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

LELO Debuts 'Ina Thrust' Thrusting Vibrator

LELO has introduced its new Ina Thrust thrusting vibrator.

Cultpix Debuts AI-Generated Vintage Adult Films at Cannes

At this year’s Cannes Film Festival, B-movie streaming service Cultpix debuted a collection of AI-generated short films drawn from erotic magazine photo spreads published 50 years ago.

Ofcom Fines Youngtek Solutions $800K for AV Noncompliance

U.K. media regulator Ofcom on Wednesday imposed fines totaling 600,000 pounds (more than $800,000) against adult site operator Youngtek Solutions for failing to implement age checks and respond to information requests as required for compliance with the Online Safety Act.

Anna Kolba Makes Her Evil Angel Debut

Anna Kolba has made her debut for Evil Angel alongside director Richard Mann.

Victoria Grant, Dillon Diaz Topline 'TS Lessons' From TransSensual

Victoria Grant and Dillon Diaz headline "TS Lessons," from Mile High Media studio imprint TransSensual.

On the Set: Fast Cars, Sleazy Detectives and Offbeat Mayhem Fuel Ricky Greenwood's 'In the Bag'

Addison Vodka sits behind the wheel of a yellow 1970 Dodge Challenger RT while Elly Clutch rides shotgun, the muscle car's black racing stripe slicing across the hood. Parked beneath the hazy California sky, the whole setup feels like something ripped straight from a Quentin Tarantino film.

Honey Play Box Debuts 'Kai Pro' Stroker at EroSpain

Honey Play Box introduced the new Kai Pro stroker at the 2026 EroSpain trade show in Barcelona.

Adam & Eve Reveals Results of 'Masturbation' Survey

Adam & Eve has released the results of a survey asking respondents about their level of satisfaction from masturbating.

JD Directs New Anne Antonela Showcase

Evil Angel has released director JD's latest showcase, titled "Anne Antonela Unleashed."

Lovense Reveals Results of 'Prostate Pleasure' Survey

Lovense has published the results of a survey on men’s reluctance to explore prostate pleasure.

Show More