Reply Brief — Bankers Life & Casualty Co. v. Crenshaw

EDITOR'S NOTE

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Supreme Court, U.S,

| FILED

NOV 20 BéT

a ES LSE, SPANO, i

IN THE

Supreme Court of the Gnited States

OCTOBER TERM, 1987

BANKERS LIFE AND CASUALTY COMPANY,

Appellant,

LLOYD M. CRENSHAW,

Appellee.

On Appeal from the Supreme Court of Mississippi

REPLY BRIEF OF APPELLANT

*THEODORE B. OLSON

LARRY L. SIMMS

TERENCE P. Ross

Of Counsel: GIBSON, DUNN & CRUTCHER

1050 Connecticut Ave., N.W.

Washington, D.C. 20036

(202) 955-8500

COPELAND, COOK, TAYLOR Attorneys for Appellant

& BUSH

Post Office Box 2132

Jackson, Mississippi 39225

(601) 354-0123

CHARLES G. COPELAND

J. TUCKER MITCHELL

*Counsel of Record

TT A LTRS er

PRESS OF BYRON S. ADAMS, WASHINGTON, D.C. (202) 347-8263

I.

Il.

Il.

IV.

TABLE OF CONTENTS

I iii ideniisciiiisndiigictiisimianzsnnencecees

A. The Excessive Fines Clause Question ...

1. The Presentation of the Excessive Fines

ID ~iicaicinsicatidsdinetideemnepese

2. The Excessive Fines Clause Question Is

Worthy of Plenary Consideration ......

B. The Due Process Clause and Contract

SE ID ceniinititetnsseninteneininenescesecccce

THE $1,600,000 PUNITIVE AWARD IM-

POSED BY THE MISSISSIPPI COURTS

VIOLATES THE EXCESSIVE FINES

CAEN ccctnncncicksicssbsbecssnsncseosuveoeseppeonssosseccs

A. Appellee’s Arguments Against the Appl-

icability of the Excessive Fines Clause

NE. teiitinitntiniatinainhitnianiiisndivateenees

B. The Historical Relevance of the Amerce-

STE teen e ee

C. The Appropriate Measure of Constitu-

tional EXCeSSIVENESS ............cccssessssssereeees

1. The Substantive Inquiry Into Exces-

EE setitiiaiitniietencntinieneniemttentineseses

2. The Procedure Utilized to Inquire into

Excessiveness and the “Workability”’ of

Appellant’s Test for Excessiveness .....

THE COURT BELOW CHANGED THE

RULES IN VIOLATION OF THE CON-

TRACT AND DUE PROCESS CLAUSES .

MISSISSIPPI’S APPEAL PENALTY

STATUTE ARBITRARILY BURDENS THE

gn

IIE idciicicccininnciinnincncbesoceses

B. The Arbitrary Classifications Drawn by §

EE» ctaieeashdattatensiatedediediceteamacianiensininnese

C. Lindsey v. Normet Is Indistinguishable .

V. CONCLUSION

iil

TABLE OF AUTHORITIES

CASES: Page

Aetna Life Insurance Co. v. Lavoie, 470 So.2d 1060

(Ala. 1984), vacated, No. 84-1601 (Apr. 22,

1986), 106 S. Ct. 1580 (1986) «0... eee 4, 16

Ash v. Security National Insurance Co., 574 S.W.2d

A Te 19

Benson v. Bart, 3 Burr. 1846, 97 Eng. Rep. 1130

EEE EET 10

Blue Cross and Blue Shield of Mississippi, Inc. v.

Campbell, 466 So.2d 833 (Miss. 1984) _.......... 17

Bonsignore v. City of New York, 521 F. Supp. 394

SDNY. SII ilies did endhicesndcentecensessesscces 8

Braniff Airways, Inc. v. Nebraska State Board of

qualization and Assessment, 347 U.S. 590

EG A DLE, I Se 4

Central Union Telephone Co. v. City of Edwards-

I, BP CIID cccecccccccccesccssccccsecces 2

Earl of Devon’s Case, 11 State Tr. 1354 (1689) . 14

Eddings v. Oklahoma, 455 U.S. 104 (1982) _........ 2

Educational Placement Services v. Wilson, 487

CC TD sc nccsccscessssssescnesovecses 2

Giaccio v. Pennsylvania, 382 U.S. 399 (1966) _.... 17

Grey v. Grant, 2 Wils. K.B. 252, 95 Eng. Rep. 794

EN EES TTT TUTTO C ETE 10

Griffin v. Mississippi, 504 So.2d 186

i scccssnonsosecs 2

Hathorn v. Lovorn, 457 U.S. 255 (1982). ............ 2

Huckle v. Money, 2 Wils. K. B. 205, 95 Eng. Rep.

as ccccssesctnsndonncncscoose 10

Ingraham v. Wright, 430 U.S. 651 (1977) ........... 6,11,12

Lindsey v. Normet, 405 U.S. 56 (1972) .............. 17,18,19

a and St. Louis Ry. Co. v. Beckwith, 129

i cssmemmnonooee 13

Mishxin v. New York, 383 U.S. 502 (1966) _........ 5

iv

Table of Authorities Continued

Page

Nationwide Mutual Insurance Co. v. Tuttle, 155

DG SG yyy 19

Pitts v. Mississippi State Bar Association, 462 So.2d

340 (Miss. 1985) (en banc) ..........cccceeeeeeeeeeeees 2

Pruneyard Shopping Center v. Robins, 447 U.S. 74

EIU ccacncasncentocesesstnsnintnincninaiensiamainiattienonmniness 5

Robinson v. California, 370 U.S. 660 (1962) _...... 12

Rowlett v. Anheuser-Busch, Inc., No. 87-1021 (ist

Cir. Sept. 90, 197) nccccccccrcccoccscccccssesccoseeseees 15,16

Town of Madison v. Bear Creek Water Ass’n, Inc.,

510 So.2d 800 (Miss. 1987) — .......cccccssceseseeeeees 2

United States ex rel. Siegal v. Follette, 290 F. Supp.

fii es ie

Webb v. Webb, 451 U.S. 493 (1981) — ..........cceeeeeeee 4

Webb’s Fabulous Pharmacies, Inc. v. Beckwith,

ye 2,3,4

Williams v. Illinois, 399 U.S. 235 (1970) _ ........... 8

FEDERAL CONSTITUTION:

Art. I, § 10, cl. 1 (Contract Clause) —..............000+ 5

Re DI rescnccccsessncsestntnescnseiassncesssnenesscows 7

Potrthn AmRGGG occccccccecccccccscccccccsscscssescsccccsesece 5

Eighth Amendment (Excessive Bail Clause) ........ 12

Eighth Amendment (Excessive Fines Clause) ....... passim

Eighth Amendment (Cruel and Unusual Punish-

BOD CRIED. ceccsccccceccocsscccccesunsessonsonesesetcosees 12

Fourteenth Amendment (Due Process Clause) ...... passim

Fourteenth Amendment (Equal Protection

IED cnccsccscsencescrenscccnsescsssnsnpsosssnasenmsanessosooecs 3,18

ENGLISH STATUTES:

—s Bill of Rights of 1689, 1 Wm. & M., Sess.

