California Court of Appeal Holds Its Ground After Rehearing Tilkey v. Allstate

On August 16, 2014, Tilkey was staying with his girlfriend, Mann, and her young grandson in Arizona. After going out for the evening and drinking, the two began to argue, and Tilkey decided to leave the home. When Tilkey stepped outside onto the enclosed patio, Mann closed and locked the patio door, which was a traditional door with glass panes. Tilkey banged on the patio door, demanding to be let back in so he could gather his belongings, which were in the bedroom where Mann's grandson was sleeping. Mann called police. 

When police arrived, Mann told them she did not want Tilkey in the apartment because she was afraid he would wake up her grandson. Police noted the interior trim on the framing above the patio door was broken. 

Officers searched Tilkey's travel bag, which contained marijuana and a plastic container used to smoke marijuana. Police arrested Tilkey and filed three charges against him: criminal damage deface (Arizona Revised Statute [A.R.S.] § 13-1602A1), possession or use of drug paraphernalia (A.R.S. § 13-3415A), and disorderly conduct - disruptive behavior (A.R.S. § 13-2904A1). A domestic violence label was attached to the criminal damage and disorderly conduct charges. 

Bill Singer's Comment: Not exactly a night that Tilkey likely wishes to remember. Note that a "domestic violence label" was attached to the criminal damage and the disorderly conduct charges. That's an interesting turn of words -- what exactly does it mean when the "label" of domestic violence is "attached" to those two charges? Moreover, what's the significance in attaching such a label but not, you know, actually filing a specific charge of domestic violence? And while you're pondering those questions, go back a re-read the above CACtApp citation. What specific conduct did Tikley allegedly engage in that rose to something akin to "domestic violence?" The argument between him and his girlfriend? His banging on the patio door? The girlfriend's fear that he would awaken her grandson? As you continue to read on, keep those questions and your answers in mind. It will all prove critical as events progress.

pled guilty to the disorderly conduct charge only, and the other two charges were dropped. After Tilkey completed a domestic nonviolence diversion program, the disorderly conduct charge was dismissed. . . 

Bill Singer's Comment: Let's make careful note of Allstate's explanation for terminating Tilkey after some 30 years of employment: based on his arrest for a domestic violence offense and his participation in the diversion program. Allstate informed Tilkey it was discharging him for threatening behavior and/or acts of physical harm or violence to another person. 

Remember how a few minutes ago we were pondering just what conduct Tilkey had engaged in that rose to the level of attaching the so-called "label" of domestic violence to the charges of criminal damage ad of disorderly conduct? So -- let's re-visit that issue again. When terminating Tilkey, Allstate filed a Uniform Termination Notice for Securities Industry Registration (the "Form U5") in which it reported that he had been arrested for a "domestic violence offense." 

Was Tilkey actually charged with an offense of "Domestic Violence," or, was "Domestic Violence" merely a "label" that was "attached" to the offenses of Criminal Damage and of Disorderly Conduct?

Is there, in fact, a difference between an "offense" and an attached "label" of same? After you've resolved that question, consider another puzzle: When Allstate said that it had terminated Tilkey for "threatening behavior and/or acts of physical harm or violence to another person," what behavior and/or acts was the employer citing? Was it the apparent oral argument? Was it the banging on the door? 

On August 31, 2014, Mann sent an e-mail to Tilkey at work mentioning the charges that had been filed against him. A field compliance employee later discovered this e-mail while conducting a routine compliance review and forwarded it to Human Resources (HR). HR professional Tera Alferos conducted the initial investigation; she interviewed Tilkey December 4, 2014. She noted Tilkey had been asked to accept a plea deal to have two of the three charges dropped, then the last one dismissed. She never spoke with Mann or interviewed the arresting officers. She also did not investigate Mann's background or review her social media accounts.

