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

Megan Mistakes, Scarlett Alexis Topline Latest 'My Lesbian Masseuse'

Megan Mistakes and Scarlett Alexis headline the second volume of “My Lesbian Masseuse,” the latest release from Girlfriends Films.

Lucy Mochi Makes Her Kink.com Debut

Lucy Mochi has made her Kink.com debut alongside John Paul the Pope in "Newbie Gets the Full Treatment."

Erotica Divine, Derek Kage Lead Latest From TransAngels

Erotica Divine and Derek Kage star in the latest release from TransAngels, titled "Steamy Soak."

AV Bulletin: Midyear Roundup

Since the U.S. 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. Meanwhile, lawsuits resulting from AV laws have begun to play out in the courts. This roundup provides an update on the latest news and developments on the age verification front as it impacts the adult industry.

Savvy Suxx Performs 1st Gangbang for WIFEY

Savvy Suxx performs her first gangbang in the latest release from Vixen Media Group studio imprint WIFEY.

Princess Emily Makes Her Evil Angel Debut

Princess Emily has made her debut for Evil Angel alongside director Richard Mann.

Williams Trading Names Lindy Court Sales Representative

Williams Trading has appointed Lindy Court as its new sales representative.

Full Circle Expands 'Be Savage' Line

Full Circle Distribution has introduced 30 new styles from its Be Savage line of lingerie.

Sportsheets to Debut 'Signature' Collection at ANME

Sportsheets will introduce its new Signature collection at the ANME trade show in Burbank next month.

Alina Lopez Performs 1st Anal in Her Tushy Debut

Alina Lopez has performed her first anal scene in her debut for Vixen Media Group studio imprint Tushy, alongside Milan Ponjevic.

Show More