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From: Pat Valentino
Date: 2/2/01
Time: 12:18:11 AM
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The simple answer to this contention is the evidence at trial contradicts it.
Plaintiffs' accounting witness Freeman testified that in his expert opinion it was
proper under accounting principles to reflect in a net worth statement the present
value of Simpson's ability to exploit his name and likeness in the future; Simpson's
expert accounting witness Goodfriend did not contradict this in principle. Plaintiffs'
other witness Roesler testified the right to exploit Simpson's name and likeness had
a present market value, for which a person in Roesler's business would pay.
Therefore, even based on Simpson's argument that present net worth is the only
permissible measure of wealth, the evidence supported including this item as a
component of present net worth.
Furthermore, although net worth is the most common measure of wealth used
in assessing punitive damages, it is not the exclusive measure. (Adams v.
Murakami, supra, 54 Cal.3d at p. 116, fn. 7 [declining to adopt any rigid formula,
such as net worth, to measure the defendant's ability to pay]; Lara v. Cadag (1993)
13 Cal.App.4th 1061, 1064-1065 & fns. 2, 3 [defining financial condition,
concluding that earnings alone is not sufficient evidence of financial condition];
Kenly v. Ukegawa (1993) 16 Cal.App.4th 49, 57 & fns. 6, 7 [some evidence
regarding liabilities must be offered, the defendant's profit on the fraudulent
transaction, alone, is not sufficient evidence of financial condition]; Robert L. Cloud
& Associates, Inc. v. Mikesell (1999) 69 Cal.App.4th 1141, 1152 [income standing
alone or wrongful profit standing alone are not sufficient evidence, there must be
"meaningful evidence" "of the defendant's ability to pay the damage award"].) In
Adams, supra, 54 Cal.3d 105, the Supreme Court primarily used the more general
terms "financial condition" or "ability to pay" instead of "net worth."
Simpson cites cases for the proposition that the defendant's wealth should be
measured as of the time of trial. These cases held only that an earlier time period
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should not be used. (Marriott v. Williams (1908) 152 Cal. 705, 710 [proper to
show defendant's wealth at the time of trial, not the time when defendant inflicted
the injury]; Zhadan v. Downtown Los Angeles Motor Distributors, Inc. (1979) 100
Cal.App.3d 821, 839 [time of second trial should be used, not time of first trial or
time of injury]; Washington v. Farlice (1991) 1 Cal.App.4th 766, 777 [upon
appellate reversal of punitive damages judgment and remand for a new trial, the
defendant's financial condition at the time of retrial should be used].) These cases
do not hold that a defendant's future financial prospects are legally irrelevant or
improper for the jury to consider.
Simpson's contention that evidence of his future financial prospects is legally
irrelevant or improper makes no sense. The ultimately proper level of punitive
damages is an amount not so low that the defendant can absorb it with little or no
discomfort (Neal v. Farmers Ins. Exchange, supra, 21 Cal.3d 910, 928), nor so
high that it destroys, annihilates, or cripples the defendant. (Adams v. Murakami,
supra, 54 Cal.3d 105, 112, 113; Kenly v. Ukegawa, supra, 16 Cal.App.4th 49, 57.)
Whether the defendant's financial prospects are bleak or bright is relevant to the
ultimate issue whether the damages will ruin him or be absorbed by him. Simpson
cites no authority that squarely supports his contention. In propounding a Model
Punitive Damages Act, the Uniform Law Commissioners considered the law to be
obviously contrary to Simpson's argument. Section 7(a) of the Act lists nine factors
to be considered by a jury in determining what constitutes a fair and reasonable
amount of punitive damages. The Commissioners endeavored "to list those factors
which are relatively noncontroversial and which would probably come into play in
most cases involving a claim for punitive damages." The fourth factor listed is, "the
defendant's present and future financial condition and the effect of an award on
each condition." (14 West's U. Laws Ann. (Master ed. 2000 supp.) Model Punitive
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Damages Act, § 7, subd. (a)(4), and com. thereto, pp. 53, 63, 64, italics added.) In
Devlin v. Kearny Mesa AMC/Jeep/Renault, Inc. (1984) 155 Cal.App.3d 381, the
court affirmed a punitive damages verdict against a corporation based in part on a
corporate resolution to borrow money. It said a corporate resolution to borrow
"serves as an indicator of the continuing health and viability of a business." (Id. at
pp. 385, 391.)
Simpson next contends that even if his ability to earn money in the future was
relevant, Roesler's testimony should have been excluded as "grossly speculative."
Simpson argues that Roesler compared Simpson to other famous sports celebrities
without confronting the negative effects stemming from the findings in this case that
he killed the victims or the evidence from the defense witnesses that the demand for
Simpson's services or products had fallen off. This argument confuses weight and
credibility of evidence with admissibility of evidence. Whether Roesler's evaluation
of Simpson's future income potential was credible was an issue of fact for the jury.
