Opinion ID: 836017
Heading Depth: 2
Heading Rank: 1

Heading: Remedy Clause

Text: Article I, section 10, provides that [n]o court shall be secret, but justice shall be administered, openly and without purchase, completely and without delay, and every man shall have a remedy by due course of law for injury done him in his person, property, or reputation.  (Emphasis added.) In Smothers v. Gresham Transfer, Inc., 332 Or. 83, 124, 23 P.3d 333 (2001), this court examined in detail the origin and meaning of the remedy clause, and held that, because Article I, section 10, guarantees a remedy for any injury to absolute common-law rights respecting person, property, or reputation, the legislature does not have the authority to deny a remedy for such injuries. The conclusions about the remedy clause outlined in Smothers define the inquiry necessary to determine whether legislative action violates that constitutional guarantee. See Jensen v. Whitlow, 334 Or. 412, 417-18, 51 P.3d 599 (2002) (so stating). In accordance with the analytical approach of Smothers, our first step, ordinarily, is to determine whether the injury that plaintiffs have alleged is one for which the remedy clause guarantees a remedy. Smothers, 332 Or. at 124, 23 P.3d 333. If so, then the next question is whether the legislation at issue in this case, ORS 18.540abolished that remedy without providing a constitutionally adequate substitute. Id. In this case, the parties appear to agree that the injury plaintiffs allegetheir underlying claims for wrongful use of civil proceedings and fraudulent transfer of real propertyare ones for which Article I, section 10, guarantees a remedy. The parties' dispute concerns whether the jury's punitive damages award is part of that constitutionally protected remedy. Plaintiffs argue that the punitive damages award itself is a remedy to which they are entitled under Article I, section 10, and that, therefore, the legislature may not interfere with plaintiffs' receipt of that award without providing a constitutionally adequate substitute remedy. [4] As we explain below, a punitive damages award is not a remedy that Article I, section 10, guarantees to a particular party for injury to person, property, or reputation. This court previously examined whether Article I, section 10, protects the availability of punitive damages awards as a remedy in Wheeler v. Green, 286 Or. 99, 118-19, 593 P.2d 777 (1979). There, the court's concern was whether the availability of punitive damages awards in actions for defamation amounted to a restraint of free speech in violation of Article I, section 8, of the Oregon Constitution. [5] Because, among other reasons, the threat of large damage recoveries can easily inhibit the exercise of freedom of constitutionally protected expression, as well as its abuse, the court was convinced    that a proper application of Article I[, section] 8, prohibit[ed] the award of punitive damages in defamation cases, unless some other constitutional provision require[d] that they be allowed. Id. at 119, 593 P.2d 777 (emphasis added). Turning to examine Article I, section 10, the court concluded that that constitutional provision did not require the availability of punitive damages because `   such damages are awarded by way of punishment to the offender and as a warning to others, or according to some authorities, by way of example.' Wheeler, 286 Or. at 118, 593 P.2d 777 (quoting Martin v. Cambas, 134 Or. 257, 261, 293 P. 601 (1930)). In other words, punitive damages were [not] necessary to compensate the plaintiff for injury to reputation. Wheeler, 286 Or. at 118, 593 P.2d 777. The court therefore concluded that it is the right to recover compensation for injuries suffered, not the punishment or deterrence that punitive damages might provide, that is the remedy protected by Article I, section 10. Id. at 119, 593 P.2d 777 (citing Davidson v. Rogers, 281 Or. 219, 222, 574 P.2d 624 (1978) (Linde, J., concurring) (statute that bars general damages for