Did the Supreme Court "Campbell" decision ban "send them a message" punitive dam

Great Debates
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The Campbell decision restricted punitive damages that were too large in proportion to actual damages. According to law professor Anthony J. Sebok, the decision also had a second aspect.

In other words,

Sebok apparently based his interpretation on the words of Justice Kennedy in the majority decision.

This could be huge. It’s one thing to show that a big corporation has a widespread pattern of bad conduct that deserves enormous punishment. It’s usually harder to show that their bad conduct just to this plaintiff deserves huge punishment.

I find this analysis almost too good to be true. IMHO unlimited punitive damage awards for unrelated actions should not be permitted. They make a mockery of the Constitutional protections against unusual punishment and ex-post facto laws. (I know that SCOTUS doesn’t agree.)

I hope Sebok is right, but wonder about it. Can anyone shed light on this decision?

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december, if you would like to read the opinion, a copy can be found here.

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december, this confuses me. The guy’s article is about a case where SCOTUS decided that an award of punitive damages was excessive in regard to Due Process. You both seem to agree that the award was excessive. Is their disagreement just that you think the analysis should have been under unusual punishment and ex post facto grounds?

Also, Sebok doesn’t have all his facts right. The jury verdict was for $186,000. The $136,000 was the amount in excess of the Campbell’s policy limits. State Farm eventually paid the excess in addition to the policy limits.

Finally, rather than seeing this as the death knell for punitive damages, you might see this as the more mundane idea that excessive punitive awards rarely survive appeal.

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Thanks for the link, robb. Sorry for introduing confusion. Let me explain as best I understand it.

No. The SCOTUS already decided that punitive damages are not “punishment,” as far as Constitutional guanantees are concerned. I didn’t like that decision, but that’s neither here nor there.

Right. It’s pretty common when an insurance company negligently refuses to settle within policy limits, they may become liable for the entire award. In this case, State Farm did not choose to pay the entire award until their policyholder had sued them. If they had paid the $136,000 XPL right away, there would not have been any punitive damamges.

Sure, it’s part of that.

BTW as I read the decision, it looks to me as though similar cases could and should be brought in. The decision instructs the state court to consider “whether the conduct involved repeated actions or was an isolated incident.” In other words, unrelated bad things could be excluded, but those that are part of a pattern could be included.

At least, that’s how it looks to me.

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I think you are reading right. I get the impression the Supremes didn’t like the scope of the evidence for punitives. Utah can’t be responsible for State Farm’s actions throughout the country, so a state court in Utah shouldn’t try it either. I get the impression that if Campbell limited evidence to a pattern within Utah, the analysis would be the same, but the results could be different.

It will be interesting to see how this case is applied in torts that cause physical damage, such as pollution or prescription drug cases.

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There is a significant difference between punitive damages being reduced because the facts of the case do not support the amount of damages awarded and a near-blanket rule that punitive damages greater than a particular multiple of the compensatory award are unconstitutional.

I’m conflicted about the Campbell decision. The portion of it that Professor Sebok wrote about is, IMO, good and important, but the ratios Justice Kennedy wrote about are overkill.

This is the troubling part:

It is unlikely that single-digit multipliers are always (or even all that often) going to serve the State’s goal of deterrence. In civil actions at law, courts lack a very important weapon - they cannot forbid the liable party from repeating its bad conduct. The Utah trial court could not say to State Farm that, “in addition to paying the damages award, you are enjoined from engaging in similar conduct in the future.” That is the role of punitive damages - to make it uneconomic for the liable party to continue to act similarly in the future.
If the punitive damages multiplier is low, it is very likely that it will continue to be in the best interests of the liable party to continue their course of conduct. If they make $100 million a year by screwing a certain class of customers, and the punitive damage award for that conduct is only $100,000 due to the single-digit multiplier limit, 999 more customers would have to sue and win each year before it no longer makes sense for the company to continue acting as it has (ignoring legal fees, bad press, etc.). IOW, there is no real deterrent effect.

The Supremes seem to have pulled a number out of the air and required that it be applied in cookie-cutter fashion to all cases. That’s not good law, and its not good policy.

Sua

7

Justices Thomas, Ginsburg and Scalia dissented for reasons pretty much like SuaSponte’s. Strange alliance…

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What I find bizarre is the Supremes’ willingness to find a logic to limit the states on punitive monetary damages, yet defer to the states with respect to three-strikes statutes that do the same, not with money, but with the years of a defendant’s life.

I realize that to some extent this is apples and oranges legally, but it’s kinda funny where this court sees the need to overrule a state in the name of justice, and where it doesn’t.

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Well…

Actually, none of the dissenters rely on the criticism I put forth. Scalia and Thomas both continue to urge that there is no substantive protection in the Constitution against large punitive damages awards (I’m rather curious why they didn’t jointly dissent - if I were to read the cases to which they refer, I’d probably find a difference in nuance in their positions), while Ginsberg dissents on federalism grounds - that if multiplier limitations on punitive damages are appropriate, it is the job of the state legislature to impose them, not the Supremes.

