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The "Farmers Insurance News-Alert" website is dedicated to providing the consumer and general public with detailed information concerning the Farmers Insurance Group. This includes fraud reports, consumer complaints, lawsuit's and other legal actions taken against this company. All information contained herein is for educational purposes only. Original sources, when known are sited.

 

Walter J. Lack (SBN 57550)
Daniel G, Whalen (SBN 126847)
Jennifer R, Schrack (SBN 190402)
Engstrom, Lipscomb & Lack
State Bar No. 57550
10100 Santa Monica Blvd.
16th Floor
Los Angeles, CA 90067-4107
(310) 552-3800

Donald W. Ricketts(SBN 39825)
28855 Kenroy Ave.
Santa Clarita,CA 91351
(805) 250-3091

Ernster Law Offices, P.C.
John H. Ernster, Jr. (SBN 59338)
70 South Lake Ave. Suite 750
Pasadena, CA 91101
(626) 844-8800

Attorneys for the Plaintiff and Plaintiff in Pro Per

SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF LOS ANGELES, CENTRAL DISTRICT

Donald W. Ricketts, an individual, Plaintiff
v.
Farmers Group, Inc. etc. et al, Defendants,

Case No. BC 165961 - STATEMENT OF DECISION

   This is an action for wrongful discharge from employment by an attorney against his former insurance-carrier employer.
   Following the trial of the liability and compensatory damages phase of this action by the court, without jury, the court ordered the entire proceedings transcribed by the court reporter, reviewed the court file and transcript, and, on August 12, 1999, issued its Tentative Decision finding in favor of plaintiff and against defendants. It awarded plaintiff special damages (past lost #835 p. 7/20)$144,172.00 and determined that plaintiff was entitled to recover punitive damages from the defendants, or some of them. It ordered further proceedings to be held to determine the proper and reasonable amount of punitive damages to be assessed.
   Both sides requested a statement of decision and both sides submitted   proposed statement of decision. In his statement, plaintiff requested an award of general damages.
   On September 2, 1999, the court issued an Order that adopted the Proposed Statement of Decision which had been submitted by plaintiff as its Proposed Statement of Decision, awarded general damages to plaintiff in the amount of $140,000, and allowed defendants 15 days to object to the Proposed Statement of Decision.
   Defendants filed Objections to the Proposed Statement of Decision and a Request for Hearing on September 23, 1999.
   On September 30,1999, plaintiff submitted a Proposed First Amended Statement of Decision.
   On October 12, 1999, defendants filed and several objections to the Proposed First Amended Statement of Decision.
   On October 27, 1999, plaintiff submitted a Proposed Second Amended Statement of Decision.
   On November 1, 1999, the court conducted a trial to determine the amount of punitive damages that would be assessed.
   On November 3, 1999, plaintiff submitted a Proposed Third Amended Statement of Decision.
   Having reviewed the court file and transcript in this manner, all admissible testimony and documents presented by the parties, all stipulated facts, and the argument of counsel, the court renders this Statement of Decision, signs the accompanying Judgment, the ORDERS both filed.
   Based upon the clear and convincing credible and admissible evidence presented by the parties, the court finds as follows:
Findings, Conclusions and Discussions:
 
