# Opposition Brief — Great Republic Insurance v. Cheval ex rel. Miller

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1989
- **Citation:** 490 U.S. 1088

## Text

| FILED
| JUN 2. 1889

No. 88-1784 JOSEPH F. SPANIOL, JR.
Sit RK

—

In The

Supreme Court of the United States
October Term, 1988

sa
=

GREAT REPUBLIC INSURANCE COMPANY and GREAT
REPUBLIC LIFE INSURANCE COMPANY,

Petitioners,

VS.

La VERNE CHEVAL, By And Through Her
Conservator, MARTIN MILLER,

Respondent.

a
e

OPPOSITION TO PETITION FOR
WRIT OF CERTIORARI TO THE COURT OF APPEAL
OF CALIFORNIA, FIRST APPELLATE DISTRICT

A.
vy

GRIFFINGER, LEVINSON, FREED & HEINEMANN
ARNOLD R. LEVINSON

(Counsel of Record)

One Market Plaza

Steuart Street Tower, 24th Floor

San Francisco, CA 94105-1415

(415) 243-0300

FIEDLER GARDNER & DERHAM
Rosert DERHAM

Ghirardelli Square

Cocoa Building, Suite 450
900 North Point

San Francisco, CA 94109
(415) 922-9404

Attorneys for Respondent
La Verne Cheval, by and through her
conservator, Martin Miller.

COCKLE LAW BRIEF PRINTING CO,, (800) 225-6964
OR CALL COLLECT (402) 342-2831

TABLE OF CONTENTS

Page
pe EF Be See ta | er ii
BRIEF IN OPPOSITION TO WRIT OF CERTIORARI... 1
PEPE EES GW BNC GA vice cccncccenverseces: 1
REASONS FOR DENYING THE WRIT............. 3

I. THE EIGHTH AMENDMENT ISSUE PRESENTED
BY THE PETITION WAS NOT PRESSED AND PAS-
ee SO TE Sa re ecaed cau ean tana weben te

A. Petitioners Did Not Raise The Eighth Amend-
ment Issue In The Court Of Appeal.........

B. The Court Of Appeal Did Not Rule On The
Eighth Amendment Question................

Il. THIS CASE IS NOT SIMILAR TO BROWNING-
EE PE eo os hs no wk nt sen eweneeeeices

A Re rrr ere rire Perr tere eer

ii
TABLE OF AUTHORITIES

CASES

Bankers Life and Casualty Co. v. Crenshaw, 486
U.S. __, 108 S.Ct. 1645, 100 L.Ed.2d 62 (1988) ...4, 5

Bowe v. Stott, 233 U.S. G56 (iP iay soviet coe avcee- sees 4

Browning-Ferris Industries v. Kelco Disposal, Inc.,
_.. U.S. __, 109 S.Ct. 527, 102 LEd.2d@ 529

(TORO) 2. cove cccven cues byes penne eee eee: 6, 7
Cardinale v. Lousiana, 394 U.S. 437 (1969)............ 3
Herndon v. Georgia, 295 U.S. 441 (1935) ............. 4
Illinois v. Gates, 462 US. 213 (ISRGh 6536s oa ese 4
McGoldrick v. Compagnie Generale Transatlanti-

que, 309 US. S350 ClO) ion 6 suite eee 3
Neal v. Farmers Insurance Exchange, 21 Cal.3d

910, 582 P.2d 980, 148 Cal.Rptr. 389 (1978)......... 8
Oxley Stave Co. v. Butler County, 166 U.S. 648

CRGBT) ones ev cccdbvduu punk de on eee eeea ee Cedar eaees 4
Street v. New York, 394 U.S. 576 (1969) .............. 6
Toole v. Richardson-Merrell Inc., 251 Cal.App.2d

OND IGG) «oe in dsca st ase raeben er eanee eeee 6
Webd v. Webb, 451 US. 693 (IDG1) i usc cee ies ress 6
STATUTES
CALIFORNIA CIVIL CODE

ee rrr srr mr ere 4; 5

OR BE iin sad ave soo ca aera eee peo

CALIFORNIA STATUTES

1987 Chapter 1498
oe RPE Ere er err es Serr ors & 5

Be cae Vein Secale nee 5

BRIEF IN OPPOSITION TO WRIT OF CERTIORARI
STATEMENT OF THE CASE

The relevant facts are set forth in the opinion of the
California Court of Appeal.’ These facts show that peti-
tioners are in the business of selling nursing home insur-
ance. Petitioners sold a “SKILLED NURSING HOME
INSURANCE” policy to respondent La Verne Cheval.
The policy promises to pay the policyholder $40 for each
day the policyholder is “necessarily and continuously”
confined to a skilled nursing home, on the advice of a
physician.