The appellate court cannot reweigh the credibility of witnesses or resolve conflicts
in the evidence. (Vallbona v. Springer (1996) 43 Cal.App.4th 1525, 1535-1536.)
The appellate court must view the conflicting evidence regarding punitive damages
in the light most favorable to the judgment pursuant to the familiar substantial
evidence rule. (Neal v. Farmers Ins. Exchange, supra, 21 Cal.3d 910, 928.)
Roesler was well qualified by his experience to render an opinion on the value of a
celebrity's name and likeness. Contrary to Simpson's present argument, Roesler
did not ignore negative publicity. He discussed how the value of Simpson's
autographed pictures went up during the criminal trial and had remained at that level
since. He discussed how the value of Mike Tyson memorabilia increased even after
Tyson's conviction of rape. He opined there was a definite market for Simpson
autographs unaffected by the outcome of this trial. He said Simpson has a very high
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level of recognition throughout the world, and there were many people who want a
Simpson product or autograph. In his written report which was admitted into
evidence, he discussed the phenomenon that value is based more on fame and
notoriety than on good, quoting, "'We live in a society where the line between
celebrity and infamy has almost disappeared. What matters most is fame and it is
not terribly important how you get famous.'" The report noted that Simpson's past
accomplishments in sports were well established, and opined that Simpson had an
appeal in international and ethnic markets unaffected by the opinion of others that he
committed these murders. The conflict between this evidence and the defense
evidence that the market for Simpson memorabilia and services had dried up was for
the jury to resolve. In denying the motion for new trial, the trial court called
plaintiffs' evidence credible.
Amount of Punitive Damages
Simpson contends the verdict totaling $25 million in punitive damages is
excessive. The amount of punitive damages is determined in the discretion of the
jury. An appellate court will not reverse the jury's determination unless the award
as a matter of law is excessive or appears so grossly disproportionate to the relevant
factors that it raises a presumption it was the result of passion or prejudice. (Neal v.
Farmers Ins. Exchange, supra, 21 Cal.3d 910, 927-928; Las Palmas Associates v.
Las Palmas Center Associates (1991) 235 Cal.App.3d 1220, 1257-1259.) In
reviewing the verdict the appellate court is guided by three main factors: the
reprehensibility of the defendant's conduct, the actual harm suffered by the victims,
and the wealth of the defendant. (Neal v. Farmers Ins. Exchange, supra, 21 Cal.3d
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at p. 928; Las Palmas Associates v. Las Palmas Center Associates, supra, 235
Cal.App.3d at p. 1258.)15
Review of these factors in the unique circumstances of this case shows that
the verdict was not the result of passion or prejudice and was not excessive as a
matter of law.
In this case the first two factors, the reprehensibility of the defendant's
conduct and the severity of harm to the victims, have the greatest weight legally
possible. In effect the jury found that Simpson committed two deliberate, vicious
murders. This is the most reprehensible conduct that society condemns and is
ordinarily punished under California criminal law by a sentence of death or life
imprisonment without possibility of parole. (Pen. Code, §§ 187, 189, 190, subd.
(a), 190.2, subd. (a)(3); see BMW of North America, Inc. v. Gore (1996) 517 U.S.
559, 583 [suggesting comparing the punitive damages to statutory criminal and civil
penalties for comparable misconduct].) The harm suffered by the victims was the
maximum possible; they were intentionally killed. This case cannot be compared to
punitive damages involving a business fraud resulting only in economic harm.
Considering the outrageousness of Simpson's conduct and the enormity of its
consequences, the amount of $25 million, in the abstract, is not offensive and does
not raise a presumption the verdict resulted from passion or prejudice.16
15 In an action by the representative of a decedent's estate, the punitive damages must be
compared to the actual harm suffered by the decedent, not the limited economic damages
recoverable by the estate. (Neal v. Farmers Ins. Exchange, supra, 21 Cal.3d at p. 929;
Gagnon v. Continental Casualty Co. (1989) 211 Cal.App.3d 1598, 1602-1605.)
