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

Liberator Introduces 'Luxe Faux-Fur' Throw Collection From 'Fascinator' Line

Liberator has debuted its Luxe Faux-Fur throw blanket collection from its Fascinator line.

Lumi Ray Performs 1st DP in Latest From Bellesa Plus

Lumi Ray has performed her first DP alongside Dante Colle and Small Hands in the new release from Bellesa Plus, titled “The Game.”

Vixen, Julmodels to Celebrate Vixen's 10th Anniversary With 'Club Vixen' Party at XBIZ Amsterdam

LOS ANGELES – Vixen Media Group (VMG) and premier European talent agency Julmodels will once again join forces to host Club Vixen at XBIZ Amsterdam on the evening of Sept. 10. This year, the party marks a milestone occasion: the 10th anniversary of VMG’s flagship brand Vixen.

Anissa Kate Fronts Latest From Pervz

Anissa Kate stars with Arin Jones in the latest release from Pervz series “PervTherapy.”

XR Brands Debuts 'Jock Premium' Squirting Dildos Collection

XR Brands has introduced its Jock Premium collection of squirting, silicone dildos.

Violet Myers, Rissa May Lead 3rd Installment of 'Equilibrium' From Deeper

Multi-XMAs winner Violet Myers and Rissa May star with Jason Luv in the third installment of Vixen Media Group studio imprint Deeper’s fantasy feature “Equilibrium.”

Kaotik Labs, Dildos Assorted Ink Distro Deal

Svakom’s male-focused sextech sister brand, Kaotik Labs, has signed a deal with Dildos Assorted (DA) for exclusive online distribution.

Calvista Now Shipping Tenga Products and 'Iroha' Line

Calvista has signed an Australian and New Zealand distribution deal for Tenga and its Iroha product line.

Elegant Angel Showcase 'Tanya Tate Is MILFWoman' Premieres

Tanya Tate takes on the role of "MILFwoman" in the latest Elegant Angel showcase series.

Richard Mann Drops New Evil Angel Scene With Alexandra Quintezz

Alexandra Quintezz stars in an Evil Angel scene alongside Sir Goldey and director/performer Richard Mann.

Show More