In Re: TMI

Opinions of the United

1995 Decisions States Court of Appeals

for the Third Circuit

10-17-1995

In Re: TMI

Precedential or Non-Precedential:

Docket 94-7600

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UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Nos. 94-7600, 94-7601, 94-7602

IN RE: TMI

METROPOLITAN EDISON COMPANY ("MET ED"); PENNSYLVANIA

ELECTRIC COMPANY; JERSEY CENTRAL POWER & LIGHT COMPANY;

GENERAL PUBLIC UTILITIES CORP.; BABCOCK & WILCOX CO.;

MCDERMOTT, INC.; DRESSER INDUSTRIES, INC.; UE & C -

CATALYTIC, INC. (RAYTHEON); BURNS & ROE ENTERPRISES,

Appellants Nos. 94-7600/7601

METRO EDISON COMPANY ("MET ED"); PENNSYLVANIA ELECTRIC

COMPANY; JERSEY CENTRAL POWER & LIGHT COMPANY; GENERAL

PUBLIC UTILITIES CORP.; BABCOCK & WILCOX CO.; MCDERMOTT,

INC.; DRESSER INDUSTRIES, INC.; UE & C - CATALYTIC, INC.

(RAYTHEON); BURNS & ROE ENTERPRISES,

Appellants No. 94-7602

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

(D.C. Civ. Nos. 88-cv-01452, 88-cv-01551, 88-cv-01558)

Argued: May 1, 1995

Before: SCIRICA, McKEE, AND SAROKIN, Circuit Judges.

(Filed October 17, 1994)

ALFRED H. WILCOX, ESQUIRE (ARGUED)

ELLEN KITTREDGE SCOTT, ESQUIRE

Pepper, Hamilton & Scheetz

3000 Two Logan Square

Eighteenth and Arch Streets

Philadelphia, PA 19103

Attorneys for Appellants

1

ARNOLD LEVIN, ESQUIRE (ARGUED)

LAURENCE S. BERMAN, ESQUIRE

FRED S. LONGER, ESQUIRE

Levin, Fishbein, Sedran & Berman

320 Walnut Street, Suite 600

Philadelphia, PA 19106

LEE C. SWARTZ, ESQUIRE

SANDRA L. MEILTON,ESQUIRE

Hepford, Swartz & Morgan

111 North Front Street

Post Office Box 889

Harrisburg, PA 17108

WILLIAM R. WILSON, JR., ESQUIRE

654 North State Street

Jackson, MS 39202

Attorneys for Appellees,

Dorothy L. Aldrich, et al.

LOUIS M. TARASI, JR., ESQUIRE

Tarasi & Johnson

510 Third Avenue

Pittsburgh, PA 15219

Attorney for Appellees,

Estate of Henrietta Adams, et al.

OPINION OF THE COURT

McKEE, Circuit Judge.

In this interlocutory appeal we are asked to determine

whether persons who claim to have been injured by radiation from

a nuclear reactor can recover punitive damages under state law.

For the reasons that follow we conclude that plaintiffs here may

recover punitive damages under Pennsylvania law and we will

therefore affirm the decision of the district court.

2

I. PROCEDURAL HISTORY

These actions were begun in the aftermath of the March 28,

1979 nuclear accident at the Three Mile Island nuclear reactor in

Dauphin County, Pennsylvania ("TMI"). Appellants - corporations

which owned, operated, or supplied materials or services to TMI -

are the defendants in personal injury actions brought by (or on

behalf of) more than 2,000 individuals who resided in the

vicinity of TMI at the time of the accident. Plaintiffs attempt

to recover both punitive and compensatory damages for illnesses

allegedly resulting from exposure to radiation released during

the accident. Because these actions seek damages on account of

the hazardous properties of special nuclear material, they are

"public liability actions" arising under the Price-Anderson Act,

as amended by the Amendments Act of 1988. See The Price-Anderson

Amendments Act of 1988, Pub. L. No. 100-408, 102 Stat. 1066

(1988) (codified at 42 U.S.C. § 2014(hh)) [hereinafter the "Act"

or the "Amendments Act"].

