Louise KING, Individually, and as Personal Representative of the Estate of Timothy King, Plaintiff-Appellee, v. GEICO INDEMNITY COMPANY, Defendant-Appellant.
No. 14-35700
United States Court of Appeals, Ninth Circuit.
Filed November 13, 2017
649
Jordan Y. Crosby, Attorney, Cathy J. Lewis, Attorney, Ugrin Alexander Zadick & Higgins, PC, Great Falls, MT, for Defendant-Appellant
Before: McKEOWN and GOULD, Circuit Judges, and ROTHSTEIN,* District Judge.
GEICO Indemnity Company (“GEICO“) appeals multiple district court orders in an insurance suit brought by Louise King. Because the parties are familiar with the facts, we do not recite them here. We have jurisdiction under
1. Constitutionality of Punitive Damages Award
GEICO argues that the district court erred by not reducing the jury‘s $2.5 million punitive damages award. We review de novo a district court‘s determination that punitive damages are constitutionally appropriate. Planned Parenthood of Columbia/Willamette Inc. v. Am. Coal. of Life Activists, 422 F.3d 949, 953 (9th Cir. 2005).
Three “guideposts” inform our analysis: (1) the degree of reprehensibility, (2) the disparity between the harm suffered and the punitive damages award, and (3) the difference between the punitive damages award and comparable authorized civil penalties. BMW of N. Am. v. Gore, 517 U.S. 559, 574-75, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996). We evaluate each in turn.
GEICO‘s conduct, while not admirable, was of low to moderate reprehensibility. See State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 419, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003) (listing five factors that inform a reprehensibility analysis, including whether the harm was physical or economic, evinced indifference to the health or safety of others, or resulted from intentional malice or deceit). On one hand, King suffered only economic and emotional harm. She was not physically injured and GEICO did not evince indifference to the health or safety of King or anyone else. On the other hand, the jury‘s verdict regarding GEICO‘s liability under the Montana Unfair Trade Practices Act (“UTPA“) indicates that the jury believed GEICO was acting in bad faith.
The disparity between King‘s actual harm and the level of punitive damages awarded her is significant. We are not bound by a particular formula, but where a defendant‘s conduct “is not particularly egregious” and there are “significant economic damages,” a four-to-one ratio is “a good proxy for the limits of constitutionality.” Planned Parenthood, 422 F.3d at 962. For purposes of calculating the ratio here, we include the $266,070.61 in compensatory damages and fees awarded to King for her harm—$100,000 for GEICO‘s violation of the UTPA, $100,000 under the insurance policy for her emotional distress, and $66,070.61 in attorneys’ fees, interest, and costs.1 See Estate of Gleason v. Cent. United Life Ins. Co., 379 Mont. 219, 350 P.3d 349, 358 (2015) (“[W]e hold that where an insurer has been found to have violated the UTPA due to delay or refusal to pay benefits in breach of the insurance contract, damages resulting from that violation may be considered compensatory damages under the UTPA for purposes of pursuing punitive damages.“); see also Riordan v. State Farm Mut. Auto. Ins. Co., 589 F.3d 999, 1007 (9th Cir. 2009) (“[A]n insured is entitled to recover attorney fees, pursuant to the insurance exception to the American Rule, when the insurer forces the insured to assume the burden of legal action to obtain the full benefit of the insurance contract.“) (quoting Mountain W. Farm
Turning to the third guidepost, in Montana, the maximum comparable civil penalty is a fine for violation of the Montana insurance code, which may not exceed $25,000, and the fine imposed on insurance producers or adjusters may not exceed $5,000 per violation.
Based on our evaluation of the guideposts, we conclude that the punitive damages award is unconstitutionally excessive.2 Given the low to moderate reprehensibility of GEICO‘s conduct and the disparate ratio between King‘s actual harm and the punitive damages award, we follow the guidance in Planned Parenthood and apply a four-to-one ratio and direct the district court to remit the punitive damages award to $1,064,282.44.
2. Admission of Expert Testimony
The district court did not abuse its discretion by admitting the testimony of King‘s expert, Randy Nelson. A jury verdict will not be reversed for evidentiary error unless the district court abused its discretion and the error was prejudicial. Hangarter v. Provident Life & Accident Ins. Co., 373 F.3d 998, 1015 (9th Cir. 2004).
Although it is well established that experts may not give opinions as to legal conclusions, experts may testify about industry standards, and the reasonableness of an insurer‘s claims handling is generally an issue of fact. Id. at 1010, 1016 (disagreeing that testimony that an insurance company deviated from industry standards offered a legal conclusion). Nelson‘s testimony fell well within these parameters. Nelson did not address an ultimate issue of law, but rather testified to GEICO‘s handling of the claim in relation to industry standards and GEICO‘s own claim manual. The fact that GEICO‘s claim manual incorporated the UTPA does not lead to a different result. See id. at 1016-17 (an expert may refer to law in expressing an opinion without such reference rendering the opinion inadmissible).
3. Post-Trial, Discovery-Related Motions
Finally, GEICO argues that the district court erred by denying its motion for a new trial and motion to compel or reopen discovery based on King‘s failure to produce certain documents during discovery. GEICO also challenges the district court‘s award to King of attorneys’ fees for opposing GEICO‘s motion to compel. We affirm the district court on each of these challenges. A district court‘s determination regarding whether to grant a new trial or reopen discovery is reviewed for abuse of discretion. See Hangarter, 373 F.3d at 1005 (new trial); Sablan v. Dep‘t of Fin. of Com. of N. Mariana Islands, 856 F.2d 1317, 1321 (9th Cir. 1988) (discovery). The decision to award reasonable fees under
Under
The same is true of the district court‘s denial of GEICO‘s motion to compel and reopen discovery. The district court explained that GEICO filed its motion to compel after the discovery deadline and, regardless, its motion was futile because the jury had returned a verdict and judgment already had been entered. Accordingly, we agree there was no compelling reason—as required by the scheduling order for a deadline continuance—to grant GEICO‘s untimely motion. The district court did not abuse its discretion by denying GEICO‘s motions.
Finally, we agree with the district court that GEICO‘s motion for leave to file a motion to compel was “at its core, a motion to compel,” and was not substantially justified. The district court did not abuse its discretion in awarding King reasonable fees to oppose the motion under
AFFIRMED IN PART; REVERSED AND VACATED IN PART.
Each party shall bear its own costs on appeal.