Amicus Curiae Brief — Bankers Life & Casualty Co. v. Crenshaw

Supreme Court, U.S.

om RILED

5} MAY 29 1987

No. 85-1765

IN THE

Supreme Court of the United States

OCTOBER TERM, 1986

BANKERS LIFE AND CASUALTY COMPANY,

. Appellant,

LLOYD M. CRENSHAW,

Appellee.

On Appeal from the Supreme Court of Mississippi

BRIEF FOR

AMERICAN COUNCIL OF LIFE INSURANCE AND

HEALTH INSURANCE ASSOCIATION OF AMERICA

AS AMICI CURIAE IN SUPPORT OF APPELLANT

Of Counsel: ERWIN N. GRISWOLD

JACK H. BLAINE (Counsel of Record )

Vice President, State Relations, PATRICIA A. DUNN

and General! Counsel SARAH W. PAYNE

PHILLIP E. STANO JONES, DAY, REAVIS & POGUE

Senior Counsel 655 15th Street, N.W.

AMERICAN COUNCIL OF Washington, D.C. 20005-5701

LIFE INSURANCE (202) 879-3939

1001 Pennsylvania Ave., N.W. Counsel for Amici

Washington, D.C. 20004-2559

(202) 624-2183

JOE W. PEEL

Vice President and

General Counsel

JOHN P. DINEEN

Associate General Counsel

HEALTH INSURANCE ASSOCIATION

OF AMERICA

1025 Connecticut Ave., N.W.

Suite 1200

Washington, D.C. 20036

(202) 223-7780

WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

Pam. 2» as

TABLE OF CONTENTS

INTERESTS OF THE AMICI.............................. Sininaeeibl

i i

8 IL AAA aN

,

SET, “sc cciessiseronetantisatnccitiannesniiiiiciilaisasininitieiiatineiimsnainimatin

I. THE ASSESSMENT OF PUNITIVE DAM-

AGES IN THIS CASE VIOLATES DUE PROC-

RUT catiecsininscihanisataninicesdieanbcniebcbsnssiibacineibnameineitauenianetiesoanetitias

B. Punitive Damages Are Penal and, As Such,

Require Application of Procedural Safe-

guards Available in Criminal Trials ..........

C. There Are No Adequate Standards for De-

termining Liability for Punitive Damages.....

D. Leaving the Computation of Punitive Dam-

ages to the Discretion of the Jury Fails to

Satisfy Due Process .............................. camiticis

II. THE DECISION OF THE SUPREME COURT

OF MISSISSIPPI UPHOLDING MASSIVE

PUNITIVE DAMAGES SHOULD NOT STAND

UNDER THE EIGHTH AMENDMENT

CONCLUSION

Page

11

13

16

17

23

ii

TABLE OF AUTHORITIES

CASES: Page

Aetna Life Insurance Co. v. Lavoie, 106 S. Ct.

REE IR a SE 9, 20

Airco Inc. v. Simmons First National Bank, 276

Ark. 486, 638 S.W.2d 660 (1982) 8

Bankers Life and Casualty Co. v. Crenshaw, 483

ee a ccsenannpianstonsnl passim

Bell v. Wolfish, 441 U.S. 520 (1979)... 11,12

Blue Cross & Blue Shield of Mississippi v. Camp-

bell, 466 So.2d 833 (Miss. 1985)... 4

Calder v. Bull, 3 Dallas 386 (1798)... 10

City of Newport v. Fact Concerts, Inc., 453 U.S.

a 11

Coker v. Georgia, 483 U.S. 584 (1977) 19

Cole v. Arkansas, 333 U.S. 196 (1948) 15

Day v. Woodworth, 13 Howard 363 (1851) _.......... 7

Dempsey v. Auto Owners Insurance Co., 717 F.2d

RE 9

Donovan v. Dewey, 452 U.S. 594 (1981)... 17

Dorsey v. Honda Motor Co., 655 F.2d 650 (5th Cir.

1981), modified on other grounds, 670 F.2d 21

(5th Cir.), cert. denied, 459 U.S. 880 (1982) __. 8

Downey Savings & Loan Co. v. Ohio Casualty In-

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

SY TEE Wskcteastateiedetcc ee One 9

Earl of Devon’s Case, 11 State Tr. 133 (1689)... 19

Egan v. Mutual of Omaha Insurance Co., 24 Cal.

3d 809, 157 Cal. Rptr. 482, 598 P.2d 425 (1979),

appeal dismissed, 445 U.S. 912 (1980) 9

Enmund v. Florida, 458 U.S. 782 (1982) 19

Flanigan v. Prudential Federal Savings & Loan

Ass’n, 720 P.2d 257 (Mont.), appeal dismissed,

Be Se I iliticcinecee 9

Ford Motor Company v. Stubblefield, 319 S.E.2d

REE eee 8

Frazier v. Metropolitan Life Insurance Co., 169

Cal.App.3d 90, 214 Cal. Rptr. 883 (1985)... 9

Gertz v. Robert Welch, Inc., 418 U.S. 323 (1974) ... 11, 15,

16

iii

TABLE OF AUTHORITIES—Continued

Gregg v. Georgia, 428 U.S. 153, reh’g denied, 429

STE a ee

Grimshaw v. Ford Motor Co., 119 Cal.App.3d 757,

106 Cal. Rete. 868 (1962) ..........-.......-.......---.--.----

Hasson v. Ford Motor Company, 32 Cal.3d 388, 185

Cal. Rptr. 654, 650 P.2d 1171 (1982), cert. dis-

missed, 459 U.S. 1190 (1983) ..........-----.-----------010-++

Hawkins v. Allstate Insurance Co., 733 P.2d 1073

SI, MITTEE cos icnncnnienusennetsncesiaccquersescescnsuesenenconennconnenne

International Brotherhood of Electrical Workers

v. Foust, 442 U.S. 42 (1979) .....................------+ 11,

Kennedy v. Mendoza-Martinez, 372 U.S. 144

SEITE cnccctsesadeinsiessiniiesibedsiahetenpennqeesansonesiincvessrwsecssesesvenaee

Lassiter v. Department of Social Services, 452

U.S. 18, reh’g denied, 453 U.S. 927 (1981) -.......

Lavoie v. Aetna Life & Casualty Co., 470 So.2d

1060 (Ala. 1984), rev’d, 106 S. Ct. 1580 (1986) ..

Lindsey v. Normet, 405 U.S. 56 (1971) .................

Marshall v. Barlow’s, Inc., 486 U.S. 307 (1978)....

Moore v. American United Life Insurance Co., 150

Cal.App.3d 610, 197 Cal. Rptr. 878 (1984) ........