The history of the several cases that have been litigated in

this circuit as a result of the TMI accident is as long as it is

complex, and we will only detail those proceedings that bear upon

the issue currently us.1 Plaintiffs seek punitive damages

against defendants General Public Utilities Corporation and

Metropolitan Edison Company [hereinafter "defendants"] for

1

For a review of other related TMI proceedings and the

issues that have been decided in previous rulings, see In re TMI

Litig. Cases Consol. II, 940 F.2d 832, 835 (3d Cir. 1991) ("TMI

II").

3

defendants' alleged willful, wanton and reckless indifference to

information concerning faulty plant equipment and design at TMI.

Plaintiffs rest their claim for punitive damages upon assertions

that defendants were aware of such information yet failed to take

proper precautions to guard against the potentially dangerous

effects of the equipment. Plaintiffs also assert that defendants

falsified leak rate tests and reports submitted to the Nuclear

Regulatory Commission and knowingly operated TMI in violation of

technical specifications.2

Early in the course of the TMI litigation, the district

court recognized the difficulty posed by the question of

plaintiffs' right to recover punitive damages under the Price

Anderson Act. In order to prevent the litigation from being held

up while that issue was addressed, the court bifurcated the

damages claims and deferred consideration of the punitive damages

claims until after resolution of the claims for compensatory

damages. In re TMI Litig. Personal Injury Claims, No. 79-0906

(M.D. Pa. order entered Dec. 30, 1982); App. at 162.

While these and companion TMI cases were being litigated in

state and district court, the Supreme Court decided Silkwood v.

Kerr-McGee Corp., 464 U.S. 238 (1984), which held in part, that

states are precluded from regulating the safety aspects of

nuclear energy but that states still had authority under the Act

2

Defendants pled no contest to possession, use and

operation of a utilization facility in violation of NRC

regulations in a criminal prosecution arising out of the same

nuclear incident that gives rise to this civil suit. See United

States v. Metropolitan Edison Co., CR-83-00188 (M.D. Pa. order

entered Feb. 29, 1984).

4

to control nonregulatory aspects of nuclear facilities. Id. at

240-41, 256. Following the decision in Silkwood, the district

court denied defendants' motion for summary judgment that had

been filed following a Rule 16 conference. See In re Three Mile

Island Litig., 605 F. Supp. 778, 784 (M.D. Pa. 1985) (holding

that punitive damages are recoverable under the Price-Anderson

Act, to the extent that damages assessed under the Act would not

be paid from federal monies) [referred to herein as "TMI I"].

Shortly thereafter, defendants successfully petitioned this court

for interlocutory review of that ruling. We ruled that the

Price-Anderson Act provided no basis for federal jurisdiction,

vacated the district court's order denying summary judgment, and

remanded the matter back to the district court for remand to

state court. See Kiick v. Metropolitan Edison Co., 784 F.2d 490

(3d Cir. 1986).

Meanwhile, Congress enacted the Amendments Act of 1988 which

became effective on August 20, 1988. The Amendments Act created

a federal cause of action, the "public liability action," and

mandated that federal courts shall have both original and removal

jurisdiction over such actions. 42 U.S.C. § 2210(n)(2). This

provision retroactively conferred "arising under" jurisdiction by

way of public liability actions over these cases. See In re TMI

Litigation Cases Consolidated II, 940 F.2d 832 (3d Cir. 1991),

cert. denied sub nom., Gumby v. General Public Utils. Corp., 112

S. Ct. 1262 (1992) ["TMI II"]. The Amendments Act also placed a

"limitation," (more accurately described as a prohibition) on

punitive damages awards in public liability actions where the

5

United States is obligated to make indemnification payments on

behalf of a particular defendant. 42 U.S.C. § 2210(s).

