TRANSCRIPT:
Paul Edelstein:
Hello. Welcome to Pulling Back the Legal Curtain. I am your host, Paul Edelstein. And this podcast is for all of you out there who have ever read about a court case, seen a court case, been involved in a court case, went to court, thought about court, and wondered, “What the hell is going on in courts?” It seems like every day we have these kinds of questions and get asked them.
So on this podcast, we will pull back the curtain on the mystery that sometimes surrounds the court and what happens there, and hopefully give you some answers, some interesting, some humorous, some surprising. Stick with us on Pulling Back the Legal Curtain.
All right, so now we can go… Let’s talk about the last component. We’ll try to do this one. This one I think we could do easily, even though it seems like a complex concept. So now, Dan-
Daniel Thomas:
Yes.
Paul Edelstein:
… let’s get back to this, Dan. So, we’re back now talking about damages, as if this is a whole new podcast.
Daniel Thomas:
Okay.
Paul Edelstein:
Well, even though it’s the same running podcast. It’s not that I… And I wore the same clothes for this next episode, just in case my mom is like, “You wore that shirt the last time.” Anyway.
Daniel Thomas:
Continuity, though. It’s for continuity.
Paul Edelstein:
Yeah, exactly. So in this case, in the Harley case, we know that this jury awarded $220 million in punitive damages. Now, we can do a whole podcast on how you do that, but this discussion is really about the reduction that happened, and how this punitive damages award was reviewed by our really fantastic trial judge, and how we thought it would be reviewed by the appellate courts, which is essentially what this trial judge was doing. He was essentially saying, “Well, I’m going to apply the law that the appellate courts will apply and do it at this stage,” which I think was… A lot of judges, by the way, wouldn’t even do that, right? They would just be like, “Ah, what do I care? Let the appellate guys decide it.”
Our judge didn’t do that. He said, “You know what? No, I’m going to handle it as if I were an appellate judge,” which I think was a great thing to do, and actually, I think a service to our clients by doing that, not just, we would say punting, right? “Eh, I did enough. Let the appellate courts decide it.” He decided, “No, I’m not going to punt to the appellate courts. I’m going to have extensive briefing,” which he did, and oral argument on both the compensatory aspect of damages in this case, which you and I already talked about, and the punitive aspect of damages in this case, right?
So he looked at the punitive damages aspect of this case and he understood, as did us, after you explained it to me, that the punitive damages bears a relation to the compensatory. And by the way, when I talk to people, they had no idea what it was in it, but they gave $220 million in punitives and now the punitive damages award, I know my client’s one was reduced to something like $35 million from $110, and yours was reduced also.
Daniel Thomas:
From $120 million to $24.
Paul Edelstein:
So mine was reduced from $120 to $35. So again, that’s another one where people are like, “What the F? What? How can that be?” Except you and I understood how it could be, and we were not surprised. Again, we argued for a higher number and I think the law justifies a higher number, but we weren’t like, “What…” We didn’t have a “what the F” reaction when we saw that. We weren’t like, “Well, this is crazy.” Did you think you got screwed by the judge? Were you like… No, neither did I, but yet everybody else that was looking at this was like, “What?” They couldn’t understand.
Daniel Thomas:
We knew we were going to be constrained by the law and the judge was going to be constrained by the law the way it’s currently exists.
Now, in a prior segment here, I mentioned that punitive damages is like the blind spot in the law, all right? Punitive damages, the entire premise behind punitive damages is to punish the bad actor, to somehow exact a punishment for the sake of deterring and the sake of making sure that there are changes to the protocols, the practices, whatever the bad conduct was, that it be altered and stopped. And the goal here is that if you give a big enough penalty that the bad actor will change their ways. That’s the premise behind it.
Compensation or compensatory damages happens all the time, lots of material to work with to compare injuries. Punitive damages, on the other hand, are very, very idiosyncratic, very specific to the player, very specific to the conduct. And to me, I understand how it can be abused. You need some regulation on a punitive damage. There was a time when somebody can be awarded a dollar compensation and get $10 million in punitive damages because there was no real injury, but it’s an offensive concept of what happened. You see that sometimes in racial discrimination cases or sex discrimination cases where the person, they suffer emotional injuries, nothing physical, but yet not enough meat on the bone for a big compensatory number, but the conduct is so outrageous that the jury will punish them with a large punitive damage.
