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

MsSexySaigon Stars in New Release From FreeUse

MsSexySaigon stars with Josh Rivers and Jason Sarcinelli in a new release from FreeUse.

Aylo/SWOP Panel Spotlights Creators' Struggle for Digital, Financial Rights

Aylo and Sex Workers Outreach Project (SWOP) Behind Bars presented, on Tuesday, an online panel on creators’ rights, debanking and deplatforming.

CC Wellness Opens New Santa Clarita Facility

JO parent company CC Wellness has opened its new operations and warehouse facility in Santa Clarita.

Addison Vodka Headlines 'Infidelity 5' From Sweet Sinner

Addison Vodka toplines "Infidelity 5," the latest release from Mile High Media studio brand Sweet Sinner.

Elise London Stars in Latest Release From FreeUse

Elise London stars with Joshua Lewis in the latest release from FreeUse.

Charlie Forde, Eva Nyx Headline Latest From Family Strokes

Charlie Forde and Eva Nyx star with Anthony Pierce and Jason Sarcinelli in the latest release from Family Strokes.

Svakom Launches New Brand 'Kaotik Labs'

Svakom has launched its new male-focused sextech sister brand, Kaotik Labs.

Amy Lynne Makes Her WIFEY Debut

Amy Lynne stars with her husband Steve and Hollywood Cash in the latest release from Vixen Media Group studio imprint WIFEY.

Pjur Introduces 'SachetCard' Dispenser at Düsseldorf's 'Sex Now' Exhibition

Pjur has introduced its SachetCard dispenser at the Sex Now exhibition at NRW-Forum in Düsseldorf.

AV Bulletin: Canada, Italy, Australia Updates

Since the Supreme Court’s decision in Free Speech Coalition v. Paxton, more state age verification laws have been enacted around the United States, as well as proposed at the federal level and in other countries. This roundup provides an update on the latest news and developments on the age verification front as it impacts the adult industry.

Show More