Defendants eventually moved for partial summary judgment on

plaintiffs' claims for punitive damages. Defendants argued

before the district court that Pennsylvania's allowance of

punitive damages was inconsistent with the compensatory nature of

the Amendments Act as well as that Act's prohibition against

state regulation of the safety aspects of nuclear reactors. The

district court denied partial summary judgment and held that

punitive damages are available in these cases so long as the

money to pay such awards does not come from the United States

Treasury. In re TMI Litig. Consol. Proceedings, Nos. 1:cv-88-

1452, 1:cv-88-1551, 1:cv-88-1558, slip op. at 9 (M.D. Pa. Feb.

18, 1994). Thereafter, the district court certified a number of

issues for interlocutory appeal, including defendants' right to

recover punitive damages. We here only address defendants' right

to recover punitive damages. In companion opinions we address

the remaining issues that were certified for appeal.

II. DISCUSSION.

The question of law certified for appeal by the district

court for this interlocutory appeal is:

Whether Pennsylvania's rules of decision

relating to punitive damages are inconsistent

with the provisions of the federal Price-

Anderson Act, as amended, and therefore may

not serve as rules of decision to be applied

in a "public liability action" under the

Price-Anderson Act.

In re TMI Litig. Consol. Proceedings, Nos. 1:cv-88-1452, 1:cv-88-

6

1551, 1:cv-88-1558, slip op. at 6 (M.D. Pa. July 13, 1994). In

holding that punitive damages awards under Pennsylvania law do

not violate the Price-Anderson Act or its Amendments, the

district court stated:

Defendants argue in great detail that the

award of punitive damages in this case is

inconsistent with the overall scheme adopted

by Congress in the Price-Anderson Act.

However, the Supreme Court addressed

essentially this same argument in Silkwood

and decided that punitive damages were

consistent with applicable federal statutes

and regulation. In addressing the

government's conflict preemption argument,

the Supreme Court explicitly found that

'exposure to punitive damages [does not]

frustrate any purpose of the federal remedial

scheme.' 464 U.S. at 257 (emphasis added). .

. . the Court clearly considered the Price-

Anderson Act to be part of the relevant

federal remedial scheme. By implication,

then, the Silkwood court concluded that

punitive damages were not inconsistent with

the Price-Anderson Act.

Id. at 5. The district court concluded that none of the 1988

amendments to the Price-Anderson Act had changed the Supreme

Court's conclusion. The court reasoned that § 2210(s) of the

Amendments Act, limiting punitive damages, has no retroactive

application, and therefore "that limit does not govern this

case." Id. at 7. In addition, the district court properly

observed that this "court did not interpret the Act as excluding

punitive damages altogether[]" in TMI II. Id. at 8. Finally,

the court noted that the indemnity agreement providing for

coverage for punitive damages, which is available to insureds

under the Amendments Act, 10 C.F.R. § 140.91, Appendix A, ¶2(c),

7

p. 489 (1993), is still unchanged. Id. at 8-9. Based upon this

analysis the district court concluded that plaintiffs could

recover punitive damages and denied defendants' motion for

partial summary judgment. Id.

Because the issue certified for review is purely a question

of law, our review is plenary. Buzzard v. Roadrunner Trucking,

Inc., 966 F.2d 777, 779 (3d Cir. 1992). Our consideration of

this issue is informed by statutory language, legislative history

and the relevant case law.

A. The Language of the Amendments Act

By now, "[i]t is axiomatic that statutory interpretation

begins with the language of the statute itself." Government of

Virgin Islands v. Knight, 989 F.2d 619, 633 (3d Cir. 1993)

(citing Pennsylvania Dep't. of Pub. Welfare v. Davenport, 495

U.S. 552, 557-58 (1990)). "Courts presume that Congress

expressed its legislative intent through the ordinary meaning of

the words it chose to use, and if the statutory language is

unambiguous, the plain meaning of the words ordinarily is

regarded as conclusive." Id. Plaintiffs argue that the plain

meaning of the language in the Amendments Act counsels that

punitive damages are available in these actions. We agree.

