Amicus Curiae Brief — Pacific Mutual Life Insurance v. Haslip

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No. 89-1279 ate

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—

IN THE —

Supreme Court of the United States

OCTOBER TERM, 1989

PACIFIC MUTUAL LIFE INSURANCE COMPANY,

. Petitioner,

CLEOPATRA HASLIP, CYNTHIA CRAIG, ALMA M. CALHOUN

and EDDIE HARGROVE,

Respondents.

On Writ of Certiorari to the Supreme Court of Alabama

BRIEF OF THE NATIONAL ASSOCIATION OF

WHOLESALER-DISTRIBUTORS,

NMTBA-THE ASSOCIATION FOR

MANUFACTURING TECHNGLOGY,

THE RISK AND INSURANCE MANAGEMENT SOCIETY,

AND THE PRODUCT LIABILITY ALLIANCE

AS AMICI CURIAE IN SUPPORT OF PETITIONER

Of Counsel: VICTOR E. SCHWARTZ

HOWARD W. GREENE CLIFTON S. ELGARTEN *

Counsel LIBERTY MAGARIAN

JAMES T. MCINTYRE Scott L. WINKELMAN

Of Counsel CROWELL & MORING

THE RISK AND INSURANCE 1001 Pennsylvania Ave., N.W.

MANAGEMENT SOCIETY Washington, D.C. 20004-2505

205 E. 42nd Street (202) 624-2528

New York, New York 10017 * Cownsel of Record for

(212) 286-9292 Amici Curiae

June 1, 1990

Re Nn me

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

od ) 7 3

QUESTIONS PRESENTED

1. Whether post-trial judicial review available in con-

nection with punitive damages awards overcomes the

fundamental inadequacies in the standards and proce-

dures for imposing punitive damages in the first instance.

2. Whether due process requires that punitive dam-

ages awards rest, at least, upon clear and convincing

evidence.

(i)

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED .......22.........2.--.2.ec.-cesceeeeeee i

sy iv

INTEREST OF THE AMICI CURIAE .......................... 1

Neen ai ccicccceneensunsscsscsncscsstessesccseecess 3

SUMMARY OF ARGUMENT. QW... eeeeeeeeeee eee 6

ES SL 7

I, THE CONSTITUTIONAL INADEQUACIES IN

EXISTING PUNITIVE DAMAGES SCHEMES

ARE NOT SAVED BY POST-TRIAL REVIEW

SE EESINED scrccorsccmnsescsssensesennsssosneserseeeee 7

II. DUE PROCESS REQUIRES THAT PUNI-

TIVE DAMAGES AWARDS BE SUPPORTED,

AT A MINIMUM, BY CLEAR AND CONVINC-

SL a 14

alae asciisincencanesisscssinnenconassenseevesceses 25

a saiiednbdndsianetiwencionsediin la

(iii)

iv

TABLE OF AUTHORITIES

CASES Page

Abel v. Conover, 104 N.W.2d 684 (Neb. 1960)... 19

Ace Truck & Equip. Rentals, Inc. v. Kahn, 746

ae Te Ch ee ccactdansteeanininbpaiatiiabiaidaias atti 11

Addington v. Texas, 441 U.S. 418 (1979) ~..220000000.... passim

Browning-Ferris Indus. of Vermont v. Kelco Dis-

posal, Inc., 109 S. Ct. 2909 (1989) ......................... 17, 18

City of Luwell v. Massachusetts Bonding & Ins.

Co., 313 Mass. 257, 47 N.E.2d 265 (1943) -........... 19

Cross v. Ledford, 161 Ohio St. 469, 120 N.E.2d

0 ee iiaainelihbiasiialebeameiianneians 21

Cuellar v. Texas Empl. Comm’n, 825 F.2d 930

SN TI, TIINTD cicccisctchoncitetsindechinchstctuasgdabidesiembeneaineltbs 8

Daniels v. Williams, 474 U.S. 327 (1986) .............. 8

Day v. Woodworth, 54 U.S. (18 ‘Iow.) 363

Pair. TUE acsssensseusissbuimatenectamsieasnnineniniaiieadamamdmibaasiin 17

Eichenseer v. Reserve Life Ins. Co., 894 F.2d 1414

GD TR CIID cicicteninsicennicichiniddetiiepaieetainci haiti das 18

Gazette, Inc. v. Harris, 229 Va. 1, 325 S.E.2d 713,

cert. denied, 472 U.S. 1082 (1985) ....................... 11

George v. International Society for Krishna Con-

sciousness of California, 262 Cal. Rptr. 215 (Cal.

BR, TE aiacanecsinnitaeasiniinsnilatbiiaiitecedalia ia hinticasailaahialiitiatuiae 13

Gertz v. Welch, Inc., 418 U.S. 323 (1974) -........... 17, 20, 22

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

sk: SF § Fj eee 11

Hammond v. City of Gadsden, 493 So. 2d 1374

i TH sissrcutursceceonidiniceniabsinaisapeambieian elec 10

Hanch v. K.F.C. Nat’l Mgmt. Corp., 615 S.W.2d 28

ic Tenney Gk a a eeasaangeiaciianee 11

Hobson v. Eaton, 399 F.2d 781 (6th Cir. 1968) .... 21

International Bhd. of Electrical Workers v. Foust,

BS ee 18, 22, 23

Kammerer v. Western Gear Corp., 618 P.2d 1330

PUI, TUITE ‘yclinsisdsianicleininicdbicheitiencatiaiinaaeaanmmans 20

Ex parte Lange, 85 U.S. (18 Wall.) 163 (1873) .... 5

Leimgruber v. Claridge Assocs., Ltd., 73 N.J.

7 Ft FF , ; Pema en mn 10

Linthicum v. Nationwide Life Ins. Co., 150 Ariz.

326, 723 P.2d 675 (1986) (en banc) ............... 15

Vv

TABLE OF AUTHORITIES—Continued

Page

Logan v. Zimmerman Brush Co., 455 U.S. 422

CD -cccnnctiinistssnrtesitssansiatiimnainsidecinctansiaiitasnicasapeiadininnine 8,14

Mathews v. Eldridge, 424 U.S. 319 (1976) .......... 16, 19

Memphis Light, Gas & Water Div. v. Craft, 436

ears I © hain escennnscilnncleccepitintaeniencaitiieniaaaooaattibe 8

O’Neal Ford, Inc. v. Davie, 299 Ark. 45, 770

i i Oe I sii ssc ncd case cseeinatennnntamaneninee 10

Parratt v. Taylor, 451 U.S. 527 (1981), overruled,

Daniels v. Williams, 474 U.S. 327 (1986) ............ 8

Ricard v. State, 390 So. 2d 882 (La. 1980) ............ 19

Rivera v. Minnich, 483 U.S. 574 (1987) ............... 16, 22

Robinson v. Mack Trucks, Inc., 426 N.W.2d 220

Cs Ge, I diieicacinaiinnescvetbninnninbiicavenns 10

Roginsky v. Richardson-Merrell, Inc., 378 F.2d

see rer en eae ee 18

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

Simpson v. Pittsburgh Corning Corp., No. 89-

ol 8) Ge 3) 6 SS eae 23

Stambaugh v. International Harvester Co., 106

Ill. App. 3d 1, 435 N.E.2d 729 (1982), rev’d on

other grounds, 102 Ill.2d 250, 464 N.E.2d 1011

CD accscacassiinincensinepsimniocminennmemnaichanninitinnnsmsiamieiitis 11

Texaco, Inc. v. Pennzoil Co., 626 F. Supp. 250

(S.D.N.Y.), aff'd in part and rev'd in part,

784 F.2d 1133 (2d Cir. 1986), rev’d, 481 U.S.

IIIT ccictensceessaudiccsdeeicnateceessatavniansatennsccananeninaniaiete 13

Texaco, Inc. v. Pennzoil Co., 729 S.W.2d 768

ee a ee 13

Tumey v. Ohio, 273 U.S. 510 (1927) ..................... 5

Tuttle v. Raymond, 494 A.2d 1353 (Me. 1985) ...... 15

United States v. Choteau, 102 U.S. 603 (1881)...... 17

United States v. Fatico, 458 F. Supp. 388

(E.D.N.Y. 1978), aff'd, 603 F.2d 1053 (2d Cir.

1979), cert. denied, 444 U.S. 1073 (1980) WW... 23

United States v. Halper, 109 S. Ct. 1892 (1989) ...... 5, 17

Villella v. Waikem Motors, Inc., 45 Ohio St. 3d 36,

Re Se Ge © ID ccitrcnesstnnennieniememntmeeseivits 9

Vitek v. Jones, 445 U.S. 480 (1980) _.000 2... 24

vi

TABLE OF AUTHORITIES—Continued

Page

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

en re OE I ce 15

In re Winship, 397 U.S. 358 (1970) ............. passim

Wisconsin v. Constantineau, 400 U.S. 433 (1971)... 19

W. M. Bashlin Co. v. Smith, 277 Ark. 406, 643

TE Se ND ih el 10

Woodby v. INS, 385 U.S. 276 (1966)... 16

Zarrella v. Robinson, 460 A.2d 415 (RI. 1983) .... 10

STATUTES

Ala. Code § 6-11-20(a) (Supp. 1989) 00 15

Alaska Stat. § 09.17.020 (Supp. 1988) .... 15

Cal. Civ. Code § 3294(a) (West Supp. 1990)... 15

Colo. Rev. Stat. § 13-25-127 (2) (Supp. 1979) _........ 15, 24

Fla. Stat. Ann. § 768.73(1) (b) (West Supp.

na, Ne ae NEAL IST, 15

Ga. Code Ann. § 51-12.51(b) (Supp. 1989) —............. 15

Ind. Code Ann. § 34-4-34-2 (Burns ee 15

Iowa Code Ann. § 668A.1(1) (a) (West Supp.

PUNT cibicitialdiiblatieltninia thie a a 15

Kan. Civ. Proc. Code Ann. § 60-3701(c) (Vernon

dee a ccc: A ee ee ea 15

Ky. Rev. Stat. Ann. § 411.184(2) (Michie/Bobbs-

meow anand cetg ae aT eT Ta TE 15

Minn. Stat. Ann. § 549.20, subdivision 1 (West

1988) ...... wad dclnnenubenininiidiialnshaiceaiditeilids icin 15

Mont. Code Ann. § 27-1-221(5) (1987) 15

gy Stat. Ann. § 42.005(1) (Michie Supp.

N. Dak. Cent. Code § 32-03.2-11 (Supp. 1987) :

N.H. Rev. Stat. Ann. § 507:16 (Supp 1988) 20

Ohio Rev. Code Ann. § 2307.80 (Anderson 1987)... 15

Okla. Stat. Ann. tit. 23, $9 (West BOOP eeccceccsocees 15

Or. Rev. Stat. § 41.315(1) (1987)... tO

S.C. Code § 15-33-1385 (Law. Co-op. Supp. 1989)... 15

S. Dak. Codified Laws Ann. §$ 21-1-4.1 (1987

WE sebiosslienarcetinscealepitemanatsneddnien dace welts ccs cs 15

vii

TABLE OF AUTHORITIES—Continued

PERIODICALS AND PUBLICATIONS Page

Barnes, Due Process and Slow Process in the Late F

Elizabethan-Early Stuart Star Chambers, 6

UG U8 Cl CU GDlO—E>E ee 4

E. Cieary, McCormick on Evidence (3d ed. 1984)... 16, 21

Comment, Criminal Safeguards and the Punitive

Damages Defendant, 34 U. Chie. L. Rev. 408

III ccs cuconchinnscintiteaiaebaipeieeddsmesnuieinsinaiuaasacbeausansabiabiadsidee 18

Demarest & Jones, ERuemplary Damages as an In-

strument of Social Policy: Is Tort Reform in the

Public Interest ?, 18 St. Mary’s L.J. 797 (1987).. 7

F. James, Civil Procedure (1965) ...........................- 21

Landes & Fosner, New Light on Punitive Damages,

10 Reg. 33 (Sept.-Oct. 1986) .................... aiiaaidaes 12

Mahoney & Littlejohn, Innovation on Trial: Puni-

tive Damages Versus New Products, 246 SCI-

BEPICES BOBS CERCC. BB, TOG) cnccccccctesccccecsecccsscsssee 13-14

Movrvis, Punitive Damages in Tort Cases, 44 Harv.

Et a ee 11

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

Damages: Empirical Findings (RAND R-3311-

pt MES Ras ER ETE ARS NE: BT SPR ee ON 12

N.Y. Times, May 19, 1990, at 50, col. 3 .................. 13

United Press International news release, keyword:

RG RC re 13

United Press International news release, keyword:

I Cs Tie Ne wikictnsteintciteintanninitiniicitippiccisesnns 13

United States General Accounting Office, Report to

the Chairman, Subcommittee on Commerce, Con-

sumer Protection, and Competitiveness, Com-

mittee on Energy and Commerce: Product Lia-

bility: Verdicts and Case Resolution in Five

SD A ian 12

W. Prosser, J. Wade & V. Schwartz, Cases And

Materials On Torts (8th ed. 1988) ....00..0000. ee. 17

Wheeler, The Constitutional Case for Reforming

Punitive Damages Procedures, 69 Va. L. Rev.

STE sviecapd.nensasdasusiisiceseieshenscninicubicealiapaddebadmasecdegeansses 9

IN THE

Supreme Court of the United States

OCTOBER TERM, 1989

No. 89-1279

PACIFIC MUTUAL LIFE INSURANCE COMPANY,

Petitioner,

V.

CLEOPATRA HASLIP, CYNTHIA CRAIG, ALMA M. CALHOUN

and EDDIE HARGROVE,

Respondents.

On Writ of Certiorari to the Supreme Court of Alabama

BRIEF OF THE NATIONAL ASSOCIATION OF

WHOLESALER-DISTRIBUTORS,

NMTBA-THE ASSOCIATION FOR

MANUFACTURING TECHNOLOGY,

THE RISK AND INSURANCE MANAGEMENT SOCIETY,

AND THE PRODUCT LIABILITY ALLIANCE

AS AMICI CURIAE IN SUPPORT OF PETITIONER

INTEREST OF THE AMICI CURIAE

Amici, The National Association of Wholesaler-Dis-

tributors, NMTBA-The Association For Manufacturing

Technology, The Risk and Insurance Management So-

ciety, and The Product Liability Alliance, with the con-

sent of the parties, present this brief in support of the

petitioner.’