Plaintiff DONALD W. RICKETTS is an individual residing within and is a citizen of the County of Los Angeles, State of California.
   Defendants FARMERS GROUP, INC. is a management company providing management services to the P&C Group. The P&C Group is owned by the policyholders of FARMERS INSURANCE EXCHANGE, Fire Insurance Exchange and Truck Insurance Exchange, their respective subsidiaries and Farmers Texas County Mutual Insurance Company. Accordingly, FARMERS GROUP, INC. has no ownership interest in the P&C Group. The policyholders each appoint FARMERS GROUP, INC. as the exclusive attorney-in-fact ("AIF") to provide management fees based primarily on the gross premiums earned by the P&C Group. Consequently, FARMERS GROUP, INC. is not directly affected by the underwriting results of the P&C Group. This is in contrast to a typical property and casualty insurance holding company which depends on dividends from owned and operated subsidiaries which are subject to fluctuations in underwriting results. The management fees compromise a major past FARMERS GROUP, INC's revenue and, as a result, FARMERS GROUP, INC's ongoing financial performance depends on the volume of business written by, and the business efficiency and financial strength of, the P&C Group. As AIF of the P&C Group, FARMERS GROUP, INC. selects risks, prepares and mails policy forms and invoices, collects premiums and performs certain other administrative and managerial functions. The P&C Group is responsible for its own claim functions, including the settlement for the payment of claims and claim adjustment expenses. The P&C Group is also responsible for the payment of commissions, benefits for agents and district managers, and its premium and income taxes. FARMERS GROUP, INC. is entitled to receive a management fees of up to 20% (25% in the case of Fire Insurance Exchange) of the gross premiums earned by the P&C Group. During the past five years, aggregate management fees averaged between 12% and 13% of gross premiums earned by the P&C Group. The P&C Group has reported a growing volume of premiums which has generated a corresponding rise in management fee income to FARMERS GROUP, INC.
   Defendant FARMERS INSURANCE EXCHANGE ("EXCHANGE") is qualified to and is engaged in the business of insurance within the Sate of California with a principal place of business at 4680 Wilshire Blvd., Los Angeles, California.
   Exchange is a reciprocal insurance carrier owned by its policyholders.
   Defendant EARLY, MASLACH & PRICE (now known as Early, Maslach, Price & Baukol,and hereinafter referred to as "EM&P") holds itself out as a law firm. It represents, exclusively, insureds or punitive insureds of the P&C Group. All of its costs and expenses are paid for by the P&C Group and its employee-attorneys are employees of EXCHANGE. It is one of approximately 50 such "firms" nationwide operated by EXCHANGE.
   Plaintiff provides services to and represents insured of EXCHANGE and the other carriers which comprise the P&C Group.
   EM&P (and the names of the other "firms" operated by EXCHANGE) is a tradename owned by EXCHANGE. Messrs. Early and Maslach in the "firm name" are decreased attorneys. The Mr. Price in the "firm name" is Stephen Price, an attorney licensed to practice law in the State of California.
   Stephen S. Price was the managing attorney of EM&P at the time he, with the advice and concurrence of plaintiff's supervisor, Joseph S. Fern, decided to terminate plaintiff. EM&P had approximately 40 attorneys and in excess of 80 employees. Mr. Price, as Managing Attorney, was directly responsible for setting company policy and procedures regarding the activities of the "firm". At the time he approved his decision to terminate plaintiffs employment, Mr. Price had been promoted to Vice President, Claims Administration, in charge of EXCHANGE's nationwide in-house counsel operation and reported only to the Vice President, and General Counsel. he was the senior officer within EXCHANGE with responsibility for the practices of the nationwide in-house counsel operation.
   In terminating plaintiff, Mr. Price was a managing agent within the course and scope of his employment and his conduct was authorized and ratified by EXCHANGE.
   Plaintiff Donald W. Ricketts was hired as a senior Trial Attorney by Defendants EXCHANGE and EM&P on July 12, 1993, and was employed by them on the date of his termination, February 15, 1996.