Mullaney v. Wilbur, 421 U.S. 684 (1975) -..............

Palmer v. A.H. Robins Co., 684 P.2d 187 (Colo.

a casscnialiiminnaienenmnienasormenees

Reserve Life Insurance Co. v. McGee, 444 So.2d

I TT ns ccirsndenesimeggnmniennenevenioncesesenens

Rowan v. U.S. Post Office Department, 397 U.S.

a

San Jose Production Credit Association v. Old Re-

public Life Insurance Co., 723 F.2d 700 (9th

AN

Santosky v. Kramer, 455 U.S. 745 (1982) -.............

Smith v. Wade, 461 U.S. 30 (1983) -.................. 7, 11,

Solem v. Helm, 463 U.S. 277 (1983) ............-.--. 6, 19,

Sparks v. Republic National Life Insurance Co.,

132 Ariz. 529, 647 P.2d 1127, cert. denied, 459

sansa saeassepnomomnernensopnens

T.D.S. Inc. v. Shelby Mutual Insurance Co., 760

F.2d 1620 (lith Cir. 19665) .............................-..---

Page

8, 22

15, 16

13

20, 21

iv

TABLE OF AUTHORITIES—Continued

Page

Texaco, Inc. v. Pennzoil, —— S.W. 2d ——, 55

U.S.L.W. 2454 (Tex. App. 1987) ...................00..... x

Trop v. Dulles, 356 U.S. 86 (1958) 0.00... 19

United States v. Ward, 448 U.S. 242, reh’g denied,

ge REE IU SEEN, eee 11.

Weems v. United States, 217 U.S. 349 (1910) ......... 19

Winship, In re, 397 U.S. 358 (1970) ........... . ae ee 13

CONSTITUTIONAL AND STATUTORY

PROVISIONS:

— ER eee 17-22

U.S. Const. Amend. XIV, Due Process Clause ........ 7-17

Miss. Code Ann. § 11-3-23 (Supp. 1982) ........00000.... 4,17

Miss. Code Ann. § 83-5-49 (1972) 000000. 20

OTHER AUTHORITIES:

Bernstein, “Dread Singularities” (Book Review),

New York Times Book Review, April 25, 1982 .. 8

Ellis, Fairness and Efficiency in the Law of Puni-

tive Damages, 56 So. Cal. L. Rev. 1 (1982) ......... 14

Granucci, “Nor Cruel and Unusual Punishment In-

flicted”: The Original Meaning, 57 Cal. L.R.

i TT ET Ea Aad ee Rea 18

Grass, The Penal Dimensions of Punitive Damages,

12 Hastings Const. L.Q. 241 (1985) 0.000. 12

J. Holt, Magna Carta 323 (1965)... 18

Jeffries, A Comment on the Constitutionality of

Punitive Damages, 72 Va. L. Rev. 139 (1986) ....7, 12, 21

F. Maitland, Pleas of the Crown for the County

of Gloucester XXXIV (1884) ................................- 18

Myers and Barrus, Punitive Damages in Product

Liability Cases: A Survey, 52 Ins. Counsel J.

I i 14

Nelson, Punishment for Profit: An Examination

of the Punitive Damage Award in Strict Liabil-

yp, 18 Forum S77 (IGGB) ........ccccccsccoccecess...-.-... 7

R. Perry, Sources of Our Liberties (1959)... 19

Vv

TABLE OF AUTHORITIES—Continued

Rabin, Dealing with Disasters: Some Thoughts on

the Adequacy of the Legal System, 30 Stan. L.

DG i I os aealidieppnansiieiabounipess

Report of Task Force on Litigation Issues, Ameri-

can College of Trial Lawyers (1986) ..................

Report of the Tort Policy Working Group on the

Causes, Extent and Policy Implications of the

Current Crisis in Insurance Availability and

Affordability (February 1986) ........:....................

Sebert, Punitive and Nonpecuniary Damages in

Actions Based Upon Contract: Toward Achiev-

ing the Objective of Full Compensation, 33

eo ES SS F:

Wheeler, The Constitutional Case for Reforming

Punitive Damages, 69 Va. L. Rev. 269 (1983) ...

Page

15

10

8, 10

14

12

IN THE

Supreme Court of the United States

OCTOBER TERM, 1986

No. 85-1765

BANKERS LIFE AND CASUALTY COMPANY,

. Appellant,

LLOYD M. CRENSHAW,

Appellee.

On Appeal from the Supreme Court of Mississippi

BRIEF FOR

AMERICAN COUNCIL OF LIFE INSURANCE AND

HEALTH INSURANCE ASSOCIATION OF AMERICA

AS AMICI CURIAE IN SUPPORT OF APPELLANT

INTERESTS OF THE AMICI!

The American Council of Life Insurance (“Council”)

is the largest life insurance trade association in the

United States, representing the interests of 635 member

life insurance companies, including most of the major

life insurers in the country. The Council’s members cur-

rently hold ninety-five percent of the life insurance in

force in legal reserve life insurance companies in the

United States. The Health Insurance Association of

America (“HIAA”’) represents the interests of 340 mem-

ber companies which write over eighty-five percent of the

health insurance written by insurance companies in the

United States. The combined memberships of the HIAA

1 Consent from counsel for both parties has been filed with the

Clerk of this Court.

2

and the Council represent over ninety percent of the

health insurance written by insurance companies in the

United States.

Because the decision below creates the possibility that

the nonpayment of an insurance claim may be accom-

panied by an unpredictable, though substantial, punitive

award, the stability of the insurance industry is seriously:

threatened. Faced with large and unpredictable punitive

awards—awards not anticipated in the contractual

scheme of the insurer-insured relationship—members of

the Council and the HIAA may be unable to provide

affordable insurance policies. The Council and the HIAA

thus have a direct and immediate interest in the issues

presented in this case.

STATEMENT

Appellee Crenshaw was an insured beneficiary under a

group accident insurance policy issued to his employer by

Appellant Bankers Life and Casualty Company (“Bank-

ers”). The policy—an “accident only” policy—provided

coverage for losses “effected solely through an accidental

bodily injury to the insured person.” Jurisdictional

Statement, 12a (emphasis added). As written, it cov-

ered, e.g., an accidental loss of limb.

On January 6, 1979, Crenshaw visited the emergency

room of Kessler Air Force Base Hospital complaining of

foot pains which he subsequently attributed to dropping

of an automobile alternator on his foot. He was given

medication and told to stay off his foot. He visited, and

was released from, the emergency room of Kessler Air

Force Base Hospital several additional times between

January 9, and January 12, 1979. Although no clinical

tests were run after the first of these visits, Crenshaw’s

injury was diagnosed as “ligamentous injury metatarsal

right foot.” Jurisdictional Statement, 4a. He received

only minor treatment, including the application of a

splint and the administration of pain medication.

