Opinion ID: 2460785
Heading Depth: 2
Heading Rank: 2

Heading: Excessiveness/Standard of Review.

Text: Recent decisions of the United States Supreme Court recognize that the Due Process Clause imposes a limit on awards of punitive damages. BMW of North America, Inc. v. Gore, supra ; TXO Production Corp. v. Alliance Resources Corp., 509 U.S. 443, 113 S.Ct. 2711, 125 L.Ed.2d 366 (1993); Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 111 S.Ct. 1032, 113 L.Ed.2d 1 (1991). OCF only briefly asserts that the punitive damages award in this case was excessive. Instead, it focuses primarily on what it claims is a constitutionally infirm standard of review used in this jurisdiction to assess whether a particular award of punitive damages is excessive. Specifically, OCF cites Davis v. Graviss, Ky., 672 S.W.2d 928 (1984) and Fowler v. Mantooth, supra , as holding that once a trial judge makes a first blush determination that a punitive damages award is not excessive, the only function of our appellate courts is to determine whether there is any evidence to support the verdict. In Honda Motor Co., Ltd. v. Oberg, 512 U.S. 415, 114 S.Ct. 2331, 129 L.Ed.2d 336 (1994), an amendment to the Oregon Constitution which prohibited any judicial review of the amount of a punitive damages award unless the court can affirmatively say there is no evidence to support the verdict was held to violate the Due Process Clause. Punitive damages pose an acute danger of arbitrary deprivation of property. Jury instructions typically leave the jury with wide discretion in choosing amounts, and the presentation of evidence of a defendant's net worth creates the potential that juries will use their verdicts to express biases against big businesses, particularly those without strong local presences. Judicial review of the amount awarded was one of the few procedural safeguards which the common law provided against that danger. Oregon has removed that safeguard without providing any substitute procedure and without any indication that the danger of arbitrary awards has in any way subsided over time. For these reasons, we hold that Oregon's denial of judicial review of the size of punitive damages awards violates the Due Process Clause of the Fourteenth Amendment. Id., 512 U.S. at 432, 114 S.Ct. at 2340-41. We, of course, are bound by the United States Supreme Court's interpretation of what constitutes due process under the United States Constitution. Wagers v. Sizemore, 222 Ky. 306, 300 S.W. 918 (1928); cf. Elmendorf v. Taylor, 23 U.S. (10 Wheat.) 152, 6 L.Ed. 289 (1825). However, we do not agree that our system of judicial review amounts to no review of the size of punitive damages awards. What we held in both Davis v. Graviss and Fowler v. Mantooth, supra , is that it is the primary function of the trial judge to determine whether, at first blush and in accordance with the criteria set forth in CR 59.01(d), (e) and (f), the verdict is excessive. On appeal, the trial judge's determination is considered presumptively correct and will be reversed only if it is clearly erroneous. Davis v. Graviss, supra at 932; Fowler v. Mantooth, supra at 253. The so-called first blush rule can be traced to Huckle v. Money, 2 Wils. 205, 95 Eng.Rep. 768 (C.P.1763), which held that an award of damages may be set aside by a reviewing court as excessive when the damages are outrageous and all mankind at first blush must think so. Id. at 207, 95 Eng.Rep. at 769. CR 59.01 authorizes a trial judge to grant a new trial for, inter alia, any of the following grounds: (d) Excessive or inadequate damages, appearing to have been given under the influence of passion or prejudice or in disregard of the evidence or the instructions of the court. (e) Error in the assessment of the amount of recovery whether too large or too small. (f) That the verdict is not sustained by sufficient evidence, or is contrary to law. Application of these criteria requires a judicial review of the evidence and a fact-finding function on the part of the trial judge. The Oregon constitutional amendment struck down in Honda Motor Co., Ltd. v. Oberg, supra , prohibited judicial review by either a trial court or an appellate court. Nor does the clearly erroneous standard of review constitute an abdication of our traditional role of appellate review. We have long held that for purposes of appellate review, a finding of fact of a trial judge ranks in equal dignity with the verdict of a properly instructed jury, i.e., if supported by substantial evidence, it will be upheld, otherwise, it will be set aside as clearly erroneous. Daniel v. Kerby, Ky., 420 S.W.2d 393 (1967); Massachusetts Bonding & Ins. Co. v. Huffman, Ky., 340 S.W.2d 447 (1960); Yates v. Wilson, Ky., 339 S.W.2d 458 (1960). In this jurisdiction, substantial evidence means evidence of substance and relevant consequence having the fitness to induce conviction in the minds of reasonable men. Kentucky State Racing Comm'n v. Fuller, Ky., 481 S.W.2d 298, 308 (1972); Smyzer v. B.F. Goodrich Chem. Co., Ky., 474 S.W.2d 367 (1971); O'Nan v. Ecklar Moore Express, Inc., Ky., 339 S.W.2d 466 (1960). Thus, even though the decision of the trial judge is accorded presumptive correctness on appeal, the appellate court still must review the evidence to determine whether that decision was clearly erroneous. Necessarily, the focus of this review is on the criteria set forth in CR 59.01, supra, and those factors set forth in Hanson v. American Nat'l Bank & Trust Co., supra at 310-11, as required by TXO Production Corp. v. Alliance Resources Corp., supra, 509 U.S. at 459-61, 113 S.Ct. at 2721-22, for determining whether punitive damages awarded in a particular case are excessive. We are satisfied that this duality of trial court and appellate court review affords a defendant the due process protections mandated in Honda Motor Co., Ltd. v. Oberg, supra . On the basis of the above criteria and our review of the evidence as set forth in Part I of this opinion, we are satisfied that the trial judge was not clearly erroneous in determining that the punitive damages verdict returned in this case was not excessive.