16 A few cases involving punitive damages assessed against a civil defendant found to
have murdered the decedent are collected in an annotation (1993) 12 A.L.R.5th 195,
section 29[b], page 361, and later cases (2000 supp.) page 26. One of these, without
specifically discussing the defendant's financial condition, affirmed a punitive damage
award of $5 million, concluding it did not indicate jury passion or prejudice and was not
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Simpson does not address the first two factors, only the third, the relationship
of the amount of punitive damages to his wealth. He relies on the language in
Adams v. Murakami, supra, 54 Cal.3d 105, 111, that, "Even if an award is entirely
reasonable in light of the [first] two factors . . . , the award can be so
disproportionate to the defendant's ability to pay that the award is excessive for that
reason alone." He contends the award of $25 million exceeds even plaintiffs'
estimate of his net worth as $15.7 million. He contends that because appellate
courts have sometimes reversed punitive damage awards exceeding a given fraction
of the defendant's net worth, an award exceeding net worth is necessarily excessive
as a matter of law.17
This contention is unpersuasive in the unusual circumstances of this case.
Although net worth is the most common measure of the defendant's financial
condition, it is not the only measure for determining whether punitive damages are
excessive in relation to that condition. (Adams v. Murakami, supra, 54 Cal.3d at
p. 116, fn. 7; Lara v. Cadag, supra, 13 Cal.App.4th 1061, 1064-1065 & fn. 3 [net
worth is subject to easy manipulation, and blind adherence to that or any single
standard could lead to awards that fail to deter and punish, or deter and punish too
unreasonable considering the character of the wrong. (Armstrong v. Randle (Tex. Ct.
App. 1994) 881 S.W.2d 53, 59.)
17 Simpson cites Michelson v. Hamada (1994) 29 Cal.App.4th 1566, 1596 (punitive
damages of 28 percent of net worth found excessive), and Storage Services v. Oosterbaan
(1989) 214 Cal.App.3d 498, 515-516 (punitive damages of 33 percent of net worth found
excessive). The other cases cited by Simpson discuss the concept of punitive damages as
a percentage of net worth but either affirmed the particular verdict or reversed on the
different ground that the plaintiff had failed to offer requisite evidence of the defendant's
net worth. (Adams v. Murakami, supra, 54 Cal.3d 105; Neal v. Farmers Ins. Exchange,
supra, 21 Cal.3d 910; Devlin v. Kearny Mesa AMC/Jeep/Renault, Inc., supra, 155
Cal.App.3d 381; Washington v. Farlice, supra, 1 Cal.App.4th 766; Kenly v. Ukegawa,
supra, 16 Cal.App.4th 49.)
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much].) Furthermore, the court that compiled a list of cases in an attempt to
discover a formula for determining whether a given percentage of net worth is
excessive ultimately concluded there is no formula, and that each case must be
decided on its own facts considering all three factors and various indicators of
wealth. (Devlin v. Kearny Mesa AMC/Jeep/Renault, Inc., supra, 155 Cal.App.3d
381, 388-389, 391-392; Vallbona v. Springer, supra, 43 Cal.App.4th 1525, 1539-
1540.)
The evidence here, viewed in the light most favorable to the judgment, shows
that Simpson is a wealthy man, with prospects to gain more wealth in the future.
The enormity of his misconduct shows that a large amount of punitive damages is
necessary to punish him and deter him. There is no formula based on net worth for
determining what amount is too much. The fundamental underlying principle is that
punitive damages must not be so large they destroy the defendant. Evidence unique
to this case shows this award will not destroy Simpson economically. He has
pension funds worth $4.1 million that are exempt from execution to pay this award.
Despite the award of punitive damages Simpson can continue to enjoy a
comfortable living. In Devlin v. Kearny Mesa AMC/Jeep/Renault, Inc., supra, 155
Cal.App.3d 381, the court affirmed a punitive damages award against a corporate
car dealer for a single fraudulent sale of a car with a turned-back odometer. The
award was 17.5 percent of the dealer's net worth. Despite the fact that this fraction
exceeded the fraction in previous cases it surveyed, the court affirmed, noting
"[t]here is nothing in the financial data presented which suggests the award will
unduly interfere with or hamper Kearny Mesa's future operations." (Id. at p. 391.)
In Vallbona v. Springer, supra, 43 Cal.App.4th 1525, the defendant doctor
misrepresented to patients the effectiveness or legality of a surgical procedure. The
punitive damages award of $200,000 was 23 percent of the net worth of the doctor
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and his wife. The court affirmed, noting that the award still "left them with
$666,000, almost 77 percent of their demonstrated net worth." (Id. at p. 1540.)
Here the fact that the punitive damages award technically exceeds net worth is not
controlling, because in light of the exempt nature of a significant part of his wealth,
Simpson will not be destroyed by the award. Considering all the factors, the
punitive damages award, "in light of the defendant's wealth and the gravity of the
particular act," does not exceed "the level necessary to properly punish and deter."
(Neal v. Farmers Ins. Exchange, supra, 21 Cal.3d at p. 928.)
DISPOSITION
The judgments are affirmed.
CERTIFIED FOR PUBLICATION
VOGEL (C.S.), P.J.
We concur:
EPSTEIN, J.
HASTINGS, J.