen?(Utah?1983)?669?P.2d?1207,?1219;?McDonough?v.?Jorda?(1986)?214?N.J.?Super.?338?[519?A.2d?874,?879];?see?also?Bankers?Life?&?Casualty?Company?v.?Kirtley?(8th?Cir.?1962)?307?F.2d?418,?425?[applying?Iowa?law?and?reversing?award?because?there?was?”no?reliable?information”?as?to?the?defendant’s?finances].)
Some?states?have?adopted?plaintiff’s?view.?(See,?e.g.,?Folks?v.?Kansas?Power?and?Light?Co.?(1988)?243?Kan.?57?[755?P.?2d?1319,?1334];?Anderson?v.?Latham?Trucking?Co.?(Tenn.?1987)?728?S.W.2d?752,?754.)?We?are?not?persuaded.?Those?decisions?show?nothing?more?than?the?same?split?of?authority?among?states?that?has?arisen?in?our?Courts?of?Appeal.?Moreover,?some?of?those?decisions?shed?little?light?on?the?issue?because?their?discussion?was?either?dictum?(Anderson?v.?Latham?Trucking?Co.,?supra,?728?S.W.2d?752,?754),?or?minimal?with?no?consideration?of?public?policy?or?fairness.?(Ibid.;?Rinaldi?v.?Aaron?(Fla.?1975)?314?So.2d?762,?763;?Asphalt?Engineers,?Inc.?v.?Galusha?(1989)?160?Ariz.?134?[770?P.?2d?1180,?1184]?[one-?sentence?discussion?of?the?issue].)?Most?important,?none?of?those?cases?were?decided?in?light?of?the?clear?requirement?for?meaningful?review?set?forth?in?Haslip,?supra,?499?U.S.?___.
FN?9.?Although?the?high?court?upheld?Alabama’s?punitive?damages?system?in?Haslip,?supra,?499?U.S.?___,?the?court?expressed?concern?with?less?detailed?state?standards.?Referring?to?the?Alabama?standards,?the?court?stated,?”This,?we?feel,?distinguishes?Alabama’s?system?from?the?Vermont?and?Mississippi?schemes?about?which?Justices?expressed?concern?in?Browning-Ferris?Industries?of?Vermont,?Inc.?v.?Kelco?Disposal,?Inc.,?492?U.S.?257,?109?S.Ct.?2909,?106?L.Ed.2d?219?(1989),?and?in?Bankers?Life?&?Casualty?Co.?v.?Crenshaw,?486?U.S.?71,?108?S.Ct.?1645,?100?L.Ed.2d?62?(1988).?In?those?respective?schemes,?an?amount?awarded?would?be?set?aside?or?modified?only?if?it?was?’manifestly?and?grossly?excessive,’?[citation]?or?would?be?considered?excessive?when?’it?evinces?passion,?bias,?and?prejudice?on?the?part?of?the?jury?so?as?to?shock?the?conscience.’?”?(Haslip,?supra,?499?U.S.?at?p.?___,?fn.?10?[113?L.Ed.2d?at?p.?22,?111?S.Ct.?at?p.?1045],?italics?added.)?The?California?standard?of?review?appears?to?be?similar?to?those?as?to?which?the?high?court?noted?its?concern.?We?have?stated?that?a?punitive?damages?award?will?be?set?aside?only?when?it?”is?so?grossly?disproportionate?as?to?raise?a?presumption?that?it?is?the?result?of?passion?or?prejudice.”?(Neal,?supra,?21?Cal.3d?at?p.?928.)?The?high?court?recently?remanded?to?the?California?Courts?of?Appeal?several?cases?for?reconsideration?in?light?of?Haslip,?supra,?499?U.S.?___,?apparently?to?determine?whether?the?California?”passion?and?prejudice”?standard?of?review?is?constitutionally?sufficient.?(See,?e.g.,?Transamerica?Occidental?Life?Ins.?Co.?v.?Koire?(1991)?___?U.S.?___?[114?L.Ed.2d?706,?111?S.Ct.?2253];?AMCA?International?Finance?Co.?v.?Hilgedick?(1991)?___?U.S.?___?[113?L.Ed.2d?713,?111?S.Ct.?1614];?Church?of?Scientology?of?California?v.?Wollersheim?(1991)?___?U.S.?___?[113?L.Ed.2d?234,?111?S.Ct.?1298];?International?Society?for?Krishna?Consciousness?of?California?v.?George?(1991)?___?U.S.?___?[113?L.Ed.2d?234,?111?S.Ct.?1299];?Pacific?Lighting?Corporation?v.?MGW,?Inc.?(1991)?___?U.S.?___?[113?L.Ed.2d?235,?111?S.Ct.?1299].)?Similarly,?our?recent?our?decision?in?Gourley?v.?State?Farm?Mut.?Auto.?Ins.?Co.?(1991)?53?Cal.3d?121?[279?Cal.Rptr.?307,?806?P.2d?1342],?as?modified,?remanded?that?action?to?the?Court?of?Appeal?for?further?consideration?under?Haslip,?supra,?499?U.S.?___.
In?light?of?our?holding?in?the?present?case?that?the?punitive?damages?award?must?be?set?aside?because?of?the?absence?of?financial?evidence,?we?need?not?now?decide,?and?do?not?decide,?whether?the?traditional?California?”passion?and?prejudice”?standard?of?review?is?constitutionally?sufficient?under?Haslip,?supra,?499?U.S.?___.?Nor?do?we?express?any?view?on?that?issue.
FN?1.?The?section?now?provides?that?the?plaintiff?must?prove?that?the?defendant?has?been?guilty?of?oppression,?fraud,?or?malice?by?clear?and?convincing?evidence.?(Civ.?Code,???3294,?subd.?(a).)
Unless?otherwise?noted,?all?further?statutory?references?are?to?the?Civil?Code.
FN?2.?The?majority?state?that?plaintiff’s?argument?”rings?hollow”?because?she?asked?that?the?jury?be?instructed?to?base?its?punitive?damages?award?on?defendant’s?financial?condition.?Plaintiff?requested,?however,?the?standard?punitive?damages?instruction.?If?anyone’s?argument?”rings?hollow”?it?would?be?that?of?defendant,?who?failed?to?submit?any?information?about?his?financial?condition?to?plaintiff?or?to?the?court.
FN?*.?Presiding?Justice,?Court?of?Appeal,?Second?Appellate?District,?Division?Six,?assigned?by?the?Chairperson?of?the?Judicial?Council.