defamation, absent timely retraction request, does not violate Article I, section 10)). See also Hall v. The May Dept. Stores, 292 Or. 131, 145, 637 P.2d 126 (1981) (remedy under Article I, section 10, does not extend beyond compensation for the injury to punishment or deterrence). Plaintiffs argue that the conclusions reached in Wheeler were the result of a unique situation that required the balancing of two competing constitutional interests. They assert that Article I, [section] 10[,] did not require punitive damages in defamation cases, because Article I[, section] 8[,] protected free expression. (Emphasis in plaintiffs' brief.) However, that interpretation of Wheeler is the opposite of what this court stated in that case. As explained above, the court in Wheeler held that Article I, section 8, could be interpreted to bar plaintiffs' recovery of punitive damages because Article I, section 10, does not protect those damages as a remedy for plaintiffs who suffer an injury to reputation. Wheeler, 286 Or. at 118-19, 593 P.2d 777. In other words, Wheeler suggests that Article I, section 10, does not protect punitive damages awards generally, and, with respect to this case, Wheeler thus supports the conclusion that the state can, as it does under ORS 18.540, appropriate portions of punitive damages awards in any case without depriving plaintiffs of a constitutionally protected remedy. Nevertheless, although we view the conclusions in Wheeler to be relevant here with respect to Article I, section 10, in that case the court did not engage in as detailed an analysis of the origins and meaning of the constitutional provision as this court more recently has concluded is appropriate. See Priest v. Pearce, 314 Or. 411, 415-16, 840 P.2d 65 (1992) (setting out methodology for analyzing constitutional provision). For that reason, we choose to follow the inquiry set out in this court's more recent case law. However, in doing so, we do not reject the conclusion that this court reached in Wheeler. Indeed, this court's holding in Wheeler is consistent with the conclusion we reach here regarding Article I, section 10. Under the analytical framework set out in Priest and followed in Smothers, we address an original constitutional provision on three levels: Its specific wording, the case law surrounding it, and the historical circumstances that led to its creation. Priest, 314 Or. at 415-16, 840 P.2d 65. According to the state, such an analysis reveals that the framers of Article I, section 10, viewed the purpose of punitive damages in Oregon as a means of punishing a defendant for particularly egregious conduct and deterring such conduct in the future. In light of that dual purpose, both aspects of which focus solely on vindicating society's interests, the state contends that the framers did not intend punitive damages to be a remedy protected by Article I, section 10, because such damages were not necessary to compensate a particular plaintiff for injury caused by the defendant's conduct. The state's position is consistent with the conclusions that this court reached in Wheeler, and, for the reasons that follow, it is correct.
We begin with an analysis of the text of Article I, section 10. Priest, 314 Or. at 415-16, 840 P.2d 65. As we noted above, the remedy clause of that provision guarantees that persons whose protected rights have been injured will have a means to seek redress for such injuries. Smothers, 332 Or. at 119-20, 124, 23 P.3d 333. Significantly, the text of Article I, section 10, protects the availability of a remedy to every man only for an injury done him in his person, property, or reputation. (Emphasis added.) [6] Those words indicate that Article I, section 10, protects punitive damages as a remedy only if those damages are a means of restoring the rights of an injured party. To determine whether that is the case, we turn to an examination of the historical circumstances surrounding the adoption of Article I, section 10. Priest, 314 Or. at 415-16, 840 P.2d 65.
