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

Magic Silk Expands 'Love' Line

Magic Silk has introduced six new styles from its Love line of lingerie.

XBIZ Virtual Pleasure Products Trade Show Set for July 28-30

To facilitate global business between brands and buyers without the need for travel, XBIZ is pleased to reintroduce a virtual edition of its pleasure products events, set for July 28-30.

Orion Debuts New Styles From 'Svenjoyment' Line

Orion Wholesale has released two new styles from its Svenjoyment undergarment line.

Ondato Joins Pineapple Support as Sponsor

Age and identity verification company Ondato has joined the ranks of over 70 adult businesses and organizations committing funds and resources to Pineapple Support.

Jewelz Blu Stars in Latest Gangbang From Ricky's Room

Jewelz Blu stars in a new gangbang scene from Ricky's Room, titled “Every Hole Is The Goal.”

Alexis Fawx, Armani Black Make Their Bellesa Plus Debuts

Armani Black and multi-XMAs winner Alexis Fawx have made their Bellesa Plus debuts alongside John Legendary in the latest episode of the studio’s “Blind Date” series.

Blush, 'Drag House Rules' Partner for Pride Month

Blush has been named an official challenge sponsor for OUTtv’s “Drag House Rules” during Pride Month.

DomCon LA Cracks the Whip on Community and Kink Education

As DomCon attendees packed up their paddles and checked out of the LAX Hilton following a long weekend of play parties, classes, and high-impact reunions with old friends, it was easy to tell who was there for the 23rd year of LA’s premier BDSM gathering and who was a business traveler from Cleveland who happened to be in the weird place at the right time.

Reptyle to Debut MYLF's 1st Serialized Release 'Motherfucker'

Reptyle will premiere MYLF’s first serialized release, “Motherfucker,” starting Friday.

Angela White Leads Latest From Brazzers

Multi-XMAs winner Angela White stars with Mick Blue in the latest release from Brazzers, titled "Formula Cum."

Show More