Ce, B CIID cccccccscccccesccccsccesscccccesescescscoeseees passim

Table of Authorities Continued

Page

Magna Carta, 25 Edw. I, Ch. I, 1 Stat. at Large

SUITE TIEN -sitiiiciintcndsatiedineneiateaseneepusienainiiltd passim

Statute of Westminster, 3 Edw. I, Ch. 6, 1 Stat.

£m 13

STATE CONSTITUTION, STATUTES AND RULES:

se Be I III, ~ ccnceceidsantntvtcuscenscnnsinnon 3

I a sae 19

Miss. Code Ann. § 11-3-23 (Supp. 1986) ......... 17,18,19

Rule 38, Rules of the Sup. Ct. of Miss. _......... 19

TREATISES:

E. Coke, The Second Part of the Institutes of the

Laws of England (6th ed. 1681) .............20000 10,13

Granucci, “Nor Cruel and Unusual Punishments

Inflicted”: The Original Meaning, 57 Calif. L.

+ ( £2 SEE raS 8

W. Hale, Handbook on the Law of Damages (2d

ea ice ict caniivnominn 10

J. Holt, Magna Carta (1965) .............ccceeseeseeeees 14

Long, Punitive Damages: An Unsettled Doctrine,

25 Drake L. Rev. 870 (1976) .........ccccseeseeeees 8

Massey, The Excessive Fines Clause and Punitive

Damages: Some Lessons History, 40 Vand.

L. Rev. 1233 (Nov. 1987) (to be published) . 11,12

W. McKechnie, Magna Carta (2d ed. 1958) .... 9, 14

Montesquieu, Tie Spirit of Laws (1751) _.......... 8

L. Schwoerer, The Declaration of Rights, 1689

GEITUEY sieacindinedasiapchictintinibitsidtipaaniieitiigittapetateniteionss 9-10

F. Thompson, Magna Carta: Its Role in the Mak-

ing of The English Constitution 1800-1629

Ep Re ree ae eee CE ee 14

I

JURISDICTION

Appellee’s arguments concerning the Court’s jurisdiction

over Question 1, Br. of Appellee, at 20-27, revisit the same

issues which were fully aired in his Motion to Dismiss, at

10-17, and presumably rejected when probable jurisdiction

was noted. Appellant will respond only to the extent ap-

pellee’s previous arguments have been re-packaged or

where additional authorities have been presented.’

A. The Excessive Fines Clause Question

1. The Presentation of the Excessive Fines Clause Ques-

tion

Appellee’s arguments regarding the presentation of the

Excessive Fines Clause question to the court below, Br.

' Appellant will not respond to appellee’s attempt to re-characterize

the record below. Br. of Appellee, at 1-6. The relevant core of the

proceedings below is that a Mississippi jury determined that appellant’s

handling of appellee’s insurance claim was unfair or improper and mer-

ited a $1,600,000 penalty. Although the amount of the fine did not

“shock .. . the judicial conscience’’ of five justices of the Supreme Court

of Mississippi, four justices of that court found the magnitude of the

fine either ‘‘grossiy excessive’ or completely unwarranted because of

appellee’s reliance on its highly qualified Medical Director. The simple

fact that punishment of this magnitude may be exacted for conduct

which so divides medical experts and the highest court of a state con-

veys telling messages concerning punitive damages.

Appellee’s discussion of the trial court’s instructions to the jury, Br.

of Appellee, at 2 n.2 and 46 n.69, regarding punitive damages is in-

complete and misleading. Appellee makes reference to only three of

the instructions given to the jury regarding the standards pursuant to

which punitive damages could be awarded and the amount of any pu-

nitive award. In the interest of completeness, all six of the pertinent

instructions have been reproduced in the appendix to this brief. The

confused, unintelligible standards pursuant to which the jury returned

its verdict for punitive damages are relevant to, and mirrored by, the

vague, shifting standards pursuant to which this verdict was affirmed

by a narrow majority of the court below as discused in part III, infra.

of Appellee, at 22-26,? are primarily directed to the inartful

manner in which this federal question was raised. Such

lack of sophistication, however, has been held by the Court

not to deprive it of the power to decide important con-

stitutional questions, Eddings vy. Oklahoma, 455 U.S. 104,

114 n.9 (1982). A unanimous Court applied this principle

in Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S.

155 (1980), on which appellant relied at the jurisdictional

stage, see Reply Mem., at 7-8 & nn.5 & 6.8

* Appellee reiterates arguments made in his Motion to Dismiss, at

13-17, that appellant was required to present its federal challenge to

the magnitude of the punitive fine in the trial court both pre- and post-

trial. Br. of Appellee, at 25. In renewing these arguments, appellee

does not address the holding of the trial court that it had no power

to consider appellant’s challenge to the size of the punitive award, see

J. S., at 10-12, a holding which deprived appellant of any “reasonable

opportunity” to have its federal and state law challenges to the punitive

damage award determined by that court. Central Union Telephone Co.

v. City of Edwardsville, 269 U.S. 190, 194-95 (1925). Although Central

Union was relied upon by appellant, Reply Mem., at 9, and is con-

trolling, appellee does not even cite that case.

Appellee’s argument is deficient in other crucial respects. Appellee

cites Educational Placement Services v. Wilson, 487 So.2d 1316 (Miss.

1986), as establishing what he characterizes as a “‘consistently-applied”’

practice of the court below in refusing to consider questions not pre-

sented to the trial court, but neglects to bring to the Court’s attention

subsequently decided cases in which the court below decided issues

raised for the first time on direct appeal. See Town of Madison v. Bear

Creek Water Ass’n, Inc., 510 So.2d 800 (Miss. 1987); Griffin v. Mis-

sissippi, 504 So.2d 186 (Miss. 1987). More importantly, neither appellee

nor the cases he cites address the practice of the court below as regards

the presentation of issues on rehearing. This Court recognized in Hath-

orn v. Lovorn, 457 U.S. 255 (1982), that the court below regularly

entertains questions raised for the first time on rehearing. Pitts v.

Mississippi State Bar Association, 462 So.2d 340, 342 (Miss. 1985) (en

banc), cited in appellant’s Reply Mem., at 1, but not mentioned by

appellee, confirms that practice.

* Appellee’s failure to respond to Beckwith in his merits brief is un-

derstandable, because Beckwith is dispositive on this point. In that case,

the appellant’s memorandum of law filed in the state trial court—

Moreover, and contrary to appellee’s assertion, appellant

expressly challenged on federal grounds in the court below

the excessiveness of the $1,600,000 award, asserting that

the award “is excessive, constitutes an excessive fine, and

violates due process, equal protection and other constitu-

tional stanoards.” J. S. App., 15la (emphasis added).‘ Ap-

pellant twice challenged the size of the award as

“constitut[ing] [an] excessive fine.” J. S. App., 139a, 15la.