On January 14, 1979, Crenshaw again returned to the

hospital. This time, he was admitted as a patient. After

his condition worsened and efforts to treat his foot failed,

doctors amputated his leg six inches below the knee. The

report of the attending surgeon and the pathologist con-

cluded that Crenshaw had “severe arteriosclerosis of the

arteries” in the right foot and lower leg. Jurisdictiona!

Statement, 8a.

In June 1979, Crenshaw filed a claim with Bankers for

the loss of his lower leg. As part of the claim investiga-

tion, Bankers requested a Board-certified vascular sur-

geon whom Bankers employed as a medical director to

review the medical records which Crenshaw presented.

He concluded—and advised Pankers—that “trauma had

nothing to do with the limb loss” and that the loss

resulted instead from Crenshaw’s pre-existing arterio-

sclerosis. 483 So. 2d 254, 273 (Miss. 1985). Although

Bankers’ procedures normally would have involved addi-

tional investigation of the claim, the surgeon advised

Bankers that the medical records provided by Crenshaw

were sufficient to arrive at a medical judgment. Ac-

cordingly, on June 11, 1979, Bankers denied Crenshaw’s

claim, relying on the surgeon’s opinion that the amputa-

tion was not caused by any “accidental” injury to Cren-

shaw’s foot.

The Proceedings Below

Crenshaw instituted this suit in Jackson County Cir-

cuit Court on November 10, 1980. He initially requested

$20,000 in compensatory damages and $400,000 in puni-

tive damages for Bankers’ alleged bad faith refusal to

pay his insurance claim. On the eve of trial in December

1981, Crenshaw amended his complaint to seek $1,635,000

in punitive damazes.

At trial, Crenshaw’s treating physician testified that

trauma contributed to the loss of his leg. Because Bank-

ers presented evidence to the contrary—that arterio-

sclerosis was the sole cause of the loss—the trial court

a

declined Crenshaw’s request for a peremptory instruc-

tion on Bankers’ contractual liability. Despite the trial

court’s implicit conclusion that Bankers had at least an

arguable basis for its coverage position, it nonetheless

instructed the jury on punitive damages. The jury then

found for Crenshaw, awarding him $20,000 in compensa-

tory damages and $1.6 million in punitive damages. The

jury reached its conclusion after hearing evidence that

Bankers had net assets of $294 million in 1980.

On appeal, the Mississippi Supreme Court affirmed the

trial court’s judgment.? As to the punitive damages

award, the court below acknowledged Mississippi prece-

dents that an insurer’s demonstration of an “arguable

basis” for denying coverage generally precludes submis-

sion of a punitive damages claim to the jury. See Reserve

Life Insurance Co. v. McGee, 444 So.2d 803 (Miss.

1983) ; Blue Cross & Blue Shield of Mississippi v. Camp-

bell, 466 So.2d 833 (Miss. 1985). The court nevertheless

sustained the trial court’s submission of Crenshaw’s pu-

nitive damages claim to the jury. It found punitive dam-

ages to be appropriate where, as it found in this case,

“the carrier offers no justifiable reason or arquable basis

under Mississippi law for denying a valid claim.” 483

So.2d at 271 (emphasis added). Accordingly, the court

below upheld the punitive damages award.

Three justices dissented, stating that “the majority en

route to affirmance has wholly departed from [Mississip-

pi’s] general substantive rules regarding the assessment

of punitive damages.” 483 So.2d at 296. They reasoned,

inter alia, that under Mississippi law, Bankers’ good

*The Court added a fifteen percent penalty ($243,000) to

Crenshaw’s award pursuant to a Mississippi statute requiring such

assessments against unsuccessful defendant-appellants. See Miss.

Code Ann. § 11-3-23 (Supp. 1982).

5

faith reliance on its medical director’s opinion precluded

any award of punitive damages, and that the “arguable

basis” standard applied by the majority was an in-

appropriate and unprecedented departure from the puni-

tive damages standard traditionally applied in Missis-

sippi.

As to the amount of the punitive damages award, five

justices, focusing principally on the “pecuniary ability

or financial worth of the defendant,” 483 So.2d at 278,

concluded that a punitive damages award should be al-

tered as excessive only when it shocks “the judicial

conscience, not the actual conscience of the members of

this Court.” Jd. Finding that the “judicial conscience”

could not be shocked by a punitive damages award which

constituted “less than 1% of the financial net worth of

the defendant,” it affirmed the award. /d.

SUMMARY OF ARGUMENT

I. The award of punitive damages below—more than

80 times the actual damages in a case which did not

involve invasion of any basic right or imposition of any

severe or continuing injury—was imposed without any

coherent substantive standards and without any par-

ticular procedural safeguards to ensure that the award

was rational, fair, or based upon intelligible standards.

This offends both due process and the Eighth Amendment

prohibition against excessive fines. It is clear that the

award was punishment—and very serious punishment

indeed. It is also clear that any criminal defendant faced

with a $100 misdemeanor, and any jury charged with

imposing it, would have been provided clearer standards

and more exacting guidance than that provided to Bank-

ers and the jury below. “Bad faith” and the distinctions

between negligence and gross negligence are concepts too

blurry to support the huge and unpredictable range of

6

results available to juries. The result reflected in the

verdict below demonstrates all too clearly the imprecision

in asking juries to draw such distinctions. A higher

standard of proof, and a clearer definition of the predi-

cate conduct, are required, at the very least, to restore a

semblance of due process.

II. The award of $1.6 million itself violates the Eighth

Amendment as well because it is grossly disproportion-

ate to the offense charged. Punitive damages are civil

fines with penal purposes, and, as punishment, the basic

Eighth Amendment principie of proportionality should

apply to them. This principle, which has been applied

since the Magna Carta, is, like other legal principles

here, a bulwark against arbitrariness and jury passion.

The “ ‘parallel limitations’ on bail, fines, and other pun-

ishments,” Solem v. Helm, 463 U.S. 277, 289 ( 1983),

embodied in the Eighth Amendment should apply to an

exaction that operates as a fine. That the jury exacted

a fine without the support of either a criminal finding

or the limits of a criminal statute should argue for,

rather than against, relief.

