Last year I wrote about Rita Cantrell, who was falsely accused by Target of using a counterfeit $100 bill. The bill was authentic, but lacking some of the modern anti-counterfeiting devices simply because it was an older series.

The resulting suit led to a $100,00 compensatory damage verdict with $3,000,000 in punitive damages for the defamation. Some tort "reformers" smelled an opportunity and a small kerfuffle was set off in the legal blogosphere (see: Target Hit for $3M in Defamation Punitives (And Tort "Reformer" Sees Opportunity).

The suit, Cantrell v. Target, has now settled. While this is good for the parties involved, it's not so good for the opinionators who were wondering what the Court of Appeals would do with the verdict and the 1:30 compensatory:punitive damage ratio. A Magistrate Judge had previously refused to toss out or modify the damage award, leading to the appeal. (And the Supreme Court had let stand a 1:100 ratio earlier this year.)

According to this paper, the 4th U.S. Circuit Court of Appeals dismissed the appeal "upon such terms as have been agreed to by the parties." The parties didn't disclose the terms.

(h/t Stegmaier)

The case was discussed previously here:

• $3 Million to the Target of Target (Scott Greenfield @ Simple Justice);

• Federal Jury Awards $3 Million to Woman Wrongly Identified as Shoplifter and CounterfeiterJonathan Turley);

• (Cantrell v. Target: $200 medical bill = $3.1 million verdict (Ted Frank @ Overlawyered)

• "Cantrell v. Target" - Sorry, Overlawyered, as former loss-prevention officer, I find for plaintiff (Law and More)

Labels: Punitive Damages, tort reform

And so it ends. Not just the matter of Williams v. Philip Morris that had been up to the Supreme Court on three different occasions. But going down the tubes with Philip Morris was the spurious argument advanced by defendants that the Supreme Court was going to artificially limit punitive damages to a 10:1 or 3:1 ratio when compared with compensatory damages. The compensatory damages here were $821,000 and the punitive damages were $79.5M.

When I wrote about this case a year ago (Philip Morris $79.5M Punitive Award Reinstated By Oregon High Court), I said:

A $79.5M punitive damage award against Philip Morris in a smoker's case has twice been tossed out by the U.S. Supreme Court and sent back to Oregon for reconsideration. Now, for the third time, the Oregon Supreme Court has upheld the blockbuster award in Philip Morris v. Williams. The news story is here. The decision is here. And as I explain below, if it should go back up to the Supreme Court a third time, Philip Morris will likely lose if the court addresses the size of the award.
...

The reason I believe the almost 100-1 ratio will stand is set forth in this analysis I did in February 2007 in the wake of the last remand by the Supremes back to Oregon:
Philip Morris Punitive Damages Decision -- Why It Was Good For Plaintiffs

Defendants had long argued that, based on conflicting commentary out of the high court, that large punitive damage awards would not withstand judicial scrutiny.

Now, as a result of the dismissal of the appeal, defendants are stuck arguing that the failure by the high court to decide this third appeal will simply mean it is without precedential value.

But every judge in the land that confronts the issue will know that the court let this punitive damage award of almost 100:1 stand, and will no doubt be guided accordingly.

This is a big loss for big business, as the courts will not be protective of those that hide or obscure the dangers of their products, to the detriment of others.

Here is the case history:

• Jury verdict for $821,000 in compensatory damages and $79.5M in punitive damages;

• Punitive damages reduced by trial court to $32M;

• Punitive damage award reinstated by Oregon Court of Appeals;

• Affirmed by Oregon Supreme Court;

• Remanded by U.S. Supreme Court to decide punitive damages issue in light of its new ruling (2003) in State Farm v Campbell;

• Affirmed again by Oregon Court of Appeals;

• Affirmed again by Oregon Supreme Court;

• Remanded by the U.S. Supreme Court due to an issue regarding jury instructions;
  

• Affirmed for the third time by the Oregon Supreme Court;

• Cert granted by Supreme Court

• Case Dismissed by Supreme Court (today) without an opinion

See:

• US Supreme Court Dismisses Philip Morris Damages Appeal (CNN: Money)

• Scotus Denies Philip Morris’s Appeal of Widow’s Award (WSJ Law Blog)

• Tobacco punitive verdict stands (SCOTUSblog)

  The marathon, however, apparently is not over yet. Philip Morris, at an earlier stage in the case, reserved the right to challenge a state law that requires that 60 percent of a punitive verdict goes to the state of Oregon. The company's argument against that is that Oregon has achieved all of the proceeds it is entitled to have under the global settlement of a group of states' lawsuit against the industry.

  
  

Labels: Punitive Damages

It's rare for any case to go the Supreme Court, but one case going three times? Philip Morris v. Williams was heard again today. And in a remarkable suggestion from the Chief Judge during oral argument, the court may consider deviating from the technical issue before it today and decide once and for all the issue of whether or not bright line limits on punitive damages can be read into the Constitution, and if so, by how much.