Appellee, Br. of Appellee, at 22, objects that appeliant

did not cite expressly to the Excessive Fines Clause of

the Eighth Amendment in its briefs in the court below

But appellant’s challenge to the punitive damage award

as being an “excessive fine’’ is surely sufficient. In any

event, the Court has made clear that a state court liti-

apparently the only document in the record relied upon by this Court

to sustain its jurisdiction—contained a series of state law challenges to

the Florida statute at issue and apparently a single reference to the

“pertinent provisions of the Florida Constitution and its Federal coun-

terpart.” 449 U.S., at 159 n.5 (emphasis in original). In the instant

case, appellant’s briefs in the court below, J. S. App., 124a-152a, much

more clearly relied on the Federal Constitution.

In Beckwith, the Court observed that the federal question “‘appears

to have been raised in the Supreme Court of Florida.’’ 449 U.S., at

159 n.5. This observation of the Court was apparently based on an

assertion to that effect by the appellant’s counse] at oral argument in

an exchange with Justice Blackmun. Although the Court did not appear

to rely on that exchange in taking jurisdiction over that case, that

exchange is in any event less substantial than the briefs of appellant

filed in the court below in this case.

‘ Appellee’s suggestion, Br. of Appellee, at 25 n.36, that appellant’s

reference to “‘due process, equal protection” in the court below may

have constituted a reference to the guarantee of due process in Art.

8, § 14 of the Mississippi Constitution overlooks the fact that Missis-

sippi’s constitution contains no equivalent of the Equal Protection Clause

of the Fourteenth Amendment. Thus, appellee’s speculation requires

concluding that appellant shifted from state to federal grounds within

a single phrase of a sentence. Furthermore, when appellant relied on

provisions of the Mississippi Constitution, it expressly cited those pro-

visions by article and section. See J. S. App., 135a.

gant’s failure to rely on the “correct” provision of the

Federal Constitution is irrelevant to this Court’s power to

decide a federal question so long as the question brought

here is “within the clear intendment”’ of the contention

made below. Braniff Airways, Inc. v. Nebraska State Board

of Equalization and Assessment, 347 U.S. 590, 599 (1954).

Appellant relied on Braniff at the jurisdictional stage after

appellee first raised this objection, Reply Mem., at 7-8 n.5.

As with Beckwith, supra, appellee inexplicably does not

even cite Braniff, which is indistinguishable and control-

ling. See Webb v. Webb, 451 U.S. 493, 501 (1981) (“we

have not insisted” that “litigants identif[y] in the state

courts precisely the provisions of the Federal Constitution

. on which they rely ....’’).

Thus, the rule announced by this Court is: Webb v. Webb,

451 U.S., at 501, requiring “that a claim under ... the

Federal Constitution was presented in the state courts and

that those courts were apprised of the nature and sub-

stance of the federal claim at the time and in the manner

required by state law,” is fully satisfied in this case.

2. The Excessive Fines Clause Question Is Worthy Of Plen-

ary Consideration

Appellee’s contention that the Excessive Fines Clause

question does not meet this Court’s standards for the ex-

ercise of its certiorari jurisdiction is authoritatively refuted

by the Court’s direct statement just eighteen months ago

in Aetna Life Insurance Co. v. Lavoie, No. 84-1601 (Apr.

22, 1986) slip op., at 13, 106 S Ct. 1580, 1589 11986)

(emphasis added), characterizing the Excessive Fines

Clause question as raising an “important” issue ‘which

... must be resolved,’”’ and the Court’s unrestricted no-

tation of probable jurisdiction in this case.*

* Appellee’s argument, Br. of Appellee, at 26-27, that the Excessive

Fines Clause question need not be reached because Congress and some

state legislatures may be “‘actively considering a broad range of re-

B. The Due Process Clause and Contract Clause Ques-

tion

Appellant expressly asserted below that the court had,

in affirming the punitive damage award, “change[d] the

law” regarding punitive damages in violation of “‘consti-

tutional requirements of equal protection.” J. S. App.,

138a. Appellee contends, Br. of Appellee, at 44-45, that

appellant cannot rely on the Contract Clause or the Due

Process Clause in support of this federal challenge in this

Court because those clauses were not cited to the court

below and because this challenge was not raised until the

rehearing stage.

Appellee’s initial contention is overcome by the same

authorities discussed above regarding appellant’s entitle-

ment to invoke the Excessive Fines Clause in this Court.

Appellee’s contention regarding the timeliness of this chal-

lenge ignores the fact that this federal question did not

arise until the court below had formulated new substantive

standards of conduct in 1985 and had imposed on appellant

a $1,600,000 penalty for not having complied with those

standards in 1979 and 1980. Thus, cases such as Prune-

yard Shopping Center v. Robins, 447 U.S. 74, 85-87 n.9

(1980) and cases cited (litigants entitled to raise in this

strictions on punitive damage awards” is singularly devoid of any spe-

cifics as to the nature of the legislation pending or the likelihood of

its enactment. S. 544, cited by appellee in his brief at 26 n.39, would

place no limit on the size of punitive damage awards.

Appellee’s reliance, Br. of Appellee, at 27, on Mishkin v. New York,

883 U.S. 502, 512-13 (1966), to suggest that the record in this case

does not present the Excessive Fines Clause question with “sufficient

clarity,”” is misplaced. The Court’s concern in Mishkin centered ezclu-

sively on the absence in the record of an evidentiary basis for deciding

the fact-bound Fourth Amendment question presented. Whether the

Excessive Fines Clause applies to punitive damages, in sharp contrast,

is not dependent for its resolution on any facts; it is a pure question

of federal constitutional law which can only be resolved definitively by

this Court.

Court a federal question raised at first opportunity to do

so in the state court system), require rejection of appellee’s

contention.

II

THE $1,600,000 PUNITIVE AWARD

IMPOSED BY THE MISSISSIPPI COURTS

VIOLATES THE EXCESSIVE FINES CLAUSE

A. Appellee’s Arguments Against the Applicability of

the Excessive Fines Clause Are Specious

The origin and development of the Eighth Amendment’s

antecedents must be examined and applied in this case in

the context of a governmentally imposed, court approved,

$1,600,000 fine levied in order to punish and deter per-

ceived antisocial conduct—precisely the purposes served by

the criminal law. The incontrovertible history of the Eng-

lish antecedents of the Excessive Fines Clause, viewed in

light of this purpose, requires the result urged by appellant.

Appellee avoids any discussion of the purpose of the pu-

nitive fine in this case and the purpose of English and

American constitutional restrictions on excessive, govern-

mentally imposed punitive fines. Instead, appellee advances

two simple and closely related propositions which are crit-

ical to his position but which fall of their own weight when

scrutinized.

