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

Court Approves Class Action in Labor Claims Against VMG

A U.S. district court has granted class certification in a civil lawsuit filed against Vixen Media Group (VMG) by retired performer Kenzie Anne, making it possible for additional performers to join in a class action against the company.

2026 Pornhub Awards Nominees Announced

The list of nominees has been revealed for the eighth annual Pornhub Awards, which will be held May 27 in Los Angeles.

AEBN Publishes Popular Searches by Country for February, March

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

Magic Silk Debuts 'Wisteria Mist' Collection

Magic Silk has introduced its new Wisteria Mist line of lingerie.

Orion Expands 'Beau Coeur' Collection

Orion Wholesale has introduced three new pleasure products from its Beau Coeur collection.

Andi Avalon, Madelyn May Front Latest From New Sensations

Andi Avalon and Madelyn May star in the latest release from New Sensations.

Elly Clutch Makes Her Debut as Brazzers Exclusive

Multi-XMAs winner Elly Clutch makes her debut as a Brazzers exclusive alongside Jordi El Niño Polla in the studio's latest release, titled "As If You Can Handle Elly."

Aleksa Mink Fronts Latest From Pure Taboo

Aleksa Mink stars with Jason Sarcinelli in the latest release from Pure Taboo, titled "What She Would Have Wanted."

PinkCherry Launches 'Scream Your Own Name' Campaign

PinkCherry has launched its Scream Your Own Name promotional campaign.

BranditScan Rolls Out 'UrLinks' Platform Feature

BranditScan has introduced its new UrLinks homepage feature for creators.

Show More