Paul Edelstein:
Right. So let me ask you a question. Is there any case you could get $1 in compensatory damages and $10 million in punies? Is that possible?
Daniel Thomas:
It is possible.
Paul Edelstein:
No, keeping it, to keep it from the appellate division.
Daniel Thomas:
Oh, that’s a different story.
Paul Edelstein:
Well, that’s what I mean. A jury could do it.
Daniel Thomas:
Yeah, keeping it-
Paul Edelstein:
But let’s talk. But we’re talking… This podcast is not about what a jury could do really, but why our award was reduced and what goes into that. So-
Daniel Thomas:
And the answer is, under the law, under the Constitution of the United States, which is essentially the document that is used to hold up and say, “What is reasonable in the form of punitive damages?” you cannot get $1 compensatory and $10 million punitive because there is ratios. There’s basically a multiplier that’s attached to the compensatory to arrive at the punitive damages number.
Paul Edelstein:
So let me see if I can explain it to you like I had to explain it to my engineer client. He’s smart like you, but I had to explain this concept.
What I told him is I said, “Look, there has to be a relation between the punitive damages and the compensatory award.” Okay? So first, the jury has to decide should they punish this defendant? And in our case, they did, and that was clear. We know that. And then they have to decide, well, what would be an appropriate punishment? And I talked about this in another podcast, but like $220 million in punitive damages would not be an appropriate punishment for me if I did something bad as a lawyer because I only got $220 in the bank, so that would be crazy. But for Harley-Davidson, we know that was appropriate based on the value of the company.
So this jury did that appropriately. They’re like, “Well, we know the value,” and they actually ascribed 1% of the value of the company to each of our clients. That’s where that number came from. They’re like, “Oh, they’re worth $11 billion. Let’s give $110,” they went a little higher, “$120 million for each client.” It had reasonableness to it. But then when the appellate, when the judges look at it, they had to apply a legal standard that the jury wasn’t even told about though, which is that that number has to relate to the compensatory in some fashion. So you can’t have the $1 compensatory example, which you just gave, which was great, and the $10 million punies, even if you’re really pissed off about the conduct. We get it, but not fair.
So the United States Supreme Court came out with a ruling, and they said, “Look, there’s some guidelines here. Here’s what we want to see.” And they said that any ratio that’s higher than 10:1 should be strictly scrutinized. That’s a good legal term which everybody can understand because the US Supreme Court said, “Look, if the ratio is more than 10:1,” so like your $10 million to $1, it’s a lot higher than 10:1, then the Supreme Court said, “you’ve got to really look at that closely. There’s got to be something really significant there. Otherwise, it’s a denial of due process.” There’s your constitutional element.
But they said anything below 10:1 can be reasonable under the circumstances that the court should then look at all the things that you just said, the conduct and all this kind of stuff, and evaluate it and pick, as you just said, a ratio, so decide what ratio to apply. So if your compensatory is $10 million, and then the court should say, “All right, well, what should the punitive ratio be? 1:1? Another $10 million. Is that appropriate? 2:1? $20 million. 3…” And so forth. And so look at the ratio. And our judge did that. Did he not?
Daniel Thomas:
He did.
Paul Edelstein:
And what did he come up with?
Daniel Thomas:
He arrived at the conclusion that the Morris case, it was reasonable under the circumstances to award punitive damages four times the compensatory. And in the SinClair case, it was reasonable to award punitive damages five times the compensatory.
Paul Edelstein:
Well, wait a minute, why? That’s interesting. We talked in the first segment of this podcast how being dead was worth less than being alive. But now you’re telling me in the punitive damages aspect, your client got a higher ratio from this judge than my client. How do you juxtapose that? How do you explain that?
Daniel Thomas:
You juxtapose that because the net that gets cast by the court in terms of items to be considered is much wider in punitive damages assessment than it is in the compensatory damages assessment. So for example, you couldn’t get a line item for Harold, who was Pam’s boyfriend. They lived together for years. They were each other’s soulmates, right?