Although the Eighth Amendment has yet to be applied

in a punitive damages case, the time is now ripe. The

proliferation of punitive awards, the meaningless stand-

ards, and the profligacy of the amounts assessed all dem-

onstrate that there is no rational or reliable jurisprudence

to be applied here if the Due Process Clause and the

Eighth Amendment are not. Punitive damages become a

windfall for the plaintiff, and a random, cruel surprise

for defendants. Punitive damages should not continue to

enjoy immunity from constitutional scrutiny.

7

ARGUMENT

I. THE ASSESSMENT OF PUNITIVE DAMAGES IN

THIS CASE VIOLATES DUE PROCESS

A. Introduction

As this Court has aptly observed:

For all its consequence, ‘due process’ has never been,

and perhaps never can be, precisely defined. ‘[U]n-

like some legal rules’ . . . due process is not a techni-

cal conception with a fixed content unrelated to time,

place and circumstances. . . . Rather, the phrase

expresses the requirement of ‘fundamental fairness.’

Lassiter v. Department of Social Services, 452 US.

18, 24, reh’g denied, 453 U.S. 927 (1981) (citations

omitted). The burgeoning development of modern puni-

tive damages law—exemplified by the decision below

affirming a $1.6 million award for failure to pay a $20,-

000 insurance claim—urgently requires application of

the standards and fairness doctrines embodied in the

Due Process Clause.

Punitive damages are not “a favorite of the law.”

Smith v. Wade, 461 U.S. 30, 58 (1983) (Rehnquist, J.,

dissenting). Current practices regarding punitive dam-

ages are neither time-honored, nor logically related to

traditional legal doctrines. See generally Jeffries, A Com-

ment on the Constitutionality of Punitive Damages, 72

Va. L. Rev. 139, 140-46 (1986). Rather, they are an

historical anomaly, transported in neo-natal form from

eighteenth century England and nurtured by early Amer-

ican courts to compensate—in small amounts—victims of

insult torts, such as libel and slander, and similar intan-

gible and otherwise unredressable injuries. See Nelson,

Punishment for Profit: An Examination of the Punitive

Damage Award in Strict Liability, 18 Forum 377, 380-

81 (1983); Day v. Woodworth, 13 Howard 363, 371

(1851).

8

From this small beginning, punitive damages have re-

cently been extended far beyond their origin in insult

torts and have been stretched beyond rational limits.’

Despite a steady growth in the types of injuries, intan-

gible or otherwise, for which courts now provide compen-

sation, recent years have seen an uncontrolled and ar-

bitrary expansion of punitive damages law and an ex-.

plosive increase in the size and frequency of punitive

awards.* Large sums have been awarded in other cases

against insurance companies by juries who, left un-

guided, have assessed damages “in a way that can only

be called freakish.” Gregg v. Georgia, 428 U.S. 153, 206,

reh’g denied, 429 U.S. 875 (1976). Moreover, lower

courts have varied unpredictably in their willingress to

* As has been well said in another context, “these laws are being

extrapolated to places where they no longer apply.” Bernstein,

“Dread Singularities” (Book Review), New York Times Book Re-

view, April 25, 1982, n.10.

*The best known example is the $1 billion punitive damages

award recently upheld against Texaco. See Texaco, Inc. v. Pennzoil,

S.W. 2d ——, 55 U.S.L.W. 2454 (Tex. App. 1987). But results

in product liability and mass tort cases illustrate these trends as

well. See, e.g., Grimshaw v. Ford Motor Co., 119 Cal.App.3d 757,

174 Cal. Rptr. 348 (1981) ($125 million punitive award remitted to

$3.5 million) ; Ford Motor Company v. Stubblefield, 319 S.E.2d 470

(Ga. App. 1984) ($8 million) ; Palmer v. A.H. Robins Co., 684 P.2d

187 (Colo. 1984) ($6.2 million) ; Dorsey v. Honda Motor Co., 655

F.2d 650 (5th Cir. 1981) ($5 million), modified on other grounds,

670 F.2d 21 (5th Cir.), cert. denied, 459 U.S. 880 (1982); Airco

Inc. v. Simmons First National Bank, 276 Ark. 486, 638 S.W.2d 660

(1982) ($3 million); Hasson v. Ford Motor Company, 32 Cal. 3d 388,

185 Cal. Rptr. 654, 650 P.2d 1171 (1982) ($4 million), cert. dis-

missed, 459 U.S. 1190 (1983). Many other comparable awards, and

awards in smaller amounts, have proliferated. See also Report of

the Tort Policy Working Group on the Causes, Extent and Policy

Implications of the Current Crisis in Insurance Availability and

Affordability (February 1986) (hereinafter “Justice Department

Report”) at 3 (measured in constant 1984 dollars, the average

personal injury punitive damage award in Cook County, Illinois

rose from $40,000 in 1970-74 to $1,152,174 in 1980-84 ).

9

disturb these often exorbitant awards.’ Since the busi-

ness of insurance is dependent upon the insurer’s ability

5 Some awards have not survived judicial scrutiny. See, e.g.,

San Jose Production Credit Association v. Old Republic Life Insur-

ance Co., 723 F.2d 700 (9th Cir. 1984) (court reversed jury award

of $500,000 in punitive damages) ; Egan v. Mutual of Omaha Insur-

ance Co., 24 Cal.3d 809, 157 Cal. Rptr. 482, 598 P.2d 452 (1979),

appeal dismissed, 455 U.S. 912 (1980) (jury award of $5 million in

punitive damages against insurer for failure to conduct proper in-

vestigation of its insured’s claim held to be excessive in that award

was 40 times larger than the compensatory damages award and

represented two and one-half months of the insurer’s net income in

1973 as well as more than seven months of its income in 1974).

Many others, however, have been upheld. See, e.g., Hawkins v.

_ Allstate Insurance Co., 733 P.2d 1073 (Ariz. 1987 ) (affirming a $3.5

million punitive award and a $15,000 compensatory award against

insurer); Downey Savings & Loan Co. v. Ohio Casualty Insurance

Co., 189 Cal.App.3d 1072, 234 Cal. Rptr. 835 (1987), pet. for review

filed, April 7, 1987 ($5 million in punitive damages awarded for bad

faith denial oi $152,983.42 claim) ; Flanigan v. Prudential Federal

Savings & Loan Ass'n, 720 P.2d 257 (Mont.), appeal dismissed, 107

S.Ct. 564 (1986) (compensatory award of $194,000; punitive award

of $1,300,000) ; Lavoie v. Aetna Life & Casualty Co., 470 So.2d 1060

(Ala. 1984), rev'd, 106 S. Ct. 1580 (1986) (state court upheld $3.5

million punitive damages award for alleged bad faith failure to pay

a $2,000 insurance claim); 7.D.S. Inc. v. Shelby Mutual Insurance

Co., 760 F.2d 1520 (11th Cir. 1985) (jury award of $2.1 million

in punitive damages against insurer held not to be excessive) ;

Dempsey v. Auto Owners Insurance Co., 717 F.2d 556 (11th Cir.

