Opinion ID: 1811971
Heading Depth: 2
Heading Rank: 1

Heading: Blizard's Right to Posttrial Discovery of Vulcan's Financial Information

Text: The trial court's order, to the extent it granted Blizard's motion to compel production of the information Blizard sought in requests no. 8 and nos. 11-14, requires Vulcan to produce all financial information it generated within five years preceding the order. Vulcan first contends that the trial court erred in ordering it to produce that information despite Vulcan's concession that its financial position does not warrant reduction of the punitive award. Petition, at 7. According to Vulcan, its concession rendered that information irrelevant to the post-trial analysis of [the] punitive award. Id. (emphasis added). Vulcan's petition requires this Court to determine, as a question of first impression, whether a defendant who has filed a motion for a remittitur of punitive damages may preclude posttrial discovery of its financial information by stipulating that it will not rely on its financial status as a ground for the remittitur. We answer that question in the affirmative. Under Rule 26(b)(1), Ala. R. Civ. P., a party may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action, whether it relates to the claim or defense of the party seeking discovery or to the claim or defense of any other party. (Emphasis added.) Considerations relevant to a trial court's inquiry on a motion for a remittitur of punitive damages have been promulgated by the United States Supreme Court. In BMW of North America, Inc. v. Gore, 517 U.S. 559, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996), that Court set forth three guideposts for determining whether a punitive-damages award offends the United States Constitution. Those guideposts are (1) the degree of reprehensibility of the defendant's misconduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award; and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases. State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 418, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003) (discussing the guideposts set forth in BMW ). Additionally, in its review of a punitive-damages award, this Court considers the factors set forth in Hammond v. City of Gadsden, 493 So.2d 1374 (Ala.1986), and Green Oil Co. v. Hornsby, 539 So.2d 218 (Ala.1989). Those factors include (1) the reprehensibility of the defendant's conduct; (2) the harm that actually occurred, or that is likely to occur, from the defendant's conduct; (3) the defendant's profit from its misconduct (the profitability factor); (4) the relationship between the defendant's financial position and the size of the punitive-damages award (the relationship factor); (5) the cost to the plaintiff of the litigation; (6) whether the defendant has been subject to criminal sanctions for similar conduct; and (7) other civil actions the defendant has been involved in arising out of similar conduct. See Shiv-Ram, Inc. v. McCaleb, 892 So.2d 299, 317 (Ala. 2003) (discussing the Green Oil factors). Blizard says that the financial evidence he seeks is discoverable under two of these Green Oil factors. Specifically, he argues that the evidence is relevant (1) to the relationship factor, and (2) to the profitability factor. We disagree.
[T]he purpose of punitive damages is not to compensate the plaintiff but to punish the wrongdoer and to deter the wrongdoer ... from committing similar wrongs in the future. Green Oil, 539 So.2d at 222 (emphasis added). Society's goal is to deter not to destroy the wrongdoer. Id. To effectuate that purpose, a punitive-damages award `ought to sting in order to deter.' Id. (quoting Ridout's-Brown Serv., Inc. v. Holloway, 397 So.2d 125, 127 (Ala.1981) (Jones, J., concurring specially) (emphasis added)). A party does not have a right to a Hammond hearing on the question of the adequacy of punitive damages. Ex parte Weyerhaeuser Co., 702 So.2d 1227, 1229 (Ala.1996) (emphasis added). In regard to punitive damages, the purpose of the Hammond hearing [at which the Green Oil factors are considered] is to protect a defendant against due process violations arising from an award of excessive damages. Id. (emphasis added). Indeed, where a jury has awarded punitive damages, a trial court may not, consistent with the right to a trial by a jury as guaranteed by Ala. Const.1901, § 11, order an additur of punitive damages under any, or any combination, of the Green Oil factors. Bozeman v. Busby, 639 So.2d 501, 502 (Ala.1994). In that connection, Vulcan states: If a defendant has conceded that its financial position provides no basis for remittitur, then further discovery directed to that factor is pointless because a court's analysis of the factor will not change in any way based upon the relative wealth of the defendant. ... [W]hen