In January, 1985, Mrs. Cheval’s doctor placed her ina
skilled nursing home, following a fall that broke her hip.
The broken hip was another step in the gradual deteriora-
tion of Mrs. Cheval’s health that began when she suffered
a stroke in 1983. In addition to the broken hip, she suf-
fered from heart disease and advanced diabetes. The
diabetes had left her legally blind. She was also deaf,
incontinent of bowel and bladder, and unable to walk.
She required constant observation by skilled nurses
because she was a “brittle” diabetic, i.e., one who is
subject to rapid changes in her blood sugar levels. A
brittle diabetic in Mrs. Cheval’s frail condition requires
close observation because an undetected change in her
blood sugar could be fatal. On top of all this, Mrs. Cheval
received potentially toxic heart medication when her api-
cal pulse (the heart beat as measured by a stethoscope)
dropped below a certain rate. As Mrs. Cheval’s doctor

1 That opinion is included in the Appendix to the Petition
for Writ of Certiorari, at A-4 to A-18.

told petitioners on one occasion, the need for skilled
nursing care would be obvious to petitioners if they ever
saw Mrs. Cheval. They never did.

Incredibly, in August 1985 petitioners decided that
Mrs. Cheval no longer required “skilled nursing care”.
Petitioners made this decision knowing full well that Mrs.
Cheval was receiving the same nursing services that peti-
tioners had up until that time considered skilled nursing
care. This and other evidence showed that petitioners
employed an ever-changing definition of skilled nursing
care that became increasingly more restrictive as Mrs.
Cheval’s health deteriorated. As a result, treatment con-
sidered to be skilled nursing care in 1983 was no longer
covered by the same policy in 1985.

At trial, California nursing home experts — including
Mrs. Cheval’s physician, the nursing director of the
skilled nursing facility, and a representative of Medi-Cal,
the state sponsored health insurance program — emphat-
ically agreed that under California law Mrs. Cheval could
not be admitted to any nursing home that provided any-
thing less than skilled and continuous nursing care. Peti-
tioners never presented any contrary evidence.

After a week long trial, the jury awarded Mrs. Cheval
$32,200 in contract damages. The parties stipulated that
the reasonable attorney’s fees owed to her as a result of
the bad faith denial of her insurance claim amounted to
$8,050. The jury also awarded $500,000 in punitive dam-
ages, to punish petitioner for its fraudulent marketing of
an insurance policy that promised far more than peti-
tioners intended to deliver, and also to deter petitioners
from handling in a similar manner any future claims from

the thousands of other people in California who had
stored this insurance policy in a desk drawer or safety
deposit box, intending to use it as a safety net when
calamity struck.

REASONS FOR DENYING THE WRIT

I.

THE EIGHTH AMENDMENT ISSUE PRESENTED
BY THE PETITION WAS NOT PRESSED AND
PASSED UPON BELOW.

This Court has repeatedly held that it is without
authority to review the decision of a state court unless it
affirmatively appears that a Federal question was actually
raised and actually decided. Cardinale v. Lousiana, 394 US.
437, 439 (1969). The reasons for this long-recognized rule
are set forth in McGoldrick v. Compagnie Generale Trans-
atlantique, 309 U.S. 430, 434-35 (1940):

“In cases coming here from state courts in which a
state statute is assailed as unconstitutional, there are
reasons of peculiar force which should lead us to
refrain from deciding questions not presented or
decided in the highest court of the state whose judi-
cial action we are called upon to review. Apart from
the reluctance with which every court should pro-
ceed to set aside legislation as unconstitutional on
grounds not properly presented, due regard for the
appropriate relationship of this Court to state courts
requires us to decline to consider and decide ques-
tions affecting the validity of state statutes not urged
or considered there. It is for these reasons that this
Court, where the constitutionality of a statute has
been upheld in the state court, consistently refuses to

consider any grounds of attack not raised or decided
in that court.”

Whether the failure to raise properly a federal ques-
tion in state court is a jurisdictional defect or a prudential
limitation on the exercise of jurisdiction appears to be an
open question. Illinois v. Gates, 462 U.S. 213, 219-20 (1983);
Bankers Life and Casualty Co. v. Crenshaw, 486 U.S. __, 108
S.Ct. 1645, 1651, 100 L.Ed.2d 62 (1988). In any event, the
Eighth Amendment question cannot be considered by
this Court because that question was neither raised in nor
decided by the California Court of Appeal.

