Oral argument: Appealing a Punitive Damages Award
Hershovitz v. Speedy Pete’s Pizza Pies
When we reconvene for class on Tuesday, we will moot oral arguments for a case on appeal before the Loyola Supreme Court.
Odd-numbered groups (1, 3, 5, 7, 9, 11) are attorneys for the plaintiff.
Even-numbered groups (2, 4, 6, 8, 10, 12) are attorneys for the defendant.
On Tuesday, I will cold call students at random to present their arguments. I will ask follow-up questions, and I will call on students representing the opposing side to address the points that have been made.
The only legal issue on appeal in this case is whether the punitive damages award is excessive and would deprive the defendant of its property without due process of law.
Use the legal tests we just went over in class.
Draw upon and analogize to the reasoning from these cases.
The facts of the case:
Speedy Pete’s Pizza Pies is a national pizza chain that promises to deliver pizzas within fifteen minutes or it is free. As a result of this policy, their delivery drivers get in a lot of car accidents. The plaintiff, Scott Hershovitz, suffered minor injuries when a Speedy Pete’s delivery driver rear-ended him at a stop sign while out for delivery. The accident occurred in the state of Loyola.
Hershovitz sued Speedy Pete’s in Loyola state court for negligence. A jury found Speedy Pete’s liable and awarded Hershovitz both compensatory and punitive damages.
Compensatory damages: $15,000
Punitive damages: $314,159
For considering punitive damages, the jury heard testimony from Speedy Pete’s workers within the state of Loyola and within the state of Nebraska, where Speedy Pete’s is headquartered. The Loyola-located workers testified to management imposing strict rules about delivery drivers delivering on time, including punishments like docked pay. The Nebraska-located workers testified to the Speedy Pete’s national office instructing managers across the country: 1) to tell their delivery drivers to obey all traffic laws, and to follow up this instruction with a playful wink (or wink emoji if the instruction was communicated over text); and 2) to tell their delivery drivers that if they got in a car accident they should remove the Speedy Pete’s Pizza Pies decal from the side of their vehicle and tell any people they injured, “I’m so sorry. My blood sugar is running low, which is why I bought all of these pizzas that are in my car. I would love to give you a free slice if you could write your signature on this waiver of liability I just happen to have on me.”
The delivery driver who injured Hershovitz testified that she did remember receiving these instructions, but forgot to follow them exactly. After rear-ending Hershovitz, the driver removed the car decal, offered Hershovitze a slice of pizza but did not ask him to sign a waiver of liability. When he asked her why she hit him, she told him that she worked for Speedy Pete’s and had been rushing to deliver a pizza.
In the State of Loyola, Speedy Pete’s could face civil penalties of up to $100,000 for instructing employees to hide that they were working for their employer in the event of an accident. In other states like Nebraska, Speedy Pete’s would not face civil penalties.
The State of Loyola permits a jury to award punitive damages if the defendant’s tortious conduct was “willful and wanton.”
Plaintiff Arguments
Willful & wanton - under Loyola State law necessary
- failure to instruct drivers / fraudulent
- ask drivers to break law / drive recklessly
- encourage employees to lie and misinform, avoid culpability
BMV v. Gore
Reprehensibility
Most important factor (BMW and State Farm (disanalogy from these two cases: details of reprehensibility analysis))
Deviation from normal / reasonable behavior
Company policy creates a huge public risk
Not purely economical
Optimal Deterrence
Evading review b/c it is a fraudulent
Ratio
Not a categorical brightline
Rely on Mathias, bring in concerns of deterrence (huge issue of public safety)
Below ratio in Mathias
Comparison
Civil penalties in State of Loyola demonstrate willful/wanton/reprehensible
Defense Arguments
BMW v. Gore
Reprehensibility
Repetition
No evidence of repetition
Company policy outside the scope
Should be focused on the harm to the plaintiff
DP violation to punish nationwide policy (State Farm)
Nexus of what is defined as reprehensible and the injury that the plaintiff suffered
Ratio
21 : 1 far more than what is allowed in State Farm
Not one of the few that will exceed ratio and satisfy due process
Compensatory damages are big and suffice here
Hiding the logo not particularly egregious
Not a reasonable relationship between harm and punitive damages
Mathias is much closerr to intentional / willful harm
Comparison
$100,000 in sanctions - jury acted arbitrarily
Direct application
