Amicus Curiae Brief — Pacific Mutual Life Insurance v. Haslip

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Supreme Court, U.S,

is FINED

No. 89-1279 |

IN THE MAY 2) me

SUPREME COURT OF THE UNITED $TAZES ¢. sean

OCTOBER TERM, 1990 clerk

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PACIFIC MUTUAL LIFE INSURANCE

COMPANY,

Petitioner,

-against-

CLEOPATRA HASLIP, CYNTHIA CRAIG,

ALMA M. CALHOUN, and EDDIE HARGROVE,

Respondents.

ON WRIT OF CERTIORARI TO THE

SUPREME COURT OF ALABAMA

BRIEF FOR AMICUS CURIAE,

THE CITY OF NEW YORK

VICTOR A. KOVNER,

Corporation Counsel,

Attorney for Amicus Curiae,

The City of New York,

100 Church Street,

New York, New York 10007.

(212) 566-4699 and 566-8306

LEONARD J. KOERNER,*

PAMELA SEIDER DOLGOW,

JOHN HOGROGIAN,

of Counsel.

*Counsel of Record.

June 1, 1990

TABLE OF CONTENTS

TABLE OF AUTHORITIES .......

INTEREST OF AMICUS CURIAE....

SUMMARY OF ARGUMENT .......

ARGUMENT

THE DUE PROCESS CLAUSE

OF THE FOURTEENTH

AMENDMENT REQUIRES THAT

JURIES BE GIVEN WORKABLE

STANDARDS TO GUIDE

THEIR DISCRETION IN

AWARDING PUNITIVE

DAMAGES IN CIVIL CASES.

DUE PROCESS FURTHER

REQUIRES THAT SUCH

AWARDS BE PROPORTIONATE

TO THE CONDUCT BEING

PUNISHED.

CONCLUSION es. dn sacceveeee

Page

17

TABLE OF AUTHORITIES

Page

Cases:

Aetna Life Insurance Co.

v. Lavoie, 475 U.S. 813

ES ed cece encce es 2-3

Bankers Life and Casualty

Co. v. Crenshaw, 486 U.S.

71 (1988) been 3, 10

Browning-Ferris Industries

of Vermont v. Kelco Disposal,

a . me oe. Cet.

DTT, cecusececcesecces 3, 10-11

City of Newport v. Fact

Concerns, 453 U.S. 247

PO cecccecses ver 4

Gertz v, Robert Welch,

Inc., 418 U.S. 323 (1974) eae 15

Ismail vy. Cohen, 899 F.2d

ee 7

Lassiter v. Department

of Social Services,

|) ee 12

Lugar v. Edmondson Oil

Co., 457 U.S. 922 (1982) ae 11

Nardelli v. Stamberg,

44 N.Y.2d 500, 406 N.Y.S.

PT wee c cece. 15-16

North Georgia Finishing

v. Di-Chem, Inc., 419

oS 0). | ee 11

ii

Co. v. Haslip, 553 So.2d 537

(Ala. 1989), cert. granted,

U.S. __, 110 S. Ct. 1780

Se pea

Papa v. City of New York,

Index No. 15695-86 (N.Y. Supreme

Court, Kings Co., 1990)

Sharapata v. Town of Islip,

56 N.Y.2d 332, 452 N.Y.S.2d

a re

Sniadach v. Family

Finance Corp., 395 U.S.

ser ers

Solem v. Helm, 463 U.S.

0 re

Southwestern Telegraph

& Telephone Co. v. Danaher,

238 U.S. 482 (1915)

Tulsa Professional Collection

Services v. Pope, 485 U.S.

Gye (igees0”—0— tw wh ev ws

Other Authorities:

New York Court of Claims

eee i neeeenues

New York General Municipal

Law §50-k — — ——— .....

New York Pattern Jury

Instruction 3:50 —......

U.S. Const. Amend. VIII

iii

7-8

13-14

16

11

3-4

5-6

14-15

13

U.S. Const. Amend. XIV

iv

No. 89-1279

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1990

PACIFIC MUTUAL LIFE INSURANCE

COMPANY,

Petitioner,

-against-

CLEOPATRA HASLIP, CYNTHIA CRAIG,

ALMA M. CALHOUN, and EDDIE HARGROVE,

Respondents.

