Filed 7/27/21
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SIX
HUY FONG FOODS, INC., 2d Civ. No. B303096
(Super. Ct. No. 56-2017-
Plaintiff, Cross-defendant, 00505141-CU-BC-VTA)
and Appellant, (Ventura County)
v.
UNDERWOOD RANCHES, LP,
Defendant, Cross-
complainant and Appellant;
UNDERWOOD & SON, LLC,
Cross-Complainant and
Respondent;
DAVID TRAN,
Cross-defendant and
Respondent.
It has been said that some contracts are not worth the
paper they are written on. But oral contracts stemming from
previous written contracts and long-standing business practices
based on custom and trust are as valid as contracts that are
worth the paper they are written on. When such a contract is
breached, there are consequences.
A pepper farmer sued the manufacturer of a pepper-based
hot sauce for breach of contract and fraud. A unanimous jury
found for the farmer, awarding $13.3 million in compensatory
damages and $10 million in punitive damages. We affirm the
judgment.
FACTS
David Tran founded Huy Fong Foods, Inc. (Huy Fong), a
business that produces Sriracha, a jalapeño pepper-based hot
sauce. In 1988, Huy Fong contracted with Underwood Ranches,
L.P. (Underwood) to purchase 500 tons of jalapeños from
Underwood. Craig Underwood (Craig) is Underwood’s principal.
This was the beginning of a relationship that would last for 28
years.
For the first 10 years, the parties executed written
agreements specifying the price per pound and volume to be
supplied. Thereafter, the parties dealt with each other
informally with oral agreements. Originally, Huy Fong needed
more peppers than Underwood could supply, so it contracted with
other farmers as needed.
Underwood’s pepper sales to Huy Fong grew along with the
success of Huy Fong’s business. Craig testified that, by 2005,
Tran was “pushing” Underwood to add more acreage.
In 2006, Tran asked Underwood to significantly increase its
pepper acreage. Underwood was growing 95 percent of Huy
Fong’s peppers. But the peppers represented only 25 percent of
Underwood’s business. Underwood also farmed diverse crops
such as lemons and vegetables. Craig told Tran that he was
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reluctant to assume the risk of growing more peppers, and
rejected Huy Fong’s offer. Craig suggested that Huy Fong
supplement Underwood’s crop with peppers from other sources.
Instead of seeking other sources, Huy Fong proposed that it
would assume some of the risk. Huy Fong would pay Underwood
by the acre grown instead of pounds produced. Thus, the risk of a
disappointing yield would be on Huy Fong. Underwood agreed to
the arrangement.
In 2007, Huy Fong advised Underwood to increase its
acreage by 50 percent. To do this, Underwood had to expand its
operations from Ventura County to Kern County. Craig testified
that the expansion into Kern County was the biggest thing he
had ever done, but he needed to do it to meet Huy Fong’s
increasing needs.
At the same time, Huy Fong was building a 600,000-
square-foot factory in Irwindale. Tran took Craig on a tour of the
site. Tran told Craig that Underwood “needed to fill it up.” Tran
told Craig that he should be farming at least 2,000 acres.
Due to Tran’s suggestion and encouragement, Underwood
invested millions of dollars in acquiring additional acres in Kern
County and, to a lesser extent, Ventura County. By the end of
the 2016 growing season, Underwood had acquired over 1,800
acres in Kern County. It took a year or more to prepare the
ground for growing peppers. Many of the leases extended into
the 2020’s, 2030’s, and beyond. By 2016, Huy Fong accounted for
approximately 80 percent of Underwood’s revenue.
Underwood made these investments because Tran and
Donna Lam, Huy Fong’s chief operations officer and Tran’s sister-
in-law, assured Underwood that Huy Fong would continue to
purchase the peppers grown by Underwood into the future. Craig
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testified Tran and Lam made sure he knew Huy Fong was going
to take all the product Underwood would produce. They
repeatedly told Craig, “You grow it, I’ll sell it.”
