2005 California Civil Code Sections 3294-3296 Article 3. Exemplary Damages

SECTION 3294-3296

3294.  (a) In an action for the breach of an obligation not arising
from contract, where it is proven by clear and convincing evidence
that the defendant has been guilty of oppression, fraud, or malice,
the plaintiff, in addition to the actual damages, may recover damages
for the sake of example and by way of punishing the defendant.
   (b) An employer shall not be liable for damages pursuant to
subdivision (a), based upon acts of an employee of the employer,
unless the employer had advance knowledge of the unfitness of the
employee and employed him or her with a conscious disregard of the
rights or safety of others or authorized or ratified the wrongful
conduct for which the damages are awarded or was personally guilty of
oppression, fraud, or malice.  With respect to a corporate employer,
the advance knowledge and conscious disregard, authorization,
ratification or act of oppression, fraud, or malice must be on the
part of an officer, director, or managing agent of the corporation.
   (c) As used in this section, the following definitions shall
   (1) "Malice" means conduct which is intended by the defendant to
cause injury to the plaintiff or despicable conduct which is carried
on by the defendant with a willful and conscious disregard of the
rights or safety of others.
   (2) "Oppression" means despicable conduct that subjects a person
to cruel and unjust hardship in conscious disregard of that person's
   (3) "Fraud" means an intentional misrepresentation, deceit, or
concealment of a material fact known to the defendant with the
intention on the part of the defendant of thereby depriving a person
of property or legal rights or otherwise causing injury.
   (d) Damages may be recovered pursuant to this section in an action
pursuant to Chapter 4 (commencing with Section 377.10) of Title 3 of
Part 2 of the Code of Civil Procedure based upon a death which
resulted from a homicide for which the defendant has been convicted
of a felony, whether or not the decedent died instantly or survived
the fatal injury for some period of time.  The procedures for joinder
and consolidation contained in Section 377.62 of the Code of Civil
Procedure shall apply to prevent multiple recoveries of punitive or
exemplary damages based upon the same wrongful act.
   (e) The amendments to this section made by Chapter 1498 of the
Statutes of 1987 apply to all actions in which the initial trial has
not commenced prior to January 1, 1988.
3294.5.  (a) The Legislature finds and declares that extraordinary
and dire budgetary needs have forced the enactment of this
extraordinary measure to allocate temporarily for the state's Public
Benefit Trust Fund a substantial portion of any punitive damages paid
from a judgment during the limited time period specified in the
statute.  The Legislature further finds and declares that this
uniquely extraordinary legislative action shall not be construed or
interpreted in any way to establish any policy, precedent,
presumption, or inference in any case or in any other setting,
including future legislatures, regarding the award of punitive
damages, its allocation, or the payment of attorney's fees arising in
connection therewith.
   (b) Punitive damages awarded pursuant to a final judgment shall be
paid, as follows:
   (1) Seventy-five percent shall be paid to the Public Benefit Trust
Fund, which is hereby created in the State Treasury, to be
administered by the Department of Finance.  Amounts deposited into
the Public Benefit Trust Fund shall be available for annual
appropriation in the Budget Act and shall be used for purposes
consisted with the nature of the award, but in no case shall be used
to fund the courts or judicial programs.  Amounts deposited in the
Public Benefit Trust Fund shall also be available for the purposes
specified in subdivision (d).
   (2) Twenty-five percent to the plaintiff or plaintiffs.
   (c) Upon a final judgment that includes punitive damages, after
payment of costs if any, to the plaintiff, the judgment debtor shall
do all of the following:
   (1) Pay the Public Benefit Trust Fund's proportional share of the
punitive damages to the Director of the Department of Finance for
deposit in the Public Benefit Trust Fund.
   (2) Pay to the plaintiff's attorney, the plaintiff's proportional
share of punitive damages.
   (3) Notify the plaintiff's attorney of the amount of punitive
damages paid to the Public Benefit Trust Fund.
   (d) Upon deposit in the Public Benefit Trust Fund of proceeds from
a final judgment punitive damages award, the plaintiff's attorney in
the action giving rise to those proceeds shall be entitled to 25
percent of the proceeds received by the fund from the punitive
damages award in that action.  Notwithstanding Section 13340 of the
Government Code, the plaintiff's attorney's share of the proceeds
shall be continuously appropriated to pay those attorney's fees,
provided that any claim for payment by the plaintiff's attorney shall
be paid by the fund on July 1 of the next fiscal year.
   (e) The state shall not be a party in interest to, and shall not
intervene in, any action in which its sole interest is the potential
recovery of a portion of a punitive damages award under this section.
  The state shall not file any amicus curiae brief regarding the
propriety of, or the amount of, any punitive damages award in any
action in which its sole interest is the potential recovery of a