Mann sent an e-mail to Allstate March 3, 2015, which revealed the arrests and made several other allegations. That same day, the e-mail was shared with Harriet Harty, Executive Vice President of HR; Christina Metzger, Vice President of HR; and Tyrone Burno, Director of HR. Alferos added the e-mail to the case file. A couple weeks later, Alferos sent Burno a summary of her investigation, which stated that the police report had been reviewed and noted Tilkey had been charged with but not convicted of a crime. The summary also explained there was no FINRA reporting obligation because there were no felony charges, and it concluded there had been no violation of company policy. 

On March 31, 2015, Alferos provided Burno with a revised summary of investigation that added that Tilkey had entered a diversion program for the disorderly conduct (domestic violence) charge, resulting in a deferred prosecution. Burno then changed the conclusion to state Tilkey's behavior may have been at a level that caused the company to lose confidence in him. Burno supplied this version of the summary of investigation to Metzger, Harty, and Greg Burns, the senior vice president of HR, the same day. 

At Burno's request, Alferos next added references to the domestic violence charge because it suggested Tilkey had engaged in behavior that could be construed as acts of physical harm or violence toward another person, in violation of company policy. 

On April 16, 2015, Metzger e-mailed Harty stating she and Burns could support a decision to terminate Tilkey's employment or not. In a May 4, 2015 e-mail referencing the decision to terminate Tilkey's employment, Metzger wrote that they were amending the reason for terminating Tilkey to be "violence against another person whether employed by Allstate or not." Alferos submitted a formal termination request two days later stating that based on Tilkey's voluntary entrance into a diversion program, he had engaged in acts of physical harm or violence to another person. It identified the policy violation as "[t]hreats or acts of physical harm or violence to the property or assets of the Company, or to any person, regardless of whether he/she is employed by Allstate." The summary of investigation attached to the termination request stated, "the retention of the domestic violence charges suggests that Tilkey engaged in behavior that was construed as acts of physical harm or violence towards another person." 

Following written approval from Tilkey's supervisors, the company terminated Tilkey's employment on May 27, 2015. When the company terminated his employment, it informed Tilkey, "Your employment is being terminated as a result of engaging in behaviors that are in violation of Company Policy. Specifically, engaging in threatening behavior and/or acts of physical harm or violence to any person, regardless of whether he/she is employed by Allstate."

The company then filed a Form U5 with FINRA reporting its reason for terminating him as follows: "Termination of employment by parent property and casualty insurance company after allegations of engaging in behaviors that are in violation of company policy, specifically, engaging in threatening behavior and/or acts of physical harm or violence to any person, regardless of whether he/she is employed by Allstate. Not securities related."

SIDE BAR:  The Uniform Application for Securities Industry Registration or Transfer (the "Form U4") states in part that:

Criminal Disclosure

14A. (1) Have you ever:

(a) been convicted of or pled guilty or nolo contendere ("no contest") in a domestic, foreign, or military court to any felony?

(b) been charged with any felony? 

. . .

14B. (1) Have you ever:

(a) been convicted of or pled guilty or nolo contendere ("no contest") in a domestic, foreign or military court to a misdemeanor involving: investments or an investment-related business or any fraud, false statements or omissions, wrongful taking of property, bribery, perjury, forgery, counterfeiting, extortion, or a conspiracy to commit any of these offenses? 

(b) been charged with a misdemeanor specified in 14B(1)(a)?

Bill Singer's Comment: Since Tilkey had not been charged with, or convicted of, pled guilty/nolo contendere to any felony, he had no disclosure obligations under 14A(1). Similarly, the three charges against him did not involve any of the characterized circumstances set forth in 14B, and the sole charge to which he pled guilty also did not fall within the characterized misdemeanors. Accordingly, as Allstate noted, Tilkey had no reporting obligation under Form U4. 

As part of its defense at trial, Allstate presented evidence that Tilkey had used company equipment, including the company-issued laptop computer and the company's Intranet and Internet system, to forward e-mails containing graphic nudity and racist jokes, among other items. It argued that had it known of these e-mails at the time, it would have discharged Tilkey. Tilkey presented evidence that the circulation of the emails was part of the culture of the workplace.