Huy Fong Video Records 2016 Harvest
Craig, along with Underwood’s chief operations officer, Jim
Roberts, developed a mechanical harvester for the peppers. The
2016 harvest was the first time the entire harvest was performed
by the harvester. Mechanical harvesting saved substantial
money.
In October 2016, Tran requested Underwood’s permission
to take video footage from an aerial drone of Underwood’s
harvesting and sorting operations. Roberts granted permission
for Huy Fong’s personal use only. Huy Fong had never before
requested to record the harvest.
Chilico, LLC
In 2014 or 2015, Tran formed a new company that he later
called Chilico, LLC. Chilico’s purpose was to obtain peppers for
Huy Fong. In May 2015, Tran offered Roberts a job. Roberts
declined the job offer and attributed the offer to a mistake.
Tran officially formed Chilico in 2016. He gave 100 percent
ownership to his sister-in-law Lam. Tran testified that he
wanted to give Lam a significant salary increase, but his son and
wife, who were on Huy Fong’s board, would object.
Huy Fong contracted with Chilico to buy all its chilies
peppers from Chilico. The contract diverted millions of dollars
from Huy Fong to Chilico.
2017 Contract
On November 1, 2016, Craig, Roberts, Tran, and Lam met
at the Huy Fong factory to plan for the 2017 pepper season. The
parties discussed ongoing field preparations for the upcoming
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season. Underwood was already preparing the ground. Because
it is a continuous process, Underwood could not wait.
Underwood and Huy Fong agreed that for the 2017 season
Underwood would plant 1,700 acres for $13,000 per acre. Tran
also agreed to advance payments of $18 million.
Breach of Contract
On November 9, 2016, Lam asked Roberts to come to the
Huy Fong factory to pick up some equipment. Lam and Tran
knew Craig was on vacation and would not accompany Roberts.
When Roberts arrived, Tran told him that he was forming a
new company. Lam was going to operate the company. Tran told
Roberts that Roberts would be working for the new company.
When Roberts declined the job offer, Tran was not happy.
Tran told Roberts that Underwood would have to deliver peppers
for $500 per ton to compete with Chinese pepper mash that sold
for $300 per ton. When Roberts told Tran that Craig makes the
decisions for Underwood, Tran replied that he would make Craig
take $500 per ton.
Underwood was suddenly facing imminent catastrophic
financial consequences. It could not grow peppers for $500 a ton.
Its costs averaged $610 a ton.
Further negotiations with Huy Fong proved unfruitful.
Lam insisted that Huy Fong needed to purchase peppers for
under $500 per ton. Tran refused to provide Underwood with
prepayments needed to finance the crop. Tran also insisted that
Underwood contract with Chilico rather than Huy Fong. Chilico
did not have the assets to ensure that Underwood would be paid
and Huy Fong refused to guarantee the Chilico contract.
Tran made a final attempt to hire Roberts away from
Underwood.
5.
In early January 2017, Craig sent an e-mail to Tran stating
that in October 2016 they had an agreement to move ahead with
production for 2017; subsequently, Huy Fong decided to change
the agreement; and it is impossible for Underwood to comply with
the modified terms. The e-mail advised Huy Fong that the start
date for planting had passed, there were no plants in the nursery,
and Underwood did not plan on delivering any peppers to Huy
Fong.
Huy Fong contracted with other farmers to provide
peppers. Tran showed those farmers the drone video of
Underwood’s 2016 harvest that he had promised to keep
confidential to show them how to harvest economically.
Consequences of Huy Fong’s Breach
After the relationship with Huy Fong ended, Underwood
had nothing to plant on the 1,700 acres it had. Nor did
Underwood have the financing to plant acreage on speculation. It
tried to get out of its leases, but was largely unsuccessful. It had
to immediately lay off 40 employees. It was too late in the season
to grow much of anything.
Underwood managed to obtain subcontracts for spring and
summer, but it lost 8.5 million in 2017. Underwood was having
difficulties in 2018, and lost over $6 million that year.