In other news, there is no alliance because the dissenters did not agree on the basis for their independent dissents.

Sua

10

The Campbell decision appears to be the result of judicial frustration. The Supremes have long been squawking that the civil tort system is out of control and have been trying to get lower and state courts to see reason, but haven’t been able to articulate a rational and constitutionally coherent system for the imposition of punitive damages.

Now, since the state courts weren’t listening (or, more accurately, weren’t able to change things because no good basis for change had been enunciated), the Supreme threw a hissy fit and applied the sledgehammer. It’s the old adage, “hard cases make bad law,” come to life.

Sua

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Note that 3-strikes statutes are based on laws enacted by the state legislature and signed by the governor. Punitive damages are common law, that is, they were made up by judges.

Since punitive damages were entirely created by the courts, I suppose the SCOTUS would unquestionably have the right to control federal punitive damage procedures. The more difficult question is just how much deference the federal SC should give to give to state courts.

There seems to be no good way to define punitive damages. There’s no written law nor discussion in the state or federal constitutions. One approach would be to prohibit them, but that’s not going to happen. The SCOTUS aready ruled that they’re allowed. It may be that they are now frustrated, because there seems to be little due process in doing the process.

A logical POV is that judges can do anything they feel like, subject to appeal. However, some of those awards seem to be getting out of hand. Yet, there are few written guidelines for the court judge or the appeals judge. Common sense or individual judgment is pretty much what there is.

That leaves the question of whose judgment should apply? Judge Ginsburg suggests that legislation be passed. Absent such legislation it seems that a structure for punitive damages may evolve over time through some amorphous combination of federal and state judidial decisions.

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December, that is a completely bogus argument.
Putting aside the fact that there are indeed laws on punitive damages, your post completely upends the common law.

Common law is indeed judge-made law. But any aspect of the common law may be modified, eliminated, enhanced, etc., by the legislature. The common law ‘fills the interstices’ between statutes where the legislature has not spoken. Once the legislature speaks, the issue is decided and is out of judges’ hands (except, of course, to apply the new statute).

The Supremes opinion in Campbell doesn’t concern this bogus point in any way. The opinion is as follows:

  1. Punitive damages serve some of the same functions as criminal law (i.e. deterrence and retribution);

  2. In criminal law, the defendant has greater due process protections than in civil law;

  3. Because the civil defendant has less due process protection, we will impose an arbitrary cap on the amount of punitive damages that may be imposed.

This argument puts a monetary value on due process rights. “If we take from you in punitive damages $50,000, your due process rights have been protected, but if we take from you $500,000 in punitive damages, your due process rights have been violated.”

Does that make any sense? Due process is due process - the right to have your day in court.

Sua

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Thinking about it some more, december, you should be appalled at this decision. This is a classic example of substantive due process - that the Due Process Clause is a matter of substantive law and determinative of the result of a case.
Substantive due process is the great conservative bug-a-boo that gave rise to many of the Warren Court’s most despised decisions.

Sua

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december, you’re espousing the frequently heard but weakly supported view that tort reform is needed because damage awards are unfairly high. This argument rests on the twin conjectures that 1. juries always hate the big bad corporation and 2. high damage awards exact a cost from society. While these are bandied about as gospel, there’s little substance behind them beyond anectodatal evidence.

There are, additionally, two things you should take into account.

  1. Numerous state courts have flatly rejected the idea of “capping” damages; especially when the push comes from the Legislature. The reasoning goes like this; capping damages means, in practice, that if the jury awards damages higher than the cap, the judge will change the award to the maximum allowed. This amounts to basically stripping a defendant’s right to a fair jury trial, because they dont really get to impose the juries will.

  2. We face a very real, very modern problem in America today that is difficult to deal with- Toxic Exposure. Like it or not, corporations DO pump chemicals into the land, air, and sea, that may irrevocably damage people or property. We have a public policy interest in making sure that smoke stacks install scrubbers, chemical plants dont dump into rivers, etc, etc.

There’s a variety of availible alternatives to discourage this practice- one of them is through tort law. The problem is that actual damages from a latent harm are difficult to quantify. How do you award damages for a toxic spill that increases the risk of cancer to a family by 50%? It isn’t clear that the family actually WILL get cancer, but isn’t their increased risk worth something?

Such indivudals are slammed between a rock and a hard place. If they sue immediately, they will get small damages because they have no real symptoms to point to. But if they wait until symptoms manifest, it may be very difficult to find the evidence and witnesses they need- it could be years, decades after the exposure. So how do we compensate the innocent and deter the negligent?

Enter punative damages. Yes, sometimes a person will get a reward out of proportion to their injury, but only when the harm is really egregious- like the pinto with the special ‘exploding gas tank’ feature.

  1. I dont really think the courts are the best vehicle for attacking Toxic Exposure problems; they focus too much on the specific and miss the policy aspects, the grand scale of things. But the executive agencies, who are supposed to be regulating, are hamstrung by politics and the Supreme Court. The EPA, for instance, has authority to crack down on virtually ALL toxic emmissions, but it has only regulated TWO - Benzyene and… something fairly innocious whose name I can’t recall now. Why? Because of political pressure from the Presidents and a conservative activist Supreme Court feverishly striking down their restrictions using junk science in order to support industry.