1 Letters of consent have been filed with the Clerk of the Court.

2

_ The National’ Association of Wholesaler-Distributors

is a federation of approximately 117 national wholesale

trade associations, 57 state and regional trade associa-

tions, and 2000 individual wholesale distribution firms. It

represents approximately 40,000 companies with 150,000

places of business across the United States. Its purpose

is to advocate its members’ interests on national public

policy issues affecting the entire wholesale distribution

industry. The enormous legal costs, loss in productive

time, and stigma attendant upon awards of punitive

damages, under the system of private punishment ex-

emplified by this case, threaten the well-being of each

participant in the wholesale distribution industry.

NMTBA-Thke Association For Manufacturing Technol-

ogy consists of over 300 firms that produce and sell

equipment, products or software used in manufacturing

machinery in the United States. Its members produce

the vast majority of this country’s metal cutting and

metal forming machines. NMTBA provides representa-

tion for its members in state and national government

affairs, actively promotes exports, maintains the world’s

largest data base on metalworking industry statistics, and

spearheads formulation of safety and technical stand-

ards. NMTBA has an interest in this case because,

among other things, the threat of unrestrained punitive

damages awards, and the legal costs that must be in-

curred in obtaining reversal or remittitur, severely dis-

advantage the manufacturing machinery industry in at-

tempts to compete with foreign business.

The Risk and Insurance Management Society, the

world’s largest association of risk management profes-

sionals, consists of approximately 4,400 industrial and

service corporations, governmental bodies and nonprofit

organizations. Risk management professionals analyze

risks that companies might encounter and offer advice

about the most effective methods of avoiding such risks

and insuring against related losses. The Risk and In-

3

surance Management Society is interested in this case

because imprecise and standardless punitive damages

_ systems make it impossible for risk management pro-

fessionals to calculate with any certainty when and in

what amounts punitive damages maybe imposed.

The Product Liability Alliance consists of more than

300 manufacturing businesses, _wholesaler-distributors,

and trade associations from a wide range of industries.

The Alliance was formed in 1981 primarily for the pur-

pose of seeking uniform and rational federal product

liability laws. This case is of interest to the Alliance

because the current unbounded punitive damages system

is a burden on its members’ ability to produce and dis-

tribute products throughout the United States?

Given their diverse perspectives, amiei are well posi-

tioned to dramatize for the Court the difficulties facing

all businesses operating under the current, essentially

standardless, punitive damages system—difficulties that

are aggravated by an equally standardless system for

judicial review of punitive awards.

STATEMENT

This case presents a scheme of state-inflicted punish-

ment under which the decision whether to seek punish-

ment, and how best to pursue that objective, is left to

private parties, rather than government officials. There

is no disputing that punitive damages, in the form of

private civil remedies, have been with us for some time,

and we do not question the basic premises of such a sys-

tem. But there is also no disputing that entrusting the

power to seek potentially ruinous punishment to private

citizens raises the potential for abuse. For example, one

historian has noted that:

The overwhelming majority of prosecutions [in Eng-

land’s Star Chamber] were brought by private par-

ties, often to shore up a purely civil suit.... All

prosecutions were ostensibly on the King’s behalf,

We

and therefore for the safety of the state and good

order in the commonwealth . .. . However, few prose-

cutions were motivated by any public concern but

stemmed rather from personal considerations, mainly

profit or revenge. The covrt was in a poor position

to influence let alone control its private litigants.

[Thus, the Star Chamber] was too useful a tool of

the vexatious litigant-and the near-vexatious litigant

to want for business... .?

Where the penalty exacted flows not into the coffers of

the state, but directly into the pocket of the private pros-

ecutor, the potential for abuse is especially great: The

private prosecutor, who will reap the financial rewards

of his advocacy, is thereby given strong incentive to in-

flame the passions of the jury to inflict ever more severe

degrees of punishment.

Such potential for abuse does not argue against the

system of private punitive damages in general. But it

does argue strongly for the need to deploy fully those

mechanisms that we have historically recognized as

proper for curbing abuse and arbitrariness in connection

with the imposition of punishment: strict procedural

protections and clear legal standards. That need is not

satisfied by the type of punitive damages scheme at issue

in this case, under which

* the decision whether to impose punishment at all

in a given case ‘as in this case) is left largely to the

devisionmaker’s discretion, based on broadly framed

questions about whether punishment is deserved ;

* juries determine the severity of punishment as

a matter of discretion, essentially unchecked and un-

guided by any legal formula, standard, or ceiling es-

tablished by law; |

* punishment may be imposed under a burden of

proof that permits the jury to inflict punishment

2 Barnes, Due Process and Slow Process in the Late Elizabethan-

Early Stuart Star Chambers, 6 Temp. L. Rev. 221, 226 (1962) (foot-

note omitted).

5

even though it may have substantial doubts about

whether the defendant did anything wrong or culp-

able; *

* the standards used by the courts to review the

jury’s decision are no less vague than the standards

for inflicting punishment in the first instance;

* citizens may be punished repeatedly for essen-

tially the same conduct or decision.*

Amici think it plain that such a system does not af-

ford the kind of process that is constitutionally due a

defendant potentially subject to ruinous punishment.

Whether considered in terms of its individual constituent

parts or in its_totality, the system of punishment at is-

sue in this case is so lawless that it is fundamentally in-

consistent with the basic premises of our legal tradition.

Beyond this short statement, however, this brief will

not attempt to present an-overview of the defects in the

present system of punitive damages, or address issues

expectably developed in the briefs of the parties or other

amici. In keeping with this Court’s rules on amicus prac-

tice, this brief will instead focus on two issues, raised by

petitioner, that we believe will not be the central focus

of<any other brief submitted in this case. First, we dis-

cuss whether post-verdict procedures, including the avail-

ability of remittitur, can salvage an otherwise_constitu-

3 Cf. Tumey v. Ohio, 273 U.S. 510, 532 (1927) (“Every procedure

which would offer a possible temptation to the average man as a

judge to forget the burden of proof required to convict the defend-

ant, or which might lead him not to hold the balance nice, clear

and true between the State and the accused, denies the latter due

process of law’).

4Cf. Ex parte Lange, 85 U.S. (18 Wall.) 163, 168 (1873) (“If

there is anything settled in the jurisprudence of England and

America, it is that no man can be twice lawfully punished for the

same offence’); United States v. Halper, 109 S. Ct. 1892 (1989)

(double jeopardy protections are triggered by civil fines of punitive

character).

6

tionally infirm system of punishment.’ Second, we dis-

cuss one of the significant defects in the system described

above—namely, an impermissibly lenient standard of

proof—and explain why application of the prevailing

“preponderance of the evidence” standard does not. suffice

to assure defendants due process of law.®

SUMMARY OF ARGUMENT

I. The availability of conventional post-verdict mecha-

nisms for reviewing punitive awards cannot obviate con-

stitutional deficiencies in the methods for imposing such

awards in the first instance. Post hoc remedies are not

an adequate substitute for timely procedural safeguards.

This is particularly true in the context of punitive dam-

ages, because existing review mechanisms are neither

designed nor sufficient to remedy the sheer arbitrariness

that governs jury assessment of punitive awards.

II. The Due Process Clause of the Fourteenth Amend-

ment requires that punitive damages awards be sup-

ported at least by clear and convincing evidence. Any

lesser standard—such as the “reasonably satisfied from

the evidence” standard imposed in this case, or the more

common “preponderance of the evidence” standard tradi-

tionally applied in civil cases—ynduly exacerbates the

risk of erroneously imposing punishment and underesti-

mates the consequences of a punitive award.

_* See Petitioner Pacific Mutual Life Insurance Company’s Peti-

tion For Writ of Certiorari, February 7, 1990, at 26-29 (discussing

remittitur and appellate review).

* See id. at 10-11 (preserving constitutional challenges), at 24

(arguing for elevated burden of proof).

7

ARGUMENT

I. THE CONSTITUTIONAL INADEQUACIES IN EX-

ISTING PUNITIVE DAMAGES SCHEMES ARE

NOT SAVED BY POST-TRIAL REVIEW OF JURY

VERDICTS —

In the present case, the Alabama Supreme Court relied

on, among other things, the availability of remittitur and

other forms of post-verdict review in rejecting petition-

er’s constitutional objections to Alabama’s punitive dam-

ages scheme. See Pacific Mutual Life Ins. Co. v. Haslip

et al., No. 87-482, slip op. at 13 (Sept. 15, 1989) (Ap-

pendix B to the petition for certiorari). That court’s

conclusion echoes the frequently expressed view of pro-

ponents of the current punitive damages system that

“j]udicial controls provide sufficient procedural protec-

tion against excessive exemplary damage awards.” ‘

This claim lacks constitutional, analytical, or empirical

foundation.

As an initial matter, it is generally not the case that

even an elaborate system of post-trial review can salvage

verdicts obtained on the basis of constitutionally deficient

trial procedures. We know of no constitutional principle,

for instance, that would excuse a state’s failure to afford

a person the opportunity to be heard at trial so long as

it afforded the defendant a close reading of the record

on appeal and a chance to present argument in the course

of appellate review. Likewise, this Court has determined

that “[r]etrospective case-by-case review cannot preserve

fundamental fairness when a class of proceedings is gov-

erned by a constitutionally defective evidentiary stand-

ard.” Santosky v. Kramer, 455 U.S. 745, 757 (1982).

The Court in Santosky went on to note that “we would

‘rewrite our precedents were we to excuse a constitution-

ally defective standard of proof based on an amorphous

7 Demarest & Jones, Exemplary Damages as an Instrument of

Social Policy: Is Tort Reform in the Public Interest?, 18 St. Mary’s

L.J. 797, 815-16 (1987) (footnote omitted).

assessment of the ‘cumulative effect’ of state procedures.”

Id. at 757 n.9 (citation omitted).* As in Santosky, this

Court cannot condone manifold infirmities in this scheme

of punishment merely because post-verdict remedies may

offer some salvation in some circumstances.’

Moreover, where punishment is imposed by a jury

without the benefit of standards, allowing judges to re-

view that verdict to determine, for example, if it was

“excessive,” does little to remedy the underlying defects

in the process. The question of excessiveness can only be

meaningfully answered by reference to specific facts and

relative to some established scale or measure. There will

be many situations where an award is not facially exces-

8 Cf. Memphis Light, Gas & Water Div. v. Craft, 436 U.S. 1, 20-

21 (1978) (availability of injunction and post-termination remedies

for improper stoppage of utility services without notice “would

not be an adequate substitute for pre-termination review,” since,

inter alia, injunctive relief “will not previde the same assurance of

accurate decisionmaking as would an adequate administrative pro-

cedure”); Logan v. Zimmerman Brush Co., 455 U.S. 422, 436

(1982) (“a post-deprivation hearing here would be constitutionally

inadequate” to correct for failure to afford timely administrative

hearing) ; Cuellar v. Texas Empl. Comm'n, 825 F.2d 930, 936 (5th

Cir. 1987) (“The existence of post-deprivation remedies through

further administrative hearings, judicial review, or independent

state-law based causes of action are irrelevant” to the question of

the constitutional adequacy of firing procedures) .

® Limited exceptions to this principle have no application here.

Thus, post-deprivation process may be sufficient in light of “the

necessity of quick action by the State.” Parratt v. Taylor, 451

U.S. 527, 539 (1981), overruled on other grounds, Daniels v. Wil-

liams, 474 U.S. 327 (1986). Certainly no such urgency can be

claimed in the present context. Post-deprivation process may also

be adequate in the case of deprivations resulting from “random

and unauthorized act[s] by a state employee” given “the imprac-

ticality of providing any meaningful predeprivation process” in

that instance. Parratt, 451 U.S. at 589, 541. But this exception

has no force where, as here, the challenge is not to random acts

but to “established state procedure[s].” See Logan, 455 U.S. at 436

(rejecting analogy to Parratt for this reason).

sive (sufficient to inspire outrage and corrective action

by a judge) but nonetheless lawless and inappropriate

because not supported by clear standards in the first in-

stance.

Thus, even if layers of judicial re-evaluation could, in

some instances, compensate for procedural deficiencies at

trial, the forms of review traditionally available in con-

nection with awards of punitive damages are neither de-

signed nor able to achieve this result. Trial court review

of punitive.awards is severely circumscribed; a standard

formulation is whether an award is “so excessive as to

be deemed a product of passion or prejudice... .”"® Al-

though “passion and prejudice” may undoubtedly taint a

punitive damages determination,'' judicial review that

focuses on that issue tends to obscure the absence of ar-

ticulated substantive and evidentiary standards for juries

to observe in rendering such awards in the first instance.

Therefore, review subject to a “passion or prejudice” or

like inquiry may offer a vehicle for remedying injustice

in some cases, but will not and cannot correct for in-

stitutionalized .infirmities such as a lack of underlying

legal standards. :

Similar limitations characterize appellate review. In-

deed, appellate courts are the first to acknowledge their

limited capacity to assess the propriety of a punitive

award. See, e.g., Villella, 543 N.E.2d at 469 (“[because]

the trial judge is in the best position to determine whether

10 Villella v. Waikem Motors, Inc., 45 Ohio St. 3d 36, 543 N.E.2d

464, 469 (1989).

11 For a court to remit a punitive damages award on the ground

that the amount awarded was based on passion and prejudice, but

to leave unaltered the jury’s findings on liability and compensatory

damages, is to act on the untenable assumption that the same jury

can be dispassionate and fair when deciding liability and compensa-

tory issues, yet impassioned and prejudiced while contemporane-

ously deciding punitive damages issues. See Wheeler, The Constitu-

tional Case for Reforming Punitive Damages Procedures, 69 Va. L.

Rev. 269, 301 (1983).

10

an award is... excessive . . . ‘an [a]ppellate court

hesitates to enter remittitur’”) (citations omitted) ;

Hammond v. City of Gadsden, 493 So. 2d 1374, 1378-79

(Ala. 1986); Robinson v. Mack Trucks, Inc., 426 N.W.

2d 220, 226 (Minn. Ct. App. 1988); Zarrella v. Robin-

son, 460 A.2d 415, 419 (R.I. 1983). The result, not sur-

prisingly, is extreme reluctance on the part of appellate

courts to trench on, or even conduct meaningful review

of, punitive awards. The present case typifies this re-

luctance: the Alabama Supreme Court’s review of the

jury’s punitive award was confined to the conclusory

observation that “jury verdicts are presumed correct,

and that presumption is strengthened: when the _presid-

ing judge refuses to grant a new trial.” Slip op. at 13

(App. B to petition for certiorari). Appellate review

cannot be a constitutional substitute for inadequate trial

court procedures when that review is premised on defer-

ence to the jury verdict, irrespective of the fact that the

jury verdict was procured unconstitutionally.