Paul Edelstein:
They were married. You could say, you basically could say that. I know I wasn’t allowed to say it at a trial, but this is my podcast, I can say whatever I want.
Daniel Thomas:
It’s true.
Paul Edelstein:
They were essentially husband and wife.
Daniel Thomas:
They were husband and wife, minus the paper.
Paul Edelstein:
Correct. That’s right.
Daniel Thomas:
In every respect, they lived as husband and wife for years before this, minus that legal document from New York State that recognized them as married, and that was enough to exclude him from any category of compensation. And however, that’s on compensation.
Punitive damages, the court is allowed, and I believe the court did properly consider all of these variables. The fact that Pam’s daughter is disabled with medical illness, that she has a granddaughter who required her assistance in raising her, the fact that she, while not legally married, was essentially married to Harold, all of these are factors that the court could factor into what is a reasonable ratio to apply to the punitive damages assessment?
So that is the reason why I believe Pam’s case got a higher ratio than Harold’s case because there was not a fair compensatory understanding by the law of this fact pattern, so the judge compensated by using those freely available factors in the punitive.
Paul Edelstein:
Dude, that’s the greatest thing that you’ve said all day. You know why? Because it makes the most freaking sense of all the damages components we’ve talked about today. Here you are basically telling me, “Okay, the dead plaintiff got more, got compensated higher because of what happened to her,” which is the ultimate loss, even though my client suffered immense loss. Obviously, no question. But here the law did something that, to me, makes sense.
You know what’s so funny? Because both of our father’s, lawyers, they actually knew each other. They were good friends and went to law school together and all. It’s amazing. Okay? Very different guys, just like you and I are very different guys, but my father used to tell me all the time, because he didn’t study like your dad and you. So he would say, “Look, if you don’t know what the law is, I’m going to tell you this.” He would say, “Most of the time the law makes sense, so what you think makes sense is probably the law.”
The funny thing is, in the world of damages, it doesn’t. In compensatory damages, what’s reasonable under the circumstances, we talked about that earlier, where you got hurt, it boggles my mind, but we operate in it. But in the punitives world, boy, oh, boy. The punitive damages law makes a whole lot of sense, doesn’t it?
Daniel Thomas:
Yes.
Paul Edelstein:
So you think this judge made a whole lot of sense in his award there?
Daniel Thomas:
Absolutely.
Paul Edelstein:
All right. So I’m going to wrap this up because this is the way to end, right?
Daniel Thomas:
Yeah.
Paul Edelstein:
So now you and I are sitting here, we’ve got this award in the Harley-Davidson case that was reduced, chopped. I don’t know what other headlines we saw or emails we got, like, “What?” But they were all with exclamation, “What!” From $287 to $80, essentially something like that, but I mean, just a giant amount of number was lopped off. But you and I were sitting there saying, “Well, we read the decision,” and while we argued for a higher number, neither of us were like… we had the WTF reaction. Neither of us did. We both were like, “We get it.”
So now, we’re waiting for an appellate division to decide whether this judge, Judge Doran, got it right or within the range of rightness because as you and I both know, no one can say, “Oh, it should be $82 million and not $81.” I mean, that’s just ludicrous, right?
So the question for you is, and I’m sure your clients asked you this, and my clients, okay, so did he get it right? What’s going to happen at the appellate level?
Daniel Thomas:
He did get it right. I believe that he took such great pain to spell out his logic, his reasoning, what he relied upon, abided by the law, quoted papers from both sides, quoted the law, quoted the transcript from the trial, cited to evidence that he’s built enough credible support for his conclusions, that I believe the appellate division is going to respect his decision and not alter it any further, neither decrease it or increase the number, but rather affirm the numbers as he’s changed them and modified them because he did such an incredible detailed job at making the changes.
Paul Edelstein:
Again, that’s a very good, intelligent response. And what I would say is, I agree with you, all right? Oh, but I say it a little differently. I always say things a little differently than you.
I think the judge got it right, or within the realm of rightness, and he would’ve been just as right if he had said $90 million or $100 million, but if he had said $150, $160, something way higher, I might’ve felt differently. So I think he’s in the range of rightness, and I think the judge is right. I think the law is wrong. I just do.