It is not disputed that these suits are "public liability

actions." See TMI II, 940 F.2d at 857; 42 U.S.C. § 2210(n). Such

actions include suits asserting "any legal liability arising out

of or resulting from a nuclear incident or precautionary

evacuation . . . ." 42 U.S.C. § 2014(w) (emphasis added).

Section 2014(w) does exclude certain types of claims from those

8

that may be brought under that statute. See 42 U.S.C.

§2014(w)(i-iii). Significantly, claims for punitive damages are

not listed as an exception. Accordingly, the district court's

conclusion is further supported by the doctrine of inclusio unius

est exclusio alterius "which informs a court to exclude from

operation those items not included in a list of elements that are

given effect expressly by the statutory language." Williams v.

Wohlgemuth, 540 F.2d 163, 169 n.30 (3d Cir. 1976). Thus, 42

U.S.C. § 2014(w)(i-iii) "`is as significant for what it omits as

for what it says.'" Id. (citation omitted). Our analysis

therefore turns on a determination of whether punitive damages

fall within the scope of "any legal liability" as that phrase is

used in the Act. Obviously, as defendants concede, punitive

damages are a type of legal liability. (Transcript of Oral

Argument at 4-5.) The Supreme Court has reaffirmed that punitive

damages are normally included within the concept of tort

liability:

[O]ne of the hallmarks of traditional tort

liability is the availability of a broad

range of damages to compensate the plaintiff

"fairly for injuries caused by the violation

of his legal rights." . . . [P]unitive or

exemplary damages are generally available in

those instances where the defendant's

misconduct was intentional or reckless.

9

United States v. Burke, 112 S. Ct. 1867, 1871-72 (1992). See

also TXO Production Corp. v. Alliance Resources Corp., 113 S.

Ct. 2711, 2718 (1993) (finding legal liability for punitive

damages by affirming a judgment of $19,000 in compensatory

damages and $10 million in punitive damages).

The Amendments Act was not intended to alter the nature of

the tort claims which constitute public liability actions.

Indeed, the Act directs that "the substantive rules for decision

in such action shall be derived from the law of the State in

which the nuclear incident involved occurs, unless such law is

inconsistent with the provisions of . . ." the Price-Anderson

Act. 42 U.S.C. § 2014(hh). Here, the applicable state law is

that of Pennsylvania, as TMI is located in Pennsylvania. See id.

Historically, Pennsylvania has recognized punitive damages as a

form of liability. See Thompson v. Swank, 176 A.2d 211, 211 (Pa.

1934) ("Where the injurious act is willful, malicious, or wanton,

the jury, according to the malignity shown, without bias or

feeling, may award a reasonable sum in vindication of the rights

of the injured party as exemplary or punitive damages."); Cf.

Martin v. Johns-Manville Corp., 494 A.2d 1088, 1096 (Pa. 1985)

(plurality) ("As a general guide in this area Pennsylvania

recognizes the principles set forth in Section 908(2) of the

Restatement of Torts (Second): `(2) Punitive damages may be

awarded for conduct that is outrageous, because of the

defendant's evil motive or his reckless indifference to the

rights of others. . . .'"); Feld v. Merriam, 485 A.2d 742, 747-48

(Pa. 1984) (same).

