Opinion ID: 2441435
Heading Depth: 2
Heading Rank: 1

Heading: single punitive damage award and due process

Text: Initially, OCF again complains about the exclusion of Frank's testimony at trial. Here, OCF sought to read into evidence a transcript of Frank's former testimony with accompanying exhibits as its enough is enough evidence. In response to the plaintiffs' objection that OCF had not shown Frank's unavailability, OCF's attorneys argued that Frank, a California resident, was not subject to the trial court's subpoena power, and added that Frank was on a European vacation. We agree with the court of appeals when it held that the trial court properly excluded OCF's enough is enough evidence because OCF did not establish Frank's unavailability under Texas Rule of Evidence 804 for transcribed testimony from another proceeding. See TEX.R. EVID. 804; Hall v. White, 525 S.W.2d 860, 862 (Tex.1975); Cf. Tex.R. Evid. 801(e)(3)(about use of depositions from same proceeding); see also Evans, 774 S.W.2d at 658 n. 5. Also, for the reasons we explained in Malone, the trial court's error, if any, in excluding Frank's prior testimony was not harmful. After the trial, the trial court held a full evidentiary hearing on OCF's motion to set aside or reduce the punitive damage awards. At the posttrial hearing, the trial court heard OCF's evidence, including Frank's live testimony, about its financial condition, including evidence about previous asbestos-related punitive damage awards. That record also shows that, at the time, OCF had only paid $3 million in past punitive damage awards. And again, counsel for OCF conceded this fact at oral argument before this Court. OCF's posttrial evidence shows that it has not paid any punitive damages in Texas or Alabama. OCF first argues that the punitive damage award in this case is unconstitutionally excessive under BMW of North America v. Gore . [4] As a threshold matter, Wasiak argues that punitive damages are the functional equivalent of compensatory damages in wrongful death cases governed by Alabama law, and, consequently, this Court should not grant OCF constitutional immunity from punitive damages in such cases. While it is true that punitive damage awards in wrongful death cases are accorded special treatment under Alabama law, the damages recoverable are intended to serve a punitive purpose and are in no sense compensatory. Gulf, Mobile & Ohio R.R. Co. v. Williams, 251 Ala. 516, 38 So.2d 334, 336 (1949); see also Atkins v. American Motors Corp., 335 So.2d 134, 144 (Ala.1976) (Damages [in wrongful death cases] are to be awarded that will punish the tortfeasor for the act and deter him and others from similar future conduct.). Because punitive damage awards in Alabama wrongful death cases are meant to punish and deter, we conclude that the BMW constitutional analysis should apply in this case.
The Due Process Clause prohibits a State from imposing a `grossly excessive' punishment on a tortfeasor. BMW, 517 U.S. at 562, 116 S.Ct. 1589. BMW marks the first time that the Supreme Court found a punitive damages award so excessive that it violated a party's substantive due process rights. See BMW, 517 U.S. at 585-86, 116 S.Ct. 1589. Under BMW, even if an assessment of punitive damages is not deemed excessive under governing state law, it may violate a party's substantive due process right to protection from grossly excessive punitive damages awards. See BMW, 517 U.S. at 568, 116 S.Ct. 1589; see also Gasperini v. Center for Humanities, Inc., 518 U.S. 415, 430 n. 12, 116 S.Ct. 2211 (1996)(noting that BMW provides an ultimate federal constitutional check for exorbitancy of punitive damages). Similarly, we have recognized that, like criminal punishment, punitive damages require appropriate substantive and procedural safeguards to minimize the risk of unjust punishment. See Moriel, 879 S.W.2d at 16-17. BMW establishes three guideposts for determining whether a punitive damages award is unconstitutionally excessive: (1) the degree of reprehensibility of the defendant's misconduct; (2) the disparity between actual and punitive damages; and (3) a comparison of the punitive damages awarded and other civil or criminal penalties that could be imposed for similar misconduct. See BMW, 517 U.S. at 574-75, 116 S.Ct. 1589; see also TXO Prod. Corp. v. Alliance Resources Corp., 509 U.S. 443, 462, 113 S.Ct. 2711, 125 L.Ed.2d 366 (1993); Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 20-21, 111 S.Ct. 1032, 113 L.Ed.2d 1 (1990). We now apply these guideposts to determine whether the punitive damage judgment here is grossly excessive to the extent it violates OCF's substantive due process rights. In doing so, we are aware that whether the amount of punitive damages is excessive as a pure factual inquiry [5] is beyond this Court's jurisdiction. See Kraus, 616 S.W.2d at 910. However, this Court has jurisdiction to determine whether the courts of appeals properly review such factual inquiries. See Keever, 915 S.W.2d at 479; Kraus, 616 S.W.2d at 910. Moreover, this Court has jurisdiction to decide questions of law like the constitutional substantive due process claims presented here. See TEX. CONST. art. V, § 3; TEX. GOV'T CODE 22.001.
