October 7, 2010

Pending cert. petitions raise punitive damages issues

Two recent cert. petitions ask the U.S. Supreme Court to address interesting questions of punitive damages law.

The first is Lawnwood Medical Center, Inc. v. Sadow, featured today on SCOTUSblog as a "Petition of the Day."  The defendant, challenging a punitive damages award of $5 million, raises questions about the application of the due process limitations on excessive punitive damages in cases involving intentional harm and nominal damages:

1. Are punitive damages for intentional harm exempt
from the guidepost analysis?

2. Can state law exempt punitive awards for certain
conduct from the guidepost analysis mandated
by the Federal Constitution?

3. When actual damages are small or nominal, may
a court rely on the defendant’s wealth--rather
than awards in similar cases or comparable legislative
penalties--as an objective indicator of
whether a punitive award is constitutional?

Links: Petition for certiorari, lower court opinion, Supreme Court docket.

The second notable petition is Shell Oil v. Hebble, in which the plaintiff obtained a $53.6 million punitive damages award.  The defendant's cert. petition asks the Court to consider what components of a plaintiff's recovery can properly be considered as "actual harm" for the purposes of comparing a punitive damages award to the plaintiff's actual harm:

1. Whether, in calculating the ratio of punitive damages
to harm to the plaintiff, heightened penalties such as
12% interest imposed to compel compliance may be
treated as “compensatory.”

2. Whether, in determining the maximum punitive
damages award in a case involving a substantial compensatory
award and only economic harm, courts should be
guided by the 1-to-1 ratio mentioned in State Farm or
instead presume that anything within the range of 4-to-1
is permissible.

Links: Petition for certiorari, National Association of Manufacturers (NAM) amicus brief, Supreme Court docket, our prior blog post.

The Hebble petition has been distributed for the Supreme Court's Oct. 15 conference, so we will have a ruling on that one soon.

Both petitions impliedly assume that, if the Supreme Court accepts these cases, it will adhere to its recent line of cases holding that the Due Process Clause limits the imposition of excessive punitive damages.  That assumption is not necessarily a foregone conclusion.  Of the Justices who joined the majority in BMW v. Gore and State Farm v. Campbell, only Justices Kennedy and Breyer remain with the Court.  Three justices who dissented from those opinions, Justices Scalia, Thomas, and Ginsburg, all remain with the Court.  Chief Justice Roberts signed on to the majority opinion in Philip Morris v. Williams, which probably means he is not ready to jettison the BMW/Campbell line of precedent, but the views of Justices Alito, Sotomayor, and Kagan are unknown (at least to me).  If two of those three joined with the trio of dissenters, they could conceivably toss this precedent aside.