CALIFORNIA

Overview

The high level of nuclear verdicts in both state and federal California venues stems from the state’s size as well as its liability-friendly laws and courts. California’s court system is the largest in the nation, serving about 12% of the total US population.

Intellectual property matters accounted for $6.7 billion of California’s federal nuclear verdict total. According to Bloomberg Law, around 2010, patent cases began shifting from the Eastern District of Texas (EDTX) to the Northern and Central Districts of California, in part due to Texas’ increasingly jammed docket, a growing number of plaintiffs firms in Los Angeles, and an absence of local rules for patent cases. Cases also began to move following the US Supreme Court’s 2017 decision in TC Heartland v. Kraft Foods, which found that a corporation is only a resident of its state of incorporation when determining a venue for patent cases. As both the Northern and Central Districts are home to many corporate registrations, they have seen upticks.

The Los Angeles-based Central District of California reigns as the top US court for intellectual property litigation overall. It is also the nation’s fourth-busiest patent venue. Marathon’s analysis found that intellectual property cases in the Central District comprised 26% percent of the state’s federal nuclear verdicts at $2.4 billion. These included high-profile verdicts of $1.1 billion in California Institute of Technology v. Broadcom Limited (2020), $752 billion in Juno Therapeutics, Inc. v. Kite Pharma, Inc. (2019), and $131 billion in Alfred E. Mann Foundation for Scientific Research v. Cochlear Corp. (2014).

Several geographical and procedural advantages account for the rise in popularity of patent litigation in the Central District. Those include speedy average time to trial resolution, a flexible alternative dispute resolution system, and the court randomly assigning judges to cases, which can be attractive for both US and international litigants seeking impartiality. Further, Southern California’s diverse business climate has afforded judges experience in unique IP case issues.

The Northern District of California – Silicon Valley’s home court – is also a top venue for technology litigation on intellectual property matters nationwide. This is due in large part to the amount of technology companies headquartered in Silicon Valley. All told, Marathon’s analysis found that the Northern District’s intellectual property nuclear verdicts accounted for 46% of California’s federal court nuclear verdicts at $4.3 billion, $1.3 billion of which came in one case, Oracle US, Inc. v. SAP AG (2010). 

Following SCOTUS’ decision in TC Heartland, the Northern District saw six nuclear verdicts in intellectual property cases, including for $54 million in Oracle America Inc. v. Hewlett Packard Enterprise Co. (2022), for $40 million in Comet Technologies USA v. XP Power (2022), for $15 million in Droplets, Inc. v. Yahoo! Inc. et al (2022), $177 million in Plexxikon, Inc. v. Novartis Pharmaceuticals Corp. (2021), and for $30 million in both LivePerson, Inc. v. [24]7.ai, Inc. (2021) and BladeRoom Group Limited v. Facebook, Inc. (2018).

Outside of nuclear verdicts, the Northern District was one of the top five venues for all new patent cases in 2019, as it was in 2010 and 2015. While the court is not as fast as some other patent-heavy venues, it has resolved cases over the past decade about as quickly as national averages.

State Courts and Nuclear Verdicts

Marathon’s analysis found Los Angeles County Superior Court accounted for 32% of California corporate nuclear verdicts, comprised of 44 verdicts for a total of $4.8 billion. These decisions include a $2.3 billion verdict in the intellectual property matter Pacesetter, Inc. v. Nervicon Co. (2011), and two massive product liability verdicts, $417 million in Lloyd v. Johnson & Johnson (2017) and $208 million in Evans v. AW Chesterton (2010). 

Santa Clara County Superior Court ranked second among state courts in California, with a
total of $4.3 billion. Twenty percent of the state’s nuclear verdict total came from just one verdict in this court, for $3 billion in the breach of contract matter Hewlett-Packard Co. v. Oracle Corp (2016).

Products Liability Claims & Nuclear Punitives in California State Courts

Overall, products liability cases accounted for 27%, or $4.1 billion, in nuclear verdicts issued in California state courts, including cases involving asbestos, talcum powder and weed killers. While many of the cases identified by Marathon took place in Los Angeles County, several of the largest verdicts were ordered in San Francisco Bay Area courts. These included a $2.05 billion verdict in Pilliod v. Monsanto Co. (2019) in Alameda County Superior Court; a $289 million verdict in Johnson v. Monsanto Co. (2018) in San Francisco County Superior Court; and a $79.8 million verdict in Kuhlmann v. Johnson & Johnson (2015) in Alameda County.

California’s verdicts also are being driven by increasingly common “nuclear punitives,” or unlimited damage awards. According to Bloomberg, under state law, employers can be held liable for punitive damages based on the acts of their employees “if their own hands are dirty.” These nuclear punitives are increasingly dwarfing underlying damages awarded to plaintiffs. In one such recent case, a Los Angeles jury awarded $24.6 million in compensatory damages and $440 million in punitive damages in June 2022 against Southern California Edison regarding allegations of repeated sexual and racial harassment at the company’s South Bay office.

To determine the amount of the award, jurors are asked to evaluate the reprehensibility of a defendant’s conduct and determine whether there is a “reasonable relationship” between the amount of punitive damages and the plaintiff’s harm. Jurors also consider what dollar amount would punish the defendant and discourage similar future conduct. 

Anchoring Tactics

As in several other top states, California’s nuclear verdicts are being driven by trial tactics such as “anchoring.” In most states, personal injury lawyers are permitted during closing arguments to relay to juries suggested amounts for damages or to propose a method for calculating damages. When lawyers suggest an extraordinarily large award to a jury, that number can become “anchored” in their minds, and may ultimately influence the case’s outcome. 

One example of anchoring identified by Marathon occurred in a San Francisco Superior Court case, Johnson V. Monsanto Co. (2018) The suit alleged that the weed killer Roundup caused the plaintiff to develop non-Hodgkin’s lymphoma. The plaintiff’s lawyers asked the jury to award one million dollars per year for pain and suffering for the remainder of the plaintiff’s expected life, for a total of $37 million. The jury awarded this exact sum, in addition to $2 million in economic damages and $250 million in punitive damages, for a total of $289 million, the ninth-largest state court corporate nuclear verdict identified in Marathon’s review. 

Legal Services Advertising

According to the ATR Foundation and Kantar, between 2016 and 2020, spending on local advertisements for legal services and/or soliciting legal claims in California increased by 50.78%, while the quantity of ads increased by 115.81%.

Litigation Finance-Favorable Jurisdiction

California has been identified as among the top four most attractive states for investing in litigation by the American Transportation Research Institute. The state does not directly regulate litigation finance by statute. There is a very low risk that California law would invalidate a litigation financing agreement now or in the near future, according to the ATRI.