The ruling also vacated $241 million in restitution that had been awarded to the commissioner. The case has been remanded the case to the district court for further proceedings to determine damages.
In 2000, the California Department of Insurance accused French billionaire Francois Pinault's holding company, Artemis S.A., of fraud in connection with the Executive Life sale, adding it as a party to a pre-existing lawsuit.
In 2005, a jury found Artemis liable for conspiracy to commit fraud and awarded the state Insurance Commissioner $700 million in punitive damages, but no compensatory damages, in the lawsuit.
The appellate court ruling said punitive damages cannot be assessed without compensatory damages. California law "is well-established and quite clear," said court. "Where the jury here explicitly found '$0' of compensatory damages, the general rule precludes punitive damages."
The court said it is also vacating the restitution award because it is remanding the case for a new damages-phase trial.