Compounding the deficiencies in judicial controls is the ~

fact that judges have no more clearly defined standards

for reviewing punitive awards than juries have for pro-

nouncing them.” Prevailing standards of review—which,

in addition to the “passion or prejudice” standard, in-

clude whether an award “shocks the conscience of the

court,” '* or whether the punitive award bears a “reason-

12 The major difficulty in establishing the amount of the puni-

tive damage recovery is the absence of any definitive standard

or criterion to guide the trier of fact in determining the

proper amount. And since reviewing courts similarly lack any

specific standards by which to measure the damages, there is

a corresponding difficulty in considering the propriety of such

award on appeal....

Leimgruber v. Claridge Assocs., Ltd., 73 N.J. 450, 375 A.2d 652,

656 (1977) (citations omitted).

13 F.g., O'Neal Ford, Inc. v. Davie, 299 Ark. 45, 770 S.W.2d 656,

659 (1989) (quoting W.M. Bashiin Co. v. Smith, 277 Ark. 406, 643

S.W.2d 526 (1982)).

ll

able relationship” to the corresponding compensatory

award “—are themselves vague and subjective. As one

commentator long ago observed, such tests are “probably

more often a rationalization of results than a means of

obtaining them. The proper ratio between actual dam-

ages and punitive damages is placed at a figure which

supports the judge’s view of the verdict. . . .” Morris,

Punitive Damages in Tort Cases, 44 Harv. L. Rev. 1173,

1180 (1931). See also Ace Truck & Equip. Rentals, Inc.

v. Kahn, 746 P.2d 132, 1385 (Nev. 1087) (citation

omitted) (“one ‘cannot avoid thinking’ that the [passion

or prejudice] rule is ‘tailored to fit {the court’s] feeling

about the particular case before it’”).° The result, not

surprising'y, is sharp and often inexplicable discrepan-

cies between judicial attempts to reduce awards—for in-

stance, from $125 million to $3.5 million (Grimshaw v.

Ford Motor Co., 119 Cal. App.8d 757, 824-25, 174 Cal.

Rptr. 348, 391 (1981)), from $15 million to $7.5 million

to $650,000 (Stambaugh v. International Harvester Co.,

106 Ill. App.3d 1, 485 N.E.2d 729, 747 (1982), rev'd on

other grounds, 102 Ill.2d 250, 464 N.E.2d 1011 (1984) ),

and from $10,000 to $9,999 (Hanch v. K.F.C.. Nat’!

Mamt. Corp., 615 S.W.2d 28, 30 (Mo. 1981) (en banc) ).”®

14 E.g., Gazette, Inc. v. Harris, 229 Va. 1, 51, 325 S.E.2d 713,

747, cert. denied, 472 U.S. 1032 (1985).

15 For the Court’s convenience, we have attached as an Appendix

to this brief an informal survey of the prevailing standards for

judicial review of punitive damages awards in the 50 states.

16 In any event, the fact that appellate courts are deciding issues

that have been expressly left within the purview of a jury indicates

that such courts are devoting an inordinate amount of time on

issues which should have been addressed below. At a time when

the appellate court systems are already overburdened, it is neither

good sense nor good economy to expect appellate tribunais to cor-

rect all deficiencies plaguing tris] systems, or to assume the duties

of a trial court merely because the latter is not performing them

properly.

12

If remittitur and other methods of trial court control

were effective, one would expect a relatively modest in-

cidence of appellate reversals of punitive awards. In

fact, a study of all punitive damages awards in product

liability cases reviewed by federal appellate courts be-

tween 1982 and mid-1985 revealed that sixty-nine per-

cent were reversed or sharply reduced on appeal.’? Like-

wise, a more recent study undertaken by the United

States General Accounting Office of product liability cases

in five states over a two-year period found that (1) ap-

pellate courts reversed or remanded for retrials all puni-

tive damages awards on which they ruled; (2) 18 of the

22 punitive damages verdicts studied were lowered by

some post-trial method; and (3) awards were reduced

less often and by a smaller percentage when the verdict

included only compensatory damages.’* The frequency of

reversal highlights the fundamentally arbitrary nature

of the underlying process and the inability of remittitur

alone to compensate for such arbitrariness.

Moreover, none of the existing mechanisms for review-

ing punitive awards can remedy the prejudice and costs

? See Landes & Posner, New Light on Punitive Damages, 10 Reg.

33, 34-35 (Sept.-Oct. 1986). In comparison, less than one-third of

the trial court decisions in favor of plaintiffs but not awarding

punitive damages were reversed on appeal. Jd. at 35.

‘8 United States General Accounting Office, Report to the Chair-

man, Subcommittee on Commerce, Consumer Protection, and Com-

petitiveness, Committee on Enerqu and Commerce: Product Lia-

bility: Verdicts and Case Resolution in Five States 40-47 (1989).

These findings are consistent with similar studies. Thus, the In-

stitute for Civil Justice of The RAND Corporation examined awards

of punitive damages in certain civil jury trials concluded in San

Francisco County, California, and Cook County, Illinois, between

1979 and 1983. See M. Peterson, S. Sarma, & M. Shanley, Punitive

Damages: Empirical Findings viii (RAND R-3311-ICJ 1987). The

Institute determined that post-trial actions reduced punitive dam-

ages awards in half of those trials and that, as a result of post-

trial action, only half of the money awarded by juries in those

cases was actually received by plaintiffs. Jd.

13

that often befall the target of a punitive award irrespec-

tive of the success of later appeals. For example, in or-

der even to maintain an appeal of an excessive punitive

damages award, a defendant may be required to post a

supersedeas bond which may necessitate the defendant’s

liquidation.’* Likewise, the defendant may have to place

its property in receivership pending appeal, thereby crip-

pling its ability to carry on as a viable entity.” Equally

damaging could be a severe drop in the price of a de-

fendant’s stock in response to an excessive punitive

award.” And an erroneous punitive damages award could

so malign the reputation of a company or product that

the defendant would cease making or marketing the

product everi if the punitive award were later reduced.”

These “real life” illustrations demonstrate that judicial

i® See Texaco, Inc. v. Pennzoil Co., 626 F. Supp. 250 (S.D.N.Y.),

aff'd in part and rev'd in part, 784 F.2d 1133 (2d Cir. 1986), rev'd,

481 U.S. 1 (1987); Texaco, Inc. v. Pennzoil Co., 729 S.W.2d 768

(Tex. Ct. App. 1987). In Pennzoil, the appellate court ultimately

determined that the punitive damages award was three times as

great as it should have been.

20 See George v. International Society for Krishna Consciousness

of California, 262 Cal. Rptr. 215, 216 (Cal. App. 1989). In Krishna

Consciousness, the trial court reduced the jury’s award of $32

million to $9.7 million, and the court of appeals further reduced

it to $2.9 million.

21 See, e.g., United Press International news release, keyword:

Snapon (Nov. 22, 1989).

22 See United Press International news release, keyword: Ben-

dectin (Mar. 9, 1990). Recently, the Monsanto Company, a chemi-

cai and drug producer, cancelled its plans to market a fiber claimed

to be an effective substitute for asbestos but lacking the health

risks associated with asbestos. Monsanto cited as the reason for

its decision the belief that its product would nevertheless attract

lawsuits from trial attorneys who make their living by suing as-

bestos companies. N.Y. Times, May 19, 1990, at 50, col. 3. This

unfortunate decision was predictable: it is logical that the manu-

facturer of any asbestos substitute, however safe, might cancel

plans to market the product because “[a] whole generation of law-

yers has been schooled in asbestos liability theories that could

14

review is “apt to be a lengthy and speculative process,

which ... [may] never make the complainant entirely

whole.” Logan, 455 U.S. at 436-37. Such review cannot

substitute for timely procedural safeguards. Id.

Finally, reliance on broad review mechanisms, which

allow a court to substitute its judgment for that of the

jury, denigrates the central role of juries in our system

of jurisprudence. If, as appears to be the premise of

private punitive damages regimes, it is the jury’s

responsibility to impose civil punishment, this goal is

severely undercut by wxolesale dependence on remittitur

and other review devices. Amici suggest that the solu-

tion to inappropriate punitive awards is not to count on

judges to correct them, but to provide juries with proper

guidelines to enable them to, carry out their historic

duties in the first instance.

Judicial review can supplement, but cannot substi- -

tute for, institutionalized processes to protect the defend-

ant at trial. Existing review procedures are stop-gap

measures that, however well-intended, serve only to ob-

scure the magnitude of the problems plaguing the under-

lying punitive damages schemes. This is not to discount

the critical role played by judges in attempting to pro-

vide some check on the unbridled discretion of juries to

impose punitive damages. It is to suggest, however, that

post-verdict review offers the civil defendant too little,

too late to satisfy due process.

II. DUE PROCESS REQUIRES THAT PUNITIVE DAM-

AGES AWARDS BE SUPPORTED, AT A MINIMUM,

BY CLEAR AND CONVINCING EVIDENCE

In assessing punitive damages against petitioner in

this case, the Alabama jury was left free to impose puni-

tive damages in any amount so long as it was “reason-

possibly be turned against this or any similar substicute.” Mahoney

& Littlejohn, In~ovation on Trial: Punitive Damages Versus New

Products, 246 SCIENCE 1395 (Dec. 15, 1989).

; 15

ably satisfied from the evidence” that a fraud had been

perpetrated, and felt, in the exercise of its “discretion,’

that punishment was in order.” This cryptic formula-

tion of the burden of proof is akin to the “preponderance

of the evidence” standard normally applied in civil cases.

And we take it as clear that it is less exacting than the

“clear and convincing evidence” standard presently ap-

plied in at least twenty-two states, including, now, Ala-

bama itself, before punitive damages may be imposed.”

This case thus squarely presents the question whether the

Due Process Clause cf the Fourteenth Amendment is sat-

isfied by a standard of proof for punitive damages less

demanding than clear and convincing evidence.

Amici submit that due process requires more. In de-

termining whether due process mandates a burden of

23 The Alabama trial court’s full charge to the jury on punitive

damages is included in petitioner's brief.

24 At lease nineteen states have enacted legislation requiring that

punitive awards be supported by clear and convincing evidence.

See Ala. Code § 6-11-20(a) (Supp. 1989); Alaska Stat. $ 09.17.020

(Supp. 1988); Cal. Civ. Code § 3294(a) (West Supp. 1990); Fla.

Stat. Ann. §768.73(1)(b) (West Supp. 1989); Ga. Code Ann.

§51-12-51(b) (Supp. 1989); Ind. Code Ann. § 34-4-34-2 (Burns

1986): Iowa Code Ann. § 668A.1(1)(a) (West. Supp. 1989); Kan.

Civ. Proc. Code Ann. § 60.3701(c) (Vernon Supp. 1989); Ky. Rev.

Stat. Ann. § 411.184(2) (Michie/Bobbs-Mevrrill 1988); Minn. Stat.

Ann. § 549.20 subdivision 1 (West 1988); Mont. Code Ann. § 27-

1-221(5) (1987); Nev. Rev. Stat. Ann. § 42.005(1) (Michie Supp.

1989); N. Dak. Cent. Code § 32-03.2-11 (Supp. 1987); Ohio Rev.

Code Ann. § 2307.80 (Anderson 1987); Okla. Stat. Ann. tit. 23,

§9 (West 1987); Or. Rev. Stat. § 41.315(1) (1987); S.C. Code

Ann. § 15-33-135 (Law. Co-op. Supp. 1989); S. Dak. Codified Laws

Ann. § 21-1-4.1 (1987 Rev.) ; Utah Code Ann. & 78-18-l(a) (1989).

Three other states have adopted this burden of proof as a matter

of common law. See Linthicum v. Nationwide Life Ins. Co., 150

Ariz. 326, 723 P.2d 675 (1986) (en banc); Tuttle v. Raymond, 494

A.2d 1353 (Me. 1985); Wangen v. Fore Motor Co., 97 Wis.2d 260,

294 N.W. 2d 437 (1980). A twenty-third state has by legislation

subjected punitive damages to the even more demanding “beyond

a> reasonable doubt” burden of proof. Colo. Rev. Stat. § 13-20-

127(2) (Supp. 1979).

16

proof more demanding than the “preponderance of the

evidence” standard applied in most civil cases,” this

Court “has engaged in a straightforward consideration”

of the factors identified in Mathews v. Eldridge, 424 U.S.

312 (1976). Santosky v. Kramer, 455 U.S. at 754 (ap-

plying Eldridge factors to New York parental termina-

tion scheme}. That is, the Court has leoked to “the pri-

vate interests affected by the proceeding; the risk of

error created by the State’s chosen procedure; and the

countervailing governmental interest supperting use of

the challenged procedures.” Id. See also Eldridge, 424

U.S. at 335 (‘identifying factors); Addington v. Texas,

441 U.S. 418, 425 (1979) (same).

In the context of Alabama’s punitive damages scheme

in particular, and punishment in general, the private in-

terest at stake—the interes. in avoiding erroneously

imposed punishment—is considerable; the risk of error

is very substantial; and there is no countervailing gov-

ernmental interest. Under settled due process analysis,

therefore, punitive damages cannot be administered ab-

sent, at least, clear and convincing evidence.

1. The first due process consideration turns on “the

nature of the private interest threatened ....” San-

tosky, 455 U.S. at 758. Cf. Addington, 441 U.S. at 425

(considering “extent of the individual’s interest’). Con-

cededly, the monetary nature of punitive awards would

not, standing alone, pose as dire a threat to the civil

defendant as, say, civil commitment ( Addington, .441

U.S. at 425-26) or deportation (Woodby v. INS, 385 U.S.

276, 285 (1966) ).

25 See Rivera v. Minnich, 483 U.S. 574, 577 (1987) (“The pre-

ponderance of the evidence standard . .*. is the standard that is

applied most frequently in litigation between private parties in

every State’); E. Cleary, McCormick on Evidence §339, at 956

(3d ed. 1984) (preponderance standard governs “the general run

of issues in civil cases”’).

17

But punitive damages are imposed to punish. They are

“private fines levied by civil juries to punish reprehen-

sible conduct and to deter its future occurrence.” Ger/z

v. Welch, Inc., 418 U.S. 323, 350 (1974). See also W.

Prosser, J. Wade & V. Schwartz, Cases And Materials

On Torts, 528-29 (8th ed. 1988) (punitive damages “are

awarded .. . for the purpose of punishing the defendant,

of admonishing him not to do it again, and of deterring

others from following his example’) ; Day v. Woodworth,

54 U.S. (13 How.) 363, 371 (1852) (“By the common as

well as by statute law, men are often punished for ag-

gravated misconduct or lawless acts, by means of a civil

action, and the damages, inflicted by way of penalty or

punishment, given to the party injured”); Browning-

Ferris Indus. of Vermont v. Kelco Disposal, Inc., 109 S§.