1983) (court held jury award of $3.1 million to be excessive and

remanded with directions to require a remittitur to $1.5 million

without explaining any basis for the $1.5 million figure it selected) ;

Frazier v. Metropolitan Life Insurance Co., 169 Cal.App.3d 90, 214

Cal. Rptr. 883 (1985) (jury award of $8 million in punitive dam-

ages, as remitted to $2 milli », overturned upon finding that claim

was time-barred); Moore v. American United Life Insurance Co.,

150. Cal.App.3d 610, 197 Cal. Rptr. 878 (1984) (court held $2.5

million punitive damages award not to be excessive, even though

award was 83 times the amount of compensatory damages) ; Sparks

v. Republic National Life Insurance Co., 132 Ariz. 529, 647 P.2d

1127, cert. denied, 459 U.S. 1070 (1982) ($3 million award of puni-

tive damages for insurer’s tortious termination of insurance ben-

efits upheld).

10

to make careful, exact computations of risks, the expan-

sion of punitive damages in the insurance industry pro-

duces particularly pernicious effects.

The uncontrolled expansion in availability of punitive

damages, and the explosive growth in the size of the

awards, have been widely recognized. Indeed, the Justice .

Department, a task force of the American College of Trial

Lawyers, and the American Bar Association independ-

ently have recommended needed reforms in this trouble-

some area of the law. See Justice Department Report

(supra note 4), at 2 (attributing insurance crisis in

part to “the explosive growth in the damages awarded

in tort lawsuits, particularly with regard to non-economic

awards such as . . . punitive damages”); Report of the

Task Force on Litigation Issues of the American College

of Trial Lawyers (August 8, 1986); Resolutions of the

American Bar Association, approved February, 1987.

Such broad-based expressions of concern reflect recog-

nition that punitive damages, as currently awarded, are

both unprecedented and so standardless and unfair as to

violate due process.

Finally, the Due Process Clause is surely impacted by

the fact that punitive damages are taken from the de-

fendant and paid not to the government but to the plain-

tiff, above and beyond the plaintiff’s actual damages. The

defendant is mulcted by governmental action in order to

give the plaintiff a windfall. This is a clear case of an

exercise of governmental power “that takes property from

A. and gives it to B”’—which one of the earliest opinions to

issue from this Court cited as a paradigm of action beyond

legislative power. Calder v. Bull, 3 Dallas 386, 388 (1798)

(per Chase, J.; emphasis in original).

11

B. Punitive Damages Are Penal and, As Such, Require

Application of Procedural Safeguards Available in

Criminal Trials

“(I]n keeping with . . . cherished tradition, punishment

cannot be imposed ‘without due process of law.’” Ken-

nedy v. Mendoza-Martinez, 372 U.S. 144, 186 (1963).

Because the purposes and impact of punitive damages are

plainly penal, constitutional protections akin to those

accorded to criminal defendants should be afforded to

defendants in punitive damages actions.

Theugh nominally civil, punitive damages are func-

tionally penal. Cf. United States v. Ward, 448 U.S. 242,

248-49, reh’g denied, 448 U.S. 916 (1980) (where penalty

is “so punitive either in purpose or effect” as to negate

its civil label, it will be treated as penal). Indeed, this

Court has so recognized:

Punitive damages ‘are not compensation for injury.

Instead, they are private fines levied by civil juries

to punish reprehensible conduct and to deter its future

occurrence.’

International Brotherhood of Electrical Workers v. Foust,

442 U.S. 42, 48 (1979), quoting Gertz v. Robert Welch,

Inc., 418 U.S. 323, 350 (1974) (emphasis added). See

also Smith v. Wade, 461 U.S. 30, 58 (Rehnquist, J., dis-

senting); City of Newport v. Fact Concerts, Inc., 453

U.S. 247, 266-67 (1981). Punitive damages further few,

if any, goals of the civil law. Rather, they promote the

traditional goals of punishment, e.g., retribution and

deterrence, which this Court has stated “are not legiti-

mate nonpunitive government objectives.” Bell v. Wol-

fish, 441 U.S. 520, 539 n.20 (1979).°

® This Court, and lower courts, have been guided by the list

of considerations articulated in Kennedy v. Mendoza-Martinez,

372 U.S. at 168-69, in determining whether a law is penal in

nature. Assessed under these factors, which are “neither ex-

haustive nor dispositive,” United States v. Ward, 448 U.S. at 249,

punitive damages can only be deemed penal. While punitive dam-

12

‘hat the award of $1.6 million on Crenshaw’s $20,0UU

insurance claim was “penal” in a constitutional sense,

so as to require enhanced procedural safeguards, is plain.

As the court below stated, such an award serves “in the

nature of punishment for wrongdoing” and to “set an

example as to deter others from similar behavior.” 483

So.2d at 268 (emphasis added).’ But despite its penal

character, the punitive award rendered against Bankers

was accompanied by none of the procedural safeguards

mandated by due process. Bankers was penalized—and

stigmatized—without the protection of a constitutionally-

mandated, elevated standard of proof, i.e., “proof beyond

ages impose no “affirmative disability or restraint,” Kennedy v.

Mendoza-Martinez, 372 U.S. at 168, they typically are imposed upon

a showing of “willfulness” or “maliciousness,” they are often as-

sessed in amounts greater than criminal actions involving similar

conduct, and no alternative purposes—other than punishment and

deterrence—can rationally be assigned to them. See Jeffries, A

Comment on the Constitutionality of Punitive Damages, 72 Va. L.

Rev. 139 (1986), Grass, The Penal Dimensions of Punitive Dam-

ages, 12 Hastings Const. L. Q. 241 (1985), and Wheeler, The Con-

stitutional Case for Reforming Punitive Damages, 69 Va. L. Rev.

269 (1983), for careful analyses of the penal nature of punitive

damages.

7 An additional purpose for punitive damages advanced by the

court below—to “reward a plaintiff for public service in bringing

the wrongdoer to account,” 483 So.2d at 268-69—does not vitiate

the penal nature of the punitive damages awarded here. First, the

primary “public service” provided is deterrence—a penal goal under

Bell v. Wolfish and Kennedy v. Mendoza-Martinez. The only other

conceivable public service achieved is stigmatizing the defendant—

the distinguishing characteristic of criminal sanctions. Equally im-

portant, a civil penalty is punitive, despite the presence of a non-

punitive purpose, if the penalty “appears excessive in relation to the

alternative purpose assigned [to it].” Bell v. Wolfish, 441 U.S. at

537-38, quoting Kennedy v. Mendoza-Martinez, 372 U.S. at 168-69.

