October 14, 2010

Stroud v. Blount: cert. petition asks whether courts can consider attorneys' fees as "actual harm" for ratio purposes

The U.S. Supreme Court will decide tomorrow whether to grant two cert. petitions raising punitive damages issues: the Hebble case we discussed last week, and Stroud v. Blount, which is featured today on SCOTUSblog's Petitions to Watch.

The Stroud petition asks the court to decide whether a court can count a plaintiff's attorneys' fees as "actual harm" for the purpose of calculating the ratio of punitive damages to the plaintiffs' actual harm, as required under the due process test set forth in BMW v. Gore and State Farm v. Campbell.  This issue could have a big impact; obviously, allowing courts to consider attorneys' fees for ratio purposes would result in larger punitive damage awards surviving judicial review. 

California courts have already answered this question. The Third Appellate District held in Bardis v. Oates (2004) 119 Cal.App.4th 1 that attorneys' fees are not properly considered part of the plaintiff's actual harm for ratio purposes.  The Bardis opinion conflicts with the lower court opinion in Stroud, but the petition does not cite Bardis.  The petition does, however, cite a decision from the Utah Supreme Court that reached the same result as Bardis on this issue.

Links: Cert. petition, lower court opinion, Supreme Court docket.