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

Supreme Court, U.S».

FILED

Jur 1888?

JOSEPH F. SPANIOL, JR,

CLERK

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 OF AMICUS CURIAE

ASSOCIATION OF TRIAL LAWYERS OF AMERICA

ROBERT L. HABUSH

777 East Wisconsin Avenue

Suite 2200

Milwaukee, Wis. 53202

(414) 271-0900

President, Association of

Trial Lawyers of America

JEFFREY ROBERT WHITE

Counsel of Record

1050 3ist St.. N.W.

Washington, D.C. 20007

(202) 965-3500

Attorney for Amicus Curiae

TABLE OF CONTENTS

TH!IS COURT SHOULD NOT IMPOSE A FEDERAL

CONSTITUTIONAL LIMIT ON PUNITIVE DAM-

AGES AWARDS IN STATE TORT ACTIONS ...........

A.

E.

Appellant seeks to impose a substantive limit on jury

verdicts for punitive damages under the Excessive

SIPIIIIIIIIL _ suctttasushiunséanohhdassesdsedidabebadtmeninhiottibeiedeneses

The Excessive Fines Clause does not apply to the

SII. " ccessedindittssdetesocssisarniaiiscibninadegitasemaneneinitanseenaiense

The Excessive Fines Clause is not essential to due

SA. sasonciinrenthtchetateminetnicnichitntineneinmtinatiietiane

1. Nocourt has adopted the Excessive Fines Clause

as a limit on punitive damages. ....................0006

2. The due process interest involved is not great. ..

3. The states adequately protect the due process in-

RR PR a

4. The proposed application of the Excessive Fines

Clause is in apparent violation of the right to trial

IIIs: sachinihdsniasiibiunictdgabilinedtcnabanivesnihiediilanainsendtecssnenie

Imposition of limits on the amount of punitive damage

awards would seriously undermine important state in-

CUTIES: ccscsdiestah cabdcnvnssescadciibstaistuetengetenssbbaaiaiiclaetsddinccens

1. Jury assessments of punitive damages serve im-

portant social policies underlying tort law. ........

2. Punitive damages further the state’s interest in

enforcing its crimimal law. .............:::ccccceeceeeeeeeee

A federal constitutional limit on damages would im-

pose a severe burden on this Court. ................0...0006.

THE EXCESSIVE FINES CLAUSE DOES NOT AP-

PLY TO PUNITIVE DAMAGE AWARDS IN CIVIL

AUIETEED ccvninnipveananubenssapuennsnnntinsnncpionmmeninannsinndannetnanticinniinssanes

A. The Eighth Amendment does not apply to civil dam-

B.

as

I : ccckcssnisiihaitnenonstntnsesesessashiententsetanianetia iearanetelicdenssiasies

The Framers of the Constitution did not intend the

Excessive Fines Clause as a limitation on civil damage

STITT ssccciniaisintdeisnsnainscniecessitinashnnetnauiasednieanibembianiiednioddeiens

Punitive Damages are not constitutionally equivalent

SIE TINIE castnsetecscintsictemtatiniintinvntansiasenan Ssailoninieis

STII ciiinctitsiinbisvcnnvinescnicnsesinnrensentmenanannenasinnumenete

TABLE OF AUTHORITIES

Cases

Addington v. Texas, 441 U.S. 418 (1979)...

Arab Termite & Pest Control v. Jenkins, 409 So. 2d

BGDD (Phe. 19B2) ....ccccccccescoscesnsespssesesenncsnnannnsaians

Arneson v. Olson, 270 N.W.2d 125 (N.D. 1978) ..

Bankers Life & Cas. Co. v. Crenshaw, 483 So. 2d 254

(EL |) eon

Baptist Hosp. of S.E. Texas v. Baber, 672 S.W.2d

296 (Tex. App. 1964) .......0......cccccccsessescssssnsessssesess

Boyd v. Bulala, 647 F. Supp. 781 (W.D. Va. 1986)

Burnett v. National Enquirer, Inc., 144 Cal. App. 3d

991, 193 Cal. Rotr. 206 (1983) ......ccccecceeeeeeeeenees

Carison v. Green, 446 U.S. 14 (1980)...

Carson v. Maurer, 120 N.H. 925, 424 A.2d 825

(2 | ee ee

Curtis Pub. Co. v. Butts, 388 U.S. 139 (1967) ......

Day v. Woodworth, 54 U.S. (13 How.) 363 (1851)

Dimick v. Schiedt, 293 U.S. 474 (1935) ............ee

Duncan v. Louisiana, 391 U.S. 145 (1968) ............

Duren ». Suburban Community Hosp., 482 N.E.2d

1358 (Chilo C.P. 2196S) ...ncercercscossescerssensesousnessessnne

Ex Parte Peterson, 253 U.S. 300 (1919) ...........

Ex Parte Watkins, 32 U.S. 568 (1833) .........ccccceee

Feinv. Fermanente Med. Group, 38 Cal. 3d 137, 211

Cal. Rptr. 368, 695 P.2d 665 (1985). app. dism.,

106 S. Ce. 214 (19BS) .nccccesecseseresscenesccpsoccssenseanssnens

Ford Motor Co. v. Durrill, 714 S.W.2d 329 (Tex.

App. 1986) .................cccsccssserececcrsessenesssensessseonsossoss

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

Graley v. Setyatham, 74 Ohio Ops. 2d 316, 343

N.E.2d 832 (Ohio Ct. C.P. 1976) ...cccccccceceeeeeeeeees

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

174 Cal. Rptr. 348 (1981) ....-cceceeeeeeeeeeeeeeeeeeeeeeees

Holbein v. Rigot, 245 So. 2d 57 (Fla. 1971) ..........

PAGE

14,18,19

26

PAGE

Huntington vy. Attrill, 146 U.S. 657 (1892) o000.00..... 26

In re “Daikon Shield” Products Liab. Lit., 526 F.

Supp. 887 (N.D. Cal. 1981), vac. other grnds. 693

F.2d 847 (9th Cir. 1982), cert. den. 459 U.S. 1117

EE 13

Ingraham v. Wright, 430 U.S. 651 (1977) wc. 12,22,23,25

Jackson v. Rosenbaum, 260 U.S. 22 (1922) woo... )

Johnson v. St. Vincent Hosp., 404 N.E.2d 585 (Ind.

a csonstpansonsnsunens 6

Jones v. State Bd. of Medicine, 97 idaho 859, 555

P.2d 399 (Idaho 1976), cert. den. 431 U.S. 914

a csnnseneconevenees - 6

Kennedy v. Mendoza-Martinez, 372 U.S. 144 (1963) 26

Malloy v. Hogan, 378 U.S. 1 (1964) voce. 8

Mapp Vv. Ohio, 367 U.S. 643 (1961) ccccccsccscccsecseeoe 8,12

Maxey v. Freightliner Corp., 450 F. Supp. 955 (N.D.

Tex. 1978), rev'd other gernds. 665 F.2d 1367 (Sth

ess scscnssecsgnesneseees 13

Morris v. Parke Davis, Inc., 573 F. Supp. 1324 (C.D.

I eiatreictsscinisineionsenese Siedlidihinsintintensonsiene 13

New State Ice Co. v. Liebman, 285 U.S. 262 (1931) 7

Newport v. Fact Concerts, Inc., 453 U.S. 247 (1981) 9

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

i cscs cedncnncensenevecsoostvecesossenes 26

Prendergast v. Nelson, 199 Neb. 97, 256 N.W.2d 657

isc ccweninersseusewersennsoscrecsoees 6

Reiter v. Sonotone Corp., 442 U.S. 330 (1979) ..... 20

Santosky v. Kramer, 455 U.S. 745 (1982) co.cc... 10

Silkwood v. Kerr-McGee Corp., 464 U.S. 238 (1984) 9

Simon v. St. Elizabeth Medical Center, 3 Ohio Ops.

