MYRETTA ADAMS, as Conservator, etc., Plaintiff and Respondent, v. CLIFFORD MURAKAMI, Defendant and Appellant, 54 Cal. 3d 105

Opinion BAXTER, J. The question in this personal injury action is twofold:

(1) Is evidence of a defendant’s financial condition a prerequisite to an award of punitive damages?

(2) If so, is the burden on the plaintiff rather than on the defendant to introduce evidence of the defendant’s financial condition? We answer both questions in the affirmative. Our prior decisions, constitutional considerations, and the importance of appellate review indicate that an award of punitive damages cannot be sustained on appeal unless the trial record contains meaningful evidence of the defendant’s financial condition. The absence of this evidence thwarts effective appellate review of a claim that punitive damages are excessive. As to the second question, we conclude that Evidence Code

section 500, the traditional allocation of burden of proof, and fundamental fairness require the plaintiff rather than the defendant to introduce this evidence. Facts A 39-year-old female (hereafter patient), a diagnosed chronic schizophrenic of low intelligence, was a resident of View Heights Convalescent Hospital. Clifford Murakami, M.D., was her attending physician. Through her conservator, patient brought this action against the hospital and Dr. Murakami for medical malpractice, battery, and intentional infliction of emotional distress.

Patient alleged that, as a result of wrongful acts and omissions of the hospital and Dr. Murakami, she became pregnant by another patient while she was hospitalized and gave birth to a son who was diagnosed as mentally retarded and autistic. Patient’s claims against the hospital were settled. Patient’s claims against Dr. Murakami proceeded to a jury trial. Neither patient nor Dr. Murakami introduced at trial any evidence of Dr. Murakami’s financial condition. The jury returned a verdict for patient on her causes of action for medical malpractice and intentional infliction of emotional distress.

After adjustments by the trial court, she was awarded a total of $1,024,266, including $750,000 in punitive damages. Dr. Murakami appealed, contending in part that the punitive damages award was improper because patient had not introduced evidence of Dr. Murakami’s financial condition. The Court of Appeal rejected the argument without discussion and affirmed the judgment. Discussion I. Necessity of evidence of defendant’s finances A.

Prior California decisions When faced with a challenge to the amount of a punitive damages award, our traditional function has been to determine whether the award is excessive as a matter of law or raises a presumption that it is the product of passion or prejudice. (Neal v. Farmers Ins. Exchange (1978) 21 Cal.3d 910, 928 [148 Cal.Rptr. 389, 582 P.2d 980] (Neal).) We set forth three criteria in Neal for making that determination, “all of which are grounded in the purpose and function of punitive damages.” (Id., at p. 928.) That purpose is a purely public one.

The public’s goal is to punish wrongdoing and thereby to protect itself from future misconduct, either by the same defendant or other potential wrongdoers. (Id., at p. 928, fn. 13.) The essential question therefore in every case must be whether the amount of damages awarded substantially serves the societal interest. In answering that question in Neal, we first explained the importance of the nature of the defendant’s wrongdoing and the amount of compensatory damages.

We then observed, “Also to be considered is the wealth of the particular defendant; obviously, the function of deterrence (see fn. 13, ante), will not be served if the wealth of the defendant allows him to absorb the award with little or no discomfort. . . .

By the same token, of course, the function of punitive damages is not served by an award which, in light of the defendant’s wealth and the gravity of the particular act, exceeds the level necessary to properly punish and deter.” (21 Cal.3d at p. 928.) This was a reiteration of our prior observation that, “It follows that the wealthier the wrongdoing defendant, the larger the award of exemplary damages need be in order to accomplish the statutory objective.” (Bertero v.

National General Corp. (1974) 13 Cal.3d 43, 65 [118 Cal.Rptr. 184, 529 P.2d 608, 65 A.L.R.3d 878].) Because the quintessence of punitive damages is to deter future misconduct by the defendant, the key question before the reviewing court is whether the amount of damages “exceeds the level necessary to properly punish and deter.” (Neal, supra, 21 Cal.3d at p. 928; Merlo v. Standard Life & Acc. Ins. Co. (1976) 59 Cal.App.3d 5, 18 [130 Cal.Rptr. 416].) The question cannot be answered in the abstract. The reviewing court must consider the amount of the award in light of the relevant facts.

The nature of the inquiry is a comparative one. Deciding in the abstract whether an award is “excessive” is like deciding whether it is “bigger,” without asking “Bigger than what?” A reviewing court cannot make a fully informed determination of whether an award of punitive damages is excessive unless the record contains evidence of the defendant’s financial condition. Since Neal, supra, 21 Cal.3d 910, we have repeatedly examined punitive damage awards in light of the defendant’s financial condition. (Wyatt v. Union Mortgage Co. (1979) 24 Cal.3d 773, 790-791 [157 Cal.Rptr. 392, 598 P.2d 45]; Egan v.

Mutual of Omaha Ins. Co. (1979) 24 Cal.3d 809, 823-824 [169 Cal.Rptr. 691, 620 P.2d 141].) This simple principle is well understood by the bench. The standard jury instruction on punitive damages given in this case expressly directed the jury to consider the “defendant’s financial condition.” (BAJI No. 14.71 (7th ed. 1986 bound vol.) p. 205.) The Use Note to this instruction explained that consideration of this factor was necessary under Neal, supra, 21 Cal.3d 910. (BAJI No. 14.71, supra, at p. 207.) The principle is also axiomatic to the bar.

