NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS NOV 13 2017
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
LOUISE KING, Individually, and as No. 14-35700
Personal Representative of the Estate of
Timothy King, D.C. No. 1:12-cv-00092-RWA
Plaintiff-Appellee,
MEMORANDUM*
v.
GEICO INDEMNITY COMPANY,
Defendant-Appellant.
Appeal from the United States District Court
for the District of Montana
Richard W. Anderson, Magistrate Judge, Presiding
Argued and Submitted August 29, 2017
Seattle, Washington
Before: McKEOWN and GOULD, Circuit Judges, and ROTHSTEIN,** District
Judge.
GEICO Indemnity Company (“GEICO”) appeals multiple district court
orders in an insurance suit brought by Louise King. Because the parties are
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Barbara Jacobs Rothstein, United States District Judge
for the Western District of Washington, sitting by designation.
familiar with the facts, we do not recite them here. We have jurisdiction under 28
U.S.C. § 1291. We remit the punitive damages award and affirm all other issues.
1. Constitutionality of Punitive Damages Award
GEICO argues that the district court erred by not reducing the jury’s $2.5
million punitive damages award. We review de novo a district court’s
determination that punitive damages are constitutionally appropriate. Planned
Parenthood of Columbia/Willamette Inc. v. Am. Coal. of Life Activists, 422 F.3d
949, 953 (9th Cir. 2005).
Three “guideposts” inform our analysis: (1) the degree of reprehensibility,
(2) the disparity between the harm suffered and the punitive damages award, and
(3) the difference between the punitive damages award and comparable authorized
civil penalties. BMW of N. Am. v. Gore, 517 U.S. 559, 574–75 (1996). We
evaluate each in turn.
GEICO’s conduct, while not admirable, was of low to moderate
reprehensibility. See State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408,
419 (2003) (listing five factors that inform a reprehensibility analysis, including
whether the harm was physical or economic, evinced indifference to the health or
safety of others, or resulted from intentional malice or deceit). On one hand, King
suffered only economic and emotional harm. She was not physically injured and
GEICO did not evince indifference to the health or safety of King or anyone else.
2
On the other hand, the jury’s verdict regarding GEICO’s liability under the
Montana Unfair Trade Practices Act (“UTPA”) indicates that the jury believed
GEICO was acting in bad faith.
The disparity between King’s actual harm and the level of punitive damages
awarded her is significant. We are not bound by a particular formula, but where a
defendant’s conduct “is not particularly egregious” and there are “significant
economic damages,” a four-to-one ratio is “a good proxy for the limits of
constitutionality.” Planned Parenthood, 422 F.3d at 962. For purposes of
calculating the ratio here, we include the $266,070.61 in compensatory damages
and fees awarded to King for her harm—$100,000 for GEICO’s violation of the
UTPA, $100,000 under the insurance policy for her emotional distress, and
$66,070.61 in attorneys’ fees, interest, and costs.1 See Estate of Gleason v. Cent.
United Life Ins. Co., 350 P.3d 349, 358 (“[W]e hold that where an insurer has been
found to have violated the UTPA due to delay or refusal to pay benefits in breach
of the insurance contract, damages resulting from that violation may be considered
compensatory damages under the UTPA for purposes of pursuing punitive
damages.”); see also Riordan v. State Farm Mut. Auto. Ins. Co., 589 F.3d 999,
1007 (9th Cir. 2009) (“[A]n insured is entitled to recover attorney fees, pursuant to
1
GEICO’s obligations to the estate of King’s husband were discharged before trial
commenced.
3
the insurance exception to the American Rule, when the insurer forces the insured
to assume the burden of legal action to obtain the full benefit of the insurance
contract.”) (quoting Mountain W. Farm Bureau Mut. Ins. Co. v. Brewer, 69 P.3d
652, 660 (Mont. 2003)) (internal quotation marks omitted). Thus, the ratio
between King’s actual harm—$266,070.61—and her punitive damages award—
$2.5 million—is roughly nine-to-one. This is significantly higher than the four-to-
one proxy that we apply in similar contexts.
Turning to the third guidepost, in Montana, the maximum comparable civil
penalty is a fine for violation of the Montana insurance code, which may not
exceed $25,000, and the fine imposed on insurance producers or adjusters may not
exceed $5,000 per violation. Mont. Code § 33-1-317. Thus, the maximum
relevant civil penalty is significantly lower than the $2.5 million punitive damages
award.