First, the degree of reprehensibility of the defendant's conduct is [p]erhaps the most important indicium of the reasonableness of a punitive damage award. See BMW, 517 U.S. at 575, 116 S.Ct. 1589. Conduct that endangers a person's health or safety merits more punishment than purely economic harm. BMW, 517 U.S. at 576, 116 S.Ct. 1589; see also Continental Trend Resources, Inc. v. OXY USA, Inc., 101 F.3d 634, 639 (10 th Cir.1996)(The appropriate penalty is no doubt below what would be justified if OXY's conduct caused loss of life, widespread health hazards, or major environmental injury.). Here, the evidence about OCF's conduct justifies punishment. In the early 1950's, OCF began distributing Kaylo. A few years later, OCF bought the Kaylo line and became both manufacturer and distributor. There is evidence that OCF knew about the dangers of asbestos even before it began selling or manufacturing Kaylo, but nevertheless consciously engaged in a pattern and practice of failing to warn Kaylo users of such dangers. Thus, there is evidence that OCF's conduct over the years displayed an indifference to or reckless disregard for the health and safety of others, including the plaintiffs here. See BMW, 517 U.S. at 576, 116 S.Ct. 1589; see also Dunn, 1 F.3d at 1374-76. Consequently, the trial court's judgment does not offend constitutional due process guarantees under BMW's first guidepost. Second, we must examine the ratio of compensatory to punitive damages. See BMW, 517 U.S. at 575, 116 S.Ct. 1589; see also Kraus, 616 S.W.2d at 910 (Exemplary damages must be reasonably proportioned to actual damages.). This is the second and perhaps most commonly cited indicium of an unreasonable or excessive punitive damages award.... BMW, 517 U.S. at 580, 116 S.Ct. 1589. In BMW, the punitive damage award (even after reduction by the Alabama Supreme Court) was 500 times the amount of the actual damage award. See BMW, 517 U.S. at 582, 116 S.Ct. 1589. Alabama law does not authorize recovery of compensatory damages for wrongful death claims. See Cherokee Elec. Coop. v. Cochran, 706 So.2d 1188, 1193 (Ala.1997)(citing ALA. CODE § 6-5-410 and holding that Alabama law does not allow recovery of compensatory damages in wrongful death cases). However, Alabama law does permit a decedent's spouse to recover for the loss of consortium that the surviving spouse suffered between the decedent's injury and death. Zimmerman v. Lloyd Noland Found., 582 So.2d 548, 551 (Ala.1991). Alabama law also permits survival damages for the decedent's estate if the decedent had a suit pending at the time of death. See King v. National Spa and Pool Inst., 607 So.2d 1241, 1246 (Ala.1992). Here, the jury awarded compensatory damages to both decedents' (Wasiak and Barnes) spouses for loss of consortium and to the estates for their survival claims. [6] The jury also awarded compensatory and punitive damages to the personal injury plaintiffs (Brownlee and Wingate). The ratios between compensatory and punitive damages for each plaintiff under the jury's verdict were as follows: Plaintiff Compensatory award Punitive award Ratio (Including spouse's Loss of consortium) Wasiak $700,000 $2,000,000 2.85 to 1 Barnes 700,000 1,500,000 2 to 1 Brownlee 500,000 750,000 1.5 to 1 Wingate 125,000 100,000 .8 to 1 The trial court reduced the jury's punitive damage awards to the decedents' survivors because under Alabama law, in wrongful death cases (but not personal injury cases), the defendant is entitled to credit settlements from settling defendants against its liability for punitive damages. See Tatum v. Schering Corp., 523 So.2d 1042, 1045 (Ala. 1988). The trial court also reduced all the compensatory awards to reflect the settlement credits. Under the trial court's judgment, the plaintiffs received about $1.6 million in total compensatory damages and about $3.7 million in total punitive damages, yielding a combined ratio of punitive to compensatory damages of slightly more than 2 to 1. The individual ratios under the judgment are: 2.85 to 1 for the Wasiak plaintiffs; 2.14 to 1 for the Barnes plaintiffs; 1.77 to 1 for the Brownlee plaintiffs; and 1.15 to 1 for the Wingate plaintiffs. Even though the constitutional due process line cannot be marked by a simple mathematical formula, BMW, 517 U.S. at 582, 116 S.Ct. 1589, we conclude that the ratios between compensatory and punitive damages in this case are well within constitutional limits. See also TXO Prod. Corp., 509 U.S. at 462, 113 S.Ct. 2711 (indicating that a 10 to 1 ratio would not be unconstitutional); Haslip, 499 U.S. at 23-24, 