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 © 2024 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

'Sex Workers Are Part of the "Everyone" That Deserves Protections': Congressional Candidate Joe Cohn Reaches Out to Adult Community

Veteran civil rights attorney Joe Cohn, who is currently running in a New Jersey Democratic primary for a seat in the U.S. House of Representatives, says he is reaching out to the adult community to champion an inclusive approach to civil liberties that encompasses all sex workers and businesses.

Mile High Unveils New Unscripted Studio 'Sex on Sight'

Mile High Media has launched a new unscripted-content studio, Sex On Sight.

Belgian Producer Dennis Black Magic Sentenced to 7 Years for Rape, CSAM

Noted Belgian adult producer and director Dennis Black Magic has been sentenced to 7 years in prison and a $4,000 fine for the rape of eight models and distribution of CSAM.

Foxxy Stars in Latest From TransAngels

Foxxy stars with Josh Rivers in "Getting D in Detention," from TransAngels.

Wicked Sensual Care Launches Sexual Assault Awareness Campaign

Wicked Sensual Care (WSC) has launched its annual campaign for Sexual Assault Awareness month.

Orion Wholesale Debuts 'Eternal' Collection

Orion Wholesale has introduced the new Eternal collection of vibrators from its You2Toys line.

PASS to Hold Town Hall About Medical Updates, Database Improvements

PASS will host a virtual town hall discussion with updates from the Medical Advisory Board and regarding planned updates to its database security.

Joy Media Group Debuts ERIKALUST Distro Agreement With 'Safe Word'

ERIKALUST has signed a distribution agreement with Joy Media Group and Bizarre Entertainment.

Angela White, Violet Myers Star in Latest From Brazzers

2020 XBIZ Female Performer of the Year Angela White stars with Violet Myers and Xander Corvus in the latest release from Brazzers.

Candee Licious, Ann Joy Star in 'Shadows of the Heart' From MixedX

MixedX has released "Shadows Of The Heart," from studio banner GetVampired, starring Candee Licious and Ann Joy.

Show More