For example, a recent practice guide for attorneys lists “The Ten Essential Steps To A Proper Punitive Damage Award.” (Riley, Proving Punitive Damages: The Complete Handbook (1981) p. 6.) The guide states, “RULE 9: Show the defendant’s wealth." (Id., at p. 7, emphasis in original.) Plaintiff would dispense with the need for evidence of a defendant’s financial condition because such evidence was only one of the three factors set forth in Neal, supra, 21 Cal.3d 910, 928. Apparently, plaintiff contends that, because the Neal court listed three criteria, less than three are sufficient.

We find no logical premise for this conclusion. The effect of such approach would be to eliminate a three-pronged analysis in favor of a two-pronged analysis. The Neal court set forth three factors, explaining the importance of each. Nothing in Neal suggests that any of the three is dispensable. To the contrary, the most important question is whether the amount of the punitive damages award will have deterrent effect—without being excessive.

Even if an award is entirely reasonable in light of the other two factors in Neal, supra, 21 Cal.3d 910 (nature of the misconduct and amount of compensatory damages), the award can be so disproportionate to the defendant’s ability to pay that the award is excessive for that reason alone. For example, in Burnett v.

National Enquirer, Inc. (1983) 144 Cal.App.3d 991 [193 Cal.Rptr. 206, 49 A.L.R.4th 1125], the court reiterated the Neal factors (supra, 21 Cal.3d 910) and concluded that, although the defendant’s misconduct was “reprehensible,” the punitive damages award had to be reduced solely because it constituted too great a portion of the defendant’s net worth and income. (Burnett v.

National Enquirer, Inc., supra, 144 Cal.App.3d at p. 1012.) The court explained that it could “find acceptable only that balance between the gravity of a defendant’s illegal act and a penalty necessary to properly punish and deter . . . .” (Ibid.) This balance cannot be made absent evidence of the defendant’s financial condition. Similarly, in Zhadan v. Downtown L. A.

Motors (1976) 66 Cal.App.3d 481 [136 Cal.Rptr. 132], the court concluded that substantial punitive damages were warranted in light of the defendant’s serious misconduct (id., at p. 497) and that the ratio between compensatory and punitive damages was not objectionable (id., at p. 499), but nevertheless reversed the judgment because the punitive damages were excessive in light of the defendant’s financial condition. (Id., at p. 500 [award exceeded one-third of the defendant’s net worth].) The determination of whether an award is excessive is admittedly more art than science. “The channeling of just the correct quantum of bile to reach the correct level of punitive damages is, to put it mildly, an unscientific process complicated by personality differences.” (Devlin v.

Kearney Mesa AMC/Jeep/ Renault, Inc. (1984) 155 Cal.App.3d 381, 388 [202 Cal.Rptr. 204].) However, when provided with evidence of a defendant’s financial condition, the reviewing court can at least reach a reasonably informed decision. Without such evidence, a reviewing court can only speculate as to whether the award is appropriate or excessive. Plaintiff offers no justification for imposing such a burden on reviewing courts or for encouraging ill-informed decisions. Sound judicial policy weighs in favor of fully informed decisions, especially when a public interest is at stake.

One state’s high court explained, “Indeed the public policy nature of the award places in question the jurisdiction of the district court to award relief in the form of punitive damages in the absence of proof of the wealth or financial condition of the defendant.” (Adel v. Parkhurst (Wyo. 1984) 681 P. 2d 886, 892.) An example demonstrates the wisdom of Neal, supra, 21 Cal.3d 910. Assume that no evidence of a defendant’s financial condition is introduced. A jury renders an award of $2 million.

The defendant’s financial condition, however, is limited so as to preclude payment of punitive damages in excess of $10,000. Neal recognized that the purpose of punitive damages is not served by financially destroying a defendant. The purpose is to deter, not to destroy. Under plaintiff’s approach, however, the reviewing court will be rendered unable to consider the effect of the award because the record will contain no evidence of the defendant’s financial condition.

Such result is contrary to the well-established rule that a punitive damages award is excessive if it is disproportionate to the defendant’s ability to pay. (Egan v. Mutual of Omaha Ins. Co., supra, 24 Cal.3d 809, 824 [punitive damages award reversed because it exceeded more than two and one-half months of defendant’s annual net income]; Merlo v. Standard Life & Acc. Ins. Co., supra, 59 Cal.App.3d 5, 18 [award of punitive damages excessive because it was more than 30 percent of defendant’s net worth]; Little v. Stuyvesant Life Ins.

Co. (1977) 67 Cal.App.3d 451, 469-470 [136 Cal.Rptr. 653] [award greater than 15 percent of net worth reversed]; Zhadan v. Downtown L. A. Motors, supra, 66 Cal.App.3d 481, 500 [award excessive because it was one-third of the net worth].) The principle that a punitive award must be considered in light of the defendant’s financial condition is ancient. After the Norman conquest in 1066, there arose in English law a system of civil sanctions known as “amercements.” (Browning-Ferris Industries v.

Kelco Disposal (1989) 492 U.S. 257, 287-289 [106 L.Ed.2d 219, 246-247, 109 S.Ct. 2909, 2927] [conc, and dis. opn. of O’Connor, J.].) Because of the sometimes abusive nature of amercements, the Magna Carta prohibited those that were disproportionate to the offense or that would deprive the wrongdoer of his means of livelihood: “A freeman shall only be amerced for a small offence according to the measure of that offence. And for a great offence he shall be amerced according to the magnitude of the offence, saving his contenement; and a merchant, in the same way, saving his merchandize.