10

Defendants assert that the Price-Anderson Act has three

relevant objectives: "(1) assure the availability of funds to

compensate persons injured; (2) limit liability to the funds so

provided, to encourage private industry to invest in the nuclear

power alternative; (3) achieve resolution of nuclear accident

claims as efficiently and expeditiously as possible." Brief of

Appellants at 6. Defendants argue that Pennsylvania's punitive

damages rules are premised upon retribution, deterrence and

punishment, and that they therefore can not apply to operators of

nuclear reactors after the Price-Anderson Act and the 1988

Amendments. See Kirkbride v. Lisbon Contractors, Inc., 555 A.2d

800, 803 (Pa. 1989) ("the purpose of punitive damages is to

punish a tortfeasor for outrageous conduct and to deter him or

others from similar conduct"). Accordingly, defendants argue

that the inherently penal nature of punitive damages in

Pennsylvania is inconsistent with the purposes and policies of

the public liability action, and the Act therefore precludes

plaintiffs from recovering punitive damages. We disagree.

As noted above, defendants' position is undermined by the

very language of the statue it is based upon. The Amendments Act

does specifically prohibit punitive damages, but that prohibition

is far more narrow than defendants' construction suggests.

Section 2210(s) states:

Limitation of punitive damages

No court may award punitive damages in

any action with respect to a nuclear incident

or precautionary evacuation against a person

11

on behalf of whom the United States is

obligated to make payments under an agreement

of indemnification covering such incident or

evacuation.

42 U.S.C. § 2210(s). However, even this prohibition is limited

and applies only "with respect to nuclear incidents occurring on

or after Aug. 20. 1988." Because TMI occurred in 1979, well

before the effective date of the 1988 Amendments, the qualified

prohibition does not apply here. See 42 U.S.C. § 2210 note (1988)

(Effective Date of 1988 Amendment). Again, the language "is as

significant for what it omits as for what it says." Williams,

supra.

Moreover, we concluded in TMI II that imposition of state

remedies in a public liability action would not frustrate the

objectives of the Price-Anderson Act. TMI II, 940 F.2d at 859.

It was there noted that "[t]he ban on punitive damages applies

only to nuclear incidents occurring after August 20, 1988, which

does not include this case. . . . It should also be noted that

punitive damages remain available when the government is not

obligated to make payments under an indemnification agreement.

See 42 U.S.C. § 2210(s) (1988)." Id. at 874 n.6 (Scirica, J.

concurring).

In Silkwood, the Court held that the Atomic Energy Act3 had

not preempted a state authorized award of punitive damages. 464

U.S. at 256. Although the Price-Anderson Act did not control the

analysis in Silkwood, the Court concluded that "the discussion

preceding its enactment and subsequent amendment indicates that

3

42 U.S.C. §§ 2011-2284 (1976 ed. and Supp. V).

12

Congress assumed that persons injured by nuclear accidents were

free to utilize existing state tort law remedies." Id. at 251-

52. The defendants in Silkwood had argued that an award of

punitive damages "frustrates Congress' express desire `to

encourage widespread participation in the development and

utilization of atomic energy for peaceful purposes'" as expressed

in the Atomic Energy Act, 42 U.S.C. § 2013(d), and that such an

award "conflicts with Congress' express intent to preclude dual

regulation of radiation hazards." Id. at 257-58. The Court

disagreed. "[T]he award of punitive damages in this case does

not hinder the accomplishment of the purpose stated in §2013(d)".

The Court further stated; "Congress did not believe that it was

inconsistent to vest the NRC with authority over the safety

aspects of nuclear development while at the same time allowing

plaintiffs . . . to recover for injuries caused by nuclear

hazards." Id. at 257-58.

Thus, although Congress clearly intended to preempt state

regulation of nuclear safety standards when it enacted Price-

Anderson, "the award of punitive damages would not impede the

congressional goal of promoting nuclear safety." TMI II, 940

F.2d at 859. All that has changed since TMI II is the enactment

of the 1988 Amendments, and it is clear from the unambiguous

language of those Amendments that Congress did not intend to

change the result the Supreme Court had reached in Silkwood.

