## Facts

- In 1994, a refinery release in Rodeo, California exposed nearby residents to hydrogen sulfide and Catacarb.
- Multiple suits followed, including a class action against Union Oil Company of California seeking, among other relief, punitive damages.
- Class counsel sought certification of a punitive-damages class and later stipulated—subject to court approval—to a mandatory, non-opt-out class for punitive damages.
- A settlement was reached under which the punitive-damages class claims were dismissed with prejudice.
- Some class members objected to the settlement; the trial court approved it and dismissed the punitive claims.
- Objecting former class members later sued class counsel for legal malpractice, alleging counsel’s conduct caused them to lose the opportunity to obtain punitive damages against the refinery owner.
- The malpractice plaintiffs sought as damages the punitive damages they asserted would have been awarded in the underlying case absent counsel’s negligence.

## Issues

1. Whether a legal malpractice plaintiff may recover, as compensatory damages, punitive damages allegedly lost in the underlying action due to attorney negligence.

## Decision

- The California Supreme Court affirmed the judgment for defendants.
- The court held that punitive damages allegedly lost in the underlying case are not recoverable as compensatory damages in a legal malpractice action.
- The court reasoned that punitive damages exist to punish and deter the original wrongdoer, not to compensate the plaintiff for injury.
- The court concluded that awarding “lost punitive damages” would improperly shift punishment from the original defendant to the attorney and would bypass statutory limits governing punitive damages.
- The court also relied on public-policy limits on proximate cause, including the speculative nature of reconstructing a hypothetical punitive award in the malpractice case.

## Legal Principles

- Legal malpractice damages are limited to detriment proximately caused by the attorney’s negligence; not every “but for” consequence is recoverable if public policy limits proximate cause.
- Punitive damages are exemplary and noncompensatory; they are intended to punish and deter and are awarded only under statutory conditions.
- A missed opportunity to impose punishment on a third party is not a compensable item of malpractice damages.
- Courts may deny recovery for claimed losses that require conjecture about discretionary outcomes (such as the amount of punitive damages a different jury might have awarded in different proceedings).

## Conclusion

California law does not permit malpractice plaintiffs to recast foregone punitive damages in the underlying litigation as compensatory damages against their attorneys; the proper measure of malpractice damages excludes “lost punitive damages” as a matter of punitive-damages doctrine and public policy limits on proximate cause.


Ferguson v. Lieff, Cabraser, Heimann & Bernstein, LLP, 30 Cal. 4th 1037, 69 P.3d 965 (Cal. 2003)