March 11, 2008

Anthony Sebok's Criticism of the Oregon Supreme Court's Goddard Decision Is Unwarranted

Professor Anthony Sebok of the Benjamin N. Cardozo School of Law has a column on Findlaw.com entitled The Oregon Supreme Court's Recent Decision on Punitive Damages: Why It Took the Wrong Approach.

Professor Sebok criticizes the court's recent decision in Goddard v. Farmers Insurance, which appears to be the first time the Oregon Supreme Court has ever reversed a punitive damages award as unconstitutionally excessive. Sebok's primary criticism is that the court reduced the punitive damages award to four times the compensatory damages award. He says the four-to-one ratio was based on nothing more than an offhand remark by the U.S. Supreme Court, and that the court's approach improperly crosses over into the realm of judicial lawmaking: "
When courts are debating between whether the ratio should be 3:1, 4:1 or 9:1, they do look an awful lot like members of a legislature dickering over the terms of a statute they are drafting."

But that's not really a fair criticism. The U.S. Supreme Court's decisions in BMW v. Gore, Cooper v. Leatherman, and State Farm v. Campbell mandate that lower courts scrutinize punitive damages awards closely and, absent extraordinary circumstances, reduce those awards to single-digit ratios. The Supreme Court has left it to the discretion of the lower courts to determine which ratio is appropriate in a particular case, but they have left no doubt that courts must pick some new ratio when they find an award to be excessive.
The Supreme Court's references to a 4:1 ratio in BMW and State Farm may have been off-hand remarks with respect to that particular ratio, but there can be no serious debate that the Supreme Court has directed the lower courts to reduce excessive awards. Whenever courts follow that mandate, they will necessarily adopt a new ratio other than the ratio chosen by the jury. So to the extent Professor Sebok believes that courts have no business deciding the appropriate ratios, that criticism is more properly aimed at the U.S. Supreme Court, not the Oregon Supreme Court.

UPDATE (by Lisa Perrochet 3/11/08 at 11:06 AM): On the other hand, there may be some cases where a complete new trial--rather than a new ratio selected by the court--is the only logical cure for an excessive punitive award because the jury's verdict suffers from so many flaws (such as wildly excessive compensatory damages that have to be reduced by the trial court and further reduced by the Court of Appeal, incomplete or inaccurate jury instructions on punitive damages, conflicting ratio analyses by the trial court and court of appeal, for example - if this sounds like a familiar scenario, see below for yesterday's post on the Buell-Wilson decision from the California Court of Appeal).