Holdgrafer v. Unocal Corp.

Opinion

PERREN, J.

In deciding whether a punitive damages award violates the constitutional prohibition of arbitrary or grossly excessive punishment, the

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most important factor to be considered is the reprehensibility of the defendant’s conduct.

1

The United States Supreme Court has instructed courts undertaking this inquiry that “[a] defendant’s dissimilar acts, independent from the acts upon which liability was premised, may not serve as the basis for punitive damages.”

2

On de novo review, we conclude that evidence of two massive oil spills is too dissimilar to be considered in assessing defendants’ reprehensibility in causing and responding to the underground contamination of plaintiffs’ commercial property. We further conclude that in order to comply with due process, the proscription of “dissimilar acts” evidence in punitive damages cases must apply to both the jury’s predicate determination whether a defendant is

liable

for punitive damages (Civ. Code, § 3294, subd. (a)), as well as to its subsequent evaluation of a defendant’s reprehensibility in assessing the

amount

of punitive damages to be awarded.

Unocal Corporation (Unocal)

3

appeals from the judgment awarding $2,564,348 in compensatory damages and $5 million in punitive damages on trespass, nuisance, and negligence claims arising from subterranean oil contamination that was caused by a leak from one of Unocal’s pipelines. Unocal contends (1) that the claims are barred by the statute of limitations; (2) that the punitive damages award must be reversed; and (3) that interest on the judgment was incorrectly calculated. On the second assignment of error, Unocal asserts that its federal due process rights were violated by the admission of evidence of Unocal’s dissimilar conduct relating to other spills that occurred on other pipelines at different locations.