(1) it did not violate section 432.7 and so there was no wrongful termination; (2) compelled self-published defamation per se is not a viable tort theory; (3) it did not defame Tilkey because there is not substantial evidence its statement was not substantially true; (4) punitive damages are unavailable in compelled self-publication defamation causes of action; (5) the defamatory statement was not made with malice; and (6) the punitive damages awarded here were unconstitutionally excessive.  

We agree that Allstate did not violate section 432.7 when it terminated Tilkey's employment based on his plea and his participation in an Arizona domestic nonviolence program and will reverse that judgment. However, we conclude compelled self-published defamation is a viable theory, and substantial evidence supports the verdict that the statement was not substantially true, so we will affirm that portion of the judgment. Additionally, while we conclude punitive damages are available in this instance, the punitive damages awarded here are not proportionate to the compensatory damages for defamation, and we will remand the matter for recalculation of the punitive damages. 

SIDE BAR: In pertinent part, Section 432.7 states:

(3) For purposes of this section:

(A) "Conviction" includes a plea, verdict, or finding of guilt, regardless of whether a sentence is imposed by the court.

(B) "Conviction" does not include, and shall not be construed to include, any adjudication by a juvenile court or any other court order or action taken with respect to a person who is under the process and jurisdiction of the juvenile court.

Because Tilkey appeared before the Arizona court and entered a guilty plea, which the court accepted, Tilkey's guilty plea was a conviction under section 432.7. This information was used by Allstate to terminate Tilkey's employment in May 2015, before the charges against Tilkey were dismissed on July 1, 2015. Thus, Allstate did not violate section 432.7 by using Tilkey's Arizona arrest as a factor in its decision to terminate his employment.

Allstate argues that because California views domestic nonviolence diversion programs as contrary to public policy, such a program is unauthorized, and thus the company's consideration of Tilkey's participation in one did not violate section 432.7. Tilkey contends that a domestic nonviolence diversion program is one that is expressly authorized and described by statute in Arizona, and thus Allstate was prohibited from considering Tilkey's participation.

abolished domestic violence diversion programs about a decade before Tilkey engaged in the domestic nonviolence program in Arizona. Were he to have been charged with the same crime in California, a diversion program would not have been an option. It would be contrary to California's public policy against misdemeanor domestic violence diversion programs to prohibit consideration of Tilkey's participation in one. The location of the crime in Arizona does not have any effect on California's public policy opposing diversion for domestic violence offenses. Accordingly, we conclude section 432.7's reference to diversion programs excludes out-of-state domestic violence programs, and Allstate's consideration of Tilkey's participation in one did not violate the law.  

Allstate next challenges the defamation verdict, contending that self-compelled defamation should not provide a basis for a defamation per se cause of action. It further contends there was no evidence here that Tilkey's self-publication was compelled by its publication of the reason for his employment termination on the Form U5 because that publication contained a privileged statement. Finally, Allstate maintains that its statement was substantially true, justifying reversal of the verdict. 

The "gist or sting" of Allstate's remarks was that Tilkey behaved in a physically violent or threatening manner, and that was why his employment was terminated. (See Campanelli, supra, 44 Cal.App.4th at p. 582.) But the facts do not point to Tilkey threatening Mann, physically harming her, or being violent. Thus, there is substantial evidence to support the jury's verdict that Allstate's statement to the contrary was not substantially true, and we will affirm. 

undermines at-will employment, which allows companies to discharge employees capriciously, as long as the decision is not unlawful. Allstate also argues that permitting this cause of action may have a chilling effect on communication between an employer and employee, reducing the free flow of information due to self-censorship. Next, Allstate argues this theory of defamation incentivizes an employee to spread defamatory statements instead of mitigating damages. Finally, Allstate notes that employment is primarily a contractual relationship. . . .