During the two decades before the drafting of Article I, section 10, in 1857, two treatises appear to have had particularly strong influence on the thinking surrounding the subject of punitive damages: Simon Greenleaf's Treatise on the Law of Evidence, published in 1842, and Theodore Sedgwick's On the Measure of Damages, published five years later, in 1847. References to those two legal works were pervasive in American courts in the 1850s. Based upon those references, we assume that the framers of the Oregon Constitution were familiar with at least some of the many cases dealing with punitive damages that were decided under principles discussed in those treatises, even if they were not directly familiar with the treatises themselves. [7] On that assumption, we turn to a review of the two texts. When Greenleaf published his treatise on evidence in 1842, American courts had been awarding punitive damages to plaintiffs for about 50 years, following a practice that had its modern origins in late eighteenth-century England. [8] In England, a plaintiff typically could recover compensatory damages only for tangible injuries to which an exact monetary value could be attached. Linda L. Schleuter & Kenneth R. Redden, 1 Punitive Damages § 1.3(C), 7 (4th ed. 2000). As a consequence, the doctrine of punitive damages emerged from the English courts' desire, in part, to compensate plaintiffs for intangible injuries, such as mental anguish and insult caused by especially egregious conduct, for which there was no available remedy. Id. § 1.3(D) at 8. [9] Unlike English courts, however, by the time Greenleaf wrote his treatise, courts in America steadily had expanded the notion of compensatory damages to cover intangible injuries to such an extent that the idea of punitive damages serving as additional compensation had begun to fade. Id. § 1.4(A) at 15. American courts instead justified punitive damages solely as a means by which juries could punish and deter defendants for egregious conduct. Id. § 1.4(A) at 16. Greenleaf objected in his treatise that punitive damages, stripped of any compensatory justification, were an improper intrusion of a public interest into private disputes. See Simon Greenleaf, 2 A Treatise on the Law of Evidence § 253, 244 (3d ed. 1850), reprinted in Morton J. Horowitz, ed., American Law: The Formative Years (1972). See also Michael Rustad & Thomas Koenig, The Historical Continuity of Punitive Damages Awards: Reforming the Tort Reformers, 42 Amer U L Rev 1269, 1298-1300 (1993) (reviewing Greenleaf's criticisms). Greenleaf asserted that [d]amages are given as a compensation, recompense, or satisfaction to the plaintiff, for an injury actually received by him from the defendant. They should be precisely commensurate with the injury; neither more, nor less; and this, whether it be to his person or estate. Greenleaf, 2 Law of Evidence § 253 at 244 (footnotes omitted). One of Greenleaf's practical concerns was that, by permitting society to vindicate an interest in punishment and deterrence in a private action, punitive damages threatened to expose a defendant, who might still be subject to criminal prosecution or fines, to double punishment. Id. § 253 at 244 n 2, 250. In 1847, Sedgwick published the first edition of his treatise on damages. Rather than join Greenleaf in criticizing the propriety of punitive damages, Sedgwick declared that, `wherever the elements of fraud, malice, gross negligence, or oppression mingle in the controversy, the law, instead of adhering to the system, or even the language of compensation, adopts a wholly different rule. It permits the Jury to give what it terms punitory, vindictive, or exemplary damages; in other words, blends together the interest of society and of the aggrieved individual, and gives damages not only to recompense the sufferer, but to punish the offender. ' Greenleaf, 2 Law of Evidence § 253 at 244 n 2 (quoting Theodore Sedgwick, Sedgwick on Damages 39) (emphasis in Greenleaf). Sedgwick justified his views primarily on the ground of stare decisis (indeed, Sedgwick conceded that, were it a new proposition, [punitive damages] would strike the Anglo-Saxon lawyer as an absurdity [10] ), and he cited the many American and English cases where courts had approved of punitive damages awards in the past. See Theodore Sedgwick, Sedgwick on the Measure of Damages 525-32 (4th ed. 1868) (hereinafter Sedgwick on Damages (4th ed.)). In subsequent editions of his treatise, Greenleaf included a rejoinder to Sedgwick's statement of the law, pointing out that, in each of the cases that Sedgwick had cited as approving of punitive damages, the courts actually had