The ability of McCarter & English LLP to recover $3.6 million in punitive damages in a breach of contract claim against former client Jarrow Formulas Inc hinges on the interpretation of state law by the Connecticut Supreme Court.
Judge Michael P. Shea of the US District Court for the District of Connecticut raised a question to the state’s high court regarding the possibility of a law firm recovering “common law punitive damages, i.e., litigation costs including attorneys’ fees, for its client’s willful and malicious breach of an agreement to compensate the law firm for legal services.” This pivotal question arose in the context of a dispute involving McCarter & English and Jarrow Formulas.
According to Judge Shea, the Connecticut Supreme Court has yet to decisively address this matter beyond passing comments (“dicta”). State trial courts have shown differing views on the issue, without a binding precedent from the state supreme court. The questions pertaining to punitive damages come on the back of McCarter’s representation of Jarrow in a Kentucky trial that ended with a multi-million-dollar verdict against the nutritional supplement company. Following the verdict, Jarrow terminated its relationship with McCarter and refused payment of remaining legal fees and costs.
In response, McCarter sued Jarrow for breach of contract. The jury returned a verdict of $1.06 million in compensatory damages in July 2023, while also ruling that the breach was willful and malicious. Post-verdict motions on Feb. 8, 2024, led Judge Shea to hold off on awarding punitives, while noting that McCarter would be entitled to $3.6 million in common law punitive damages, limited to litigation expenses under Connecticut law, if the state high court determines that such damages are available for willful and malicious breach of contract.
The case is McCarter & Eng. LLP v. Jarrow Formulas Inc., 2024 BL 59664, D. Conn., No. 19-cv-01124, 2/23/24.