This is the nutshell history for this smoker's case that challenges the limits of punitive damages:

• Jury verdict for $821,000 in compensatory damages and $79.5M in punitive damages;

• Punitive damages reduced by trial court to $32M;

• Punitive damage award reinstated by Oregon Court of Appeals;

• Affirmed by Oregon Supreme Court;

• Remanded by U.S. Supreme Court to decide punitive damages issue in light of its new punitive damages ruling in State Farm v Campbell, which gave confusing guidance on the degree to which the Due Process Clause of the Fourteenth Amendment is violated by a large award;
  

• After considering State Farm v. Campbell, the Oregon Court of Appeals and then Oregon Supreme Court both affirm again;

• Philip Morris appealed and the US Supreme Court once again remanded the case to Oregon, this time based on the jury instructions;
  

• Affirmed for the third time by the Oregon Supreme Court; and

• Argued in the U.S. Supreme Court today for the third time, with Philip Morris trying to claim that the Oregon courts were defying the Supremes by not knocking the award down.
  

Now here is the interesting part: During oral argument today about the esoteric issue of the federal courts interceding on state law issues involving jury charges, Chief Justice Roberts reportedly suggested that the court finally decide the penultimate issue of whether the Constitution permits a nearly 100 to 1 ratio of punitive to compensatory damages. (Pages 51-53 of this transcript, via How Appealing)

This is odd for two reasons. First, Roberts suggested that the court decide an issue it doesn't really have to decide, since the issue before it was jury instructions. But more importantly, if the court were to decide whether a 100:1 punitive to compensatory ratio is constitutionally permissible, there are already five votes in favor of upholding the principle of a 100:1 ratio.

Here's why the court will uphold the award it if decides that issue: The prior punitive damage case of State Farm v. Campbell was decided by a 6-3 majority. But two members of that majority are gone (Rehnquist and O'Connor) and two others from that majority have indicated in this case, either in dissent (Stevens) or oral argument (Breyer) that they have no problem with the concept of a 100:1 ratio if the facts deem it appropriate. Therefore, there are already five votes in favor of upholding a 100:1 ratio in principle. (See, Philip Morris Punitive Damages Decision -- Why It Was Good For Plaintiffs.) And that is without Roberts and Alito having tipped their hands as to which way they will vote.

See also:

• In Big Punitives Case, Has Court Painted Itself into a Corner? (WSJ Law Blog)

• Third and Long for Philip Morris (Greenburg @ Legalities)

• Smoker's widow seeks $79.5M award at Supreme Court (Salon)

• New briefing on tobacco case? Maybe (Denniston @ ScotusBlog)

Labels: Punitive Damages

This is two stories in one. First, a Target store down in South Carolina falsely accused a woman of using a counterfeit $100 bill. She sued Target and won $100K in compensatory damages and Target was hit by the jury with $3M in punitive damages. Then Ted Frank at Overlawyered decided this would be a good fit for that site, but the facts he used didn't seem to fit the story. If you want to see how some lawsuits get turned into urban legends, this might be a good example to follow.

First the suit, which comes via Turley, citing a local news story:

Rita Cantrell of Greer went to two Target stores in the Greenville area in Feb. 2006, and both times employees accused her of using a counterfeit bill. Cantrell tried to buy items at the store and pay with an older series $100 bill.

[A Target] store employee sent out an e-mail to dozens of other retailers and law enforcement agencies warning them that Cantrell was a shoplifter who tried to spend bogus cash. The e-mail also included Cantrell's picture.

According to Target's own brief in their failed motion for summary judgment, Ms. Cantrell visited a Target store (just one store, not two as in the news story above) where a counterfeit was suspected. They declined to take the money when offered and asked her if she had another form of payment. She shook her head no, took the goods out of her basket, and walked out of the store. Then came the accusatory email.

The problems were that the bill was legit, and the email also went to her place of employment. And Target didn't identify the money as a "possible" counterfeit. No sirree. The email said "The lady pictured attempted to use a counterfeit 100 dollar bill today." So the accusation was unambiguous. (See Order denying judgment.)

The Secret Service was called in, verified the money as real, and Target was sued for the embarrassment and humiliation that Ms. Cantrell suffered, with the jury ordering 100K in compensatory damages and $3M in punitives.

From the original article came this response: Target spokeswoman Bethany Zucco said Friday the company will challenge the ruling.

"We are extremely disappointed by the magnitude of the compensatory and punitive damages awarded by the jury in this case," Zucco said in a statement. "We sincerely regret any inconvenience incurred by the plaintiff.

Scott Greenfield wrote about this case the other day ($3M to the Target of Target) and remarked about this pathetic response:

Any inconvenience? You sent out a mass email, with her picture, telling the world that she's a thief and forger, and you're sorry for the inconvenience? There's an "apology" that demands some serious puni's alone.

And now comes the urban legend part. Ted Frank, a well known tort "reformer" at Overlawyered jumps into the action (Cantrell v. Target: $200 medical bill = $3.1M verdict). Except some of the facts in his post look a little different from the Target brief and the judge's opinion.

1. As noted above, Target clearly identified the money as counterfeit, writing in the email, "The lady pictured attempted to use a counterfeit 100 dollar bill today." But not according to Frank. In his version of the story, the central accusation is watered down to this:

Target employees were foolish in being unable to recognize the old currency, and mistakenly identified it as a possible counterfeit.

Now that, my friends, is just flat out wrong. They did not use any qualifying language about this being a "possible" counterfeit. That's why there was a lawsuit and a jury verdict. Because the language was not qualified the way Frank wrote it. Hopefully Frank will fix this before his new version of the story becomes an urban legend.

