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

Kasey Kei, Ameena Green Star in Latest From Evil Angel

Kasey Kei and Ameena Green star in a scene from Evil Angel.

Evil Angel Debuts Proxy Paige's 'All Aboard The Trans Express'

Evil Angel has released director Proxy Paige’s new title, “All Aboard The Trans Express.”

Brazil: New AV Requirements Set to Take Effect March 17

President Luiz Inácio Lula da Silva this week gave final approval to new regulations requiring adult websites to age-verify users located in Brazil starting March 17.

Angela White Leads Latest From Brazzers

Multi-XMAs winner Angela White stars with Victor Ray in the latest release from Brazzers, titled "BuZZed and Boned."

Ariel Demure, Lulu Chu Star in New Transfixed Release

Reigning and two-time XMAs Trans Performer of the Year Ariel Demure stars with Lulu Chu in the latest release from Transfixed, titled "A Matter of Principal."

Elizabeth Skylar, Isa Bella Topline 'Tempted by the Babysitter' From Sweetheart Video

Elizabeth Skylar and Isa Bella headline “Tempted by the Babysitter” from Mile High Media studio imprint Sweetheart Video.

Kira McKay Makes Her WIFEY Debut

Kira McKay stars with her husband Jerome and Dan Damage in the latest release from Vixen Media Group studio imprint WIFEY.

FSC Recommends Platforms Integrate StopNCII.org Tool

In a blog post, Free Speech Coalition (FSC) has recommended that platforms integrate the StopNCII.org tool to prevent the sharing of non-consensual intimate imagery (NCII).

Orion Debuts 'Duo Vibrator' From 'Couples Choice' Line

Orion Wholesale has introduced the Duo Vibrator from its Couples Choice line.

Calita Fire Toplines 'Swingers Resort' From Private

Calita First headlines the latest release from Private, titled “Swingers Resort.”

Show More