And a villein, in the same way, if he fall under our mercy, shall be amerced saving his wainnage.''’ (Magna Carta (1215) ch. 20, italics added.) Absent evidence of a defendant’s financial condition, a punitive damages award can financially annihilate the defendant. We see no reason why a modern-day civil defendant should be entitled to less consideration than one was given 800 years ago.

Plaintiff attempts to justify discarding the defendant’s financial condition from the analysis under Neal, supra, 21 Cal.3d 910, by claiming that a reviewing court will be able to consider the other two Neal factors— the nature of the misconduct and the amount of compensatory damages. Those two factors standing alone, however, will not enable a reviewing court to make an informed determination of whether an award is excessive. As explained above (maj. opn., ante, pp. 111-112), an award might seem to be warranted under those factors, but nevertheless be excessive in light of the defendant’s financial condition.

The better reasoned line of Court of Appeal decisions requires evidence of the defendant’s financial condition. In Forte v. Nolfi (1972) 25 Cal.App.3d 656 [102 Cal.Rptr. 455], the court reversed a punitive damages award, primarily because the trial court entered judgment “without taking any evidence of the resources of the alleged wrongdoers which it sought to punish.” (Id., at p. 689.) More recently, in Dumas v.

Stocker (1989) 213 Cal.App.3d 1262 [262 Cal.Rptr. 311] (Dumas), the court fully considered our decision in Neal, supra, 21 Cal.3d 910, and explained that the absence of evidence as to financial condition “frustrates meaningful appellate review of punitive damage awards (i.e., of whether* the award was ‘grossly disproportionate’), since the absence of evidence of net worth precludes an appellate court from deciding whether an award might, for example, bankrupt the defendant.” (Dumas, supra, 213 Cal.App.3d at p. 1269.) The Dumas court, supra, 213 Cal.App.3d 1262, also correctly observed that, absent financial evidence, a jury will be encouraged (indeed, required) to speculate as to a defendant’s net worth in seeking to return a verdict that will appropriately punish the defendant.

The present case bears out that concern. At plaintiff’s request, the jury was given BAJI No. 14.71 (7th ed. 1986 bound vol.), which stated, “In arriving at any award of punitive damages, you are to consider the following: . . . The amount of punitive damages which will have a deterrent effect on the defendant in the light of defendant’s financial condition . . . .” (Italics added.) Plaintiff’s present argument that financial evidence is not necessary rings hollow in light of her own decision to request that the jury be instructed to base its punitive damages award on defendant’s financial condition.

More important, the jury was told to base its award on a factor as to which there was no evidence. Faced with such a dilemma, the jury was forced to speculate as to defendant’s financial condition. Sound public policy should preclude awards based on mere speculation. The traditional rule is that compensatory damages must not be based on speculation. (Dumas, supra, 213 Cal.App.3d at p. 1269.) There is no reason for a different standard for punitive damages. Dumas states the correct rule. (See also Storage Services v.

Oosterbaan (1989) 214 Cal.App.3d 498, 516 [262 Cal.Rptr. 689] [expressly following Dumas rule].) The decision most commonly cited for the contrary view is Vossler v. Richards Manufacturing Co. (1983) 143 Cal.App.3d 952 [192 Cal.Rptr. 219] (Vossler). As the court explained, however, in Dumas, supra, 213 Cal.App.3d 1262, all of the decisions relied on by the Vossler court, supra, 143 Cal.App.3d 952, were themselves based on a single decision—Hanley v. Lund (1963) 218 Cal.App.2d 633 [32 Cal.Rptr. 733] (Hanley). Hanley is unpersuasive in several respects.

First, the court’s consideration of the issue was minimal, two short paragraphs. The court noted only that the defendant had cited no authority directly in support of his position. (Id., at p. 645.) The court, however, cited no contrary authority. Without any support one way or the other and without any meaningful discussion of the issue, Hanley provides slender support for the subsequent cases that have relied on it.

Second, as a later court put it, Hanley, supra, 218 Cal.App.2d 633, “reached its conclusion on a unique rationale.” (Dumas, supra, 213 Cal.App.3d at p. 1268.) The defendant in Hanley, supra, 218 Cal.App.2d 633, “did not contend, either in the trial court or here [on appeal], that in fact the award made was excessive in the light of his financial status.” (Id., at p. 646.) As the Dumas court, supra, 213 Cal.App.3d 1262, explained, “In effect, Hanley held that under the circumstances of that case, and in light of the failure to raise the issue of excessiveness, the parties inferentially stipulated away the issue of [the defendant’s] net worth, rendering evidence by the plaintiff unnecessary.” (Id., at p. 1268.) Petitioner in this case, however, has contended that the punitive damages are excessive.

Third and most important, Hanley, supra, 218 Cal.App.2d 633, was decided long before our decision in Neal, supra, 21 Cal.3d 910, in which we emphasized the importance of considering a defendant’s financial condition in order to determine whether an award of punitive damages is excessive. A Court of Appeal recently faced with the conflict on this issue concluded: “We have reviewed Dumas [supra, 213 Cal.App.3d 1262,] and Vossler [supra, 143 Cal.App.3d 952, 961-965,] and the California cases upon which they rely, and we are persuaded that Dumas states the better rule.