2. Next up: When the incident happened, Ms. Cantrell "shook her head no and walked out of the store" in response to Target's query of whether or not she had any other way to pay for the merchandise -- as described in Target's own brief to the court. But Frank says she "fled." That's right. Instead of an angry or anguished person simply walking away without the goods they came for after indicating they had no other funds to pay with, he claims she "fled" the scene. Now that's just wrong (defamatory?).

Hopefully Frank will fix this too before his new version of the story becomes an urban legend. (I'm not being snarky, by the way. We all make errors and he has fixed his in the past.)

3. Next up, the Frank headline refers to a $200 bill and says that is no reason for a big award. Apparently, mental anguish and humiliation are not compensable under Frank's view. We know this because he calls her experience merely an "inconvenience'" though there is no evidence in Frank's piece to suggest he actually heard any of the testimony of what she went through. And when I challenged him in the comments to his post, he responded by writing that "the plaintiff suffered no actual injury." Obviously the people who actually heard the evidence feel otherwise. When people who haven't heard the evidence make such comments about those who have, it would be appropriate to immediately question the objectivity of that critic and question how their political leanings have affected their view of the facts.

If is fine, of course, for Frank to have a strong opinion and political leanings and write about them -- only a fool would question his rights to criticize -- but that should not lead to changing the facts of a case.

Frank brings up medical costs and their relationship to injuries in order to minimize Ms. Cantrell's experience, and it is true that sometimes medical costs have a relationship to the seriousness of an injury. But not always. While a high bill usually means a pretty serious injury, a low bill does not necessarily mean a small injury. Psychological injuries are a perfect example of something that can torment an individual but have very low (or non-existent) medical bills. Another example is ongoing back pain that may be almost crippling to an individual but have no viable medical treatment. Looking at medical bills in a defamation action, and pretending it will have some bearing on the injury, is almost bizarre.

There are plenty of frivolous claims around to keep law bloggers busy if they want to write about them. With a nation of 300 million people this will happen. I write about them from time to time, as do others, because there are lessons to be learned in doing so. But there is no evidence this suit falls into that category. So long as one sticks to the actual facts.

Last note: Will the damage awards be sustained on appeal? That's hard to say, since I didn't hear the testimony nor have I seen a full record of the trial. But the 30-1 ratio may well be sustainable in general for a personal injury case. My analysis on why this is so is based on decisions and argument from the US Supreme Court here: Philip Morris Punitive Damages Decision -- Why It Was Good For Plaintiffs

Labels: Personal Injury, Punitive Damages, tort reform

In the New York Times, Adam Liptak writes that in Europe punitive damages are not viewed the same way they are here (see: Foreign Courts Wary of U.S. Punitive Damages). The idea of punitive damages "was so offensive to Italian notions of justice that it would not enforce [an] Alabama judgment" in a case Liptak uses to illustrate the point.

In the U.S., of course, punitive damages are a crucial part of our judicial system, where private litigants can punish others for reckless wrongdoing that causes injury. Not so elsewhere, where the idea of punishment and deterrence is strictly a government function. The essence of Liptak's piece is this:

Most of the rest of the world views the idea of punitive damages with alarm. As the Italian court explained, private lawsuits brought by injured people should have only one goal -- compensation for a loss. Allowing separate awards meant to punish the defendant, foreign courts say, is a terrible idea.

Punishments, they say, should be meted out only by the criminal justice system, with its elaborate due process protections and disinterested prosecutors.

Why the difference? I think it's easy. America was founded from the time of the Revolution on limiting the power of government. The political tension between those that want larger government and those that want smaller is seen to this day, and will likely be seen so long as the republic exists. It is seen every time the issue of taxes is broached, for example, because larger government means more payments to government employees, and the money has to come from somewhere.

While I don't profess to be a scholar of European governments, I think most would agree that they are significantly more interventionist in the private lives of the people than here. You see that in nations that restrict free speech or grant universal health care, as two examples. Our notions of freedom are not always the same as elsewhere.

Intervention means not only larger government with larger powers. It also means higher taxes to pay for it. So wrongdoing is handled by the government, which the people pay for.

While comparing tax rates is exceptionally difficult because of all the exemptions and complications, not to mention state and local tax issues, I see that the top rate in Italy is 43%. Our top rate is 35%. And Italy isn't spending bazillions on two wars. A comparison of tax rate changes in the 80s and 90s can be seen in this government report (chart on p. 17). We are clearly at the low end of industrialized nations, despite our significantly higher military expenditures.

So we could, in theory, create criminal penalties to take the place of civil wrongs, and spend much more on criminal prosecutions of those wrongs as they do elsewhere. But we have to pay for that, and money has to come from somewhere if you care about fiscal responsibility.

Or we could let the private sector regulate itself by empowering people to bring the wrongdoers to court themselves, and let the private sector handle the costs. And the public, instead of paying, receives not only the benefits of stopping reckless conduct, but the financial benefits by taxing the punitive damage award.

Now here is the irony in this: Those that want to kill off punitive damages in the U.S. come from the right side of the political spectrum. But in doing so, they are not advocating changes in laws to criminalize civil wrongs and increase taxes to pay for enforcement.

It seems to me that a little ideological consistency is in order, because all I see when arguments pop up for eliminating punitive damages, is hypocrisy.

