California allows punitive damages for warranty breach

Punitive damages for breach of contract will apparently be available in California as a result of last week’s decision by the state’s supreme court.  In a 6-1 decision, the court reinstated a punitive award of $6 million (on top of a $1.5 million breach of warranty award) against a helicopter parts supplier.

The supplier, Dana Corp., delivered a batch of clutches to Robinson Helicopter, about 9 percent of which were defective.  Robinson claimed that the defects were due to a chance in Dana’s manufacturing process, about which it did not tell Robinson.   Robinson suffered $1.5 million in actual damages from recalls, but the $6 million in punitives, said the court, were to protect “innocent parties” from “fraudulent conduct.”