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

Utah VPN Rule Enforcement Pause Extended in Aylo Lawsuit

Provisions of a Utah law making adult websites liable if minors in the state circumvent geolocation efforts to bypass age verification, which were set to come into force in May, have again been put on hold temporarily.

Anti-Censorship Bill Could Shield US Sites From Foreign AV Laws

A Republican congressman has introduced legislation to bar U.S. courts from helping to enforce any foreign law restricting speech that would domestically be protected under the First Amendment, potentially including foreign age verification laws.

X3 Expo 2027 All-Stars Unveiled, Dates Set for Jan. 8-9

X3 Expo will make its L.A. LIVE debut at the JW Marriott on Jan. 8-9, bringing together fans and industry insiders for North America’s largest assembly of stars, alongside a dazzling lineup of attractions spotlighting the cutting edge of modern media and pleasure tech.

Courtney Tillia, Girthmasterr Star in Latest From Brazzers

Courtney Tillia stars with Brazzers exclusive Girthmasterr and Kaiia Eve in the studio's latest release, "Yoga, Massage, Sex...In That Order!"

Adriana Chechik Returns to Dorcel for 'Dirty Game'

Adriana Chechik headlines the latest release from Dorcel, titled “Dirty Game.”

Beisar Introduces 'E-Stim Anal' Collection

Beisar has debuted its new E-Stim collection of anal pleasure products.

Keeley Kennedy Makes Her WIFEY Debut

Keeley Kennedy has made her debut for Vixen Media Group studio imprint WIFEY alongside her husband Seth and Chocolate Rod.

Hankey's Toys Debuts UnicornHorn48 Silicone Lifecast Dildo

Mr. Hankey's Toys has introduced its newest silicone lifecast dildo, modeled on the anatomy of creator UnicornHorn48.

Rouge Opens US-Based Warehouse

U.K. pleasure brand Rouge has revealed that it will expand into the United States with a new U.S.-based warehouse.

On the Set: Ricky Greenwood Makes a Case for Dystopian Desire in 'The Tribunal'

Outside a warehouse on a scorching, treeless frontage road in Compton, there is little to suggest that a movie is being made behind its nondescript walls. Similar buildings across the Southwest frequently house adult productions, their unassuming exteriors concealing carefully lit sets where crews labor over every visual detail.

Show More