Louise King v. Geico Indemnity Company
712 F. App'x 649
| 9th Cir. | 2017Background
- Plaintiff Louise King sued GEICO for bad-faith claims handling under Montana law and sought compensatory and punitive damages; jury awarded $266,070.61 in compensatory damages/fees and $2.5 million in punitive damages.
- Jury found GEICO violated the Montana Unfair Trade Practices Act (UTPA) and breached the insurance contract causing economic and emotional harm to King.
- GEICO challenged (1) constitutionality of the punitive award, (2) admission of King’s expert Randy Nelson, and (3) post-trial discovery rulings including denial of a new trial and fee awards to King.
- The district court admitted Nelson’s testimony about industry standards, denied GEICO’s motions to reopen discovery and for a new trial, and awarded fees to King under Fed. R. Civ. P. 37(a)(5).
- The Ninth Circuit affirmed most rulings but held the $2.5 million punitive award was unconstitutionally excessive under Supreme Court guideposts and remitted it to $1,064,282.44 (4:1 ratio).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Constitutionality of punitive damages | King: $2.5M punitive justified by UTPA violation and compensatory/fee awards | GEICO: $2.5M punitive is excessive under Gore guideposts and Due Process | Court: Reduce punitive to $1,064,282.44 (4:1 ratio) because conduct was low–moderately reprehensible and 9:1 ratio was excessive |
| Admissibility of expert testimony | King: Expert may testify to industry standards and insurer reasonableness | GEICO: Nelson impermissibly opined on legal conclusions and UTPA compliance | Court: Admit Nelson; testimony on standards and claim handling permissible; reliance on claim manual and reference to law not barred |
| Post-trial motion for new trial based on discovery nondisclosure | King: No prejudice; GEICO knew relevant facts and did not timely seek documents | GEICO: Failure to produce documents warrants new trial or reopening discovery | Court: Deny new trial and reopen discovery; GEICO failed to show clear & convincing misconduct or justification for untimely motions |
| Fee award under Fed. R. Civ. P. 37(a)(5) | King: Entitled to fees because GEICO’s motion to compel/leave was not substantially justified | GEICO: Motion was justified | Court: Affirm award of reasonable fees to King; GEICO’s motion was not substantially justified |
Key Cases Cited
- Planned Parenthood of Columbia/Willamette Inc. v. Am. Coal. of Life Activists, 422 F.3d 949 (9th Cir.) (sets out punitive-damage guidepost analysis application in Ninth Circuit)
- BMW of N. Am. v. Gore, 517 U.S. 559 (U.S. 1996) (establishes three guideposts for due-process review of punitive damages)
- State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (U.S. 2003) (factors for reprehensibility in punitive-damage analysis)
- Riordan v. State Farm Mut. Auto. Ins. Co., 589 F.3d 999 (9th Cir.) (attorney-fee recovery when insurer forces insured into litigation to obtain contract benefits)
- Hangarter v. Provident Life & Accident Ins. Co., 373 F.3d 998 (9th Cir.) (standard for evidentiary rulings and expert testimony on insurer conduct)
- Jones v. Aero/Chem Corp., 921 F.2d 875 (9th Cir.) (standard for new trial based on discovery misconduct)
- Balla v. Idaho, 677 F.3d 910 (9th Cir.) (abuse-of-discretion review for Rule 37 fee awards)
- Sablan v. Dep’t of Fin. of Com. of N. Mariana Islands, 856 F.2d 1317 (9th Cir.) (standard for reopening discovery)
- Estate of Gleason v. Cent. United Life Ins. Co., 350 P.3d 349 (Mont.) (treating damages from UTPA violation as compensatory for punitive-damage purposes)
- Mountain W. Farm Bureau Mut. Ins. Co. v. Brewer, 69 P.3d 652 (Mont.) (attorney-fee recovery principle under Montana law)