These same arguments could be offered to support the elimination of a defamation cause of action against employers altogether-the crux of Allstate's argument is that because the employee controls whether a statement is repeated to a third party, the risks of an end-run around the at-will employment doctrine is greater. But the additional requirements of proving a strong compulsion, the necessity to disclose the statement, and the foreseeability of the repetition all contribute to discouraging employees from simply repeating the defamatory information instead of mitigating their damages. . . .

Bill Singer's Comment:  I can't stress enough how powerful and dramatic this section of the CACtApp Opinion is and, lest it be lost in the shuffle, let me repeat it once again [Ed: emphasis supplied]:

However, the communication of Tilkey's termination here did not regard improper securities-related conduct, and Allstate did not limit its responses to fraud-and securities-related information. Instead, Allstate explained Tilkey's departure was the result of a "termination of employment by parent property and casualty insurance company after allegations of engaging in behavior that are in violation of company policy, specifically, engaging in threatening behavior and/or acts of physical harm or violence to any person, regardless of whether he/she is employed by Allstate. Not securities related." This statement did not contain allegations of improper securities conduct, theft, or allegations or charges of fraud or dishonesty. It was not offered in anticipation of or to initiate an investigation; nor was it offered in the course of any other official  proceeding. 

CACtApp enunciates a critical limit upon the absolute immunity frequently granted to FINRA member firms when they submit Forms U5. Pointedly, the immunity may not extend beyond "improper securities-related conduct" and beyond "fraud- and securities-related information." As I have long argued, there is an area where U5 narratives become what I term "gratuitous," i.e., they stray from what is mandated/required within the regulatory construct. Moreover, the Court perceives that such gratuitous commentary may not fall under the ambit of the absolute immunity doctrine if it is determined that the cited language was "not offered in anticipation of or to initiate an investigation," and further pull back such protection from comments not "offered in the course of any other official proceeding." 

The order denying Allstate's motion for JNOV regarding wrongful termination for violation of section 432.7 is reversed, and the matter is remanded to the trial court with directions to enter a judgment for Allstate on this cause of action. 

We affirm the portions of the judgment finding Allstate liable for defamation and punitive damages. However, the punitive damages portion of the judgment against Allstate is reversed, and the matter is remanded to the trial court with directions to modify the punitive damages award to $2,554,372.50, representing a ratio of 1.5 times the amount awarded in compensatory damages.

[T]ilkey's testimony likewise focused on the ultimate outcome of the case; when asked if he believed the plea of guilt he entered had been entered on the record, Tilkey replied that he believed completion of the diversion program would mean there would not be "any record of anything anywhere." 

Because Tilkey appeared before the Arizona court and entered a guilty plea, which the court accepted, Tilkey's guilty plea was a conviction under section 432.7. This information was used by Allstate to terminate Tilkey's employment in May 2015, before the charges against Tilkey were dismissed on July 1, 2015. Thus, Allstate did not violate section 432.7 by using Tilkey's Arizona arrest as a factor in its decision to terminate his employment.

Form U5 Privilege 

In its petition for rehearing, Allstate questioned our understanding of the purpose and role of the Form U5. We have reviewed the materials provided by both parties, and our conclusion on this topic remains the same. When the information provided in the Form U5 is not made in anticipation of or designed to prompt an official proceeding, it is not protected by an absolute privilege. 

Civil Code section 47, subdivision (b) confers an absolute privilege to any communication " '(1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that [have] some connection or logical relation to the action.' " (Action Apartment Assn., Inc. v. City of Santa Monica (2007) 41 Cal.4th 1232, 1241.) The communication must be reasonably relevant to the subject matter of the action for privilege to apply. (Nguyen v. Proton Technology Corp. (1999) 69 Cal.App.4th 140, 148.) 