There is no basis for meaningful appellate review of a punitive damage award without evidence of the defendant’s financial condition.” (Storage Services v. Oosterbaan, supra, 214 Cal.App.3d 498, 516.) We agree. We affirm the rule stated in Dumas, supra, 213 Cal.App.3d 1262, and disapprove of Hanley, supra, 218 Cal.App.2d 633, and its progeny. (See, e.g., Fenlon v. Block (1989) 216 Cal.App.3d 1174, 1178-1183 [265 Cal.Rptr. 324]; Pat Rose Associates v. Coombe (1990) 225 Cal.App.3d 9, 23 [275 Cal.Rptr. 1]; Liberty Transport, Inc. v. Harry W.

Gorst Co. (1991) 229 Cal.App.3d 417, 438 [280 Cal.Rptr. 159].) Our decision in Neal, supra, 21 Cal.3d 910, reflected sound considerations of fairness and a concern for rationality in the awarding of punitive damages. We decline to eviscerate that decision by eliminating the need for evidence of the defendant’s financial condition. Without such evidence, reviewing courts will be unduly restricted in their attempts to assess whether awards of punitive damages are excessive. B.

Constitutional considerations The question before us is one of state law, but it has recently acquired a federal constitutional dimension, which although not dispositive, weighs strongly in favor of requiring evidence of a defendant’s financial condition. In Pacific Mut. Life Ins. Co. v.

Haslip (1991) 499 U.S. _ [113 L.Ed.2d 1, 111 S.Ct. 1032] (Haslip), the high court rejected a due process challenge to a punitive damages award under Alabama law, holding that the long-entrenched common law method for assessing punitive damages is not “per se unconstitutional.” (Id., at p._[113 L.Ed.2d at p. 19, 111 S.Ct. at p. 1043], italics in original.) More important for the issue before us, however, the court also made clear that, “It would be just as inappropriate to say that, because punitive damages have been recognized for so long, their imposition is never unconstitutional. . . .

We note once again our concern about punitive damages that ‘run wild.’ . . . [f] One must concede that unlimited jury discretion—or unlimited judicial discretion for that matter—in the fixing of punitive damages may invite extreme results that jar one’s constitutional sensibilities.” (499 U.S. at p. _ [113 L.Ed.2d at p. 20, 111 S.Ct. at p. 1043].) To determine if the constitutional line had been crossed in that case, the court carefully examined the Alabama law governing punitive damages.

In upholding the award, the court noted the state’s “post-trial procedures for scrutinizing punitive awards.” (Haslip, supra, 499 U.S. at p__[113 L.Ed.2d at p. 21, 111 S.Ct. at p. 1044].) The trial court was required “ ‘to reflect in the record the reasons for interfering with a jury verdict, or refusing to do so, on grounds of excessiveness of the damages.’ ” (Ibid. [113 L.Ed.2d at p.21, 111 S.Ct. at p. 1044], quoting Hammond v.

City of Gadsden (Ala. 1986) 493 So.2d 1374, 1379.) The factors deemed appropriate for the trial court to consider included “ ‘the impact upon the parties.’ ” (Haslip, supra, 499 U.S. at p._[113 L.Ed.2d at p. 21, 111 S.Ct. at p. 1044].) Obviously, this factor would encompass consideration of the defendant’s financial condition. Otherwise, effect on the defendant could not be considered.

Most important, the high court emphasized the “detailed substantive standards” the Alabama Supreme Court uses in evaluating punitive awards on appeal. (Haslip, supra, 499 U.S. at p__[113 L.Ed.2d at p. 22, 111 S.Ct. at p. 1045].) The Alabama court had made clear that the defendant’s financial condition is “a consideration essential to a post-judgment critique of a punitive damages award.” (Green Oil Co. v.

Hornsby (Ala. 1989) 539 So.2d 218, 222, italics added.) The high court explained, that “The [Alabama] standards provide for a rational relationship in determining whether a particular award is greater than reasonably necessary to punish and deter.” (Haslip, supra, 499 U.S. at p._[113 L.Ed.2d at p. 23, 111 S.Ct. at pp. 1045-1046].) Absent a consideration of a defendant’s financial condition, a court (whether at the trial or appellate level) simply cannot make an informed decision whether, as the high court put it, “a particular award is greater than reasonably necessary.” (Ibid. [113 L.Ed.2d at p. 23, 111 S.Ct. at p. 1046]) Or, as the Alabama high court phrased it, “What (i.e., how much) will it take to punish this Defendant? . . . [f] The gravity of the wrong may be the same, whether the defendant is a salaried employee or a multimillion dollar corporation, but, in the case of the former, the $220,000 verdict would be far out of proportion to its intended purpose.

What it takes to punish the one bears no relationship to what it takes to punish the other.” (Green Oil Co. v. Hornsby, supra, 539 So.2d 218, 223, italics in opinion, quoting Ridout’s Brown Service, Inc. v. Holloway (Ala. 1981) 397 So.2d 125, 127-128 (cone, opn. of Jones, J.).) We need not decide, and do not decide, whether evidence of a defendant’s financial condition is a constitutional prerequisite under Haslip, supra, 499 U.S._, to an award of punitive damages. At a minimum, however, the high court has made clear a constitutional mandate for meaningful judicial scrutiny of punitive damages awards.