Crenshaw received the full value of his contract when he recovered

compensatory damages. The only detriment he sustained, in con-

trast, was the amount of his attorneys’ fees. The Mississippi courts

could have allowed Crenshaw compensaitory damages for those fees,

instead of permitting the jury to assess, without regard to the

amount of the fees, the excessive punitive award of $1.6 million.

13

a reasonable doubt”; was accorded none of the benefits of

more stringent pleading requirements in criminal cases; *

and the sanction was not determined in a less prejudicial

bifurcated trial, but in the same proceeding during which

its liability was decided. See Rowan v. U.S. Post Office

Department, 397 U.S. 728, 740 (1970); Mullaney v. Wil-

bur, 421 U.S. 684 (1975); In Re Winship, 397 U.S. 358

(1970); Cole v. Arkansas, 333 U.S. 196 (1948); ef.

Santosky v. Kramer, 455 U.S. 745 (1982) (enhanced

burden of proof is constitutionally required where pro-

ceedings threaten one of the parties with a significant

stigma). Moreover, unlike criminal defendants who face

maximum punishments, Bankers’ “punishment” was left

to the unbridled—and unlimited—discretion of a jury.

Without any of these safeguards of penal liability—e.g.,

an elevated standard of proof, standards for and limita-

tions on the amount of punitive damages, pre-trial notice

of the precise “charges,” and bifurcation of punitive dam-

ages trials—the carelessness of recent history in punitive

damage cases cannot be a substitute for constitutionally

required due process.

C. There Are No Adequate Standards for Determining

Liability for Punitive Damages

That punitive damages actions, as they now exist, fail

to comport with even the simplest notion of due process

is further evident from the complete lack of intelligible

standards for assessing punitive damages—a deficiency

starkly illustrated by the decision below. Indeed, although

the court below cited one standard—that punitive dam-

ages are recoverable only for “a willful and intentional

wrong, or for such gross negligence and reckless negli-

gence as is equivalent to such a wrong,” 483 So.2d at

’ Even in civil fraud cases—causes accompanied by stigmatiza-

tion of the kind the Mississippi courts imposed upon Bankers—

the allegations generally must be pleaded with particularity. No

doubt this requirement is rooted in an intuitive recognition of

what is, and what is not, fair.

14

269—it also referred to a different test, i.e, whether

Bankers failed to offer “a justifiable reason or arguable

basis under Mississippi law for denying a valid claim,”

id., at 271. Both “standards” are constitutionally deficient.

Under the Fifth and Fourteenth Amendments, it is

clearly a denial of due process to punish a person who is

without culpability. See Smith v. Wade, 461 U.S. at

87-88 (Rehnquist J., dissenting) (“It is anomalous, and

counter to deep-rooted legal principles and common-sense

notions, to punish persons who meant no harm... .”).

But punitive damages—often awarded with no showing

of intentional culpability—do precisely that. Indeed, the

“standards” for imposing these damages, though never

carefully defined, have been perceptibly lowered, permit-

ting courts to award punitive damages against a defend-

ant whose conduct can be characterized, at most, by some

heightened degree of negligence. See Myers and Barrus,

Punitive Damages in Product Liability Cases: A Survey,

52 Ins. Counsel J. 212 (April 1984); Ellis, Fairness and

Efficiency in the Law of Punitive Damages, 56 So. Cal.

L. Rev. 1, 34-37 (1982).° Moreover, given the blurred

distinctions between these vague and varying standards,

such as “gross negligence” and “reckless negligence,” no

® As aptly stated by one author:

Many of the insurance bad faith awards have been greatly

excessive and ... courts and juries have applied significantly

different standards when awarding punitive damages in insur-

ance cases than they have in other cases. The rational basis

for such widely differing standards is not obvious. From an

ethical standpoint, there is little basis to conclude that the

type of misconduct typically found in insurance cases regularly

deserves vastly greater sanctions than the blatant fraud and

misrepresentations often found in other cases.

Sebert, Punitive and Nonpecuniary Damages in Actions Based

Upon Contract: Toward Achieving the Objective of Full Compen-

sation, 33 UCLA L. Rev. 1565, 1620 (1986).

15

real guidance is provided to judges and juries vested with

authority to award punitive damages.” As a _ result,

judges and juries remain free to “assess punitive dam-

ages in wholly unpredictable amounts bearing no relation

to the actual harm caused . .. [and] to use their dis-

cretion selectively to punish expressions of unpopular

views. . . .” International Brotherhood of Electrical

Workers v. Foust, 442 U.S. 42, 51 (1979), quoting Gertz

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

These difficulties are all too evident in the present case.

Requiring little more than a finding of liability on Cren-

shaw’s contract claim, the court below upheld the jury’s

punitive award after saying that Bankers had shown

no “arguable basis under Mississippi law” for denying

Crenshaw’s claim—a standard recognized by the dissent

as a liberalized exception to punitive damages law carved

out especially to support bad faith claims against insur-

ance companies. Thus, the court, as well as the jury,

plainly confused the state of mind necessary, at the least,

to support the punitive award. Moreover, although the

court below found that only five Bankers employees, out

of a “nationwide accident and health insurance com-

pany,” were involved in the denial of Crenshaw’s claim,

and although the court further emphasized that Bankers

had proper investigatory procedures in place, it affirmed

a massive penalty against Bankers as a whole on the

basis of an arguable error that had occurred in day-to-

10 The difficulty of distinguishing conduct which is “reckless” as

opposed to merely negligent, leads inevitably to inconsistent applica-

tions of these standards. As stated by one author:

Unfortunately, the distinction between recklessness and negli-

gence relates to no clear behavioral standards in the real world

.... It is truly striking how we have devised a system that is

not far from a lottery for deciding such grave matters—with

the draw determined not only by the predilections of the presid-

ing judge, but the emotions of the jury sitting in the case.

Rabin, Dealing with Disasters: Some Thoughts on the Adequacy

of the Legal System, 30 Stan. L. Rev. 281, 297 (1978).

16

day claims administration. 483 So.2d at 260, 270, 272,

276. It is not clear what Bankers could have done, or

should do in the future, to avoid such punishment—ex-

cept to pay all claims made, promptly and without ques-

tion. The burden, of course, falls on shareholders, and

eventually on policy owners. There is nothing rational

or fair about awarding punitive damages in such cir-

cumstances.

