Court Opinion

ID: 9579791
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:58:42.231273+00
Date Added: 2024-06-11T13:35:47.052158
License: Public Domain

HOLOHAN, Justice,
dissenting.
The concept of punitive damages has been the subject of considerable controver*506sy among legal scholars. Punitive damages are not allowed in some states; in others, restrictive rules have been developed to control such damages. The entire concept of punitive damages has been subjected to attack from some sources. RESTATEMENT (SECOND) OF TORTS § 908 comment f (1965). This court in Rawlings v. Apodaca, 151 Ariz. 149, 726 P.2d 565 (1986), and Linthicum v. Nationwide Life Ins. Co., 150 Ariz. 326, 723 P.2d 675 (1986), narrowed the field of conduct justifying punitive damages and adopted a higher standard of proof to justify the imposition of punitive damages. These reforms should not be viewed as the end of the reexamination of the concept of punitive damages.
The action by the court in this case in declining to apply the Linthicum standard of proof retroactively does not appear justified. The three factors of reliance, purpose and inequity, adopted in Chevron Chemical Co. v. Superior Court, 131 Ariz. 431, 641 P.2d 1275 (1982), for the retroactive-prospective analysis, weigh heavily for retroactive application of the Linthicum rule. Reliance on the old rule is the only factor which favors prospective application. The purpose of the new rule to avoid loosely assessed punitive damage favors retroactive application. Finally, the factor of inequity does not favor the plaintiffs because there is no particular right to punitive damages—they are a windfall. Punitive damages are a discretionary matter with the jury, and a retrial of the punitive damage issue does not deprive the plaintiffs of their right to compensatory damages—which are the only damages they had a right to recover.
From my review of the Chevron factors I conclude that they weigh in favor of the usual rule in civil cases of retroactive application. I therefore dissent from the decision of the court.
There is also another matter which deserves comment. The compensatory damage award in this case is $15,000, but the punitive damage award is $3.5 million which is three and one-half times the maximum fine which could have been imposed upon the defendant if it had been convicted of a felony. See A.R.S. § 13-803(A)(1) (Supp.1986). The amount of the award in this ease is a clear illustration of the penal nature of such damages. The court, however, declines to consider the constitutional issues raised by the defendant concerning the current procedures for assessing punitive damages. I believe that this case presents the right opportunity for the court to consider the constitutionality of our procedures in determining and assessing punitive damages.
Two notable law review articles discuss a number of the constitutional issues arising from the current procedure employed by a number of states in determining and assessing punitive damages. Wheeler, The Constitutional Case for Reforming Punitive Damages Procedures, 69 VA.L.REV. 269 (1983); Grass, The Penal Dimensions of Punitive Damages, 12 HASTINGS CONST. L.Q. 241 (1985). Essentially, the authors agree that punitive damages are penal in nature and require a due process procedure greater than that required for civil matters but not as strict as that required for criminal matters. The authors note that juries are usually given no standards to guide them in assessing the amount of punitive damages. They are told that the purpose of punitive damages is to punish the defendant and to deter others. This is also the purpose of the criminal law. Unlike the criminal law, however, there are no defined limits to the punishment in the instance of punitive damages. The jury’s discretion is virtually unlimited save and except for the occasional finding by an appellate court that the award was manifestly unfair, unreasonable or outrageous so as to shock the conscience of the appellate court. The authors conclude that such broad unguided discretion does not meet due process requirements for the assessment of what is in fact a criminal penalty.
At least three minimum requirements have been suggested as necessary for punitive damage procedures to meet due pro*507cess standards: (1) the procedure should be bifurcated from the compensation portion of the case; (2) proof of the right to punitive damages should be by clear and convincing evidence; and (3) the maximum amount for punitive damages should be established by law. Wheeler, supra.
The United States Supreme Court has not directly addressed the issue of procedural due process for assessing punitive damages. That court has noted that the due process clause protects civil litigants who seek recourse in the courts either as defendants hoping to protect their property or as plaintiffs attempting to redress grievances. Logan v. Zimmerman Brush Co., 455 U.S. 422, 102 S.Ct. 1148, 71 L.Ed.2d 265 (1982). On another occasion it has observed that in most jurisdictions jury discretion over the amounts awarded is limited only by the general rule that punitive damages not be excessive. Consequently, juries assess punitive damages in wholly unpredictable amounts bearing no necessary relation to the actual harm caused. Juries remain free to use their discretion selectively to punish or not punish. Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789 (1974). Last year in Aetna Life Insurance Co. v. Lavoie, — U.S. -, 106 S.Ct. 1580, 89 L.Ed.2d 823 (1986), the court acknowledged that challenges to the constitutionality of the lack of standards for the award of punitive damages raised important issues which, in an appropriate setting, must be resolved. The case was, however, decided on another basis which made it unnecessary for the court to resolve the challenge to the award of punitive damages.
No purpose can be accomplished by delaying a decision on the important issues raised by the defendant’s challenge to the constitutionality of our present procedure for awarding punitive damages.
In Linthicum this court adopted the higher standard of proof to establish a claim for punitive damages. This action brings us part of the way towards meeting the suggested due process standards for assessing punitive damages. The mechanism for meeting another requirement—bifurcated trial—is already in place. Arizona Rule of Civil Procedure 42(b), 16 A.R.S. permits separate trials of claims on any issue. A claim for punitive damages could and should be separated from the other issues in the case and tried separately after the plaintiff has prevailed on the issues for compensatory damages. The same jury which heard the first phase of the case could hear the second phase dealing with the punitive damages issue.
The only matter of real controversy is whether due process requires that limits be placed on the maximum amount which may be awarded for punitive damages. There appear to be strong arguments for the position that due process requires such maximum limits because of the penal nature of punitive damages. In any event, the issue should be considered and resolved.
The constitutional issues raised in this case will not disappear. Other counsel faced with the problem will, perhaps, make a better record, but ultimately this court must decide the issues. This case presented the opportunity for this court to resolve the challenges to the constitutionality of the Arizona procedure for awarding punitive damages. The decision of the court leaves the matter in doubt and speculation.