ON WRIT OF CERTIORARI TO THE

SUPREME COURT OF ALABAMA

BRIEF FOR AMICUS CURIAE,

THE CITY OF NEW YORK

INTEREST OF AMICUS CURIAE

The City of New York submits this

brief in support of reversal of the order of

the Supreme Court of Alabama, dated

September 15, 1989. In that order, the

Supreme Court affirmed judgments, upon

jury verdict, of the Alabama Circuit Court,

a= ~

Jefferson County, which awarded $1,040,000

to plaintiff Cleopatra Haslip, $12,400 to

plaintiff Cynthia Craig, $15,290 to ple‘ntiff

Alma Calhoun, and $10,288 to plaintiff Eddie

Hargrove. Of the award to Ms. Haslip,

punitive damages apparently account for an

amount in excess of $800,000. The Supreme

Court of Alabama rejected a challenge to the

award of punitive damages based upon the

Due Process Clause of the Fourteenth

Amendment of the United States Constitution.

Pacific Mutual Life Insurance Co. v. Haslip,

553 So.2d 537 (Ala. 1989), cert. granted,

a Ueee 110 S. Ct. 1780 (1990).

This is the fourth case in recent years

to bring before this Court the issue of

whether the standardless discretion given to

juries to fix the amount of an award of

punitive damages violates the Due Process

Clause of the Fourteenth Amendment. In

Aetna Life Insurance Co. vy. Lavoie, 475

U.S. 813 (1986), Bankers Life and Casualty

Co. v. Crenshaw, 486 U.S. 71 (1988), and

browning-Ferris Industries of Vermont v.

Kelco Disposal, U.S. __, 109 S. Ct.

2909 (1989), this Court resolved the case

without having to address this recurring

constitutional issue. In those cases, various

amici curiae informed the Court about the

growth in recent years of the frejuency and

size of awards of punitive damages. Those

amici were almost exclusively insurance

companies and business concerns in the

private sector.

The City of New York has felt the

effects of increased punitive damage awards

and of a growing burden of tort liability in

general in recent years. In 1929, the New

York State Legislature waived sovereign

immunity for torts by the State and its

political subdivisions. That waiver is now

codified in section eight of the New York

Court of Claims Act. The City is not

insured for torts and pays judgments from a

budget allocation for that purpose. In fiscal

1988-89, the City paid approximately $150

million in tort judgments. In fiscal 1989-90,

the City will most likely pay in excess of

$170 million in tort judgments. Such

payments strain the City's budget in a time

of financial stringency.

Some of these payments from the City

treasury are for punitive damages. The

City suffers from such awards despite being

immune from the direct assessment of

punitive damages under both New York law

and the federal civil rights’ statutes.

Sharapata v. Town of Jslip, 56 N.Y.2d 332,

452 N.Y.S.2d 347 (1982); City of Newport v.

Fact Concerns, 453 U.S. 247 (1981).

This immunity does not shield the City

from the weight of punitive damages. The

City has frequently indemnified City

employees who have been assessed punitive

damages in civil cases. This indemnification

arises from section 50-k of the New York

General Municipal Law. General Municipal

Law §50-k(2) requires the Corporation

Counsel, upon the commencement of an action

against a City employee, to make an initial

determination whether the act or omission at

issue “occurred while the employee was

acting within the scope of his public

employment and in the discharge of his

duties and was not in violation of any rule

or regulation of his agency at the time the

alleged act or omission occurred." Once the,

Corporation Counsel makes that determination

in the employee's favor, the City provides

for the defense of the employee in that civil

action.

General Municipal Law §50-k(3) provides

that the City indemnify its employees for =

judgment arising from an action or omission

which "occurred while the employee was

acting within the scope of his _ public

employment and in the discharge of his

duties and was not in violation of any rule

or regulation of his agency at the time the

alleged damages were sustained." The

statute further provides that the duty to

indemnify does not arise "where the injury

or damage resulted from intentional

wrongdoing or recklessness on the part of

the employee."

The City has paid awards of punitive

damages in cases where the Corporation

Counsel believes that the employee acted

properly within the scope of his or her

employment. Once that determination is

made, the City does not abandon the

employee because the jury reaches a

contrary conclusion, perhaps influenced by

the vision of a deep pocket. The City

indemnifies its well-intentioned employees

LY ck I

regardless of the jury verdict. Thus does

the City feel the sting of escalating punitive

damages.