111 S.Ct. 1032 (holding that ratio of 4 to 1 did not cross the line into constitutional impropriety). Third, comparing the punitive damage award with other civil or criminal penalties that could be imposed for comparable misconduct provides a final indicium of excessiveness. BMW, 517 U.S. at 583, 116 S.Ct. 1589. However, unlike BMW, which involved deceptive trade practices and slight economic harm, the nature of this personal injury and wrongful death case does not lend itself to a comparison with statutory penalties. See Continental Trend Resources, Inc., 101 F.3d at 640-41 (holding that violation of common law tort duties are not comparable to statutory penalties). Importantly though, judicial decisions at the time of the misconduct are also relevant under BMW 's third prong to ascertain whether a defendant had notice that its misconduct could subject it to a large punitive damages award. See BMW, 517 U.S. at 584, 116 S.Ct. 1589; Continental Trend Resources, Inc., 101 F.3d at 641. Thus, the question under BMW is whether OCF had reasonable notice that its failure to provide warnings about the dangers of Kaylo could result in substantial punishment in the form of punitive damages. See Continental Trend Resources, 101 F.3d at 641 (applying BMW guideposts on remand after BMW decision). Although the notice analysis is difficult to apply because OCF's misconduct during the 1950's and 1960's occurred before product liability law was mature and before punitive damages as a remedy in product cases was fully assimilated into our jurisprudence, the law has recognized for decades that a supplier has a duty to adequately warn of its product's hidden dangers. See Noel, Products Defective Because of Inadequate Directions or Warnings, 23 Sw. L.J. 256, 264-67 (1969); see also Owen I, supra, at 1258; Owen, Problems in Assessing Punitive Damages Against Manufacturers of Defective Products, 49 U. Chic. L.Rev. 1, 2-3 (1982)(Owen III). Indeed, the original Restatement articulated a supplier's duty to warn about a product's dangers. See RESTATEMENT OF TORTS § 388 (1934). The evidence here shows that OCF knew about the dangers of asbestos even before it began selling or manufacturing Kaylo. Moreover, reported cases involving damages caused by defective products gave a manufacturer like OCF notice that its misconducthere OCF's manufacture of asbestos-containing Kaylo for about 14 years and the distribution of it for almost 20 years without warning of Kaylo's dangerscould subject it to punitive damages. See, e.g., Standard Oil Co. v. Gunn, 234 Ala. 598, 176 So. 332 (1937)(affirming punitive damage award for sale of adulterated motor oil); Birmingham Ry. Light & Power Co. v. Murphy, 2 Ala. App. 588, 56 So. 817 (1911)(upholding punitive damage award for faulty wiring on street car); Toole v. Richardson-Merrell, Inc., 251 Cal.App.2d 689, 60 Cal.Rptr. 398 (1967)(upholding $250,000 punitive damage award for drug manufacturer's failure to warn consumers about known hazards of its product); Boise Dodge, Inc. v. Clark, 92 Idaho 902, 453 P.2d 551 (1969)(affirming punitive damage award against auto dealer for misrepresentations about auto); Moore v. Jewel Tea Co., 116 Ill.App.2d 109, 253 N.E.2d 636 (1969), affd., 46 Ill.2d 288, 263 N.E.2d 103 (1970)(affirming punitive damage award against manufacturer because it did not warn consumers of known risk of explosion of can of Drano drain-cleaner); see also Owen I, supra, at 1269 (discussing Fleet v. Hollenkemp, 52 Ky. 219 (1852)(involving the sale of an adulterated drug where court upheld punitive damage award)); Wheeler, A Proposal for Further Common Law Development of the Use of Punitive Damages in Modern Product Liability Litigation, 40 Ala. L.Rev. 919 (1989)(discussing history of punitive damage awards in product liability litigation). And [i]t has long been established ... that tortious behavior that is particularly egregious will warrant punitive damages. Continental Trend Resources, Inc., 101 F.3d at 638. Despite the dearth of judicial decisions about punitive damages in products liability cases during the relevant time period, the award in this case is still constitutionally sound given OCF's knowledge about Kaylo and its continuing failure to warn about Kaylo's hidden dangers. Although the court of appeals did not have the benefit of BMW when it reviewed the punitive damage awards against OCF, applying the BMW guideposts reveals that we should not alter the court of appeals' conclusion. We hold that the punitive damage awards here do not, by themselves, violate due process under BMW 's standards.