Ct. 2909, 2926 (1989) (O‘Connor, J., concurring in part,

dissenting in part) (“punitive damages serve the same

purposes—punishment and deterrence—as the criminal

law”).* In meting out punishment, society registers a

moral judgment about the character of the punished in-

dividual.” Our jurisprudence has historically required

that such solemn decisions be made only with the utmost

care and cirecumspection. It is for this reason that .a

heightened burden of proof is “critical [to] the moral

force of the criminal law” (In re Winship, 397 U.S. 358;

364 (1970)), just as it is in other circumstances in

which punishment is imposed, id. at 365 (“The same con-

26 In assessing the character and gravity of a sanction, “the

labels ‘criminal’ and ‘civil’ are not of paramount importance.”

United States v. Halper, 109 S. Ct. at 1901. Likewise, it has long

been recog iized that whether a sanction serves a.reparative or

punitive purpose “is not changed by the mode in which it is in-

flicted, whether by a civil action or a criminal prosecution.” United

States v. Chouteau, 102 U.S. 603, 611 (1881).

27 Punitive damages arising from tortious injury virtually al-

ways entail an element of opprobrium. The same is not true of

most civil fines. Civil fines are generally imposed for failure to

adhere to strict, clearly defined standards that govern one’s trade

or business, often irrespective of moral culpability.

18

siderations . . . demand extreme caution” in juvenile pro-

ceedings, whether they be characterized as criminal or

civil).

The interest implicated by punitive awards is defined

not merely by their purpose, but by their consequences

as well. Like other forms of punishment, punitive dam-

ages are by their nature designed to “engender adverse

social consequences” (Addington, 441 U.S. at 425-26 (de-

scribing effect of civil commitment) ), including, in many

instances, debilitating stigma. Courts and commentators

alike have emphasized the “potentially devastating” ram-

ifications of an award of punitive damages for the char-

acter, reputation, business and good will of the civil de-

fendant. Browning-Ferris, 109 S. Ct. at 2923 (Brennan,

J., concurring). See, e.g., International Bhd. of Electri-

cal Workers v. Foust, 442 U.S. 42, 50 (1979) (“the im-

pact of [punitive awards] is unpredictable and poten-

tially substantial”) ; Comment, Criminal Safeguards and

the Punitive Damages Defendant, 34 U. Chic. L. Rev.

408, 417 (1967) (citation omitted) (punitive awards

have “ ‘momentous and serious’ . . . consequences” for

civil defendant); Roginsky v. Richardson-Merrell, Inc.,

378 F.2d 832, 842 (2d Cir. 1967) (Friendly, J.) (noting

“serious” consequences for defendant-of punitive award).

The private interest at stake is thus far more than

“mere loss of money.’”’ Addington, 441 U.S. at 424. Sim-

ply put, punishment is different. See Fichenseer v. Reserve

Life Ins. Co., 894 F.2d 1414, 1419 (5th Cir. 1990) (Jones,

J., dissenting from denial of rehearing en banc) (“The

goal of punishment critically distinguishes punitive dam-

ages from other common law remedies. . .”). Indeed, this

Court has recognized that the+heightened “clear and con-

vincing evidence” standard is often imposed to “reduce

the risk to the defendant of having his reputation tar-

nished erroneously by increasing the plaintiff’s burden

of proof.” Addington, 441 U.S. at 424. See also In re

Winship, 397 U.S. at 363 (heightened standard required

19

in criminal cases in part because of “the certainty that

{the accused] would be stigmatized by the conviction’).

Accerd Wisconsin v. Constantineau, 400 U.S. 433, 437

(1971) (“where the State attaches ‘a badge of infamy’

to the citizen, due process comes into play”).

That a civil defendant’s reputation stands to be tar-

nished, often irrevocably, by a punitive award is unde-

niable. This interest thus demands the high level of care

and certainty that our legal tradition has traditionally

demanded where punishment is to be inflicted and so-

ciety’s moral opprobrium meted out.** The first Eldridge

factor, then, weighs in favor of a burden of proof more

exacting than “reasonably satisfied from the evidence”

or “preponderance of the evidence.”

2. The state’s interest in punishing and deterring

wrongful behavior—the second factor to be considered

under Eldridge—cannot be gainsaid. On the other hand,

the state’s interest in imposing punishment based merely

on a “preponderance of the evidence” is slight, at best.

Of the forty-five states that permit awards of punitive

damages,” more than half—including now, Alabama

281It is true, of course, that there are situations Jn ie we

tolerate awards with some extra-compensatory charActer, and do

not impose a burden of proof higher than “preponderance of the

evidence.” For example, treble damages are imposed for antitrust

violations. But in antitrust cases, the jury determines compensa-

tion. Trebling reflects the decision of the legislature, not the

jury. Where strict ceilings on punishment are clearly set by

statute, it may well be that the need for an elevated standard of

proof is less. But here, where. unlimited punishment may be im-

posed purely as a matter of the decisionmaker’s discretion, the need

for an elevated standard of proof is clear.

29 Five states have outlawed punitive awards altogether absent

explicit statutory authorization. See Ricard v. State, 390 So. 2d 882,

884 (La. 1980) (Louisiana) ; City of Lowel! v. Massachusetts Bond-

ing & Ins. Cce., 3138 Mass. 257, 47 N.E.2d 265 (1943) (Massachu-

setts); Adel v. Conover, 104 N.W.2d 684 (Neb. 1960) (Nebraska) ;

20

itself—already impose a stricter standard of proof with-

out any appreciable effect on their ability to deter or

punish wrongful behavior. See supra n.24 (enumerating

states imposing higher burden). Cf. Santosky, 455 U.S.

at 767 (observing no perceptible effect of higher stand-

ard of proof on efficacy of civil commitment proceedings).

Moreover, this Court has observed that “States have no

substantial interest in securing for plaintiffs

gratuitous awards of money damages far in excess of

any actual injury.” Gertz, 418 U.S. at 349. The added

certainty afforded by a higher standard of proof—the

assurance that the defendant being punished actually de-

serves to be punished—neither disparages the state’s

interest in punishment nor undermines the state’s abil-

ity to punish when punishment is properly due.

While states indisputably have an interest in punish-

ing those who actually engage in reprehensible conduct,

they have no interest in blemishing the reputation and

character of business entities’ or individuals which have

not engaged in wrongful behavior. Because standards

of proof less exacting than “clear and convincing evi-

- dence” increase the risk of wrongfully imposing so-

ciety’s wrath on innocent defendants, “it is at least un-

clear to what extent, if any, the state’s interests are fur-

thered by using a preponderance standard in such” cir-

cumstances. Addington, 441 U.S. at 426. ;

3. Finally, the Court has historically considered the

risk of error associated with use of a chosen standard of

proof, and whether that risk is constitutionally tolerable

in the given context. Santosky, 455 U.S. at 761; El-

dridge, 424 U.S. at 344-45. It has long been recognized

that adopting a standard of. proof “is more than an

empty semantic exercise” (Addington, 441 U.S. at 425

(citation omitted) ), and indeed reflects ultimate societal

N.H. Rey. Stat. Ann. § 507:16. (Supp. 1988) (New Hampshire) ;

Kammerer v. Western Gear Corp., 618 P.2d 1330, 1337 (Wash.

1980) (Washington).

21

iudgments about competing outcom.s. See Santosky, 455

US. at 766-67: In re Winship, 397 U.S. at 363; Adding-

ton, 441 U.S. at 427.” Imposition of any standard less

exacting than “clear and convincing evidence” embodies

at least three societal judgments, none of which accu-

rately reffects society’s purpose in imposing punitive

damages.

First, the preponderance standard embodies a notion

of equipoise: it suggests that society is content to let

the competing litigants “share the risk of error in

roughly equal fashion.” Addington, 441 U.S. at 423. See

also In re Winship, 397 U.S. at 371 (Harlan, J., con-

3 In particular, the difference between the preponderance and

clear and. convincing standards, while “quantitatively imprecise

(In re Winship, 397 U.S. at 370 (Harlan, J., concurring) ), 1s

nevertheless fundamental. In a nutshell, the preponderance stand-

ard merely requires the trier of fact “ ‘to believe that the existence

of a fact is more probable than its nonexistence ....’" Jd. at 371

(quoting F. James, Civil Procedure 250-51 (1960) ). jecause this

standard by its terms measures the quantity, rather than the qual-

ity, of the evidence presented, it is more likely to “misdirect the

factfinder in the margina! case.” Santosky, 455 U.S. at 764. This

is because the preponderance standard may lead the jury “merely

to perform an abstract weighing of the evidence in order to de-

termine which side has produced the greater quantum, without

regard to its effect in convincing [the] mind of the truth of the

proposition asserted.” In re Winship, 597 U.S. at 368 (emphas!s

added) (citation omitted). See also Addington, 441 U.S. at 426

(“the preponderance standard creates the risk of increasing the

number of individuals erroneously committed” ).

Conversely, the clear and convincing standard by its: terms

focuses attention on the quality of the evidence, requiring in par-

ticular “a firm belief or conviction as to the allegations sought to

be established.” Hebscn v. Eaton, 399 F.2d 781, 784 n.2 (6th Cir.

1968) (quoting Cross v. Ledford, 161 Ohio St. 469, 120 N.E.2d 118

(1954)). See also E. Cleary, McCormick on Evidence § 340, at

959-60 (clear and convincing standard requires that truth of allega-

tion be “highiy probable”) (citation omitted). This standard thus

mandates a degree of confidence in a chosen outcome greater than

the slightly better than average certainty embodied in a preponder-

ance standard. - |

22

curring) (use of the preponderance standard suggests

that “we view it as no more serious in general for there

to be an erroneous verdict in the defendant’s favor than

for there to be an erroneous verdict in the plaintiff’s

favor”); Rivera, 483 U.S. at 581 (preponderance stand-

ard is appropriate in context of paternity suits since

each party “has an extremely important, but neverthe-

less relatively equal, interest in the outcome’’). In short,

the preponderance standard embodies the belief that, as

between two competing parties, each possesses a pre-

sumptively equal claim to the money or other interests at

stake between them.

Such a presumption has no place in the context of

punitive damages. Any award the plaintiff receive: in

the form of exemplary damages constitutes a “win — ll

recover|y|’’ over and above the damages requive to

make him whole. Foust, 442 U.S. at 50. See alo Gertz,

418 U.S. at 349 (characterizing punitive damages as

“gratuitous awards” to plaintiffs). Conversely, as dis-

cussed above, the prejudice befalling a civil defendant

erroneously saddled with a punitive award is grave, and

his interest in avoiding such a result is correspondingly

strong. It cannot accurately be said, therefore, that each

party to a case involving punitive damages “would suffer

in a similar way the consequences of an adverse rul-

ing ....” Rivera, 483 U.S. at 581 (endorsing pre- ©

ponderance standard for paternity suits).

Second, by subjecting awards of punitive damages to

the same standard as awards of compensation, we imply

that both types of awards stand on an equal footing. But

we have long accepted the notion that when the state

exercises its power te punish, it is engaged in a quali-

tatively different type of process than when it seeks

merely to resolve a private dispute. The gravity of the

former inquiry underlies the criminal law’s exacting “be-

yond a reasonable doubt” standard. See In re Winship,

397 U.S. at 363 (heightened standard of proof is “a

prime instrument for reducing the risk of convictions

23

resting on factual error’). It is also the reason why,

at the very least, the intermediate “clear and convincing

evidence” standard is appropriate for “civil cases involv-

ing . . . quasi-criminal wrongdoing by the defendant.”

Addington, 441 U.S. at 424 (discussing civil fraud}. See

also Simpson v, Pittsburgh Corning Corp., No. 89-7742

(2d Cir. April 16, 1990) ‘same). Conversely, the Court

has held that civil commitment proceedings need not be

governed by the high criminal law standard precisely

because “[{i]n a civil commitment state power is not exer-

cised in a punitive sense.” Addington, 441 U.S. at 428

(emphasis added).

In the context of punitive damages, state power is by

definition being exercised “in a punitive sense.” /d.

When a jury administers the “extraordinary sanction” of

punitive damages (Foust, 442 U.S. at 48), it is plainly

making a decision about quasi-criminal wrongdoing.

Such a determination is far more consequential, and thus

must be based on far greater certainty, than an ordinary

civil verdict.

Third, the preponderance standard reflects a willing-

ness in a given setting to tolerate a rate of error only

slightly better than equipoise. As applied to punitive

damages, such a standard suggests that we, as a people,

are satisfied if punishment is inflicted on the basis of no

better than fifty-one percent probability. See, e.7.,

United States v. Fatico, 458 F. Supp. 388 (E.D.N.Y.

1978), aff'd, 603 F.2d 1053 (2d Cir. 1979), cert. denied,

444 U.S. 1073 (1980). Punishment meted out on the

basis of marginal determinations of wrongdoing quickly

lose their moral force, and come to be regarded as capri-

cious and uniust. Likewise, a would-be deterrent meted

out on the basis of caprice ceases to serve as a meaning-

ful deterrent, for it fails to be regarded as providing a

clear standard upon which to base one’s conduct.

The “logical conclusion of this balancing process” ‘ San-

tosky, 455 U.S. at 768) is that_due process requires that

24

punitive damages awards be supported by at least clear

and convincing: evidence.*' The requirement that pu-

nitive damages awards be premised upon a convincing

and clear factual foundation will serve both practical and

symbolic purposes. See Addington, 441 U.S. at 426

(“standards of proof are important for their symbolic

meaning as well as for their practical effect’).

Where, as in Alabama, the burden for establishing

punitive awards has traditionally been the same as for

any other civil award, a stricter standard of proof would

convey to the judge and jury in dramatic fashion the

fundamental difference between an award of compensa-

tory relief and an award of exemplary damages. Rais-

ing the burden of proof is “one way to impress the fact-

finder with the importance of the decision and thereby

perhaps to reduce the chances that inappropriate |deci-

sions} will be ordered.” Addington, 441 U.S. at 427.

Simply put, an elevated standard of proof will put juries

on notice that in awarding punitive damages they are no

longer dealing with a simple question of compensation.”

31 The manifest parallels between a punitive award and a criminal

penalty support application to the former of the higher “beyond a

reasonable doubt” standard of proof applied in the criminal law.

The reasonable doubt standard would afford an appropriately high

degree of certainty that punishment is being properly inflicted. See

In re Winship, 397 U.S. at 364. At a minimum, clear and convincing

evidence is constitutionally required. Of course, the Constitution

only prescribes “minimum requirements [of due process as} a

matter of federal law.” Vitek v. Jones, 445 U.S. 486, 491 (1980).

