Business Falsehoods Can Cost Plenty — Court

SAN FRANCISCO — Businesses — mainstream as well as adult — have a new incentive to be honest in the state of California.

The California Supreme Court ruled last week that they could be slapped with punitive damages for fraudulently breaching contracts.

The far-reaching decision could, in essence, threaten the predictability of risk in commercial contracts, whether it involves deals with adult webmaster affiliate programs or, in the case decided, faulty helicopter clutches.

The court affirmed $6 million in punitive damages against Dana Corp., a company that supplied helicopter equipment to Robinson Helicopter Co. The ruling was separate of $1.5 million in compensatory damages awarded to Robinson.

Robinson sued Dana for intentionally concealing that its sprag clutches — parts that keep helicopter blades rotating through a loss of power — weren't up to FAA specifications.

California justices ruled, 6-1, that Dana could be slapped with punitive damages because its fraudulent conduct was separate from breaching a contract.

Writing for the majority, Justice Janice Rogers Brown said Robinson had proven “dispositive fraudulent conduct” independent of the breach of contract — continuing to provide written certificates to Robinson with each delivery, falsely asserting that the clutches had been manufactured in conformance with Robinson’s written specifications.

Brown rejected the argument that limiting the buyer to a contract remedy under such circumstances would be consistent with public policy encouraging commercial transactions with predictable results.

“No rational party would enter into a contract anticipating that they are or will be lied to,” Brown wrote. “[D]ana’s argument therefore proposes to increase the certainty in contractual relationships by encouraging fraudulent conduct at the expense of an innocent party. No public policy supports such an outcome.”

But Justice Kathryn Mickle Werdegar, with the lone dissent, said the majority of the court was prescribing “a cure worse than the disease.”

“Today's decision greatly enhances the ease with which every breach of contract claim can don tort clothes,” Werdeger wrote. “I fear that in doing so, it opens a Pandora's box better left sealed.”

The ruling is Robinson Helicopter vs. Dana, No. S114054.

Copyright © 2026 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More News

Adam & Eve, Lovehoney Group Partner for Custom Products

Adam & Eve and Lovehoney Group have partnered to introduce two custom editions of We-Vibe vibrators and an advent calendar sex kit.

Lovely Planet, Dorcel Expand Partnership

Lovely Planet, longtime manufacturer and distributor of the Dorcel Toys line, has expanded its partnership with the company to include all Dorcel physical pleasure products.

Arcwave Debuts 'Air' Male Stroker

Arcwave has introduced Air, the newest stroker from its Pleasure Air collection.

Digital Playground Premieres Ricky Greenwood's Action Feature 'Crash and Burn'

Digital Playground has dropped the first installment of "Crash and Burn," an action crime feature from multi-XMAs winner Ricky Greenwood.

Valentina Nappi Featured in Season 2 Cast of 'The Traitors: Italy'

Multi-XMAs winner Valentina Nappi will be among the Faithful, as the veteran adult performer is part of the second season cast of "The Traitors: Italy" on Prime Video.

Sportsheets Introduces 11-Piece 'Amethyst' Collection From 'Sex & Mischief' Line

Sportsheets is accepting pre-orders for its new Amethyst collection of pleasure accessories from its Sex & Mischief line.

Dragon Fruit, Lexi Star Headline Latest Volume of Angelo Godshack's 'Hardcore Gangbangs'

Dragon Fruit and Lexi Star topline the ninth volume of director Angelo Godshack's "Hardcore Gangbangs," from Evil Angel.

Haute Sugar to Make Industry Debut at XBIZ Expo

Haute Sugar, a new lifestyle brand that blends intimate wellness with fashion-inspired design, will make its industry debut at XBIZ Expo in Los Angeles this January.

Roald Riepen Steps Down as CEO of IMC

Roald Riepen, CEO of International Media Company (IMC), is stepping down.

Chloe Amour Stars in Latest From Blacked Raw

Chloe Amour stars with Chocolate Rod and Goldey in the latest release from Vixen Media Group studio imprint Blacked Raw.

Show More