Fiduciary litigation often produces extraordinary remedies. Whether the case involves trustees accused of self-dealing, majority owners alleged to have oppressed minority investors, or corporate fiduciaries accused of concealment and disloyalty, the underlying facts tend to indicate betrayals of trust rather than ordinary breaches. That matters, because those facts can drive not only liability findings but also large damages awards, including punitive damages. Across jurisdictions, however, courts continue to distinguish between strong equitable relief and remedies that go too far.
The constitutional baseline comes from BMW of North America, Inc. v. Gore, 116 S. Ct. 1589 (1996) where the Supreme Court held that grossly excessive punitive damages violate the Due Process Clause and identified three guideposts for appellate review: reprehensibility, the ratio between actual or potential harm and the punitive award, and the comparison between the punitive award and civil penalties for comparable conduct. That framework matters in fiduciary disputes because those cases often involve especially blameworthy conduct, but reprehensibility alone is not sufficient. Courts increasingly scrutinize whether punitive awards remain proportional to the actual harm and whether the evidentiary record justifies the amount imposed.
California law adds another layer. Civil Code section 3294 permits punitive damages where a plaintiff proves oppression, fraud, or malice by clear and convincing evidence. But California also requires meaningful evidence of the defendant’s financial condition before a punitive award can stand. In Adams v. Murakami, 54 Cal.3d 105 (1991), the California Supreme Court explained that a reviewing court cannot properly evaluate whether punitive damages are excessive without evidence of the defendant’s financial condition because the purpose of punitive damages is punishment and deterrence, not financial destruction. The rule serves a practical purpose: Punitive damages are intended to sting, not cripple, and courts cannot determine whether an award achieves that balance without evidence of the defendant’s net worth, liabilities, or overall financial condition.
Two recent cases in California show how that principle works after trial. In Skye Orthobiologics, LLC v. Banman, 350 F.R.D. 641 (C.D. Cal. 2025), a biomedical company accused a former employee and fiduciary of leveraging proprietary company information and diverting business opportunities in breach of fiduciary duties and duties of loyalty. In 2023, a jury found Defendant Banman liable and awarded approximately $29.1 million in lost profits, $26 million in punitive damages, and another $7.2 million in damages. Following trial, the court concluded that, despite the jury’s findings, the punitive damages award could not stand because the record contained insufficient evidence of Defendant Banman’s financial condition. The court therefore ordered a new trial limited to punitive damages while preserving the liability findings and compensatory damages. The decision is significant not merely because the punitive award was disturbed but because it demonstrates how aggressively courts may scrutinize punitive awards in fiduciary cases after verdict, particularly where the evidentiary record is incomplete.
Zhu v. Li, 2023 WL 47772338 (N.D. Cal. July 26, 2023) reinforces a similar lesson. There, after a jury trial involving intentional misrepresentation, breach of fiduciary duty, and contract claims, the Northern District of California conditionally denied a new trial on punitive damages and remitted the award to nominal damages of one dollar because the plaintiff had failed to present meaningful evidence of the defendant’s net worth. The opinion is a clean example of California’s financial-condition requirement doing real work after trial: Even where the conduct may support punishment in principle, and no matter the size the punitive damages award, the punitive award can still fail if the record is incomplete.
A recent case in Maryland illustrates what happens when the evidentiary record is sufficient to sustain a substantial punitive award on appeal. In The Ritz LLC v. Buddy’s River Grill & Oyster Bar LLC, 2025 WL 1703469 (June 18, 2025), minority LLC members accused the managing member of siphoning company profits through affiliated entities, misrepresenting the company’s financial condition, and concealing self-dealing transactions over a period of years. After a 16-day trial, the jury awarded more than $9.6 million total, including approximately $3.09 million in punitive damages. On appeal, the Maryland court affirmed the punitive award and rejected remittitur, concluding that the record contained sufficient evidence of intentional misconduct, repeated misrepresentations, and the defendant’s ability to pay. Unlike Banman and Zhu, where punitive damages failed because of deficiencies in the evidentiary record, Ritz demonstrates that appellate courts will uphold substantial punitive awards in fiduciary cases when plaintiffs establish both egregious misconduct and an adequate factual basis for punishment and deterrence.
Taken together, these cases reflect a broader trend in fiduciary litigation. Courts remain willing to authorize substantial punitive awards where fiduciaries abuse positions of trust through fraud, concealment, or self-dealing. But appellate and post-trial review increasingly focuses on whether those awards are supported by disciplined proof rather than emotion alone. In practice, that means punitive damages in fiduciary cases are often litigated twice: first before the jury, and then again through post-trial motions and appellate scrutiny focused on proportionality, financial-condition evidence, and procedural sufficiency.
The lesson for fiduciary litigators is straightforward. Plaintiffs seeking punitive damages must build the evidentiary record early, particularly with respect to the defendant’s financial condition, because courts may not permit plaintiffs a second opportunity after verdict. Defendants, meanwhile, should carefully preserve post-trial objections regarding evidentiary sufficiency, proportionality, and remittitur. As Banman, Zhu, and Ritz demonstrate, the most consequential fight in fiduciary litigation may no longer concern liability alone but whether an extraordinary remedy can survive the scrutiny that follows trial.
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