Stanford Law School - Robert Crown Law Library

Filed 6/16/05 (this opn. should precede companion case, S121723, also filed this date)

IN THE SUPREME COURT OF CALIFORNIA

LIONEL SIMON,
Plaintiff and Appellant,
S121933
v.
Ct.App. 2/4 B121917
SAN PAOLO U.S. HOLDING
COMPANY, INC.,
Los Angeles County
Super. Ct. No. BC15243
Defendant and Appellant.

In an action arising from plaintiff’s failed attempt to purchase an office
building from defendant, the jury found that the parties had no binding and
enforceable agreement but that defendant had committed promissory fraud. On
his fraud cause of action, plaintiff was awarded $5,000 in economic compensatory
damages and $1.7 million in punitive damages. Considering all the relevant
circumstances, we conclude this award of punitive damages exceeds the federal
due process limitations outlined in recent United States Supreme Court decisions.
We further conclude the maximum award constitutionally permissible in the
circumstances of this case is $50,000.
The central issue presented is whether, in addition to the $5,000 in
compensatory damages awarded, the punitive damages award should be measured
against the $400,000 in profit plaintiff claims he would have achieved had
defendant sold the property to him at the agreed price. Plaintiff argues this
amount represents either the uncompensated harm he suffered from defendant’s
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conduct or the potential harm that conduct could have caused him. On this issue,
we conclude that while uncompensated or potential harm may in some
circumstances be properly considered in assessing the constitutionality of a
punitive damages award, here defendant’s fraud neither caused nor foreseeably
threatened to cause $400,000 in harm to plaintiff. Under these circumstances, the
$1.7 million punitive damages award must be measured against the $5,000
compensatory award, and so measured it is grossly excessive.
Our decision here addresses only the federal constitutional question, not
any issue of excessiveness under California law.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff Lionel Simon owns and operates a paper supply company, Liberty
Paper Company, located in Los Angeles. In 1996, when the events that gave rise
to this lawsuit occurred, Simon was leasing premises for his business; he had
never before purchased a commercial building.
Defendant San Paolo U.S. Holding Company, Inc. (San Paolo Holding), is
a wholly owned subsidiary of an Italian bank, Instituto Bancario San Paolo, S.p.A.
(San Paolo Bank). In the mid-1990’s, San Paolo Holding acquired and disposed
of the nonperforming loans and real property of First Los Angeles Bank, a bank
San Paolo Bank sold in 1995. At the end of 1996, San Paolo Holding had net
assets worth around $46 million. Pursuant to a plan of liquidation, however, most
of this wealth was transferred in cash to the parent corporation, and by 1998, when
punitive damages were tried in this case, San Paolo Holding held only about $4.8
million in net assets.
Duane King, who represented San Paolo Holding in the failed negotiations
with Simon, was a vice-president in charge of disposing of the properties acquired
from First Los Angeles Bank. William Schack, a first vice-president of San Paolo
Holding, supervised King.
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In 1994, Simon noticed that a small downtown office building at 816 South
Figueroa Street was for sale. He considered it perfect for his business needs and
remained interested in buying it after San Paolo Holding acquired it through
foreclosure in late 1995. In March 1996, Simon learned that an arrangement to
sell the building to an investment group headed by Robert DeVogelaere for $1.5
million had fallen though; Simon then asked William Atha, the real estate broker
handling the property for San Paolo Holding, to present Simon’s offer to buy the
building for $1.2 million. In ensuing negotiations, King twice raised the asking
price after obtaining Simon’s oral agreement to buy, and no written agreement was
reached. Additional negotiations in April and May collapsed in disputes over
price (King wanted $1.35 million) and closing date (King wanted to close by the
end of June for internal bookkeeping reasons, while Simon wanted a long escrow
in case the foreclosed prior owner exercised its right of redemption).
The parties finally reached a tentative written agreement in June 1996. On
June 12, King and Simon executed a letter of intent drafted by Atha, the broker.
In exchange for San Paolo Holding’s acceptance of a $1.1 million sale price,
Simon promised his cooperation in closing the transaction by June 27. Escrow
was to open by 5:00 p.m. the next day, June 13, upon the approval of San Paolo
Bank’s Los Angeles and New York offices. Simon was to deposit $50,000 to
open escrow and was to complete all inspections and due diligence and secure
financing by June 26, at which time his deposit would be released to the seller.
The parties agreed “to exclusively negotiate upon execution of this letter” and “to
proceed to escrow and attempt to complete a transaction based upon the above
conditions,” which were said to constitute the “essential elements” of the
transaction. Simon added a handwritten addendum stating, “This letter is intended
as a letter of intent only and this transaction is subject to approval by legal counsel
of the deposit receipt and escrow instructions.” (Simon retained counsel on
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June 12, paying a nonrefundable $5,000 retainer.) On the facsimile cover sheet
transmitting the executed letter to Simon, Atha described it as a “signed letter of
intent (nonbinding).”
On the morning of June 13, Atha asked Simon if he could have his
inspections done by June 21, instead of June 26 as agreed. Simon replied that he
also was anxious to complete the purchase and would try to have the inspections
done by June 21. Later, Atha called to tell him that San Paolo Holding was now
insisting on completion by June 21. Simon said he would agree to finish by
June 24, a Monday, and to use his best efforts to do so by June 21, the previous
Friday. Atha drafted a deposit receipt reflecting that schedule, but King did not
sign it. Despite Atha’s pointing out to both sides that they were only one business
day apart in their positions, no further agreement was reached and escrow did not
open as planned on June 13. Around 5:00 p.m. on June 13, King faxed a letter to
Simon, giving notice that San Paolo Holding “has failed to come to terms with
you” and “[a]ccordingly, we are terminating negotiations with you and plan to
move on in our efforts to market the building.”
Schack, King’s supervisor in Los Angeles, testified that he and King
wanted to sell the building at 816 South Figueroa Street in the quarter ending
June 30, 1996, in order to maximize the department’s bonus and show bank
headquarters that the Los Angeles office was selling assets. According to Schack,
after King signed the letter of intent specifying June 26 as the buyer’s date to
complete inspections and release his deposit, King and Schack instead decided that
“the 21st was what would work for us.” Although King told Schack that Simon
had agreed to complete by June 24, King and Schack did not seek approval from
the New York office for any date other than June 21. Because Simon would not
agree to June 21, “the transaction was cancelled.”
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King agreed with Schack that the “big issue” causing failure of the sale to
Simon was the date for completion of inspections and release of Simon’s deposit.
King also suggested that escrow could not be opened on June 13 because Simon
did not submit the financial statements necessary for him to obtain financing from
San Paolo Bank. Atha, however, testified that King told him San Paolo Holding
would not accept Simon’s deposit or financials because of the disagreement over
the release date; Atha in turn told Simon not to bother tendering the deposit and
submitting the financials.
On June 14, 1996, San Paolo Holding reached a written agreement to sell
the building for $1 million to a group that included DeVogelaere, the investor with
whom King had negotiated earlier in the year. At trial, the parties vigorously
disputed whether King began the negotiations that led to this agreement during the
period between executing the letter of intent with Simon on June 12 and
terminating negotiations with him at 5:00 p.m. on June 13.
While King and DeVogelaere, in declarations submitted for the purpose of
expunging a lis pendens Simon had filed in connection with this lawsuit, stated
they had conducted no negotiations until after the negotiations with Simon were
terminated, there was considerable evidence to the contrary: phone records
showed numerous calls between King and DeVogelaere during the day on
June 13, in which, DeVogelaere testified, they discussed his group’s offer to buy
the building; according to notes that Atha took before a call to Simon at 3:30 p.m.
on June 13, and according as well to King’s own testimony, King told Atha that
afternoon not to tell Simon that King was talking to another possible buyer; the
sale contract originally bore dates of June 12 and June 13, later overwritten to read
June 14; the offer sheet was also dated June 13; and Schack faxed the offer sheet
and a credit memorandum to the New York office at 9:15 a.m. on June 14, casting
doubt on King’s testimony that starting around 8:00 a.m. on the morning of
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June 14 he signed the contract at his Malibu home, took the executed contract to
DeVogelaere’s home in Pacific Palisades, drove to his downtown Los Angeles
office (a trip DeVogelaere testified ordinarily took at least 45 minutes), and
prepared the offer sheet and detailed credit memorandum.
Even after opening escrow with the DeVogelaere group, King had Atha, as
yet unaware of the DeVogelaere contract, engage in renewed negotiations with
Simon, orally offering on June 17 to accept a June 26 deposit release date and to
pay $5,000 to help with Simon’s due diligence. Simon instead filed this lawsuit
on June 21, 1996. His lis pendens was later expunged, and the DeVogelaere sale
closed in August 1996.
Simon’s real estate valuation expert testified the building was worth $1.5
million as of June 1996, $400,000 more than Simon was to pay under the letter of
intent. San Paolo Holding’s expert, who had also previously appraised the
building at $1.5 million, nevertheless testified to a value of only $1 million, based
in large part on the sale for that amount to the DeVogelaere group.
Simon sued San Paolo Holding for breach of contract and promissory fraud.
As to breach of contract, the jury by special verdict found the parties had no
“binding and enforceable agreement.” As to fraud, the jury found San Paolo
Holding had made “a false promise about a material matter” to Simon without the
intent to perform and with the intent to defraud Simon, and that Simon had
justifiably relied on the promise and was damaged in the amount of $5,000. The
jury also found by clear and convincing evidence that San Paolo Holding acted
with fraud, malice or oppression and awarded Simon $2.5 million in punitive
damages. On San Paolo Holding’s motion for a new trial, the trial court ordered a
new trial on punitive damages unless Simon agreed to their reduction to $250,000.
Simon declined the remittitur. On retrial of punitive damages, a new jury awarded
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him $1.7 million, and the trial court rendered judgment upon that award together
with the $5,000 in compensatory damages.
The Court of Appeal affirmed. The United States Supreme Court granted
certiorari, vacated the decision and remanded the case to the Court of Appeal for
further consideration in light of Cooper Industries, Inc. v. Leatherman Tool
Group, Inc. (2001) 532 U.S. 424 (Cooper Industries). Upon reconsideration, the
Court of Appeal again affirmed, but the high court again granted certiorari,
vacated and remanded, this time for further consideration in light of State Farm
Mut. Auto Ins. Co. v. Campbell (2003) 538 U.S. 408 (State Farm). In its third
decision in this matter, the Court of Appeal again affirmed the punitive damages
award, holding it was not unconstitutionally excessive under guidelines
established in State Farm and BMW of North America v. Gore (1996) 517 U.S.
559 (BMW). The appellate court concluded that the “continuous and intricate”
deceit by San Paolo Holding’s officer, King, was sufficiently reprehensible to
support a substantial award and that the $1.7 million punitive damages award was
only just over four times Simon’s actual loss, the $400,000 difference between
what his expert testified the building was worth and what Simon had agreed to pay
for it.
We granted San Paolo Holding’s petition for review, which presented the
question whether the punitive damages award is unconstitutionally excessive
under State Farm and its predecessors.1