Roberts explained that with two or three years’ notice,
Underwood could have avoided the losses. He testified: “[W]e
would have compressed the acreage on the peppers. We wouldn’t
have worried about the [crop] rotation. I could have shed
property at the same time as growing peppers and generated
revenue from those. It would have given me–that entire first
year when we had absolutely nothing to grow, that would have
been covered. So, that massive loss in the first year would have
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been eliminated. And in the second year, we would be taking on
new customers. Then if we could work it out, reduce our pepper
acres, add the new acres of other crops, it might have been
seamless. Might not have had any loss.”
Roberts testified that growing peppers for Huy Fong
required planning three years ahead of time.
Procedure
Huy Fong brought an action against Underwood seeking a
$1.4 million refund of payments Huy Fong had made for the 2016
season.
Underwood cross-complained alleging breach of contract,
promissory estoppel, and fraud against Huy Fong, and
intentional interference with prospective economic relations and
intentional interference with contractual relations again Tran.
The trial court granted Tran judgment of nonsuit on the
tortious interference claims.
Verdict
The jury unanimously found in Underwood’s favor on
breach of contract and fraud. The jury awarded Underwood
$13.32 million in compensatory damages and $10 million in
punitive damages. The trial court denied Huy Fong’s motion for
judgment notwithstanding the verdict. 1
1 Huy Fong’s motion to supplement the record on appeal,
filed April 22, 2020, is denied.
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DISCUSSION
Huy Fong’s Appeal
I
Fraud
Huy Fong contends it is entitled to judgment on
Underwood’s fraud claim.
Huy Fong argues that Underwood prevailed on a legally
impermissible theory of fraudulent concealment. Huy Fong
mischaracterizes Underwood’s theory. Huy Fong claims
Underwood’s theory is that “every party to a contract–solely by
virtue of the contract’s existence–has a freestanding state-law
duty to disclose to its counterparty any intention to discontinue
the contractual relationship.”
Having mischaracterized Underwood’s theory, Huy Fong
cites Norkin v. United States Fire Ins. Co. (1965) 237 Cal.App.2d
435, to show why the theory it falsely attributes to Underwood is
wrong.
In Norkin, plaintiff made a claim against his homeowner’s
insurer. Thereafter, the insurer refused to renew the policy.
Plaintiff brought an action for fraud against the insurer alleging
the insurer failed to disclose it would not do further business with
plaintiff if he made a claim. The trial court sustained the
insurer’s demurrer without leave to amend. The Court of Appel
affirmed, stating the insurer was under no duty to disclose its
intention not to renew. (Norkin v. United States Fire Ins. Co.,
supra, 237 Cal.App.2d at p. 438.)
Underwood’s theory is not that every contract requires a
party to disclose an intention not to renew. Instead, Underwood’s
theory is that Huy Fong induced Underwood to acquire more and
more land by continually promising Underwood that Huy Fong
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would purchase all the peppers Underwood produced. Huy Fong
understood that it was inducing Underwood to commit itself into
the future, while at the same time concealing its plan to
terminate its relationship with Underwood.
Had the insurer in Norkin induced plaintiff to purchase his
house on the fraudulent promise that it would continue to insure
it, we are confident the result would have been different.
More to the point, the question on appeal is not whether
the judgment can be upheld on a particular legal theory, but
whether the judgment can be upheld on any legal theory. (See,
e.g., International etc. Workers v. Landowitz (1942) 20 Cal.2d 418,
423 [judgment entered on grounds that ordinance is
unconstitutional upheld on other grounds].)
(a) Fraudulent Concealment
Huy Fong contends it had no duty to disclose that it did not
intend to continue its contractual relationship with Underwood
Fraudulent concealment requires the “suppression of a fact,
by one who is bound to disclose it.” (Civ. Code, § 1710, subd. 3.)
Plaintiff must show that defendant had a duty to disclose.
(Linear Technology Corp. v. Applied Materials, Inc. (2007) 152
Cal.App.4th 115, 131.)
A duty to disclose may arise from a confidential
relationship. Where there exists a relationship of trust and
confidence, it is the duty of one in whom the confidence is reposed
to make a full disclosure of all material facts within his
knowledge relating to the transaction in question and any
concealment of a material fact is a fraud. (Estate of Sanders
(1985) 40 Cal.3d 607, 616.) A confidential relationship can exist
even though, strictly speaking, there is no fiduciary relationship.