Your thoughts on the subject are welcome in the comments....

Labels: Punitive Damages

A $79.5M punitive damage award against Philip Morris in a smoker's case has twice been tossed out by the U.S. Supreme Court and sent back to Oregon for reconsideration. Now, for the third time, the Oregon Supreme Court has upheld the blockbuster award in Philip Morris v. Williams. The news story is here (hat tip, How Appealing). The decision is here. And as I explain below, if it should go back up to the Supreme Court a third time, Philip Morris will likely lose if the court addresses the size of the award.

The last remand was due to an issue of confusing jury instructions, and the penultimate issue of the size of the award was never reached. The compensatory award was for $821,000, meaning that the punitive: compensatory ratio was almost 100:1. Defendants believe that no more than a 4:1 or 9:1 ratio will survive judicial scrutiny based on the court's prior decison in State Farm v. Campbell (see, for instance, these posts at Drug and Device Law, Insurance Law Journal, the WSJ).

What will the Supreme Court do if they decide the size of the punitive damage award? They will likely let it stand under the present composition of the court, even though neither Roberts or Alito has spoken on the matter.

The reason I believe the almost 100-1 ratio will stand is set forth in this analysis I did in February 2007 in the wake of the last remand by the Supremes back to Oregon:
Philip Morris Punitive Damages Decision -- Why It Was Good For Plaintiffs

Summarizing that post: The prior punitive damage case of State Farm v. Campbell was decided by a 6-3 majority. But two members of that majority are gone (Rehnquist and O'Connor) and two others from that majority indicated in the last decision either in dissent (Stevens) or oral argument (Breyer) that they have no problem with the concept of a 100:1 ratio if the facts deem it appropriate. Therefore, there are already five votes in favor of upholding a 100:1 ratio in principle.

Thus if the Supreme Court reviews this case for a third time, and actually reaches the issue of the ratio of punitive damages to compensatory, then Philip Morris will likely lose.

Here is the history of the case:

• Jury verdict for $821,000 in compensatory damages and $79.5M in punitive damages;
• Punitive damages reduced by trial court to $32M;
• Punitive damage award reinstated by Oregon Court of Appeals;
• Affirmed by Oregon Supreme Court;
• Remanded by U.S. Supreme Court to decide punitive damages issue in light of its new ruling in State Farm v Campbell;
• Affirmed again by Oregon Court of Appeals;
• Affirmed again by Oregon Supreme Court;
• Remanded by the U.S. Supreme Court based on the jury instructions; and
• Affirmed for the third time (today) by the Oregon Court of Appeals.

Elsewhere:

• The cost to Philip Morris of trying to slant jury instructions too far in its favor -- $79.5 million in punitive damages (Bashman, analysis);
• Oregon Supreme Court to U.S. Supreme Court: Thanks, But No Thanks (BLT/Mauro);
• Oregon Supreme Court to SCOTUS: Go piss up a rope (Subject to Complete Defeasance);
• Oregon Supreme Court plays chicken in Williams v. Philip Morris case (Point of Law)
• Oregon High Court Reaffirms $79.5 Million Award in Philip Morris Case (Associated Press via Law.com)
  

Labels: Punitive Damages

A trial against McDonalds out of Kentucky regarding a strip search hoax has resulted in a $5M punitive damage award and a $1.1M compensatory damage award.

It is not yet on the newswires, but just turned up at Know More Media.

Background on the case can be found at:

• Kentucky Law Review
• Hans Poppe Law Blog
  

Labels: Personal Injury, Punitive Damages

Both breasts were removed. Why? Because a lab technician admitted to cutting corners while labelling tissue specimens.

According to an ABC News report, a 35-year old woman underwent a double mastectomy after being told she had breast cancer, when in fact, she did not. The Long Beach, Long Island victim has now filed suit in Nassau County Supreme Court.

If, in fact, the technician was cutting corners either to save time or money, then we may be looking at a very rare beast: A matter of punitive damages in a medical malpractice case (though this could also be a matter of general negligence if done by the lab and not medical malpractice). The standard here in New York for punitive damages is reckless conduct that endangers the health, safety and well-being of the public (as opposed to negligent conduct). And this must be proven by clear and convincing evidence (as opposed to preponderance of the evidence).

In fact, just last week the Appellate Division Second Department (where this case resides) issued an opinion on the subject of punitive damages in the context of an abortion case. In Randi A. J. v Long Is. Surgi-Center, the defendant disclosed to the mother of the patient that her daughter had been in, allowing the mother to deduce her daughter had an abortion. While the case was sent back to the trial court on other grounds, it is a good discussion of the state of punitive damages law in New York.


(Eric Turkewitz is a personal injury attorney in New York)

Labels: Medical Malpractice, Punitive Damages

How much is too much when it comes to pain and suffering? While I have dealt with that subject before (see: How New York Caps Personal Injury Damages), New York's Court of Appeals will re-visit today the issue in one of the saddest cases ever brought. And if they follow the law, they may be forced to reduce a compensatory damage award against a monstrous child killer.

The year was 1987 and now-disbarred lawyer Joel Steinberg beat his six-year old daughter Lisa to death. In 2004 the executor of Lisa's estate procured a $15M judgment: $5 million for Lisa's pain and suffering that day, $5 million for her pain and suffering as a battered child, and $5 million in punitive damages.