Additionally, the "privilege extends to communications intended to report wrongdoing or trigger an investigation." (Hawran v. Hixson (2012) 209 Cal.App.4th 256, 282 (Hawran).) "[T]he critical question is the aim of the communication, not the forum in which it takes place. If the communication is made 'in anticipation of or [is] designed to prompt official proceedings, the communication is protected.' " (Hagberg v. California Federal Bank (2004) 32 Cal.4th 350, 368 (Hagberg).) We look to the aim of the Form U5 and the role of FINRA to evaluate whether a statement was made as part of, or anticipation of an official proceeding. (See Fontani v. Wells Fargo Investments, LLC (2005) 129 Cal.App.4th 719, 732 (Fontani), disapproved of on other grounds in Kibler v. Northern Inyo County Local Hospital District (2006) 39 Cal.4th 192.) 

Firms are required to file a Form U5 with FINRA whenever a registered representative leaves the firm. If the registered representative's employment has been terminated, the form asks the firm to provide a reason for termination. When the Form U5 identifies allegations of improper conduct by a broker-dealer, an issue that FINRA may need to investigate, it can on those occasions be considered "a communication made 'in anticipation of an action or other official proceeding.' (Briggs [v. Eden Council for Hope & Opportunity (1999)] 19 Cal.4th [1106,] 1115.)" (Fontani, supra, 129 Cal.App.4th at p. 732.) In those instances, the information reported on the Form U5 would be protected by the absolute privilege outlined in Civil Code section 47, subdivision (b). (See Fontani, at p. 734.)

Allstate explains the Form U5 is used for a variety of purposes, including to identify and sanction misconduct, to make informed licensing and registration decisions, and to ensure the public can make informed decisions about hiring FINRA-registered representatives to manage portfolios. Indeed, FINRA's "rules and guidance strive to protect the investors and ensure the integrity of today's rapidly evolving market." (FINRA Rules & Guidance, [as of Oct. 26, 2020] archived at .) To that end, FINRA "investigates potential securities violations and, when appropriate, brings formal disciplinary actions against firms and the associated persons." (FINRA Rules & Guidance Enforcement, [as of Oct. 26, 2020] archived at .) Those disciplinary actions are based on FINRA's rules, which cover a variety of topics related to business activities of registered representatives and member firms. (See, e.g., FINRA Rule 2010, [as of Oct. 26, 2020] archived at [commercial honor and principles of trade]; FINRA Rule 2020 [as of Oct. 26, 2020] archived at [use of manipulation of fraudulent devices]; FINRA Rule 2100, [as of Oct. 26, 2020] archived at [transactions with customers]; FINRA Rule 4500 et seq., [as of Oct. 26, 2020] archived at [books, records and reports].) 

To the extent the Form U5 provides information related to FINRA's enforcement of its rules, the statements are protected. However, the scope of FINRA's authority is not unlimited. Section 7 of the Form U5 includes a list of disclosure questions for full terminations that asks if the terminated employee was the subject of a governmental investigation; was under internal review for fraud, wrongful taking of property, or violated investment related laws, regulations, or industry standards relating to compliance; was convicted of or pled guilty to a felony; or was convicted of or pled guilty to a misdemeanor that related to investments, fraud, false statements, bribery, perjury, forgery, counterfeiting, extortion, or wrongful taking of property. These questions make clear that FINRA seeks termination information that allows it to assess whether the employee's conduct lacked compliance with regulatory requirements in the securities arena. The explanation required in section 3 of the form helps FINRA determine whether and in what ways an employee may have engaged in unethical behavior or otherwise violated FINRA rules. 

Thus, the absolute privilege extends to communications required by FINRA, i.e., fraud- and securities-related information and other information covered by its rules. However, the communication of Tilkey's termination here did not regard improper business activities, and Allstate did not limit its responses to such information. Instead, Allstate explained Tilkey's departure was the result of a "termination of employment by parent property and casualty insurance company after allegations of engaging in behavior that are in violation of company policy, specifically, engaging in threatening behavior and/or acts of physical harm or violence to any person, regardless of whether he/she is employed by Allstate. Not securities related." This statement did not contain allegations of improper securities conduct, theft, or allegations or charges of fraud or dishonesty. It was not offered in anticipation of or to initiate an investigation; nor was it offered in the course of any other official proceeding. (See Civ. Code, § 47, subd. (b).) 