(Id. at p. 615.) A confidential relationship may be founded on
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moral, social, domestic, or merely a personal relationship.
(Barbara A. v. John G. (1983) 145 Cal.App.3d 369, 382.)
In Bank of America v. Sanchez (1934) 3 Cal.App.2d 238,
243, the court stated, “[I]t is sufficient to show the existence of
such friendly relations during a period of several years between
the parties as would entitle the injured person to place confidence
in the integrity and honesty of the other party to a contract . . . .”
The court determined that a customer’s business relationship
with a bank over a period of years, her husband’s former
employment with the bank, and her acquaintance with and
confidence in officers of the bank were substantial evidence of a
confidential relationship. (Ibid.)
Here the parties’ relationship extended over 28 years. Tran
testified his relationship with Craig was like a family, that he
trusted Craig, and saw him as a good friend. Lam described the
relationship between Underwood and Huy Fong as a “concrete
bond.” The parties shared financial information. Craig obtained
more land in reliance on Huy Fong’s assurance that it would buy
what Underwood produced. Perhaps the most compelling
evidence of a confidential relationship is that for many years the
parties entered into transactions involving tens of millions of
dollars without formal written contracts.
Huy Fong points out that the jury was instructed on
fraudulent concealment, but the instruction did not include
confidential relationship.
If this was error, it is patently harmless. The evidence that
Underwood and Huy Fong were in a confidential relationship is
overwhelming. Even Huy Fong concedes in its opening brief that
the parties had enjoyed a “close and friendly” relationship, that
the parties “successfully collaborated for decades,” that the
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relationship grew less formal as the parties “drew closer,” and
that they “shared the financial burdens and risks of jalapeño
cultivation.” Huy Fong does not even suggest any contrary
evidence.
Huy Fong argues the concealed information must be fact
not intention. But again the authority Huy Fong cites does not
support the argument. The cases Huy Fong cites do involve a
concealment of fact but none of them hold a concealment of
intention is not sufficient. (See, e.g., Hoffman v. 162 North Wolfe
LLC (2014) 228 Cal.App.4th 1178 [cited by Huy Fong; does not
involve concealment of intention].)
Here Huy Fong’s decision to terminate its relationship with
Underwood was not some inchoate idea. Huy Fong’s business
required a dependable supply of peppers. Huy Fong made the
decision to terminate its relationship with Underwood long before
the end of the 2016 harvest. That decision was a “fact” that Huy
Fong had a duty to disclose to Underwood. And the jury had
ample evidence to so find.
(b) Affirmative Misrepresentation
Huy Fong contends there is no evidence of an affirmative
misrepresentation.
In viewing the evidence, we look only to the evidence
supporting the prevailing party. (GHK Associates v Mayer
Group, Inc. (1990) 224 Cal.App.3d 856, 872.) We discard
evidence unfavorable to the prevailing party as not having
sufficient verity to be accepted by the trier of fact. (Ibid.) Where
the trial court or jury has drawn reasonable inferences from the
evidence, we have no power to draw different inferences, even
though different inferences may also be reasonable. (McIntyre v.
Doe & Roe (1954) 125 Cal.App.2d 285, 287.) The trier of fact is
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not required to believe even uncontradicted testimony. (Sprague
v. Equifax, Inc. (1985) 166 Cal.App.3d 1012, 1028.)
One who willfully deceives another with intent to induce
him to alter his position to his injury or risk is liable for any
damage that he thereby suffers. (Civ. Code, § 1709.) A promise
to do something necessarily implies an intention to perform;
hence, when a promise is made without such an intention, it is
fraud. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.)
Huy Fong points out that the only fraud Underwood alleges
in its complaint is a July 2016 representation that Huy Fong
would purchase peppers from Underwood for the 2017, 2018,
2019 pepper seasons and beyond. Huy Fong argues that at best
there was an implied promise based on vague reassurances of
good feelings between the parties. Huy Fong cites Lonely Maiden
Productions, LLC v. Golden Tree Asset Management, LP (2011)
201 Cal.App.4th 368, 375, for the proposition that California does
not recognize a fraud claim based on an implied false promise.