3d 164, 355 N.E.2d 903 (Ohio C.P. 1976) .......... 6

Smith v. Department of Insurance, 507 So. 2d 1080

eo. ssacsesssecsone idicneinisidedieddeesens 5,16

Smith v. Wade, 461 U.S. 30 (1983) ooo... )

Solem v. Helm, 463 U.S. 277 (1983) .o.cccccccccececece. 21,22,24

Sturm, Ruger & Co. v. Day, 594 P.2d 38 (Alaska

Teen os sacsnessensnscosvesevennces 14

Thiry v. Johns Manville Corp., 661 P.2d 515 (Okla.

SEIT <ncsiissiunisssssennssinscsiisadessbiainsesiesiinaplbshapmasnibiioapadadneiames

Travelers Indem. Co. v. Armstrong, 442 N.E.2d 349

CE, TEI ccctcnnicsscnsscsncinsntnsvnretnsosiinesceteciustansasnnocin

Tuttle v. Raymond, 494 A.2d 1353 (Me. 1985) ....

United States v. Ward, 448 U.S. 242 (1980) .........

Waggoner v. Gibson, 647 F.Supp. 1102 (N.D. Tex.

SIN. sscxseusdilashinesspshindnastenioceasicuinslandaanscsiabenvedneninaniiaapniinens

Wangen v. Ford Motor Co., 97 Wis. 2d 260, 294

De GU CID icssccestccsntcenceusnsinsanepenienenineusiion

Wright v. Central DuPage Hosp., 63 Ill. 2d 313, 347

RE SEP UII. IP EIIID bncocccccncnscecomsesssancsennnbeninnntent

U.S. Constitution

Seventh Amendment ........ seeiniaaentittiniiiadeiaoiiiebaiaeeinimanaiti

Eighth Amendment .............. <seiiehisilaianabibeniigdaiamibdagibe:

Other Authorities

W. Blackstone, Commentaries on the Laws of

TI kccsiinncesseccnnscosncveesenimmanosninpianneneneaiesmnnnienatose

Daniels, Punitive Damages: Storm on the Horizon?

(American Bar Foundation 1986) ...........:ccccccceeeees

Demarest and Jones, Exemplary Damages as an In-

strument of Social Policy: Is Tort Reform in the

Public Interest, 18 St. Mary’s L.J. 787 (1987) ...

Ghiardi and Kircher, Punitive Damages Law and

SINE CIID << ccrcisnuitcosendeusennsintnsusstincsdneteimintiansoonns

Landes and Posner, New Light on Punitive Damages,

Regulation 33 (Sept./Oct. 1986) ........::cceeeeeeees

Levine, Demonstrating and Preserving the Deterrent

Effect of Punitive Damages in Insurance Bad Faith

Actions, 13 U.S.F.L. Rev. 613 (1979) wc.

Dinan Caste Gh. BD .cccccsscccssscssccssccvssencsascoscsassonsoesees

Mallor and Roberts, Punitive Damages: Toward a

Principled Approach, 3\ Hastings L.J. 639 (1980)

Nader, The Corporate Drive to Restrict Their Vic-

tims’ Rights, 22 Gonzaga L. Rev. 15 (1986/87)

PAGE

12,13,14

6

15

22

National Association of Attorneys General, An Anal-

ysis of the Causes of the Current Crisis of Unavaila-

bility and Unaffordability of Liability Insurance

I a ee

Neal, Punitive Damages: Suggested Reform for an

Insurance Probiem, 18 St. Mary’s L.J. 1019 (1987)

Note, /n Defense of Punitive Damages, 55 N.Y.U.L.

RRR SI CaS ace Richi NEA Hienceeea ee

Owen, Problems in Assessing Punitive Damages

Against Manufacturers of Defective Products, 49

Se. FS 32) | eee ee

Owen, Punitive Damages in Products Liability Liti-

gation, 74 Mich. L. Rev. 1258 (1976) oo...

M. Peterson, S. Sarma and M. Shanley, Punitive

Damages: Empirical Findings (Rand Corp. 1987)

F. Pollock and F. Maitland, The History of English

gL eaeerinin 2 TSieie Siel e ec ennana ena

W. Prosser, Torts (4th ed. 1971) ou... eeeeeeeeeeeee

Punitive Damages: A Constructive Examination

(American Bar Association 1986) ....0.0.0....cccecce eee.

K. Redden, Punitive Damages (1980) .0.....0.cc.

Restatement (Second) of Torts § 908(2)(1977) ....

Schroeter and Rutzick, Being an Insurance Company

Means Never Having to Say You're Sorrv, 22 Gon-

I E RR enn

J. Stephen, History of the Criminal Law of England

SNe suthceedentaennscnianpnsadotedunencanbiantonnnbabiiciinuniasnens

T. Taswell-Langmead, English Constitutional Histo-

OF ED sittin desisandidisdbcthinasiettnstadibathagebatsiescctanbbibesseses

Wade, On the Nature of Strict Tort Liability for

Products, 44 Miss. L.J. 825 (1973) cocccccccccceeeeeeeeee

L. Tribe, American Consitutional Law (1978) .......

“Both Sides Brace for Tort Battle.” National Law

I ee sees

“How Ford Won Pinto Trial,” National Law Journal,

I a

“The Manufactured Crisis: Liability-Insurance Com-

panies Have Created a Crisis and Dumped It On

You,” 51 Consumer Reports 544 (Aug. 1986) .....

PAGE

11,14,15

25

9

No. 85-1765

IN THE

Supreme Court of the United States

OCTOBER TERM, 1986

>>

BANKERS LIFE AND CASUALTY COMPANY,

Appeilant,

Vv.

LLoyp M. CRENSHAW,

Appellee.

ON APPEAL FROM THE SUPREME COURT OF MISSISSIPPI

BRIEF OF AMICUS CURIAE

ASSOCIATION OF TRIAL LAWYERS OF AMERICA

INTEREST OF AMICUS

The Association of Trial Lawyers of America [“ATLA”™]

respectfully submits this brief as amicus curiae in support of

appellee in this case. Copies of letters from both parties granting

their consent to the filing of this brief have been filed with this

Court.

ATLA is a voluntary association of approximately 65,000 trial

lawyers from every state in the U.S. and several foreign countries.

ATLA members primarily represent iniured victims of tortious

misconduct. ATLA is concerned by the challenge to the punitive

damage award presented by appellant and supporting amici in

this case. ATLA views the punitive damage remedy as a strong

force for safety, individual rights, and corporate good faith.

We are all potential victims of the type of willful or reckless

misconduci that punitive damages seek to punish and deter.

ATLA believes that limiting the effectiveness of this remedy sac-

rifices the right of the public to be free of such misconduct to

2

protect the pockets of those who may seek to profit by such

misconduct.

SUMMARY OF ARGUMENT

A Mississippi jury found that Bankers Life and Casualty Co.

(“Bankers Life”) was guilty of such willful and wanton miscon-

duct in denying Mr. Crenshaw’s valid insurance claim that puni-

tive damages were appropriate to punish the company and deter

others from engaging in similar misconduct in the future. Bank-

ers Life does not contend that the judgment did not conform to

the common law of punitive damages applied by Mississippi

courts. Instead, appellant argues that the U.S. Constitution

imposes a limit on the amount of punitive damages a state court

jury may assess. Specifically, appellant urges this Court to hold

that the Excessive Fines Clause of the Eighth Amendment bars

an award of punitive damages that is not proportional to the

criminal penalty for the same misconduct.

This Court should dismiss this appeal for the fundamental

reason that the Excessive Fines Clause does not apply to the

states. This Court has never incorporated the Excessive Fines

Clause into the Fourteenth Amendment and should not do so

here.

The limitation on punitive damages is clearly not essential to an

Anglo-American system of ordered liberty. A civil defendant’s

interest in avoiding large monetary judgments is not particularly

weighty. The rule that the jury should fix the appropriate

amount of punitive damages, based on the egregiousness of the

particular misconduct and the resources of the defendant, has

been followed by the great majority of states and recognized by

this Court for well over a century. Moreover, state courts and

legislatures have effectively protected defendants against exces-

sive awards through other means. Finally, the limitation pro-

posed by Bankers Life is in apparent violation of the right to trial

by jury.