A. Petitioners Did Not Raise The Eighth Amend-
ment Issue In The Court Of Appeal.

It is well-recognized that a bare reference to the
“Constitution of the United States” is insufficient to raise
a Federal question. See, e.g., Herndon v. Georgia, 295 U.S.
441, 442-43 (1935); Oxley Stave Co. v. Butler County, 166
U.S. 648 (1897); Bowe v. Stott, 233 U.S. 658, 664-65 (1914).

Here, petitioners merely asked the Court of Appeal
to defer its decision until this Court had issued its deci-
sion in Bankers Life. Petitioners’ entire argument in the
Court of Appeal on the constitutionality of punitive dam-
ages is set forth at page A-23 of the Appendix attached to
the Petition. Petitioners did not challenge the California
punitive damage statute on the basis of either the Four-
teenth Amendment or the Eighth Amendment.? Instead,

2 California Civil Code sections 3294 and 3295 instruct
when and how punitive damages may be awarded. The statute

(Continued on following page)

petitioners elected to let their constitutional challenge
rise or fall with Bankers Life.

This Court issued its decision in Bankers Life on May
16, 1988, weeks before respondent filed her opposition to
petitioners’ opening brief in the Court of Appeal, and
months before the Court of Appeal filed its decision on
January 5, 1989. Petitioners’ constitutional challenge to
the punitive damages expired when this Court elected
not to review the constitutionality of punitive damages in
Bankers Life. At no time after Bankers Life was decided did
petitioners recast or renew their constitutional argument.
In fact, their 44 page reply brief in the Court of Appeal
contains no mention of any constitutional issues. Sim-
ilarly, petitioners never raised any constitutional issues
during oral argument. It appears, therefore, that peti-
tioners had no constitutional claim whatsoever before the
Court of Appeal when the court issued its decision in
January, 1985.

(Continued from previous page)

was amended after the jury verdict in this case. See, Cal. Stats.
1987, ch. 1498, §§ 5 and 6. The amended statutes provide that
punitive damages may be awarded only upon “clear and con-
vincing evidence” that a defendant has acted with malice,
fraud or oppression, as those terms are defined by the statute.
Cal. Civ. Code § 3294, subd. (a). In addition, evidence of a
defendant’s financial condition may not be introduced at trial
until the jury has found the defendant guilty of malice, fraud
or oppression. Cal. Civ. Code § 3295, subd. (d). The amend-
ments address several of the issues raised by petitioners, ren-
dering this case of interest only to the parties involved. This is
another reason to deny the petition.

B. The Court Of Appeal Did Not Rule On The
Eighth Amendment Question.

This Court has frequently stated that “when the high-
est state court has failed to pass upon a federal question,
it will be assumed that the omission was due to want of
proper presentation in the state courts, unless the
aggrieved party can affirmatively show the contrary.”
Street v. New York, 394 U.S. 576, 582 (1969); Webb v. Webb,
451 U.S. 493, 495 (1981). Petitioners assert that the Court
of Appeal resolved the Eighth Amendment issue in the
court’s one sentence statement that “[d]efendant’s attack
on the constitutionality of punitive damages, raised for
the first time on appeal, is without merit.” Petition, at 4.
However, the case cited by the Court of Appeal, Toole v.
Richardson-Merrell Inc., 251 Cal.App.2d 689, at pages
716-17, (1967) makes no reference to the Eighth
Amendment.

It is apparent that the Eighth Amendment issue peti-
tioners now raise is a mere afterthought. It was never
raised at trial, never mentioned on appeal. The parties
never debated the merits of this argument. More impor-
tantly, there is no record that the California Court of
Appeal decided this Federal question. It would be error
to presume that it did. i

II.

THIS CASE IS NOT SIMILAR TO BROWNING-
FERRIS INDUSTRIES.

Petitioners assert the instant case is similar to Brown-
ing-Ferris Industries v. Kelco Disposal, Inc., cert granted, ___
U.S. __, 109 S.Ct. 527, 102 L.Ed.2d 529 (1988). Petitioners

have asked this Court to hold the petition until a decision
is reached in Browning-Ferris. Petition, at 28.

There are several differences between this case and
Browning-Ferris. First, the damages are of a very different
order of magnitude. Browning-Ferris involves actual dam-
ages of approximately $50,000 and punitive damages of
$6 million. Here, the actual damages are $40,250 and the
punitive damages are $500,000. Because the question of
excessiveness is one of degree, the amount of the dam-
ages is necessarily relevant in determining whether con-
stitutional boundaries (if any exist) have been exceeded.
The damages in the instant case are not disproportionate
to the actual harm suffered, and are not otherwise
excessive.

