Opinion ID: 2516780
Heading Depth: 4
Heading Rank: 2

Heading: The trial court's instruction on statutory damages caps was harmless error.

Text: Because the defamatory conduct at issue here took place in 1998, the jury's award of punitive damages is governed by AS 09.17.020. This statute limits punitive damages awards to the greater of three times compensatory damages or $500,000. Subsection (g) of the statute allows an increased award of up to $7,000,000 if the fact finder determines that the conduct proven was motivated by financial gain and the adverse consequences of the conduct were actually known by the defendant or the person responsible for making policy decisions on behalf of the defendant. The statute is silent as to whether the court should inform the jury of the statutory caps or the legal significance of their findings as to motivation. Here, over the Association's and Merculief's objection, the trial court instructed the jury that they could award a maximum of $500,000 in punitive damages, unless they answered yes to special verdict form questions 1 and 2asking separately whether each defendant was motivated by financial gain and knew the adverse consequences of its conductin which case the jury could award up to $7,000,000 in punitive damages. The jury answered yes to both questions 1 and 2 of the special verdict form, and awarded punitive damages of $400,000 against the Association and $200,000 against Merculief. The Association and Merculief argue that, by informing jurors of AS 09.17.020's damages cap provisions, the trial court infringed on their constitutional right to a jury trial on punitive damages. The Association and Merculief assert that article I, section 16 of the Alaska Constitution guarantees them the right to a jury trial to the extent that that right existed at common law, and that the trial court, by informing the jury of the applicable damages caps, interfered with the jury's ability to independently calculate, and ultimately to decide, that issue. They support their position by citing to a number of state court decisions that have found compensatory damages caps unconstitutional under their state constitutions. [23] Other states that have found caps constitutional have done so based on an assumption that the caps will be employed by the trial judge after the jury calculates its award of damages independent of the caps. [24] Subsequent to the briefing in this case we resolved the question of whether the punitive damages caps of AS 09.17.020 are constitutional. In Evans v. State we held that the punitive damages caps are constitutional and do not infringe on the right to trial by jury. [25] That holding controls here. But Evans did not resolve the question whether it is appropriateor constitutionalto instruct a jury as to the existence and the amount of the caps. We proceed to address that question. The trial court here responded to appellants' objection to the cap instruction by giving the following instruction: In giving these instructions to guide you on how punitive damages are to be determined, the court does not intend to express any opinion as to how much money for punitive damages you should award. You may not assume that because the court identifies ranges of damages or explains how to measure the damages that you are required to make an award of a particular amount of punitive damages. The amount of punitive damages to award is entirely within the purview of you, the jury. As Anderson correctly notes, we presume that a jury follows the trial court's instructions. [26] Anderson contends that because the trial court instructed the jury not to use the caps as a gauge for an appropriate award, we should assume that the jury refrained from doing so. We agree with the appellants that instructing the jury on the punitive damages caps was error. Putting the caps before the jury carried a substantial risk of suggesting the range of appropriate punitive awards. [27] Moreover, no countervailing benefit could be gained from the instruction. [28] However, we find that under the circumstances of this case the error does not warrant reversal. Three factors lead to this conclusion. First, this is an issue of first impression in Alaska, and no clear guidance has been available on the issue. Second, the instruction quoted above warned the jury against drawing suggestive inferences from the caps and we normally presume that a jury follows such instructions. [29] And third, the fact that the jury awarded punitive damages totaling $400,000 against the Association and $200,000 against Merculiefwhen their findings as to financial motivation and actual knowledge entitled them to award up to $7,000,000 against eachindicates that the jury did not improperly adjust its award of punitive damages based on the caps instruction.