In addition, imposing a federal constitutional limit on punitive

damages would trample important state interests. Punitive dam-

ages are designed to further the social policies that underlie tort

law. Making punitive awards predictable in amount would

encourage defendants to continue their willful misconduct. treat-

ing punitive damage awards as a mere cost of doing business. It

would also impair the ability of the states to rely on civil punitive

damage awards as a supplement to criminal law enforcement

efforts.

Appellant's proposed constitutional rule would also impose

onerous burdens upon this Court. To hold that punitive damages

are constitutionally equivalent to criminal fines calls into question

many other procedural and substantive tort law rules. This

Court would be called upon to create a new area of federal

punitive damage law under the Eighth Amendment. In addition,

this Court would be adding to its docket appeals from all the

States presenting fact-bound issues of proportionality of punitive

damage judgments.

Even if this Court should determine that the Excessive Fines

Clause is applicable to the states, that constitutional provision is

limited to fines imposed in criminal proceedings. This Court has

held that the Eighth Amendment does not apply to civil actions.

There is no support for the notion that the drafters of the Eighth

Amendment intended the Excessive Fines Clause to include puni-

tive damages in civil cases. The ban against excessive amerce-

ments in the Magna Carta was clearly understood as a limit on

criminal punishments, not civil damages. The fact that punitive

damages and criminal penalties both seek to punish and deter

misconduct does not entitle civil defendants to the safeguards

accorded a criminal accused. Civil and criminal proceedings are

constitutionally distinct, and there is no basis for requiring plain-

tiffs in civil actions to comply with constitutional restrictions

imposed on the prosecution in criminal cases.

4

ARGUMENT

i.

THIS COURT SHOULD NOT IMPOSE A FEDERAL CON-

STITUTIONAL LIMIT ON PUNITIVE DAMAGES AWARDS

IN STATE TORT ACTIONS

A. Appellant seeks to impose a substantive limit on jury ver-

dicts for punitive damages under the Excessive Fines

Clause.

It is important to describe precisely the nature of the relief that

appellant seeks in this Court. Bankers Life acknowledges that

ihe purpose of punitive damages is to punish and deter miscon-

duct. Appellant does not argue that the judgment against it did

not conform to the requirements of state law, nor that the manner

in which punitive damages are awarded in Mississippi courts

violates procedural due process.’ Instead, appellant charges that

the common-law rule that permits juries to make “subjective”

assessments of punitive damages based on the specific misconduct

and the wealth of the defendant leads to unpredictable and

unduly high verdicts. App. Brief at 12-14. Appellant asserts

that the criminal penalty set by the legislature for prosecutions of

similar misconduct is the proper objective standard for determin-

ing the amount of punitive damages necessary to punish and

deter. App. Brief at 35.

Bankers Life does not offer a conc’ :te description of the rule it

wishes this Court to impose on the states. A fair reading of

appellant's brief is that the trial judge, and then the Mississippi

Supreme Court, after reviewing the propriety of the punitive

damage verdict under state law, should have determined that

Bankers Life could have been fined no more than $1,000 in a

criminal prosecution for its misconduct. App. Brief at 14.°

1. Amicus does not address appellant's due process challenge to the retroac-

tive application of a standard of conduct (App. Brief at 40-43) which is limited

to the facts of this particular case.

2. Actually, Bankers Life submits that the objective standard of excessive-

ness should be the re/ationship of the punitive damage award to the monetary

criminal penalty for the same or similar misconduct. App. Brief at 35. It is clear

What Bankers Life seeks, essentially, is a substantive cap on

punitive damages. The liability insurance industry and other

interest groups have proposed damage caps of various sorts as

part of an intense lobbying effort for tort “reform” in the state

legislatures. See generally Demarest and Jones, Exemplary

Damages as an Instrument of Social Policy: Is Tort Reform in

the Public Interest, 18 St. Mary’s L.J. 787 (1987); “Both Sides

Brace for Tort Battle,” National Law Journal, Feb. 16, 1987, at 1.

Such caps are generally characterized by a maximum set by the

legislature on the amount a jury can award in a common law tort

action.’ The maximum is not based on the evidence before the

jury in the particular action, but on extrinsic factors, generally

the legislature’s desire to protect a class of defendants from the

effects of large verdicts. It is worth noting that in its 1986

legislative session, the Mississippi legislature defeated HB 307,

which would have limited awards of noneconomic damages,

including punitive damages, to $150,000. Bankers Life now

offers a similar proposal to this Court in the guise of a constitu-

tional imperative. Appellant would substitute the legislature's

judgment as to the monetary amount needed to punish and deter

in place of the factual findings of the jury. The only difference is

that, instead of applying a cap that was designed by the legisla-

ture to limit punitive awards, the court would look to the fines set

forth in the criminal code, which were never intended to serve this

purpose. Even when imposed by a state legislature after due

consideration of the policies involved, such damage caps are of

dubious constitutionality.‘. For appellant to urge this Court to

from appellant's desire for predictability and objective standards, and from the

fact that appellant suggests no other factors that might affect the determination,

that appellant would expect the reviewing court to treat the maximum criminal

fine as the maximum punitive damage award.

3. Damage caps imposed on common-law causes of action shouid be distin-

guished from limitations of liability for statutory causes of action, which are well

within the province of the legislature.

4. See Smithy. Department of Insurance, 507 So. 2d 1080 ( Fila. 1987) (cap

on noneconomic damages violates right of access to the courts): Carson v.

Maurer, 120 N.H. 925, 424 A.2d 825 (1980) (limit on noneconomic damages

violates equal protection); Arneson v Olson, 270 N.W.2d 125 (N.D. 1978) (cap

on liability of a physician for medical negligence unfairly discriminates against

6

impose a legislative limit on punitive damages in spite of the

legislature’s rejection of that notion shows precious little regard

for the legislative judgment that appellant professes to prize so

highly. App brief at 35.

The sole source of authority offered by appellant for this dra-

matic intrusion into state tort law is the Excessive Fines Clause of

the Eighth Amendment. Amicus vigorously contests appellant's

construction of “fines” in this provision to include punitive dam-

age awards in civil suits. See Part II, infra. This Court need not

reach that issue of constitutional construction, however. Even if

appellant’s novel reading of the Excessive Fines Clause were

correct, its appeal must fail because the Excessive Fines Clause

does not apply to the states.

malpractice victims in violation of equal proiection and due process provisions of

the state and federal constitutions); Boyd v. Bulala, 647 F. Supp. 781 (W.D.

Va. 1986) (cap on recovery under Virginia's medical malpractice statute violates

the victim's right to a jury trial under the U.S. and Virginia Constitutions);

Waggoner v. Gibson, 647 F.Supp. 1102 (N.D. Tex. 1986) (statute limiting

medical malpractice recovery to $500,000 violates equal protection under the

state and federal constitution and the open courts provision of the state constitu-

tion Baptist Hosp. of S.E. Texas v. Baber, 672 S.W.2d 296 (Tex. App.

198. (limit on damages in malpractice actions against hospitals violates equal

protection); Duren v. Suburban Community Hosp., 482 N.E.2d 1358 (Ohio

C.P. 1985)(cap on general damages in medical malpractice actions violates

equal protection guarantees of state and federal constitutions); Simon v. St.

Elizabeth Medical Center, 3 Ohio Ops. 3d 164, 355 N.E.2d 903 (Ohio C.P.

1976) (cap on damages violates equal protection, due process and right to trial

by jury); Graley v. Satyatham, 74 Ohio Ops. 2d 316, 343 N.E.2d 832 (Ohio Ct.