In a split decision from New York's Appellate Division First Department in January 2007 that upheld the award from trial judge Louis York, Justice James Catterson, wrote for the majority as he bluntly summarized the case:

Joel Steinberg, the defendant-appellant, is a convicted child killer and abuser who fatally felled his six-year-old daughter with one blow of his hand, and then went out to dinner as she lay on a bathroom floor losing consciousness over the next eight to ten hours. He appeals now from a judgment that awarded damages against him for the pain and suffering he caused the little girl during her life, and in the tormented hours before her death.

Steinberg who appears pro se in this action complains, inter alia, that because the first-grader's death was preceded by "at most eight hours of pain and suffering" and "quick loss of consciousness [emphasis supplied]," the award of $15 million in compensatory and punitive damages is excessive. We disagree, and in simply so stating acknowledge that sometimes words fail even those who use the language to render judgments on a daily basis.

In upholding the award, the Court specifically rejected its prior case law, with this rationale:

This case of an abusive father killing his child by knocking her down with a "staggering" blow to her head and then leaving her without medical attention while he enjoyed dinner and freebased cocaine is without precedential analog. Consequently, we find ourselves free to evaluate the award on the basis of "subjective opinions which are formulated without the availability, or guidance of precise mathematical quantification. [emphasis added]

The repercussions on New York law could be quite dramatic, unless the court rules (as it may try) that the facts of the conduct are so without precedent that even if the compensatory award is upheld, it could not be used on any other cases.

But wait! If New York's high court goes that route, they have a major problem. As Justice James McGuire notes in a separate dissent:

In reviewing this award of compensatory damages, it is important to bear in mind that the outrageousness of appellant's conduct is not a relevant factor.

He goes on from there to cite U.S. Supreme Court precedent:

"Although compensatory damages and punitive damages are typically awarded at the same time by the same decisionmaker, they serve distinct purposes. The former are intended to redress the concrete loss that the plaintiff has suffered by reason of the defendant's wrongful conduct. See Restatement (Second) of Torts § 903, pp. 453-454 (1979); Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 54 [111 S.Ct. 1032, 113 L.Ed.2d 1] (1991) (O'Connor, J., dissenting). The latter, which have been described as 'quasi-criminal,' id. at 19 [111 S.Ct. 1032], operate as 'private fines' intended to punish the defendant and to deter future wrongdoing. A jury's assessment of the extent of a plaintiff's injury is essentially a factual determination, whereas its imposition of punitive damages is an expression of its moral condemnation" (Cooper Indus. v. Leatherman Tool Group, 532 U.S. 424, 432 [121 S.Ct. 1678, 149 L.Ed.2d 674] [2001] ).

And so there is, I think, the ultimate battle: On one side a huge award against a despised individual who did unspeakable acts. And on the other, a real issue that while punitive damages are to punish, compensatory damages are not supposed to take into account the nature of how the injury occurred. The bottom line: By considering the nature of the conduct for both punitive damages as well as compensatory damages, the court is allowing double-dipping. They are using the exact same conduct to justify two different awards.

This analysis of the extent of compensatory damages, by the way, brings me back to the September 11 lawsuits that I discussed yesterday, and the limited amount of damages that might be available to claimants. It seems likely that, if the compensatory award in Steinberg is upheld, claimants attorneys will attempt to cite it whenever possible in trying to uphold large awards, notwithstanding any caveat the court attempts to use in stating that this was a one-of-a-kind suit based on the reprehensible nature of the conduct.

Additional sources:

• N.Y. High Court to Review $15 Million Award in Steinberg Case (New York Law Journal)
  
• Joel Steinberg wants $15M damage award thrown out (New York Daily News)
• Evil Joel Shock (New York Post)

Labels: Personal Injury, Punitive Damages

A blog was put up by the son-in-law of the plaintiff, Frederick "Mike" Humeston, reflecting on the two Vioxx trials that they went through in Atlantic City against Merck. The first trial was won by Merck, but the verdict was tossed out by the judge. The second has now resulted in a whopper of a loss for Merck of $20M in compensatory damages and $27.5M in punitive damages.

The writer discusses the lawyers, the jurors and the judge. The jury comments, as always, are the most interesting.

About the first jury, he writes:

My wife went to Atlantic City that first time and told me that the jury seemed completely uninterested in the proceedings....After that first trial, my father-in-law told me he realized his case was in trouble when one of the questions the Jury asked was whether they (the Court) served any drinks in the "side bar." The Judge had allowed the Jury to ask written questions of the witnesses and apparently were bored with the many "side bars" the lawyers and the Judge had undertaken to clarify points of law.

About the second jury, he writes:

Visiting, I could see the jury was involved, taking notes, asking intelligent questions. They were definitely engaged.

(link via Evan Schaeffer's Legal Underground)

Labels: Interesting Cases in the News, Punitive Damages

This week DaimlerChrysler was hit with a $50M punitive damage award along with $5.2M in compensatory damages. In the wake of the Supreme Court's recent 5-4 decision in Philip Morris v. Williams, many might wonder if this award of almost 10-1 ratio of punitive to compensatory damages will withstand judicial review.