The first proposition, Br. of Appellee, at 28, is that

punitive damages must be distinguished from other gov-

ernmentally imposed financial penalties because they are

not extracted by the government “‘to fine or punish for

its own benefit,” id. (emphasis added), but rather are

merely made available by the government “but ‘designed

for the benefit of other parties.’” Id., quoting Ingraham v.

Wright, 430 U.S. 651, 668 (1977) (emphasis added). Ap-

pellee’s unstated premise is that punitive fines in civil cases

are not intended primarily to serve the government’s ob-

jectives. But that premise is plainly false, and the history

of punitive damages is to the contrary. Punitive damages

are invariably justified as serving society’s goals.*

Even assuming the validity of appellee’s major premise,

the logical fallacy in appellee’s reasoning is his assumption

that the government’s involvement becomes immaterial

merely because there may be some ancillary benefit to a

private litigant. Such logic would, for example, authorize

privately obtained injunctions against the printing of news-

papers despite the First Amendment’s prohibition against

the government’s obtaining such an order for its own “‘ben-

efit.”” That is not the law.

Appellee’s second, closely related proposition, Br. of Ap-

pellee, at 30-35, is that these punitive fines are ‘‘different”’

for constitutional purposes because they are “awarded to

private plaintiffs” rather than paid to the government. Id.,

at 30. Appellee seems to argue, Br., at 30-38, that the

principal concern over amercements and fines reflected in

Magna Carta and the English Bill of Rights is that they

were set by and payable to the King and therefore subject

to abuse whenever the Crown needed to generate addi-

tional revenue. This premise is, however, grounded in a

myopic view of history.

Concern over excessive and disproportionate punishment

has ancient roots that go far beyond the potential ‘‘conflict

of interest” identified by appellee. From Genesis, Leviticus

and the lex talionis, the concept of proportionality—equal-

ity between the crime and the punishment—has been abid-

* Appellee’s counsel advised the jury during his opening statement:

“we are asking you to return to us a sizable verdict ... not to com-

pensate Lloyd Crenshaw, but to penalize this company and let them

know that the people of Jackson County don’t like their insurance

claims handled in that manner.” R. 174. The jury was subsequently

instructed that punitive damages “are never awarded to benefit the

injured party, but rather to punish and compel the wrongdoer to have

due and proper regard for the rights of the public.” R. 1130, App. 5a,

infra.

ing and fundamental. See Granucci, “Nor Cruel and

Unusual Punishments Inflicted”: The Original Meaning, 57

Calif. L. Rev. 839, 844 (1969); Montesquieu, The Spirit of

Laws *111 (bk. VI, ch. XVI) (“It is an essential point that

there should be a certain proportion in punishments, be-

cause it is essential that a great crime should be avoided

rather than a lesser ....”’). And even if history were to

the contrary—which it is not—‘“‘neither the antiquity of a

practice nor the fact of steadfast ... judicial adherence

to it through the centuries insulates it from constitutional

attack ....”’ Williams v. Illinois, 399 U.S. 235, 239 (1970).

Underlying appellee’s argument is the proposition that

American governments may achieve the retributive and

deterrent purposes of punitive fines without regard to cen-

turies-old restrictions on excessive monetary punishments

by the simple expedient of turning those fines over to

private persons. Appellee has, however, advanced no sup-

port in law, logic or history for his gossamer theory.’

’ Appellee also argues, Br. of Appellee, at 31, that amercements are

“different” from punitive damages because the former were imposed

not only upon “great or serious” offenses, but also for “minor and

trivial’’ offenses, whereas punitive damages are awarded “‘only’’ where

“particularly culpable and reprehensible behavior” is involved. Like ap-

pellee’s other arguments, this one starts with a false premise and then

stretches to reach conclusions which are untenable even if the premise

were valid. The suggestion that punitive damages are available only

for egregious, highly culpable conduct is simply wrong. They may be

awarded for conduct which a jury finds to be “wanton” or in “reckless

disregard for the rights of others” (Iowa), for “gross negligence” (Ar-

izona) or even “‘rudeness’’ or “mere caprice” (North Carolina). See

Long, Punitive Damages: An Unsettled Doctrine, 25 Drake L. Rev. 870,

880-81 (1976). See, e.g., Bonsignore v. City of New York, 521 F. Supp.

394 (S.D.N.Y. 1981) (New York City held liable for $125,000 punitive

damage award to wife of police officer shot by her husband on basis

of city’s policy of requiring police officials to carry firearms while off

duty). Even if this dichotomy actually existed, appellee does not suggest

how this asserted “difference” would give rise to a distinction of con-

stitutional dimension.

B. The Historical Relevance of the Amercements

Clauses

Appellee acknowledges that a substantial consideration

in determining whether the Excessive Fines Clause limits

the magnitude of punitive damage awards is the historical

derivation of that Clause. Br. of Appellee, at 27-28 n.40.

Moreover, appellee does not dispute that the principal pur-

pose served by amercements, fines, and punitive damages

is to inflict punishment on the perpetrator of antisocial

conduct in order to deter the wrongdoer and others from

engaging in similar conduct. Br. of Appellant, at 25-26;

Br. of Aetna Life Insurance Co., et al., as Amici Curiae,

at 10-11 (“Br. of Aetna”). However, appellee asserts that

Chapter 20 of Magna Carta was concerned only with lim-

iting the ability of the Crown to determine the size of

poten al amercements which would be paid into its coffers.

But neither the text nor historical application of Chapter

20 provides any support whatsoever for that argument.

On its face, see Br. of Appellant, at 23, Chapter 20

adopts substantive limications on the size of amercements

without regard to the identity of the beneficiary of the

extraction. In addition, amercements were, as an historical

fact, paid to officials other than the Crown. See Br. of

Aetna, at 16 n.26 & 17 n.27. Furthermore, the central

point of Chapter 20 was to remove the arbitrary element

in the exaction of amercements by requiring the Crown

to “conform to its own customary rules.”” W. McKechnie,

Magna Carta 287 (2d ed. 1958). See generally Br. of Aetna,

at 15. This objective was, in practice, achieved through

the articulation of substantive standards and the imposition

of procedural regularity on the amercements system. This

objective was also pursued by those who drafted the pro-

hibition on excessive fines as it appeared in the Declaration

of Rights of 1689, subsequently enacted later that year by

Parliament as the English Bill of Rights. Those drafters

“wanted to prohibit punishments that were unauthorized

by statute ....” L. Schwoerer, The Declaration of Rights,

10

1689, 93-94 (1981). Appellee cites no evidence to the con-

trary.

Appellee also argues that English constitutional limits

on excessive penalties would have been regarded as in-

applicable to 20th-Century punitive damage awards be-

cause in some cases English courts in the 18th Century

perceived themselves to be without authority to set aside

disproportionate “exemplary damage” awards. Br. of Ap-

pellee, at 33-35. Appellee’s argument, however, totally fails

to address the fact that the three cases upon which he

relies* either involved misconduct by government officials,

who did not enjoy the protection of the Amercements

Clauses, see E. Coke, The Second Part of the Institutes of

the Laws of England 27 (6th ed. 1681); Br. of Appellant,

at 29, or involved “‘exemplary damage” awards which were

perceived to be compensatory as well as punitive. Jd., at

28-30.