This requirement weighs heavily in favor of evidence of a defendant’s financial condition. Absent such evidence, a reviewing court cannot make an informed decision whether the amount of punitive damages is excessive as a matter of law. That commonsense concern is itself sufficient to require such evidence as a matter of state law. Moreover, in light of Haslip, the absence of such evidence raises doubt as to the constitutionality of a punitive damages award. II.

Allocation of the burden of proof If evidence of the defendant’s financial condition is a prerequisite to a punitive damages award, the next question is which party bears the burden of introducing the evidence at trial. Plaintiff contends that, because such evidence is unnecessary, neither party bears the burden of producing it. This reasoning is tenable only if one accepts plaintiff’s argument that the evidence is unnecessary, period. The correct rule is that the evidence is required. (Maj. opn., ante, pp. 109-118.) Thus, one side or the other must bear the burden of producing it.

As we shall explain, the burden is properly placed on the plaintiff. Evidence Code

section 500 states, “Except as otherwise provided by law, a party has the burden of proof as to each fact the existence or nonexistence of which is essential to the claim for relief or defense that he is asserting.” (Italics added.) As the California Law Revision Commission explained, “The facts that must be shown to establish a cause of action or a defense are determined by the substantive law, not the law of evidence.” (Cal. Law Revision Com. com., 29B West’s Ann. Evid. Code (1966 ed.) § 500, at p. 431 [Deering’s Ann. Evid.

Code (1986 ed.) § 500, p. 215].) In light of our holding that evidence of a defendant’s financial condition is essential to support an award of punitive damages, Evidence Code

section 500 mandates that the plaintiff bear the burden of proof on the issue. A plaintiff seeking punitive damages is not seeking a mere declaration by the jury that the plaintiff is entitled to punitive damages in the abstract. The plaintiff is seeking an award of red money in a specific amount to be set by the jury. Because the award, whatever its amount, cannot be sustained absent evidence of the defendant’s financial condition, such evidence is “essential to the claim for relief.” (Evid. Code, § 500.) Fundamental fairness must be the lodestar for our analysis. The California Law Revision Commission comment to Evidence Code

section 500 states, “In determining the incidence of the burden of proof, ‘the truth is that there is not and cannot be any one general solvent for all cases. It is merely a question of policy and fairness based on experience in the different situations.’ ” (Cal. Law Revision Com. com., supra, § 500, at p. 431 [Deering’s Ann. Evid. Code, supra, § 500, at p. 215], quoting 9 Wigmore, Evidence (3d ed. 1940) § 2486, p. 275, italics added.) These bedrock concerns—policy and fairness—support placing the burden on a plaintiff to prove a defendant’s financial condition.

The very nature of punitive damages points to this conclusion. Whatever his or her injury, a plaintiff will be made whole by the award of compensatory damages. An award of punitive damages, though perhaps justified for societal reasons of deterrence, is a boon for the plaintiff. “Such damages constitute a windfall . . . .” (Rosener v. Sears, Roebuck & Co. (1980) 110 Cal.App.3d 740, 750 [168 Cal.Rptr. 237]; Electrical Workers v.

Foust (1979) 442 U.S. 42, 50 [60 L.Ed.2d 698, 706, 99 S.Ct. 2121] [also referring to punitive damages as “windfall recoveries”].) “[I]t is indeed an anomaly to find that in any case more than full compensation may be awarded him [the plaintiff].” (Davis v. Hearst (1911) 160 Cal. 143, 162 [116 R 530].) The general rule has long been that “He who takes the benefit must bear the burden.” (Civ.

Code, § 3521.) It is not too much to ask of a plaintiff seeking such a windfall to require that he or she introduce evidence that will allow a jury and a reviewing court to determine whether the amount of the award is appropriate and, in particular, whether it is excessive in light of the central goal of deterrence. As explained above, evidence of the defendant’s financial condition is crucial to that determination. The potential unfairness of imposing the burden on the defendant becomes even more clear when considered in light of trial practice reality. The issue is not merely a question of trial strategy.

As our former colleague Justice Peters aptly put it, “The trial of a law suit is not a game where the spoils of victory go to the clever and technical regardless of the merits, but a method devised by a civilized society to settle peaceably and justly disputes between litigants. The rules of the contest are not an end in themselves.” (Simon v. City & County of San Francisco (1947) 79 Cal.App.2d 590, 600 [180 P.2d 393].) An award of punitive damages can be a matter of economic life or death for a defendant. The “game” theory of litigation is particularly inappropriate when the public interest is at stake.

If the plaintiff does not introduce evidence of the defendant’s finances, the only alternative source of the information is the defendant. It is inherently prejudicial to require a defendant to introduce evidence of personal finances. Doing so places a defendant in the position of bidding against himself or herself. A defendant in that position is forced to tell the jury in effect that: “My conduct doesn’t warrant punitive damages.

But, by the way, if you disagree, please be gentle, I’m worth only the following amount.” Such an approach has the not unexpected effect of suggesting to the jury that the defendant is admitting punitive damages should be assessed. Put colloquially, the jury is led to think,” This person must know he deserves a beating or else he would not be pleading poverty.” Under current Civil Code

section 3295, subdivision (d), the jury is asked to decide at the same time whether to impose punitive damages and, if so, in what amount. (See also BAJI No. 14.72.2, supra, at p. 66.) Requiring a defendant to prove his or her own financial condition may improperly taint the jury’s decision whether to impose punitive damages in the first instance. The defendant’s only alternative is to remain silent as to personal finances and run the risk of being annihilated financially. It is simply unfair and unnecessary to put the defendant in this “damned if you do, damned if you don’t” position.