Based on our evaluation of the guideposts, we conclude that the punitive
damages award is unconstitutionally excessive. 2 Given the low to moderate
reprehensibility of GEICO’s conduct and the disparate ratio between King’s actual
harm and the punitive damages award, we follow the guidance in Planned
2
The $2.5 million verdict in this appeal complies with Montana law, which limits
punitive damages to the lesser of $10 million or 3% of the defendant’s net worth,
Mont. Code § 27-1-220(3); however, the award is nonetheless unconstitutionally
excessive.
4
Parenthood and apply a four-to-one ratio and direct the district court to remit the
punitive damages award to $1,064,282.44.
2. Admission of Expert Testimony
The district court did not abuse its discretion by admitting the testimony of
King’s expert, Randy Nelson. A jury verdict will not be reversed for evidentiary
error unless the district court abused its discretion and the error was prejudicial.
Hangarter v. Provident Life & Accident Ins. Co., 373 F.3d 998, 1015 (9th Cir.
2004).
Although it is well established that experts may not give opinions as to legal
conclusions, experts may testify about industry standards, and the reasonableness
of an insurer’s claims handling is generally an issue of fact. Id. at 1010, 1016
(disagreeing that testimony that an insurance company deviated from industry
standards offered a legal conclusion). Nelson’s testimony fell well within these
parameters. Nelson did not address an ultimate issue of law, but rather testified to
GEICO’s handling of the claim in relation to industry standards and GEICO’s own
claim manual. The fact that GEICO’s claim manual incorporated the UTPA does
not lead to a different result. See id. at 1016-17 (an expert may refer to law in
expressing an opinion without such reference rendering the opinion inadmissible).
3. Post-Trial, Discovery-Related Motions
Finally, GEICO argues that the district court erred by denying its motion for
5
a new trial and motion to compel or reopen discovery based on King’s failure to
produce certain documents during discovery. GEICO also challenges the district
court’s award to King of attorneys’ fees for opposing GEICO’s motion to compel.
We affirm the district court on each of these challenges. A district court’s
determination regarding whether to grant a new trial or reopen discovery is
reviewed for abuse of discretion. See Hangarter, 373 F.3d at 1005 (new trial);
Sablan v. Dep’t of Fin. of Com. of N. Mariana Islands, 856 F.2d 1317, 1321 (9th
Cir. 1988) (discovery). The decision to award reasonable fees under Federal Rule
of Civil Procedure 37(a)(5) is also reviewed for abuse of discretion. Balla v.
Idaho, 677 F.3d 910, 918, 920 (9th Cir. 2012).
Under Federal Rule of Civil Procedure 59, a new trial may be warranted for
discovery misconduct when the movant can: “(1) prove by clear and convincing
evidence that the verdict was obtained through . . . misconduct,” and “(2) establish
that the conduct complained of prevented the losing party from fully and fairly
presenting his case or defense.” Jones v. Aero/Chem Corp., 921 F.2d 875, 878–79
(9th Cir. 1990). Failure to produce materials requested in discovery can constitute
“misconduct” for Rule 59 purposes. See id. at 879. GEICO knew there was no
attorney-client relationship before May 2012 at least as early as trial, when both
King and Randy Bishop testified that they had only conferred as friends until that
point. Despite this knowledge, GEICO did not request the documents or object to
6
what King produced during discovery. Instead, GEICO waited until after the
verdict and entry of judgment. There is no clear or convincing evidence that the
verdict was obtained through misconduct. Thus, the district court did not abuse its
discretion in denying GEICO’s motion for a new trial.
The same is true of the district court’s denial of GEICO’s motion to compel
and reopen discovery. The district court explained that GEICO filed its motion to
compel after the discovery deadline and, regardless, its motion was futile because
the jury had returned a verdict and judgment already had been entered.
Accordingly, we agree there was no compelling reason—as required by the
scheduling order for a deadline continuance—to grant GEICO’s untimely motion.
The district court did not abuse its discretion by denying GEICO’s motions.
Finally, we agree with the district court that GEICO’s motion for leave to
file a motion to compel was “at its core, a motion to compel,” and was not
substantially justified. The district court did not abuse its discretion in awarding
King reasonable fees to oppose the motion under Federal Rule of Civil Procedure
37(a)(5).
AFFIRMED IN PART; REVERSED AND VACATED IN PART.
Each party shall bear its own costs on appeal.
7