please the court good morning my name is kathy lewis and i'm from the ukraine alexander's attic firm in great falls montana i'd like to try to reserve about three minutes for rebuttal if i may in this case the jury awarded damages for all of the harm caused by guy caused violation of the unfair trade practices act the punitive damages were also awarded soley under the young fair trade practices act the second gore guidepost compares the punitive damages to the compensatory damages to arrive at a ratio with regard to mrs king's awards for breach of contract and the related awards of attorneys fees and prejudgment interest a key question face today is whether it is appropriate to include those amounts with the compensatory damages for purposes of that core guidepost and the answer is no it not appropriate for several reasons in this case as in gore the comparison is between the punitive award and quote the amount of actual harm as determined by the jury and that's gore at page five eighty two jury instruction twenty which is document one sixteen a page twenty five told the jury that if it found a unfair trade practices violation then it quote must determine the amount of money which will reasonably unfairly compensate the plaintiff for all loss caused by the defendant that instruction twenty one informed them that that damages means the amount of money that will reasonably unfairly compensate plaintiff for any injury you find was caused by defendant we have course with them they follow that instruction the unfair trade practices act allows all damages proxim caused without limit that's found out much code in section thirty three eighteen to forty two sub for the jury thus awarded one hundred thousand dollars that's at the verdict a document one twenty and in this case that is the number to use in the gore ratio this is not a potential damages case contract claims of montana do not allow for punitive damages c section twenty seven dash one dash two twenty sub two this is a unique case it's an us trying to break this apart then the hundred thousand dollars that was awarded to the estate to mr king's estate was that a breach of cunt on breach of contract yes it was just mchugh and your position then is that should be excluded correct as well as was the same breach that underlies the very trade practices you see those as separate damages i do and the reason is because there is no punishment for breach of contract under montana law and supreme court jurisprudence const concentrates on the notice to the defendant of the punishment for his actions and there is no notice requirements or no notice concern for breach of contract claim since there is no punishment for such a violation it's only the unfair trade practices act that allows punitive damages the other issue that's unique about this case is that this is an under insured motorists case and so the damages on the breach of contract are measured by the amounts caused by the death of mr king there is that measurement doesn't sync up with the notice requirements of gore and  versus supreme court where we're looking at the defendant's current conduct soley when used the word harm in the jury instructions aren't things so interrelated that the jury sees it all as a harm they're not they're not making a distinction between breach of contract and tort or the language of the unfair trade practices they're looking at the harm that was done to her i think you're right rusty i think you're right about that and that's why the harm was fully compensated in this case and this is unlike a lot of other cases where forward ever reason the jury couldn't ordered nominal damages or even no damages on the claim that underlies the punitive damages award here they were fully compensated or here mrs king was fully compensated for the unfair trade practices act violation if you then so we have the hundred for unfair trade practices that's one hundred thousand dollars contract hundred thousand over here and the but then we have the emotional damage so one hundred thousand again correct yes i recall why  why wouldn't that be sufficiently intertwined to be a foundation for punitive damages well if you look at the jury verdict again document one twenty it asked did plain to flew is king suffer serious or severe emotional distress is a consequence of the negligence on the part of an uninsured motorist and then asked her what amount of money will compensate plaintiffs for the serious or severe emotional stress she suffered as a result of the death of her husband so again there's that disconnect between notice to geico a punishment for its conduct and focusing as undergoing supreme and other supreme court cases at the conduct of the tortfeasor or statutory violation that led to the punitive damages you try in your view the jury verdict is the loss to the loss of the husband but not to the payment on the contract absolutely it's explicit in the jury instruction one other question yes there's a fourth album and that's the fees yes and i you know i've read some d some cases some states have statutes that cause that other states just have cases what's a situation that's exactly right the cases if you look carefully at all of the cases there is a ruling a statutory provision or something by which you tie the attorneys fees to the tort which gave rise to the punitive damages not so here under montana's unfair trade practices act the montana supreme court has ruled at least twice that fees and costs are not compensatory damages under the unfair trade practices act as the as judge the anderson in the district court awarded the fees for pre  marie judgment work only in fact he says in his order which is that document one sixty six pages eight through nine montana's obligatory insurance exception to the american rule regarding entitlement to attorney's fees is narrow and under the facts of this case only applies to king's declaratory judgment action on whether she could assert a standalone emotional distress claim the narrow insurance exception does not apply to the trial phase of this case where the issue was not whether king had coverage but rather was the amount of king's emotional distress claim and whether geico violated the unfair trade claims