It in no way pretermits efforts by states to fashion more rigorous

procedural safeguards. Thus, the states are always free to subject

punitive awards to the reasonable doubt standard, as at least one

state has already done. See Colo. Rev. Stat. § 13-25-*27(2) (Supp.

1979).

82 As a practical matter, the risk of error and confusion is

great where the jury is simultaneously asked to address issues of

compensation and punishment. It is certainly implicit to the jury

that in awarding compensation it is choosing between two equal

claimants to the money at stake: The jury is not blind to plain-

25

Rather, they are meting out punishment, and hence are

making peculiarly sacrosanct decisions’ on behalf of

society.

In addition, the clear and convincing standard will bet-

ter allow judges of both trial and appellate courts to parse

those cases which create a jury issue of punitive damages

from those which do not. It can provide a court with

legitimate tools to determine (rather than simply de-

clare) whether a resulting award is, indeed, based upon

and supported by facts and evidence, rather than the

product of passion, prejudice, and the rhetoric of sophis-

ticated advocacy. In short, it provides a necessary means

of protecting defendants from the dangers inherent in

this unusual civil system of punishment, and ensuring

that the system attains some measure of fairness and

legitimacy.

CONCLUSION

_ The availability of judicial review offers no constitu-

tional salvation for standardless punitive damages

schemes. An elevated burden of proof, while also not a

panacea, 1s a necessary component of the process con-

stitutionally due civil defendants before they may be

subjected to punishment.

Respectfully submitted,

Of Counsel: Victor E. SCHWARTZ

HOWARD W. GREENE CLIFTON S. ELGARTEN *

Counsel LIBERTY MAGARIAN

JAMES T. MCINTYRE Scott L. WINKELMAN

Of Counsel CROWELL & MoRING

THE RISK AND INSURANCE 1001 Pennsylvania Ave., N.W.

MANAGEMENT SOCIETY Washington, D.C. 20004-2505

205 E. 42nd Street (202) 624-2523

New York, New York-10017 * Counsel of Record for

(212) 286-9292 Amici Curiae

June 1, 1990

tiff’s need. A stricter standard will communicate to the jury that

punishment involves an entirely separate and far graver inquiry

focusing more sharply and narrowly on defendant's culpability.

APPENDIX

le ta

Pie

la

APPENDIX

STANDARDS FOR REMITTITUR AND APPELLATE

REVIEW OF JURY AWARDS OF

PUNITIVE DAMAGES IN THE FIFTY STATES

ALABAMA

(a) No presumption of correctness shall apply as to

the amount of punitive damages awarded by the trier

of the fact.

(b) In all cases wherein a verdict for punitive dam-

ages is awarded, the trial court shall, upon motion

of any party, either conduct hearings or receive ad-

ditional evidence, or both, concerning the amount of

punitive damages. Any relevant evidence, including

but not limited to the economic impact of the verdict

on the defendant or the plaintiff, the amount of com-

pensatory damages awarded, whether or not the de-

fendant has been guilty of the same or similar acts

in the past, the nature and the extent of any effort

the defendant made to remedy the wrong and the

opportunity or lack of opportunity the plaintiffs gave

the defendant to remedy the wrong complained of

shall be admissible. . . . After such post verdict

hearing the trial court shall independently (without

any presumption that the award of punitive damages

is correct) reassess the nature, extent and economic

impact of such an award of punitive damages, and

reduce or increase the award if appropriate in light

of all the evidence.

Ala. Code § 6-11-23 (1989).

(a) On appeal, no presumption of correctness shall

apply to the amount of punitive damages awarded.

(b) The appellate court shall independently reassess

the nature, extent and economic impact of such an

2a

award and reduce... the award if appropriate in

light of all the evidence.

eee

3a

Morrison v. Lowe, 274 Ark. 358, 625 S.W.2d 452,

455 (1981).

CALIFORNIA

“[O]ur review of punitive damage awards rendered

at the trial level is guided by the ‘historically hon-

ored standard of reversing as excessive. only those

Ala. Code § 6-11-24 (1989).

ALASKA |

“A punitive damage award is excessive if it is man-

ifestly unreasonable, resulting from passion or pre)-

udice or disregard of the rules of law. Relevant fac-

tors include the compensatory damage amount, imag-

nitude of the offense, importance of the policy vio-

lated, and the defendant’s wealth.”

Alaskan Village, Inc. v. Smelley, 720 P.2d 945, 949

(Alaska 1986) (citations omitted).

ARIZONA

“The appropriate test of passion or prejudice is

whether the verdict is ‘so manifestly unfair, unrea-

sonable and outrageous as to shock the conscience of

the court.’ ‘The test to be applied . . . Is whether

the “verdict is so outrageously excessive as to sug-

gest, at first blush, passion or prejudice.

Hawkins v. Allstate Ins. Co., 152 Ariz. 490, 733

P.2d 1073, 1084 (1987) (quoting Acheson v. Shafter,

107 Ariz. 576, 579, 490 P.2d 8382, 835 (1971) and

Wry v. Dial, 18 Ariz. App. 503, 515, 503 P.2d 979,

991 (1972) ), cert. denied, 484 U.S. 874 (1987) ).

ARKANSAS

“(T]he standard for determining whether a damage

verdict is excessive is ‘whether it shocks the con-

science of the court or demonstrates that jurors were

motivated by passion or prejudice.’ ”

O’Neal Ford, Inc. v. Davie, 299 Ark. 45, 770 S.W.2d

656, 659 (1989) (quoting W.M. Bashlin Co. v. Smith,

277 Ark. 406, 643 S.W.2d 526 (1982) ).

judgments which the entire record, when viewed

most favorably to the judgment, indicates were ren-

dered as the result of passion and prejudice. . . .’

... [A]n appellate court may reverse such an award

‘only “when the award as a matter of law appears

excessive, or where the recovery is so grossly dis-

proportionate as to raise a presumption that it is

the result of passion or prejudice.” ’ ”

Neal v. Farmers Ins. Exch., 21 Cal. 83d 910, 928-29,

582 P.2d 980, 990, 148 Cal. Rptr. 389, 399 (1978)

(quoting Bertero v. National Gen. Corp., 13 Cal. 3d

43, 65, 529 P.2d 608, 624, 118 Cal. Rptr. 184, 200

(1974) and Schroeder v. Auto Driveaway Co., 11

Cal. 3d 908, 919, 523 P.2d 662, 669, 114 Cal. Rptr.

622, 629 (1974) ) (footnote and citations omitted).

COLORADO

““{A]bsent an award so excessive . .. as to shock

the judicial conscience and to raise an irresistible in-

ference that passion, prejudice, corruption or other

improper cause invaded the trial, the jury’s deter-

minatior of the fact is considered inviolate.’ ”

Higgs v. District Ct. In and For Douglas County,

713 P.2d 840, 860-62 (Colo. 1985) (quoting Hurd

v. American Hoist & Derrick Co., 734 F.2d 495, 508

(10th Cir. 1984) (quoting Barnes v. Smith, 305 F.2d

226, 228 (10th Cir. 1962)) and Frick v. Abell, 198

Colo. 508, 512, 602 P.2d 852, 854 (1979)) (citations

omitted). : °

4a

“(The court may reduce or disallow the award of

exemplary damages to the extent that:

(a) The deterrent effect of the damages has been

accomplished ; or

(b) The conduct which resulted in the award has

ceased ; or

(c) Thé purpose of such damages has otherwise

been served.

Colo. Rev. Stat. § 13-21-102(2) (1989).

CONNECTICUT

“‘Punitive damages . . . are restricted to cost of

litigation less taxable costs of the action being tried

and not that of any former trial... .’”

Alaimo v. Royer, 188 Conn. 36, 448 A.2d 207, 209-

10 (1982) (quoting Vandersiuis v. Weil, 176 Conn.

358, 358-59, 407 A.2d 982, 986 (1978)) (citations

omitted); Accord Holbrook v. Casazza, 204 Conn.

' 336, 528 A. 2d 774, 785 (1987), cert. denied, 484 U.S.

1006 (1988).

DELAWARE

“*A verdict will not’ be disturbed as excessive unless

it is so clearly so as to indicate that it was the re-

sult of passion, prejudice, partiality, or corruption;

or that it was manifestly the result of disregard of

the evidence or applicable rules of law. A verdict

should not be set aside unless it is so grossly exces-.-

sive as to shock the Court’s conscience and sense of

justice; and unless the injustice of .allowing the ver-

dict to stand is clear.’ ”’

Cloroben Chem. Corp. v. Comegys, 464 A.2d 887,

892 (Del. 1983) (quoting Riegel v. Aastad, 272 A.2d

715, 718 (Del. 1940)».

5a

FLORIDA

(1) (a) In any civil action based on negligence,

strict liability, products liability, misconduct in com-

mercial transactions, professional liability, or breach

of warranty that involves willful, wanton, or gross

misconduct, the judgment for the total amount of

punitive damages awarded to a claimant shall not

exceed three times the amount of compensatory dam-

ages awarded to each person entitled thereto by the _

trier of fact, except as provided in paragraph (by.

However, this subsection does not apply to any class

action. “

(b) If any award for punitive datkages exceeds the

limitation specijied in paragraph (a), the award is

presumed to be excessive and defendant shall be en-

_. titled to remittitur of the amount in excess of the

limitation unless the claimant demons‘rates to the

court by clear and convincing evidence that the

award is not excessive in light of the facts and cir-

cumstances which were presented to the trier of

fact.

Fla. Stat. Ann. § 768.73(1) (a), (b) (West 1989).

(1) In any action to which this part applies wherein

the trier of fact determines that liability exists on

the part of the defendant and a verdict is rendered

which awards money damages to the plaintiff, it

shall be the responsibility of the court, upon proper

motion, to review the amount of such award to deter-

mine if such amount is excessive . . . in light of the

facts and circumstances which were presented to the

trier of fact.

(5) In determining whether an award is excessive

. in light of the facts and circumstances presented

to the trier of fact and in determining the amount,

if any, that such award exceeds a reasonable range

6a

of damages. . . the court shall consider the following

eriteria:

(a) Whether the amount awarded is indicative

of prejudice, passion, or corruption on the part:

of the trier of fact;

(b) Whether it appears that the trier of fact

ignored the evidence in reaching a verdict or

misconceived the merits of the case relating to

the amount of damages recoverable;

(c) Whether the trier of fact took improper

elements of damages into account or arrived at

the amount of damages by qpremiation and con-

jecture;

(d) Whether the amount awarded bears a rea-

sonable relation to the amount of damages

proved and the injury suffered; and

(e) Whether the amount awarded is supported —

by’ the evidence and is such that it could be

adduced in a logical manner by reasonable per-

sons.

Fla. Stat. Ann. § 768.74(1), (5) (West 1989).

GEORGIA

“Trial courts are authorized to set aside arbitrary -

verdicts under OCGA § 51-12-12: ‘The question of

damages is one for the jury; and the court should

not interfere with the jury’s discretion unless the

damages are... so excessive as to justify the infer-

ence of gross mistake or undue bias,’ or, if requested

by a proper motion for new trial under OCGA

§ 5-5-20, ‘. . . when the verdict of a jury is found

contrary to evidence and the principles of justice

and equity, the judge presiding may grant a new

trial before another jury.’... The appellate court

Ta

will not disturb the award ‘absent an award so ex-

cessive . . . as to shock the judicial conscience.’ ”

Hospital Auth. of Gwinnett County v. Jones, 259. Ga.

759, 386 S.E.2d 120, 125-26 (1989) (quoting Davis

piiecseg 182 Ga. App. 18, 23, 354 —* 845, 851

7))

HAWAII

“The test on appellate review as to whether the dam-

ages awarded by the jury were excessive is whether

the award was ‘palpably not supported by the evi-

dence, or so excessive and outrageous when consid-

ered with the circumstances of the case as to demon-

strate that the jury in assessing damages. acted

against rules of law or suffered their passions or

prejudices to mislead them.’ ”-

Kang v. Harrington, 59 Haw. 652, 587 P.2d 285,

292 (1978) (quoting Vasconcellos v. Juarez, 37 Haw.

364, 366 (1946) ).

- IDAHO

““(O]ur power over excessive damages exists only

when the facts are such that the excess appears as a

matter of law or is such as to suggest at first blush,

passion, prejudice, or corruption on the part of the

jury. >»?

Dinneen v. Finch, 100 Idaho 620, 603 P.2d 575, 579

(1979) (quoting Mendenhall v. MacGregor Triangle

Co., 83 Idaho 145, 150-51, 358 P.2d 860, 862-63

(1961) ); accord Soria v. Sierra Pac. Airlines, Inc.,

ltl Idaho 594, 726 P.2d 706, 720 (1986).

ILLINOIS

“A reviewing court will not disturb. an award of

punitive damages on grounds that the amount is ex-

8a

cessive unless it is apparent that the award is the

result of passion, partiality, or corruption.”

Deal v. Byford, 127 Ill. 2d 192, 130 Ill. Dec. 200,

537 N.E.2d 267, 272 (1989) (citations omitted).

\

INDIANA - Ls

“Damages are not [to be] considered excessive un-

less at first blush they appear outrageous and exces-

sive or it is apparent that some improper element

was taken into account by the jury in determining

the amount.’ ”

Hibschman Pontiac, Inc. v. Batchelor, 266 Ind. 310,

362 N.E.2d 845, 849 (1977) (quoting City of In-

dianapolis v. Stokes, 182 Ind. 31, 105 N.E. 477, 479

(1914) ). | |

“We will not reverse an award of damages as be-

ing excessive unless the damages appear so unrea-

sonable as to convince us the jury was motivated by

passion or prejudice.” :

Archem, Inc. v. Simo, 549 N.E.2d 1054, 1061 (Ind.

App. 1990) (citation omitted).

IOWA

“No remittitur is permitted in this state if punitive

damages awarded are found to be excessive.”

Northrup v. Miles Homes, Inc. of Iowa, 204 N.W.2d

850, 861 (Iowa 1973). —

“However, we may set a punitive damage verdict

aside entirely upon proper circumstances.”

Team Cent., Inc. v. Teamco, Inc., 271 N.W.2d 914,

926 (Iowa 1978).

9a

KANSAS

“The award of punitive damages will not be set

aside unless the trial judge finds that the award (1)

was based on passion, prejudice or bias; (2) was

based on mistake of law or fact; or (3) lacked evi-

dentiary support.”

“Where a verdict is so excessive and out of pro-

portion to the damages sustained as to shock: the

conscience of the court and judgment has been en-

tered, the trial judge may tentatively affirm the

judgment, provided that the plaintiff will accept a

reduced judgment, or may grant a new trial... .”