1
Because the present petition goes only to federal issues, we do not address
whether the award is excessive under state law standards. (See Adams v.
Murikami (1991) 54 Cal.3d 105, 109-110; Neal v. Farmers Ins. Exchange (1978)
21 Cal.3d 910, 927-928.) And because San Paolo Holding’s challenge at this
stage of the litigation is to the Court of Appeal’s failure to reduce the award on
remand from the United States Supreme Court, not to the jury instructions

(footnote continued on next page)
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DISCUSSION
In a series of decisions culminating in State Farm, supra, 538 U.S. 408, the
United States Supreme Court has determined that the due process clause of the
Fourteenth Amendment to the United States Constitution places limits on state
courts’ awards of punitive damages, limits appellate courts are required to enforce
in their review of jury awards. (See Pacific Mut. Life Ins. Co. v. Haslip (1991)
499 U.S. 1, 18-24; TXO Production Corp. v. Alliance Resources Corp. (1993) 509
U.S. 443, 453-458 (plur. opn.); BMW, supra, 517 U.S. at p. 568; Cooper
Industries, supra, 532 U.S. at pp. 433-436; State Farm, supra, at pp. 416-418.)
The imposition of “grossly excessive or arbitrary” awards is constitutionally
prohibited, for due process entitles a tortfeasor to “ ‘fair notice not only of the
conduct that will subject him to punishment, but also of the severity of the penalty
that a State may impose.’ ” (State Farm, supra, at pp. 416-417, quoting BMW,
supra, at p. 574.)
Eschewing both rigid numerical limits and a subjective inquiry into the
jury’s motives, the high court eventually expounded in BMW and State Farm a
three-factor weighing analysis looking to the nature and effects of the defendant’s
tortious conduct and the state’s treatment of comparable conduct in other contexts.
As articulated in State Farm, the constitutional “guideposts” for reviewing courts
are: “(1) the degree of reprehensibility of the defendant’s misconduct; (2) the
disparity between the actual or potential harm suffered by the plaintiff and the
punitive damages award; and (3) the difference between the punitive damages

(footnote continued from previous page)
employed at trial, we address neither the correctness of those instructions nor the
question whether, as plaintiff contends, San Paolo Holding invited any error by
submitting standard instructions on punitive damages.
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awarded by the jury and the civil penalties authorized or imposed in comparable
cases.” (State Farm, supra, 538 U.S. at p. 418; see BMW, supra, 517 U.S. at
p. 575.)
In deciding whether an award of punitive damages is constitutionally
excessive under State Farm and its predecessors, we are to review the award de
novo, making an independent assessment of the reprehensibility of the defendant’s
conduct, the relationship between the award and the harm done to the plaintiff, and
the relationship between the award and civil penalties authorized for comparable
conduct. (State Farm, supra, 538 U.S. at p. 418; Cooper Industries, supra, 532
U.S. at pp. 436-443.) This “[e]xacting appellate review” is intended to ensure
punitive damages are the product of the “ ‘application of law, rather than a
decisionmaker’s caprice.’ ” (State Farm, supra, at p. 418.)2
On the other hand, findings of historical fact made in the trial court are still
entitled to the ordinary measure of appellate deference. (Cooper Industries, supra,
532 U.S. at p. 440, fn. 14; see also Leatherman Tool Group, Inc. v. Cooper
Industries, Inc. (9th Cir. 2002) 285 F.3d 1146, 1150 (decision on remand)

2
The requirement of independent review applies to state as well as federal
appellate courts when assessing excessiveness under the federal due process
clause. (See State Farm, supra, 538 U.S. at pp. 418 [“courts reviewing punitive
damages” must independently review BMW factors], 429 [remanding case to Utah
Supreme Court for state courts to make a “proper calculation of punitive damages
under the principles we have discussed”]; Time Warner Entertainment Company v.
Six Flags Over Georgia, LLC (Ga.Ct.App. 2002) 563 S.E.2d 178, 180-181;
O’Neill v. Gallant Insurance Company (Ill.App.Ct. 2002) 769 N.E.2d 100, 113.)
But when no federal due process issue is involved, as when awards are reviewed
for excessiveness under state law, the high court’s decisions do not forbid greater
deference to jury verdicts or trial court judgments. (Cooper Industries, supra, 532
U.S. at p. 433; Time Warner Entertainment Company v. Six Flags Over Georgia,
LLC, supra, at pp. 181-182.)
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[“Although determining the ‘degree of reprehensibility’ ultimately involves a legal
conclusion, we must accept the underlying facts as found by the jury and the
district court”].) Here, for example, the jury expressly found that the parties had
no binding and enforceable agreement, but that San Paolo Holding made a
fraudulent promise upon which Simon justifiably relied to his detriment in the
amount of $5,000. As neither party contends these findings lack substantial
evidentiary support in the record, we accept them as the factual basis for our
constitutional analysis of the punitive damages award.
The Court of Appeal, however, erred in “presum[ing],” simply from the
size of the punitive damages award, that the jury found Simon had suffered “an
actual loss of at least . . . $400,000.” The jury made no such express finding, and
to infer one from the size of the award would be inconsistent with de novo review,
for the award’s size would thereby indirectly justify itself. (See Cooper
Industries, supra, 532 U.S. at pp. 441-442 [determining independently that the
potential harm from defendant’s unfair competition (passing off plaintiff’s product
as its own) did not extend to all of defendant’s profits from the product for five
years].)
I. Uncompensated Harm/Potential Harm
Before undertaking the multifactor evaluation mandated by BMW, supra,
517 U.S. 559, and State Farm, supra, 538 U.S. 408, we address Simon’s principal
arguments for upholding the award: that the $400,000 gain he assertedly would
have made by purchasing the subject building for $1.1 million may be deemed a
measure of either the harm San Paolo Holding’s fraud actually caused him or the
harm it potentially could have caused him, and that such uncompensated or
potential harm may properly be considered in the comparison of punitive damages
to harm required by the high court. San Paolo Holding, in contrast, contends the
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actual compensatory damages award, here $5,000, provides the appropriate basis
for comparison under the high court’s rulings.
United States Supreme Court precedents appear to contemplate, in some
circumstances, the use of measures of harm beyond the compensatory damages.
Thus in State Farm, discussing the second BMW “guidepost,” the high court spoke
repeatedly of a proportionality between punitive damages and the harm or
“potential harm” suffered by the plaintiff. (State Farm, supra, 538 U.S. at pp.
418, 424.) At another point (id. at p. 426), the court referred to the relationship
between punitive damages and both “the amount of harm” and “the general
damages recovered,” impliedly recognizing that these two are not always identical.
More explicitly, in State Farm the high court reiterated its recognition in BMW
that in some cases compensatory damages are not the definitive quantification of
harm because “ ‘the injury is hard to detect or the monetary value of noneconomic
harm might have been difficult to determine.’ ” (State Farm, supra, at p. 425,
quoting BMW, supra, 517 U.S. at p. 582.)
State Farm’s reference to potential harm echoed the high court’s earlier
decision in TXO Production Corp. v. Alliance Resources Corp., supra, 509 U.S.
443 (TXO), a business tort case in which the court approved a $10 million punitive
damages award on compensatory damages of only $19,000. The plurality opinion
relied heavily on the economic injuries the defendant’s scheme to cheat the
plaintiff of oil and gas royalties could have caused had it succeeded, injuries
estimated in the millions of dollars. (Id. at pp. 459-462.) “It is appropriate to
consider the magnitude of the potential harm that the defendant’s conduct would
have caused to its intended victim if the wrongful plan had succeeded . . . .” (Id.
at p. 460; see also id. at p. 484 (dis. opn. of O’Conner, J.) [“I have no quarrel with
the plurality that, in the abstract, punitive damages may be predicated on the
potential but unrealized harm to the victim”].)
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In the wake of TXO, BMW and State Farm, a large number of federal and
state courts have, in a variety of factual contexts, considered uncompensated or
potential harm as part of the predicate for a punitive damages award.3 In the