But Lonely Maiden cites no authority for the proposition
that fraud cannot be based on an implied false promise. Where
the implied promise is certain enough to cause reasonable
reliance, there is no reason it cannot be a proper basis for fraud.
Parties may not avoid liability for fraud simply because they
leave to implication what they clearly intend to communicate.
In any event, here there was far more than an implied
promise based on vague reassurances of good feelings between
the parties. Huy Fong expressly told Underwood numerous times
that Huy Fong would purchase all the peppers Underwood could
produce. These promises were made in the context of Huy Fong’s
insistence that Underwood obtain more land, a matter that
required Underwood to undertake long-term financial
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commitments. In addition, Huy Fong expressly agreed to
purchase the 2017 harvest of 1,700 acres at $13,000 per acre.
The jury could reasonably conclude that Huy Fong had no
intention of keeping those promises when they were made. There
is evidence to show that Tran had long planned to cut Huy Fong’s
ties to Underwood. As far back as 2014, Tran was planning to
form Chilico, a company that would purchase peppers from
farmers other than Underwood, allowing Huy Fong to cut its ties
to Underwood. In 2015, Tran began his campaign to hire Roberts
away from Underwood. Roberts was the key employee in
Underwood’s pepper production. Tran informed Roberts that
Huy Fong was breaching the contract to purchase Underwood’s
2017 harvest just days after making it. Tran waited until he
knew Craig was on vacation before informing Roberts. Finally, in
2016, Tran, who had never before showed an interest in harvest
operations, used a drone to video Underwood’s harvest. After he
cut ties with Underwood, he used the video to show other farmers
how to harvest efficiently.
There is more than ample evidence to support a finding of
fraud based on affirmative misrepresentation.
II
Alleged Inconsistent Jury Findings
Huy Fong contends the jury made inconsistent findings on
the parties’ contract.
On the jury’s special verdict form, the jury answered yes to
both the following questions: “Did Underwood Ranches LP and
Huy Fong Foods, Inc. enter into an ongoing contract (something
more than annual contracts) whereby Underwood Ranches would
grow jalapeño peppers for Huy Fong?” “Did Underwood Ranches
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LP and Huy Fong Foods, Inc. enter into a contract for the 2017
jalapeño pepper growing season?”
A special verdict is inconsistent if there is no possibility of
reconciling its findings with each other. (Singh v. Southland
Stone U.S.A., Inc. (2010) 186 Cal.App.4th 338, 357.)
Here the jury’s findings are consistent and easily
reconciled. Read together, the jury found that the parties had an
ongoing contractual relationship that included the 2017 jalapeño
growing season.
III
Motion for New Trial
Huy Fong contends the trial court abdicated its
responsibility to sit as a 13th juror in ruling on its motion for a
new trial.
Huy Fong made a motion for a new trial on the ground of
insufficiency of the evidence to justify the verdict. (Code Civ.
Proc., § 657, subd. 6.)
Code of Civil Procedure section 657 provides, in part: “A
new trial shall not be granted upon the ground of insufficiency of
the evidence to justify the verdict or other decision . . . unless
after weighing the evidence the court is convinced from the entire
record, including reasonable inferences therefrom, that the court
or jury clearly should have reached a different verdict or
decision.” (Italics added.)
Huy Fong’s contention that the trial court abdicated its
duty is based on the court’s statement: “I may be the 13th juror,
but I don’t view myself as the super juror where, because I
disagree with what the jury has returned in the way of a verdict,
I can just, you know, run over the top of it and substitute my
personal opinion for theirs.”
14.
Huy Fong apparently believes the trial court does have the
power to substitute the court’s personal opinion for that of the
jury. Huy Fong relies on Ryan v. Crown Castle NG Networks,
Inc. (2016) 6 Cal.App.5th 775. In Ryan, the Court of Appeal
reversed the trial court’s denial of the plaintiff’s motion for a new
trial on the ground of inadequate damages because the trial court
implied it had no power to question the adequacy of the jury’s
award and because the trial court did not evaluate the evidence.