This sting is not merely theoretical. In

Ismail _v. Cohen, 899 F.2d 183 (2d Cir.

1990), the Court of Appeals reinstated a

jury verdict of $800,000, including $150,000

in punitive damages, against a police officer

who the Corporation Counsel determined had

acted within the scope of his duties. In

Papa _v. City of New York, Index No.

15695-86 (N.Y. Supreme Court, Kings Co.,

1990) a jury returned a verdict against the

City and five police officers in favor of two

plaintiffs in a police brutality case for

$76,115,000, including $46 , 000, 000 in

punitive damages against police officers who

the Corporation Counsel determined had

acted within the scope of their duties. The

nisi prius court subsequently reduced the

awards and entered judgment for $6,005,000,

including $2,500,000 in punitive damages.

Even apart from indemnification, the

specter of punitive damages affects the City

by affecting the attitude of its employees.

The high profile of the City's perceived deep

pocket may encourage punitive awards where

not even compensatory damages are

appropriate. The best judgment of

conscientious City employees may

understandably be chilled by the prospect of

punitive damages. The skyrocketing levels

of these awards make this delicate situation

that much more chilling.

SUMMARY OF ARGUMENT

The Due Process Clause of _ the

Fourteenth Amendment imposes _ procedural

norms with which each state must comply in

framing its system for punitive damages in

civil cases. One such norm is that a jury

must be given workable standards to guide

its discretion in determining the amount of

an award of punitive damages. Due process

requires that the amount of punitive damages

be proportionate to the conduct being

punished.

ARGUMENT

THE DUE PROCESS CLAUSE OF

REQUIRES THAT JURIES BE

GIVEN WORKABLE STANDARDS TO

GUIDE THEIR DISCRETION IN

AWARDING PUNITIVE DAMAGES IN

CIVIL CASES. DUE PROCESS

FURTHER REQUIRES THAT SUCH

AWARDS BE PROPORTIONATE TO

THE CONDUCT BEING PUNISHED.

The City will not make a full argument

in this brief about the requirements of due

process upon State laws regarding punitive

damages. A complete exposition of the

argument must be left to the briefs of the

parties to this appeal. This brief presents

only the broad contours of one aspect of

that argument.

Several recent opinions of individual

Justices have noted the apparent merit of

the argument that due process requires some

principled limits on a jury's discretion as to

the awarding of punitive damages. In

Bankers Life and Casualty Co. v. Crenshaw,

supra, 486 U.S. at 86-89, Justice O'Connor

addressed the due process argument which

the Court did not reach. Noting that juries

in Mississippi had untrammeled discretion in

setting the amount of punitive damages,

Justice O'Connor stated that "[t]his grant of

wholly standardless discretion to determine

the severity of punishment appears

inconsistent with due process." Id. at 1656.

In Browning-Ferris Industries __ of

Vermont _v. Kelco Disposal, supra, 109 S.

Ct. at 2923-2924, Justice Brennan wrote a

short concurrence in which he stated that "I

join the Court's opinion on the

understanding that it leaves the door open

for a holding that the Due Process Clause

constrains the imposition of punitive damages

a

10

in civil cases brought by private parties."

Justice Brennan brought attention to "a

deeper flaw: the fact that punitive damages

are imposed by juries guided by little more

than an admonition to do what they think is

best." Id. at 2923. The issue of standards

for juries as to punitive damages is now

before this Court for resolution.

State procedures which authorize juries

to award punitive damages are state action

for purposes of the Due Process Clause of

the Fourteenth Amendment. This Court has

applied the requirements of due process to

state statutes which govern litigation and

property executions between private parties.

See, e.g., Tulsa_ Professional Collection

Services v. Pope, 485 U.S. 478 (1988);

Lugar v. Edmondson Oil Co., 457 U.S. 922

(1982); North Georgia Finishing v. Di-Chem,

Inc., 419 U.S. 601 (1975); Sniadach_ Vv.

Family Finance Corp., 395 U.S. 337 (1969).

11

In awarding punitive damages, a jury serves

the purposes of punishment and deterrence,

classic functions of criminal law. Those

functions are served only under the aegis of

the state. In empowering a jury to punish

civil litigants with punitive damages, a state

engages in state action which must comply

with the requirements of due process.