3 See,
e.g.,
Romo v. Ford Motor Co. (2003) 113 Cal.App.4th 738, 760-761
(considering harm to decedents that cannot be recovered under California law);
Mathias v. Accor Economy Lodging, Inc. (7th Cir. 2003) 347 F.3d 672, 677
(relatively large ratio between punitive and compensatory damages for rental of
motel room infested with bedbugs justified in part because “the compensable harm
done was . . . difficult to quantify because a large element of it was emotional”);
DiSorbo v. Hoy (2d Cir. 2003) 343 F.3d 172, 187 (where jury awarded only
nominal damages on abuse of process claim, ratio between punitive and
compensatory damages was “ ‘not the best tool’ ” for analysis); Continental Trend
Resources, Inc. v. OXY USA (10th Cir. 1996) 101 F.3d 634, 639-640 (potential
harm from tortious interference with contract may be considered); In re the Exxon
Valdez (D.Alaska 2004) 296 F.Supp.2d 1071, 1103 (had ship captain succeeded in
backing oil tanker off reef, additional oil could have spilled, causing “immense
and incalculable” additional harms); Southern Union Company v. Southwest Gas
Corporation (D.Ariz. 2003) 281 F.Supp.2d 1090, 1099-1105 (unquantifiable harm
from breach of public trust and potential harm from intentional interference with
corporate merger may be considered to justify relatively large punitive damages
award against state corporations commissioner); Parrish v. Sollecito (S.D.N.Y.
2003) 280 F.Supp.2d 145, 163 (potential emotional distress from illegal
discrimination and retaliation increases reprehensibility); Craig v. Holsey
(Ga.Ct.App. 2003) 590 S.E.2d 742, 744, 748 (while plaintiff in automobile
accident case actually suffered only about $8,800 in damages, she “could have
died as a result of [defendant’s] driving under the influence”); In re New Orleans
Train Car Leakage Fire Litigation (La.Ct.App. 2001) 795 So.2d 364, 386
(justifying size of punitive damages award in part by observing that if train car
leaking flammable gas had exploded as well as burning “whole city blocks of a
residential area could have been destroyed”); Medeja v. MPB Corporation (N.H.
2003) 821 A.2d 1034, 1050-1051 (relatively high ratio between punitive and
compensatory damages permitted in sexual harassment case due to “the difficulty
of measuring actual damages where the injury is primarily personal”); Trinity
Evangelical Lutheran Church v. Tower Ins. Co. (Wis. 2003) 661 N.W.2d 789, 803
(considering potential injury had insurer’s bad faith denial of coverage succeeded
at summary judgment). By citing these cases, we do not necessarily indicate
agreement with each particular result.
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present case, however, we conclude that the $400,000 in profit that plaintiff might
have gained by purchasing the building is not a proper consideration.
As explained above, we must determine independently the relationship
between the harm done plaintiff and the amount awarded in punitive damages.
(Cooper Industries, supra, 532 U.S. at pp. 436-440.) While we defer to express
jury findings supported by the evidence (see ante, at p. 9), in the absence of an
express finding on the question we must independently decide whether
defendant’s promissory fraud did, or foreseeably could have, hurt plaintiff in the
amount of $400,000.
The first jury did not specify the “false promise about a material matter” it
found San Paolo Holding had made. Based on the evidence and argument, the
finding could refer to San Paolo Holding’s express promise, in the letter of intent,
to “proceed to escrow and attempt to complete a transaction” on the agreed terms,
to its express promise to “exclusively negotiate,” to its implied promise to seek
approval from the New York office for a sale on the agreed terms, or to any
combination of these. None of these possible false promises, however, was the
factual cause of a $400,000 loss to Simon. Had San Paolo Holding never
promised to proceed to escrow, never promised to negotiate exclusively with
Simon, and never promised to seek the New York office’s approval, Simon would
still not have obtained the property. Simon, the first jury found, had no
contractual right to buy the property. Consequently, San Paolo Holding’s
promissory fraud did not deprive him of property he would otherwise have
obtained; it merely led him, as the jury indeed found, to spend $5,000 to retain an
attorney in anticipation of opening escrow.
Gray v. Don Miller & Associates, Inc. (1984) 35 Cal.3d 498 is closely on
point. The plaintiff made an offer to purchase real property for his business. The
broker falsely told him the sellers had accepted his offer, leading him to expend
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various sums in anticipation of closing the purchase and moving to the new site.
In the plaintiff’s action against the broker for fraud, we held he was entitled to the
amounts he had spent in reliance on the misrepresentation, but not to claimed
“delay damages” for increases in the cost of construction during the six-month
period he believed the purchase would proceed. (Id. at p. 504.) The plaintiff’s
inability to promptly begin renovating the property for his business, we explained,
“was not caused by [the broker’s] misrepresentation, but by the sellers’ refusal to
accept his offer of sale.” (Ibid.; accord, Kenly v. Ukegawa (1993) 16 Cal.App.4th
49, 53-55 [where defendant falsely promised to sell plaintiff farm property,
plaintiff may recover only costs incurred in reliance on the promise, not profits
that would have been gained had he purchased and resold the property].)
Simon contends, and the Court of Appeal agreed, that he was precluded
from recovering the $400,000 in lost profits only by operation of Civil Code
section 3343, subdivision (a)(1), which in effect sets damages for a defrauded
attempted purchaser of property at the “[a]mounts actually and reasonably
expended in reliance upon the fraud.” We disagree. Regardless of the effect of
Civil Code section 3343, Simon could not recover those lost profits on his
promissory fraud cause of action because the fraud did not cause them.
Fraudulent promises to sell (as in Kenly v. Ukegawa, supra, 16 Cal.App.4th at
p. 55), fraudulent representations that an offer to purchase has been accepted (as in
Gray v. Don Miller & Associates, Inc., supra, 35 Cal.3d at p. 504) or, as here,
fraudulent promises to negotiate exclusively and proceed to escrow may cause the
attempted buyer to expend money in reliance, but they do not themselves cause the
losses occasioned by the attempted buyer’s failure to actually obtain the property.
That injury is instead caused by the seller’s breach of an enforceable contractual
obligation to sell the property—where one exists. If Simon had prevailed on his
breach of contract cause of action, he would have been entitled to recover on that
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cause of action the benefit of his bargain, here assertedly $400,000, because San
Paolo Holding’s refusal to sell to him caused that injury. (See Civ. Code, § 3306.)
But San Paolo Holding in fact had no contractual obligation to sell Simon the
property. It had an obligation—imposed by law—not to fraudulently promise to
sell Simon the property, but had San Paolo Holding complied with its legal
obligation by refraining from making false promises, Simon still would not have
obtained the property.4
This is not a case like Neal v. Farmers Ins. Exchange, supra, 21 Cal.3d
910, in which a statute barred recovery of damages actually caused by the
defendant’s tortious acts. In that insurance bad faith case, the plaintiff died before
judgment, precluding her estate’s recovery of damages for emotional distress. (Id.
at p. 920, fn. 3; see Code Civ. Proc., § 377.34 (formerly Prob. Code, § 573).)
Considering it “likely that absent this limitation plaintiff would have recovered a
substantial additional amount in compensation for emotional distress,” this court
held the disparity between the relatively small compensatory damages award and
the significant award of punitive damages did not require nullification of the latter
under state law. (Neal v. Farmers Ins. Exchange, supra, at p. 929; see also Romo
v. Ford Motor Co., supra, 113 Cal.App.4th at pp. 760-761 [reaching similar
conclusion under State Farm].) Farmers’ bad faith conduct had actually caused
Mrs. Neal substantial emotional distress; her estate was barred from recovering

4
Simon cites our decision in Lazar v. Superior Court (1996) 12 Cal.4th 631,
646, for the proposition that fraud plaintiffs generally may recover
benefit-of-bargain as well as out-of-pocket damages. The reliance is misplaced:
our reference in that decision to benefit-of-bargain damages was to their recovery
under a contract cause of action. (See Tavaglione v. Billings (1993) 4 Cal.4th
1150, 1159.) On a different point, nothing we say in this case affects the scope of
damages recoverable for fraud committed by a fiduciary. (See Alliance Mortgage
Co. v. Rothwell (1995) 10 Cal.4th 1226, 1240-1241.)
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such damages only by Probate Code former section 573. In contrast, San Paolo
Holding’s false promise or promises, as we have seen, did not cause Simon’s
failure to obtain the property; even in the absence of Civil Code section 3343,
subdivision (a)(1), he would not be entitled to recover benefit-of-the-bargain
damages for San Paolo Holding’s promissory fraud.
Simon also contends San Paolo Holding’s fraud was intended to cause him,
or risked causing him, “potential losses . . . well in excess of $455,000.” In
addition to the $400,000 anticipated profit from acquiring the building and his
$5,000 out-of-pocket loss, Simon includes in this sum the $50,000 deposit that
was, under the letter of intent, to become nonrefundable upon completion of
inspections and due diligence on June 26, 1996. Simon argues that had he agreed
to King’s demand to move the completion date up to June 21, King “would likely
have strung [him] along until the 22nd, and then manufactured some other reason
to back out of the sale,” resulting in the loss of his deposit. Simon further
contends his potential losses include an unquantified financial impact: had he
given up his leased business premises after signing the letter of intent, he would
then have “found himself on the street” when San Paolo Holding pulled out of the
sale. We conclude, however, that these asserted potential injuries, like the
uncompensated harm Simon claims, may not be considered in assessing the ratio
of punitive damages to harm.
The potential harm that is properly included in the due process analysis is
“ ‘harm that is likely to occur from the defendant’s conduct.’ ” (TXO, supra, 509
U.S. at p. 460.) In TXO, the high court, quoting from the state court decision, gave
a hypothetical illustration: “ ‘For instance, a man wildly fires a gun into a crowd.
By sheer chance, no one is injured and the only damage is to a $10 pair of glasses.
A jury reasonably could find only $10 in compensatory damages, but thousands of
dollars in punitive damages to teach a duty of care.’ ” (Id. at p. 459.) A potential
16