In view of the sweeping changes effectuated in the

Amendments Act, Congress could easily have completely precluded

punitive damages in every case arising out of a nuclear incident

13

or precautionary evacuation. However, Congress declined to

extend its punitive damages limitation that far. The district

court correctly reasoned:

In passing the [Amendments] Act, Congress

clearly had an opportunity to overturn the

Supreme Court's pronouncement in Silkwood. In

"transform[ing] . . . the entire Price-

Anderson landscape . . . [w]ith the passage

of the Amendments Act," TMI II, 940 F.2d at

857, Congress did not hesitate to overturn

several prior decisions of the Third Circuit

with which it disagreed. See 42 U.S.C.

§2014(hh) (providing for federal jurisdiction

over suits arising out of all nuclear

incidents and reversing Stibbitz [sic] v.

General Pub. Utils. Corp., 746 F.2d 993 (3d

Cir. 1984), cert. denied, 469 U.S. 1214

(1985); and Kiick v. Metropolitan Edison Co.,

784 F.2d 490 (3d Cir. 1986). Yet, despite

its substantial revision of the nuclear

regulatory scheme, Congress only partially

limited Silkwood's holding.

. . . While a statement in the

legislative history indicates that Congress

did not intend any inference for or against

the applicability of punitive damages in

other cases be drawn from the provision, see

S. Rep. No. 70, 100th Cong., 1st Sess. 27,

(1987), the failure of Congress to completely

reverse Silkwood at the very least indicates

that Congress did not believe an award of

punitive damages in prior cases to be so

inconsistent with the purposes of the Act

that it must be changed.

In re TMI Litig. Consol. Proceedings, Nos. 1:cv-88-1452, 1:cv-88-

1551, 1:cv-88-1558, slip op. at 6-7 (M.D. Pa. Feb. 18, 1994).

B. Legislative History

Presented with the unambiguous language of the Act we need

not, and ordinarily should not, look to its legislative history

14

for clarification. Nevertheless, "[a] court may consider

persuasive legislative history that Congress did not intend the

words they selected to be accorded their common meaning. A

construction inconsistent with a statute's plain meaning,

however, is justifiable only when clear indications of a contrary

legislative intent exist." Knight, 989 F.2d at 633 (citations

omitted).

We disagree with defendants' position that references in the

Act's legislative history suggest that punitive damages would

"undermine" the "compensatory purposes" of the legislation and

make it unworkable. Brief of Appellants at 20. The availability

of punitive damages does not undermine Congress' compensatory

scheme as set forth in the insurance/indemnification provision of

the Amendments Act. In the discussion which preceded the

Amendments Act, the House Committee eliminated a proposed

amendment to preclude punitive damages entirely. In so doing,

the House Committee confirmed that the holding of Silkwood is

still controlling authority on that issue:

The current Act [pre-1988 Amendments]

does not expressly state whether a court may

award punitive damages in connection with a

claim arising out of a nuclear incident. Nor

does the Act expressly state whether private

financial protection funds or government

indemnity funds could be used to pay punitive

damages if imposed. In 1984, in Silkwood v.

Kerr-McGee Corporation, 464 U.S. 238, the

U.S. Supreme Court resolved the first of

these two issues when it held that the Atomic

Energy Act, as amended by the Price-Anderson

Act, does not prevent a court from imposing

punitive damages under state tort law. The

15

Court did not address the second issue,

however, whether private financial protection

or government indemnity funds available under

the Price-Anderson Act could be used to pay a

punitive damages award.

During the 99th Congress, the

Subcommittee on Energy and the Environment

approved an amendment to H.R. 3653 that would

have prohibited use of either private

financial protection or government indemnity

funds available under the Act to pay punitive

damage awards. The purpose of this amendment

was to prevent the limited funds available

for compensating actual injuries from being

used to pay punitive awards. A serious

question arose, however, whether the

amendment subjected NRC licensees and DOE

contractors to unlimited liability for

punitive damages, thereby undermining one of

the primary tenets of the Act. Accordingly

the Committee subsequently agreed to

eliminate the amendment, thus restoring

current law on the issue.