Allstate also argues that even if FINRA only initiates disciplinary matters in response to terminations issued under FINRA rules, the Form U5 is still protected by absolute privilege because the Form U5 is itself an official proceeding. The cases Allstate cites to support this interpretation are distinguishable. Fontani concluded statements that alleged improper business conduct on the Form U5 were protected because an investigation was a possible consequence, making the allegations ones brought in anticipation of an official proceeding. (Fontani, supra, 129 Cal.App.4th at pp. 731-732.) O'Shea v. General Tel. Co. (1987) 193 Cal.App.3d 1040, 1048, did not address the Form U5. There, statements made during a background investigation conducted as required by state law were connected to the investigation about the applicant's moral character. While Allstate is correct that these are examples of privileged statements in anticipation of or as part of investigations, neither supports the conclusion that the Form U5 is itself an official proceeding. Even recognizing, as we do, that an absolute privilege extends to communications related to official proceedings (Laker, supra, 32 Cal.App.5th at p. 765), in this context, that means the absolute "privilege extends to communications intended to report wrongdoing or trigger an investigation" (Hawran, supra, 209 Cal.App.4th at p. 282, citing Hagberg, supra, 32 Cal.4th at p. 368), and Allstate here was not intending to report wrongdoing or trigger an investigation by FINRA. 

Finally, Allstate maintains that the information provided on the Form U5 is connected to an official proceeding because FINRA plays a disciplinary role over employment-related conduct. Allstate offers two FINRA rules to support this claim, but neither addresses workplace disputes that do not also impact the business activities of the member. Specifically, FINRA Rule 2010, which falls under the umbrella of "standards of commercial honor and principles of trade," expressly references the member's behavior "in the conduct of its business" and cross-references other rules that focus on commercial business practices, like filing of misleading information, restrictions on the purchase and sale of initial equity public offerings, and prohibiting trading ahead of customer orders. (FINRA Rule 2010, [as of Oct. 26, 2020] archived at .) Similarly, the anti-intimidation rule, FINRA Rule 5240, which falls within rules regarding "quotation and trading obligations and practices" prohibits engaging in conduct that "threatens, harasses, coerces, intimidates or otherwise attempts improperly to influence" another person or member. Subsequent language in that section explains the rule includes, but is not limited to, attempting to influence another person or member "to adjust or maintain a price or quotation," a commercially-related concern. (FINRA Rule 5240, [as of Oct. 26, 2020] archived at .) These rules do not persuade us that FINRA's regulatory and disciplinary authority includes all employment-related conduct.

Neither do the examples of disciplinary matters offered by Allstate in its request for judicial notice. Those matters involved situations in which the former employees had allegedly engaged in improper business activities, including misappropriating customer funds, harassing and threatening employees to secure leverage for post-employment commissions, making unauthorized transactions, converting firm funds, violating sales practices, and committing fraud. Thus, FINRA was exercising its authority under its rules. 

We recognize there are adjudications via arbitration that raise defamation issues, including defamation arising out of the Form U5. (Top 15 Controversy Types in Intra-Industry Arbitrations, FINRA Dispute Resolution Statistics, [as of Oct. 26, 2020] archived at .) However, FINRA's arbitration provisions are only mandatory for disputes involving customers, or pursuant to a written agreement; there is no requirement that employment disputes be arbitrated or brought to FINRA. (Ibid; FINRA Rule 13201, [as of Oct. 26, 2020] archived at ; SEC Approves Rule Change Regarding Arbitration of Statutory Employment Disputes, Notice to Members 98-56, available at [as of Oct. 26, 2020] archived at .) In other words, FINRA's jurisdiction over workplace disputes is more contractual than regulatory.