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injury that was foreseeable from the defendant’s conduct—whether because it
constituted an unintended but reasonably likely risk or because it was a goal of the
tortfeasor’s conduct—is properly considered because a tortfeasor had notice of the
likelihood of such an injury. Considering such injuries in assessing punitive
damages therefore comports with the due process mandate that “a person receive
fair notice . . . of the severity of the penalty that a State may impose.” (BMW,
supra, 517 U.S. at p. 574.)
In TXO itself, the defendant, hoping to renegotiate downward the royalties
it had agreed to pay for development of the plaintiff’s oil and gas rights, had
solicited a false affidavit impairing the plaintiff’s title, then brought an
unsuccessful declaratory relief action in state court. (TXO, supra, 509 U.S. at pp.
448-449.) The high court plurality held it appropriate to consider the harm “the
defendant’s conduct would have caused to its intended victim if the wrongful plan
had succeeded.” (Id. at p. 460.) Other cases have also considered foreseeable
potential injuries in the punitive damages-to-harm ratio.5
By contrast, in Pulla v. Amoco Oil Company (8th Cir. 1995) 72 F.3d 648,
where the employer defendant had invaded the employee plaintiff’s private credit

5
See Southern Union Company v. Southwest Gas Corporation, supra, 281
F.Supp.2d at page 1104, footnote 5 (where defendant corporations commissioner’s
“undisputed experience and knowledge made him aware of the potential enormous
risks his conduct would have in disrupting a multimillion dollar transaction”); In
re New Orleans Train Car Leakage Fire Litigation, supra, 795 So.2d at page 386
(where defendant railroad’s reckless conduct “could have” resulted in a
“monumental catastrophe”); Trinity Evangelical Lutheran Church v. Tower Ins.
Co., supra, 661 N.W.2d at pages 793-794, 803 (where defendant insurer had
unsuccessfully sought, by summary judgment, to avoid coverage that the parties
had intended to include in the policy, making it proper to consider the further
injury to the insured that would have resulted had the insurer’s attempt to avoid
coverage succeeded).
17

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card records to determine whether he had been abusing sick leave, the potential
injury to other employees from similar conduct could not properly be considered
because such injury was not “likely to occur” from the defendant’s tortious
conduct—the plaintiff “failed to present any evidence that Amoco put any other
individual’s privacy at risk.” (Id. at p. 660.) And in Leatherman Tool Group, Inc.
v. Cooper Industries, Inc., supra, 285 F.3d at page 1149, the appellate court
declined to consider as a measure of potential harm all of the gross profits the
defendant might have made on its copycat product had the plaintiff not obtained a
preliminary injunction against the product’s sale, as the sale of the copied product
was not itself illegal, though passing it off as the plaintiff’s was.
The present case more closely resembles the last cited decisions, in which
the asserted potential injuries were not foreseeable results of the defendant’s
tortious conduct, than it does the decisions approving consideration of potential
losses. The $400,000 in profit Simon claims he would have earned by acquiring
the property cannot be considered potential harm from San Paolo Holding’s
promissory fraud because, in the absence of any contractual obligation to sell
Simon the property, San Paolo Holding’s tortious conduct could not have had the
foreseeable effect of depriving Simon of an entitlement to purchase it. As in
Leatherman Tool Group, Inc. v. Cooper Industries, Inc., supra, 285 F.3d at page
1149, Simon erroneously characterizes damages he might have obtained on
another cause of action, one on which he did not prevail, as potential damages for
the cause of action on which he did prevail. And, as in Pulla v. Amoco Oil
Company, supra, 72 F.3d at pages 659-660, Simon’s potential loss of his $50,000
deposit was simply not shown to be a likely result of defendant’s fraud: to obtain
the $50,000, San Paolo Holding would first have had to open escrow, which
required entering into a binding contract of sale, giving Simon an enforceable right
to purchase. The same may be said of Simon’s possible cancellation of his then
18

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current leasing arrangement: that he might do so without first entering into a
binding purchase contract was not foreseeable, and had he done so after executing
such a contract he would not have been “out on the street” because he could have
enforced the contract. As observed by an amicus curiae, “there is no basis for
believing that San Paolo [Holding] knew that Simon was at risk of having no place
to operate his business, much less intended him to suffer that consequence.”
As the record does not reveal the goals of San Paolo Holding’s fraud, it is
difficult to say what injuries beyond his $5,000 out-of-pocket loss, if any, Simon
would have suffered had those goals been achieved. To the extent King, for
reasons that are not apparent,6 simply wanted to keep Simon on the hook as long
as possible, he succeeded, but Simon’s only resulting loss, as far as the record
shows, was the $5,000 retainer. (See Bains LLC v. Arco Products Company (9th
Cir. 2005) 405 F.3d 764 [no potential harm to be added to compensatory damages
where the defendant’s wrongful conduct succeeded].) King’s scheme, whatever it
was, evidently did not extend to executing and then breaching a binding contract
of sale, for he had the opportunity to execute such a contract on June 13, 1996, and
instead broke off dealings with Simon. We are thus unable to conclude Simon
demonstrated the existence of substantial potential damages representing harm
“the defendant’s conduct would have caused to its intended victim if the wrongful
plan had succeeded.” (TXO, supra, 509 U.S. at p. 460.)
The $5,000 award of compensatory damages, therefore, must be considered
the true measure of the harm (or potential harm) San Paolo Holding’s tortious act
caused to Simon.

6
Simon has suggested that King had a personal financial motive for
ultimately selling to the DeVogelaere group rather than to Simon. Even if true,
this would not explain why King first executed a letter of intent with Simon.
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II. Evaluation of the Award Under State Farm and BMW
We now consider in sequence the three guideposts prescribed by the high
court: “(1) the degree of reprehensibility of the defendant’s misconduct; (2) the
disparity between the actual or potential harm suffered by the plaintiff and the
punitive damages award; and (3) the difference between the punitive damages
awarded by the jury and the civil penalties authorized or imposed in comparable
cases.” (State Farm, supra, 538 U.S. at p. 418; see BMW, supra, 517 U.S. at
p. 575.)
A. Degree of Reprehensibility
The high court in both BMW and State Farm recognized that “the most
important indicium of the reasonableness of a punitive damages award is the
degree of reprehensibility of the defendant’s conduct.” (State Farm, supra, 538
U.S. at p. 419; BMW, supra, 517 U.S. at p. 575.) In State Farm, the court
summarized the subsidiary factual circumstances it believed particularly relevant
to assessing reprehensibility: “We have instructed courts to determine the
reprehensibility of a defendant by considering whether: the harm caused was
physical as opposed to economic; the tortious conduct evinced an indifference to
or a reckless disregard of the health or safety of others; the target of the conduct
had financial vulnerability; the conduct involved repeated actions or was an
isolated incident; and the harm was the result of intentional malice, trickery, or
deceit, or mere accident.” (State Farm, supra, at p. 419.)
Here, defendant’s tortious acts caused only economic harm and did not
show disregard of others’ health or safety. The first two subfactors are clearly
inapplicable.
The parties dispute whether Simon was financially vulnerable, but we
assess this factor as essentially neutral. While San Paolo Holding had financial
resources vastly superior to Simon’s, the transaction was an arm’s-length one upon
20

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which neither party depended for economic survival or security; Simon wanted to
buy the office building and San Paolo Holding wanted to sell it (albeit seemingly
not to Simon), but neither needed for the transaction to go through. This limited
the leverage San Paolo Holding’s superior financial position might otherwise have
given it over Simon.
Similarly, although San Paolo Holding’s conduct could be characterized as
more than a single isolated incident, as the evidence showed deceptive conduct by
King spanning several weeks, the tortious act on which liability was based was a
single false promise (or set of promises) made in the letter of intent, and no
evidence indicated King had acted similarly toward other potential buyers.
Unlike, for example, the defendant in our companion case of Johnson v. Ford
Motor Co. (June 16, 2005, S121723) ___ Cal.4th ___, San Paolo Holding cannot
be characterized as a repeat offender. This subfactor, too, fails to support a high
assessment of reprehensibility.
Finally, San Paolo Holding concedes King’s making of one or more
intentionally false promises, as the jury found he did, constitutes “intentional . . .
deceit” (State Farm, supra, 538 U.S. at p. 419) rather than a “mere accident”
(ibid.). We agree this subfactor applies. True, a comparison to accidentally
caused harm is of little value in assessing a California punitive damages award, as
accidentally harmful conduct cannot provide the basis for punitive damages under
our law. At a minimum, California law requires conduct done with “willful and
conscious disregard of the rights or safety of others” or despicable conduct done
“in conscious disregard” of a person’s rights. (Civ. Code, § 3294, subd. (c)(1),
(2); see Taylor v. Superior Court (1979) 24 Cal.3d 890, 895-896 [conscious
disregard means “that the defendant was aware of the probable dangerous
consequences of his conduct, and that he wilfully and deliberately failed to avoid
those consequences”].) The jury’s finding that King made false promises with the
21

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intent to defraud Simon shows he was not merely indifferent to, but actively
sought an injury to, Simon’s rights. He did so, moreover, through affirmative
misrepresentation, not merely nondisclosure. (See BMW, supra, 517 U.S. at
p. 580 [“[T]he omission of a material fact may be less reprehensible than a
deliberate false statement”].) The final reprehensibility subfactor, then, does
weigh on the plus side of the scale.
In sum, of the five subfactors relevant to reprehensibility, only one applies.
In the universe of cases warranting punitive damages under California law, the
fraudulent promise or promises that led to San Paolo Holding’s liability have to be
regarded as of relatively low culpability.
B. Ratio of Punitive Damages to Actual or Potential Harm
While the high court had in BMW and earlier decisions already demanded
that punitive damages bear a “ ‘reasonable relationship’ ” to compensatory
damages (BMW, supra, 517 U.S. at p. 580) and had in BMW made that
relationship one of the three “guideposts” for due process evaluation (id. at pp.
574-575, 580-581), the decision in State Farm addressed this guidepost with
markedly greater emphasis and more constraining language. “If, in [BMW], the
high court threw a lasso around the problem of what it had previously identified as
‘punitive damages awards “ ‘run wild’ ” ’ [citation], in [State Farm] it tightened
the noose considerably.” (Bardis v. Oates (2004) 119 Cal.App.4th 1, 19.)
In BMW, the court not only abjured drawing “ ‘a mathematical bright
line,’ ” but observed that “[i]n most cases, the ratio will be within a
constitutionally acceptable range,” disapproving only the “breathtaking 500 to 1”
ratio in the case before it. (BMW, supra, 517 U.S. at p. 583.) In State Farm, while
still “declin[ing] . . . to impose a bright-line ratio which a punitive damages award
cannot exceed,” the court went on to hold that “few awards exceeding a
22