(Id. at pp. 783-786.)
But here the trial court evaluated the evidence and did not
say it had no power to question the jury’s verdict. The court said
it had no power to act as a super juror and substitute its personal
opinion for that of the jurors. That is a correct statement of the
law and reflects how all judges are duty bound to act. To do
otherwise would impoverish our system of justice.
Underwood has a constitutional right to a jury trial. (Cal.
Const., art I, § 16.) Code of Civil Procedure section 657 empowers
the trial court to grant a new trial only when after independently
evaluating the evidence the court concludes the jury’s verdict is
“clearly” wrong. The court cannot grant a new trial simply
because it would have found differently than the jury.
(Dominguez v. Pantalone (1989) 212 Cal.App.3d 201, 216.) That
is what the trial court said.
The purpose of Code of Civil Procedure section 657 is not to
give the trial court permission to run roughshod over a party’s
constitutional right to jury determination. Instead, the purpose
is to allow the trial court to grant a new trial on those rare
occasions when the jury’s verdict is so at odds with any
reasonable view of the evidence that judicial intervention is
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required to avoid a manifest miscarriage of justice. To the extent
Ryan can be read to the contrary, we decline to follow it.
IV
Punitive Damages
Huy Foods contends that the $10 million punitive damage
award must be vacated.
Huy Fong argues that punitive damages cannot be awarded
for breach of contract in the absence of an independent tort. But
here punitive damages were awarded for fraud, not breach of
contract. Punitive damages may be awarded for fraud even
though the fraud incidentally involves breach of contract. (See
Schroeder v. Auto Driveaway Co. (1974) 11 Cal.3d 908, 921
[defendants who contracted to transport plaintiffs’ goods are
liable for punitive damages for fraudulently concealing they were
not authorized by the Interstate Commerce Commission to
transport goods].)
Huy Fong’s reliance on Applied Equipment Corp. v. Litton
Saudi Arabia, Ltd. (1994) 7 Cal.4th 503, 516, is misplaced. In
that case our Supreme Court held that a party cannot be liable
for conspiracy to interfere with its own contract. This case
involves fraud, not interference with contract. If a party could
interfere with its own contract, every breach of contract would be
a tort. But not every breach of contract involves fraud.
Huy Fong argues that punitive damages were not proven
by clear and convincing evidence. (Civ. Code, § 3294, subd. (a) [to
recover punitive damages, fraud must be proven by clear and
convincing evidence].) But the jury unanimously found fraud by
clear and convincing evidence. We stated the evidence that
supports a finding of fraud by affirmative misrepresentation and
fraudulent concealment. We viewed the record as a whole and
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determine that the record contains substantial evidence from
which a reasonable trier of fact could have made the finding of
the high probability demanded by the clear and convincing
evidence standard. (Conservatorship of O.B. (2020) 9 Cal.5th
989, 1005.)
Finally, Huy Fong argues the $10 million punitive damages
award was so excessive as to violate federal due process. The
United States Supreme Court has set forth three guideposts for
reviewing a punitive damages award: “(1) the degree of
reprehensibility of the defendant's misconduct; (2) the disparity
between the actual or potential harm suffered by the plaintiff and
the punitive damages award; and (3) the difference between the
punitive damages awarded by the jury and the civil penalties
authorized or imposed in comparable cases.” (State Farm Mutual
Automobile Insurance Co. v. Campbell (2003) 538 U.S. 408, 418.)
Concerning the first guidepost, the Supreme Court stated:
“ ‘[T]he most important indicium of the reasonableness of a
punitive damages award is the degree of reprehensibility of the
defendant's conduct.’ [Citation.] We have instructed courts to
determine the reprehensibility of a defendant by considering
whether: the harm caused was physical as opposed to economic;
the tortious conduct evinced an indifference to or a reckless
disregard of the health or safety of others; the target of the
conduct had financial vulnerability; the conduct involved
repeated actions or was an isolated incident; and the harm was
the result of intentional malice, trickery, or deceit, or mere
accident.” (State Farm Mutual Automobile Insurance Co. v.