The suit was based on the company's failure to fix a safety defect that caused parked vehicles to unexpectedly go in reverse. In April 2004, the plaintiff suffered fatal head injuries when an unoccupied 1992 Dodge Dakota pickup truck ran him over after he exited it believing it was in park. He tried to dive back in and stop it, with fatal results. Defendant tried to blame the plaintiff for jumping into a moving vehicle while plaintiff's counsel told jurors that DaimlerChrysler "had 20 years to take care of this problem [while] Richard Mraz had two seconds to get this vehicle under control."

Addressing only the ratio of the award, the answer as to its acceptability on a constitutional basis must be a resounding yes if one looks to prior decisions of the U.S. Supreme Court for guidance. While the court had cut back some awards based on due process concerns, the recent conduct of the court in Philip Morris is unlikely to help DaimlerChyrsler. As I indicated in the wake of the Philip Morris decision (Philip Morris decision -- Why It was Good For Plaintiffs), five of the judges have already stated that they could approve a ratio as high as the almost 100-1 in Philip Morris if the conduct was egregious enough, and two justices (Alito and Roberts) have not yet spoken on the matter.

While there are no doubt other issues that will be raised in the wake of the verdict, the issue of the ratio as an absolute bar is not an argument that will help the defendants.

Labels: Punitive Damages

On Friday I wrote about the death of the 9-1 punitive damage ratio that defendants like to claim exists, in: Philip Morris Punitive Damages Decision -- Why It Was Good For Plaintiffs. I focused on the Stevens dissent and also discussed Breyer's commentary at oral argument.

Today, Anthony Sebok at FindLaw takes a more in-depth look on the same subject with:
The Supreme Court's Decision to Overturn a $79.5 Punitive Damages Verdict Against Philip Morris:
A Big Win, But One With Implications That May Trouble Corporate America

Labels: Punitive Damages

Much has now been written about the Supreme Court tossing out a $79.5M punitive damage award against Philip Morris in a smoking case where the compensatory damages were $821,000. Philip Morris v. Williams has been greeted by most as a victory for big business in limiting such awards (here, here and here). But it was not.

The key to understanding this is that Justice Stevens dissented. Stevens had formed part of the 6-3 majority in State Farm v. Campbell -- the last significant ruling on the law of punitive damages -- and State Farm had discussed much smaller ratios of compensatory to punitive damages, of 4-1 and 9-1.

Since Stevens voted to affirm the decision of the Oregon Supreme Court in Philip Morris, for the reasons stated in its opinion, this meant that a 100-1 ratio was within the bounds of acceptability to Stevens, and in accordance with his view of State Farm.

That State Farm majority ruling, often debated because of contradictory and confusing language, had held that an award of $145 million in punitive damages, when full compensatory damages were $1 million, was excessive and in violation of the Due Process Clause of the Fourteenth Amendment.

So how much was too much, became the question that lawyers and judges have asked. Justice Kennedy's majority opinion in State Farm, citing prior court precedent, said:

[W]e concluded that an award of more than four times the amount of compensatory damages might be close to the line of constitutional impropriety.

He also wrote that:

[F]ew awards exceeding a single-digit ratio between punitive and compensatory damages will satisfy due process.

This was qualified with the following:

Nonetheless, because there are no rigid benchmarks that a punitive damages award may not surpass, ratios greater than those we have previously upheld may comport with due process where "a particularly egregious act has resulted in only a small amount of economic damages."

Kennedy's majority decision had also said "We decline again to impose a bright-line ratio which a punitive damages award cannot exceed." And he had further noted that the injuries in State Farm (as well as its predecessors) were economic, not physical, and that these ratios might not hold up if the harm was physical.

Notwithstanding the qualifiers that Kennedy gave, the 9-1 ratio has been cited, like some talismanic incantation, for the idea that corporate exposure to punitive damages was capped close to that level.

Justice Stevens, in agreeing that the 100-1 ratio was acceptable, and in doing so despite an $800,000 compensatory award, has now completely destroyed that argument. Of the seven remaining justices from the State Farm court, by a vote of 4-3 they would not disrupt the Philip Morris 100-1 punitive verdict based solely on the ratio. (Rehnquist and O'Connor had both sided with the 6-3 majority in State Farm.)

So, unless both Alito and Roberts in a future decision decide that the Constitution calls for some arbitrary protections against those whose reckless behavior injures others, high punitive damage multipliers will be allowed in some cases regarding personal injury. It is worthy to note, in that regard, that both Scalia and Thomas are against such limits and would form part of the new majority of such a decision if they persuade either of the two new justices to join them.

While Philip Morris v. Williams represented a set back for that particular litigant (it goes back to Oregon for further consideration), the overall effect of the Stevens dissent may be very bad news for corporate defendants if reckless conduct injures others.