. Second, the conduct to be punished and deterred is
qualitatively different. Petitioners and respondent in this
case are not two competitors locked in a commercial
dispute, as is the case in Browning-Ferris. Rather, respon-
dent was a frail, elderly woman trying to collect insur-
ance benefits she needed in order to pay for her nursing
home care. It is utterly reprehensible for an insurance
company, faced with such a claim, to invent a series of
false excuses for not paying the claim, leaving the insured
without the benefits she relied on to pay her medical
bills. Both the trial court judge and the California Court
of Appeal examined petitioners’ conduct and found the
damages awarded by the jury to be appropriate.

Third, the California punitive damage statute pro-
vides a completely different standard for awarding puni-
tive damages than Vermont, the state where Browning
Ferris Industries arose. California jury instructions provide

guidelines to assist the jurors in determining whether
punitive damages should be awarded, and if so, in what
amount. See, Book of Approved Jury Instructions (BAJI) No.
14.71 (7th ed. 1988 pocket pt.). Moreover, California has a
well-developed body of case law that guides the trial
court in ruling on a motion to remit the punitive dam-
ages. See, e.g., Neal v. Farmers Ins. Exch., 21 Cal.3d 910,
927, 582 P.2d 980, 148 Cal.Rptr. 389 (1978).

The damages awarded in this case do not give cause
for review by this Court, even if the Eighth Amendment
issue had been properly preserved in the state court.

a
vv

CONCLUSION

For the reasons stated above, respondent requests
that the petition be denied.

Respectfully submitted,

GRIFFINGER, LEVINSON, FreED & HEINEMANN
ARNOLD R. LEVINSON

(Counsel of Record)

One Market Plaza

Steuart Street Tower, 24th Floor

San Francisco, CA 94105-1415

(415) 243-0300

FIEDLER GARDNER & DERHAM
Ropert DERHAM

Ghirardelli Square

Cocoa Building, Suite 450
900 North Point

San Francisco, CA 94109
(415) 922-9404

Attorneys for Respondent
La Verne Cheval, by and through her
conservator, Martin Miller.

REP

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syn 10 1989
No. 88-1784
ic aed a} r SPAN LOL, JR.
phe
———
In The

Supreme Court of the United States
October Term, 1988

,

GREAT REPUBLIC INSURANCE COMPANY and
GREAT REPUBLIC LIFE INSURANCE COMPANY,

Petitioners,

VS.

LaVERNE CHEVAL, By And Through Her Conservator,
MARTIN MILLER,

Respondent.

,’
=

REPLY TO OPPOSITION TO PETITION FOR
WRIT OF CERTIORARI TO THE COURT OF APPEAL
OF CALIFORNIA, FIRST APPELLATE DISTRICT

,%
4

LYNBERG & WATKINS

MakrtTIN D. KapLan

888 South Figueroa Street, 16th Floor
Los Angeles, California 90017-2516

Horvitz & Levy

Davip M. AxELRAD

(Counsel of Record)

GEORGE P. SCHIAVELLI

S. THomas Topp

Grecory R. ELLs

15760 Ventura Boulevard, 18th Floor
Encino, California 91436

(818) 995-0800

Attorneys for Petitioners
Great Republic Insurance Company and
Great Republic Life Insurance Company

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964
OR CALL COLLECT (402) 342-2831

TABLE OF AUTHORITIES
INTRODUCTION
I.

IT.

TABLE OF CONTENTS

ee ee ee ee ee oe ee ne ee ee ee ee ee a a ee ee ee

PETITIONERS PROPERLY RAISED THE CON-
STITUFIONAL CHALLENGE TO PUNITIVE
Et ESR ey a Oe ES Pee eee ae eras

RESPONDENT MISCHARACTERIZED THE
CURRENT STATE OF CALIFORNIA’S PUNI-
TIVE DAMAGE LAW

il

TABLE OF AUTHORITIES

Page
CAsEs
Auto Equity Sales, Inc. v. Superior Court, 57 Cal.

2d 450, 369 P.2d 937, 20 Cal. Rptr. 321 (1962)...... 4
Bankers Life & Casualty Co. v. Crenshaw, 108 S.

C2. 1645 (1966) .... 6005 1c aeee eeeee y
Barr v. Columbia, 376 U.S. 166 (196@). csc 05 cs 2
Downey Sav. & Loan Ass’n v. Ohio Casualty Ins.

