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

Brazil Issues Guide to Digital Safety Compliance

Brazil’s National Data Protection Agency (ANPD) published on Wednesday a new guide outlining online providers’ child-protection responsibilities under the Digital Statute for Children and Adolescents (Digital ECA), which requires adult websites to age-verify users located in Brazil.

Leigh Raven, Gal Ritchie Star in Latest From Kink.com

Gal Ritchie stars with Leigh Raven in the latest installment of Kink.com’s "Whipped Ass" series, titled "Oil-Soaked Slut."

Penny Barber, Lexi Lore Star in Latest From TeamSkeet

Penny Barber and Lexi Lore star with Clarke Kent and Vince Vicious in the latest release from TeamSkeet.

AEBN Publishes Popular Searches by Country for August, September

AEBN has released the list of popular searches from its straight and gay theaters, by country, for August and September.

Nalpac Releases 2026 Winter Catalog

Nalpac has released its 84-page 2026 winter catalog.

2027 XBIZ Exec Awards Nominees Announced for Pleasure Product and Retail Edition

XBIZ is pleased to announce the exec nominees for the pleasure product and retail industry edition of the 2027 XBIZ Awards, presented by Svakom and sister brand Kaotik Labs, set to take place on Saturday, Jan. 9, in conjunction with the XBIZ 2027 event series.

2027 XBIZ Exec Awards Nominees Announced for Adult Entertainment Edition

XBIZ is pleased to announce the nominees for the adult entertainment industry edition of the 2027 XBIZ Exec Awards, set to be presented as part of the annual XBIZ Honors ceremony on Friday, Jan. 8, in conjunction with the XBIZ 2027 event series.

Jennifer White Fronts Dorcel's 'Vampire Night'

Reigning XMAs Female Performer of the Year Jennifer White stars with Milan Ponjevic in the latest release from Dorcel, titled "Vampire Night," directed by Ricky Greenwood.

Pineapple Support to Host 'Effective Parenting' Support Group

Pineapple Support is hosting a free online support group for performers with children.

Armani Black Leads Latest From Elegant Angel

Armani Black stars with Jax Slayer in the latest release from Elegant Angel, titled "Candy for the Boogeyman."

Show More