Legal Brief: A Lesson on Punitive Damages

March 17, 2025
An update on Vivint's appeal of a massive judgment on a deceptive sales lawsuit

A successful lawsuit can result in various forms of relief – including an injunction (usually stopping someone from doing something), a declaration (adjudging the parties’ respective rights and obligations), disgorgement (forfeiting money obtained illegally), compensatory damages (making an injured party whole), consequential damages (for the losses that flowed from the harm), and punitive damages (punishing the wrongdoer and deterring others who may engage in the same conduct).

In my March 2024 column, I wrote about a lawsuit brought by CPI Security Systems, one of the largest privately held security providers in the Southeast, against security giant Vivint that alleged Vivint used deceptive sales practices.

The case was brought in 2020. In 2023, a jury rendered a verdict in favor of CPI and against Vivint for more than $189 million. Punitive damages made up $140 million of the verdict, while $29.3 million was for violations of the North Carolina Unfair and Deceptive Trade Practices Act; $13.5 million for unfair competition; $5.4 million for trademark violations;  and $1.5 million for interfering with the contracts of seven identified CPI customers.

As I wrote in my original column, the size of the punitive damage award reflected the jury’s intention to punish what it perceived to be intentional misconduct.

Update: The Appeal

Vivint appealed, and an appellate argument was held on Jan. 28, 2025. Among other issues, Vivint argued the verdict violated North Carolina's statutory cap on punitive damages, which maxes out punitive damages at three times the amount of compensatory damages. The non-punitive damage award totaled $49 million. Vivint argued that amount is not all compensatory damages, but some is disgorgement. If correct, then the $140 million punitive damage award may be deemed excessive by the appellate court. It then could be reduced, set aside for further proceedings at the trial court, or struck in its entirety (which is unlikely here).

Because the general verdict form at trial did not differentiate between disgorgement and compensatory damages, it is not clear how the appellate court will or can calculate the amount from which North Carolina’s statutory damage cap can be measured.

However, because the general verdict form at trial did not differentiate between disgorgement and compensatory damages, it is not clear how the appellate court will or can calculate the amount from which North Carolina’s statutory damage cap can be measured. One of the three judges on the appellate panel suggested that, if that distinction was known, Vivint might have a case for arguing a portion of the non-punitive award was attributable to disgorgement and not compensatory damages; therefore, Vivint would have a basis to argue the punitive damages exceeded the three-times statutory cap.

CPI argued that both sides agreed to the verdict form at trial – and neither side addressed whether disgorgement is eligible for calculating the statutory cap on punitive damages. Also, CPI argued that this was not a “runaway jury” – but a case worthy of punitive damages due to the extensive evidence of misconduct found by the jury.

Vivint’s appeal may succeed in part, but its path surely would have been easier if the amount of the compensatory damages vs. disgorgement was addressed at trial.

Ultimately, the lesson of my original column remains – do not use deception to make sales. If you use deception to make a sale, you may find yourself on the wrong side of a punitive damage award – with limited appellate options to reduce or overturn the award.

About the Author

Timothy J. Pastore, Esq.

Timothy J. Pastore Esq., is a Partner in the New York office of Montgomery McCracken Walker & Rhoads LLP (www.mmwr.com), where he is Vice-Chair of the Litigation Department. Before entering private practice, he was an officer and Judge Advocate General (JAG) in the U.S. Air Force and Attorney with the DOJ. [email protected]  •  (212) 551-7707

Meet Timothy J. Pastore

Timothy J. Pastore, Esq., is the newest columnist to join the Security Business magazine family. He is a Partner in the New York office of Montgomery McCracken Walker & Rhoads LLP (www.mmwr.com), where he is Vice-Chair of the Litigation Department. 

Before entering private practice, Mr. Pastore was an officer and Judge Advocate General (JAG) in the U.S. Air Force and a Special Assistant U.S. Attorney with the U.S. Department of Justice. As a JAG, in particular, Mr. Pastore was legal counsel to the Air Force Security Forces and Air Force Office of Special Investigations.

Mr. Pastore has represented some of the largest companies in the security industry, including Protection One, Comcast, Charter, Cox, Altice, Mediacom, IASG, CMS and others. He regularly provides counsel on risk management, contracting, operations, licensing, sales practices, etc. Mr. Pastore also has served as lead counsel in courts throughout the country in dozens of litigation matters involving the security industry.

Among other examples, Mr. Pastore led the successful defense at trial of cable giant Comcast in a home invasion case in Seattle, Washington. The case received significant press attention and was heralded by CVN as a top-ten defense verdict.

Mr. Pastore is a graduate of Bucknell University and Boston College Law School.

Reach him at (212) 551-7707 or by e-mail at [email protected].