Los Angeles Jury Hands $155 Million Holiday Gift to Fired Insurance Executive

Proskauer - California Employment Law

As we recently reported, California juries continue to award massive verdicts to employees with alarming regularity.  And, just in time for the holidays, a Los Angeles Superior Court jury upped the ante on Thursday, handing a fired insurance company executive a verdict totaling $155.4 million – including $150 million in punitive damages.

Plaintiff Andrew Rudnicki worked for Farmers Insurance Exchange as a senior executive and lawyer in its Claims Litigation division.  Farmers claimed it terminated Rudnicki’s employment after he made sexist and inappropriate remarks (e.g., using terms like “girlish figure” and “lesbian quota”); failed to escalate concerns raised by female employees about underrepresentation of women in management roles; and did not respond appropriately to one of his reports’ failure to adhere to document preservation protocols.  For his part, Rudnicki claimed his termination was discriminatory based on his age, gender, and disability, and in retaliation for his participation in the investigation and defense of a pay equity class action against Farmers, which ultimately settled for over $4 million.

While Farmers successfully secured summary adjudication on a number of Rudnicki’s claims, several causes of action remained for the jury to decide.  And, although they unanimously rejected Rudnicki’s discrimination allegations, the jury found in his favor on his retaliation allegations, awarding him $5.4 million in compensatory damages, including $4.4 million for lost past and future wages and $1 million for emotional distress (he testified that he experienced “shock, depression, and embarrassment” over the termination and that he “endured fitful sleep and a loss of appetite for at least three or four months”).

Not to be outdone by the San Francisco jury that recently awarded $130 million in punitive damages against Tesla to a short-term employee, the Los Angeles jury in this case assessed $150 million in punitive damages against Farmers.

Fast math:  That is almost a sixth of a billion dollars for the firing of one person!

Setting aside the likelihood that this unconstitutionally high punitive damages award will be reduced through post-trial motions or on appeal, this verdict is just another example of the very real dangers that await those employers who blithely trust their fate to a California jury and further proves what we have preached time and again. There is only one way for California employers to insulate themselves from such catastrophes:  Arbitration, arbitration, arbitration!

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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