Nickerson v. Stonebridge Life Insurance Co., 63 Cal. 4th 363

Plaintiff Thomas Nickerson (paraplegic) was hospitalized 109 days after a wheelchair-lift fall; he sought indemnity benefits under a policy that paid $350/day for hospitalization.
Stonebridge paid only for an emergency visit and 18 days of hospitalization, tendering $6,450; Nickerson sued for breach of contract and bad faith.
The trial court directed verdict for Nickerson on contract damages ($31,500); the jury awarded $35,000 for emotional distress and $19 million in punitive damages for fraud/bad faith.
The parties had stipulated pretrial that Brandt attorney fees (fees incurred to compel payment of benefits) would be determined by the trial court after the verdict; postverdict the parties stipulated Brandt fees of $12,500 and the court awarded that amount.
The trial court granted a conditional new trial unless punitive damages were reduced to a 10:1 ratio versus compensatory damages, calculating the ratio using only the $35,000 emotional-distress award (excluding the $12,500 Brandt fees).
The Court of Appeal affirmed excluding postverdict Brandt fees from the punitive/compensatory ratio; the California Supreme Court granted review and reversed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Brandt attorney fees awarded after the jury verdict may be included as compensatory damages when calculating whether punitive damages are constitutionally excessive	Brandt fees are compensatory damages proximately caused by tort and therefore must be included whether awarded by jury or court	Excluding postverdict Brandt fees is required because Gore review of punitive excess should consider only evidence before the jury; fees determined after verdict should not affect the punitive-compensatory ratio	Included: Brandt fees properly count as compensatory harm in the Gore/State Farm ratio regardless of whether awarded by jury or postverdict court; Court of Appeal reversed

BMW of North America, Inc. v. Gore, 517 U.S. 559 (establishes guideposts for assessing punitive-damages excess)
State Farm Mut. Automobile Ins. Co. v. Campbell, 538 U.S. 408 (single-digit ratios ordinarily required; guides punitive-compensatory comparison)
Simon v. San Paolo U.S. Holding Co., Inc., 35 Cal.4th 1159 (California adopts State Farm guidance; ratios >9–10:1 presumptively excessive)
Brandt v. Superior Court, 37 Cal.3d 813 (attorney fees to compel payment of insurance benefits are compensatory damages)
Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424 (appellate review standard and role of courts in punitive-damages review)
Honda Motor Co. v. Oberg, 512 U.S. 415 (due process requires judicial review of punitive awards)
Philip Morris USA v. Williams, 549 U.S. 346 (constitutional limits include procedural and substantive constraints on punitive damages)
Pacific Mutual Life Ins. Co. v. Haslip, 499 U.S. 1 (states have broad discretion in punitive damages but subject to constitutional limits)