used such terms as exemplary or vindictive damages to refer to damages for mental anguish, personal indignity, insult, or other injury. In other words, in Greenleaf's view, the courts improperly had described as exemplary or vindictive damages what should have been understood as compensatory damages for nontangible injuries. Greenleaf, Law of Evidence § 253 at 244 n. 2, 249-50. See also Donald Paul Hodel, The Doctrine of Exemplary Damages in Oregon, 44 Or. L. Rev. 175, 177 (1965) (reviewing Greenleaf's criticism). Greenleaf thus continued to insist that true punitive damages i.e., damages inflicted solely to punish and deterhad no doctrinal support. See Rustad, 42 Amer. U. L. Rev. at 1299. Sedgwick subsequently modified his view of punitive damages to omit any reference to a compensatory justification, but he nonetheless continued to maintain that such damages were warranted to impose a punishment on the defendant and [to] hold up an example to the community. Sedgwick on Damages (4th ed.) at 522. Courts in the 1850s frequently cited the conflict between Greenleaf and Sedgwick in decisions involving punitive damage awards. [11] Although many acknowledged Greenleaf's criticisms, only four states (Louisiana, Massachusetts, Nebraska, and Washington) ultimately rejected as improper the awarding of punitive damages to punish a defendant in any case. See Charles T. McCormick, McCormick on Damages § 78, 278-79 (1935) (reviewing extent of acceptance of punitive damages). Most state courts accepted Sedgwick's view that punitive damages, whether or not conceptually satisfying, had become part of the law, based on long-standing precedent. [12] However, what is significant here is not that Sedgwick's view ultimately prevailed in the majority of states but, rather, the way in which Greenleaf and Sedgwick had framed the debatenamely, whether punitive damages were an appropriate means of vindicating an interest of society. Neither writer asserted that punitive damages were necessary to vindicate an interest of an injured plaintiff. In 1851, the United States Supreme Court acknowledged that, although the propriety of [the] doctrine [of punitive damages had] been questioned by some writers, (undoubtedly referring to Greenleaf, among others) the matter had been settled as follows: It is a well-established principle of the common law, that in    all actions on the case for torts, a jury may inflict what are called exemplary, punitive, or vindictive damages upon a defendant, having in view the enormity of his offense rather than the measure of compensation to the plaintiff.  Day v. Woodworth, 54 U.S. 363, 371, 13 How. 363, 14 L.Ed. 181 (1851) (emphasis added). Day reflects the outcome of the Greenleaf-Sedgwick debate and illustrates the predominant view of punitive damages in the years preceding the drafting of the Oregon Constitution in 1857: Punitive damages were imposed on defendants as punishment and deterrence, not as a means of compensating an injured party. Because it generally was understood that punitive damages were not compensatory in nature, it is not surprising that a plaintiff's receipt of those damages was not considered to be an entitlement or a right. Greenleaf, of course, because he advocated the abolition of punitive damages, certainly did not think so: `   The criminal, by suffering in his goods, may be discouraged or prevented from offending again[;] but a design to discourage or prevent him from offending again can be no ground for that person, whom he has injured by offending once, to claim property in the goods, which he is deprived of. The ends of punishment may be answered by taking the criminal's goods from him[;] but these ends do not require, that the property, which he loses, should be vested in the person, whom he has injured.' Greenleaf, 2 Law of Evidence § 253 at 244 n. 2, 254 (quoting T. Rutherforth, 1 Rutherforth's Institutes of Natural Law 434 (1799)). Sedgwick, on the other hand, believed that awarding plaintiffs punitive damages was a benign and even helpful practice: [T]here is little practical harm in the injured party getting more than actual compensation, if it be proper that the offender should pay it. There is a large class of offences which society is slow in punishing. The community (or those who represent it in the prosecution of such offenses), often fails to pursue the offender, and he would too often escape unless brought to justice by the determined effort which springs from the personal sense of wrong. A change in the rule would therefore be, to a certain extent, an irreparable loss to society. Sedgwick on Damages (4th ed.) at 532 n. , 535 (emphasis added). Sedgwick