Mattco Forge, Inc. v. Arthur Young & Co.

*825 Opinion

Appellants and cross-respondents Arthur Young & Company, Richard E. Lamping, Thomas W. Blumer and Ernst & Young (collectively Arthur Young) appeal the judgment following jury verdicts in favor of respondent Mattco Forge, Inc. (Mattco).

Because of prejudicial instructional error, the judgment is reversed, except for the award for out-of-pocket expenses and the interest thereon.

Cross-appellant Mateo Minguez (Minguez), owner of Mattco, appeals the judgment upon the granting of a directed verdict in favor of Arthur Young, which judgment is affirmed.

Background Information

This fact situation has spawned 11 years of convoluted and costly litigation, beginning in September 1985 in the federal court in Cincinnati, Ohio. Mattco, a parts manufacturer, filed a federal civil rights action against General Electric (GE), claiming GE’s elimination of Mattco as an approved subcontractor was racially motivated. The case eventually was transferred to the United States District Court for the Central District of California, where it was bitterly contested for three and one-half years.

In August of 1987, GE filed a counterclaim against Mattco alleging Mattco had engaged in…

With but one exception, I concur with the thoughtful and well-reasoned opinion of my colleagues. However, that exception is important as it relates to the very significant question of what jurors should be told about the “clear and convincing” evidentiary standard they are required to apply in determining a defendant’s *851 liability for punitive damages. Regrettably, I must dissent from the majority opinion’s analysis and discussion of this issue and from the resulting withdrawal from previously asserted declarations by this court regarding the inadequacy of BAJI No. 2.62.

One of the important changes in the law made by the Willie L. Brown Jr.Bill Lockyer Civil Liability Reform Act of 1987 was to increase the evidentiary threshold which must be met in order to justify a recovery of punitive damages. Civil Code section 3294, subdivision (a), now requires that a party seeking punitive damages must prove the existence of fraud, malice or oppression by “clear and convincing” evidence. This represents an important change in the law and is in line with a number of procedural and substantive changes which have been made by the Legislature over the past 15 years to limit and make more…

Appellants and cross-respondents Arthur Young & Company, Richard E. Lamping, Thomas W. Blumer and Ernst & Young (collectively Arthur Young) appeal the judgment following jury verdicts in favor of respondent Mattco Forge, Inc. (Mattco). [1]

Because of prejudicial instructional error, the judgment is reversed, except for the award for out-of-pocket expenses and the interest thereon.

Cross-appellant Mateo Minguez (Minguez), owner of Mattco, appeals the judgment upon the granting of a directed verdict in favor of Arthur Young, which judgment is affirmed.

This fact situation has spawned 11 years of convoluted and costly litigation, beginning in September 1985 in the federal court in Cincinnati, Ohio. Mattco, a parts manufacturer, filed a federal civil rights action against General Electric (GE), claiming GE's elimination of Mattco as an approved subcontractor was racially motivated. The case eventually was transferred to the United States District Court for the Central District of California, where it was bitterly contested for three and one-half years.

In August of 1987, GE filed a counterclaim against Mattco alleging Mattco had engaged in bid-rigging fraud…