In Re Pacific Fertility Center Litigation

Background

The plaintiffs requested punitive damages on their negligence claim against Chart. The claim concerned Chart’s alleged failure to recall or retrofit the TEC-3000 electronic controller installed on Tank 4. At a June 7, 2021 charging conference, Chart objected to the proposed punitive-damages instruction. The court requested briefing and orally ruled before instructing the jury that no reasonable factfinder could find the required facts by clear and convincing evidence. This written order explained that ruling.

Legal standard

Under California law, punitive damages against a corporation require clear and convincing evidence that an officer, director, or managing agent authorized, approved, or ratified the conduct involving malice, oppression, or fraud. A managing agent is an employee who exercises substantial independent authority and judgment over decisions that ultimately determine corporate policy. The evidence must permit a clear and convincing inference that an authorized person acted with willful and conscious disregard for others’ rights or safety.

Evidence considered

The plaintiffs identified Trial Exhibits 200, 223, and 284. They argued that the exhibits showed Chart’s upper management was informed about the controller’s serial-number-zero issue, the development of a retrofit, and the decision to release the retrofit without notifying customers that it addressed a known defect.

The court found that the exhibits referred to the “Chart hierarchy” and “upper management” without identifying the people meant or showing what they were told. The plaintiffs did not identify testimony establishing that an officer or managing agent knew about the alleged controller issues. Although the plaintiffs asserted that Frank Bies, Chart’s Vice President and General Manager of its cryobiological business, knew about the issue, they did not cite supporting deposition testimony, and he was not copied on the identified emails.

The court also rejected the argument that knowledge could be inferred merely from Chart’s release of a retrofit kit. The evidence could, at most, support a finding by a preponderance of the evidence that some communications occurred. It did not show the substance of those communications or establish the clear and convincing evidence required for punitive damages.

The plaintiffs argued that Josep Fernandez and Ramon Gonzalez were managing agents. The court found no evidence that Fernandez knew about the issue or authorized, approved, or ratified the alleged misconduct. The only identified reference to Fernandez was an email suggesting that someone might mention the issue to him and Gonzalez; the plaintiffs offered no evidence that the issue was actually raised with Fernandez.

As to Gonzalez, the plaintiffs argued that his position above two other employees in Chart’s hierarchy and his participation in email chains showed that he was a managing agent. The court found that the emails instead suggested Gonzalez was gathering information to pass to “upper management” or the “Chart hierarchy.” The plaintiffs identified no evidence that Gonzalez had input or influence over whether Chart should recall or retrofit the controller. At most, the emails suggested that his role was to provide information to those who formulated company policy.

Ruling

The court concluded that the plaintiffs had failed to demonstrate substantial evidence supporting an inference that a Chart officer or managing agent authorized, ratified, or approved Chart’s alleged misconduct concerning the controller. The court therefore declined to give the jury a punitive-damages instruction.

Disposition

The order elaborated on the court’s prior oral ruling and declined to give the requested punitive-damages instruction.