Co., 189 Cal. App. 3d 1072, 234 Cal. Rptr. 835

(1987), cert. denied, 108 S. Ct. 2023 (1988) ......... 4
Flores v. Natividad Medical Center, 192 Cal. App.

a0 1106, 238 Cal. Rpty. 26 (IGG hc ccc ccs cv sases ses 3
Hale v. Morgan, 22 Cal. 3d 388, 584 P.2d 512, 149

Cal. Rots. 375 (1976)......0c05 045 3
Hathorn v. Lovorn, 457 U.S. 255 (1962)... .....4«:;. Zz, 3
Llinois v. Gates, 462 U.S: 213 (legen cee 2
Jolly v. Eli Lilly & Co., 44 Cal. 3d 1103, 751 P.2d

923, 245 Cal. Rpty. 656 (ISG). csciewcos eee 3
Moradi-Shalal v. Fireman’s Fund Ins. Companies,

46 Cal. 3d 287, 758 P.2d 58, 250 Cal. Rptr. 116

(1968S) . 4. cnc ecoseeuee eee es Seu nee 1, 4
Toole v. Richardson-Merrell Inc., 251 Cal. App. 2d

669, 60 Cal. Epte. 398 (1907) «5 eee eee 4

Tyre v. Aetna Life Ins. Co., 54 Cal. 2d 399, 353 P.2d
725, 6 Cal. Rpts. 139 (1000)... 55.5435 3

TABLE OF AUTHORITIES —- Continued
Page
FEDERAL CONSTITUTIONAL PROVISIONS, STATUTES, AND RULES

er dre vneWir keen vevecceveeswias passim

STATE STATUTES
California Civil Code section 3294................. 1, 6

California Rules of Court, Rule 29(b)(1).............. 2

OTHER AUTHORITIES

Book of Approved Jury Instructions (BAJI) No.
oO BEE ro i i ee eee ee 5, 6

R. Stern, E. Gressman & S. Shapiro, Supreme
Court Practice § 3.21, at 149-50 (6th ed. 1986)...... 2

INTRODUCTION

Respondent’s opposition contains erroneous state-
ments of fact and law. Contrary to respondent’s conten-
tions, Great Republic raised the constitutional challenge
to punitive damages in the courts below, and the 1988
revision to California Civil Code section 3294 and Califor-
nia’s standard jury instructions does not remedy the
serious constitutional infirmities of California’s punitive
damage scheme.

4

PETITIONERS PROPERLY RAISED
THE CONSTITUTIONAL CHALLENGE
TO PUNITIVE DAMAGES.

Respondent contends Great Republic did not prop-
erly raise below its constitutional challenge to Califor-
nia’s punitive damage scheme. Opposition to Petition for
Writ of Certiorari (hereinafter “Opposition”) at 4-5. This
is incorrect.

In Great Republic’s Petition for Writ of Certiorari
(hereinafter “Petition”), we observed the California
Supreme Court has rejected constitutional attacks on
punitive damages based upon due process arguments,
thus making it futile for Great Republic to raise such
issues in the trial court_or court of appeal. See Petition at
1-2 n.1. The due process issues were therefore preserved
by raising them in the petition for review to the Califor-
nia Supreme Court.!

1 Under Moradi-Shalal v. Fireman’s Fund Ins. Companies, 46
Cal. 3d 287, 292 n.1, 758 P.2d 58, 60 n.1, 250 Cal. Rptr. 116, 118
n.1 (1988), the California Supreme Court would have deemed it

(Continued on following page)

The California Supreme Court cases we cited, see id.,
did not expressly address the Eighth Amendment issue.
Nonetheless, Great Republic preserved the Eighth
Amendment issue below.

This Court will consider federal claims either raised
or considered and resolved by the appropriate state court
below. See, e.g., Illinois v. Gates, 462 U.S. 213, 218 n.1
(1983); see generally R. Stern, E. Gressman & S. Shapiro,
Supreme Court Practice § 3.21, at 149-50 (6th ed. 1986). The
Eighth Amendment attack on punitive damages was
explicitly raised in the California Supreme Court in Great
Republic’s petition for review. Petition app. at A-26. This
Court has held that raising a federal question initially in
the state’s highest court is sufficient to preserve the ques-
tion if state law does not consistently bar such procedure.
See Hathorn v. Lovorn, 457 U.S. 255, 262-65 (1982) (cited in
Bankers Life & Casualty Co. v. Crenshaw, 108 S. Ct. 1645,
1650 (1988)); Barr v. Columbia, 378 U.S. 146, 149 (1964).