practices that again the u t p a being the only claim for which p recovered and montana law does not recognize attorney's fees as compensation under that claim and then according to let me interrupt you for a minute and one tends to think that i know you're making distinctions here between what was under the trade practices act and what was her emotional damages and well the fact of the matter is that if that go had done what it was supposed to do and paid her the money and and just didn't try to get her a sign away thing she would have had to bring a lawsuit and she would have had to have attorneys so why isn't that part of the incurred because it is again tied to those contract claims or the declaratory judgment claim and those claims do not allow for punishment they are not there's no  notice problems that you the concerns for notice of the punishment that go with the kinds of conduct that allows for punitive damages are not present in those claims so you keep coming back to the fact that  sixty one it four where he talks about how pre judgment interest is only on those contractual damages for mr king i'd like to move on to reprehensible of the if i may i'm running out of time in virtually every punitive damages case you're looking at intentional reckless or fraudulent acts it's not a continuum of admirable contact however in this case with its unique set of facts a guy close conduct was low on the scale it's not a case of repeated sexual harassment racial discrimination or withholding funds needed for medical care nor is this a case of nominate them the facts show in the testimony of janay estell the claims adjuster that there was a four point five month away while she was investigating for liability insurance since this is an under insured she wasn't sure at the time but it turned out to be an under insured uninsured motorist provision she had three avenues to look for and once she found out that there were one she made the determination there was no liability insurance and then she communicated with mrs king there was pushback and two weeks later montana tourney was engaged and that attorney john boy of missoula shows that his testimony at trial shows that he did reserve a bodily injury claim there is no evidence that he knew she was sinking emotional distress standalone emotional distress crime and that he was hoping to engage in discussions with her attorneys he suspected that there was an attorney and you can see that in the transcript at pages four fifteen through four seventeen you can also see his letters which really tell pretty much a lot about what happened with him there never was a bodily injury claim and as it turns out no although there are there are cases where bodily injury is allowed in such a case but that's another issue that's not in the break this did not  this testimony or the testimony of the evidence here did not an incident difference to or reckless disregard of health she was not physically harmed and she was not particularly financially vulnerable mrs king was working she was able to keep her employment her husband's business did not fail she made modest adjustments to her lifestyle until she realized she didn't need to she didn't seek medical help for her distressed and much of the evidence about her emotional distress understandably was focused on her husband's death because she had that stand alone claim to prove she complained about being embarrassed about geico calling her work but there's no evidence that she ever told them not to do so again this is a scale and when the evidence is confined to difference in kind of reprehensible between these kinds of cases and the kinds of cases the saying was it was one where there are discrimination and other kinds of cases there's scant evidence of  recidivism and the economic harm of course state farm is duplicated in the emotional distress award scuse me for the unfair claims practices act i want to save some time for me but i would like to unless you have a question on any of the other issues and i would prefer to do that thank you so much commanding your honour's john heenan along with my law partner randy this up here on behalf of our client louise again and we appreciate the court's time here this morning and we've waited a long time to be here  and i really appreciate the time here because i frankly in reading the briefs i don't think i understood the issues that i wait the day the way that i do standing here this morning we both parties kind of briefed on the line and gore analysis and there's this court's aware t x so gore campbell all are cases that concern supreme court's concerned about basically unfettered jury discretion in awarding punitive damages  none of those cases concerned an instance where there was a statutory cap on damages here this jury proceeded on our montana law has a statutory cap on damages it's twenty seven one to twenty and the u s supreme court and cooper industries tells us that where the state legislature has spoken about giving notice of the defendants of the potential penalty then the analysis changes dramatically and if i can quote from the cooper industries decision quote legislatures enjoy broad discretion and authorizing and limiting permissible punitive damages awards a good many states have enacted statutes that place limits on the permissible size of punitive damages awards when juries make particular awards within those limits the role of the trial judge is to determine whether the jury's verdict is within the confines set by state law and determined by reference to federal standards under rule fifty nine whether a new trial or emitter should be ordered if no constitutional issues raised the role of the appellate court at least in the federal system is merely to review the trial court issue concern punitive damages under title seven which has a statutory cap on punitive damages and there this court says the next acting gauri view applying the three guidepost rigorously may be appropriate when reviewing common law punitive damages award however one of the punitive damages awarded arises from a statutory regime the rigid application of the gourd excuse me the gore guideposts is less necessary or appropriate thus the more relevant first