Breaking Barriers to Justice
traditional net-worth evidence proves unavailable or misleading.
In Zaxis Wireless Communications, Inc. v. Motor Sound Corp. (2001) 89 Cal.App.4th 577, the court upheld a $300,000 punitive award against a defendant with negative net worth because the defendant maintained a $50 million credit line with $5.3 million available. The existence of the credit facility demonstrated the “ability to pay” amounts exceeding the punitive award. Similarly, Bankhead v. ArvinMeritor, Inc. (2012) 205 Cal.App.4th 68 affirmed a $4.5 million punitive award notwithstanding a negative net worth exceeding $1 billion. The court focused on other indicators: the defendant recently borrowed $245 million; it held $343 million in cash on hand; its prior-year profit reached $12 million; and its CEO’s compensation package exceeded $7.6 million. Discovery should target the defendant’s “broader financial picture,” credit facilities, cash on hand, profit margins, executive compensation, major transactions, and any indicia of practical ability to satisfy a judgment.
Identify categories of documents likely to exist with specificity: federal and state tax returns; audited and unaudited financial statements; credit agreements and amendments; board resolutions regarding compensation or dividends; bank statements; accounts receivable aging reports; insurance policies (which may reflect coverage limits and premium- paying capacity); and loan applications (which often contain detailed financial representations).
Engage Valuation Experts Early
Financial forensics and valuation experts assist in crafting discovery requests that capture the most relevant evidence. An experienced valuation accountant identifies categories of documents typically maintained by businesses in the defendant’s industry, suggests non-obvious sources of financial information, and helps interpret incomplete or informal records if that is all the defendant produces. Retaining the expert early, during the discovery phase rather than after trial begins, maximizes value. The expert can guide discovery strategy, identify gaps in production, and prepare to testify regarding reasonable inferences from whatever financial evidence you ultimately obtain.
Subpoena Early, Even Without Pretrial Discovery
Civil Code § 3295(d) permits plaintiffs to subpoena financial documents for delivery at trial without obtaining a pretrial discovery order. The subpoena can require production contingent on a liability finding. While this approach carries risk, the subpoenaed documents may prove unhelpful, and the court may decline to compel production after the discovery cutoff, it preserves options and creates additional record support for any mid-trial continuance request.
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Consumer Attorneys of California
FORUM July/August 2026
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