FINRA's disciplinary authority extends to its own rules, which regard business activities of registered representatives and member firms, and statements that aim to prompt an investigation that would result in discipline under those rules are protected. (See Civil Code, § 47, subd. (b); Hagberg, supra, 32 Cal.4th at p. 368.) As we have explained, the statement in section 3 here did not relate to Tilkey's business activities or any violation of FINRA Rules and was therefore not protected by an absolute privilege. Although we conclude the Form U5 statement was not absolutely privileged, even were we to have concluded otherwise, it would not preclude a finding that Tilkey was compelled to self-publish a defamatory statement because, as we next explain, there was substantial evidence to support compelled self-publication even without the Form U5. 

The jury awarded Tilkey $960,222 for wrongful discharge and $1,702,915 in actual damages for defamation. The punitive damages award was $15,978,822, a ratio of six times the compensatory damages amount. Even without excluding the damages awarded for wrongful discharge, this ratio strikes us as excessive given the level of reprehensibility here. Without the compensatory damages awarded for wrongful discharge, the ratio is greater than nine to one, a ratio we conclude is constitutionally excessive. (See Gober, supra, 137 Cal.App.4th at pp. 213, 214.) 

In our initial opinion, we explained that because the jury's punitive damages award is not allocated to the various liabilities it found, it is not possible to know how much punishment the jury felt was necessary for the company's defamatory action, which must serve as the basis for the damages in this case. In his request for rehearing, Tilkey argued the jury's compensatory damages award for defamation and Allstate's stipulated net worth of $2.87 billion provide all the required elements for evaluating the appropriate amount of punitive damages and requested a remittitur on the punitive damages issue.There is some authority that doing so is appropriate. 

In Colucci, a panel of our division issued a remittitur that set a constitutional limit of 1.5-to-one as the ratio between punitive and compensatory damages. (Colucci, supra, 48 Cal.App.5th at p. 459.) There, the plaintiff successfully sued his employer for wrongful termination based on workplace retaliation and was awarded $1,020,042 in compensatory damages and $4 million in punitive damages. (Id. at pp. 449-450.) The court of appeal explained that in practice few punitive damages awards exceed a single-digit ratio when compared to compensatory damages and noted that when compensatory damages are substantial, a lesser ratio of punitive damages may be more appropriate. (Id. at p. 458, citing State Farm Mut. Automobile Ins. Co. v. Campbell (2003) 538 U.S. 408, 425.) The court concluded that "[g]iven the low to moderate range of reprehensibility of [the company's] conduct here, we conclude that a 1.5-to-one ratio between punitive and compensatory damages is the federal constitutional maximum." (Colucci, at p. 459.)

The facts here are similar, although the ratio of compensatory - to punitive damages is much higher, making their excessiveness even more extreme. The jury awarded $1,702,915 in actual damages for defamation, with the largest sum-$1,586,105-allocated to harm to Tilkey's profession or occupation. The jury allocated $5,730.00 to shame, mortification, or hurt feelings, and $111,000 to harm to reputation, which is roughly seven percent of the total award. We do not know from the record if the jury's financial allocation was driven by limited evidence of emotional distress or if this also reflected the jury's assessment of Allstate's reprehensibility. (See Colucci, supra, 48 Cal.App.5th at p. 459.) However, the act here did not result in only a small amount of economic damages; thus, a lesser ratio of punitive-to-compensatory damages is appropriate to ensure due process. (Major, supra, 169 Cal.App.4th at p. 1224, quoting Simon, supra, 35 Cal.4th at p. 1182.) 

Accordingly, we will reverse the punitive damages award and remand the matter with directions to enter judgment in the amount of $2,554,372.50, or one and one-half times (1.5) the compensatory damages awarded for defamation. 

• Tilkey
• Allstate
• Domestic Violence
• Form U5
• FINRA
• Email
• Form U4
• Felony
• Misdemeanor
• Diversionary Program
• ACD
• Labor Code 432.7
• Punitive Damages
• CACtApp
• Wrongful Termination
• Self Compelled Defamation
• Defamation
• BrokeAndBroker
• Bill Singer