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California Appellate Court Reverses $32.5 Million Punitive Damage Award Against BorgWarner, Among Other Rulings Court of Appeal of California, July 15, 2015

In this wrongful death lawsuit, the decedent was allegedly exposed to asbestos from BorgWarner clutches while working as a security guard at a General Motors assembly plant. The case went to trial and the jury awarded various economic and noneconomic damages to the family of the decedent. During the punitive damages phase of the trial, the plaintiff’s expert testified as to the financial condition of BorgWarner over objections that he improperly considered the financial condition of other separate corporate entities. The jury unanimously awarded punitive damages of $32.5 million.

On appeal, BorgWarner contended “that the $32.5 million punitive damages award to Medina's estate cannot stand because it is unsupported by the evidentiary record.” The Court of Appeal of California agreed, stating: “In order for the jury (and the reviewing court) to ascertain whether a punitive damages award is properly calibrated so as to inflict economic pain without financially ruining the defendant, it needs some evidence about the defendant’s financial condition and ability to pay the award. … The problem is that this evidence was, at best, pertinent to only half of BWMT's balance sheet and therefore was not, standing alone, meaningful evidence of BWMT's financial condition. (Mike Davidov Co., supra, 78 Cal.App.4th at p. 607.) Johnson’s  testimony did not shed any light on BWMT's liabilities or expenses, with respect to either the turbo charger line or BWMT's business as a whole. Indeed, Johnson acknowledged on cross-examination that revenue ‘doesn't tell you anything about’ profits, losses, debts, or available credit. In other words, revenue alone provides little information about a defendant's ability to pay punitive damages."

Read the full decision here.

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