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single-digit ratio between punitive and compensatory damages, to a significant
degree, will satisfy due process.” (State Farm, supra, 538 U.S. at p. 425.) The
court also explained that past decisions and statutory penalties approving ratios of
three or four to one were “instructive” as to the due process norm, and that while
relatively high ratios could be justified when “ ‘a particularly egregious act has
resulted in only a small amount of economic damages’ [citation] . . . [t]he
converse is also true . . . . When compensatory damages are substantial, then a
lesser ratio, perhaps only equal to compensatory damages, can reach the outermost
limit of the due process guarantee.” (Ibid.)
We understand the court’s statement in State Farm that “few awards”
significantly exceeding a single-digit ratio will satisfy due process to establish a
type of presumption: ratios between the punitive damages award and the
plaintiff’s actual or potential compensatory damages significantly greater than
nine or 10 to one are suspect and, absent special justification (by, for example,
extreme reprehensibility or unusually small, hard-to-detect or hard-to-measure
compensatory damages), cannot survive appellate scrutiny under the due process
clause.7 As stated in Williams v. Conagra Poultry Company (8th Cir. 2004) 378
F.3d 790, 799, a ratio significantly greater than single digits “alerts the court to the
need for special justification.” (See also Bardis v. Oates, supra, 119 Cal.App.4th
at p. 22 [42-to-one ratio “cannot stand unless extraordinary factors are present”];

7
Though one court has referred to a nine-to-one ratio as the constitutional
trigger point (McClain v. Metabolife International, Inc. (N.D.Ala. 2003) 259
F.Supp.2d 1225, 1231), one could also argue a “single-digit” ratio includes
anything less than 10 to one. (See Hollock v. Erie Insurance Exchange (Pa. 2004)
842 A.2d 409, 422 [10-to-one ratio “just barely exceeds” single-digit level].) The
question is of little or no importance, however, as the presumption of
unconstitutionality applies only to awards exceeding the single-digit level “to a
significant degree.” (State Farm, supra, 538 U.S. at p. 425.)
23

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McClain v. Metabolife International, Inc., supra, 259 F.Supp.2d at p. 1231 [“red
flag goes up” when ratio exceeds single digit].)
Multipliers less than nine or 10 are not, however, presumptively valid under
State Farm. Especially when the compensatory damages are substantial or already
contain a punitive element, lesser ratios “can reach the outermost limit of the due
process guarantee.” (State Farm, supra, 538 U.S. at p. 425.) But we do not agree
with the court in Diamond Woodworks, Inc. v. Argonaut Insurance Company
(2003) 109 Cal.App.4th 1020, 1057, that “in the usual case” the high court’s
decisions establish an “outer constitutional limit” of approximately four times the
compensatory damages. Reviewing the history of double, triple and quadruple
damages, the court in State Farm warned that “these ratios are not binding,” but
only “instructive.” (State Farm, supra, at p. 425, italics added.) Moreover, their
instruction, what “[t]hey demonstrate,” is simply that “[s]ingle digit multipliers are
more likely to comport with due process” than ratios of 500 to 1, as in BMW, or
145 to 1, as in State Farm. (Ibid., italics added.)
Measurement of damages is, of course, far from exact, a fact reflected in
the high court’s qualification of its single-digit presumption: only awards
exceeding that level “to a significant degree” are constitutionally suspect. (State
Farm, supra, 538 U.S. at p. 425.) As due process does not entitle a tortfeasor to
notice of the precise amount the state may penalize him or her, “[t]he judicial
function is to police a range, not a point” (Mathias v. Accor Economy Lodging,
Inc., supra, 347 F.3d at p. 678).
The disputed $1.7 million punitive damages award to Simon was 340 times
his $5,000 award of compensatory damages. This qualifies as a “breathtaking”
multiplier (BMW, supra, 517 U.S. at p. 583), far outside the “single-digit
neighborhood” (Bocci v. Key Pharmaceuticals, Inc. (Or.Ct.App. 2003) 76 P.3d
669, 675, mod. on other grounds and adhered to as mod., 79 P.3d 908) suggested
24

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by the high court in State Farm. As we have already determined, moreover, the
$5,000 compensatory award accurately measures the actual harm done to Simon,
and Simon failed to demonstrate that San Paolo Holding’s fraud threatened to
cause him substantial additional harm. (See pt. I., ante.) Nor can the 340-to-one
ratio here be justified on the ground that “ ‘a particularly egregious act has
resulted in only a small amount of economic damages’ ” (State Farm, supra, 538
U.S. at p. 425, italics added), for while San Paolo Holding’s fraud qualified for
punitive damages under California law, compared to conduct in other punitive
damages cases it was not highly reprehensible. (See pt. II.A., ante; accord,
Atkinson v. Orkin Exterminating Co., Inc. (S.C. 2004) 604 S.E.2d 385, 393
[despite “particlarly low” compensatory damages of $6,191, ratio of 127 to 1 not
justified because conduct not sufficiently egregious].)
Measured against the second BMW/State Farm guidepost, therefore, the
punitive damages award is grossly excessive.
C. Comparable Civil Penalties
The third guidepost is less useful in a case like this one, where plaintiff
prevailed only on a cause of action involving “common law tort duties that do not
lend themselves to a comparison with statutory penalties” (Continental Trend
Resources v. OXY USA, Inc., supra, 101 F.3d at p. 641), than in a case where the
tort duty closely parallels a statutory duty for breach of which a penalty is
provided. The parties have not drawn our attention to any specific statutory civil
penalties for promissory fraud in a business transaction, though defendant cites
Business and Professions Code section 17206, allowing a $2,500 penalty for
unfair competition (which, as the lower court noted, does not necessarily involve
fraudulent acts). The Court of Appeal, in turn, cited provisions providing for
treble fines or damages for fraudulent or deceptive acts in other contexts (e.g., Civ.
25

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Code, §§ 3345 [deceptive practices causing economic injury to disabled or senior
persons], 1947.10 [fraudulent eviction in municipality with rent controls]), as well
as statutes criminalizing theft by fraud (Pen. Code, §§ 182, subd. (a)(4), 484, subd.
(a); see also id., § 672 [fine of $1,000 for misdemeanor and $10,000 for felony]).8
While comparison to these statutory penalties cannot tell us precisely how
large an award would be constitutional, it clearly does not tend to support the
present award of $1.7 million dollars in punitive damages, a sum 340 times the
financial harm defendant’s fraud caused plaintiff.
D. The Role Played by the Defendant’s Financial Condition
Plaintiff contends a substantial reduction will make the punitive damages so
small as to be written off as a cost of doing business, negating the state’s interest
in deterring repetition or imitation of defendant’s conduct. Defendant counters
that after BMW and State Farm, the small size of an award in comparison to the
defendant’s financial condition is no longer a factor to consider in assessing
excessiveness. We briefly address the question of a defendant’s wealth or
financial condition in relation to the state’s interests in punishing and deterring a
defendant’s wrongful conduct.
Where the defendant’s oppression, fraud or malice has been proven by clear
and convincing evidence, California law permits the recovery of punitive damages

8
In State Farm, the high court explained the limited value of comparing
punitive damages to criminal penalties: “The existence of a criminal penalty does
have bearing on the seriousness with which a State views the wrongful action.
When used to determine the dollar amount of the award, however, the criminal
penalty has less utility. Great care must be taken to avoid use of the civil process
to assess criminal penalties that can be imposed only after the heightened
protections of a criminal trial have been observed, including, of course, its higher
standards of proof.” (State Farm, supra, 538 U.S. at p. 428.)
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“for the sake of example and by way of punishing the defendant.” (Civ. Code,
§ 3294, subd. (a).) As we explained in Neal v. Farmers Ins. Exchange, supra, 21
Cal.3d at page 928, and Adams v. Murikami, supra, 54 Cal.3d at pages 110-112,
the defendant’s financial condition is an essential factor in fixing an amount that is
sufficient to serve these goals without exceeding the necessary level of
punishment. “[O]bviously, the function of deterrence . . . will not be served if the
wealth of the defendant allows him to absorb the award with little or no
discomfort.” (Neal v. Farmers Ins. Exchange, supra, at p. 928.) “[P]unitive
damage awards should not be a routine cost of doing business that an industry can
simply pass on to its customers through price increases, while continuing the
conduct the law proscribes.” (Lane v. Hughes Aircraft Co. (2000) 22 Cal.4th 405,
427 (conc. opn. of Brown, J.).) On the other hand, “the purpose of punitive
damages is not served by financially destroying a defendant.” (Adams v.
Murikami, supra, at p. 112.)
Due process does not preclude a state from using punitive damages for the
purposes of deterrence. As the high court stated in State Farm, supra, 538 U.S. at
page 416, “ ‘Punitive damages may properly be imposed to further a State’s
legitimate interests in punishing unlawful conduct and deterring its repetition.’ ”
Indeed, in BMW the high court made clear that a court reviewing the jury’s award
for due process compliance, under its guideposts, should consider whether the
level of punishment imposed is necessary to vindicate the state’s legitimate
interests in deterring conduct harmful to state residents. Acknowledging the
state’s interests in punishment and deterrence, the court continued: “Only when
an award can fairly be categorized as ‘grossly excessive’ in relation to these
interests does it enter the zone of arbitrariness that violates the Due Process Clause
of the Fourteenth Amendment.” (BMW, supra, 517 U.S. at p. 568.) After
reviewing the three guideposts, the court held the award in BMW was excessive in
27