As appellant has demonstrated, id., the blending of the

reparative and retributive rationales by English courts in

the 18th Century to justify the affirmance of the earliest

“exemplary damage” awards explains in part why the

defendants in those cases may not have invoked the prin-

ciple of proportionality in Magna Carta and the Excessive

Fines Clause of the English Bill of Rights. It was not until

the middle of the 19th Century that punitive damages in

their more purely punitive form—imposed, like amerce-

ments and fines, for the purposes of punishment and de-

terrence—began to emerge “as ‘a sort of hybrid between

a display of ethical indignation, and the imposition of a

criminal fine.’’’ W. Hale, Handbook on the Law of Dam-

ages 303 (2d ed. 1912). At that point, the reparative and

retributive purposes of the law continued to be joined in

* Huckle v. Money, 2 Wils. K.B. 205, 95 Eng. Rep. 768 (C.P. 1763);

Grey v. Grant, 2 Wils. K.B. 252, 95 Eng. Rep. 794 (C.P. 1764); Benson

v. Bart, 3 Burr. 1846, 97 Eng. Rep. 1130 (1766).

a

. 1]

civil actions, but the function of punitive or exemplary

damages was finally recognized as purely punitive.

The best indication of the meaning and intended reach

of the Excessive Fines Clause is not, as appellee would

have it, a few English cases from the mid-18th Century

before “exemplary damages’’ had taken on the exclusively

punitive and deterrent role they now perform. Rather, the

understanding of the Colonists and Framers of the Eighth

Amendment who, as history shows, fully intended to pro-

tect themselves from disproportionate, excessive punish-

ment, is the better source from which to derive the

meaning of the Excessive Fines Clause.

The distinctions between ‘“‘amercement”’ and “‘fine”’ had

become blurred as early as the 15th Century. Br. of Aetna,

at 18 n.29. As documented by amici curiae, the Colonists

also used the terms amercement and fine interchangeably

in the fundamental Colonial documents, some of which

expressly incorporated Chapter 20 of Magna Carta. Br. of

Aetna, at 20-25. Those materials demonstrate the under-

standing of the Colonists that Chapter 20 was applicable

to fines imposed in civil as well as criminal cases, id., at

23,° and was applicable to fines payable directly to a pri-

*The understanding of the Colonists regarding the applicability of

Chapter 20 and the prohibition on excessive fines in the English Bill

of Rights of 1689 to civil cases mirrors the understanding of the com-

mittees of the Convention which drafted Article 10 of the Declaration

of Rights in early 1689 and the Members of Parliament who enacted

the Declaration as the Bill of Rights later that year. Professor Massey,

after a thorough exposition of the relevant historical materials, con-

cludes that the prohibition on excessive fines in Article 10 of the Dec-

laration ‘‘should be read as prohibiting excessive fines and amercements,

whether imposed by judge or jury, in both civil and criminal proceed-

ings.” Massey, The Excessive Fines Clause and Punitive Damages: Some

Lessons from History, 40 Vand. L. Rev. 1233, 1256 (Nov. 1987) (to be

published).

An examination of the briefs before the Court in Ingraham v. Wright,

430 U.S. 651 (1977), demonstrates that the primary historical materials

12

vate litigant, id., at 21. Like the drafters of the English

Bill of Rights, the Colonists, including the Framers of the

Eighth Amendment, were concerned about excessive gov-

ernmentally imposed punishments, not the particular form

in which such punishments were administered. The sug-

gestion that the Colonists would have been indifferent to

excessive governmentally imposed financial sanctions

merely because they were paid to randomly selected citi-

zens rather than to the government’s treasury defies com-

mon sense and is not supported by any historical evidence.’

relied on by appellant, amici curiae Aetna, et al., and Professor Massey

were not placed before this Court by the litigants in Ingraham. This

lack of full development of the historical background of the framing

of the English Bill of Rights may well have been responsible for the

Court’s suggestion in Ingraham that the Eighth Amendment applies

only to punishment imposed after a criminal trial. As noted at the time,

the Ingraham Court proffered this suggestion based upon a “vague

and inconclusive recitation of the history of the [Eighth] Amendment.”’

430 U.S., at 685 (White, J., dissenting).

Moreover, in Ingraham the Court’s opinion observed that, as an

historical fact, the use of moderate corporal punishment by a teacher

to correct a student in his care was viewed as “lawful,” 430 U.S., at

661, by Blackstone. In sharp contrast, the exaction of excessive amerce-

ments (and, later, fines) has been violative of English law since at least

1215. Thus, while English history arguably supported the result reached

in Ingraham, it did not support the breadth of some of the Court’s

language. As Professor Massey’s research establishes, the elimination

of the reference to “criminal cases” from an early draft of Article 10

of the Declaration should, in light of the contemporary events, be re-

garded as reflecting the understanding of the drafters that the pro-

hibitions on excessive fines, bail and punishments were not limited to

criminal cases. 40 Vand. L. Rev., at 1254-56.

” Appellee suggests, without elaboration, that the Court should hold

the Excessive Fines Clause inapplicable to the States, Br. of Appellee,

at 29 & n.43, and that corporations are not entitled to its protection,

id. & n.44. Neither suggestion has merit. In Robinson v. California,

370 U.S. 660 (1962), the Court first held the Cruel and Unusual Pun-

ishments Clause applicable to the States through the Due Process Clause

of the Fourteenth Amendment. The Excessive Bail Clause has also been

held applicable to the States through the Due Process Clause. See, e.g.,

13

C. The Appropriate Measure of Constitutional Exces-

siveness

Appellee appears to agree that Chapter 20 of Magna

Carta required amercements to be proportional to the se-

riousness of the conduct for which the amercement was

imposed. Br. of Appellee, at 32. Appellee nevertheless ar-

gues that there is no historical support for appellant's

position that the constitutional excessiveness ot punitive

damage awards should be measured, at least in part, by

comparing the magnitude of such awards to civil and crim-

inal penalties established prospectively by legislatures and

made generally applicable to all citizens as the appropriate

financial sanctions for comparable conduct. Br. of Appel-

lee, at 37-41.

Appellee’s explanation of his position confuses, perhaps

unintentionally, two separate questions. As noted in the

foregoing paragraph, the initial question regards the sub-

stantive standards imposed on the excessiveness of puni-

tive awards by Chapter 20; on this question the parties

generally agree. The second, and more important, question

revolves around how English courts avoided the imposition

of amercements which were disproportionate to the offense

United States ex rel. Siegal v. Follette, 290 F. Supp. 632, 634-35 &

nn.11-13 (S.D.N.Y. 1968).

