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

Reborn Cinema Drops New Feature 'Reina Reborn'

Reborn Cinema has released its new, music-driven feature, "Reina Reborn," produced by Michael Vegas and Siouxsie Q, and directed by studio honcho Karim Z.

Pineapple Support Releases End of Year Review for 2025

Pineapple Support has released its End of Year Review for 2025, detailing the organization's achievements, challenges, and new initiatives.

XBIZ Miami 2026 Lets the Good Times Roll at New South Beach Venue

Pack your favorite shades and sexiest poolside looks, because XBIZ Miami is splashing into a new hotspot — the chic Goodtime Hotel in the heart of Miami Beach — May 11–14.

Arcom Threatens to Block, Delist 2 Adult Sites Over AV Violation

French media regulator Arcom has sent enforcement notices to the operators of two adult websites that the agency says have failed to implement age verification as required under France’s Security and Regulation of the Digital Space (SREN) law.

Passionate Playground Debuts Limited Edition 'Hawxboxx'

Passionate Playground has introduced its limited-edition Hawxboxx pleasure product cleaning and storage container.

Orion Debuts 3 New Styles From Cottelli Lingerie

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

Jessi Rae Makes Her Blacked Debut

Jessi Rae has made her debut for Vixen Media Group (VMG) studio imprint Blacked, alongside Jax Slayher, in the studio’s latest release.

Elizabeth Skylar, Sky Wonderland Front All-Girl V-Day Release From Elegant Angel

Elizabeth Skylar and Sky Wonderland star in a new scene from Elegant Angel, titled "Valentine's Day Hotwives."

Sabien DeMonia Drops Latest Evil Angel Directorial

Reigning Euro XMAs MILF Performer of the Year Sabien DeMonia has dropped her latest directorial effort for Evil Angel, “0% Pussy 100% Anal Squirt ATM.”

Amari Anne, Hazel Grace & Naomi Foxxx Star in V-Day Release From West Coast Productions

Amari Anne, Hazel Grace, and Naomi Foxxx star in the latest release from West Coast Productions, titled “Valentine’s Day Threesome.”

Show More