For more on the subject:

• Court Tosses Philip Morris Verdict, And Further Confuses Punitive Damages Issue (this blog);
• More on Philip Morris v. Williams (Point of Law);
  
• Punitive damages ruling: narrow, confusing victory for business (CNN Money);
• Round-Up (SCOTUS blog)
• US Supreme Court Hears Punitive Damages Case, Again (this blog, Dec. 5, 2006)
• Analysis: Tobacco case going back? (SCOTUS blog, Oct. 31, 2006)
  

Addendum: 2/24/07 -- Upon further review, the case against a 9-1 ratio seems worse for businesses than I had originally stated. I reviewed the transcript of the oral argument, found here, and looked at the comments of Justice Breyer (in response to a comment left here by another). Breyer, in addition to Stevens, was part of the 6-3 majority in State Farm. At page 30, line 5 of the Philip Morris argument Justice Breyer states:

...the more severely awful the conduct, the higher the ratio between the damage award and the injury suffered by this victim in court. And if it's really bad, you're going to maybe have a hundred times this compensation instead of only ten times or five times. So -- we take it into account, the extent of the harm that could be suffered, in deciding what that ratio should be. That means it goes to the evilness of the conduct.

Breyer seems to indicate that he would not stand in the way of a 100-1 ratio in the right circumstances.

Thus, even if Kennedy and Souter (both part of the State Farm decision) as well as new justices Alito and Roberts all voted for the strictest ratios possible on punitive damages, it wouldn't seem to matter with the current court composition. The idea peddled by many of a firm 9-1 ratio seems dead in the water with a case involving personal injuries.

I think that any corporation that took comfort in the Philip Morris decision would be making a grave mistake. And while Philip Morris may have won this battle, if the Oregon Supreme Court again upholds the verdict, it appears that they will lose the war of numbers if comes back to the U.S. Supreme Court.

Update: 1/31/08: The Oregon Court of Appeals has once again affirmed the $79.5M punitive damage award.

(Eric Turkewitz is a personal injury attorney in New York)

Labels: Personal Injury, Punitive Damages

The Supreme Court came down with a split decision on punitive damages today, avoiding a determination in a highly watched case on the penultimate issue of "How much is too much." In doing so, however, they tossed out the verdict based on the jury instructions, since the jury was told it could base its determination on how non-litigants had also been harmed. The case was decided 5-4.

That part of the decision avoiding the issue of "excessive damages" was not unexpected, as I wrote a few months ago (US Supreme Court Hears Punitive Damages Case, Again), as the justices fretted over the jury instructions.

The Oregon case, Philip Morris v. Williams, had resulted in an $800,000 compensatory award and a $79.5M punitive award.

This case has been an extraordinary odyssey that has taken it up to the Supreme Court twice on the subject. It goes something like this:

• Jury verdict for $800,000 in compensatory damages and $79.5M in punitive damages;
• Punitive damages reduced by trial court to $32M;
• Punitive damage award reinstated by Oregon Court of Appeals;
  
• Affirmed by Oregon Supreme Court;
• Remanded by US Supreme Court to decide punitive damages issue in light of its new ruling in State Farm v Campbell;
• Affirmed again by Oregon Court of Appeals;
  
• Affirmed again by Oregon Supreme Court;
• Now vacated by U.S. Supreme Court based on the jury instructions.
  

Justice Breyer's majority opinion starts with this summary:

The question we address today concerns a large state-
court punitive damages award. We are asked whether the
Constitution's Due Process Clause permits a jury to base
that award in part upon its desire to punish the defendant
for harming persons who are not before the court (e.g.,
victims whom the parties do not represent). We hold that
such an award would amount to a taking of "property"
from the defendant without due process.

Since the jury instructions included a charge that Philip Morris could be punished for harm to non-litigants, the court never reached the ultimate issue of what constitutes "grossly excessive" punitive damages.

The problem with the majority's view is that the "degree of reprehensibility of the defendant's misconduct" is already before the jury on the issue of punitive damages, and that includes the dangers to others. How then, not to consider the harm to others?

The hair-splitting of the court was extraordinary in considering the issue of how to view the dangers or harm presented to non-litigants. The holding by the court came down to this: You can show potential harm to others in order to argue that the conduct is reprehensible and therefore worthy of being punished with punitive damages. But a jury can't consider actual harm to others. I hope you followed that Clintonian parsing, because it was too much for four of the justices. Justice Stevens,wrote in dissent:

While apparently recognizing the novelty of its holding... the majority relies on a distinction between taking third-party harm into account in order to assess the reprehensibility of the defendant's conduct -- which is permitted -- from doing so in order to punish the defendant "directly" -- which is forbidden...This nuance eludes me....
[T]here is no reason why the measure of the appropriate punishment for engaging in a campaign of deceit in distributing a poisonous and addictive substance to thousands of cigarette smokers statewide should not include consideration of the harm to those "bystanders" as well as the harm to the individual plaintiff. The Court endorses a contrary conclusion without providing us with any reasoned justification.

Justice Ginsburg (joined by Scalia and Thomas) felt the same way on this issue, writing:

The Court thus conveys that, when punitive damages are at issue, a jury is properly instructed to consider the extent of harm suffered by others as a measure of reprehensibility, but not to mete out punishment for injuries in fact sustained by nonparties.

Thus, a judge must now tell a jury in a punitive damage case that they may consider the reprehensibility of the defendant's conduct toward others, but not the harm to them. If four Supreme Court justices don't understand this formula, why would a jury?

The case now goes back to the Oregon Supreme Court, perhaps to clarify its opinion on how the jury instructions were used, or perhaps for a new trial with clearer instructions (if that is possible). Unless, of course, all the litigation ultimately drives the plaintiffs' lawyers bankrupt.