The applicability of the Excessive Fines Clause to corporate entities

is controlled by the opinion of Justice Field, writing for a unanimous

Court in Minneapolis and St. Lowis Ry. Co. v. Beckwith, 129 U.S. 26,

28 (1889), in which the Court reasoned “that corporations can invoke

the benefits of provisions of the Constitution ... which guarantee to

persons the enjoyment of property ....” Moreover, at least since the

enactment of the Statute of Westminster, 3 Edw.I, Ch. 6, in 1275, the

protections of Magna Carta were extended to corporate and political

entities. E. Coke, The Second Part of the Institutes of the Laws of

England 27, 169-70 (6th ed. 1681). Thus, the Framers of the Eighth

Amendment would have understood the Excessive Fines Clause to be

applicable to corporate entities.

14

involved in a particular case. That latter question involves

an inquiry into both substance and process.

1. The Substantive Inquiry Into Excessiveness

Contrary to appellee’s submission, there is no doubt that

limits on amercements and fines, both before and after

Magna Carta, were frequently established by local customs,

rules and the equivalent of statues." See J. Holt, Magna

Carta 50, 230-32 (1965) (cited for this specific point in Br.

of Appellant, at 37). There was in fact a recognized scale

of maximum amercements established in the first year of

Henry VI, W. McKechnie, supra, at 298, and statutes also

established specific limits. F. Thompson, Magna Carta: Its

Role in the Making of the English Constitution 1800-1629,

361 (1948). This history demonstrates that in implementing

Chapter 20, the English rejected the proposition that juries

were competent to make the threshold determination re-

garding the maximum punishment which was “‘propor-

tional’”” to the particular offense involved. In fact, the

English settled on a degree of certainty that parallels the

process suggested by appellant’s submission to this Court

on this point.

'' Appellee asserts, Br. of Appellee, at 37-38, that amercements were

not required to be proportional to punishments imposed by “‘Parlia-

ment.” That assertion is contrary to Earl of Devon’s Case, 11 State

Tr. 1354 (1689), as discussed in appellant’s opening brief, at 38-39.

* Appellant’s proposed test of constitutional excessiveness implies

none of the inflexibility that appellee suggests. See Br. of Appellee, at

28-29 (treble damages would per se violate Excessive Fines Clause).

Appellant has not argued that a punitive award is invariably excessive

in the constitutional sense merely because it may be greater than any

particular legislatively imposed analog. Such enactments are, however,

valuable benchmarks which permit an objective inquiry into excessive-

ness and which will produce consistent, easily administered application

of the Excessive Fines Clause. Furthermore, if Mississippi had legislated

a treble damage standard for insurance bad faith cases, that standard

would, standing alone, reduce the punitive award in this case by

$1,560,000.

15

2. The Procedure Utilized to Inquire Into Excessiveness

and the “Workability’”’ of Appellant’s Tesi for Exces-

siveness

Appellee attempts to convince the Court that English

juries “had unlimited discretion to determine the appro-

priate amount” a person should be amerced, Br. of Ap-

pellee, at 38, while simultaneously arguing that appellant's

submission would require judges “‘to make substantive and

policy judgments they are ill-equipped to make.” Jd., at

41. The extreme tension between these two positions is

self-evident. Appellee would leave within the unfettered

discretion of juries the administration of an ad hoc system

of punishment which cannot, for reasons appellee fails to

articulate, be entrusted to judges guided by legislative en-

actments which presumptively reflect the values of society

as a whole, expressed prospectively, regarding standards

of conduct and penalties for deviation therefrom. Appel-

lee’s system, however, is not the system developed in Eng-

land and transplanted here.

The function of English juries within the amercements

system was to reduce an amercement which a court, often

guided by rule, custom or statute, had already determined

to be proportional to the particular offense involved. Br.

of Aetna, at 11-14 and authorities cited; Br. of Appellant,

36-39. Appellee eschews responding to this well-docu-

mented argument, apparently content to stand on the

proposition that reliance on judges and legislative stand-

ards in determining the maximum punitive damage award

permissible in a particular case is “doomed to failure.”

Br. of Appellee, at 43.

The First Circuit, however, has recently recognized the

arbitrariness of committing to juries the power to award

unlimited punitive damages. Rowlett v. Anheuser-Busch,

Inc. No. 87-1021 (1st Cir. Sept. 30, 1987). In the course

of reducing a $3,000,000 punitive damage award to

$300,000, that court imposed a prophylactic rule under

16

which trial courts were directed henceforth to establish a

limit on the amount of punitive damages which could be

awarded and so to instruct the jury, which would be per-

mitted to award less, but not more, than that judicially

ascertained limit. Slip op., at 33. Fashioned as a matter

of statutory interpretation rather than constitutional im-

perative, the First Circuit’s approach is both ‘workable’

and implicitly adopts one of the key principles recognized

and implemented in the antecedents of the Excessive Fines

Clause: punishment administered in arbitrary, purely vis-

ceral zmounts by juries is fundamentally inconsistent with

our constitutional system.

Ill

THE COURT BELOW CHANGED THE RULES

IN VIOLATION OF THE CONTRACT AND DUE

PROCESS CLAUSES

Appellee argues that the Court below did not ‘change

[the] law in any respect.” Br. of Appellee, at 47. However,

prior to the decision in this case the court below had never,

in a bad faith case, determined that insurers would be

liable for punitive damages when they had an arguable

basis for denying a claim but communicated an improper

basis to their insureds. As stated unequivocally by the

court below:

The issue is not the defense which Bankers Life

at trial finally settled upon to defend the suit,

but the reason it gave Crenshaw for denying the

claim.

J. S. App., 40a, 483 So.2d, at 283. To support this prop-

osition, the court below relied not on its prior cases but,

rather, the then-recent decision of the Supreme Court of

Alabama in Aetna Life Insurance Co. v. Lavoie, 470 So.2d

1060 (Ala. 1984), vacated, No. 84-1601 (Apr. 22, 1986), 106

S. Ct. 1580 (1986).

Having framed the “issue” in this manner, the majority

of the court below affirmed a punitive damage award for

ee eee ee

ill Rall 6 tlh ha ott ay

17

conduct held to be inconsistent with vague and uncertain

standards which have not even been susceptible to clear

articulation in general terms by the court below. Compare

the majority opinion below, J. S. App., 40a-47a, 483 So.2d,

at 173-76 (appellant not entitled to rely on expert opinion

of Medical Director), with dissenting opinion, J. S. App.

64a-68a, 78a-80a, 483 So.2d, at 284-85, 290-91 (appellant

justified in relying on expert opinion of Medical Director)

and Blue Cross and Blue Shield of Mississippi, Inc. v.

Campbell, 466 So.2d 833 (Miss. 1984) (insurer entitled to

rely on expert opinion of registered nurse).

Furthermore, if the imposition of a $230.95 fine for

conduct found to be “reprehensible in some respect’’ is

violative of the Due Process Clause, Giaccio v. Pennsyl-

vania, 382 U.S. 399, 403-04 (1966), then due process must

surely be violated by the imposition of a $1,600,000 fine

based on the elusive definitions of misconduct in this case

presented to the jury” and articulated by the court below.