California law does not consistently bar this pro-
cedure. Rule 29(b)(1) of the California Rules of Court
provides that “on petition for review the [California]
Supreme Court normally will not consider: (1) any issue
that could have been but was not timely raised in the
briefs filed in the Court of Appeal” (emphasis added).
This rule cannot be characterized as a consistent bar to

(Continued from previous page)

futile to raise these issues in the court of appeal because the
supreme court's decisions finding no due process violation are
controlling.

raising an issue for the first time in the California
Supreme Court. See, e.g., Jolly v. Eli Lilly & Co., 44 Cal. 3d
1103, 1118, 751 P.2d 923, 932, 245 Cal. Rptr. 658, 667 (1988)
(“Defendants respond that the issue is not properly
before us, as it was not raised below (Cal. Rules of Covrt,
rule 29), a contention we reject in light of the issue’s great
public importance”); Tyre v. Aetna Life Ins. Co., 54 Cal. 2d
399, 405, 353 P.2d 725, 729, 6 Cal. Rptr. 13, 17 (1960)
(“Defendant has been permitted to raise this issue for the
first time in this court because the facts are not disputed
and the issue merely raises a new question of law”). In
fact, it is the general rule in California that appellate
courts have discretion to consider a constitutional issue,
presented on undisputed facts, raised for the first time on
appeal. See, e.g., Hale v. Morgan, 22 Cal. 3d 388, 394, 584
P.2d 512, 516, 149 Cal. Rptr. 375, 379 (1978); Flores v.
Natividad Medical Center, 192 Cal. App. 3d 1106,
1117-1118, 238 Cal. Rptr. 24, 30-31 (1987). Because the
California Supreme Court had discretionary authority to
hear the Eighth Amendment issue raised in Great Repub-
lic’s petition for review, it cannot be said that the denial
of the petition was a “silent application of a procedural
bar.” Hathorn, 457 U.S. at 263.

Evening assuming arguendo it was not sufficient to
raise the Eighth Amendment issue for the first time in the
California Supreme Court, the issue was raised in the
California Court of Appeal as well. Great Republic
requested that the court of appeal align its ruling with the
upcoming decision in Bankers Life & Casualty Co. v.
Crenshaw, 108 S. Ct. 1645. Petition app. at A-23. Appel-
lants in Bankers Life raised both Eighth Amendment and
due process issues. See Bankers Life, 108 S. Ct. at 1649-50.

Hence an Eighth Amendment ruling in that case would
have bound the court of appeal in this case. The issue was
clearly before the court of appeal.

The court of appeal in fact ruled on Great Republic’s
constitutional attack on punitive damages, citing Toole v.
Richardson-Merrell Inc., 251 Cal. App. 2d 689, 716-17, 60
Cal. Rptr. 398, 417-18 (1967), which held that constitu-
tional guarantees applicable to criminal proceedings are
not required in civil actions. Apparently, the court of
appeal in this case interpreted Toole as rebutting Great
Republic’s Eighth Amendment as well as its due process
attack on the punitive damage award.

Great Republic did not raise the Eighth Amendment
issue in the trial court, but it was not necessary to do so
in order to preserve the issue for review by the court of
appeal. As discussed above, the court of appeal reached
the issue on the merits even though it had not been raised
in the trial court. Moreover, on February 26, 1987, the
court of appeal, in Downey Sav. & Loan Ass’n v. Ohio
Casualty Ins. Co., 189 Cal. App. 3d 1072, 234 Cal. Rptr. 835
(1987), cert. denied, 108 S. Ct. 2023 (1988), expressly
rejected an Eighth Amendment attack on California’s
punitive damage statute. Id. at 1100-01 (“Eighth Amend-
ment applies only to criminal actions, not to purely civil
penalties, as involved here”). The present case went to
trial after Downey Sav. & Loan Ass‘n, on July 27, 1987,
Petition app. at A-1, and the trial court was therefore
bound by the Downey Sav. & Loan Ass‘n decision. See Auto
Equity Sales, Inc. v. Superior Court, 57 Cal. 2d 450, 455, 369
P.2d 937, 939-40, 20 Cal. Rptr. 321, 323-24 (1962). Hence it
was pointless for Great Republic to raise the Eighth
Amendment issue in the trial court. See Moradi-Shalal v.

Fireman's Fund Ins. Cos., 46 Cal. 3d at 292 n.1, 758 P.2d at
60 n.1, 250 Cal. Rptr. at 118 n.1.

