November 1, 2006

"We’re going to be in a kind of bog of mixtures of constitutional law, unclear Oregon state law... et cetera."

Justice Breyer fretted yesterday in the course of the oral argument in a case about the constitutional restrictions on punitive damages. The Oregon Supreme Court accepted $79.5 million awarded to one person, the widow of a man who smoked a lot of Marlboros and died of lung cancer. Her compensatory damages were only $871,000. Philip Morris argued that the court has essentially allowed one plaintiff's case to become “a one-way class action in which Philip Morris was exposed to global punishment by the jury without any of the protections of a class action.” But is that what the Oregon court did?
Finding the Oregon Supreme Court’s opinion insufficiently clear on this basic point, the justices would be unable to use the case as a vehicle for taking their consideration of punitive damages to the next level.

"What’s worrying me... is that we’re going to be in a kind of bog of mixtures of constitutional law, unclear Oregon state law, not certain exactly what was meant by whom in the context of the trial, et cetera."

And Justice David H. Souter, referring to the Oregon Supreme Court, asked Mr. Peck: “Isn’t perhaps the better course to send this back to them and say, ‘We don’t know what you mean?’ And let them tell us clearly.”...

“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?” Justice Ginsburg asked Mr. Frey.

“The concept may be abstract,” Mr. Frey replied, insisting that there was a “difference between considering and punishing” that a proper jury instruction would have made “quite clear to the jury.”
So, it seems, this case could fizzle. But it has the potential to quite significant.
The United States Supreme Court has been deeply split on the punitive damages question, with three justices, Antonin Scalia, Clarence Thomas and Ruth Bader Ginsburg, rejecting the idea that the Constitution’s guarantee of due process places a limit on what states can permit juries to award.

With the departure of William H. Rehnquist, the former chief justice, and Justice Sandra Day O’Connor, both of whom supported due process limits on punitive damages, the known margin of support for the court’s precedents fell to 4 to 3, with the views of Chief Justice John G. Roberts Jr. and Justice Samuel A. Alito Jr. unknown.

ADDED: Dahlia Lithwick looks at the argument. Nugget:
Robert Peck represents Mayola Williams, and he achieves the distinction of eliciting the following admission from Chief Justice John Roberts: "I thought our cases clearly establish that you can consider the harm to others in assessing the reprehensible nature of the conduct." Roberts adds that the case law also prohibits punishment of the defendant for harms to others. In other words, he seems to be saying, the proposed instruction is confused because our precedent is confused. In which case, why not send it back for the Oregon Supreme Court to fix?

It's the Roberts Court's New Minimalism: We screw up the law, then ship it out to the lower courts to correct it.

Well, why not get the law straight now that you've gone to all the trouble to hear the case?


goesh said...

Thanks for the update. I wish more citizens would follow the workings and doings of OUR Supreme Court...

JohnF said...

The trouble here is not the amount of the award as such, but the fact that it can be imposed over and over again in every suit. The idea of punitive damages is to punish the conduct at issue and discourage repeat performances by the defendant or others. To me, the question is not on the amount of the award that is appropriate--a fact question that is ok to leave to juries--but whether a defendant can be punished multiple times for the same tort.

David Walser said...

The idea that a jury has unfettered ability to punish defies the notion of due process. (I know the jury's ability is not literally unfettered. The term does, however, convey the lack of realistic and concrete restrictions on the ability to punish the current system allows.) The jury takes the role of the legislature, deciding which actions merit punishment and how much punishment is warranted -- all after the "crime" has been committed. If a legislature tried to criminalize prior behavior, we'd say the legislature had overreached, in part, on due process grounds. Why do we allow juries to do what the legislature cannot?

Apart from the constitutional question, I think punitive awards are poor public policy. If certain behaviors are worthy of punishment, the legislature ought to say so. And, any award (penalty) ought to go to the state. We don't give the fines collected from parking tickets to the people who own the building in front of which the violation occurred, why do we give punitive damages to the plaintiff when the plaintiff has already been made whole through compensatory damages?

Anonymous said...

But...but... Scalia and Thomas are right-wingers who use their "originalism" as a pretext for enforcing their conservative policy preferences! How could they not side with Philip Morris?

Edward said...

Out of fear of appearing to micromanage our complex and fragmented electoral system, the Supreme Court hesitates to put a stop to high-tech gerrymandering that risks making each person’s vote meaningless.

Yet now the court seriously considers wading into the complex and fragmented system of laws governing punitive damages.

The Supreme Court does not believe that it can determine the degree of district compactness required by the constitution, but it may believe that it can determine the precise ceiling for punitive damages that the constitution requires.

It just doesn’t make sense to me.

If the Supreme Court sides with Philip Morris on this, it will look like they care more about big corporations than about the average voter.

Richard Dolan said...

"The idea that a jury has unfettered ability to punish defies the notion of due process."