H.R. Rep. No. 104, 100th Cong., 1st Sess., pt.1, at 19 (May 21,

1987) (emphasis added). The then current law on the issue of

punitive damages was expressed in the holding of Silkwood. Thus,

the legislative history reveals that the compromise in the

legislative process led to a statute permitting punitive damages,

despite the House Committee's reservations concerning such

awards. See id. ("the Committee remains opposed to punitive

damage awards in connection with claims arising under the Price-

Anderson Act because such awards could have the effect of

diminishing the limited funds available to compensate actual

injuries"). Thus, Congress decidedly declined the opportunity to

expressly eliminate punitive damages.

Subsequent consideration of the Amendments Act in the Senate

also indicates Congress' intent to allow punitive damages:

16

Section 13 prohibits courts from

awarding punitive damages under State law in

any action that involves a nuclear incident

if the action is brought against a Department

of Energy Contractor, subcontractor or

supplier indemnified under the Price-Anderson

Act. The provision insures that the Federal

taxpayers will not have to pay punitive

damages, consistent with established Federal

policy, most forcefully stated in the Federal

Tort Claims Act (28 U.S.C. 2674), that

punitive damages may not be awarded against

the Federal Government.

This provision does not preclude the

award of punitive damages against persons,

including licensees of the Commission, who

are not indemnified by DOE under the Price-

Anderson Act. The Committee intends no

preference, for or against the awarding of

punitive damages in suits against such

persons, be inferred from the inclusion of

this provision in the bill.

S. Rep. No. 70, 100th Cong., 1st Sess. 27 (June 12, 1987),

reprinted in 1988 U.S.C.C.A.N. 1424, 1440 (emphasis added).

Similarly, the Committee on Environment and Public Works,

concluded:

The bill clarifies that an award of

punitive damages is prohibited if the award

would result in any obligation of the United

States to make any payments for public

liability. This reflects the longstanding

policy that the Federal government should not

be liable for punitive damages.

Thus, all punitive damages would be

prohibited in actions involving DOE

contractors indemnified under section 170 r.

Punitive damage awards also would be

prohibited in suits against licensees covered

by the retrospective premium system, if, as a

result of such an award, payments beyond the

primary and secondary layers of financial

17

protection would be necessary, since the

United States is obligated to provide a

source of funding for such claims.

The bill does not otherwise affect

current law regarding punitive damages.

S. Rep. No. 218, 100th Cong., 2d Sess. 12-13, reprinted in 1988

U.S.C.C.A.N. 1476, 1487-88 (emphasis added).

It is hard to imagine more lucid declarations of

Congressional intent, and we will not judicially amend this

statute or subvert the policy of the legislation by adopting

defendants' arguments to the contrary.

C. Purpose of Punitive Damages

As noted above, defendants accurately characterize the

purposes of punitive damages under Pennsylvania law. See Martin

v. Johns-Manville Corp., 494 A.2d 1088, 1096 (Pa. 1985) ("In

Pennsylvania, the function of punitive damages is to deter and

punish egregious behavior.") (citations omitted).4 However,

those penal objectives are not necessarily in conflict with the

Amendments Act.

Defendants correctly point out that the 1988 Act created a

system of mandatory insurance premiums in order to create a fund

to compensate those who were injured in nuclear accidents. This

scheme causes all operators of nuclear reactors to collectively

shoulder the cost of damages paid to anyone who recovers in a

public liability action. Defendants rely in part upon Esmond v.

4

We note that Pennsylvania law is consistent with the

Supreme Court's characterization of punitive damages. See Gertz

v. Robert Welch, Inc., 418 U.S. 323, 350 (1974) (describing

punitive damages as "private fines levied by civil juries to

punish reprehensible conduct and to deter its future

occurrence").