In sum, Great Republic did everything necessary to
preserve the Eighth Amendment issue for review in this
Court.

II.

RESPONDENT MISCHARACTERIZED THE CURRENT
STATE OF CALIFORNIA’S PUNITIVE DAMAGE LAW.

Respondent implies that the 1988 revision to Califor-
nia standard jury instruction, Book of Approved Jury
Instructions (BAJI) No. 14.71 (7th ed. 1988 supp.)
remedied the constitutional infirmities articulated by
Great Republic in its petition. Opposition at 7-8. Not so.

As was stated in the petition for certiorari, revised
BAJI No. 14.71 retains the constitutional inadequacies of
its 1986 predecessor. Petition at 14-18. For the Court’s
convenience we have attached at App., A-1 the text of
both BAJI No. 14.71 (7th Ed. 1986), which was given to
the jury in this case, and BAJI No. 14.71 (7th ed. 1988
supp.). A comparison of the two instructions makes clear
the inaccuracy of respondent’s implication that the
revised instruction has corrected the constitutional fail-
ings of its predecessor.?

2 Although the 1988 revision to BAJI 14.71 does change the
burden of proof to “clear and convincing evidence,” it does not
address the other constitutional deficiencies in California’s
punitive damage law: the lack of a “beyond a reasonable
doubt” proof standard, the lack of a legislatively-prescribed
statutory maximum, and the lack of any meaningful standards
governing a jury’s determination of the amount of a punitive
award. It likewise does not remedy the Eighth Amendment
problem.

Respondent also suggests amended Civil Code sec-
tion 3294, effective January 1, 1988, remedies all the con-
stitutional problems. This again is incorrect, for the same
reasons stated above with regard to the revision of BAJI
No. 14.71. It was the amendment to section 3294 that
resulted in the revision of BAJI No. 14.71. (For the Court’s
convenience we have attached the text of the revised
section 3294 at App., A-5.)3

Respondent is wrong that this case is “of interest
only to the parties involved.” Opposition at 5 n.2. It is of
great interest to all California defendants with punitive
damage claims pending, and, for that matter, all such
defendants across the nation. We urge that a writ of
certiorari be granted.

Respectfuly submitted,

LynserG & WarkINs
Martin D. Kaplan
888 South Figueroa Street, 16th Floor
Los Angeles, California 90017-2516

Horvitz & Levy

Davip M. AxELRAD

(Counsel of Record)

GeEorGE P. SCHIAVELLI

S. THomas Topp

Grecory R. ELLis

15760 Ventura Boulevard, 18th Floor
Encino, California 91436

(818) 995-0800

Attorneys for Petitioners
Great Republic Insurance Company and
Great Republic Life Insurance Company

3 The text of former section 3294 was attached to the
petition at App., A-27.

APPENDIX

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7

A-1

BAJI 14.71 (1986)

PUNITIVE DAMAGES - RECOVERY OF
AND MEASURE

If you find that plaintiff suffered damage as a [proxi-
mate] [legal] result of the conduct of the defendant on
which you base a finding of liability, you may then con-
sider whether you should award punitive damages
against defendant [___ only], for the sake of example and
by way of punishment. You may in your discretion award
such damages, if, but only if, you find by a prepon-
derance of the evidence that said defendant was guilty of
[oppression] [fraud] [or] [malice] in the conduct on which
you base your finding of liability.

[“Malice” means conduct which is [intended by the
defendant to cause injury to the plaintiff] [or] [carried on
by the defendant with a conscious disregard for the]
[rights] [or] [safety] of others.] [A person acts with con-
scious disregard of the rights or safety of others when
[he] [she] is aware of the probable dangerous conse-
quences of [his] [her] conduct and willfully and deliber-
ately fails to avoid those consequences. ]

[“Oppression” means subjecting a person to cruel
and unjust hardship in conscious disregard of that per-
son’s rights.]

[“Fraud” means an intentional misrepresentation,
deceit, or concealment of a material fact known to the
defendant with the intention on the part of the defendant
of thereby depriving a person of property or legal rights
or otherwise causing injury.]

The law provides no fixed standards as to the
amount of such punitive damages, but leaves the amount

A-2

to the jury’s sound discretion, exercised without passion
or prejudice.

In arriving at any award of punitive damages, you
are to consider the following:

(1) The reprehensibility of the conduct of the
defendant,

(2) The amount of punitive damages which will
have a deterrent effect on the defendant in the light of
defendant’s financial condition,

(3) That the punitive damages must bear a reason-
able relation to the actual damages.