C.P. 1976)(similar); Wright v. Central DuPage Hosp., 63 Mil. 2d 313, 347

N.E.2d 736 (Ill. 1976)(cap on medical malpractice damages violates state

constitutional ban against special legislation); Jones v. State Bd. of Medicine,

97 Idaho 859, 555 P.2d 399 (1976), cert. den. 431 U.S. 914 (1977) (cap on

damages did not violate federal due process or state access to courts; but court

remanded to determine whether statute violated prohibition against special

legislation. On remand, damages limit held unconstitutional: No. 55527 &

$5586 (4th Dist. Ct., Nov. 3, 1980). Contra, Fein v. Permanente Med. Group,

38 Cai. 3d 137, 211 Cal. Rptr. 368, 695 P.2d 665 (1985), app. dism., 106 S. Ct.

214 (1985)(upholding cap on noneconomic damages in medical malpractice

cases). Johnson v. St. Vincent Hosp., 404 N.E.2d $85 (Ind. 1980) (upholding

cap in medical malpractice actions); cf. Prendergast v. Nelson, 199 Neb. 97,

256 N.W.2d 657 (1977) (plurality; only three of seven justices found $500,000

limit on damages constitutiona! ).

—

B. The Excessive Fines Clause does not apply to the states

The first eight amendments to the U.S. Constitution are a limit

on the power of the federal government. Although this Court has

applied many of the specific guarantees in the Bill of Rights to the

states through the Due Process Clause of the Fourteenth Amend-

ment, this Court has never incorporated the Excessive Fines

Clause. See L. Tribe, American Constitutional Law 567-68

(1978) (collecting decisions).

The demand that the states comply with a federal constitu-

tional provision is a matter that this Court has never taken lightly.

This Court has recognized that the federal government is not the

repository of all wisdom. “One of the happy incidents of our

federal system,” as Justice Brandeis pointed out, is that a state

may serve as a “laboratory” in matters of economic and social

regulation. New State Ice Co. v. Liebman, 285 U.S. 262, 280

(1931) (dissenting). The decisions to incorporate many Bill of

Rights safeguards did not repudiate this fundamental notion.

Rather they illustrate the corollary principle that where the states

have shown themselves unwilling or unable to protect fundamen-

tal individual rights, this Court will impose federal constitutional

safeguards.

Bankers Life does not address the issue of applicability of the

Excessive Fines Clause to the states. Appellant’s brief makes no

effort to sustain the heavy burden of showing that its construction

of that provision is not only proper under federal law, but is so

fundamental to due process that state courts must also obey its

command. For this reason, Amicus suggests that Bankers Life’s

appeal be dismissed for failure to raise a substantial federal

question.

C. The Excessive Fines Clause is not essential to due process

This Court could, of course, address the issue of incorporation

on its own. Amicus suggests that a review of the factors that this

Court has considered in making this determination leads to the

clear conclusion that the Excessive Fines Clause should not be

applied to the states.

8

The precise issue, of course, does not focus on the Excessive

Fines Clause in the abstract, but on the specific interpretation of

the requirements of that provision. Malloy v. Hogan, 378 US. |

(1964). A.» -us will therefore assume for the sake of this argu-

ment that th cxcessive Fines Clause means what appellant says

it means: Punitive damage awards must be proportional to mone-

tary criminal penalties for the same or similar conduct. This

Court's test for determining whether a particular constitutional

rule should be incorporated into the Fourteenth Amendment is

whether that rule is “necessary to an Anglo-American scheme of

ordered liberty.” Duncan v. Louisiana, 391 U.S. 145, 149 n.14

(1968).

The factors that this Court considered in its decision to incor-

porate the Fourth Amendment exclusionary rule and other con-

stitutional provisions provide a useful paradigm in analyzing the

question presented here. In Mapp v. Ohio, 367 U.S. 1684 (1961),

this Court applied the exclusionary rule to the states based on (1)

the importance of the interest protected by the rule, 367 U.S. at

656, (2) the fact that the federal government and some states had

already adopted the rule, 367 U.S. 659-60, and (3) the experi-

ence in the states in protecting the interest by other means, 367

U.S. at 651. In Mapp, this Court concluded that since the privacy

interest protected by the proposed exclusionary rule was funda-

mentally important, since the rule had been recognized by the

federal government and an increasing number of states, and since

other means of protecting privacy had proved futile, the rule

should be imposed on the states through the Fourteenth Amend-

ment. These factors recur in other incorporation decisions fol-

lowing Mapp. Amicus submits that under this analysis,

appellant's proposed application of the Excessive Fines Clause is

clearly not an essential element of ordered liberty.

9

1. No court has adopted the Excessive Fines Clause as a

limit on punitive damages.

Appellant is faced with the fact that the rule it seeks to replace

is rooted in the tort law system of the great majority of states. The

classic formulation of the rule is:

Punitive damages may be awarded for conduct that in

Outrageous, because of the defendant's evil motive or his

reckless indifference to the rights of others. In assessing

punitive damages, the trier of fact can properly consider

the character of defendant's act, the nature and extent of

the harm to the plaintiff that defendant caused or intended

to cause, and the wealth of the defendant

Restatement (Second) of Torts § 908(2)(1977). No state has

required that punitive damages be proportional to analogous

criminal fines. As Justice Holmes has remarked, “if a thing has

been practiced for two hundred years by common consent, it will

need a strong case for the Fourteenth Amendment to affect it.”

Jackson v. Rosenbaum, 260 U.S. 22 (1922).

Furthermore, this Court has approved the awarding of punitive

damages by the jury, at least implicitly, since Day v. Woodworth,

54 U.S. (13 How.) 363, 371 (1851), where this Court noted that

jury awards of punitive damages were “a well-established princi-

ple of the common law.” In Smith v. Wade, 461 U:S. 30 (1983),

this Court, citing numerous common-law decisions recognizing

punitive damages, held that a jury may award punitive damages,

under a state standard of reckless indifference, in a federal civil

rights action. This Court explained in Newport v. Fact Concerts,

Inc., 453 U.S. 247, 269-70 (1981) that by “allowing juries and

courts to assess punitive damages in appropriate circumstances

against the offending official, based on his persona! financial

resources, the statute [42 U.S.C. § 1983] directly advances the

public’s interest in preventing repeated constitutional depriva-

tions.” As this Court pointed out in Carlson v. Green, 446 U.S.

14, 22 n.9 (1980), “punitive damages may be the only significant

remedy available in some § 1983 actions where constitutional

10

rights are maliciously violated but the victim cannot prove com-

pensable injury.” In Silkwood v. Kerr-McGee Corp., 464 U.S.

238 (1984), this Court upheld a $10 million punitive damage

award as not preempted by the Atomic Energy Act. The Court

noted that punitive damages “have long been a part of traditional

State tort law” which Congress intended to preserve to provide

“adequate remedies for those who are injured by exposure to

hazardous materials.” 464 U.S. at 255 and 257. The Court

rendered these decisions against the backdrop of the basic princi-

ple that “the Constitution presents no general bar to the assess-

ment of punitive damages in a civil case.” Curtis Pub. Co. v.

Butts, 388 U.S. 139, 159 (1967). It is highly unlikely that this

Court should have repeatedly approved punitive damage recov-

eries that violated fundamental notions of ordered liberty. This

Court may be fallible, but does not make it a routine practice.

2. The due process interest involved is not great.

Whether the states must apply a federal constitutional guaran-

tee depends in large part on the nature of the interest at stake.

Most of this court’s decisions incorporating provisions of the Bill

of Rights have protected the life or liberty of criminal defendants

or First Amendment speech. This Court has pointed out that,

while the parties in a civil suit may be intensely interested in the

damages awarded, a defendant’s property interest in “mere

money” is far less significant in the due process equation. Adding-

tonv. Texas, 441 U.S. 418, 423-24 (1979), Santosky v. Kramer,

455 U.S. 745, 755-56 (1982).

Bankers Life attempts to bolster the significance of the interest

at stake by claiming that punitive damages are wildly out of

control. Critics of punitive damages have often resorted to alarm-

ist rhetoric concerning the dire impact of skyrocketing punitive

damage verdicts. See Daniels, Punitive Damages: Storm on the

5. The First Amendment presents a specific limitation on the use of punitive

damages that may inhibit protected speech. Gertz v. Robert Welch, Inc. 418

U.S. 323 (1974). No First Amendment concerns are presented by the judg-

ment against Bankers Life in this case.