   Employees working for EM&P as in-house lawyers for EXCHANGE were subject to the progressive discipline system as outlined in the Human Resources Manual system designed to provide feedback to employees and to recognize possible problems early enough to prevent detriment to the company and the employee. The process included four steps: Counseling, formal warning, probation and termination. The normal process was to advance through each step to try to improve the employee's conduct and prevent termination.
   Counseling as the first step could either be written or in person. This step was intended as a process for resolution of minor and routine complications and not necessarily as a negative event. It was appropriate to have multiple counseling sessions with positive results.
   A formal warning was intended as the next step to formalize the issues addressed in the counseling sessions for the inclusion in the employee's personnel file. The warning was to include a notice of possible future actions and consequences for non-improvement.
   Probation as the next step was intended to give the employee a set time period to improve or face termination.
   Finally, if counseling, formal warnings and probation failed, the employee was subject to termination. Human resources procedures dictated that careful documentation be kept and copies sent to human resources for inclusion in the employee's personnel file to justify any disciplinary actions taken.
   This progressive discipline system also included several alternatives to termination: Demotion, suspension for varying lengths of time without pay, and the deferral of salary increase reviews were three suggested alternatives to termination.
   Termination under the progressive discipline system required the approval of both the employee's supervisors and the human resources manager. In the event of extreme circumstances, such as allegations of theft, fraud, or criminal and/or actionable conduct, a supervisor with approval of his or her direct superior could terminate the employee.
   At trial, Stephen Price gave two examples of his use of progressive discipline system. An attorney who exhibited bizarre behavior such as talking to the walls and performed unsatisfactorily was given a number of counseling sessions, suspended, placed on probation and finally terminated. A young attorney whose work was unsatisfactory was also given a number of counseling sessions, placed on probation several times and transferred to another location. Mr. Price testified that he did not follow the recommendations to terminate given by this employee's direct supervisor and gave the young lawyer another chance.
   In October of 1993, plaintiff successfully completed his 90-day probation. In December of 1993, he received a positive performance review and was recommended for a salary increase. His reviews noted that he worked at a high level, commensurate with his extensive trial experience.
   In May of 1994, after approximately ten months into his employment with EXCHANGE, his supervisor wrote a letter to managing attorney Stephen S. Price praising plaintiff's abilities as a trial lawyer and supervisor. This letter included the following praise regarding plaintiff's work:
   He was assigned a significant number of cases which needed immediate attention. He promptly organized his caseload, reviewed each file and took those action steps necessary to resolve each and every problem on those files.
   At his request, he was placed in a position for taking and attending all in-house management development classes and courses and has completed a number of those.
   He was thrust into the position of acting intern Supervising Attorney as well as dealing with his day-to-day Senior Trial Attorney duties. While juggling the day-to-day administrative and other caseload as well as personnel issue, he was successful in trying a case with an exposure of $150,000.00 by obtaining a jury verdict of $71,000.00.
   He completed a complex jury trial with significant injuries including a total hip replacement with a demand and probable reasonable value of $350,00.00. Based primarily on his legal background and experience and the utilization of technical experts, he was able to obtain a defense verdict.
   IN the meantime, he was thrust into the arena of acting Supervising Attorney wherein he was not only required to deal with the day to day administration tasks and personnel challenges and opportunities,but was required to make new case and file assignments as appointed.
  (Exhibit 18)
  