D. Leaving the Computation of Punitive Damages to

the Discretion of the Jury Fails to Satisfy Due

Process

The “standards” used for determining the amount of

punitive damages to be assessed against a defendant are

equally deficient. In contrast to criminal sanctions, puni-

tive damages are generally computed without regard to

any statutory or common law maximum. Nor is any

rational, intelligible, or workable measure of damages

provided. The amounts of punitive damages ave left to

the sole discretion of the jury, guided only by ii-defined

factors, including the wealth of the defendant, and “the

gentle rule that they not be excessive.” Gertz v. Robert

Welch, Ine., 419 U.S. 323, 350 (1974). See also Inter-

national Brotherhood of Electrical Workers v. Foust, 442

U.S. 42, 50-51 (1979); Smith v. Wade, 461 U.S. 30,

56-65, 92-94 (dissenting opinions of Rehnquist and O’Con-

nor, JJ.).™

The present case provides a clear example of un-

bridied jury discretion. Bankers was penalized by a jury

which was guided by no more definite standards than

11 The standards upon which courts rely in reviewing jury awards

of punitive damages are equally imprecise, requiring judges to in-

quire generally whether an award reflects the passions or preju-

dices of the jury. The difficulty of this review, and the lack of

guidance to judges, are all too evident from the decisions below,

where the trial court concluded that it had no “authority to change

the punitive damages” awarded against Bankers. Jurisdictional

Statement, 134a.

en ne

17

that its award should serve as punishment and a deter-

rent and should take into account Bankers’ wealth.

Swayed by evidence that Bankers’ assets came to a total

of $294 million, the jury awarded—and the court below

affirmed—a $1.6 million punitive award which was ap-

parently plucked out of the air, has not been explained,

and bears little, if any, relationship to customary crim-

inal sanctions or to meaningful punishment. These in-

firmities were enhanced by the automatic and arbitrary

imposition, pursuant to Miss. Code Ann. § 11-3-23 (Supp.

1982), of a fifteen percent penalty against Bankers, as

an unsuccessful defendant-appellant, in violation of Lind-

sey v. Normet, 405 U.S. 56, 74-80 (1971).

The constitutional infirmities inherent in punitive dam-

ages actions should no longer be ignored. In the absence

of appropriate limits, clear and rational standards, and

proper procedural protections, punitive damages should be

eliminated entirely from the field of insurance—an area

where they do not belong. (For the need for protection

from “unbridled discretion” in another area, see Marshall

v. Barlow’s, Inc., 486 U.S. 307, 323 (1978); Donovan v.

Dewey, 452 U.S. 594, 599, 600 (1981).) The ultimate

responsibility rests with this Court to guard against

stealthy encroachments upon constitutional rights by prac-

tices which spring from unjustified deviations from proper

standards of due process. No clearer example of a stealthy

encroachment exists than that which has developed in the

field of punitive damages.

II. THE DECISION OF THE SUPREME COURT OF

MISSISSIPPI UPHOLDING MASSIVE PUNITIVE

DAMAGES SHOULD NOT STAND UNDER THE

EIGHTH AMENDMENT

The Eighth Amendment provides protection against

arbitrariness and excessiveness in punishment. Focusing

upon the result itself, the Eighth Amendment ensures

that punishment wil! not be meted out arbitrarily, or in

18

excessive amounts wholly disproportionate to the offense.

Even assuming that the procedures employed in assessing

punitive damage awards comport with due process, the

decision below should not survive scrutiny under the

Eighth Amendment.

The Eighth Amendment’s ban against excessive pun-

ishments and its requirement of proportionality are de-

rived from English law. By the thirteenth century,

discretionary amercements, often excessive and oppres-

sive, were prevalent in England—so prevalent that three

chapters of Magna Carta were devoted to their control.”

Indeed, Chapter 14 of Magna Carta, setting forth the

rule against excessive punishment, provided:

A free man shall not be amerced for a trivial offence,

except in accordance with the degree of the offence,

and for a serious offence he shall be amerced accord-

ing to its gravity, saving his livelihood; and a

merchant likewise, saving his merchandise; in the

same way a villein shall be amerced saving his wain-

age; if they fall into our mercy. And none of the

aforesaid amercements shall be imposed except by the

testimony of reputable men of the neighborhood.

J. Holt, Magna Carta 323 (1965).¥

The princivle that amercements could not be excessive

was reiterated in the English Bill of Rights of 1689,

which strove to curb selective and arbitrary application

of harsh penalties by incorporating “the longstand-

12 The amercement was the equivalent of the modern fine. See

Granucci, “Nor Cruel and Unusual Punishment Inflicted”: The

Original Meaning, 57 Cal. L.R. 839, 845 (1969). Though the dis-

cretionary character of amercements permitted the circumstances

of each case to be considered, and the fine fixed accordingly, it in-

vited the opportunity for arbitrary and excessive penalties. Jd.

18 Maitland said of this chapter that “very likely there was no

clause in the Magna Carta more grateful to the mass of the

people.” F. Maitland, Pleas of the Crown for the County of

Gloucester XXXIV (1884), cited in Granucci, supra, at 845.

19

ing principle of English law that the punishment .. .

should not be . . . greatly disproportionate to the offense

charged.” R. Perry, Sources of Our Liberties 236 (1959).

Evidencing the intent of the English Bill of Rights to

preclude disproportionate and excessive fines, the House

of Lords, “barely three months after the Bill of Rights

was adopted, . . . declared that a ‘fine of thirty thousand

pounds, imposed by the court of King’s Bench upon the

earl of Devon was excessive and exorbitant, against

magna carta, the common right of the subject, and the

law of the land.” Solem v. Helm, 463 U.S. 277, 285

(1983), quoting Earl of Devon’s Case, 11 State Tr. 133,

136 (1689).

The concept of proportionality which was firmly em-

bedded in English law by 1689 was transplanted to

American soil, and ultimately incorporated into the Bill

of Rights as the Eighth Amendment. See Solem v. Helm,

supra, 463 U.S. at 285-86. This “constitutional principle

of proportionality,” id. at 286, was recognized by this

Court as early as 1910. In Weems v. United States, 217

U.S. 349, 367 (1910), the Court held that the Eighth

Amendment precluded the punishment of 15 years of im-

prisonment plus hard labor in chains for the crime of

falsifying a public document, noting “that it is a precept

of justice that punishment for crime should be graduated

and proportioned to the offense.” On repeated occasions

since Weems, the Court has resorted to the constitutional

principle of proportionality to conclude that certain pun-

ishments are, or are not, excessive." Most recently, this

14 See Coker v. Georgia, 433 U.S. 584 (1977) (death sentence

held to be disproportionate and excessive for the crime of rape) ;

Trop v. Dulles, 356 U.S. 86 (1958) (expatriation for wartime de-

sertion violated the Eighth Amendment) ; Enmund v. Florida, 458

U.S. 782 (1982) (death penalty for felony murder held to be ex-

cessive under the circumstances).