11

Horizon? 1-3 (American Bar Foundation 1986) (collecting nota-

ble examples). But there has been almost no empirical informa-

tion concerning the impact of such verdicts beyond “anecdotes,

horror stories, and surveys of appellate opinions, all of which are

guaranteed to produce a distorted (unintentionally, we may

assume) picture of things.” Jd. at 5. One commentator, who is

otherwise sympathetic to the insurance industry’s pleas for “tort

reform,” admits that “there remains a noticeable lack of statisti-

cal data supporting the insurance industry's position regarding

the allegedly devastating effects of increased size and frequency

of punitive damage awards.” Neal, Punitive Damages: Suggested

Reform for an Insurance Problem, 18 St. Mary’s L.J. 1019, 1021

(1987).° Recent studies examining awards in selected jurisdic-

tions now reveal what trial lawyers have known all along: Juries

do not award punitive damages routinely, and large punitive dam-

age verdicts are quite rare. The most ambitious study, conducted

by the Rand Corporation examining 24,000 jury verdicts in San

Francisco and Chicago area courts from 1960 to 1984, found that

“punitive damages were rarely awarded in personal injury litiga-

tion, and when awarded were usually small.” M. Peterson, S.

Sarma and M. Shanley, Punitive Damages: Empirical Findings vi

(Rand Corp. 1987)[“Rand Study”}. The American Bar Asso-

ciation’s Special Committee on Punitive Damages, utilizing the

Rand data and a 10-state study by the American Bar Foundation,

found that most of the increase in punitive damage awards

occurred in business and contract cases (including insurance bad-

6. Commentators more sympathetic to the interests of consumers and poten-

tial tort victims take a decidedly less sanguine approach to the purported “crisis”

in tort litigation. The latest data reveals that the liability insurance industry

has remained quite profitable and that the purported “crisis” has less to do with

verdicts than with insurance company greed and mismanagement and the cycli-

cal nature of the industry. See National Association of Attorneys General, An

' Analysis of the Causes of the Current Crisis of Unavailability and Unaf-

fordability of Liability Insurance (May 1986); Nader, The Corporate Drive to

Restrict Their Victims’ Rights, 22 Gonzaga L. Rev. 15 (1986/87); Schroeter

and Rutzick, Being an Insurance Company Means Never Having to Say You're

Sorry, 22 Gonzaga L. Rev. 31 (1986/87); “The Manufactured Crisis: Liability-

Insurance Companies Have Created a Crisis and Dumped It On You,” 51

Consumer Reports 544 (Aug. 1986).

12

faith cases). Awards in persona! injury cases, the target of most

criticism, have remained relatively stable in frequency and

amount during 1960 to 1984. Punitive Damages: A Constructive

Examination 2-2 to 2-5 (American Bar Association

1986)[“ABA Report”]. An independent statistical survey of

reported punitive damage decisions confirms that “such awards

seem to be neither frequent nor crushing in any absolute sense.”

Landes and Posner, New Light on Punitive Damages, Regulation

33 (Sept./Oct. 1986) Amicus will not burden this Court with

the considerable amount of statistical data underlying these con-

clusions and readily concedes that none of the studies purports to

present a conclusive picture of punitive damage verdicts across

the country. Amicus does submit, however, that the best existing

evidence reveals no “crisis” that might conceivably warrant a

federal constitutional limitation on punitive damage verdicts.

3. The states adequately protect the due process interests of

defendants.

Another factor that this Court’s has looked to is whether the

States adequately protect the defendant’s interest by other means.

For example, this Court did not compel the states to apply the

exclusionary rule under the Fourth Amendment until it was clear

that alternative state methods of protecting privacy interests were

ineffective. Mapp v. Ohio, 367 U.S. 643, 651-53 (1961). Con-

versely, this Court declined to extend the cruel and unusual pun-

ishment clause to school punishment, in part, because existing

state common-law remedies were sufficient to protect the liberty

interests of school children. /Jngraham v. Wright, 430 U.S. 651,

677-79 (1977).

Appellant asserts that defendants may be subjected to exces-

Sive punitive damage awards because juries “impose crushing

financial burdens for the most whimsical of reasons.” App. Brief

at 8. Amicus agrees that juries should be instructed concerning

the specific factors which they may consider in assessing punitive

damages. The courts can readily correct any deficiency in this

area. See, e.g, Wangenv. Ford Motor Co.,97 Wis. 2d 260, 295,

13

294 N.W.2d 437, 460 (1980) (listing seven specific factors that

the jury must be instructed to consider). Imposing a constitu-

tional limit on the maximum award does nothing to further this

goal.

More importantly, appellant makes the mistake of looking at

punitive damages in a vacuum. Trial and appellate judges bear

the responsibility of reviewing punitive damage awards for exces-

siveness. In a leading decision, the Wisconsin Supreme Court

stated that “judicial controls . . . will provide for fair administra-

tion of punitive damage awards in this state.” Wangen v. Ford

Motor Co., 97 Wis. 2d 260, 298, 294 N.W.2d 437, 457 (1980).

Amicus submits that these controls adequately protect defend-

ants against excessive punitive damage verdicts, rendering a fed-

eral constitutional limitation an unnecessary intrusion into state

tort law.

Appellant’s concern that punitive damages may be “employed

to punish unpopular defendants,” (App. Brief at 13) is mis-

placed. A jury may assess punitive damages only after finding

the defendant liable for a recognized tort and guilty of willful or

reckless misconduct. Even then, a trial judge or appellate court

must reverse or reduce the award if it was based on passion or

prejudice. 2 Ghiardi and Kircher, Punitive Damages Law and

Practice § 18.07 (1985); see, e.g., Burnett v. National Enquirer,

Inc., 144 Cal. App. 3d 991, 193 Cal. Rptr. 206 (1983) (remittitur

of $1.3 million verdict to $150,000).

Appellant strenuously objects to the notion that juries base

their assessment on the proper amount of damages on the wealth

of the defendant. Appellant overlooks the fact that this principle

protects the rights of defendants. The universally-accepted

corollary of this principle is that: “Punitive damages should be

painful enough to provide some retribution and deterrence, but

should not be allowed to destroy the defendant.” Arab Termite

& Pest Control v. Jenkins, 409 So.2d 1039, 1043 (Fla. 1982).

Courts routinely order remittiturs on the ground that punitive

damage awards must not be allowed to bankrupt the defendant.

See In re “Dalkon Shield” Products Liability Litigation, 526 F.

14

Supp. 887, 899 (N.D. Cal. 1981), vac. other grnds. 693 F.2d 847

(9th Cir. 1982), cert. den. 459 U.S. 1117 (1983); Maxey v.

Freightliner Corp., 450 F. Supp. 955, 960-61 (N.D. Tex. 1978),

rev'd other grnds. 665 F.2d 1367 (Sth Cir. 1982); Morris v.

Parke Davis, Inc., 573 F. Supp. 1324, 1327-28 (C.D. Cal. 1983);

Thiry v. Johns Manville Corp., 661 P.2d 515, 518 (Okla. 1985);

Grimshaw v. Ford Motor Co., 119 Cal. App. 3d 757, 174 Cal.

Rptr. 348 (1981). It is more likely that large compensatory

awards, which are not assessed in relation to defendant's ability to

pay, could bankrupt a defendant.

These standards of review do not merely exist on paper.