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light of the guideposts, even considering the state’s interest in deterrence, because
the record did not show “whether less drastic remedies could be expected to
achieve that goal,” that is, “whether a lesser deterrent would have adequately
protected the interests of Alabama consumers.” (Id. at p. 584.) Finally, the court
indicated that on remand the Alabama Supreme Court was either to order a new
trial or itself determine what award was “necessary to vindicate the economic
interests of Alabama consumers.” (Id. at p. 586.)
Because a court reviewing the jury’s award for due process compliance
may consider what level of punishment is necessary to vindicate the state’s
legitimate interests in deterring conduct harmful to state residents, the defendant’s
financial condition remains a legitimate consideration in setting punitive damages.
(See State Farm, supra, 538 U.S. at p. 428 [use of wealth as a factor not
“ ‘unlawful or inappropriate’ ”].) The State Farm court, however, also
emphasized that wealthy defendants are equally entitled to due process and that
“[t]he wealth of a defendant cannot justify an otherwise unconstitutional punitive
damages award.” (Id. at p. 427.) Quoting from Justice Breyer’s concurring
opinion in BMW, the court disapproved using wealth as “ ‘an open ended basis for
inflating awards’ ” and warned that wealth cannot replace reprehensibility as a
constraining principle. (State Farm, supra, at pp. 427-428.)
Reading the high court’s decisions as a whole, we agree with the Eleventh
Circuit Court of Appeals that while wealth cannot substitute for the high court’s
guideposts in limiting awards, and cannot alone justify a high award, the
guideposts were not intended “to prevent juries from levying awards that serve
important state interests and provide a meaningful deterrent against corporate
misconduct.” (Kemp v. American Telephone & Telegraph Co. (11th Cir. 2004)
393 F.3d 1354, 1365.) The BMW/State Farm guideposts cannot be abandoned or
ignored, but in determining whether a lesser award “could have satisfied the
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State’s legitimate objectives” (State Farm, supra, 538 U.S. at p. 420), a reviewing
court may nonetheless give some consideration to the defendant’s financial
condition.9
We need not in this case attempt to delineate the relationship between
wealth and the BMW/State Farm guideposts under all circumstances. In some
cases, the defendant’s financial condition may combine with high reprehensibility
and a low compensatory award to justify an extraordinary ratio between
compensatory and punitive damages. (See, e.g., Kemp v. American Telephone &
Telegraph Co., supra, 393 F.3d at pp. 1357, 1365 [where defendant played a
“critical role” in conduct of illegal gambling scheme, punitive damages of
$250,000 on only $115 in compensatory damages were justified in part by need
for “meaningful deterrent” to illegal conduct by large corporation].) In other
cases, especially those involving substantial compensatory awards, the level of
deterrence may be limited, after State Farm, to that provided “as a natural result of
imposing damages over and above traditional compensatory damages, not from

9
Accord, Bardis v. Oates, supra, 119 Cal.App.4th at page 26 (considering
wealth for purpose of deterrence while recognizing that under State Farm “the
wealth of the defendant will not by itself compensate for a lack of other factors”);
Bains LLC v. Arco Products Company, supra, 405 F.3d at p. 777 [wealth properly
considered “in determining an award that will carry the right degree of sting,” but
cannot make up for absence of reprehensibility]; Kemp v. American Telephone &
Telegraph Co., supra, 393 F.3d at page 1365, footnote 9 (wealth cannot be sole
basis for a large punitive damages award but is a “legitimate consideration” in
determining reasonableness of jury’s award); Mathias v. Accor Economy Lodging,
Inc., supra, 347 F.3d at page 677 (while under State Farm “wealth is not a
sufficient basis for awarding punitive damages,” it may nonetheless be considered
in relation to costs of obtaining compensation in litigation); Hollock v. Erie
Insurance Exchange, supra, 842 A.2d at page 421 (same); Eden Electrical, Ltd. v.
Amana Company, L.P. (N.D.Iowa 2003) 258 F.Supp.2d 958, 975 (reviewing court,
in some circumstances, may “throw into the balance” defendant’s financial
condition).
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the imposition of sanctions in an individual case that are actually disabling to the
defendant” (Romo v. Ford Motor Co., supra, 113 Cal.App.4th at p. 750); the state
may have to partly yield its goals of punishment and deterrence to the federal
requirement that an award stay within the limits of due process. But when, as in
the present case, the reprehensibility of the defendant’s conduct is relatively low,
the state’s interest in punishing it and deterring its repetition is correspondingly
slight. Here, neither the interest in deterrence nor San Paolo Holding’s substantial
wealth can conceivably justify enforcing the jury’s award of $1.7 million for a
false promise that caused only a $5,000 injury.10
III. The Maximum Constitutional Award
A. Appellate Determination vs. Remittitur
Our review of the BMW/State Farm guideposts, even in light of
California’s interest in punishing and deterring fraudulent conduct, leads to the
conclusion that the jury’s award of $1.7 million in punitive damages is grossly
excessive. The Court of Appeal erred in holding to the contrary. We could end
our discussion here and remand to the Court of Appeal for that court to reduce the
award to the constitutionally allowed maximum. But because this litigation has
already lasted more than eight years, a process so far including two trips to the
United States Supreme Court and three decisions by the Court of Appeal, we
believe the better course is for this court itself to determine the maximum punitive

10
This is true whether we use the $46 million San Paolo Holding had in 1996
or the $4.8 million it had in 1998, after transferring cash to its corporate parent.
We consider the higher number more appropriate, however, because it more
closely reflects San Paolo Holding’s condition at the time of the tortious acts
whose repetition or imitation the law seeks to deter.
30

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damages award that satisfies the constraints of due process and to order the
judgment reduced accordingly.
Moreover, we agree with San Paolo Holding that the appropriate order is
for an absolute reduction, rather than a conditional reduction with the alternative
of a new trial, i.e., a remittitur. As constitutional excessiveness is a legal issue
appellate courts determine independently (State Farm, supra, 538 U.S. at p. 418;
Cooper Industries, supra, 532 U.S. at pp. 436-443), we do not, in determining the
maximum constitutional award ourselves, decide any question of fact plaintiff has
a right to have decided by a jury. (Johansen v. Combustion Engineering, Inc.
(11th Cir. 1999) 170 F.3d 1320, 1331 (Johansen) [“Plaintiff’s consent is irrelevant
if the Constitution requires the reduction”]; Leatherman Tool Group, Inc. v.
Cooper Industries, Inc., supra, 285 F.3d at p. 1151 [following Johansen: “[A]n
appellate court need not remand for a new trial in every case in which it finds that
a punitive damages award exceeds the constitutional maximum. . . . We therefore
will determine the constitutional maximum on the basis of the existing record”];
see, e.g., Bardis v. Oates, supra, 119 Cal.App.4th at pp. 26-27 [Court of Appeal
reduces punitive damages award to due process limit and affirms as modified,
without offering plaintiff a new trial alternative].)
Once a maximum constitutional award has been determined, moreover, a
new trial on punitive damages would be futile. “Giving a plaintiff the option of a
new trial rather than accepting the constitutional maximum for this case would be
of no value. If, on a new trial, the plaintiff was awarded punitive damages less
than the constitutional maximum, he would have lost. If the plaintiff obtained
more than the constitutional maximum, the award could not be sustained. Thus, a
new trial provides only a ‘heads the defendant wins; tails the plaintiff loses’
option.” (Johansen, supra, 170 F.3d at p. 1332, fn. 19.)
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B. Determination of Maximum Award
To state a particular level beyond which punitive damages in a given case
would be grossly excessive, and hence unconstitutionally arbitrary, “ ‘is not an
enviable task. . . . In the last analysis, an appellate panel, convinced it must reduce
an award of punitive damages, must rely on its combined experience and
judgment.’ ” (Leatherman Tool Group, Inc. v. Cooper Industries, Inc., supra, 285
F.3d at p. 1152.) The high court’s due process analysis does not easily yield an
exact figure: we must attempt to arrive at such a number using imprecisely
determined facts and “applying guidelines that contain no absolutes.”
(Continental Trend Resources v. OXY USA, Inc., supra, 101 F.3d at p. 643.) An
appellate court should keep in mind, as well, that its constitutional mission is only
to find a level higher than which an award may not go; it is not to find the “right”
level in the court’s own view. While we must, under Cooper Industries, supra,
532 U.S. 424, assess independently the wrongfulness of a defendant’s conduct, our
determination of a maximum award should allow some leeway for the possibility
of reasonable differences in the weighing of culpability. In enforcing federal due
process limits, an appellate court does not sit as a replacement for the jury but only
as a check on arbitrary awards. (See BMW, supra, 517 U.S. at p. 568 [“States
necessarily have considerable flexibility in determining the level of punitive
damages they will allow . . . in any particular case”].)
Referring to our earlier reprehensibility analysis and using the comparisons
to compensatory damages and civil penalties for calibration, we conclude the
maximum here lies at $50,000, or 10 times the compensatory award. This amount,
we believe, will “further [California’s] legitimate interests in punishing unlawful
conduct and deterring its repetition” (BMW, supra, 517 U.S. at p. 568)―interests
limited here by the relatively light culpability of the conduct―without exceeding a
32