Campbell, supra, 538 U.S. at p. 419.)
Concerning the first guidepost, the degree of
reprehensibility, it is true that Huy Fong’s fraudulent conduct
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did not directly physically harm anyone. But in addition to the
mental distress Craig felt, 40 people lost their jobs. The harm
done by Huy Fong’s deception was not limited to Craig. The
emotional distress and loss of jobs were entirely foreseeable. Huy
Fong simply did not care. In addition, Underwood was
particularly vulnerable. Almost all of Underwood’s production
was devoted to Huy Fong. Huy Fong encouraged Underwood’s
dependence by demanding that Underwood obtain more acreage
and by promising to buy all that Underwood produced. Even if
Huy Fong’s deception may be described as a single incident, Huy
Fong had been planning the deception for some period of time. It
did not occur in an aberrant moment. Finally, the harm was the
result of intentional deceit, not a mere accident. The degree of
reprehensibility is more than sufficient to support the punitive
damages award.
The second guidepost, the disparity between the actual
harm and the punitive damages award, also favors affirming the
award. The United States Supreme Court has refused to draw a
bright line. (Simon v. San Paolo U.S. Holding Co., Inc. (2005) 35
Cal.4th 1159, 1181.) But few awards exceeding a single-digit
ratio between punitive and compensatory damages will satisfy
due process. (State Farm Mutual Automobile Insurance Co. v.
Campbell, supra, 538 U.S. at p. 425.) Past decisions approving
ratios of three- or four-to-one are “instructive.” (Ibid.)
Here the ratio of punitive to compensatory damages is 0.75-
to-one. Even if we were to consider the reprehensibility factor to
be in the middle range, the low punitive to compensatory
damages ratio supports the award.
Finally, the third guidepost is the difference between the
punitive damages award and the civil penalties authorized or
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imposed in comparable cases. Our Supreme Court has noted that
the third guidepost is less useful in a case like this where
plaintiff prevailed only on a cause of action involving common law
tort duties that do not lend themselves to comparison with
statutory penalties. (Simon v. San Paolo U.S. Holding Co., Inc.
supra, 35 Cal.4th at pp. 1184-1185.) Nevertheless, “we do note
that California [statutes] typically impose[] treble damages
penalties for fraudulent and bad faith conduct.” (Bardis v. Oates
(2004) 119 Cal.App.4th 1, 24.) There is nothing about statutory
penalties that indicates a 0.75-to-one ratio of punitive to
compensatory damages is excessive. Far from it. Here the award
of punitive damages is low.
Underwood’s Appeal
Underwood appeals the judgment of nonsuit on its claims
against Tran: intentional interference with prospective economic
advantage and interference with contract.
Underwood asserts the appeal is protective. If we affirm
the judgment against Huy Fong, it will be unnecessary for us to
consider Underwood’s claims against Tran.
Because we affirm the judgment against Huy Fong, it is
unnecessary for us to consider Underwood’s appeal.
DISPOSITION
The judgment is affirmed. Costs are awarded to
Underwood.
CERTIFIED FOR PUBLICATION.
GILBERT, P. J.
We concur:
YEGAN, J. TANGEMAN, J.
19.
Henry J. Walsh, Judge
Superior Court County of Ventura
______________________________
Latham & Watkins, Joshua G. Hamilton, Dixie C. Tauber,
Roman Martinez, Charles S. Dameron, Riley T. Keenan; Pearson,
Simon & Warshaw, Thomas J. Nolan for Plaintiff, Cross-
defendant and Appellant Huy Fong Foods, Inc., and Cross-
defendant and Respondent David Tran.
Ferguson Case Orr Paterson, Wendy C. Lascher, John A.
Hribar, James Q. McDermott, Michael A. Velthoen and Jessica
M. Wan for Defendant, Cross-Complainant and Appellant
Underwood Ranches and Cross-complainant and Respondent
Underwood & Son.
20.