Courts are becoming increasingly stringent in reviewing punitive

awards. “[T]here appears to be a growing trend to subject such

awards to greater judicial scrutiny.” Owen, Problems in Assess-

ing Punitive Damages Against Manufacturer: +f Defective Prod-

ucts, 49 U. Chi. L. Rev. 1, 44 (1982). A-study of the subsequent

history of punitive damage verdicts found that 50% of jury ver-

dicts were reduced by remittitur or settlement. For the largest

awards, the number was 80%. ABA Report, supra, at 2-5. See

also Rand Study, supra, at 30. As one court notes, “judicial

scrutiny over the awards provides a partial justification for

allowing such awards in the first place. The spectre of bankruptcy

and excessive punishment can be in part dispelled to the extent

that trial and appellate courts exercise their powers of review.”

Sturm, Ruger & Co. v. Day, 594 P.2d 38, 48 (Alaska 1979).

it is Amicus’ position that the common-law rules governing

punitive damages represent the most effective way for states to

further the goals of tort law in protecting citizens from socially

undesirable conduct in a manner that is not arbitrary or unfair to

defendants. If a different balance should be struck more

favorable to the interests of defendants, it is for the states to strike

it. Several state courts, for example, have required plaintiffs to

prove misconduct by clear and convincing evidence. Tuttle v.

Raymond, 494 A.2d 1353 (Me. 1985); Travelers Indem. Co. v.

Armstrong, 442 N.E.2d 349 (Ind. 1982); Wangen v. Ford Motor

Co., 97 Wis.2d 260, 298, 294 N.W.2d 437, 457 (1980).

15

Of particular significance is the fact that state legislatures have

been actively addressing the concerns raised by defendants. In

1986 alone, nine states enacted modifications of laws relating to

punitive damages, including raising the quantum of proof

required of plaintiffs, setting a ratio between the punitive award

and compensatory damages, and providing that a portion of

awards be paid to public funds. See ABA Report, supra, at 1-5

(collecting statutes).

It is clear that the states are performing their function as

laboratories and that they are fully protecting the interests of

defendants against liability for excessive punitive damage

awards. Imposition of a federal constitutional mandate is

unwarranted.

4. The proposed application of the Excessive Fines Clause

is in apparent violation of the right to trial by jury.

As amicus previously noted, the limitation on punitive damages

that Bankers Life seeks to impose under the Excessive Fines

Clause is essentially a cap on damages. It substitutes the judg-

ment of the legislature for that of the jury in a civil action.

Amicus contends that such a limitation violates the plaintiffs

right to trial by jury under the Seventh Amendment and/or

‘substantially similar guararitees under the state constitutions.

The Seventh Amendment provides:

In suits at common law ... the right of trial by jury shall

be preserved, and no fact tried by a jury shall otherwise be

re-examined in any Court of the United States, than

according to the rules of the common law.

U.S. Const., amend VII.

A federal district court presented with this precise issue found

that a Virginia statute which imposed a monetary limit on medi-

cal malpractice damages was unconstitutional. Boyd v. Bulala,

647 F. Supp. 78! (W.D. Va. 1986). The court’s analysis is a

focused and principled application of the right to trial by jury

which is worth examining in some detail:

16

“The federal right to a civil jury trial is limited to those

actions in which the right to jury trial existed at common

law and actions where Congress specifically provides for a

jury by statute. Ex Parte Peterson, 253 U.S. 300, 40S. Ct.

543, 64 L. Ed. 919 (1919). In such actions the seventh

amendment prohibits interference with the ultimate deter-

mination of issues of fact by the jury. /d. at 310,40S. Ct.

546. Specifically, the amendment provides the right to

have a jury properly determine not only the question of

liability but also the extent of damages. Dimick v. Schiedt,

293 U.S. 474, 486, 55 S. Ct. 269, 301, 79 L. Ed.2d 603

(1935).” The Virginia damage cap “infringes strongly

on the fact-finding function of the jury in assessing appro-

priate damages. Since the assessment of damages is a

fact issue committed to the jury for resolution, a limitation

on the performance of that function is a limitation on the

role of the jury. Since the right to a jury is guaranteed

under the seventh amendment, it therefore follows that

such a limitation is unconstitutional under the provisions

of that amendment.” The court further explained that

the statute “would require the court to ignore a verdict in

an amount above the cap which is supported by the evi-

dence and instead enter judgment for the cap amount.

This extraordinary requirement bears no relation to the

doctrines of remittitur, new trial, and judgment notwith-

standing the verdict, and it cannot be founded upon the

court's inherent power over verdicts and judgments.

Indeed, there exists no permissible basis for entering a

judgment predetermined by the legislature in place of a

judgment on a verdict properly reached by a jury.” The

court concluded: “The legislature may not mandate the

amount of judgment to be entered :n a trial.”

647 F. Supp. at 788-90.

In Smith vy. Dept of Insurance, 507 So.2d 1080 (Fla. 1987) the

Florida Supreme Court also found that a cap on noneconomic

damages violated the state guarantee of access to the courts.

“Nor, we add, because the jury verdict is being capped, is the

plaintiff receiving the constitutional benefit of a jury trial as we

have heretofore understood that right.” Slip op. at 12.

17

The Seventh Amendment right to a civ,! jury trial has not been

incorporated into ihe Fourteenth Amendment and so does not

govern this case. What amicus suggests, however, is that a cap

on damages which substitutes legislative standards for the find-

ings of a jury in a common law action is so clearly violative of the

right to a jury trial in the federal and state constitutions, along

with the state constitutional right of access to the courts, that

such a limitation cannot possibly be deemed essential to Anglo-

American scheme of justice.

D. Imposition of limits on the amount of punitive damage

awards would seriously undermine important state

interests.

1. Jury assessments of punitive damages serve important

social policies underlying tort law.

Tort law, generally speaking, is state law. Bankers Life mis-

takenly characterizes tort law as merely a system for compensat-

ing injured victims. The states bear the responsibility of

delineating the duties and standards of conduct that citizens may

reasonably expect to render and receive. An aggrieved plaintiff

must not only establish causation, but also a breach of duty. In

this manner, compensatory damages also serve to punish and

deter undesirable conduct. These duties do not remain static, but

evolve to reflect the social values, economic conditions, and tech-

nological advances of the time.

Compensatory damages alone are not always adequate to serve

these policies. Recent developments in the law of torts have

focused on protecting the rights of consumers against corporate

entities that enjoy vastly superior bargaining power in the mar-

ketplace. Products liability and insurance bad-faith actions are

primary examples of this evolution. Punitive damages play an

important role in securing the policies that led the states to adopt

these causes of action.

Products liability law, for example, is concerned not only with

compensating injured victims of defective products, but also with

keeping unreasonably dangerous products off the market in the

18

first place. Wade, On the Nature of Strict Tort Liability for

Products, 44 Miss. L.J. 825, 826 (1973). The problem is that

“the principles of strict liability are ill-equipped to deal with

problems at the other end of the culpability scale where an injury

results when a manufacturer markets its products in an inten-

tional or reckless disregard for consumer safety. Nor has the

criminal law filled this void. A legal tool is needed that will help

to expose this type of gross misconduct, punish those manufactur-

ers guilty of such flagrant misbehavior, and deter all manufactur-

ers from acting with similar disregard for the public welfare. The

punitive damages remedy is such a tool.” Owen, Punitive Dam-

ages in Products Liability Litigation, 74 Mich. L. Rev. 1258,

1259-60 (1976). An excellent example is provided by the Pinto

experience. Ford Motor Company had explicitly anticipated

that 180 people would die and 180 others would be seriously

burned each year due to the vulnerability of the Pinto’s fuel

system to rear-end impact. After estimating the amount of com-

pensatory damages Ford might be expected to pay, the company

found it was cheaper to pay the compensatory damages than to

invest about $11 per car to make the fuel system safer. See

Grimshaw v. Ford Motor Co., 119 Cal. App. 3d 757, 800, 174

Cal. Rptr. 348, 376 (1981). The predictability of compensatory

liability permits an unscrupulous manufacturer to simply inter-

nalize such awards as a cost of doing business. By deciding not to

invest in safety, such a manufacturer can achieve a price advan-

tage over more safety-conscious competitors. It is estimated, for

example, that Ford saved some $200 million by delaying fuel-

system safety and using its influence to postpone federal regula-

tions. Ford Motor Co. v. Durrill, 714 S.W.2d 329 (Tex. App.-

1986). A rule that makes punitive damages similarly predictable

would seriously undermine the social goals that led the courts to

adopt strict liability in the first place.