“(I)f the appellate court determines the trial court

did not abuse its discretion in affirming the award

of punitive damages, but the award is so excessive

and out of proportion as to shock the conscience of

the appellate court, the appellate court may tenta-

tively affirm the judgment and allow the plaintiff to

‘either accept a reduced amount or-be granted a new

”?

trial on the issue of punitive damages... .

Folks v. Kansas Power & Light Co., 243: Kan. 57,

755 P.2d 1319, 1335-36 (1988) (citation omitted).

KENTUCKY

“We have no power to correct the excessive award

by remittitur. It is only where the items constitut-

ing the damages recovered are separable so that the

court may eliminate those not properly recoverable

from those which are recoverable that a remittitur

may be ordered.”

Louisville & N.R. Co. v. Complete Auto Transit,

Inc., 259 S.W.2d 483, 484 (Ky. App. 1953) (cita-

tions omitted). ,

“(T]jhe standard for deciding excessiveness which

applies to the trial court’s responsibility when called

upon to decide whether to grant a new trial on

10a

grounds of excessiveness, which is whether the

award appears ‘to have been given under the influ-

ence of passion or prejudice.” ... The appellate

court will reverse only when it can be said that the

trial court has ‘clearly erred,’ i.e., abused its dis-

cretion, in refusing to set aside the award as exces-

sive.”

Fowler v. Mantooth, 683 $.W.2d 250, 253 (Ky.

1984). (quoting CR 59.01(d) and Davis v. Graviss,

672 S.W.2d 928, 932 (Ky. 1984) ).

“The test [of excessiveness of an award of punitive

damages] for the trial court is often styled ‘the first

blush rule.’” -

First & Farmers Bank of Somerset, Inc. v. Hender-

son, 763-S.W.2d 137, 142 (Ky. App. 1988) (quoting

Davis v. Graviss, 672 S.W.2d 928, 932 (Ky. 1984) ).

LOUISIANA

“Tt is well settled in our jurisprudence that the

trial court is granted much discretion in the award-

ing of damages, and its determination will not be

disturbed absent manifest abuse of that discretion.

Before a damage award may be questioned as .. .

excessive, the appellate court must look.to the -indi-

vidual circumstances of the particular case to deter-

mine whether the award was a clear abuse of the

trier of fact’s great discretion.”

Bauer v. White, 532 So. 2d 506, 510. (La. App.

1988) (citing Reck v. Stevens, 373 So. 2d 498 (La.

1979) ).

MAINE

“‘The award of punitive damages . . . is within the

sound discretion of the fact finder after weighing

all relevant aggravating and mitigating factors.’ ”

2

-

*

ante

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lla

Goucher v. Dinneen, 471 A.2d 688, 689 (Me. 1984)

. (quoting Hanover Ins. Co. v. Hayward, 464 A.2d.

156, 158 (Me. 1983) ).

MARYLAND

“|Ojrdinarily|,] excessive damages are not a matter

for review by the appellate court.”

J.C. Penney Co. v. Harker, 23 Md. App. 121, 326

A.2d 228, 231 (1974).

aes : ,

“The Court of Appeals has frequently reiterated its

determined disinclination to review the amount of a

jury’s award of damages in a tort action... ‘We

know of no case where this Court has ever disturbed

the exercise of the lower court’s discretion in deny-

ing a motion’ for new trial because of the .. .

excessiveness of damages.’ ”’

Carl M. Freeman Assocs., Inc. v. Murray, 18 Md.

App. 419, 306 A.2d 548, 552 (1973) (quoting Kirk-

patrick v. Zimmerman, 257 Md. 215, 218, 262 A.2d

531, 532 (1970) ).

MASSACHUSETTS

““'Tjn deciding whether a jury award is excessive

. . the trial judge has his traditional discretion,

and his view that the jury verdict should stand

would generally be respected by an appellate court,

at least where damages were unliquidated.’ ”

Magaw v. Massachusetts Bay Transp. Auth., 21

Mass. App. 129, 485 N.E.2d 695, 700 (1985) (quot-

ing Griffin v. General Motors Corp., 380 Mass. 362,

371, 403 N.E.2d 402, 408 (1980) ).

MICHIGAN

“In reviewing the decision of a trial judge to either

grant or deny remittitur or grant a new trial, we

12a

must determine whether there has been an abuse of

discretion. A reviewing court will only substitute its

judgment for that of the trier of fact where a ver-

dict has been secured by improper methods, preju-

dice, or sympathy, or where it is so excessive as to

‘shock the judicial conscience’.”

Green v. Evans, 156 Mich. App. 145, 401 N.W.2d

250, 255 (1985) (citations omitted) (quoting Gillis-

pie v. Board of Tenant Affairs of the Detroit Hous.

Comm’n, 122 Mich. App. 699, 704, 332 N.W.2d 474,

476 (1983) ).

MINNESOTA

“The trial court’s denial of a remittitur may be re-

versed only where there has been a clear showing of

an abuse of discretion... .”

“The trial court, having heard the testimony and

observed the parties and witnesses, is in a better

position than this court to determine whether the

damages were given under the influence of. passion

and prejudice, and in the absence of a clear abuse

of that discretion its action will not be reversed.”

Robinson v. Mack Trucks, Inc., 426 N.W.2d 220, 226

(Minn. App. 1988).

MISSISSIPPI

“Our general rule is that a damage award is so ex-

cessive that it should be altered or amended when it

evinces passion, bias and prejudice on the part of the

jury so as to shock the conscience. This shock must

be experienced by the judicial conscience, not the ac-

tual conscies*e of the members of this Court.”

Bankers Life & Casualty Co. v. Crenshaw, 483 So.

2d 254, 278, (Miss. 1985) (citations omitted), aff'd,

486 U.S. 71 (1988).

a

13a

MISSOURI

Remittitur was abolished in Firestone v. Crown Cen-

ter Redevelopment Corp., 693 S.W.2d 99, 110 (Mo.

1985) because it “permits the trial court to find er-

ror in its trial and excuse the error upon remittitur

of a commanded portion of the jury’s verdict, only

to see the case appealed despite the remittitur, in-

cluding a charge of error in thé amount of remitti-

tur ordered.”

The court’s ability to order remittitur in cases in-

volving punitive damages was reinstated by RSMo

§ 510.263.6 (1988) (“The doctrines of remittitur

and additur, based on the trial judge’s assessment of

the totality of the surrounding circumstances, shall

apply to punitive damage awards”). This statute

has not ye. been interpreted or challenged in a pub-

lished decision.

MONTANA

(b) When an award of punitive damages is made

by the judge, he shall clearly state his reasons for

making the award in findings of fact and conclu-

sions of law, demonstrating consideration of each

of the following matters:

(i) the nature and ney of the defend-

ant’s wrongdoing;

(ii) the extent of the defendant’s wrongdoing;

(iii) the intent of the defendant in committing the

wrong;

(iv) the profitability of the defendant’s wrongdoing,

if applicable;

(v) the amount of actual damages awarded by the

jury:

(vi) the defendant’s net worth;

l4a

(vii) previous awards of punitive or exemplary

damages against the defendant based upon the same

wrongful act;

(viii) potential or prior criminal sanctions against

the defendant based upon the same wrongful act;

and

(ix) any other circumstances which may operate

to increase or reduce, without wholly defeating,

punitive damages. .

(c) The judge shall review a jury award of“puni-

tive damages, giving consideration to each of the mat-

ters listed in subsection (7) (b). If after review the

judge determines that the jury award of punitive

damages should be . . . decreased, he may do so.

The judge shall clearly state his reasons for .. .

decreasing, or not... . decreasing the punitive dam-

ages award of the jury in findings of fact and con-

clusions of law, demonstrating consideration of each

of the factors listed in subsection (7) (b). .

Mont. Code Ann. § 27-1-221(7)(b), (ce) (1989).

NEBRASKA

Punitive damages are not allowed. See Abel v. Cou-

over, 170 Neb. 926, 104 N.W.2d 684 (1960).

NEVADA

“NRCP 59 includes as grounds for a new trial ‘ex-

cessive damages appearing to have been given under

the influence of passion or prejudice.” ... [T]he

assessing of punitive damages is wholly subjective.

There are no objective standards by which the mone-

tary amount can be calcuiated. The concept of puni-

tive d»mages rests upon a presumed public policy

to punish a wrongdoer for his act and to deter others

from acting in similar fashion. The punitive allow-

15a

ance should be in an amount that would promote the

public interest without financially annihilating the

defendant. The wrongdoer may be punished but not

destroyed.”

Caple v. Raynel Campers, Inc.,.90 Nev. 341, 526

P.2d 334, 336-37 (1974).

NEW HAMPSHIRE

Punitive damages are not allowed. N.H. Rev. Stat.

Ann. § 507:16 (1988).

NEW JERSEY

“This Court has held that verdicts should be upset

for being excessive only in clear cases, that damage

awards wiil not be set aside unless so excessive as

irresistibly to give rise to the inference of mistake,

passion, prejudice or partiality, or are so dispropor-

tionate as to shock the conscience, or the sustaining

of the award would result in a manifest denial of

justice.”

Leimgruber v. Claridge Assocs., Ltd., 73 N.J. 450,

375 A.2d 652, 657 (1977) (citations omitted).

NEW MEXICO

“<«rT lhe findings of the jury should not be disturbed

as excessive, except in extreme cases, as where it re-

sults from passion, prejudice, partiality, sympathy,

undue influence, or some corrupt cause or motive

where palpable error is committed by the jury, or

where the jury has mistaken the measure of dam-

ages. However, the mere fact that. a jury’s award

‘ is possibly larger than the court would have given is

» 99

not sufficient to disturb a verdict.

Richardson v. Rutherford, 787 P.2d 414, 422 (N.M.

1990) (quoting Montgomery wv. Vigil, 65 N.M. 107,

——*

?

16a

113, 332 P.2d 1023, 1027 (1958) (quoting Hall v.

Stiles, 57 N.M. 281, 285, 258 P.2d 386, 389

(1953) )).

NEW YORK .

“[T]he amount of exemplary damages ay arded by

a jury should not be reduced by a court unless it is

so grossly excessive ‘as to show by its very exorbi-

tancy that it was actuated by passion’.” a

Nardelli v. Stamberg, 44 N.Y.2d 500, 377 N.E.2d

975, 977, 406 N.Y.S.2d 443, 445 (1978).

NORTH CAROLINA

“The award of punitive damages is within the dis-

cretion of the jury, subject to the limitation that the

amount may not be excessively disproportionate to

the circumstances.”

Raymond U. v. Duke Univ., 91 N.C. App. 171, 371

S.E.2d 701, 709, rev. denied, 323~N.C. 629, 374

S.E.2d 590 (1988).

NORTH DAKOTA

“We will not overturn an exemplary damages award

as excessive absent passion or prejudice on the part

of the jury. Passion means that the jury was moti-

vated by feelings or emotions rather than by the

evidence. Prejudice includes forming an opinion

without due knowledge or examination.”

Olmstead v. First Interstate Bank of Fargo, N.A.,

449 N.W.2d 804, 809 (N.D. 1989) (citations

omitted).

OHIO

“TGjenerally, the amount of punitive damages to be

awarded rests largely within the determination of

the trier of fact. Furthermore, the trial judge is in

}

4

|

4

|

17a

the best position to determine whether an award is so

excessive as to be deemed the product of passion or.

prejudice, or to require remittitur.... [A]n ‘[a]p-

pellate court hesitates to enter remittitur or set aside

[a] jury’s verdict, supported by creditable proof, as

excessive, in [the] absence of passion or prejudice

evidenced by [the] record.’ ”

Villella v. Waiken Motors, Inc., 45 Ohio St. 3d 36,

543 N.E.2d 464, 469. (1989) (emphasis in a

citations and

OKLAHOMA

“A punitive damages verdict lies peculiarly within

the province of the jury and it will not be casually

interfered with on appeal when it is claimed to have

been actuated by passion or prejudice. Unless the

verdict appears to be grossly excessive or the result

of the jury’s passion, prejudice or improper sym-

pathy, it will not be conditioned by a remittitur. But

where an award is found so out of proportion as to

be unconscionable, a conditional affirmance, subject

to remittitur, may be required.”

Chandler v. Denton, 741 P.2d 855, 868 (Okla. 1987)

(footnotes omitted).

OREGON

“Remittitur, in consequence of Oregon Cotistitution

Art. VII, § 3, is not available in this state.”

State ex rel. Young v. Crookham, 290 Or. 61, 618

P.2d 1268, 1272 (1980) (citing Van Lom v. Schnei-

derman, 187 Or. 89, 110-13, 210 P.2d 461, 471

(1949) ).

18a

PENNSYLVANIA

“[A]t some point the amount of punitive damages

may be so disproportionate when compared to the

character of the act, the nature and extent of the

harm and the wealth of the defendant, that it will

shock the court’s sense of justice. In those rare in-

stances, the court is given discretion to remit the

damages to a more reasonable amount.”

Kirkbride_v. Lisbon Contractors, Inc., 521 Pa. 97,

555, A.2d 800, 803-04 (1989).

RHODE ISLAND

“A jury award of punitive damages may be set aside

by the trial court if the amount ‘clearly appears to

be excessive, or to represent biased judgment.’ ”’

Zarrella v. Robinson, 460 A.2d 415, 418-19 (RI.

1983).

SOUTH CAROLINA

“It is not necessary in reducing an excessive ver-

dict by granting a new trial nisi that the judge find

it to be so excessive as to indicate it was the result

of prejudice, caprice, passion, or other consideration

not founded on the evidence; it is enough if the judge

deems the verdict to indicate undue liberality on the

part of the jury.”

Johnston v. Brown, 290 8.C. 141, 348 S.E.2d 391, 394

(S.C. App. 1986), rev’d on other grounds, 292 S.C.

478, 357 S.E.2d 450 (1987).

SOUTER DAKOTA

“There is no precise mathematical ratio between com-

pensatory and punitive damages. Punitive damages

must not be so oppressive or so large as to shock the

sense of fair-minded men, but they may considerably

;

7

-

:

{

19a

exceed compensatory damages. To accomplish the ob-

jective of punishing the wrongdoer and deterring oth-

ers from similar wrongdoing, punitive damages must

be relatively large. The amount allowed in compensa-

tory damages is but one of the circumstances to con-

sider regarding the proper amount of punitive dam-

ages. Other factors that properly have a bearing

upon the amount of punitive damages are the nature

and enormity of the wrong, the intent of the wrong-

doer, his financial condition, and all of the circum-

stances attendant to his actions.”

Hulstein v. Meilman Food Indus., Inc., 293 N.W.2d

889, 892 (S.D. 1980) (citations omitted).

TENNESSEE

“Admittedly, it is difficult to lay down a rule for

testing the excessiveness of a verdict for punitive

damages; however, such an award will be set aside

if it is grossly excessive or appears to be the result

of passion, prejudice, improper sympathy, or for

some other reason appears to constitute an injustice.