A commonly used practice guide for attorneys (authored in part by former Justice Kaufman of this court) illustrates the problem. “Practice Pointer for Defense: The insurer [defendant] should be careful about presenting ‘mitigating’ evidence as to its financial condition. The jury may regard it as a tacit admission that some award of punitive damages is appropriate. Quibbles as to its finances could be viewed as ‘just one more instance of insurer cover-up!’ ” (Kornblum, Cal.

Practice Guide: Bad Faith (The Rutter Group 1989) 1 11.236, p. 11-66, italics in original.) We need not blind ourselves to this reality of trial dynamics that is well understood by the bar and our colleagues on the trial bench. The prejudice in this case was exacerbated because it was tried before Civil Code

section 3295 was amended to provide for bifurcation. Under the current procedure, the jury first decides whether to impose liability for compensatory damages and whether the defendant acted with fraud, oppression, or malice. (Civ. Code, § 3295, subd. (d); see also BAJI No. 14.72.1 (1989 re-rev.) (7th ed. 1991 pocket pt.) p. 64.) Only after finding such misconduct, is the jury then asked to decide whether to impose punitive damages and, if so, in what amount. As explained in the preceding paragraph, there is a serious risk of prejudice to the defendant under this scheme if the defendant is required to prove its own finances. The risk, of course, was greater under former Civil Code

section 3295 because it made no provision for bifurcation. Under plaintiff’s view, Dr. Murakami would have had to introduce evidence of his finances even before the jury decided whether he was liable for compensatory damages.

The Association for California Tort Reform, appearing as amicus curiae on behalf of defendant, well states the point: “According to plaintiff, if defendant had any substantial net worth, he also had but a Hobson’s choice in a trial where liability and penalty were to be decided in the same hearing: evidence of his financial condition could be introduced with the likely result that it would inflame the passion and prejudice of the jury to tip their judgment in favor of liability.” Putting the defendant in this untenable situation is analytically similar to imposing on the defendant the burden of contesting liability for compensatory damages while simultaneously proving the amount of compensatory damages that should be awarded.

That, of course, is not the law. A plaintiff must prove the amount of compensatory damages to which he or she is entitled. Consideration of the question from the plaintiff’s perspective also leads to the conclusion that the burden is properly hers. Unlike the defendant, the plaintiff faces no risk.

As one practice guide for attorneys explains in plain language, “Plaintiff’s counsel has everything to gain and nothing to lose by utilizing the rule that permits (and if the verdict is high) compels introduction of the defendant’s wealth.” (Riley, Proving Punitive Damages: The Complete Handbook, supra, § 9.15, at pp. 6-7; see also Kornblum, Cal.

Practice Guide: Bad Faith, supra, § 11.235, at p. 11-66 [explaining benefit to plaintiff of introducing the evidence].) Perhaps a plaintiff might want to keep from a jury the evidence of a defendant’s financial resources if they were meager and thus might lead to a small punitive damages award. In that circumstance, however, the plaintiff would be deliberately seeking an award disproportionate (or at least unrelated) to the defendant’s ability to pay. That result, of course, is contrary to the public purpose of punitive damages. Moreover, under Civil Code

section 3295, subdivision (c), the plaintiff is allowed, on a proper showing, to “subpoena documents or witnesses to be available at the trial for the purpose of establishing the profits or financial condition” of the defendant.

The plaintiff may also obtain pretrial discovery of that information. “Like the Colt revolver made all men in the west the same size, discovery procedures reduce the advantage the giant corporations [or any other defendant] otherwise have over the individual plaintiff in litigation, and if the goal is a large verdict, such discovery procedures should not be used sparingly.” (Riley, Proving Punitive Damages: The Complete Handbook, supra, § 9.16, at p. 102.) We see no reason why it is even slightly unfair to require a plaintiff to use the procedures available.

The apparent legislative intent underlying the punitive damages statutes is also consonant with having plaintiff assume this responsibility. At the time this case was tried (July 1987), Civil Code

section 3295, subdivision (

a) provided that the trial court could grant a defendant a protective order requiring the plaintiff to prove a prima facie case of punitive damages liability before being allowed to introduce evidence of the defendant’s profits or financial condition. This provision, though not directly on point, reflects a legislative awareness that the plaintiff is the party who must introduce such evidence. By setting forth the procedure for the plaintiff to do so, the Legislature acknowledged that the orthodox practice had long been for plaintiffs, not defendants, to prove a defendant’s financial condition.

Indeed, the Legislature’s awareness of this reality is reflected in the 1980 amendments to Civil Code

section 3295 regarding introduction of evidence of a defendant’s financial condition. The Legislative Counsel’s Digest to Senate Bill No. 227 (1979-1980 Reg. Sess.), which gave rise to the amendments, stated, “In general, the application of this provision is governed by case law which generally provides that the plaintiff has the burden of proof . . . .” (Legis. Counsel’s Dig., Sen. Bill No. 227,4 Stats. 1979 (Reg. Sess.)