Similarly, the fairly recent adoption of the tort of bad-faith

denial of insurance claims recognizes that an unscrupulous

insurer whose liability is limited to compensatory damages has a

financial incentive to improperly deny claims with the expectation

19

that most insureds will not sue and that the profits will offset

compensatory liability. Indeed, the Mississippi Supreme Court

indicates that this is precisely the course that Bankers Life was

following in this instance. See Bankers Life & Cas. Co. v. Cren-

shaw, 483 So.2d 254, 271 (Miss. 1985) Punitive damages has

been shown to deter such outrageous misconduct toward the con-

sumer. See Levine, Demonstrating and Preserving the Deterrent

Effect of Punitive Damages in Insurance Bad Faith Actions, \3

U.S.F.L. Rev. 613 (1979). As the Mississippi court concluded in

this case, “Conduct of an insurance company not authorized by

law which carries with it a potentiality of great harm to the

insurance public is an outrage, and should be condemned. Puni-

tive damages in such a case is an appropriate, and perhaps the

only remedy. In this kind of case, it is the medicine most likely to

cure the malady.” Bankers Life & Cas. Co. v. Crenshaw, 483 So.

2d 254, 276 (Miss. 1985).

The fact that a wrongdoer cannot predict his potential exposure

to punitive damages before embarking on willful or reckless mis-

conduct is not a vice, but a virtue that serves the purposes of the

substantive law of torts. If such a remedy did not exist, tort law

would have to invent it. This Court should not undermine the

important objectives of tort law by neutralizing an important tool

available to the states.

2. Punitive damages further the state’s interest in enforc-

ing its criminal law.

The fact that punitive damages seek to punish and deter mis-

conduct does not set them in conflict with the criminal law. Puni-

tive damages offer an effective supplement to criminal law

enforcement. Mallor and Roberts, Punitive Damages. Toward a

Principled Approach, 3\ Hastings L.J. 639, 657-58 (1980).

Criminal sanctions are often too low to represent an adequate

deterrence to corporate wrongdoers. In Grimshaw, supra, the

California Court of Appeal rejected Ford’s complaint that the

20

punitive damage award was disproportionate to penalties for vio-

lation of the Vehicle Code. The court pointed out that the maxi-

mum penalties under the state code provisions were $50 and $100.

The court's answer is directly responsive to appellant's conten-

tions here:

It is precisely because monetary penalties under govern-

ment regulations prescribing business standards or the

criminal law are so inadequate and ineffective as deter-

rents against a manufacturer and distributor of defective

products that punitive damages must be of sufficient

amount to discourage such practices. Instead of showing

that the punitive damage award was excessive, the com-

parison between the award and the maximum penalties

under state and federal statutes and regulations governing

automotive safety demonstrates the propriety of the

amount of punitive damages awarded.

119 Cal. App.3d at 810, 174 Cal. Rptr. at 389.

Moreover. the likelihood of criminal punishment for many

types of corporate misconduct is slim indeed. The states do not

possess the resources for enforcing criminal sanctions against all

such misconduct. The Pinto experience again provides an excel-

lent object lesson. After three women died in a fiery crash, an

Indiana prosecutor brought homicide charges against the com-

pany. The maximum penalty faced by Ford was $10,000 for

each death. Ford spent an estimated $1 million to defend the

case: the prosecution spent $45,000, twice its entire annual

budget. Ford was acquitted. See “How Ford Won Pinto Trial,”

National Law Journal, Mar. 24, 1980, at 1. The states must be

able to rely on private tort actions to supplement its law enforce-

ment efforts. This Court similarly recognized that the treble

damage remedy for antitrust violations is a significant supple-

ment to the limited resources of the Justice Department. Reiter v.

Sonotone Corp., 442 U.S. 330 (1979).

Appellant's proposal to set a federal limitation on the amount

of punitive damages does not simply reduce a “windfali” to pri-

vate plaintiffs. It severely undermines the public policy objective

21

of the states. Principles of federalism should lead this Court to

reject such an intrusion on the interests of the states.

E. A federal constitutional limit on damages would impose a

severe burden on this Court.

Bankers Life presents its proposed rule in deceptively simple

terms: Merely look to the criminal fine for the same conduct and

strike the excess. In fact, there is no precise correlation between

torts and crimes. Some tortious misconduct may not be criminal

at all; other wrongs may fit within a variety of criminal offenses.

Bankers Life itself suggests some difficulty in determining the

proper criminal provision applicable to its conduct in this case.

App. Brief at 35 n.18. Should a drunk driver who kills a pedes-

trian be subject to punitive damages up to the maximum fine for

driving while intoxicated, or that for negligent homicide? By

asking this Court to impose a federal constitutional standard that

is utterly lacking in precedent, appellant presumes that this Court

is willing and able to undertake the burden of creating and con-

struing an entirely new federal law of punitive damages. Further,

as this Court recognized in Solem v. Helm, 463 U.S. 277, 290

n.17 (1983), the proportionality analysis is inherently fact-

bound. Appellant proposes that this Court entertain federal

question appeals on a continuing basis from punitive damage

verdicts around the country.

Amicus suggests that the interest of Bankers Life in placing a

federal limit on the amount of punitive damages it may be

required to pay for its misconduct does not justify the substantial

increase in this Court’s workload.

THE EXCESSIVE FINES CLAUSE DOES NOT APPLY TO

PUNITIVE DAMAGE AWARDS IN CIVIL CASES

If this Court determines that the Excessive Fines Clause

applies to the states, the Court faces the issue that was assumed in

Part I: Does the Excessive Fines Clause apply to punitive damage

22

awards? Amicus submits that the Eighth Amendment’s protec-

tion against excessive fines is a limit on the power of the govern-

ment to punish crimes. It extends only to the punishment

imposed on one convicted of a crime by a court exercising its

criminal jurisdictional power. It does not apply to damage

awards of any kind in private civil suits.

A. The Eighth Amendment does not apply to civil damages.

The Eighth Amendment provides: “Excessive bail shall not be

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

ishments inflicted.” U.S. Const., amend. VIII. An early decision

by this Court held that the Excessive Fines clause is addressed to

federal courts in the exercise of their criminal jurisdiction. Ex

Parte Watkins, 32 U.S. 568 (1833).

In Ingraham v. Wright, 430 U.S. 651 (1977), where this Court

declined to extend the guarantee against cruel and unusual pun-

ishment to corporal punishment in the schools, the Court clearly

defined the boundaries of the Eighth Amendment.

Bail, fines, and punishment traditionally have been associ-

ated with the criminal process, and by subjecting the three

to parallel limitations, the text of the Amendment suggests

an intention to limit the power of those entrusted with the

criminal-law function of government. An examination of

the history of the Amendment and the decisions of this

Court construing the proscription against cruel and unu-

sual punishment confirms that it was designed to protect

those convicted of crimes.

430 U.S. at 664. This Court reaffirmed its view that the plain

meaning of the text of the Eight Amendment imposed parallel

limitations on criminal punishments in Solem v. Helm, 463 U.S.

277, 289 (1983).

Appellant places a great deal of emphasis on dicta in Jngraham

that some punishments not labelled criminal by the state may be

sufficiently analogous to justify application of the Eighth Amend-

ment. 430 U.S. at 669 n.37. The Court referred to actions for

involuntary commitment in mental or juvenile institutions.

23

These are governmental deprivations of personal liberty autho-

rized by statute. Nothing in the Court’s footnote provides any

support for the notion that an element of damages in a lawsuit

based on a common-law cause of action could ever be subject to

the Eighth Amendment.