If you find that plaintiff is entitled to an award of
punitive damages against defendant, you shall state the
amount of punitive damages separately in your verdict.

BAJI 14.71 (1988 Revision)

PUNITIVE DAMAGES —- RECOVERY OF
AND MEASURE - TRIAL NOT BIFURCATED

If you find that plaintiff suffered damage as a [proxi-
mate] [legal] result of the conduct of the defendant on
which you base a finding of liability, you may then con-
sider whether you should award punitive damages
against defendant [___ only], for the sake of example and
by way of punishment. You may in your discretion award
such damages, if, but only if, you find by clear and
convincing evidence that said defendant was guilty of

A-3

[oppression] [fraud] [or] [malice] in the conduct on which
you base your finding of liability.

[“Malice” means conduct which is [intended by the
defendant to cause injury to the plaintiff] [or] [despicable
conduct which is carried on by the defendant with a
willful and conscious disregard for the [rights] [or]
[safety] of others.] [A person acts with conscious disre-
gard of the rights or safety of others when [he] [she] is
aware of the probable dangerous consequences of [his]
[her] conduct and willfully and deliberately fails to avoid
those consequences. ]

[“Oppression” means despicable conduct that sub-
jects a person to cruel and unjust hardship in conscious
disregard of that person’s rights.]

[(“Despicable conduct” is conduct which is so [vile,]
[base,] [contemptible,] [miserable,] [wretched,] [or]
[loathsome] that it would be looked down upon and
despised by ordinary decent people.]

[“Fraud” means an intentional misrepresentation,
deceit, or concealment of a material fact known to the
defendant with the intention on the part of the defendant
of thereby depriving a person of property or legal rights
or otherwise causing injury.]

The law provides no fixed standards as to the
amount of such punitive damages, but leaves the amount
to the jury’s sound discretion, exercised without passion
or prejudice.

In arriving at any award of punitive damages, you
are to consider the following:

A-4

(1) The reprehensibility of the conduct of the
defendant.

(2) The amount of punitive damages which will
have a deterrent effect on the defendant in the light of
defendant’s financial condition,

[((3) The amount of actual damages.]

If you find that plaintiff is entitled to an award of
punitive damages against defendant, you shall state the
amount of punitive damages separately in your verdict.

A-5

§ 3294. Exemplary damages; when allowable; definitions

(a) In an action for the breach of an obligation not
arising from contract, where it is proven by clear and
convincing evidence that the defendant has been guilty of
oppression, fraud, or malice, the plaintiff, in addition to
the actual damages, may recover damages for the sake of
example and by way of punishing the defendant.

(b) An employer shall not be liable for damages
pursuant to subdivision (a), based upon acts of an
employee of the employer, unless the employer had
advance knowledge of the unfitness of the employee and
employed him or her with a conscious disregard of the
rights or safety of others or authorized or ratified the
wrongful conduct for which the damages are awarded or
was personally guilty of oppression, fraud, or malice.
With respect to a corporate employer, the advance knowl-
edge and conscious disregard, authorization, ratification
or act of oppression, fraud, or malice must be on the part
of an officer, director, or managing agent of the
corporation.

(c) As used in this section, the following definitions
shall apply:

(1) “Malice” means conduct which is intended by
the defendant to cause injury to the plaintiff or despicable
conduct which is carried on by the defendant with a
willful and conscious disregard of the rights or safety of
others.

(2) “Oppression” means despicable conduct that
subjects a person to cruel and unjust hardship in con-
scious disregard of that person’s rights.

A-6

(3) “Fraud” means an intentional misrepresentation,
deceit, or concealment of a material fact known to the
defendant with the intention on the part of the defendant
of thereby depriving a person of property or legal rights
or otherwise causing injury.

(d) Damages may be recovered pursuant to this sec-
tion in an action pursuant to Section 377 of the Code of
Civil Procedure or Section 573 of the Probate Code based
upon a death which resulted from a homicide for which
the defendant has been convicted of a felony, whether or
not the decedent died instantly or survived the fatal
injury for some period of time. The procedures for joinder
and consolidation contained in Section 377 of the Code of
Civil Procedure shall apply to prevent multiple recoveries
of punitive or exemplary damages based upon the same
wrongful act.

(e) The amendments to this section made by Chapter
1498 of the Statutes of 1987 apply to all actions in which

the initial trial has not commenced prior to January 1,
1988.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385002_1297%3A2. Public record. Not legal advice.