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California Court Of Appeal Holds That Plaintiff May Not Collect Both Multiple Damages And Punitive Damages For Same Conduct

By Andrew L. Frey & Rory K. Schneider on January 26, 2015
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Do Not Duplicate StampIn prior posts, we have occasionally adverted to the issue of multiple punishments in the constitutional context.  Just before the new year, a California appellate court issued an unpublished decision in Paletz v. Adaya bearing on a different aspect of the multiple punishment problem.  In Paletz, the Court of Appeal reversed an award of punitive damages as duplicative of an award of statutory penalties, concluding that the plaintiffs were not entitled to collect both forms of punishment for the same course of conduct.

The case was brought by organizers and guests of a pool party at the defendants’ hotel in Santa Monica, California, to raise money to send children of fallen Israeli soldiers to camp in the United States.  When the hotel’s owners learned that the event participants were Jewish, they ordered the event shut down and evicted the participants.  The event organizers and a number of individual participants sued claiming, inter alia, intentional infliction of emotional distress and discrimination under the Unruh Act, a California civil rights statute.  Like many similar remedial statutes, the Unruh Act provided for super-compensatory damages, ranging from a minimum of $4,000 to a maximum of three times actual damages.  The jury awarded the plaintiffs penalties on their statutory claim and in addition punitive damages on their intentional-infliction claims.

On appeal, the Court of Appeal concluded that the awards of punitive damages were duplicative of the statutory penalties and set the former aside.  Its analysis reflects relatively typical judicial inquiry into whether and when a defendant may be subjected to both statutory penalties and punitive damages for the same conduct.  The court began with a background principle of law with which the majority of courts in other jurisdictions appear to agree:  A defendant generally may not be subjected to duplicative punishment for the same conduct; when both punitive damages and statutory penalties are awarded, the plaintiff is limited to one or the other.  In order to decide whether that principle applied, the Court of Appeal considered a number of subsidiary questions commonly addressed by other courts in this context.

The court first considered whether the damages provided by California’s civil rights statute constituted punishment—seemingly assuming that, to the extent the statutory damages are intended to be compensatory, they could co-exist with punitive damages.  Relying upon prior California cases interpreting the Unruh Act, the court concluded that the statutory damages were punitive in nature.  Without the benefit of that precedent, though, this may not have been a foregone conclusion.  Courts diverge in how they characterize statutory multiple damages, deeming them punitive sometimes, remedial sometimes, and a combination of the two sometimes.  In PacifiCare v. Book, the U.S. Supreme Court itself recognized that it has “placed different statutory treble-damages provisions on different points along the spectrum between purely compensatory and strictly punitive awards.”

That said, most state courts appear to err on the side of finding multiple damages provisions to include a punitive element and therefore have not permitted their imposition alongside punitive damages.  And the outliers seem generally to rely not upon a loose characterization of the multiple damages as remedial but instead upon express statutory language or clear legislative history indicating that the legislature intended the statutory penalties to coexist with other remedies, including punitive damages.

The California appellate court looked for such statutory cues but did not find any that were clear enough to override the rule against double recovery.  It considered in particular a provision in California’s civil rights statute providing that “[a]ctions brought pursuant to this section are independent of any other actions, remedies, or procedures that may be available to an aggrieved party.”  Because the provision addressed “actions” and not “remedies,” though, the court concluded that it did “not permit duplicative recovery of punitive damages for the same conduct.”  Its conclusion contrasts with the Arizona Court of Appeals’ decision in Rhue v. Dawson, which interpreted a provision stating that “civil remedies provided under [this statute] [as opposed to just actions generally] are supplemental and not mutually exclusive” to allow recovery of both statutory damages and punitive damages.

The final step in the California court’s analysis returned to a baseline presumption from which it started:  that the two forms of punishments were in fact duplicative if imposed for violation of the same “primary right”—here, the right to be free from invidious discrimination.  If the jury imposed statutory penalties and punitive damages for distinct acts of misconduct or distinct injuries, there would be no duplicative punishment.  Here, however, the court easily concluded that the same course of conduct—the hotel owner’s religious discrimination—formed the basis for both the statutory and the intentional-infliction claims and imposed a single injury on the plaintiffs.

This opinion is a thoughtful and comprehensive treatment of the issue of the permissibility of multiple punishments by combining statutory penalties and common-law punitive damages that deserves to be published.  Our thanks to our friends at the California Punitive Damages blog for bringing it to our attention.

Photo of Andrew L. Frey Andrew L. Frey

Andy Frey has been integral to the development of constitutional limitations on punitive damages for over 30 years.  During that time, he has argued four punitive damages cases in the US Supreme Court for business defendants, including BMW of North America, Inc. v.

Andy Frey has been integral to the development of constitutional limitations on punitive damages for over 30 years.  During that time, he has argued four punitive damages cases in the US Supreme Court for business defendants, including BMW of North America, Inc. v. Gore, the Court’s seminal excessiveness case, as well as Philip Morris USA v. Williams and Honda Motor Co. v. Oberg, each of which resolved procedural due process challenges in favor of our clients.  No other defense counsel has argued more than one punitive damages case in the Court.  Andy also has successfully argued punitive damages cases in many lower federal and state courts.  Andy has represented insurers, automobile manufacturers, consumer product manufacturers, pharmaceutical companies, energy companies, financial institutions, and many other kinds of businesses in punitive damages litigation.

In addition, Andy has written many scholarly pieces on punitive damages, including co-authoring with Evan Tager and Lauren Goldman the chapter on punitive damages in the ABA’s multi-volume treatise, Business and Commercial Litigation in Federal Courts.  Andy has also often appeared on panels on punitive damages.

Andy retired from Mayer Brown in 2020, but remains available to assist Mayer Brown clients with punitive damages litigation.

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Photo of Rory K. Schneider Rory K. Schneider

Rory Schneider is a Supreme Court & Appellate associate in Mayer Brown’s New York office. Prior to joining Mayer Brown in 2014, Rory worked as a law clerk to Judge Marjorie O. Rendell of the Third Circuit Court of Appeals. He also spent…

Rory Schneider is a Supreme Court & Appellate associate in Mayer Brown’s New York office. Prior to joining Mayer Brown in 2014, Rory worked as a law clerk to Judge Marjorie O. Rendell of the Third Circuit Court of Appeals. He also spent a year as a litigation associate at another prominent international law firm based in New York. Rory received his JD, summa cum laude, from the University of Pennsylvania Law School, where he was a comments editor on the Law Review. He received his undergraduate degree from the George Washington University.

Read Rory’s full bio.

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  • Posted in:
    Class Action & Mass Torts
  • Blog:
    Guideposts
  • Organization:
    Mayer Brown
  • Article: View Original Source

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