Bankers Life also relies on the absence of any express language

limiting the Eighth Amendment to criminal cases. App. Brief at

18. Appellant acknowledges that the English Bill of Rights of

1689 is an important source in determining the meaning of the

Eight Amendment. App. Brief at 20-21. Bankers Life ignores

this Court’s explanation that although original draft of the

English Bill of Rights expressly limited to criminal cases, and

reference to “criminal cases” was eliminated from the final draft,

“the preservation of a similar reference in the preamble indicates

that the deletion was without substantive significance.” /ngra-

ham v. Wright, 430 U.S. at 66S.

B. The Framers of the Constitution did not intend the Exces-

sive Fines Clause as a limitation on civil damage awards.

Despite this Court’s clear ruling that the Eighth Amendment

extends only to criminal cases, Bankers Life argues that the

Framers intended the Excessive Fines Clause to limit any mone-

tary penalty, civil or criminal, imposed for the purpose of punish-

ment and deterrence. Bankers Life acknowledges that the

evidence of the intent of the Framers is “scant.” Appellant there-

fore harkens back to the mists of Runnymede and Chapter 20 of

the Magna Carta. That chapter reads:

A freemar shall not be amerced for a small offence, except

in accorda..ce with the degree of the offence; and for grave

offence he shall be amerced in accordance with the gravity

of his offence ...

Appellant argues that “modern-day punitive damage awards

are virtually indistinguishable from amercements in theory and in

practice and therefore would have been regarded by the Framers

and the colonists as being controlled in their size by the Excessive

24

Fines Clause.” App. Brief at 24. This statement reveals an

ignorance of history of considerable depth. Appellant ignores

this Court’s gently understated reminder that the distinction

between civil and criminal “is of some constitutional import.”

United States v. Ward, 448 U.S. 242, 249 (1980). The distinc-

tion is fundamental. Civil lawsuits are essentially disputes

between private parties for which the state provides an arena but

which do not implicate the power of the state. Criminal prosecu-

tions represent the ultimate exercise of the sovereign’s power over

the individual. The barons who confronted King John in 1215

were not a committee seeking tort reform; They sought to confine

the sovereign power of the king.

Amercements were, essentially, criminal fines. They were “a

pecuniary mulct laid upon an individual who had offended the

king.” T. Taswell-Langmead, English Constitutional History 92

(1905). The distinction between grave offenses and small

offenses reflected the distinction between felonies and misde-

meanor crimes. 2 J. Stephen, History of the Crimina! Law of

England 198 (1883). These misdemeanors included misconduct

by parties in connection with judicial actions, such as false swear-

ing and failure to prosecute a claim. Jd. The amounts were

payable to the king.

As this Court explained in Solem v. Helm, 463 U.S. 277

(1983) “An amercement was similar to the modern day fine. It

was the most common criminal sanction in 13th-Century

England. See 2 F. Pollock and F. Maitland, The History of

English Law 513-515 (2d ed. 1909).” 463 US. at 284 n.8. The

amercements chapters of the Magna Carta were limitations

solely on the criminal power of the king.

Appellant's assertion that the amercements chapters were

applied to civil as well as criminal penalties is plainiy wrong.

Appellant's sole support for that assertion Is a misquoted sentence

from Blackstone:

The reasonableness of fines in criminal cases has also been

usually regulated by the determination of Magna Carta,

concerning amercements for misbehavior of the suitors

in matters of civil right. (Emphasis added)

25

4 W. Blackstone, Commentaries on the Laws of England *379

(miscited as *372 at App. Brief 27). In quoting this sentence at

page 27 of its brief, Bankers Life omitted the words “of the

suitors,” a crucial phrase which reveals that Blackstone was refer-

ring to those misdemeanors such as false swearing or failure to

prosecute, not to torts against the opposing party. The examples

cited from Blackstone in which private litigants would have been

required to pay a fine to the king as well as compensation to the

plaintiff, App. Brief at 27, merely reflect the fact that until 1694,

the criminal and civil jurisdictions were not separated. W. Pros-

ser, Torts 8 (4th ed. 1971). This Court has had occasion to

interpret the same passage and came to opposite conclusion from

appellant’s. “Thus, Blackstone treated each of the provision’s

three prohibitions as bearing only on criminal proceedings and

judgments. 4 Blackstone's Commentaries *297 (bail) *379 (fines

and other punishments).” /ngraham v. Wright, 430 U.S. 651,

665 (1977).

It is clear that the Framers of the Excessive Fines Clause would

have viewed the Magna Carta’s provisions relating to amerce-

ments as applicable only to fines imposed by the state upon an

individual convicted of a crime.

To the extent that the Framers gave any thought to punitive

damage awards in tort actions, it is likely that they would have

viewed such awards as essentially compensatory. As Bankers

Life recognizes {[ App. Brief at 29], the English decisions that first

set forth the notion of punitive damages rationalized them as

compensatory. See also K. Redden, Punitive Damages § 2.2

(1980). As appellant admits, the notions of punishment and

deterrence did not become the dominant justification for punitive

damages until well into the 19th Century. App. Brief at 30.

There is no basis for appellant's assumption that the drafters

implicitly included punitive damage awards in their use of the

word “fine.”

26

C. Punitive Damages are not constitutionally equivalent to

criminal fines.

Bankers Life and amicus Alliance of American Insurers, argue

that since punitive damages serve the same function as criminal

fines, they should be subject to the same safeguards. From the

point of view of the corporate defendant and the impact of the

penalty on corporate conduct, this may be true. It is a policy

consideration that may be considered by a legislature in modify-

‘ng common law remedies. The issue before this Court, however,

eoncerns the constitutional boundaries of the power of the courts.

In that analysis, the distinction between civil and criminal penal-

ties is fundamental.

The reliance by amici on Kennedy v. Mendoza-Martinez, 372

U.S. 144 (1963) is clearly misplaced. The Court set out a test for

making the sometimes elusive determination of whether a statu-

tory action brought by the government seeks a criminal or civil,

i.e. regulatory, penalty. A perceptive rebuttal to this argument is

made in Note, /n Defense of Punitive Damages, 55 N.Y.U.L.

Rev. 303. 331-37 (1980). Kennedy is not concerned with the

elements of damages in common-law actions. In the rare

instance in which this Court found it necessary to make such a

distinction, the Court has squarely held that punitive damages are

civil. Huntington v. Atrill, 146 U.S. 657 ( 1892) (holding that, for

purposes of the rule that a state will not enforce foreign criminal

judgments, punitive damage judgments are civil) See Holbein v.

Rigot, 245 So.2d 57 (Fla. 1971).

A court may impose a criminal penalty only in a proceeding

brought by the state properly invoking the criminal jurisdiction of

the court. A claim for punitive damages is not a separate Cause of

action. It is merely an element of damages that a plaintiff can

recover after establishing defendant's liability for a recognized

tort. A court simply has n@ power to impose a criminal penalty in

a civil action. Palmer v. A.H. Robins Co., 684 P.2d 187, 214

(Colo. 1984).

eS

27

Moreover, the interests at stake in a criminal action are funda-

mentally different. The criminal defendant faces the investiga-

tory and prosecutorial resources of the state. He is often indigent

and represented by appointed counsel. The parties ina civil suit

may be deemed to be on equal footing. Often, as in this case, the

defendant is possessed of considerable financial and legal

resources. There is no basis for requiring the injured plaintiff to

meet the constitutional standards imposed on the prosecution in

criminal cases.

CONCLUSION

To avoid paying the judgment rendered ageimst it by the

Mississippi court, Bankers Life is willing to unravel a great deal

of constitutional law. Appellant's novel proposal violates notions

of federalism and blurs the constitutional distinction between

civil and criminal law. It has no support in history, precedent, or

policy. Amicus submits that this Court should dismiss this appeal

or affirm the judgment of the Mississippi Supreme Court.

Respectfully submitted,

JEFFREY ROBERT WHITE

Counsel of Record

1050 31st St., N.W.

Washington, D.C. 20007

(202) 965-3500

Attorney for Amicus Curiae

July 13, 1987