consideration is the statute itself through which the legislature has spoken explicitly on the proper scope of punitive damages well here we have twenty seven one two twenty one where our legislature has exactly the type of conduct that subjects a party to punitive damages and that's committing fraud or malice and both of those terms are clearly defined in our statute our legislature has said heightened clear and convincing standard burden of proof that the plaintiffs are obligated to prove and so that satisfies the first prong articulated by the supreme court and gore does the defendant have notice of the type of conduct that would subject them to punitive damages and twenty seven one to twenty satisfies the second prong notice of the potential penalty our legislature and it's reflected in the excerpts of record sharing some of the same concerns that supreme court shared in the t x owen goran campbell they said we're concerned about arbitrary capricious lottery like jury awards therefore we're going to cap unit damages that ten million dollars or three percent of the defendant's net worth whichever is less and the argument that we just heard a few minutes ago also focused on notice the issue being whether there was sufficient notice about the contract type damages other than the damages that were clearly related to the unfair trade practices that you want to address that sure i'd be happy to you i think first basically what the issue now on appeal is is montana statutory damages cap of ten million dollars to is that constitutional does that give geico due process notice of the potential penalty that it faced and so whether the damages are contractor or tort basically they're on notice that conduct that's fraudulent or malicious subjects them to damages up to ten million second and sure i mean if i get your argument what you're saying is as long as it's under ten million dollars then there's shouldn't be what do you benchmark it against yeah i think that's what this court that was nine million dollars you would stand here and say that would be fine so if those aren't the for no yes absolutely i would say and your answer is it's lies it's under ten million then anything goes in montana punitive damages with no constitutional consideration well with limited i think the asarco and bond court is careful to say that the gourd or guidepost still have some relevance just not the exacting relevance that is required when a common law can answer your question candidly your honor yes if the jury had awarded nine million dollars i'd be standing here saying that's absolutely appropriate because geico from a constitutional due process analysis was on notice that they could get some if they committed malice or if they committed fraud in montana they're subject to a penalty up to ten million dollars and our legislature met conferred determine the ten million dollars is an appropriate  potential penalty and i think it depends on how you read it they're putting it by putting a cap on it doesn't endorse that it's an appropriate penalty in every case so you know the fact that you've kept punitive damages simply means that even though you might not use the gore guidelines to the same degree if there was a one dollar you'd be saying the same thing it doesn't matter because they put a cap on  is all right so i mean so i think you're going further than i thought you had gone in your briefs ok so i'm just interested to hear this argument morning well and i think the decision by this court in a right where it was a one dollar nominal damages and three hundred thousand dollars in punitive damages and the panel first kind of tackled it from what's the highest ratio that we can talk about and they brought it down to one hundred twenty five thousand and when the end panel met they said no it's three hundred thousand because congress has spoken they have told us that an award between zero dollars and three hundred thousand and punitive is appropriate and so we have to defer to the legislature unlike a common law ward where there is no legislature to defer to and that's reflected in justice o'connor's decisions justice kennedy's decisions of course all justice do the magistrate judge say did he give us any reason basis for denying the motion he didn't your honor what what he said it is the the court having considered the arguments presented by the parties as well as the record as a whole and the applicable law denies the motion and that's one thing that bothered me about this case is a month for how we can review a decision without any reasons well i think your honor that the cooper industries decision answers that and it tells us that when a jury award is within the when the jury makes an award within the limits set by statute the role of the trial judge is to whether the jury's verdict is within the confines set by state law which it was here the cap was ten million hits the trial court instructed the jury and the instructions with no objection by either party that the cap was ten million  we argued for ten million geico argued for one hundred thousand and the jury considered where on the spectrum this award fell and it awarded two point five million dollars and geico had it did not appeal at the time that jury instruction has not appealed the constitutionality of arc of our statute our cap and so i think because i and i was concerned about your honour's concern and i think cooper industries saves us basically because what it says is where where the award is within the statute the trial court's job is simply to determine under rule fifty nine whether a new trial or emitter should be ordered and h honored did consider and denied a motion for a new trial or method or and so i think now this court's appellate review is simply to determine whether the trial court's determination u nder an abuse of discretion standard was flawed and i don't think it was thank you and so our position is that the ratios have limited limited use but if then i can address those well don't you also want to talk about the three percent part because that to an alternate for you isn't the three percent part of the statute to be proud of that it's the lesser of it's the lesser of ten million or three percent of a