Unfortunately, a jury's decision to award punitive damages has nothing to do with whatever "process" may be "due" under state law. And the SCOTUS hasn't used the constitution to impose some alternative process. Instead, what the SCOTUS has tried to do is impose limits on the size of these awards, and has done so by focusing on the relationship between the compensatory and the punitive awards. A ratio of 2 or 3 to 1 is OK -- that's more or less what the Sherman/Clayton Acts and RICO embody -- but much more than that is supposedly troublesome. The Court has had trouble deciding whether the proper referent on the "compensatory" side is the damages award made by the jury, or the amount of the improper benefit the defendant was trying to obtain, or something else. Questions like that are unanswerable because there is no real anchor in the constitution for the kinds of limits the Court is trying to impose. Due process doesn't help here. For a while, some looked to the "excessive fines" clause of Amend. 8, but that is focused on criminal matters and thus is a poor fit in this context. Must be a penumbra hiding out somewhere.

The award of runaway punitive damages is a serious problem, and the only folks who defend it are the trial lawyers who benefit from it. Since the trial lawyers are among the Democrat's biggest contributors (and provided their last VP nominee), as a political matter, the Democrats just kill whatever attempts are made to adopt legislative solutions. In states where the judges of the highest court are elected, they also make sure that the Democratic nominees have the "right" point of view on the issue. Given the partisan divide, all of that sometimes gets defended in terms of "siding with the people" rather than the corporations. That's just empty rhetoric, and it's pretty half-hearted even from them.

From an economic perspective, there is nothing efficient or sensible about a jury's ability to award punitive damages. It's just an irrational form of regulation, combined with a lottery as its means of allocation of costs/benefits. While I can't see anything in the constitution that permits the SCOTUS to overrule the decision by some states to engage in irrationality of that sort, the negative impact on interstate commerce almost certainly empowers Congress to adopt a national solution. In early 2005, Congress took a small and indirect step in that direction, by adopting class action reforms (28 USC 1332(d)) but hasn't addressed punitive damages directly yet. Since the constitution only grants the power to regulate interstate commerce to Congress, not the SCOTUS, there is not much the Court can do here. It's "due process" jurisprudence on this point is unconvincing, to say the least. That the states have adopted an irrational form of regulation that in turn imposes substantial costs on the national economy is just another example of stupid lawmaking at the state level. Nothing in the federal constitution empowers the SCOTUS to correct the irrationality, or substitute wisdom for stupidity in order to right the wrong being done to the nation.

It must be very hard for the SCOTUS justices to resist trying to right that wrong, where they can clearly see the utter irrationality and unfairness of the punitive damages system, and they are presented with sophisticated theories of constitutional interpretation, churned out by able advocates and academic theorists, that would allow the SCOTUS to redress an obvious problem if they let themselves be seduced by the siren song. They obviously think of themselves as a player on the national stage, and there's not much point in being a player at that level if you can try to solve national problems. I think their self-image has a lot to do with how these kinds of tangents develop in their constitutional jurisprudence. But if the continuance of this line of cases depends on the votes of CJ Roberts and Alito, it may not have much of a future. Maybe even Breyer and Souter are having second thoughts.

Unknown said...

OK, I'm reading along on a blog post about some legal matters that are, to me at least, a bit out of my league. Still, in the interest of actually learning something I plod along until... ah, good, the standard conservative coalition of Thomas, Scalia, and Ginsburg...

... GINSBURG!!??

David Walser said...

Richard Dolan, I agree with everything you said. I don't think the Constitution bars punitive damage awards. I also agree that it must be tempting for the Justices to correct this wrong. After all, if the Court has the authority to rule abortion on demand legal (and any laws to the contrary unconstitutional), why can't the Court deal with this inequity created by the judicial system? Yet, despite the problems with leaving the question to the legislature, the better approach would be for the Court to keep out of the question. I just wish the Court always showed such restraint.

the pooka said...

... GINSBURG!!??

Yes, indeed. Perhaps her position on due process limits on damages is what made her so bloody unpopular...

David L said...

The Constitution is silent on the question of punitive damage limits. The question belongs to the several states.

The solution is simple. As punitive damages are meant to punish the defendents and not enrich the plaintiffs, we need each state to enact a one hundred percent excise tax on all punitive damages. End of problem.

Bruce Hayden said...

Or you could just limit the attorney's fees to a percentage of the compensatory awards. The thing driving these cases is the ability of some litigation attorneys to make tens, hundreds, if not thousands of millions of dollars on their part of the awards. Eliminate that, and you eliminate the problem.

The absuridity all along though, at least for me, is that if the intent is to punish the companies, then why are one or two victims making millions, while the rest of the victims and society making zip?

And that is why your idea of a 100% tax on punitive damages makes sense - the award would go to the state, and presumably indirectly compensate everyone else for the miscreants actions, through better services and/or lower taxes.

There might be some negative consequences of that idea, but it would be highly unlikely that the negative consequences (in the form of negative incentives) would be anywhere near as bad as they are now.

John Thacker said...

Clearly, what bloggers hate are justices who don't think that the Constitution allows limits of punitive damages.

Kirk Parker said...

David Walser,

I have no answer to your questions. But I can say that I'm completely opposed to the concept of punitive damages in the first place. Want to be made whole? Fine, file a lawsuit and win it! But punishment--that should be the exclusive province of the criminal justice system, if nothing else for the higher standard of proof required therein.

(P.S. to John Thacker: please note I didn't use the word "unconsitutional" anywhere in my rant against punitive damages.)