One year later, on June 20, 1995, plaintiff's supervisor as head of the Commercial Team (recognized as the team of lawyers handling the more complex cases) wrote to Edward Morris, Vice President of Claims Administration and Stephen Price, Managing Attorney, to recommend a salary increase for Plaintiff. The letter included the following language:
   Don has been a Senior Trial Attorney with the firm for two years. He was assigned to the Commercial Team in the fall of 1994.
   Don is a very experienced attorney with a lot of trial experience and is never intimidated by opposing counsel and is capable of handling cases of the greatest complexity.
   He presently has the second largest category on the Commercial Team and his clients are being well represented. Attorneys like Don enable the Commercial Team to function without having to be concerned that the attorney will not have the knowledge or expertise to handle a case.
   Don is well liked by the members of the team and is only too happy to share his knowledge and expertise with them, He is unquestionably a great asset to the firm.
   (Exhibit 67)

    In August of 1995, approximately two months after being the subject of the above described praise, and contemporaneous with receipt of plaintiff's second Premier Award, Plaintiff was transferred to a litigation team by Joe Fern. Mr. Fern knew plaintiff to be an experienced litigator of over 100 jury trials. At trial Fern testified that he had been an attorney for approximately 27 years, and had conducted three trials during his seven years with EXCHANGE. During his five and one half years as a supervisor with EXCHANGE, he supervised a total of approximately twenty to thirty people. He testified with certainty that the number of employees to which he issued "counseling memos number less than ten" and possibly less than five.
   Between August 21, 1995 and mid-November of that year, a period of approximately 90 days, Joe Fern issued 29 counseling memos to plaintiff.
   The evidence is undisputed that during this 90 day period:
   Plaintiff took over approximately 54 active cases;
   Plaintiff did not receive summary reports, calendaring or contract from prior lawyers on these cases;
   Plaintiff was assigned approximately 26 additional new cases;
   Plaintiff had on his trial calendar for a one month period between November and December five trials and one binding arbitration;
   As of mid-November, plaintiff's caseload of 73 cases consisted of 54 Superior Court matters, 6 Municipal Court matters and 13 other matters. This was a caseload with at least twice as many Superior Court matters than any other member of his team;
   Plaintiff was called to Jury Service as of October;
   In mid-October, Plaintiff's minor son was struck by an automobile and required extensive hospitalization.
   In addition to the counseling memos, Fern created a "Ricketts File" to which he directed memos from himself describing in detail routine supervisory conversations with plaintiff. This file was separate from and in addition to the personnel file maintained by the human resources department.
    On October 20, 1995, Plaintiff informed Fern in writing that his minor son had been struck by an automobile requiring him to undergo extensive hospitalization. Plaintiff requested time off either as a vacation or time of under the Family Leave Act, Despite the numerous memos directed to plaintiff in the span of their short team relationship, Mr. Fern did NOT respond to this request. Instead, he directed plaintiff to prepare case summaries for files to be transported to the claims department for review within three days.
   On November 15, 1995, Plaintiff informed Mr. Fern in writing that his caseload has reached an unmanageable level and requested that not be assigned any new files for the next two months. A list showing the distribution of the case within the team was attached.
   The following day,plaintiff was issued a Formal Warning. The day after, Mr. Price directed Mr. Fern to submit his package on Ricketts to human resources to get the approval to terminate.
   Having assessed the testimony of the witness at trial and the admissible evidence that was offered, this court finds credible and finds as a matter of clear and convincing fact that plaintiff's demise within the organization was a direct result of his formal submission to management of comments and memoranda expressing concern regarding the possible ethical violations and suggesting significant changes in the organization and structure of the legal department to avoid such violations.
   There is clear and convincing admissible evidence that Stephen Price considered any considerations of potential ethical issues raised in connection within house insurance companies as "attacks by outside counsel who want the business." EXCAHNGE's in house counsel were encouraged in writing to become active in the ethics subcommittees of bar groups so that such "attacks" could be "fought head on". Price told plaintiff that if the California legislature was to follow in the direction of several other states and prohibit in-house insurance counsel holding itself out and operating as if it were a law firm, he would "just go down the street, open up the Law Offices of Stephen Price and hire the people he liked out of the disbanded Farmers office and serve Farmers from down the street." It is in this environment that Plaintiff expressed his concern that the interests of his clients, the insureds, were not primarily served by the overwhelming amount of power and authority of the claims department in the legal decision making of litigation.
   One month after plaintiff presented his concerns and suggestions in writing to senior attorneys he received his first criticism of his work performance. By evaluating the testimony at trial and the clear and convincing admissible evidence presented, this Court finds credible plaintiff's assertions that upon plaintiff's assignment to Team Fern, Mr. Fern and Mr. Price decided and acted with intent to immediately begin a memo trial required by human resources to justify termination.
   It is significant that Plaintiff not only voiced his concerns regarding the conflict he faced serving the insureds with undue pressure from Claims but took action he believed was favorable to the insureds but clearly disliked by Claims. There is clear and convincing admissible evidence that the Claims Department expressed criticism of plaintiff because he reported that the liability of an insured in a third party action was approximately 40% where Claims had insured in a third party action was approximately 40% where Claims had  to(unreadable)insured's policy of insurance did not provide coverage. Needless to say, this situation has severe ramifications in any potential bad faith actions.
   Joe Fern testified that plaintiff was terminated for cause. Stephen Price attempted to contradict his own witness and establish an at-will status. There is credible compelling, and admissible testimony that during the second year of Plaintiff's employment, EXCHANGE attempted to have employees sign an "at-will" employment acknowledgment. Plaintiff crossed out the language establishing acknowledgment of at-will employment and signed a document acknowledging receipt of the new employee handbook. The court finds that plaintiff was not at at-will employee but could only be terminated for just cause.