18

Liscio, 224 A.2d 793 (Pa. Super 1966), to argue that punitive

damages can not be imposed on any particular defendant or group

of defendants without violating this collective approach to

compensation. They suggest that "Pennsylvania's law does not

permit one personally guilty of conduct which warrants imposition

of punitive damages to `shift the burden of punitive damages to

his insurer.'" Brief of Appellants at 15 (quoting Esmond, 224

A.2d at 800). We do not think that Esmond prohibits punitive

damages in a public liability action. Under the scheme of

compensation established by the Amendments, an award of punitive

damages which required payment out of the second layer of

liability would presumably be spread vicariously through the

industry, and no one facility would be penalized more than

another. See 42 U.S.C. § 2210(b). This is not totally

inconsistent with Esmond wherein the court stated, "[i]n general,

allowing one who is only vicariously liable for punitive damages

to shift the burden of satisfying the judgment to his insurer

does not conflict with the rule of policy that we announce

today." 224 A.2d at 800.

As a practical matter we are, of course, aware of the

possibility that several large punitive damage awards here, as

with any mass tort litigation involving a limited fund, might

deplete the fund. In Juzwin v. Amtorg Trading Corp., 705 F.

Supp. 1053, 1055 (D. N.J.) modified, 718 F. Supp. 1233, 1235 (D.

N.J. 1989), then district judge Sarokin noted the particular

dangers that plague punitive damage awards in mass tort

19

litigation and expressed concerns which we share in deciding the

availability of punitive damages in these cases:

Defendants can be held liable over and over

again for the same conduct, a result which

would be barred by virtue of the right

against double jeopardy in a criminal matter.

Although an award in an individual case may

be fair and reasonable, the cumulative effect

of such awards may not be. . . .

Payment to individual plaintiffs rather

than to a fund or class raises special

problems in mass tort litigation. There is a

decided risk that the earlier claimants will

deplete the available assets to pay later

claimants. Such a risk may exist even as to

compensatory damages, but it would seem

inappropriate to impose repeated penalties on

a company if the result is to deny

compensatory damages to subsequent claimants.

See also Dunn v. HOVIC, 1 F.3d 1371, 1393 (3d Cir. 1993)

(dissenting opinion arguing against punitive damages awards in

mass tort cases in general and in asbestos cases in particular).

As we explained in Dunn, "[w]e do not disagree with the

concerns that have been expressed about punitive damages awards .

. . . We differ instead with those who would have the judiciary

resolve the conflicting policy arguments." Id. at 1387. We have

neither the authority nor the desire to usurp Congress'

policymaking function regarding the benefits and burdens of

punitive damages in mass tort cases; rather, we are constrained

to interpret the law as written. In doing so, however, we call

attention to the possible inequities built into a statutory

scheme such as is before us here, where plaintiffs must resort to

a finite fund to get compensatory as well as punitive damages.

Because there is no conflict between the Amendments Act and

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the substantive laws of Pennsylvania which allow punitive

damages, we will instruct the district court to proceed with the

litigation of these matters in a manner consistent with this

opinion. In so doing, we emphasize that the district court has

authority to prioritize the various claims if punitive damages

are awarded and that the Price-Anderson Act's tri-level insurance

scheme is easily adaptable to such a prioritization of claims. It

cannot be gainsaid that "[i]f there is a limited fund, priority

should be given to compensating those who have been injured

rather than conferring windfalls on those who have already been

compensated." Juzwin, 705 F. Supp. at 1055. We see nothing in

the Act that precludes a district court from using its discretion

to limit or even preclude punitive damages in accordance with the

financial constraints of the fund and the Act's prohibition

against punitive damage awards being paid out of the federal

layer of insurance. However, we do not express any view as to

whether the district court should so exercise its discretion. We

leave the resolution of this issue to the district court.

III. CONCLUSION

For the reasons set forth herein, we will affirm the ruling

of the district court granting plaintiffs the right to attempt to

recover punitive damages, and remand these matters for further

proceedings consistent with this opinion.

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