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level “both reasonable and proportionate to the amount of harm to the plaintiff”
(State Farm, supra, 538 U.S. at p. 426).
We have already explained the reasons for our evaluation of San Paolo
Holding’s reprehensibility as low, and the presumption against awards
significantly exceeding a single-digit multiplier of the actual or potential harm
inflicted. (See pts. II.A. & II.B., ante.) In State Farm, the high court made clear
that due process permits a higher ratio between punitive damages and a small
compensatory award for purely economic damages containing no punitive element
than between punitive damages and a substantial compensatory award for
emotional distress; the latter may be based in part on indignation at the
defendant’s act and may be so large as to serve, itself, as a deterrent. (State Farm,
supra, 538 U.S. at pp. 425-426.) Here the $5,000 award was for purely economic
damages containing no punitive element and is quite small. Yet the compensatory
award here, as earlier discussed, did accurately measure the injury proven to have
been inflicted. (See pt. I., ante.) This was not a case where the harm could not be
quantified and only nominal damages were awarded. (See, e.g., DiSorbo v. Hoy,
supra, 343 F.3d at p. 187.) The nature and size of the compensatory award here
thus militates for a maximum award at the top of, but not significantly beyond, the
single-digit range.
A penalty of $50,000, though just exceeding the largest single-digit ratio
amount, is in absolute size not extraordinary for fraudulent conduct. (See, e.g.,
Mathias v. Accor Economy Lodging, Inc., supra, 347 F.3d at pp. 677-678
[upholding $186,000 in punitives on a $5,000 compensatory award against
wealthy corporate defendant for outrageous but not very harmful behavior];
McClain v. Metabolife International, Inc., supra, 259 F.Supp.2d at p. 1235
[“Seventy-five thousand dollars would probably not be excessive in any gross
fraud case, no matter how inconsequential the actual damages were”].) But
33

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neither is it so minor, even accounting for San Paolo Holding’s wealth, that it can
be completely ignored, especially when imposed for conduct that led to no profit
for the company; even a prosperous company would ordinarily take reasonable
measures to prevent the recurrence of a $50,000 net loss. (See, e.g., Las Palmas
Associates v. Las Palmas Center Associates (1991) 235 Cal.App.3d 1220, 1255
[$2 million award “sends a forceful message” even to defendants worth $500
million].)
We therefore conclude $50,000 is, considering all the circumstances of this
case, the maximum award of punitive damages consistent with due process.
DISPOSITION
The judgment of the Court of Appeal is reversed. The matter is remanded
to the Court of Appeal with directions that it modify the superior court judgment
to reduce the award of punitive damages to $50,000 and affirm the judgment as
modified.
WERDEGAR, J.
WE CONCUR:
GEORGE, C.J.
KENNARD, J.
BAXTER, J.
CHIN, J.
BROWN, J.
MORENO, J.
34

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See last page for addresses and telephone numbers for counsel who argued in Supreme Court.

Name of Opinion Simon v. San Paolo U.S. Holding Company, Inc.
__________________________________________________________________________________

Unpublished Opinion

Original Appeal
Original Proceeding
Review Granted XXX 113 Cal.App.4th 1137
Rehearing Granted

__________________________________________________________________________________

Opinion No.

S121933
Date Filed: June 16, 2005

__________________________________________________________________________________

Court: Superior
County: Los Angeles
Judge: Richard P. Kalustian

__________________________________________________________________________________

Attorneys for Appellant:

Knapp Petersen & Clarke, André E. Jardini, Kevin J. Stack and Mitchell B. Ludwig for Plaintiff and
Appellant.

Todd A. Smith; Jeffrey R. White; Smoger and Associates and Gerson H. Smoger for the Association of
Trial Lawyers of America as Amicus Curiae on behalf of Plaintiff and Appellant.

Law Office of Daniel U. Smith, Daniel U. Smith and Ted Pelletier for Consumer Attorneys of California as
Amicus Curiae on behalf of Plaintiff and Appellant.

Amy Bach; Pillsbury & Levinson, Arnold R. Levinson; Esner & Chang, Stuart B. Esner and Andrew N.
Chang for United Policyholders as Amicus Curiae on behalf of Plaintiff and Appellant.

__________________________________________________________________________________

Attorneys for Respondent:

Epport & Richman, Epport, Richman & Robbins, Steven N. Richman and Lawrence A. Abelson for
Defendant and Appellant.

Susan Liebeler; Daniel J. Popeo and David Price for Washington Legal Foundation as Amicus Curiae on
behalf of Defendant and Appellant.

Horvitz & Levy, Lisa Perrochet and Curt Cutting for the California Chamber of Commerce, the American
Chemistry Council, the National Association of Manufacturers, Unocal Corp. and American International
Companies as Amici Curiae on behalf of Defendant and Appellant.

Mayer, Brown, Rowe & Maw, Andrew L. Frey, Evan M. Tager, Donald M. Falk; National Chamber
Litigation Center and Robin S. Conrad for The Chamber of Commerce of the United States as Amici
Curiae on behalf of Defendant and Appellant.

---

Page 2 – counsel continued – S121933

Attorneys for Respondent:

Greines, Martin, Stein & Richland, Robert A. Olson and Ferris M. Greenberger for Farmers Insurance
Exchange, Truck Insurance Exchange, Fire Insurance Exchange and Mid-Century Insurance Company
as Amici Curiae on behalf of Defendant and Appellant.

Hugh F. Young, Jr.; Martin, Bischoff, Templeton, Langlset & Hoffman, Jonathan M. Hoffman; Drinker
Biddle & Reath and Alan Lazarus for The Product Liability Advisory Council, Inc., as Amicus Curiae on
behalf of Defendant and Appellant.

Deborah J. La Fetra for Pacific Legal Foundation as Amicus Curiae.

---

Counsel who argued in Supreme Court (not intended for publication with opinion):

André E. Jardini
Knapp Petersen & Clarke
500 North Brand Boulevard, Twentieth Floor
Glendale, CA 91203-1904
(818) 547-5000

Daniel U. Smith
Law Office of Daniel U. Smith
Post Office Box 278
Kentfield, CA 94914
(415) 461-5630

Steven N. Richman
Epport, Richman & Robbins
1875 Century Park East, Suite 800
Los Angeles, CA 90067-2512
(310) 785-0885

Andrew L. Frey
Mayer, Brown, Rowe & Maw
1675 Broadway
New York, NY 10019
(212) 506-2500