defendant's net worth and here geico is net worth exceeded two billion dollars so ten million dollars was much last than three percent for geico so basically by the site by its enormous you know money monetary size it got more of a benefit under the statute than would say a business that had a net worth of one hundred thousand or a million or ten million if that makes sense your honor  with respect to the guidepost because one thing that so so three things right the reprehensive belittle me and their briefs and again here this morning geico wants to minimize their conduct but are you now animists jury found that guy co's conduct was fraudulent and or malicious and those are that's intentional conduct as defined by our statute they haven't appealed they haven't appealed whether it was fraudulent or malicious and so efforts to try  minimize and say it wasn't that reprehensible or just frankly not an issue anymore because they haven't appealed it and our jury spoke loud and clear it wasn't a mistake our jury found it wasn't a mistake it was intentional conduct that geico perpetrated with respect to the third prong civil penalties i was wrong in my brief because we talked about the ten thousand or twenty five thousand dollars fine and or the insurance code and we talked about revoking a asarco decision the third guy post reflects deference to legislative judgment so montana's legislature has determined that up to ten million dollars is an appropriate punishment for this type of misconduct and that's  dressed explicitly in the asarco decision and with respect to the ratios because i as i think this court understands by its questioning of geico is counsel this is a constitutional issue that we that is that has occurred or is likely to occur and so it's our position that with respect to the tort damages the the unfair trade practices the jury pegged that the damage to mrs king is one hundred thousand dollars but when you look at the damage that was likely to occur that geico knew was likely to occur when they leveraged a financial and emotionally vulnerable widow into trying to take half of what she was owed under her insurance policy they were they were intending to cheat her out of at least one hundred thousand dollars and they knew as as your honor dress that she would have to hire an attorney bring a lawsuit do all the things it takes to recover what she was o and so by the time you add all those things up it's not just the hundred thousand it's the attorney's fees it's the pre judgment interest which by the way as we sit here today six years after mrs king's minuter claim to geico she still hasn't received the other hundred thousand judgment as art is much maybe a hundred thousand dollars what's your ratio if you have one hundred thousand dollars if you got the contract damages you take out the damages that are related to her loss which don't relate to a range and there's some constitutional limit even to the ten million being a cat could you cite as to anything else that we might take some solace in with that kind of a range well i think the as on all fours on this right that was three hundred thousand to one and we've also put in our briefs i mean i think there's the philip morris versus williams decision there was campbell henri mand there's been lots of decisions that are well in excess of twenty five to one but i think candidly the denominator denominator includes it's at least two hundred thousand plus attorneys fees and interest in those things and that brings it to at least three hundred thousand because we have to calculate interest even up till today i'd like to first address the cap argument first and foremost the punitive damages who did not is in the asarco two case arise from member a bust statutory regime the punitive damages heroes from the unfair trade practices act which has no cap on compensatory damages and by the way i was quoting from asarco to montana stand alone cap is you know what that cap is it applies to a wide range of contract i mean and it does it does it in this case that he applies to the statute it applies to any any situation which punitive damages so that's why i say a wide range of conduct where is under you're looking at a title seven cap that applies to title seven violations and that that prompted the court to say that it did or damages a rose from a robust statutory scheme through they didn't arise from the cap the title seven cap is it is so much more as this court talked about it strictly and rigidly limit limiting damages than the montana cap and it does and montana cap does not argument that the reprehensible it is reflected in the verdict but i do want to remind the court that we have a situation here where we had an expert that told the jury what the law was and that the law was violated and of course that further exacerbated the situation of the reasonable of this of that that award the kuperman versus leatherman case of course established that this court provides a dean over review of the of the amount of punitive damages and that's why judge gould's is concerned with the fact that judge andersen did not publish his findings or or any reasoning for his denial of guy caus motion should should not worry this court because it was fully briefed we have to believe judge anderson when he says that he considered the arguments on the record as a whole and judicial economy has been the driving force behind this court's several times when it remits punitive damages to within a constitutional range and i would posit that judicial economy here would do the same thing in fact i would like the court to know that the tenth circuit recently is no longer giving plaintiffs the choice of whether to accept the remitted amount it simply remitting the amount you can see that enjoy jones versus united parcel they versus sun ridge also the california supreme court is doing the same thing so we've got to do novo standard of review no deference required or replying so ideally we ask that you remit punitive damages to no more than a three to one ratio review and in the but in the alternative we asked to do a new trial be granted due to allowing an expert to instruct the jury on the law and how to apply the law to the facts and they have your