IV

MISSISSIPPI’S APPEAL PENALTY STATUTE

ARBITRARILY BURDENS THE RIGHT TO APPEAL

A. Standard of Review

Relying on a passage from this Court’s opinion in Lind-

sey v. Normet, 405 U.S. 56, 73 (1972), which is irrelevant

to the showing which must be made to justify a State’s

burdening of the right to appeal, appellee defends § 11-3-

23 without acknowledging the burden he carries under

Lindsey. Br. of Appellee, at 12. As Lindsey held, the ex-

ercise of the statutory right to appeal “cannot be granted

8 As noted above, note 1, supra, the six jury instructions on punitive

damages, reprinted in the Appendix, infra, la-7a, taken collectively,

provided the jury the opportunity to impose punitive damages on the

basis of virtually meaningless standards and in a virtually unlimited

sum.

BEST AVAILABLE COPY

18

to some litigants and capriciously or arbitrarily denied to

others without violating the Equal Protection Clause.” 405

U.S., at 77.

B. The Arbitrary Classifications Drawn by § 11-3-23

Based on his mischaracterization of the applicable stand-

ard of review dictated by Lindsey, appellee argues that

the arbitrary overinclusiveness and underinclusiveness of

§ 11-3-23 are essentially irrelevant to a determination of

the constitutional issue. Br. of Appellee, at 16-17. This

assertion is flatly inconsistent with Lindsey, in which the

Court held that the statute at issue was unconstitutional

because it at once barred nonfrivolous appeals and allowed

“meritless appeals” to go unpunished. 405 U.S., at 78.

Section 11-3-23 also fails to punish certain frivolous appeals

and cross-appeals, yet imposes a substantial penalty (here,

$240,000) on an appellant, as here, who brings an appeal!

which fails by a single vote in the highest court of a state

after three years of deliberation.

Appellee also theorizes that the windfall received by

successful appellees may bear some relationship to “intan-

gible costs that cannot be precisely measured, such as the

emotional toll of participating in litigation ....” Br. of

Appellee, at 15. But this suggestion merely obscures the

fundamental defect in § 11-3-23. If Mississippi desires to

reimburse litigants for such “intangible costs” in connec-

tion with appeals pursued within its appellate system, Mis-

sissippi is required to place all litigants who experience

such “intangible costs” on an equal footing. Section 11-3-

23 makes no pretense of doing so.

C. Lindsey v. Normet Is Indistinguishable

Although appellee generally ignores the pertinent as-

pects of Lindsey, his muted attempt, Br. of Appellee, at

19-20 n.26, to distinguish Lindsey is without merit. He

argues that Lindsey involved “poor tenants.” Yet, as the

Lindsey Court expressly held, the statute imposed on a

“nonindigent ... appellant ... a substantial barrier to

19

appeal faced by no other civil litigant ....” 405 U.S., at

79."

Appellee also argues that the burden on appellants un-

der that statute “doubled the stakes,” while § 11-3-23 only

raises the stakes by fifteen percent. The Court’s concern

in Lindsey, however, was not with the fact that the stakes

were doubled but, rather, was with the fact that the wind-

fall recovery by the landlord was ‘“‘unrelated to actual rent

accrued or to specific damage sustained by the landlord.”

Id., at 77. Section 11-3-23 results in an indistinguishable

“windfall” to successful appellees.

Finally, appellee contends that the double-bond require-

ment struck down in Lindsey ‘“‘applied only to a very small

class of litigants.’”’” But nothing in the Court’s opinion in

Lindsey suggests that the Court would have sustained the

statute if its arbitrary exactions had been extended to

other classes of litigants on the same unequal basis. Con-

trary to appellee’s suggestion, Mississippi now stands vir-

tually alone among the States in imposing arbitrary

penalties on unsuccessful appellants.'* Even Mississippi has

now adopted a rational substitute for § 11-3-23."

This observation by the Court disposes of appellee’s argument, Br.

of Appellee, at 11 n.9, that appellant has no “standing” to challenge

§ 11-3-23 by laying before the Court all of the arbitrary classifications

drawn by § 11-3-23.

'’ Appellee acknowledges that only the States of Alabama, Kentucky

and Virginia have enacted statutes under which mandatory penalties

are imposed on unsuccessful money-judgment appellants. Br. of Ap-

pellee, at 19 & n.24. Alabama repealed its statute on a prospective

basis effective June 11, 1987. 1987 Ala. Acts 188. The Kentucky statute

imposes a penalty only on the second appeal of a case, Ash v. Security

National Insurance Co., 574 S.W.2d 346, 350-51 (Ky. 1978), while Vir-

ginia’s statute is applied in very narrow circumstances. Nationwide

Mutual Ins. Co. v. Tuttle, 155 S.E.2d 358, 362 (Va. 1967).

1% On June 15, 1987, the court below promulgated new Rule 38 under

which, “if this Court shall determine that an appeal is frivolous, it

shall award just damages and single or double costs to the appellee.”

20

V

CONCLUSION

This case concerns the question whether excessive, dis-

proportionate punishment may be inflicted by the govern-

ment notwithstanding an ancient and clear constitutional

prohibition. Today’s punitive damage system is, if any-

thing, worse than the arbitrary fines which Magna Carta

and the English Bill of Rights were adopted to control,

because the present system is even more arbitrary, stand-

ardless, capricious and destructive. The $1,600,000 punitive

fine at issue must be vacated and the Mississippi courts

directed to reduce it according to the principles of Magne

Carta and the English Bill of Rights as carried over in

the Eighth Amendment.

November 20, 1987 Respectfully submitted,

*Theodore B. Olson

Larry L. Simms

Terence P. Ross

Of Counsel: GIBSON, DUNN & CRUTCHER

1050 Connecticut Avenue, N.W.

Charles G. Copeland Washington, D.C. 20036-5303

J. Tucker Mitchell (202) 955-8500

Attorneys for Appellant

COPELAND, COOK, TAYLOR ‘*Counsel of Record

& BusH

Post Office Box 2132

Jackson, Mississippi 39225-

2532

(601) 354-0123

This rule was made applicable, as of January 1, 1988, only to civil

cases in which § 11-3-23 “does not apply.”

APPENDIX

weet GN

Sh mh,

la

INSTRUCTION NO. P-6—GIVEN—Filed November 30, 1981

IN THE CIRCUIT COURT OF JACKSON COUNTY,

MISSISSIPPI

LLOYD M. CRENSHAW PLAINTIFF

VERSUS NO. 11,292

BANKERS LIFE AND CASUALTY COMPANY DEFENDANT

INSTRUCTION NO. P-6

The Court instructs the Jury that an insurance is ob-

ligated to deal fairly and in good faith with its insured in

handling and processing an insured’s claim and to refrain

from abuse, gross negligence, malice, fraudulent or out-

rageous conduct in the handling of its insured’s claim.