never suggested, however, that a plaintiff was entitled to receive punitive damages as a matter of right. To the contrary, several common-law principles, endorsed by Sedgwick, among others, reinforced the idea that punitive damages were not a right or entitlement. First, it was recognized as a general rule that a jury had the discretion to refuse to award punitive damages, even if the plaintiff had proved all facts in support of such an award. See, e.g., Theodore Sedgwick, 1 Sedgwick on Damages § 387, 546 (8th ed. 1891) (hereinafter 1 Sedgwick on Damages (8th ed.)) (it is error to instruct the jury to give exemplary damages, for the plaintiff can never claim them as a matter of law). See also Smith v. Wade, 461 U.S. 30, 52, 103 S.Ct. 1625, 75 L.Ed.2d 632 (1983) (because punitive damages are within jury's discretion, they are never awarded as of right, no matter how egregious the defendant's conduct). Second, courts refused to allow plaintiffs to assert a claim for punitive damages, alone, as the basis for an action. See 1 Sedgwick on Damages (8th ed.) § 361 at 525 (citing cases). Finally, courts circumscribed plaintiffs' ability to recover punitive damages in various circumstances deemed inappropriate. See, e.g., Francis Hilliard, The Law of Remedies for Torts, or Private Wrongs § 17, 446 (1867) (citing cases barring recovery when tortfeasor is deceased and, thus, cannot be punished); 1 Sedgwick on Damages (8th ed.) § 370 at 531 (citing cases barring recovery of punitive damages in breach of contract cases). The foregoing historical circumstances indicate that, around the time the Oregon Constitution was drafted in 1857, most courts and commentators viewed punitive damages as a means by which society could punish and deter egregious behavior and not as a remedy for an injured party. Furthermore, although plaintiffs were acknowledged as the traditional beneficiaries of those damages, plaintiffs could not claim those damages as a matter of right or entitlement. Having examined the text of the remedy clause and historical evidence, our final step is to examine Oregon case law to determine whether this court's rulings are consistent with the notion that punitive damages are not a remedy within the meaning of Article I, section 10. See Priest, 314 Or. at 415-16, 840 P.2d 65.
Like the majority of courts in other states, the earliest Oregon Supreme Court cases endorsed the view that juries could award punitive damages in those cases in which the defendant had injured the plaintiff wilfully or with express malice. See Moore v. Floyd, 4 Or. 101, 104 (1871) (in cases of willful neglect, exemplary damages might be recovered against [defendant]). See also Heneky v. Smith, 10 Or. 349, 353 (1882); Smith v. Harris, 7 Or. 76, 77 (1879) (both holding same). However, the Oregon Supreme Court did not address the doctrine of punitive damages meaningfully until 1885, when it decided Sullivan v. Oreg. Ry. & N. Co., 12 Or. 392, 7 P. 508 (1885). There, this court stated: It has in many instances been seriously questioned whether exemplary or punitive damages could properly be allowed in any private action. It would be extremely difficult, if not impossible, to give any good reason for such allowance, since the rule giving actual damages has been so liberally construed; but, however that may be, it seems to have attached itself to our jurisprudence, and we are made recipients of its benefits and compelled to endure the hardships it imposes.    When the conduct of a person has been wilful, malicious, and wanton or reckless, and an injury has resulted to another in consequence of it, a jury might, with a semblance of reason, in an action to recover damages for such injury, assess something more than a mere compensatory sum therefor. That course, doubtless, would have a salutary effect in two respects: would visit the wrong-doer with wholesome punishment, and afford an example calculated to deter others from the commission of malevolent acts[.] Id. at 404, 7 P. 508. Thus, in Sullivan, based upon the principle of stare decisis, this court accepted the doctrine of punitive damages as a means of punishment and deterrence. This court never has articulated any other rationale for the doctrine. See, e.g., Honeywell v. Sterling Furniture Co., 310 Or. 206, 210, 797 P.2d 1019 (1990) (Punitive damages are not a substitute for compensatory awards nor an offset against litigation expense. (Internal quotation marks omitted.)); Lane County v. Wood, 298 Or. 191, 203, 691 P.2d 473 (1984) (Punitive damages are not to compensate an injured party, but to give bad actors a legal spanking.); Noe v. Kaiser Foundation Hosp., 248 Or. 420, 425, 435 