The three opinions are here:PhilipMorris.pdf

[Update: 2/23/07 -- Philip Morris Punitive Damages Decision -- Why It Was Good For Plaintiffs - based on the dissent of Justice Stevens and oral argument comments of Justice Breyer]

Labels: Personal Injury, Punitive Damages

State Farm has done it again. Some years back they made quite a bit of law in a case called State Farm v. Campbell that went up to the U.S. Supreme Court on the issue of punitive damages that they had to pay for their conduct.

Now they got smacked again by a jury, this time for $2.5M in a case they offered to settle for $20K. This time, it was people victimized once by Katrina, before State Farm got to them for a second go-round:

Jan. 11 (Bloomberg) -- State Farm Mutual Automobile Insurance Co. must pay a Mississippi couple $2.7 million for the loss of their property, a judge and jury ruled in a test case over how much Hurricane Katrina damage is covered by insurance.

The judge, deciding actual damages without the jury, awarded $223,000 for the home and belongings of Norman and Genevieve Broussard of Biloxi, Mississippi. The jury awarded punitive damages of $2.5 million for State Farm's improper conduct in processing the claim...

The Broussards argued their house had been destroyed by wind or a tornado, a type of damage covered by insurance. State Farm, which is owned by policy holders, argued at trial that the loss stemmed from flooding, which the company's policy didn't cover.
...

[U.S. District Judge L.T. ] Senter called the company's handling of the claim ``impermissible,'' saying it offered the couple no choice except to sue over their claim.

``I find the defendant did not have any legal or arguable reason for refusing to pay,'' Senter said today in federal court.
...

Senter ruled today that Bloomington, Illinois-based State Farm, the largest U.S. auto and home insurer, failed to present enough evidence for the jury to be able to find that the policy terms didn't cover the damage.
...

The Broussards' attorney Bill Walker told the jury that his clients had been needlessly wronged by State Farm.

``Did they act like a good neighbor?'' he asked, referring to the company's famous slogan. ``No, they acted like a cheat. They acted like a chiseler.''

Labels: Insurance Industry, Interesting Cases in the News, Odds and Ends, Punitive Damages, Trial Practice

The issue of punitive damages in personal injury cases came before the Supreme Court recently. For the second time in this case. And based on the oral argument, possibly not the last.

In a highly watched case, Philip Morris v. Williams (05-1256) was argued October 31st, with the Justices hinting it may send the case back to the state court from which it came, instead of resolving an open question: How much in punitive damages should a jury be allowed to award?

In Williams, an Oregon jury returned $800,000 in compensatory damages and $79.5M in punitives. Thus began a journey up the appellate ladder in Oregon, where the verdict was affirmed by the state's highest court, and then on to Washington for an ultimate review by the US Supreme Court. But the Supremes, in the meantime, had decided another punitive damage case (State Farm v. Campbell) and sent Williams back to Oregon to reconsider in light of its opinion.

So after doing an extraordinarily detailed analysis of State Farm, the Oregon Supreme Court affirmed the punitive damage award in this personal injury tobacco case that was almost 100x the compensatory award, writing:

Philip Morris showed indifference to and reckless disregard for the safety not just Williams, but of countless other Oregonians, when it knowingly spread false or misleading information to keep smokers smoking. Philip Morris's actions were no isolated incident, but a carefully calculated program spanning decades.

Thus, Philip Morris asked the US Supreme Court to review again.

The State Farm opinion has been the source of much legal discussion. In part, it seems to put limits on the amount of punitive damages that can be awarded, and discusses a ratio of compensatory damages to punitive damages. At one point the court mentions a multiplier of 4x and another of 10x, and in other parts specifically saying that there are no "bright line" tests for how much is too much. The source of the limits is that some justices believe that a large punitive damage award violates the due process clause of the 14th Amendment.

What makes Phillip Morris interesting is that it is a personal injury matter, not some commercial dispute. It thus differs from the other cases the high court has heard on the issue. It remains to be seen if the court will create constitutional protections for reckless conduct that endangers the health, safety and welfare of the public, where no such protection presently exists.

So what happened before the US Supreme Court on the new review? Well, it seems that right after oral argument started, the justices got caught up in a contradictory jury instruction that had been requested by Philip Morris. If you read the second sentence, which I placed in italics, you see the contradiction:

"The size of any punishment should bear a reasonable relationship to the harm caused to Jesse Williams [the deceased smoker] by the defendant's punishable misconduct. Although you may consider the extent of harm suffered by others in determining what that reasonable relationship is, you are not to punish the defendant for the impact of its alleged misconduct on other persons, who may bring lawsuits of their own in which juries can resolve their claims and award punitive damages for those harms, as such other juries see fit."

So Philip Morris was claiming the jury may consider the harm suffered by others, but can't punish them for it. What, exactly, does that mean? Perhaps it is no wonder the court refused to give the instruction. The high court justices themselves were confused, as you can see in this ScotusBlog note regarding the argument. A transcript of the oral argument is here. Justice Ginsburg got the ball rolling with this:

JUSTICE GINSBURG: You don't think that
would confuse the jury if they are first told that they
may consider the extent of harm suffered by others, and
then the next instruction seems to say they can't?

The court will likely decide the case by June. But don't be surprised if they avoid the issue and send it back (again) to the Oregon courts to flesh out the issue of the jury instructions.

Labels: Damages, Personal Injury, Punitive Damages