If you find from a preponderance of the evidence in this

case that the Plaintiff filed a legitimate claim with the

Defendant for the loss of his foot and that the Defendant

subsequently denied and refused to pay said claim, and if

you further find that such refusal was attended by abuse,

gross negligence, malice, fraudulent, or outrageous con-

duct, then it is your sworn duty to return a verdict for

the Plaintiff and in doing so, you may award both com-

pensatory and punitive damages.

[1124]

2a

INSTRUCTION NO. P-9A—GIVEN—Filed December 3, 1981

IN THE CIRCUIT COURT OF JACKSON COUNTY,

MISSISSIPPI

LLOYD M. CRENSHAW PLAINTIFF

VERSUS NO. 11,292

BANKERS LIFE AND CASUALTY COMPANY DEFENDANT

INSTRUCTION NO. P-9A

The Court instructs the jury that an insurance company

and its employees, in doing the various acts required to

make effective an insurance policy, owes a duty to its

insureds to act in good faith in handling claims presented

by its insureds. Such a relationship is a position of trust

and confidence and it demands that the insurance company

through its employees deal fairly and exercise good faith

in administering the insurance coverage.

If you find from a preponderance of the evidence in this

case that the Defendant, Bankers Life and Casualty Com-

pany, through its employees delayed or denied the payment

of policy benefits, improperly handled the claim, and that

such conduct amounted to a breach of the duty to deal

fairly and in good faith with its insured, Lloyd M. Cren-

shaw, under the contract of insurance amounting to an

independent tort as more fully set out in Instruction P-

19A, then you may award punitive damages against the

Defendant, Bankers Life and Casualty Company.

[1125]

a ore Pee

3a

INSTRUCTION NO. P-12—GIVEN—Filed November 30, 1981

IN THE CIRCUIT COURT OF JACKSON COUNTY,

MISSISSIPPI

LLOYD M. CRENSHAW PLAINTIFF

VERSUS NO. 11,292

BANKERS LIFE AND CASUALTY COMPANY DEFENDANT

INSTRUCTION NO. P-12

The Court instructs the Jury that punitive damages may

also be awarded against an insurance company when an

insurance company refuses to pay a ligitimate claim, and

bases its refusal to honor the claim on a reason clearly

contrary to the espressed [sic] provisions of its own policy

as defined by law. Further, punitive damages may be

awarded against an insurance company when an insurance

company refuses to pay a legitimate claim and has no

legitimate reason or arguable reason for failing to pay such

a claim.

The purpose of punitive damages against an insurance

company where an insurance company refuses to pay a

legitimate claim, for the reasons stated above, is as fol-

lows: If an insurance company could not be subjected to

punitive damages it could intentionally and unreasonably

refuse payment of a legitimate claim with veritable im-

punity. To permit an insurer to deny a legitimate claim,

and thus force a claimant to litigate with no fear that

claimant’s maximum recovery could exceed the amount of

the claim plus interest, would enable the insurer to pres-

sure an insured to a point of desperation, enabling the

insurer to force an inadequate or avoid payment entirely.

If you believe from a preponderance of the evidence, if

any, that the insured, Lloyd M. Crenshaw, filed a legiti-

mate claim and that said legitimate claim was refused by

the Defendant and that the basis for the refusal to honor

the claim was for reasons clearly contrary to the provisions

[1126]

4a

[1127] of the policy, as defined by law or for no legitimate

or arguable reason, then it is your sworn duty to assess

punitive damages against the Defendant.

[1127]

5a

INSTRUCTION NO. P-6—GIVEN—Filed December 3, 1981

IN THE CIRCUIT COURT OF JACKSON COUNTY,

MISSISSIPPI

LLOYD M. CRENSHAW PLAINTIFF

VERSUS NO. 11,292

BANKERS LIFE AND CASUALTY COMPANY DEFENDANT

INSTRUCTION NO. P-19A

The Court instructs the Jury that an insurer is obligated

to deal in good faith and fairly with its insureds in han-

dling their claims, and to refrain from abuse, gross neg-

ligence, malice or fraudulent conduct.

If the handling of an insured’s claim is attended by

abuse, gross negligence, malice or fraudulent conduct, an

independent tort (wrong) may arise, separate from breach

of contract, for which punitive damages are recoverable.

Punitive damages are not awarded to compensate the

injured party but are allowed in addition to compensatory

damages. Punitive damages are granted, therefore, to pun-

ish the wrongdoer as an example, to deter the wrongdoer

and others from committing similar offenses in the future,

and to reward the injured party for his public service in

bringing the wrongdoer to account.

They are never awarded to benefit the injured party,

but rather to punish and to compel the wrongdoer to have

due and proper regard for the rights of the public.

If you find from a preponderance of the evidence if any

that punitive damages are warranted, you may take into

account the financial status of the defendant, Bankers Life

and Casualty Company.

[1130]

6a

IN THE CIRCUIT COURT OF JACKSON COUNTY,

MISSISSIPPI

LLOYD M. CRENSHAW PLAINTIFF

VERSUS NO. 11,292

BANKERS LIFE AND CASUALTY COMPANY DEFENDANT

JURY INSTRUCTION NO. D-1

The Court instructs the Jury that if you believe from

a preponderance of the believable evidence in this case

that Bankers Life and Casualty Company had a legitimate

or an arguable reason for refusing to pay the claim made

by Lloyd M. Crenshaw, then you may not return a verdict

for him which includes punitive damages.

The Court instructs you that any award of punitive dam-

ages to Lloyd M. Crenshaw must be based on a finding,

from a preponderance of the believable evidence in this

case, that at the time Bankers Life and Casualty Company

denied Lloyd M. Crenshaw’s claim, it did not have a le-

gitimate or arguable reason for doing so and that, in de-

nying the claim, Bankers Life and Casualty Company was

guilty of such gross and wanton misconduct as to amount

to an independent wrong against Lloyd M. Crenshaw.

INSTRUCTIONS

GIVEN

Filed 3rd day Dec 1981

JOE W. MARTIN JR., Clerk

By G. Jones, D.C.

[1138]

Ta

IN THE CIRCUIT COURT OF JACKSON COUNTY,

MISSISSIPPI

LLOYD M. CRENSHAW PLAINTIFF

VERSUS NO. 11,292

BANKERS LIFE AND CASUALTY COMPANY DEFENDANT

JURY INSTRUCTION NO. D-7

The Court instructs the Jury that if you believe from

a preponderance of the believable evidence presented in

this case that the basis of the Defendant’s denial of Lloyd

M. Crenshaw’s claim for benefits was based upon a rea-

sonable medical opinion, that Lloyd M. Crenshaw’s alleged

accident to his foot had no medical correlation to the sur-

gery performed, then you must find that the Defendant

had an arguable basis for the denial of benefits and you

further cannot hold the Defendant accountable for punitive

damage, even though you might ultimately find Lloyd M.

Crenshaw to be entitled to the full policy benefits.

INSTRUCTIONS

GIVEN

Filed 3rd day Dec 1981

JOE W. MARTIN JR., Clerk

By G. Jones, D.C.

[1141]