So, if the agencies dont save us, we’re back to using tort law. (Or contract law, or criminal law. But mostly tort law.)

-C

15

Some more on the single-digit multiplier:

I agree with Sua that the Court seems to have pulled a number out of the air; I’d also submit that they didn’t think too hard about that number before making it part of the opinion. Take a look at BMW v. Gore. In that case, a jury found that the plaintiff was entitled to $4,000 in compensatory damages. They then tacked on $4 million in punitive damages, finding that the corporation’s policy of not disclosing that they had repainted their customers’ cars constituted “gross, oppressive, or malicious fraud.”

The Supreme Court struck down that award as excessive, but that’s not the issue–I’ve got no beef with the idea that some punitive awards are unconstitutional. The thing is, though, that under Campbell, the most a jury could constitutionally award in punitives for a $4,000 compensatory claim is $36,000.

That’s nothing. That’s peanuts. That takes away the entire point of punitive damages (which is, in part, to deter future bad acts), as BMW could pay out that much without even blinking. Moreover, insofar as mass torts claims go, Campbell is especially troubling. First, a common trial structure for mass torts litigation is to determine the potential punitive damages while determining liability (and before the determination of compensatory or other damages)–this greatly facilitates settlement proceedings, as both sides have a better idea more quickly of the amount of money at stake. Under Campbell, you can’t do this–no court can compute punitives without reference to compensatory. Also–and I think this point is unclear in the Campbell analysis–what happens to aggregated claims, where punitives are awarded on the basis of bad acts against thousands of people, each of whom individually only has a few thousand dollar claim?

I think Campbell is a potential death knell for meaningful punitives, and as such a poorly thought-out opinion.

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[APROPO OF NOTHING] I’m starting to come around to the opinion that the legal system’s preference for and efforts to facilitate settlement has become a monster. Actual fault is becoming a secondary consideration[/APPROPO OF NOTHING]

Sua

17

I always appreciate your legal input, Sua. Your argument points out an inconsistency in the SCOTUS approach, which makes their approach wrong. The trouble is, all approaches seem to be wrong.

Consider the situation, absent some sort of SCOTUS limitations: A defendant can be “fined” an unlimited amount of money by a jury for any reason the jury chooses, as long as the “fine” is upheld by the trial judge and appeals courts. However, the judge and appeals courts have no guidelines for whether or not to uphold the “fine,” just as the jury has no guidelines for assessing it. (The “fine” is paid to the defendant, not to the state.) Under those circumstances, how can there be adequate due process?

In principle, I wish that the legislature would select a reasonable structure and enact it. The ABA would seem to be the natural body to design a model law. However, punitive damages are big money in the pockets of some members, so this might be a hot potato for them. Or, am I too cynical?

However, I don’t see how anyone could define precise guidelines for due process. The whole point of pd’s is to cover unspecified bad actions and compensate an amount in addition to measurable damages. It seems contradictory to ask that unspecified causes and amounts be specified in advance. Do you have any thoughts on what such guidelines might look like?

On preview, you think I should be appalled, because this is a use of substantive due process. I guess that’s why Thomas and Scalia dissented. Maybe I should be appalled. However, I can see a case that judge-made law should be more subject to overturning than legislated law.

The more key question may be one of states rights. I assume a state supreme court can control judge-made punitive damage procedures in that state. They don’t need any Constitutional justification. But, the federal court does need Constitutional reason to overrule a state court. So, the use of “substantive due process” is an excuse for the federal court to take control of what should be a state court-controlled area.

This line of thinking suggests that state supreme courts perhaps ought to take the bull by the horns and deal with this problem. Maybe some of them have done so…

18

:sigh:
Your argument is “the democratic system doesn’t work because I don’t like the result. So let’s have the unelected judges come to a different result!”

Your argument is based upon three false premises:

  1. There is a need to change punitive damages law. There isn’t. The current system may be bad, there may be a better way, but that does not mean that the system must change.

  2. The failure of state legislatures to change the punitive damages system is a result, effectively, of corruption. There is just as much money, if not more, on the side of limiting punitive damages. So, tell the corporations to pay more bribes!

  3. The failure of the state legislatures to act is indeed a failure. The decision not to change a system is, in fact, a decision. The state of Utah didn’t just sit on their collective arse and twiddle their thumbs while Rome burned. The legislature has decided not to change the punitive damage system in that state, by not passing any laws to change the system.

Sua

19

Not quite true, Sua. There have been states where the courts fought back ferociously against perceived attempts by the legislature of manhandling the common law by dictating how tort cases should come out.

Its not always their fault they can’t do anything.

-C

20

Yah, the Pennsylvania Supreme Court did that recently.

'Course, back in law school, whenever we wanted an example of a poorly-decided case, we went to the Pennsylvania Supreme Court. :smiley:

Elected Supreme Court justices = bad idea.

Sua