The factors to be considered in assessing the award

include the nature of the defendant’s acts, the amount

of compensatory damages awarded and the wealth

of the particular defendant.”

Coppinger Color Lab, Inc. v. Nixon, 698 S.W.2d 72,

75 (Tenn. 1985) (citations omitted).

TEXAS

“Although the verdict is large and the trial court,

in the exercise of its sound discretion, could have set

it aside, an appellate court will not disturb the ver-

dict in the absence of circumstances tending to show

that it was the result of passion, prejudice, or other

improper motive; or that the amount fixed was not

the result of a deliberate and conscientious conviction

in the minds of the jury and the court; or that the

20a

amount was so excessive as to shock a sense of jus-

tice of the appellate court.”’

Texaco, Inc. v. Pennzoil Co., 729 S.W.2d 768, 864

(Tex. App. 1987).

UTAH

“Generally, the only limitation on this discretion [of

the jury to award punitive damages] is that the

award must not be the result of passion and prej-

udice. The measure of the verdict might be so grossly

excessive and disproportionate to the injury that this

court would say, from that fact alone, that as a mat-

ter of law the verdict must have been arrived at by

passion. or prejudice. However, to support that con-

clusion, the verdict must be so excessive as to be

shocking to one’s conscience and to clearly indicate

passion, prejudice or corruption on the part of the

jury.”

Terry v. Zions Coop. Mercantile Inst., 605 P.2d 314,

328-29, (Utah 1979) (footnote omitted), rev’d on

other grounds, McFarland v. Skaggs Cos., Inc., 678

P.2d 298 (Utah 1984).

VERMONT

“Essentially, remittitur is evaluated by whether or

not the damages were ‘manifestly and grossly ex-

cessive.’ Unless grossly excessive, this Court will not

interfere with an award of damages where exact

computation is impossible.”

Lent v. Huntoon, 143 Vt. 589, 470 A.2d 1162, 1172

| (1983) (citations omitted).

VIRGINIA

“[N]» fixed standard exists for the calculation of

punitive damages and . . . it is an issue largely

within the discretion of the jury. Nevertheless, the .

Zia

‘amount of punitive damages awarded should bear

some reasonable relationship to the actual damages

sustained and to the measure of punishment re-

quired... .’”

Philtp Morris Inc, v. Emerson, 235 Va. 380, 368

S.E.2d 268, 286-87 (1988) (citation omitted) (quot-

ing Gazette, Inc. v. Harris, 229 Va. 1, 51, 325 S.E.2d

713, 747, cert. denied, 472 U.S. 10382 (1985), and

473 U.S. 905 (1985) ).

WASHINGTON

Punitive damages are not allowed. Spokane Truck &

Dray Co. v. Hoefer, 2 Wash. 45, 25 P. 1072 (1891).

WEST VIRGINIA

“Only where the award of punitive damages has no

foundation in the evidence so as to evince passion,

prejudice or corruption in the jury should the award

be set aside as excessive.”

Wells v. Smith, 297 S.E.2d 872, 880 (W. Va. 1982).

In- Roberts v. Stevens Clinic Hosp., Inc., 345 S.E.2d

791, 800 (W. Va. 1986), the West Virginia Supreme

Court of Appeals abandoned the rule that remittitur

of indeterminate damages is impermissible, and es-

tablished the following standard for deciding the

amount of damages to be remitted:

“What is the highest jury award under the facts of

. this Case that would not be monstrous and enormous,

at first blush beyond all measure, unreasonable and

outrageous, and such as manifestly shows jury pas-

sion, partiality, prejudice, or corruption?”

WISCONSIN

“We hold that the Powers Rule extends to punitive

damages and a trial court has the power to reduce

22a

the amount of “punitive damages to which it deter-

mines is a fair and reasonable amount for such kind

of damages.”

Malco, Ine. v. Midwest Aluminum Sales, Inc., 14 Wis.

2d 57, 109 N.W.2d 516, 521 (1961) (citing Powers

v. Allstate Ins. Co., 10 Wis. 2d 78, 102 N.W.2d 393

(1960) ).

WYOMING

“Consistently with the purposes of punishment and

deterrence this court has identified the factors justi-

fying an award of punitive damages as: ‘(a) the

financial condition or wealth of the defendant; (b)

the activity of the defendant causing the harm; and

(c) the nature and extent of the injury suffered.’ 3

Adel v. Parkhurst, 681 P.2d 886, 891 (Wyo. 1984)

(quoting Cates v. Eddy, 669 P.2d 912, 921 (Wyo.

1983) ).

ae i Sipreme Cot, US,

No. 89-1279 FILED

———s «(188

IN THE JOSEPH F. SPasace

Supreme Court of the United States——

OCTOBER TERM, 1989

PACIFIC MUTUAL LIFE INSURANCE COMPANY,

Petitioner,

v.

CLEOPATRA HASLIP, CYNTHIA CRAIG,

ALMA M. CALHOUN, and EDDIE HARGROVE,

Respondents.

On Writ of Certiorari to

the Supreme Court of Alabama

BRIEF OF THE WASHINGTON LEGAL

FOUNDATION; U.S. REPRESENTATIVES JOE

BARTON, DAN BURTON, HAMILTON FISH, JR..,

PAUL B. HENRY, HENRY J. HYDE, AND THOMAS

E. PETRI; AND THE ALLIED EDUCATIONAL

FOUNDATION AS AMICI CURIAE IN SUPPORT OF

PETITIONER

DANIEL J. POPEO

RICHARD A. SAMP

(Counsel of Record)

Washington Legal Foundation

1705 N Street, N.W.

Washington, D.C. 20036

(202) 857-0240

June 1, 1990

LL ETS

CASILLAS PRESS INC. — 1717 K STREET NW WASHINGTON DC 20036 — 223-1220

i

QUESTION PRESENTED

Amici will address the following issue:

Whether Alabama law, as applied below, violates

Pacific Mutual’s right to Due Process under the Four-

teenth Amendment by allowing the jury to award puni-

tive damages against Pacific Mutual in the absence of

any advance notice to Pacific Mutual as to the potential

size of a punitive damage award.

Page

TABLE OF AUTHORITIES ............... ii

INTEREST OF THE AMICI CURIAE ..........

STATEMENT OF THE CASE .............. 3

SUMMARY OF ARGUMENT .............. 5

ARGUMENT

I. THE PUNITIVE DAMAGE AWARD IN THIS

CASE VIOLATED PACIFIC MUTUAL’S DUE

PROCESS RIGHTS IN THE ABSENCE OF

ANY ADVANCE NOTICE TO PACIFIC

MUTUAL AS TO THE POTENTIAL SIZE OF -

A PUNITIVE DAMAGE AWARD ......... 6

Il. THE VOID-FOR-VAGUENESS DOCTRINE IS

FULLY APPLICABLE TO CIVIL CASES ... 11

Il. PROVIDING NOTICE OF POTENTIAL

PENALTIES IS JUST AS IMPORTANT AS

PROVIDING NOTICE OF PROHIBITED

IV. PUNITIVE DAMAGE AWARDS IMPLICATE

DUE PROCESS CONCERNS REGARDLESS

WHETHER, AS HERE, THE PARTY

RECEIVING THE AWARD IS A PRIVATE

alee Wh aaa’ o c0 6 60 so see ete 18

TABLE OF AUTHORITIES

Page

CASES:

Bankers Life and Casualty Co. v. Crenshaw,

See Ge OP AIOUED os ce ce cs 9, 15

Browning-Ferris Industries of Vermont, Inc.

v. Kelco Disposai, Inc.,

BGS B.Gt-20r (1969) 2. ee ee ee 14

Calder v. Bull,

> ap ee.) 306 (1798) i ee 18

‘Campbell v. Burns,

512 So.2d 1341 (Ala 1987) ............. 9

Cummings v. Missouri,

71 US. 4 Wall.) 277 (1867) ............ 18

Dobbert v. Florida,

ES ee 18

Eichenseer v. Reserve Life Ins. Co.,

894 F.2d 1414 (Sth Cir. 1990) ........... 10

First National Bank of Boston v. Bellotti,

EEE Py oes ee 6

Fuentes v. Shevin,

ED ge Sc cere cake ese 19

Gertz v. Robert Welch, Inc.,

BR ere 8, 14, 18

iv

Giaccio v. Staie of Pennsylvania,

SBS UD. Be CAPM oc ce ees ‘11, 18

Grayned v. City of Rockford,

406 US. 104 (1972)... ee 6, 7

H.J., Inc. v. Northwestern Bell Telephone Co.,

eto oF, era 2

International Brotherhood of Electrical

Workers v. Foust,

gS ee), eee 8,9

Jordan v. DeGeorge,

Se Se ee 6 io Ws wee wee be 12, 18

Kansas and Missouri v. Utilicorp United Inc.,

No. 88-2109 (decision pending 1990)........ 2

Kolender v. Lawson, —

ED i. gp wn og 6 sa wae owes 11

Logan v. Zimmerman Brush Co.,

GIG WR. Ge Ge nk oe cece ce ceux 6, 19

Mitchell v. W.T. Grant Co.,

416 US. 600 (1974) ...........2054.. 19

North Georgia Finishing, Inc. v. DiChem,

gk Beare 19

Pacific Gas & Electric Co. v. Public —

Utilities Commission of California,

SS a eee eee ee 2

—-Pacific Mutual Life Ins. Co. v. Haslip,

$53 So.2d 537 (Ala 1989) .............. 4

Rooney v. North Dakota,

er reer 17

Shiloh Construction Co. v. Mercury

Construction Corp.,

392 $0.28 OE = sg ooo. o's 6 08 0 68 10

Smith v. Goguen,

8 Naa a ear rere 11

Sniadich v. Family Financial Corp.,

tS 5 Ee rrr 19

Tull v. United States,

Se AED noc ei lee wee ee 2, 14

United States v. Batchelder, |

eee ee 15

Village of Hoffman Estates v. Flipside,

Hoffman Estates, Inc.,

455 US. 489 (1982) ....... 11, 12, 13, 14, 19

Weaver vy. Graham,

RE 18

Zauderer v. Office of Disciplinary Counsel,

pe We Dk so oc oe ee eo 13

CONSTITUTIONAL PROVISIONS:

RS eS ee 17

Se ee ee Me Ce wee 17

n,n Ss be Se cubete 6

vi

Wheeler, "The Constitutional Case For

Reforming Punitive Damages Procedures,"

69 U.Va.L Rev. 269 (1963) .............. 14, 19

Note, "RICO’s ‘Pattern’ Requirement: Void

for Vagueness?,” 90 Colum.L.Rev. 489,

ES i ner SoU ae rarer

Note, "Can Punitive Damages Standards Be

Void for Vagueness?," 63 St. John’s L.Rev.

Se I ks oO 4 a6 6k Ge a cde oe oe eo

Petition for Wnt of Certiorari, Pacific

Mutual Life ins. Co. v. Cleopatra Haslip,

Cynthia Craig, Alma M. Calhoun, ad Eddie

Hargrove, No. 89-1279 ...............4..

Reply Brief m Support of Petition for

Certiorari, Pacific Mutual Life Ins. Co.

v. Cleopatra Haslip, Cynthia Craig,

Alma M. Calhoun, and Eddie Hargrove,

ee I se 6 a bso w oe 8

IN THE

SUPREME COURT OF THE UNITED STATES

Ocroszr Term, 1989

No. 89-1279

PACIFIC MUTUAL LIFE INSURANCE COMPANY,

Petitioner,

Vv.

CLEOPATRA HASLIP, CYNTHIA CRAIG,

ALMA M. CALHOUN, and EDDIE HARGROVE,

Respondents.

BRIEF OF THE WASHINGTON LEGAL

FOUNDATION; U.S. REPRESENTATIVES

JOE BARTON, DAN BURTON, HAMILTON

FISH, JR., PAUL B. HENRY, HENRY J. HYDE,

AND THOMAS E. PETRI; AND THE

ALLIED EDUCATIONAL FOUNDATION AS

AMICI CURIAE IN SUPPORT OF PETITIONER

INTEREST OF THE AMICI CURIAE

The Washington- Legal Foundation (WLF) is a

national nonprofit public interest law and policy center

with more than 125,000 members and supporters nation-

wide. While WLF engages in litigation and the admin-

istrative process in a variety of areas, WLF devotes a

substantial amount of time to advancing the interests of

the free enterprise system, and the economic and civil

2

liberties of individuals and businesses. To this end,

WLF has appeared as amicus curiae before this Court

as well as other state and federal courts in cases

affecting business. See, e.g., Kansas and Missouri v.

Utilicorp United Inc., No. 88-2109 (decision

1990); AJ., Inc. v. Northwestern Bell Telephone Co.,

109 S.Ct. 2893 (1989); Tull v. United States, 481 U.S.

412 (1987); and Pacific Gas & Electric Co. v. Public

Utilities Commission of California, 475 U.S. 1 (1986).

Reps. Joe Barton (Tex.), Dan Burton (Ind.),

Hamilton Fish, Jr. (N.Y.), Paul B. Henry (Mich.), Henry

J. Hyde (Ill.), and Thomas E. Petri (Wisc.) are

Members of the United States House of Representatives.

Each is vitally concerned that the nation’s court systems

fully respect the constitutional rights of all litigants.

Their constituents, as consumers, must ultimately bear

the large custs associated with the award of punitive

damages in tort suits. Congress has been oe

the adoption of reforms m the tort system,

outcome of this lawsuit may well have an irs eon

the course of such reforms.

study such as history, law, and public policy, and has

appeared as amicus before this Court on several occa-

sions in cases involving individaal rights.

Each of the amici is affected by the increasing

number of truly staggering punitive damage awards that

have been imposed against civil litigants in recent years.

The most frequent target of such awards are businesses.

While the direct payors of such awards are the individ-

ual litigants themselves, the consuming public ultimately

3

pays for such awards in the form of higher prices and

the absence of products forced off the U.S. market for

fear of unpredictable liability.

Amici believe that the best interests of the

consuming public will be served if the Court imposes

some constitutional limitations on the award of punitive

damages by state and federal courts. Amici are filing

this brief because of their interest in promoting the

welfare of the consuming public; they have no direct

economic interest in the outcome of this lawsuit or of

othcs lawsuits raising similar constitutional issues.

Because of their lack of direct econcmic interests, amici

believe that they can assist the Court by providing a

perspective that is distinct from that of either party.

Amici submit this brief on behalf of Petitioner with

the written consent of both parties.

STATEMENT OF THE CASE

Amici are, in the interest of brevity, omitting any

detailed statement of the facts of this case. Amici adopt

by reference the statement of facts contained in Petition-

er’s brief.