portion of a punitive damages award under this section.  The state's
sole right to the proceeds of a punitive damages award is as provided
in this section.
   (f) Notwithstanding any other provision of law, any attorney's
fees paid to an attorney from the plaintiff's share of the award
shall be deemed to be the income of the attorney and not income to
the plaintiff for state and local taxation purposes.
   (g) A jury shall not be informed that any portion of a punitive
damages award will be paid to a government fund, and no argument or
inference shall be made to a jury that a punitive damages award would
result in a windfall to the plaintiff or plaintiffs.  However,
nothing in this section shall be construed to affect a punitive
damages award if a juror or jurors had independent knowledge that a
portion of a punitive damages award will be paid to a government
   (h) This section shall only apply to actions filed after the
effective date of this section and finally adjudicated, including the
resolution of all mandatory or discretionary appeals, the resolution
of any motion for attorney's fees on appeal and any appeals
therefrom, and the issue of final remittitur, prior to the date this
section ceases to be operative.
   (i) This section shall remain in effect until July 1, 2006, and as
of that date is repealed, unless a later enacted statute extends or
deletes that date.
3295.  (a) The court may, for good cause, grant any defendant a
protective order requiring the plaintiff to produce evidence of a
prima facie case of liability for damages pursuant to Section 3294,
prior to the introduction of evidence of:
   (1) The profits the defendant has gained by virtue of the wrongful
course of conduct of the nature and type shown by the evidence.
   (2) The financial condition of the defendant.
   (b) Nothing in this section shall prohibit the introduction of
prima facie evidence to establish a case for damages pursuant to
Section 3294.
   (c) No pretrial discovery by the plaintiff shall be permitted with
respect to the evidence referred to in paragraphs (1) and (2) of
subdivision (a) unless the court enters an order permitting such
discovery pursuant to this subdivision.  However, the plaintiff may
subpoena documents or witnesses to be available at the trial for the
purpose of establishing the profits or financial condition referred
to in subdivision (a), and the defendant may be required to identify
documents in the defendant's possession which are relevant and
admissible for that purpose and the witnesses employed by or related
to the defendant who would be most competent to testify to those
facts.  Upon motion by the plaintiff supported by appropriate
affidavits and after a hearing, if the court deems a hearing to be
necessary, the court may at any time enter an order permitting the
discovery otherwise prohibited by this subdivision if the court
finds, on the basis of the supporting and opposing affidavits
presented, that the plaintiff has established that there is a
substantial probability that the plaintiff will prevail on the claim
pursuant to Section 3294.  Such order shall not be considered to be a
determination on the merits of the claim or any defense thereto and
shall not be given  in evidence or referred to at the trial.
   (d) The court shall, on application of any defendant, preclude the
admission of evidence of that defendant's profits or financial
condition until after the trier of fact returns a verdict for
plaintiff awarding actual damages and finds that a defendant is
guilty of malice, oppression, or fraud in accordance with Section
3294.  Evidence of profit and financial condition shall be admissible
only as to the defendant or defendants found to be liable to the
plaintiff and to be guilty of malice, oppression, or fraud.  Evidence
of profit and financial condition shall be presented to the same
trier of fact that found for the plaintiff and found one or more
defendants guilty of malice, oppression, or fraud.
   (e) No claim for exemplary damages shall state an amount or
   (f) The amendments to this section made by Senate Bill No. 241 of
the 1987-88 Regular Session apply to all actions in which the initial
trial has not commenced prior to January 1, 1988.
3296.  (a) Whenever a judgment for punitive damages is entered
against an insurer or health care service plan licensed pursuant to
Chapter 2.2 (commencing with Section 1340) of Division 2 of the
Health and Safety Code, the plaintiff in the action shall, within 10
days of entry of judgment, provide all of the following to the
Commissioner of the Department of Insurance or the Director of the
Department of Managed Health Care, whichever commissioner has
regulatory jurisdiction over the insurer or health care service plan:
   (1) A copy of the judgment.
   (2) A brief recitation of the facts of the case.
   (3) Copies of relevant pleadings, as determined by the plaintiff.
   (b) The willful failure to comply with this section may, at the
discretion of the trial court, result in the imposition of sanctions
against the plaintiff or his or her attorney.
   (c) This section shall apply to all judgments entered on or after
January 1, 1995.
   (d) "Insurer," for purposes of this section, means any person or
entity transacting any of the classes of insurance described in
Chapter 1 (commencing with Section 100) of Part 1 of Division 1 of
the Insurance Code.

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