Opinion ID: 1654654
Heading Depth: 2
Heading Rank: 3

Heading: Constitutionality of the Punitive Damages Award

Text: Steel Technologies claims that the award of $1,000,000 in punitive damages violated due process under BMW of N. America v. Gore, 517 U.S. 559, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996), State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003), and related cases. The company claims that the jury instruction on punitive damages was flawed because it included no limits on the amount available and that the punitive damages award itself was unconstitutionally excessive. When discussing the punitive damages instructions after the close of proof, the parties discussed the due process cases and their effect on limiting punitive damages awards. However, Steel Technologies' attorney agreed to omit a specific limitation on the amount of the damages in the instruction, while reserving an objection to any award that was excessive and noting, We don't have to argue that today. This was the correct approach, as the due process analysis requires a review of a punitive damages award after the fact. It also means that even if limitations in the instructions were appropriate, Steel Technologies waived them in favor of a post award review. After the trial, Steel Technologies challenged the constitutionality of the punitive damages award in its JNOV motion, arguing that the award should be set aside entirely as requested in the directed verdict motions allegedly made at trial. Such a claim should actually be brought under CR 59.05, since it is a challenge to the amount of damages in light of due process requirements rather than a challenge to the sufficiency of the evidence. However, the form of the claim will not control the substance. Steel Technologies challenged the constitutionality of the award after trial; such a claim is sufficient to invoke the due process clause of the Fourteenth Amendment and therefore require review pursuant to the United States Supreme Court's punitive damages jurisprudence. It is unclear whether the trial court engaged in the substantive analysis required by that jurisprudence, since the JNOV motion was summarily denied. As the trial court is also required to engage in the due process review, specific findings and conclusions by the court are preferred because they aid appellate review. However, the failure to make such findings does not bar review on appeal because the appellate court's review is de novo. Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 436, 121 S.Ct. 1678, 1685-86, 149 L.Ed.2d 674 (2001) ([C]ourts of appeals should apply a de novo standard of review when passing on district courts' determinations of the constitutionality of punitive damages awards.). It is unclear what standard of review is required on a subsequent appeal, since in Cooper Industries the Court remanded the case to the Court of Appeals for the due process review. However, since in Campbell the Supreme Court engaged in the de novo analysis itself, that standard of review appears appropriate even on subsequent, discretionary appeals such as this one. Regardless of the appropriate standard of review, the Court of Appeals' review in this case simply was not in error. Gore and Campbell require that punitive damages awards be reviewed under three guideposts: (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. Campbell, 538 U.S. at 418, 123 S.Ct. at 1520; Gore, 517 U.S. at 575, 116 S.Ct. at 1598-99. The first guidepost, which is the most important indicium of the reasonableness of a punitive damages award, Gore, 517 U.S. at 575, 116 S.Ct. at 1599, requires the review of a variety of factors: the harm caused was physical as opposed to economic; the tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others; the target of the conduct had financial vulnerability; the conduct involved repeated actions or was an isolated incident; and the harm was the result of intentional malice, trickery, or deceit, or mere accident. Campbell, 538 U.S. at 419, 123 S.Ct. at 1521. Unlike the harm involved in Campbell and Gore , the harm in this case was not economic. Rather, it consisted of the violent death of a young mother. The jury also found that the conduct in question involved reckless disregard for the lives or safety of others. While the other factors were not present, meaning the degree of reprehensibility involved is certainly lower than if Steel Technologies had intentionally harmed Mrs. Congleton, there is no doubt that some reprehensibility is present. Under the second guidepost, it is clear that the difference between the compensatory damages and the punitive damages awarded was not outrageously disparate. The Supreme Court has held that few punitive damages awards that exceed a single digit multiplier of compensatory damages will survive constitutional scrutiny, and that the constitutional limit may be closer to a 4-to-1 ratio of punitive to compensatory damages. Id. at 425, 123 S.Ct at 1524. The punitive damages award of $1,000,000 fell well within these ranges. The direct compensatory damages for Mrs. Congleton's wrongful death were $667,267. That makes for a ratio of approximately 1½ to 1. When the children's compensatory damages awards totaling $2,000,000 are taken into account, the ratio of punitive damages to compensatory damages is significantly lower, approximately 3/8 to 1. Both these ratios are significantly lower than those found to be inappropriate by the Supreme Court. See id. (ratio of 145 to 1); Gore, 517 U.S. at 582, 116 S.Ct. at 1603 (ratio in the range of 500 to 1). With regard to the third guidepost, the civil penalty allowed by the Motor Vehicle Carrier Administration for the sort of violation in this case is $10,000. In fact, Steel Technologies did pay a fine of $10,000 for this incident. While the civil fine is significantly less than the punitive damages awarded in this case, the difference is significantly less than that encountered in Gore and Campbell , both of which also discussed $10,000 civil penalties. Campbell, 538 U.S. at 428, 123 S.Ct. at 1526 (The most relevant civil sanction under Utah state law for the wrong done to the Campbells appears to be a $10,000 fine. . . .); Gore, 517 U.S. at 584, 116 S.Ct. at 1603 (noting that the maximum fine under the law of the state where the conduct occurred was $2,000 but noting that other states allowed up to $10,000). The disparity between the fine in this case and the punitive damages is several orders of magnitude less than that encountered in both Gore and Campbell . While the degree of reprehensibility in this case may not even approach the conceivable maximum, it is balanced by the fact that the ratios of punitive damages to compensatory damages and to civil fines are significantly lower than those in the Supreme Court's jurisprudence. In light of this, the punitive damages in this case were not excessive or exorbitant and therefore survive the due process challenge. The decision of the Court of Appeals is affirmed in part and reversed in part, and this case is remanded to the circuit court with instructions to vacate that portion of the judgment awarding damages for emotional anxiety. LAMBERT, C.J.; CUNNINGHAM, SCHRODER and SCOTT, JJ., concur. MCANULTY, J., concurs by separate opinion. MINTON, J., not sitting.