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

Orion Debuts 4 New Styles From Cottelli Lingerie

Orion Wholesale has introduced four new styles from its Cottelli Lingerie line.

New Federal Report Slams Debanking but Ignores Adult Industry

The Office of the Comptroller of the Currency (OCC) on Wednesday released a report on debanking activities at nine large national banks, but omitted any mention of the adult industry, despite previously identifying it as a sector facing banking discrimination.

Ravyn Alexa Makes Her Reality Kings Debut

Ravyn Alexa has made her debut for Reality Kings alongside Lucas Frost in the studio's latest release, titled "Inked and Oiled."

Yhivi Stars in Latest From Kink.com

Yhivi stars with director John Paul "The Pope" in the latest release from Kink.com, titled "Bound and Squirting."

TTS Expands Testing Coverage to 300 New Labs

Talent Testing Service (TTS) has expanded its coverage to 300 ARCPoint and Any Lab Test Now locations across the U.S.

EU Court Rejects Stripchat Challenge of Past VLOP Designation

The EU’s General Court on Wednesday ruled against Stripchat in a lawsuit seeking to annul a 2023 European Commission decision designating the site as a “very large online platform” (VLOP) under the Digital Services Act (DSA).

JO Launches Retail Education Program

Pleasure brand JO has rolled out a new in-store education program for retailers.

Penny Barber Leads Latest From MYLF

Penny Barber stars with newcomer Vince Vicious in the latest release from MYLF.

Blush Debuts Fine Jewelry-Inspired 'Queen's Reign' Collection

Blush has introduced its new Queen's Reign line of five pleasure products, inspired by fine-jewelry designs.

Emma Rose, Kasey Kei Star in Latest From Transfixed

Multi-XMAs winner Emma Rose and Kasey Kei star with Ameena Green in the latest release from Transfixed, titled "A Nuru Solution."

Show More