   Mr. Price testified that he made the decision to terminate plaintiff without following the formal disciplinary process under the extreme circumstances provisions. Price testified that he made the decision to terminate plaintiff at a point in time when he knew he was about to be promoted to the position of his then supervisor - Vice President of Claims Administration. Following promotion, Mr. Price approved the termination. Having made the decision to terminate in one capacity and approving the decision in the promoted capacity, enabled Price to both recommend and approve the termination with technical compliance of the human resources requirement that in case of termination outside the progressive disciplinary system, a supervisor must have the approval of his or her immediate superior before termination. As argued by plaintiff's attorney, it may be that following the proper channels through the progressive disciplinary system, that Mr. Ricketts might well have lost his job and may not have cause of action. But Mr. Price with the help of Mr. Fern violated Farmer's own policy by not following the established progressive system and frustrating the exceptions established for deviation from the policy.
   Careful assessment of the credibility of the testimony of the witnesses and of the clear and convincing admissible evidence has established to this court that the motive behind these actions was the recognition that plaintiff was not going to cease voicing his concerns regarding the ethical dilemmas in which he found himself. The evidence is uncontradicted that Mr. Price requested and received at least one legal opinion that EM&P was not legal entity but a department within EXCHANGE. He was given a legal opinion that this created the potential for numerous violations of the Rules to Professional Conduct and the Business  and Professional Code. Specifically, Mr. Price was informed that for an attorney to lend his name to be used by another person who is not an attorney is cause for disbarment or suspension under section 6105 of the Business Professions Code. He was given the legal opinion that given their legal status as a legal department within EXCHANGE created issues regarding the unauthorized practice of law under section 6125 of the Business and Professions Code. These were the very issues plaintiff had pointed out and addressed throughout his relationship with Mr. Price and his employment. Prior to being transferred to Team Fern, Plaintiff took the bold step of putting his concerns and drastic suggestions in writing and distributing the same. Credible testimony and evidence has lead this court to conclude that Mr. Fern commenced the supervision of plaintiff with the intention of creating the documentation needed to gain approval and justification for plaintiffs termination.
   Plaintiff's employee contract contained an implied covenant of good faith   and fair dealing, which obligated his employers to perform the terms  and conditions of the agreement fairly and in good faith and to refrain from doing and act that would prevent or impede plaintiff from performing any or all of the conditions of the contract that he agreed to perform, or any act that would deprive plaintiff of the benefits of the contract.
   Plaintiff reasonably relied upon the representations of his employers regarding their desire to have employees submit comments, suggestions, and criticisms and regarding the causes for and manner of assessing discipline, including termination, and reasonably expected that comments, criticisms and suggestions would be welcomed and given due regard, and reasonably expected that defendants would apply their discipline procedures even-handedly to afford plaintiff the protections of those procedures if they believed there was cause to discharge plaintiff.
    There is clear and convincing evidence that defendants EM&P and EXCHANGE breached the implied covenant of good faith and fair dealing under the employment contract by summarily terminating plaintiff without affording him the administrative due process guaranteed by the contract and in terminating him for his complaints and suggestions regarding (unreadable) discussed above.
   There is clear evidence that the willful act of defendants EM&P and EXCHANGE in terminating plaintiff in the manner described above because of strong expression of potential serious ethical and legal considerations regarding the legal representation of insureds of EXCHANGE and/or other entities within the P&C Group was malicious, oppressive, retaliatory and a violation of public policy. The pretextual nature of the termination was fraudulent. Plaintiff suffered humiliation and mental distress because of the violation of public policy by defendants EXCHANGE and EM&P in terminating plaintiff for, in part, voicing his reasonably based allegations that EXCHANGE and EM&P may have been acting in violation of specific statutory standards governing the practice of law in the State of California.
   The court finds that plaintiff sustained a loss of earnings for two years which had a value of $154,172. The court finds that during these two years plaintiff earned $10,000 and awards plaintiff $144,172 as special damages. In light of evidence that attorneys at EXCHANGE were permitted to practice law separated from their duties at EXCHANGE, the court finds that proceeds from settlement of an action instituted by plaintiff against third parties prior to termination, but concluded following termination is not relevant to the calculation of plaintiff's lost earnings.
   The court finds that an award to plaintiff of $1240,000.00, as general damages is reasonable compensation for the pain, suffering, mental anguish and humiliation suffered by plaintiff during the approximately two years he was unemployed and virtually without any income.
   There is clear and convincing evidence that plaintiff's strong expression of potential serious ethical considerations additionally included concerns regarding the control of an attorney's representation of others by nom-attorneys, the knowing assistance in or inducing a violation of the Rules of Professional Conduct of the State Bar of California, advising the violation of law, all of which are contrary to the public policy of the State of California as enunciated in California Business and Professions Code sections 1-120, 1-300, and 3-210. Similarly, preventing the illegal practice of law is a matter of public policy of the State of California expressed in the statues and (unreadable) Conduct of the State Bar of California cited above. The Standing Committee on Professional Responsibility and Conduct: of the State bar of California (in Formal Opinion No. 1987-91) has declared:
       "Attorneys working within the Law Division [of a carrier] should be alert that the Law Division does not become a front or subterfuge for lay adjusters or other unlicensed personnel to practice law ....."
                   *********************
      "In-house counsel for an insurer may represent insureds in litigation without violating the prohibition against the unauthorized practice of law set forth in rule 3-100(A). However, the attorney's must ensure that the insurance company does not control or interfere with the exercise of professional judgment in representing insureds ...." Ibid