Summary Dig., p. 227, italics added.) It seems clear enough that, to the extent the Legislature gave any thought to the burden of proof, the assumption was that the burden always had belonged to plaintiffs and would remain theirs. Subsequent amendments to Civil Code

section 3295, though not applicable to this case, reinforce the conclusion that the Legislature was aware of the traditional allocation of burden of proof. Subdivision (

d) was added to

section 3295 of the Civil Code effective January 1, 1988. It states, “The court shall, on application of any defendant, preclude the admission of evidence of that defendant’s profits or financial condition until after the trier of fact returns a verdict for plaintiff awarding actual damages and finds that a defendant is guilty of malice, oppression, or fraud in accordance with

Section 3294.” (Stats. 1987, ch. 1498, § 6, pp. 5781-5782.) On its face, this amendment does not purport to address the precise question before us. The provision, however, does clearly illustrate the Legislature’s awareness that plaintiffs, rather than defendants, seek to introduce financial evidence. More important, Civil Code

section 3295 offers no support, not even a suggestion, for the view that defendants bear the burden of introducing such evidence. If defendants had that burden, the provisions regulating plaintiffs’ introduction of the evidence would be meaningless. We do not presume that the Legislature engages in idle acts. (Shoemaker v. Myers (1990) 52 Cal.3d 1, 22 [276 Cal.Rptr. 303, 801 P.2d 1054].) In

summary, Evidence Code

section 500 and consideration of fundamental fairness lead to the conclusion that a plaintiff who seeks to recover punitive damages must bear the burden of establishing the defendant’s financial condition. A defendant should not be required to justify the amount of the award he or she is seeking to avoid. Disposition The judgment of the Court of Appeal is reversed to the extent that it affirmed the award of punitive damages. The Court of Appeal is directed to remand this action to the trial court for further proceedings in accord with this opinion. Defendant is awarded his costs on appeal. Lucas, C.

J., Panelli, J., and Arabian, J., concurred. By acknowledging the commonly accepted purpose of punitive damages, we express no view as to the efficacy of punitive damages in deterring misconduct. To our knowledge, no empirical data exists on that question. (1 Ghiardi, Punitive Damages Law & Practice (1985) § 2.06, p. 14.) There is, however, a continuing debate on the issue. (Id., §§ 2.07-2.13, at pp. 15-29.) The selective approach to the factors in Neal, supra, 21 Cal.3d 910, is troublesome in general. If the defendant’s financial condition were dispensable, so would be the other two factors stated in Neal.

Under the selective approach, a reviewing court could refuse to consider whether a punitive damages award has any rational relationship to either the nature of the defendant’s misconduct or the amount of compensatory damages. Even if the misconduct were relatively minor (in light of the types of misconduct that will support punitive damages) and the compensatory damages were nominal, the reviewing court could uphold a multimillion dollar award solely because the defendant had enough resources to pay the award. Such result would stand Neal on its head.

The absence of financial evidence would lead to an even more egregious result in the common situation in which a punitive damages claim is asserted against multiple defendants. Assume a simple case in which two defendants are found jointly and severally liable for beating a plaintiff. As to each of them, the reprehensibility of the misconduct and the amount of the plaintiff’s compensatory damages will be the same or similar.

Under plaintiff’s view, the jury could properly impose equal punitive damages awards against each defendant, even if they had widely differing abilities to pay, i.e., one could pay the award with little discomfort, but the other would be destroyed. A reviewing court, however, would be unable to differentiate between them. Such a result would have little rationality or fairness.

Nor would it further the public interest in punitive damages awards that are sufficient to deter misconduct without being excessive. “Contenement” referred to a freehold or, in a broader sense, property of any kind necessary for a freeman to maintain his position. (3 Oxford English Dict. (2d ed. 1989) p. 815, col. 2.) A “villein” was a peasant occupier of land who was subject to a lord. (19 Oxford English Diet., supra, at p. 637, col. 2; see also 1 Pollock & Maitland, History of English Law (2d ed. 1909) ch. 1, § 12, pp. 356-383.) The villein’s “wainnage,” also referred to as “gainage,” signified his necessary implements of cultivation and husbandry. (6 Oxford English Dict., supra, at p. 314, col. 1.) Plaintiff disputes whether defendant properly preserved his argument on this point.

We have, as a practical matter, decided this question in defendant’s favor by granting review solely on this issue. Moreover, a reviewing court has discretion to decide such an issue if it presents a pure question of law arising on undisputed facts, particularly when the issue is a matter of important public policy. (Sea & Sage Audubon Society, Inc. v. Planning Com. (1983) 34 Cal.3d 412, 417 [194 Cal.Rptr. 357, 668 P.2d 664].) Most important, as we have explained above, the primary interest that must be protected is the public interest in punitive damage awards in appropriate amounts.

We cannot allow the public interest to be thwarted by a defendant’s oversight or trial tactics. This result seems to have been implicitly approved by the drafters of the current California Jury Instructions, Civil.

The Comment to the punitive damages instruction notes the two conflicting lines of Court of Appeal decisions. (BAJI No. 14.72.2 (1989 re-rev.) (7th ed. 1991 pocket pt.) com., p. 67.) The instruction itself, however, continues to state that the jury must consider evidence of the defendant’s financial condition. (BAJI No. 14.72.2, supra, at p. 66.) Various measures of a defendant’s ability to pay a punitive damages award have been suggested. Defendant in this case contends the best measure of his ability to pay is his net worth.

The Association for California Tort Reform, appearing as amicus curiae on behalf of defendant, advocates the profitability of the defendant’s misconduct as the proper measure. We decline at present, however, to prescribe any rigid standard for measuring a defendant’s ability to pay. No financial evidence of any kind was introduced, and the issue has not been fully developed by the parties. We cannot conclude on the record before us that any particular measure of ability to pay is superior to all others or that a single standard is appropriate in all cases.