---

Opinion Information

Date:	Docket Number:
Thu, 06/16/2005	S121933

Disposition
Jun 16 2005	Opinion: Reversed

Dockets
Jan 12 2004	Petition for review filed   counsel for deft & applnt & x-resp San Paolo U.S. Holding Company, Inc.
Jan 15 2004	Record requested
Jan 26 2004	2nd record request
Jan 27 2004	Received Court of Appeal record   one doghouse
Jan 28 2004	Request for depublication (petition for review pending)   by Greines, Martin, Stein & Richard LLP on behalf of Farmers Insurance Exchange, Fire Insurance Exchange, Truck Insurance Exchange, and Mid-Century Insurance Company.
Feb 2 2004	Request for depublication filed (another request pending)   by Horvitz & Levy LLP on behalf of the American Chemistry Council, Unocal Corporation, and Argonaut Group, Inc.
Feb 3 2004	Answer to petition for review filed   by counsel for plaintiff and respondent (Lionel Simon d.b.a. Liberty Paper Company)
Feb 6 2004	Request for depublication filed (another request pending)   California Chamber of Commerce
Feb 6 2004	Received letter from:   Wyeth [a non-pty] joining in depublication filed Jan 28, 04..
Feb 10 2004	Filed:   Knapp Petersen & Clarke for plaintiff/respondent/appellant Simon (dated 2-9-2004): response to depublication requests by the Farmers Group etc. et al. and the American Chemistry Council et al.
Feb 13 2004	Reply to answer to petition filed   resp's. San Paolo U. S. Holding co., Inc.
Feb 13 2004	Request for depublication filed (another request pending)   by non-party American International Companies ("AIG")
Mar 1 2004	Time extended to grant or deny review   to and including April 9, 2004
Mar 24 2004	Petition for review granted (civil case)   Votes: George, C.J., Kennard, Baxter, Werdegar, Chin, Brown, and Moreno, JJ.
Mar 25 2004	Received Court of Appeal record   remaining four doghouses.
Apr 2 2004	Certification of interested entities or persons filed   by Kevin J. Stack, Mitchell B. Ludwig, Knapp Petersen & Clarke, counsel for defendants/appellants/cross-respondents.
Apr 6 2004	Certification of interested entities or persons filed   by Lawrence Abelson, of Epport Richyman & Robbins, LLP, counsel for San Paolo U. S. Holding Co., Inc. [Defendant/Appellant/Cross-Respondent]
Apr 19 2004	Note: Mail returned and re-sent   letter mailed 3/24/2004 to Steven N. Richman, counsel for defendants and appellants.
Apr 19 2004	Request for extension of time filed   to file opening brief/merits -- asking to May 24 ,2004.
Apr 22 2004	Extension of time granted   Appellants' (San Paolo ) Opening Brief on the Merits to and including May 24, 2004. No further extensions of time are contemplated.
Apr 23 2004	Request for extension of time filed   to file opening brief/merits, atty., for resp., San Paolo, asking to May 24, 2004.
May 24 2004	Opening brief on the merits filed   deft. applnt. & x-resp., San Paolo U.S. Holding Co., Inc.
Jun 11 2004	Request for extension of time filed   by plaintiff and respondent (Lionel Simon) for an extension to 7-23-2004, to file the answer brief on the merits.
Jun 16 2004	Extension of time granted   On application of Respondent (Simon) and good cause appearing, it is ordered that the time to serve and file the Answer Brief on the Merits is extended to and including July 23, 2004.
Jul 14 2004	Request for extension of time filed   to file reply brief/merits asking to Sept., 13, 2004. deft./applnts.& -x-resps. San Paolo U.S. Holding Co., Inc.
Jul 23 2004	Answer brief on the merits filed   plainftiff and respondent, Lionel Simon d.b.a. Liberty Paper Company.
Aug 3 2004	Extension of time granted   On application of appellants and good cause appearing, it is ordered that the time to serve and file Appellants' Reply Brief on the Merits is extended to and including September 13, 2004. No further extensions of time are contemplated.
Aug 12 2004	Received:   Letter from Respondent Lionel Simon requesting permission to submit this letter brief.
Aug 16 2004	Filed:   supplemental letter from Respondent ( Simon).
Sep 13 2004	Reply brief filed (case fully briefed)   appellant San Paolo US Holding Company, Inc.
Sep 15 2004	Received:   letter from appellant San Paolo US Holding Company, Inc.
Oct 7 2004	Request for extension of time filed   to Nov. 12, 2004 for United Policyholders to file an application and Amicus Curiae Brief.
Oct 8 2004	Received:   response of San Paolo U.S. Holding Company, Inc. responding to application for extension of time to file application and amicus brief of United Policy Holders
Oct 12 2004	Request for extension of time filed   To November 12, 2004 for Consumer Attorneys of California to Amicus Curiae application and brief.
Oct 12 2004	Received application to file Amicus Curiae Brief   THE ASSOCIATION OF TRIAL LAWYERS OF AMERICA in support of respondent (Simon).
Oct 12 2004	Received application to file Amicus Curiae Brief   THE PRODUCT LIABILITY ADVISORY COUNCIL in support of appellant (Sao Paolo).
Oct 12 2004	Extension of time granted   to November 12, 2004 for UNITED POLICYHOLDERS to file the amicus curiae application and brief.
Oct 13 2004	Received application to file Amicus Curiae Brief   PACIFIC LEGAL FOUNDATION.
Oct 13 2004	Received application to file Amicus Curiae Brief   CHAMBER OF COMMERCE OF THE UNITED STATES in support of appellant (San Paolo).
Oct 14 2004	Received application to file Amicus Curiae Brief   from Washington Legal Foundation, in support of appellant. (40k)
Oct 14 2004	Received application to file Amicus Curiae Brief   by Farmers Insurance Exchange et al, in support of appellant. (40k)
Oct 14 2004	Received application to file Amicus Curiae Brief   by the California Chamber of Commerce et al, in support of appellant. (40k)
Oct 18 2004	Application to appear as counsel pro hac vice (granted case)   Robin S. Conrad for amicus curiae Chamber of Commerce of the U.S.
Oct 20 2004	Extension of time granted   to Nov. 12, 2004 for CONSUMER ATTORNEYS OF CALIFORNIA to file their amicus curiae brief. Answer due within 20 days .
Oct 20 2004	Permission to file amicus curiae brief granted   THE ASSOCIATION OF TRIAL LAWYERS OF AMERICA in support of respondent. Answer due within 20 days.
Oct 20 2004	Amicus curiae brief filed   THE ASSOCIATION OF TRIAL LAWYERS OF AMERICA.
Oct 20 2004	Permission to file amicus curiae brief granted   WASHINGTON LEGAL FOUNDATION in support of appellant. Answer due within 20 days.
Oct 20 2004	Amicus curiae brief filed   WASHINGTON LEGAL FOUNDATION.
Oct 20 2004	Permission to file amicus curiae brief granted   PACIFIC LEGAL FOUNDATION. Answer due within 20 days.
Oct 20 2004	Amicus curiae brief filed   PACIFIC LEGAL FOUNDATION.
Oct 20 2004	Permission to file amicus curiae brief granted   PRODUCT LIABILITY ADVISORY COUNCIL, INC., in support of appellant. Answer due within 20 days.
Oct 20 2004	Amicus curiae brief filed   PRODUCT LIABILITY ADVISORY COUNCIL, INC.
Oct 20 2004	Permission to file amicus curiae brief granted   CALIFORNIA CHAMBER OF COMMERCE,et al., in support of appellant. Answer due within 20 days.
Oct 20 2004	Amicus curiae brief filed   CALIFORNIA CHAMBER OF COMMERCE, et al.
Oct 20 2004	Permission to file amicus curiae brief granted   FARMERS INSURANCE EXCHANGE, et al., in support of appellant. Answer due within 20 days.
Oct 20 2004	Amicus curiae brief filed   FARMERS INSURANCE EXCHANGE,et al.
Oct 20 2004	Permission to file amicus curiae brief granted   THE CHAMBER OF COMMERCE OF THE UNITED STATES in support of appellant. Answer due within 20 days.
Oct 20 2004	Amicus curiae brief filed   THE CHAMBER OF COMMERCE OF THE UNITED STATES.
Oct 25 2004	Received:   letter from counsel for A/C Farmers Insurance
Oct 27 2004	Application to appear as counsel pro hac vice granted   by Robin S. Conrad for A/C Chamber of Commerce of the USA
Oct 29 2004	Request for extension of time filed   by counsel for appellant, Lionel Simon/Liberty Paper Co. to file response to all amicus briefs - asking to December 31, 2004.
Nov 3 2004	Extension of time granted   to DEC. 1, 2004 for respondent to file one consolidated answer to amicus curiae briefs.
Nov 10 2004	Response to amicus curiae brief filed   SAN PAULO U.S. HOLDING COMPANY, INC., as defendants; appellants, and respondents answering A.C..brief of THE ASSOC., OF TRIAL LAWYERS OF AMERICA. [40k]
Nov 12 2004	Received application to file Amicus Curiae Brief   By United PolicyHolders in support of respondent.
Nov 15 2004	Amicus curiae brief filed   CONSUMER ATTORNEYS OF CALIFORNIA in support of ( Simon).
Nov 17 2004	Amicus curiae brief filed   UNITED POLICYHOLDERS in support of respondent. Answer due within 20 days.
Nov 30 2004	Response to amicus curiae brief filed   appellant Lionel Simon -- (Joint Answer) responding to all amici in support of respondent, San Paolo U.S. Holding Co.
Dec 1 2004	Received:   from appellant, LIONEL SIMON amended p.o.s. for a.c. response.
Dec 3 2004	Request for extension of time filed   to file answers to amicus brief of Consumrer Attorneys of Califonria and United policyholders. submitted by applt., San Paolo U.S. Holding Co., Inc.
Dec 13 2004	Extension of time granted   to Dec. 20, 2004 for appellant ( San Paolo) to file the answers to amicus curiae briefs of Consumer Attys. and United Policyholders.
Dec 21 2004	Response to amicus curiae brief filed   deft., aplnt and x-resp. San Paolo U.S. Holding Co., Inc. answering a.c. brief of United Policyholders.
Dec 21 2004	Response to amicus curiae brief filed   deft., aplnt. and x-resps. San Paulo U.S.Holding Co., Inc., aswering a.c. brief of Consumer Attorneys of California.
Mar 8 2005	Case ordered on calendar   Thurs. 4/7/05 @1:30pm - Los Angeles
Mar 18 2005	Filed:   Request of appellant {San Paolo U.S. Holding Company, Inc.} to divide oral argument time.
Mar 21 2005	Application to appear as counsel pro hac vice (granted case)   by Andrew L. Frey of the State of New York on behalf of amicus curiae Chamber of Commerce of the United States, in support of appellants.
Mar 22 2005	Filed:   Request of respondent {Lionel Simon} to divide oral argument time.
Mar 28 2005	Order filed   The request of counsel for appellant to allow two counsel to argue on behalf of appellant at oral argument is hereby granted.
Mar 28 2005	Order filed   The request of appellant to allocate to amicus curiae The Chamber of Commerce of the United States 10 minutes of appellant's 30-minute allotted time for oral argument is granted.
Mar 28 2005	Order filed   The request of counsel for respondent to allow two counsel to argue on behalf of respondent at oral argument is hereby granted.
Mar 28 2005	Order filed   The request of respondent to allocate to amicus curiae Consumer Attorneys of California 10 minutes of respondent's 30-minute alloted time for oral argument is granted.
Mar 29 2005	Filed:   Appellant's additiional authority.
Apr 4 2005	Application to appear as counsel pro hac vice granted   The application of Andrew L. Frey of the State of New York to appear as counsel pro hac vice on behalf of amicus curiae The Chamber of Commerce of the United States is hereby granted.
Apr 7 2005	Cause argued and submitted
Apr 12 2005	Received:   Respondent's (Lionel Simon) (Application for Leave to File Letter Brief Clarifying Response To Issue Raised at Oral Argument and Letter Brief.
Apr 15 2005	Order filed   The application for leave to file letter brief clarifying response to issue raised at oral argument is hereby denied.
Apr 25 2005	Received:   (copy) Letter dated 3-28-2005, from counsel for Appellant San Paolo U.S. Holding Co., Inc..
Jun 16 2005	Opinion filed: Judgment reversed   And remanded. Opinion by Werdegar, J. ----joined by George, CJ., Kennard, Baxter, Chin, Brown, Moreno, JJ.
Jul 21 2005	Remittitur issued (civil case)   to Second Appellate District, Division Four, includes certified copies.
Jul 27 2005	Received:   Receipt for remittitur from Second Appellate District, Division four, signed for by S. Verorka, Deputy Clerk

Briefs
May 24 2004	Opening brief on the merits filed
Jul 23 2004	Answer brief on the merits filed
Sep 13 2004	Reply brief filed (case fully briefed)
Oct 20 2004	Amicus curiae brief filed
Oct 20 2004	Amicus curiae brief filed
Oct 20 2004	Amicus curiae brief filed
Oct 20 2004	Amicus curiae brief filed
Oct 20 2004	Amicus curiae brief filed
Oct 20 2004	Amicus curiae brief filed
Oct 20 2004	Amicus curiae brief filed
Nov 10 2004	Response to amicus curiae brief filed
Nov 15 2004	Amicus curiae brief filed
Nov 17 2004	Amicus curiae brief filed
Nov 30 2004	Response to amicus curiae brief filed
Dec 21 2004	Response to amicus curiae brief filed
Dec 21 2004	Response to amicus curiae brief filed

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