   Without reaching the issue of whether or not violations of these standards actually exist within the policies, procedures and practices of EXCHANGE and EM&P, this Court finds that it is the clear and convincing evidence that Mr. Price terminated plaintiff in the manner described above for the plaintiff having even raised such concerns that is reprehensible, particularly in light of EXCAHNGE's subsequent ratification of Mr. Price's conduct. This creates the strong potential for an improper and chilling effect upon other attorneys in situations similar to that  of the plaintiffs herein when confronted with professional and ethical concerns and amply justifies the awarding of exemplary damages against EXCHANGE and EM&P.
    In Neal v. Farmers Insurance Exchange (1978) 21 Cal.3d 910, 927-9287 the California Supreme Court affirmed an award of this court (L.A. No. 30775) for punitive damages and enunciated general guidelines to assess the reasonableness of punitive damages awards. It stated:
      "As we pointed out in Bertero v. National General Corp., supra, 13 Cal. 3d 43, our review of punitive damage awards rendered at the trial level is guided by the historically honored standard of reversing as excessive only those judgments which the entire record, when viewed most favorably to the judgment, indicates were rendered as the result of passion and prejudice ...." (13 Cal.3d at p.65, fn 12) Stating the matter somewhat differently in a similar case, we indicated that an appellate court may reverse such an award (unreadable) as a matter of law appears excessive, or where the recovery is so grossly disproportionate as to raise a presumption that it is the result of passion or prejudice." (Schroeder v. Auto Driveway Co. (1974) 11 Cal.3d 908, 919 [114 Cal. Rptr. 622, 523 P.2d 662].)
   "In making the indicated assessment we are afforded guidance by certain established principles, all of which are grounded in the purpose and function of punitive damages. [Fn.] 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 more reprehensible the act, the greater the appropriate punishment, assuming all the factors are equal. (See Bertero v. National General Corp., suora, 13 Cal.3d 43, 65; Fletcher v. Western National Life Ins. Co.,supra, 10 Cal.App.3d 376, 408-409; Ferraro v. Pacific Fin. Corp. (1970) & Cal.App.3d 339, 352-353 [87 Cal.Rptr.226].) Another relevant yardstick is the mount 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. (But cf. Finney v. Lockhart (1950) 35 Cal.2d 161,164 [217 P.2d 19].) Also to be considered is the wealth of the particular defendant; obviously, the function of deterrence (see fn. 13, ante), will not be served if the wealth of the defendant allows him to absorb the award with little or no discomfort. (See Bertero, supra, at p. 65, Roemer v. Retail Credit Co. (1975) 44 Cal. App.3d 926, 270-271 [95 Cal.Rptr.82]; Wetherbee v. United Ins. Co. of America (1971) 18 Cal.App3d 266, 270-271 [95 Cal.Rptr. 678]; Ferraro v. Pacific Fin. Corp., supra, 8 Cal.App.3d 339, 353, MacDonald v. Joslyn (1969) 275 Cal.App.2d 282, 293-294 [79 Cal.Rptr. 707, 35 A.L.R.3d 641].) By the same token, of course, the function of the 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."
   In Weeks v. Baker & McKenzie (1998) 63 Cal.App.1128,1166, the Court noted that "punitive damages awards generally are not permitted to exceed 10 percent of defendant's net worth"
   Neal, noting with approval the decision in Wetherbee v. United Insurance Corp. of America (1971) 18 Cal.App3d 266, 271, held that the jury and the trial court "could reasonably conclude that an award equal to one week's earnings was required to effect the necessary punishment of defendant and to serve as an example for other insurers." (Cf. Zhadan v. Downtown L.A. Motors (1976) 66Cal.3d 481, 499-501 [136 Cal.Rptr. 132].)
   Although not enunciating a formula as a standard to be followed, Neal approved punitive damages that were 70 times the amount of compensatory damages and Weeks approved a ratio of punitive damages to compensatory damages of 74:1.
   The court finds that the net worth of defendant EXCHANGE as of December 31, 1998, was $1,878,825,000.00, and that in 1998, EXCHANGE had net income of $19,556,000.00.
   Applying the standards set forth in the above opinions to the facts set forth above, the Court finds that exemplary damages in the amount of $2,500,000.00 (two million, five hundred thousand dollars)is reasonable and plaintiff is awarded that amount against defendants EXCHANGE and EM&P, and each of them.
    Plaintiff is awarded costs.

Dated:January 27,2000

 

                         Soussan G. Bruguera
                          Judge of the Supreme Court

 

 

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