Posted by: bridget | 18 January 2007

Guidelines or Marching Orders?

Anthony Sebok discusses the problems with the application of BMW v. Gore (1996) and State Farm v. Campbell (2003) to negligence cases (here, the Exxon-Valdez oil spill). The Ninth Circuit has played ping-pong with the jury’s determination of punitive damages. Exxon paid fines of $900 million dollars to government entities; $287 million in compensatory damages to landowners and fishermen whose property was damaged; and other miscellaneous fines. The jury returned with punitive damages of $5 billion. In light of BMW, the Ninth Circuit remanded the case down to district court to recalculate appropriate punitive damages. The district court returned with $4 billion in punitive damages. Exxon appealed; during that time, State Farm was decided and the Ninth Circuit remanded the case to district court. Again, the district court recalculated the punitive damages and returned with an award of $4.5 billion. Exxon appealed, and the Ninth Circuit made its winning shot by determining punitive damages to be $2.5 billion.

Under Gore, punitive damage awards are limited by the Due Process Clause, and courts should make their decisions with regards to three factors:

  1. reprehensibility of conduct;
  2. ratio of punitive damages to actual harm (single-digit ratios are assumed to be in accord with Due Process limits); and
  3. comparable civil and criminal penalties.

Sebok discusses the problems of importing the Gore standards into a case involving negligence, as that and State Farm involved intentional conduct. He gave brief mention of the larger problem: the Gore standards, in the words of Justice Ginsburg (hardly an advocate for big business), we should not “…join the Court’s swift conversion of those guides into instructions that begin to resemble marching orders.” She also stated that limits on a jury award is not built into the Fourteenth Amendment’s Due Process guarantee, but rather is the province of the states. Scalia’s Gore dissent, reaffirmed in his State Farm dissent, was much in the same vein: the Constitution does not limit jury awards, which are the voices of the community, and applicable remedies against an egregious award are the provinces of the states.

One has to wonder about a decision from which Justices Scalia and Ginsburg both dissent, on similar grounds. This is the crux of the problem with the Gore/State Farm jurisprudence: it removes power from the jury and gives it to appellate courts, leaving them to determine fact-driven damage awards as a matter of law. To the extent that the Gore factors are vague, they are of little use to appellate courts; to the extent that they delineate a specific sum, they take on the role of legislation. The factors, as discussed by Judge Posner in regards to bed-bugs, are inapplicable to dignitary harms. State Farm gives little guidance on how the factors should be compared with each other when bringing about opposite results. Juries are uniquely well-suited to make such determinations; states that want to limit damage awards may do so by statute, which gives more guidance to both judges and juries. States may also, to intice businesses or to protect individuals, allow for a range of punitive damages awards.

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Responses

  1. […] two most conservative justices, who diseented from an opinion written by the middle of the Court.  We saw this in State Farm.  Ooh, […]


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