So I’m hopeful the appellate division sees it to say, well, and I think they will, that judge applied the law that’s right, and I wish our legislature would understand that there’s some wrongness here, particularly in the area of wrongful deaths and people not getting compensated properly for that and do something about it.
Daniel Thomas:
Well, in actuality, the legislature does understand that. It’s our governor who doesn’t. Our governor’s the one who vetoed three years in a row this Grieving Families Act, which had bipartisan support and passed the state legislature. There’s been overwhelming support for this, and the governor’s the one who’s vetoed it, and ultimately, I don’t ever see her signing it. So New York’s going to have to have a new governor before we see the Grieving Families Act actually passed and made into law.
Paul Edelstein:
Good. So let’s end it, let’s end it there, and let’s make a request for all six people that have watched this podcast to send it to their politicians, to the governor, and send out your last request because it’s just ridiculous.
Daniel Thomas:
Absolutely. And you know what? All I got to do is say, “Give five minutes of understanding to the life that Pam SinClair and Harold Morris had, and to the absolute foreclosure and preclusion of compensation for his losses from her passing, and that will show you the injustice and the unfairness of the state of law in New York in this area.”
And here’s a man who literally has lived on pause. His life was paused until he had a chance to be heard in court, and a jury came back and delivered the verdict that they did that basically said, “Hey, Harley, you’re not proper for blaming him for this. It’s your fault and it’s because of you he has this tremendous loss.” So while he has some degree of solace that came from the result, he never will ever get back literally, figuratively, monetarily, or in any other way, the true loss that was exacted on him by all this.
Paul Edelstein:
No. You said it better than I said it to this jury.
All right, listen, that’s it for today because you know why? I got to go to Staten Island where your case is worth the same as it would be in Brooklyn, and let’s thank God. Thank God for that. All right, we’ll chat more, but I really appreciate you explaining this to me, well, I knew it a little bit, but explaining it to anybody who’s actually going to log into this.
Daniel Thomas:
Sure.
Paul Edelstein:
You’re the man.
Daniel Thomas:
Actually, can I steal one more quick moment of your time?
Paul Edelstein:
No, there’s no quick moments with lawyers. You know that. What are you going to steal? What are you going to do? You’re going to steal more than one.
Daniel Thomas:
I just wanted to share one thing, that the system does allow for some sort of a rightening of the wrong by something called interest.
Paul Edelstein:
Oh, no, no, no. Another podcast another podcast.
Daniel Thomas:
Just give it quick lip service, okay? Quick lip service.
So those are thinking you said, “All right, so now you got reduction to this $80 million. Now what?” Well, we’ve entered in this into court something called the judgment. And now with this judgment, there’s interest running at just shy of $20,000 a day until it gets satisfied or until the case gets resolved. And if that takes years, then that’s $20,000 a day for years. So there is a sort of back-end equalizer to certain extent that helps reduce the game-playing that often happens when a plaintiff is victorious and the defendant wants to sort of mess around, but this, they’re going to try and negotiate down off of that, but…
Paul Edelstein:
Well, here’s what I’ll leave you, Dan. All right? We started out by seeing with a reduction in this verdict, prompted most people to respond by saying, “What the F? WTF?” Let’s hope on your last sentence that this $20,000 a day in interest that’s running from this judgment causes our defendant here, Harley-Davidson, somebody over there to have the same reaction, “What the?” and maybe decide to do the right thing. I hope so, I doubt it, but we’ll talk about interest another time.
Daniel Thomas:
All right. Well, thank you very much for having me. Pleasure.
Paul Edelstein:
You’re the man, Blanky. Thanks.
Thanks for joining us on Pulling Back the Legal Curtain with Paul and Glenn. Because we get so many questions over so many years about what goes on behind the legal curtain in the legal world, we tried to put this together so that it would be entertaining and interesting and hopefully educational. If you liked it, come join us again or visit our website at edelsteinslaw.com. Either way, we’re always going to be here in front of and behind the legal curtain doing the only thing that we know how to do, which is proceed. Take care.