20

Court in Solem revisited the concept of proportionality in

punishments, holding that the Eighth Amendment pro-

hibits a life sentence, without possibility of parole, for the

commission of a seventh nonviolent felony.**

Although this Court has had little occasion to address

the Excessive Fines Clause of the Eighth Amendment, the

eases decided under the Cruel and Unusual Punishments

Clause provide a useful framework for assessing the

validity of punitive damages under the Eighth Amend-

ment—an issue of first impression in this Court. See

Aetna Life Insurance Co. v. Lavoie, 106 S. Ct. 1580, 1589

(1986), where this Court said that the argument that

the imposition of massive punitive damages “is imper-

missible under the Excessive Fines Clause of the Eighth

Amendment . . . raise[s] important issues which, in an

appropriate setting, must be resolved.” In light of the

common origin of the clauses of the Eighth Amendment,

the concept of proportionality should be equally applicable

to all of the clauses of the Amendment. Indeed, as this

Court has stated:

We have recognized that the Eighth Amendment im-

poses “parallel limitations” on bail, fines, and other

punishments, Ingraham v. Wright, [430 U.S.] at 664,

15In so holding, the Court weighed the gravity of the offense

and the harshness of the penalty, and looked to the sentences im-

posed for similar conduct in the same and other jurisdictions, stat-

ing that “[i]f more serious crimes are subject to the same penalty,

or to less serious penalties, that is some indication that the punish-

ment at issue may be excessive.” Jd. at 291. Applying the consid-

erations enunciated in Solem here, a punitive award, 80 times the

amount of actual damages, is obviously excessive and grossly dis-

proportionate to the offense of bad faith failure to pay an insurance

claim. Moreover, consideration of the fines allowed for violation of

the Mississippi Insurance Code, which proscribes unfair or deceptive

acts or practices in insurance, removes all doubt that the award

here was excessive. Section 83-5-49 of the Mississippi Code pro-

vides that a villful violation of a cease and desist order proscrib-

ing an unfair practice is punishable, at most, by a $1,000 fine.

Miss. Code Ann. § 83-5-49.

ee pete

21

and the text is explicit that bail and fines may not be

excessive. It would be anomalous indeed if the lesser

punishment of a fine and the greater punishment of

death were both subject to proportionality analysis,

but the intermediate punishment of imprisonment

were not. There is also no historical support for such

an exception.

Solem v. Helm, 463 U.S. at 289.**

The governing principle of proportionality as a pro-

tection against arbitrariness and excessiveness in pun-

ishment should lead to reversal of the award of penalty

damages in the amount of $1.6 million against Bankers

for the “offense” of declining to pay a $20,000 insurance

claim. The award of $1.6 million against Bankers was

rendered in a proceeding which failed to comport with

due process, and which permitted the jury to award a

penalty in the form of punitive damages in an amount

which was arbitrary and wholly disproportionate to the

offense charged.'’ The complete absence of standards for

16 That punitive damages are nominally civil should not bar the

application of the Eighth Amendment to them. Not only are puni-

tive damages functionally penal (as their name clearly indicates),

but the Eighth Amendment, unlike some other Bill of Rights guar-

antees, does not distinguish between civil and criminal punishment.

Compare the Eighth Amendment (“[e]xcessive bail shall not be

required, nor excessive fines imposed, nor cruel and unusual punish-

ment inflicted”) with the Fifth Amendment (no person can be

held to answer “for a capital, or otherwise infamous crime” with-

out indictment by a grand jury; no person “shall be compelled in

any criminal case to be a witness against himself’) (emphasis

added) and the Sixth Amendment (“[i]n all criminal prosecu-

tions”) (emphasis added). See generally Jeffries, A Comment on

the Constitutionality , runitive Damages, 72 Va. L. Rev. 139, 147-

51 (1986).

17 Significantly, this Court, in reviewing the role of the jury in

meting out criminal sentences, has emphasized the importance of

providing guidance to juries to protect against arbitrary and dis-

22

assessing punitive damages (an infirmity which would

not survive in other criminal contexts) has led inevi-

tably to a proliferation of similar punitive awards—a

result which the Eighth Amendment proscribes.

Despite the magnitude of the punitive damages award

assessed against Bankers, the court below concluded that

it was not excessive, stating that “the judicial conscience

could [not] be shocked by a punitive damages assessment

which is less than 1% of the financial net worth of the

defendant.” 483 So.2d at 279. But to call the verdict

below anything but excessive rejects the concept of pro-

portionality and gives open-ended indulgence to the sort

of jury passion—and, indeed, enthusiasm—that inflates

such awards. By upholding an award of $1.6 million in

punitive damages—for failure to pay a $20,000 claim

after careful consideration—the court below has sanc-

tioned a scheme of punishment which bears no ascertain-

able or rational relation to the offense charged. Such

punishment should not be upheld under the plain words

and purposes of the Eighth Amendment.

criminatory sentences. See Gregg v. Georgia, 428 U.S. at 189

(“discretion must be suitably directed and limited so as to mini-

mize the risk of wholly arbitrary and capricious action”). Al-

though guidance has traditionally been provided to juries assessing

punishment in criminal contexts, no similar guidance—or, at least,

no useful guidance—has been given by courts to juries vested with

the power to assess punitive damages.

23

CONCLUSION

For the reasons set forth above and for the additional

reasons advanced in the Brief for the Appellant, the

decision below should be reversed.

Respectfully submitted,

Of Counsel: ERWIN N. GRISWOLD

JACK H. BLAINE (Counsel of Record)

Vice President, State Relations, PATRICIA A. DUNN

and General Counsel SARAH W. PAYNE

PHILLIP E. STANO JONES, Day, REAVIS & POGUE

Senior Counsel 655 15th Street, N.W.

AMERICAN COUNCIL OF Washington, D.C. 20005-5701

LIFE INSURANCE (202) 879-3939

1001 Pennsylvania Ave., N.W. Counsel for Amici

Washington, D.C. 20004-2559

(202) 624-2183

JOE W. PEEL

Vice President and

General Counsel

JOHN P. DINEEN

Associate General Counsel

HEALTH INSURANCE ASSOCIATION

OF AMERICA

1025 Connecticut Ave., N.W.

Suite 1200

Washington, D.C. 20036

(202) 223-7780

MAY, 1987