The essence of due process in civil

litigation is fundamental fairness. Lassiter

v. Department of Social Services, 452 U.S.

18, 24-25 (1981). That concern is

heightened when juries engage in the classic

criminal function of punishment without the

safeguards mandated in _ criminal cases.

Fundamental fairness is lacking when juries

are told that they may award punitive

damages in an amount that they see fit for

purposes of punishment and deterrence.

Without workable standards and limits, juries

are free to assess huge awards of punitive

12

damages against litigants viewed as deep

pockets. Fundamental fairness should forbid

singling out unpopular or prosperous

defendants as especial targets.

Due process requires that juries be

given standards to guide their discretion. A

maximum ratio of punitive damages to

compensatory damages is an indispensable

standard. Such a ratio is common in areas

such as anti-trust law. Without such a

standard, jury awards of punitive damages

are almost inevitably arbitrary. Indeed,

juries typically lack workable standards for

deciding whether punitive damages should be

assessed at all.

More generally, due process forbids

punitive awards which are disproportionate

to the conduct being punished. The concept

of proportionality is inherent in the Eighth

Amendment prohibition against excessive

fines. See Solem v. Helm, 463 U.S. 277

13

(1983). The same requirement of

proportionality should apply as a matter of

due process to civil punishment administered

by juries in the form of punitive damages.

A maximum ratio of punitive damages to

compenatory damages is the most logical

measure of proportionality.

Jury instructions typically do not

communicate any requirement of

proportionality. New York Pattern Jury

Instruction 3:50, concerning the _ tort of

malicious prosecution, is representative of

the guidance given to juries in cases

involving a wide spectrum of torts. As to

punitive damages, that instruction states:

There is no exact rule by which to

determine the amount of punitive

damages. The amount you fix as

punitive damages need bear no

particular ratio or relationship to

the amount you award as

compensatory damages. You may

fix such amount as you find, in

your sound judgment and

discretion, based on all of the

facts before you, will serve to

punish the defendant and deter

14

others from the commission of like

offense.

Such an instruction licenses juries to award

huge sums of money in punitive damages

when a defendant appears to be a aeep

pocket. Fundamental fairness requires a

principled limit to jury discretion.

Most current judicial review of punitive

damage awards is toothless. In Gertz v.

Robert Welch, Inc., 418 U.S. 323, 350

(1974), this Court remarked that "[i]n most

jurisdictions jury discretion over the amounts

awarded is limited only by the gentle rule

that they not be excessive.” This Court

relied in part on the gentleness of such

review to ban, under the First Amendment,

punitive damages in defamation actions

against publishers and broadcasters. Id.

The New York Court of Appeals has stated

that "the amount of exemplary damages

awarded by a jury should not be reduced by

a court unless it is so grossly excessive ‘as

15

to show by its very exorbitancy that it was

actuated by passion’ [cites omitted] ."

Nardelli v. Stamberg, 44 N.Y.2d 500, 504,

406 N.Y.S. 2d 443, 445 (1978). Due process

requires that standards be available to

structure a jury verdict from its inception,

not that litigants rely on weak court review

of an arbitrary verdict.

This Court has overturned a_ civil

penalty which it found to be "so plainly

arbitrary and oppressive as to be nothing

short of a taking of its property without due

process of law." Southwestern Telegraph &

Telephone Co. V. Danaher, 238 U.S. 482

(1915). That phrase describes the present

system for awarding punitive damages in this

country. Due process requires standards

and proportionality as indispensible elements

of fundamental fairness in this realm.

16

CONCLUSION

THE DUE PROCESS CLAU SE OF

THE FOURTEENTH AMENDMENT

REQUIRES THAT JURIES’ BE

CASES. DUE PROCESS FURTHER

REQUIRES THAT SUCH AWARDS

BE PROPORTIONATE TO THE

CONDUCT BEING PUNISHED. THE

ORDER OF THE SUPREME COURT

OF ALABAMA SHOULD BE

REVERSED.

Respectfully submitted,

VICTOR A. KOVNER,

Corporation Counsel,

Attorney for Amicus Curiae,

the City of New York.

LEONARD J. KOERNER, *

PAMELA SEIDER DOLGOW,

JOHN HOGROGIAN,

of Counsel.

*Counsel of Record

17