Alabama’s punitive damages law differs from California’s in a procedural respect. An Alabama jury is not allowed to consider the financial position of the defendant. (Green Oil Co. v. Hornsby, supra, 539 So.2d 218, 222.) This difference does not support the view that evidence of a defendant’s financial condition is unnecessary.

Although the evidence is withheld from an Alabama jury, it is deemed “essential to a post-judgment critique” by the trial and appellate courts. (Ibid.) Shortly after the high court decided Haslip, supra, 499 U.S. _, the Alabama Supreme court reiterated that, “A trial judge, in reviewing a punitive damages award by a jury, must likewise consider the effect of the verdict on the defendant’s financial condition . . . .” {Fuller v. Preferred Risk Life Ins.

Co. (Ala. 1991) 577 So.2d 878, 884, italics added.) Alabama law is therefore consistent with our decision that evidence of a defendant’s financial condition is essential. Other states also require evidence of a defendant’s financial condition to sustain a punitive damages award. {Adel v. Parkhurst, supra, 681 P.2d 886, 892; Nelson v. Jacobsen (Utah 1983) 669 P.2d 1207, 1219; McDonough v. Jorda (1986) 214 N.J. Super. 338 [519 A.2d 874, 879]; see also Bankers Life & Casualty Company v.

Kirtley (8th Cir. 1962) 307 F.2d 418, 425 [applying Iowa law and reversing award because there was “no reliable information" as to the defendant’s finances].) Some states have adopted plaintiff’s view. (See, e.g., Folks v. Kansas Power and Light Co. (1988) 243 Kan. 57 [755 P. 2d 1319, 1334]; Anderson v. Latham Trucking Co. (Tenn. 1987) 728 S.W.2d 752, 754.) We are not persuaded. Those decisions show nothing more than the same split of authority among states that has arisen in our Courts of Appeal.

Moreover, some of those decisions shed little light on the issue because their discussion was either dictum {Anderson v. Latham Trucking Co., supra, 728 S.W.2d 752, 754), or minimal with no consideration of public policy or fairness. {Ibid.-, Rinaldi v. Aaron (Fla. 1975) 314 So.2d 762, 763; Asphalt Engineers, Inc. v.

Galusha (1989) 160 Ariz. 134 [770 P. 2d 1180, 1184] [one-sentence discussion of the issue].) Most important, none of those cases were decided in light of the clear requirement for meaningful review set forth in Haslip, supra, 499 U.S.___ Although the high court upheld Alabama’s punitive damages system in Haslip, supra, 499 U.S. _, the court expressed concern with less detailed state standards.

Referring to the Alabama standards, the court stated, “This, we feel, distinguishes Alabama’s system from the Vermont and Mississippi schemes about which Justices expressed concern in Browning-Ferris Industries of Vermont, Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 109 S.Ct. 2909, 106 L.Ed.2d 219 (1989), and in Bankers Life & Casualty Co. v. Crenshaw, 486 U.S. 71, 108 S.Ct. 1645, 100 L.Ed.2d 62 (1988).

In those respective schemes, an amount awarded would be set aside or modified only if it was ‘manifestly and grossly excessive,’ [citation] or would be considered excessive when ‘it evinces passion, bias, and prejudice on the part of the jury so as to shock the conscience.’ ” (Haslip, supra, 499 U.S. at p___ in. 10 [113 L.Ed.2d at p. 22, 111 S.Ct. at p. 1045], italics added.) The California standard of review appears to be similar to those as to which the high court noted its concern.

We have stated that a punitive damages award will be set aside only when it “is so grossly disproportionate as to raise a presumption that it is the result of passion or prejudice.” (Neal, supra, 21 Cal.3d at p. 928.) The high court recently remanded to the California Courts of Appeal several cases for reconsideration in light of Haslip, supra, 499 U.S._, apparently to determine whether the California “passion and prejudice” standard of review is constitutionally sufficient. (See, e.g., Transamerica Occidental Life Ins. Co. v.

Koire (1991) _ U.S. _ [114 L.Ed.2d 706, 111 S.Ct. 2253]; AMCA International Finance Co. v. Hilgedick (1991)_U.S__[113 L.Ed.2d 713, 111 S.Ct. 1614]; Church of Scientology of California v. Wollersheim (1991)_U.S._[113 L.Ed.2d 234, 111 S.Ct. 1298]; International Society for Krishna Consciousness of California v. George (1991)_ U.S._[113 L.Ed.2d 234, 111 S.Ct. 1299]; Pacific Lighting Corporation v. MGW, Inc. (1991) — U.S._[113 L.Ed.2d 235, 111 S.Ct. 1299].) Similarly, our recent decision in Gourley v. State Farm Mut. Auto. Ins.

Co. (1991) 53 Cal.3d 121 [279 Cal.Rptr. 307, 806 P.2d 1342], as modified, remanded that action to the Court of Appeal for further consideration under Haslip, supra, 499 U.S.__ In light of our holding in the present case that the punitive damages award must be set aside because of the absence of financial evidence, we need not now decide, and do not decide, whether the traditional California “passion and prejudice” standard of review is constitutionally sufficient under Haslip, supra, 499 U.S.__Nor do we express any view on that issue.