presented with such a concession, there is simply nothing more for the court to consider. Reply brief, at 7-8 (emphasis added). We agree. Because the Green Oil factors are considered for the benefit of defendants, a defendant may waive the benefit of one or more of the factors. In fact, our cases have held that a defendant's failure to produce evidence of its net worth effectively negates the benefit to the defendant of the relationship factor. In other words, a defendant cannot argue as a basis for reducing the punitive-damages award that the award stings too much, in the absence of evidence of the defendant's financial status. See Shiv-Ram, 892 So.2d at 319 (defendant's concession that it was insured, coupled with the absence of evidence that payment of the damages awarded [would] cause it any undue financial hardship.... weigh[ed] against a finding of excessiveness); Lance, Inc. v. Ramanauskas, 731 So.2d 1204, 1220 (Ala. 1999) (where the defendant produced no evidence of its net worth or evidence showing that the verdict [would] affect its future insurability, the relationship factor would not benefit the defendant); Employees' Benefit Ass'n v. Grissett, 732 So.2d 968, 981 (Ala.1998) (where the defendant stipulated that it would not be crippled financially if it had to pay the punitive damages award, the relationship factor was of no benefit). Moreover, it has, indeed, been heldcorrectly, in our viewthat a defendant may avoid extensive inquiry into its financial affairs simply by stipulating to its net worth, Sprague v. Walter, 441 Pa.Super. 1, 62, 656 A.2d 890, 920 (1995) (it is a sound defense strategy to prevent freewheeling financial discovery by stipulating to a specific net worth), or to its ability to satisfy a punitive-damages award. Cobb v. Superior Ct. of California, 99 Cal.App.3d 543, 551, 160 Cal.Rptr. 561, 566-67 (1979) (inquiry into the effect of a verdict awarding punitive damages can often be satisfied by a simple request for a stipulation). Here, by expressly conceding that its financial position does not warrant reduction of the punitive award, Petition, at 7, Vulcan has disclaimed reliance on the relationship factor as a reason for remitting the punitive-damages award. That disclaimer requires the trial court to weigh the relationship factor against a remittitur. Consequently, financial discovery as to that factor is unnecessary and irrelevant.
The parties dispute the relevance of evidence of a defendant's general financial status, or net worth, to the profitability factor. In Green Oil, this Court said: `If the wrongful conduct was profitable to the defendant, the punitive damages should remove the profit and should be in excess of the profit, so that the defendant recognizes a loss.' 539 So.2d at 223 (quoting Aetna Life Ins. Co. v. Lavoie, 505 So.2d 1050, 1062 (Houston, J., concurring specially)). Blizard contends that the financial information he seeks in the requests is relevant to enable the trial court to determine whether the punitive-damages award exceeds the profit Vulcan realized from its wrongful conduct. However, according to Vulcan: While there may be circumstances where certain financial information could be relevant to [the profitability] factor, Blizard's notion that he can obtain sweeping discovery into all aspects of Vulcan's finances to advance his arguments with regard to that factor cannot be right. The key is that the factor seeks to remove the profit arising from the alleged conduct for which punitive damages are being imposed, not any profit generally.  Reply brief, at 9 (emphasis added). We agree with Vulcan. The profitability factor speaks to the particular conduct that occasioned the imposition of punitive damages. Evidence of Vulcan's general financial status is far too attenuated for useful analysis under the profitability factor. In that connection, Vulcan did not object to Blizard's request for the production of documents ostensibly relevant to the specific circumstances at issue. In particular, Blizard sought in request no. 32, and Vulcan expressly agreed to produce, [a]ny and all documents, items or things which reflect Vulcan's profit per ton of rock sold from the Scottsboro quarry for the past ten (10) years. However, Blizard's requests no. 8 and nos. 11-14 are not directed to, and do not reference, profit from the conduct underlying this litigation. Therefore, production of those documents would add little, or nothing, of value to a profitability analysis beyond what Vulcan has agreed to produce. [3] For these reasons, we conclude that the trial court exceeded its discretion in denying Vulcan's motion for a protective order as to the financial information sought in requests no. 8 and nos. 11-14. Thus, we grant Vulcan's petition insofar as it is directed to that portion of the request.