P.2d 306 (1967) (Punitive damages can only be justified on the theory of determent.). See also Hodel, 44 Or. L. Rev. at 182 (No Oregon case has been found which approves of the idea that exemplary damages are allowed to give the plaintiff revenge, and no cases assert the compensatory function of exemplary damages as a justification for their award.). Furthermore, Oregon courts viewed the punitive and deterrent effect of punitive damages as vindicating interests of society in general, and not of any plaintiff in particular. See, e.g., Stroud v. Denny's Restaurant, 271 Or. 430, 437, 532 P.2d 790 (1975); Noe, 248 Or. at 425, 435 P.2d 306 (both so stating). Consistent with those views, this court never has recognized punitive damages as an entitlement or right protected by the Oregon Constitution. For example, in Osmun v. Winters, 25 Or. 260, 268, 35 P. 250 (1894), this court held that `the question whether [exemplary damages] shall be given or not is one for the jury, and it is erroneous to instruct the jury to give exemplary damages, for the plaintiff can never recover them as a matter of law. ' (Quoting Jacobs v. Sire, 4 Misc. 398, 23 N.Y.S. 1063, 1064 (N.Y.Super.1893)) (emphasis added). See also Hall, 292 Or. at 146, 637 P.2d 126 (Where such damages beyond any actual injury are allowable, the plaintiff collects them as a form of public punishment, not by virtue of a personal entitlement to compensation.); State ex rel Young v. Crookham, 290 Or. 61, 71-72, 618 P.2d 1268 (1980) (The issue in determining punitive damages is not who will share what with whom, but the sufficiency of the deterrent effect of punitive damages on the defendant.); Van Lom v. Schneiderman, 187 Or. 89, 108, 210 P.2d 461 (1949) ([T]he jury has entire discretion to refrain from giving any punitive damages at all even though all the elements of malicious and damaging misconduct may have been established.); Lane v. Schilling et al., 130 Or. 119, 127, 279 P. 267 (1929) (plaintiff receives exemplary damages to which he is not entitled as a matter of right and compensation). Courts and commentators nonetheless have advanced a number of reasons why plaintiffs should receive punitive damages awards. One of the more common arguments, articulated by Sedgwick among others, is that the prospect of receiving punitive damages provides an incentive for plaintiffs to prosecute claims that the state otherwise would not pursue, i.e., to act as so-called private attorneys general. See Sedgwick on Damages (4th ed.) at 532 fn. , 535 (discussing punitive damages as inducement to pursue claims); Hodel, 44 Or. L. Rev. at 182 (same). Indeed, for that reason this court has noted the utility of punitive damages. See Crookham, 290 Or. at 68-69, 618 P.2d 1268 (discussing rationales for multiple awards of punitive damages against single wrongdoer for a single wrongful act). That rationale for awarding punitive damages also is consistent with the underlying purpose of punitive damages as serving a societal interest. As the cases previously discussed demonstrate, this court for more than a century has affirmed the usefulness of punitive damages as a means to punish and deter wrongful conduct. We also have recognized the desirability of awarding punitive damages to plaintiffs to provide an incentive to bring claims against wrongdoers. Crookham, 290 Or. at 68, 618 P.2d 1268. However, the extent of that incentive is a matter of common-law adjudication or policy, and this court never has viewed it as a constitutional entitlement under Article I, section 10. As such, like other nonconstitutional issues of law, the allocation of punitive damages may be changed by the legislature. [O]rdinarily, the creation of law for reasons of public policy    is a task assigned to the legislature, not to the courts. Bennett v. Farmers Ins. Co., 332 Or. 138, 149, 26 P.3d 785 (2001). To summarize, although this court's first discussions of punitive damages awards are not precisely contemporaneous with the drafting of the Oregon Constitution in 1857, they contain some of the earliest expressions of the purpose and nature of punitive damages in the state. When taken together with the historical circumstances surrounding the drafting of Article I, section 10, they lead us to conclude that punitive damages were understood as a means of vindicating society's interest in punishing and deterring especially egregious conduct, rather than as a means for seeking redress for injury to person, property or reputation. Accordingly, we hold that ORS 18.540 does not deprive plaintiffs of a remedy protected under Article I, section 10, by allocating part of punitive damages awards to the state.