January 18, 2018

SCOTUS asked to address punitive damages "overkill" in mass tort cases (Crane Co. v. Poage)

In a few months, the Supreme Court will decide whether to wade back into the subject of punitive damages, a topic it hasn't addressed in a few years.  A pending cert. petition asks the Court to address the following two issues:

1. Whether the Due Process Clause requires appellate review that considers factors undermining the reasonableness of a punitive damages award? 
2. Whether the Due Process Clause prohibits a punitive damages award that is more than ten times a substantial compensatory damages award against a defendant who faces multiple suits arising from a single course of conduct?
The petition arises from a decision of the Missouri Court of Appeals that affirmed $822,250 in compensatory damages and $10 million in punitive damages.

The second issue in the petition is particularly interesting to me.  For decades courts have struggled to find a way to address the problem of duplicative punishment that arises when multiple plaintiffs seek punitive damages for the same conduct.  (In this case, the conduct was the defendant's use of asbestos-containing materials in equipment supplied to the Navy shortly after World War II).  Many courts have voiced concerns about punitive damages overkill, but they have not yet devised a workable solution. 

In California, defendants are permitted to raise this concern only if they present the jury with evidence or prior punitive damages awards.  (See Stevens v. Owens-Corning Fiberglas.)  In my view, that rule conflicts with the Supreme Court's subsequent due process decisions.  Those decisions require courts to evaluate punitive damages based on various matters not presented to the jury.  For example, the California Supreme Court held in 2016 that, when courts compare punitive damages awards to the amount of actual harm for excessiveness purposes, they can take into account attorney fees awarded as compensatory damages (Brandt fees), even if the fee award occurred after the jury's punitive damages verdict.  (See Nickerson v. Stonebridge.)  If courts can consider other matters not presented to the jury, they should also be allowed to consider the fact that the defendant has already been punished for the same conduct in other cases.

The Court will likely hold its conference on this petition in March. I believe this will be the first punitive damages petition to come before the Court since Justice Gorsuch replaced Justice Scalia, who consistently dissented from all of the Court's due process decisions on punitive damages.