In brief, the Alabama courts in this case granted

Respondents a $1,078,000 punitive damage award

against Petitioner Pacific Mutual Life Insurance Co.

("Pacific Mutual") based on the conduct of one of

Pacific Mutual’s agents. The agent, unbeknownst to

senior officials at Pacific Mutual, had collected health

insurance premiums from Respondents on behalf of an-

other, wholly unrelated, insurance company (Union

Fidelity Life Insurance Co.) and then, instead of

obtaining insurance coverage for Respondents through

Union Fidelity, had simply pocketed the premiums.

4

Respondents discovered the agent’s fraud after one

of the Respondents, Cleopatra Haslip, was hospitalized

and incurred $3,800 in medical expenses. Union

Fidelity denied coverage for those expenses on the

ground that no health insurance policy was in force.

Those expenses, together with the trauma suffered by

Ms. Haslip as a result of being faced with large,

uninsured medical bills, were the only actual damages

suffered by any of the Respondents in this case; ali

health insurance premiums paid by Respondents were

refunded in full.

At trial, the jury was instructed that if it found the

agent guilty of fraud and if it found Pacific Mutual

responsible for the agent's conduct, it was free to award

punitive damages against Pacific Mutual “in your discre-

tion.” The only guidance given to the jury as to the

amount of punitive damages to be awarded was, “[Y]ou

must take into consideration the character and degree of

the wrong as shown by the evidence and the necessity

of preventing similar wrongs." The jury then returned a

punitive damage award against Pacific Mutual that was

more than 283 times greater than Ms. Haslip’s medical

expenses. The jury award was twice as large as any

punitive damages award that had ever been upheld in

the history of the Alabama court system as of 1981,

when the events relevant to this case took place.

The trial court and the Alabama Supreme Court

(with two justices dissenting) upheld the jury’s punitive

damage award. Pacific Mutual Life Ins. Co. v. Haslip,

553 So.2d 537 (Ala. 1989).

5

SUMMARY OF ARGUMENT

Alabama punitive damages law is overly vague;

people of ordinary intelligence simply are unable to

determine their potential liabilit, for punitive damage

awards and to fashion their conduct accordingly. The

imposition of punitive damages on Pacific Mutual on

the basis of Alabama’s overly vague laws is a violation

of Pacific Mutual’s rights under the Due Process

Clause.

The doctrine prohibiting the deprivation of liberty

or property on the basis of overly vague laws -- known

as the "void-for-vagueness” doctrine -- had its genesis

in criminal cases. However, recent case law makes

clear that the doctrine is equally applicable to civil

cases, such as this case. Moreover, the doctrine is

applicable not only to claims that the prohibited conduct

is not clearly defined but also to claims, as here, that

the potential penalty is overly vague. The argument

that the doctrine can be invoked to void laws with

overly vague penalty provisions is supported by analogy

to the Ex Post Facto Clauses of the U.S. Constitution.

Finally, the void-for-vagueness doctrine is fully

applicable even when it is not the goverment that

seeks a judgment against the defendant but rather, as

here, it is a private mndividual that seeks a judgment.

6

ARGUMENT

I. THE PUNITIVE DAMAGE AWARD IN THIS

CASE VIOLATED PACIFIC MUTUAL’S DUE

PROCESS RIGHTS IN THE ABSENCE OF

ANY ADVANCE NOTICE TO _ PACIFIC

MUTUAL AS TO THE POTENTIAL SIZE OF

A PUNITIVE DAMAGE AWARD

Before the courts of Alabama may issue a judgment

depriving Pacific Mutual of property, they must afford

Pacific Mutual all protections it is entitled to under the

Due Process Clause of the Fourteenth Amendment.’

Logan v. Zimmerman Brush Co., 455 U.S. 422, 429

(1982). Chief among those protections is the right not

to be deprived of property on the basis of any overly

vague law. Grayned vy. City of Rockford, 408 U.S. 104,

108 (1972). As the Court explained in Grayned:

Vague laws offend several important values.

First, because we assume that m~~ is free to

Steer between lawful and unlawful conduct, we

insist that laws give the person of ordinary

intelligence a reasonable opportunity to know

' what is prohibited, so that he may act accord-

ingly. Vague laws may trap the mnocent by

not providing fair warming. Second, if arbitrary

and discriminatory enforcement is to be pre-

' The Due Process Clause of the Fourteenth Amendment pro-

vides:

{Njor shall any state deprive any person of life, liberty or

property without due process of law.

A corporation is considered a “person” within the meaning of the

Fourteenth Amendment. First National Bank of Boston \. Bellotti,

435 US. 765, 780 n1§ (1978).

7

vented, laws must provide explicit standards for

those who apply them. A vague law impermis-

sibly delegates basic policy matters to police-

men, judges, and juries for resolution on an ad

hoc basis, with the attendant dangers of axbi-

trary and discriminatory application.

Id. at 108-09. See also Note, “RICO’s ‘Pattern’ Re-

quirement: Void for Vagueness?,” 90 Colum. L. Rev.

489, 512-14 (1990).

Amici believe that Alabama’s system for the

imposition of punitive damages in civil cases offends

both of the important values cited above. By permitting

juries to deprive defendants of their property through

the imposition of punitive damages without simultane-

ously providing juries with adequate standards with

which to determine whether to award punitive damages

and, if so, in what amount, Alabama runs afoul of the

void-for-vagueness doctrine, as.enunciated by Grayned.

Amici understand that other briefs to be filed in

support of Pacific Mutual will press the argument that

Alabama punitive damages law offends the second of

the two values cited in Grayned: that the law creates

unacceptable dangers of arbitrary and discriminatory

enforcement by impermissibly delegating basic policy

matters to juries. Accordingly, amici have focused their

brief on the argument that Alabama punsive damages

law offends the first of the two values cited in

Grayned: that the law deprived Pacific Mutual of fair

notice that it might be held liable for the punitive

8

damages imposed upon it in thi> case.’

This Court has repeatedly recognized that an award

of punitive damages is an “extraordinary sanction."

International Brotherhood of Electrical Workers v. Foust,

442 U.S. 42, 48 (1979). Punitive damages do not

represent compensation for any injury suffered by the

plaintiff in a civil suit; rather, they “are private fines

levied by civil juries to punish reprehensible conduct

and to deter its future occurrence.” Gertz v. Robert

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

The average person is aware that tort law requires

him to pay all actual damages caused by his wrongful

conduct. Given the reasonable foreseeability of most

injuries suffered by others as a result of one’s wrongful

conduct, due process is not offended by a judgment re-

quiring a defendant to compensate a plaintiff for all

such injuries. Such a defendant has faii notice, be*ore

committing his wrongful act, of the potential magnitude

of his liability. However, because punitive damuge

awards need not bear an} ‘elation to the amount «—

damages actually suffered, a defendant has no similar

advance notice regarding the potential size of his

punitive damages liability. As Justice O’Connor has

explained, "Punitive damages are not measured against

actual injury, so there is no objective standard -that

limits their amount. Hence, ‘the impact of these

windfall recoveries i« wmpiedictable and _ potentially

_-*«

> Amici believe that Alabama law failed even to place Pacific

Mutual on notice that it was liable for any award of punitive

damages. However, am ci have focased this brief on a more nar-

row point: that even if Alabama law placed Pacific Mutual on

notice that it might be held liable for some amount of punitive

damages (based on a theory of vicarious liability for the unautho-

rized conduct of its agent), Pacific Mutual lacked any notice

regarding the potentially vast size of a punitive damage award.

9

substantial.”"" Bankers Life and Casualty Co. v. Cren-

shaw, 108 S.Ct. 1645, 1655 (1988)(O’Connor, J., con-

curring in judgment)(quoting Electrical Workers v.

Foust, 442 U.S. at 50).

A state is free to cure that absence of notice by,

for example, adopting laws that specify a range of

potential punitive damage awards for specific types of

wrongful conduct. However, Alabama has taken no

such steps. Rather, it has delegated to juries unbridled

discretion to determine the size of punitive damage

awards as they see fit.’ In the absence of any advance

notice to Pacific Mutual that it could be held liable for

more than $1 million in punitive damages based on its

conduct in this case, the judgment entered by the

Alabama courts is in violation of Pacific Mutual’s due

process rights and must be vacated.

It will not do for Respondents to argue that since

Pacific Mutual was aware that Alabama juries are

empowered to award punitive damages as. they see fit,

Pacific Mutual had notice of the possibility of a

muilion-dollar verdict. Notice that one’s conduct might

subject one to punitive damages liability of anywhere

from $1 to $10 million is no notice at all; the "person

of ordinary intelligence" referred to in Grayned will be

unable to use that notice-as a guide to the conduct of

his affairs. Nor is Alabama law saved because it is

* While Alabama jury verdicts awarding punitive damages are

subject to post-trial review by the tal court and appellate courts,

that review generally accords great deference to the jury’s award

and thus does little to control a jury’s-unbridled discretion to award

pumitive damages. See, e.g., Campbell vy. Burns, 512 So.2d 1341,

1343 (Ala. 1987). Accordingly, Alabama appellate decisions pro-

vide virtually no notice as to the potential size of punitive damage

awards.

10

judge-made rather than statutorily based. As Judge

Jones of the Fifth Circuit has noted:

(I]f a statute declared as an offense the refusal

to pay an insurance claim without an arguable

or reasonable basis, which refusal was attended

by gross negligence or recklessness, and if the

statute then punished this offense with fines

ranging from zero to millions of dollars at the

sole discretion of the factfinder, I think we

would not hesitate to strike it down for

vagueness.

Eichenseer v. Reserve Life Ins. Co., 894 F.2d 1414,

1421-22 (Sth Cir. 1990)(Jones, J., dissenting from denial

of rehearing en banc).

Moreover, even if it could be argued that

companies doing business in Alabama today have notice

of their potential liability for multi-million-dollar

punitive damage awards, Pacific Mutual clearly had no

such notice in the summer of 1981 -- when the events

at issue in this lawsuit transpired. The largest punitive

damages award ever affirmed by the Alabama Supreme

Court up until that date was in the amount of $560,000.

See Shiloh Construction Co. v. Mercury Construction

Corp., 392 So.2d 809 (Ala. 1980).“ Accordingly,

Pacific Mutual could not have had notice in 1981 that

its conduct was opening itself up for a punitive damage

award nearly twice as large as any award ever affirmed

to that date.

—<—

* A table listing all Alabama Supreme Court cases involving an

award of punitive damages (and indicating the court's disposition of

each case) is attached as Appendix E to Pacific Mutual's reply

brief in suppori of its petition for a wnt of certioran.

11

In the absence of some advance waming to Pacific

Mutual -- either in the form of a statute or in the form

of a judicially crafted rule -- that its conduct toward

Respondents would subject it to a punitive damage

award in the range of the award actually rendered, the

judgment in this case cannot pass muster under the Due

Process Clause.

Il. THE VOID-FOR-VAGUENESS DOCTRINE IS

FULLY APPLICABLE TO CIVIL CASES

Many of the cases in which this Court has

considered the void-for-vagueness doctrine have

involved the application of criminal statutes, and

language in some of those cases suggests that the

doctrine applies with special force in the criminal

context. See, e.g., Kolender v. Lawson, 461 U.S. 352,

358 n.8& (1983); Smith v. Goguen, 415 U.S. 566, 573

n.10 (1974).

Nonetheless, one need not argue that a punitive

damage award is a quasi-criminal penalty in order to

invoke the protection of the void-for-vagueness doctrine

against such awards. The Court has made clear that

while greater deference will be granted to civil laws

than to criminal laws when applying the void-for-

vagueness doctrine, the doctrine is fully applicable in

the civil context. See Village of Hoffmen Estates vy.

Flipside, Hoffman Estates, Inc., 455 U.S. 489, 498-99

(1982); Note, "Can Punitive Damages Standards Be

Void for Vagueness?,” 63 St. John’s L. Rev. 52, 59

(1988). Thus, in Giaccio v. State of Pennsylvania, 382

U.S. 399 (1966), the Court struck down on vagueness

grounds a Pennsylvania statuie that authorized a jury, at

its discretion and unguided by any clear standards, to

impose the costs of a criminal prosecution on an

acquitted defendant. The Court stated that whether the

12

statute should be classified as civil or criminal was

urelevant to the vagueness analysis:

Whatever label has been given to the [Pennsyl-

vania statute], there is no doubt that it provides

the State with a procedure for depriving an

acquitted defendant of his liberty and his

property. . . Implicit in this _ constitutional

safeguard [the Due Process Clause] is the

premise that the law must be one that carries

an understandable meaning with legal standards

that courts must accept.

Id_at 402, 403. Similarly, in Jordan vy. DeGeorge, 341

U.S. 223, 231 (1951), the Court applied a void-for-

vagueness test to a civil statute involving deportation

proceedings.

In Hoffman Estates, the Court discussed several

factors that should be considered in determining how

strictly the void-for-vagueness doctrine should be

applied to a given statute. Among those factors were:

(1) Economic regulation is subject to a less

strict vagueness test, particularly where the

subject matter of the regulation is narrow,

or where the regulated businesses have the

opportunity to seek clarification of poten-

tially vague regulations;

(2) Laws with civil rather than criminal penal-

ties are subject to a less strict vagueness

test because the consequences of impreci-

sion are less severe;

(3) Laws containing a scienter requirement are

subject to a less strict vagueness test,

13

especially with respect to the adequacy of

notice that one’s conduct is proscribed; and

(4) Laws that threaten to inhibit the exercise of

constitutionally protected rights are subject

to a more stringent vagueness test.

Hoffman Estates, 455 U.S. at 498-99.

Applying the factors enunciated in Hojfman Estates

to this case, one could conclude that Alabama’s punitive

damages laws should be tested under a mode ely re-

laxed void-for-vagueness standard. First, those laws do

not appear to be the type of “economic regulation” that

the Court had in mind in Hoffman as meriting relaxed

review; although Alabama's punitive damages laws are

being applied to a business enterprise in this instance,

the laws are of general applicability to all citizens and

are not confined to a “narrow” subject matter. More-

over, Alabama has no mechanism whereby companies

such as Pacific Mutual can seek guidance from the state

government regarding they potential liability for

punitive damages. C/. Zauderer v. Office of Discipli-

nary Counsel, 471 U.S. 626, 668 (1985) (Brennan, J.,

concurring in part and dissenting in part) (there is little

rationale for permitting punishment for violation of

umprecise commercial regulations uniess ‘a _business-

person can clarify the meaning of an arguably vague

regulation by consulting with the government adminis-

trators”).

The second Hoffmen factor -- whether the law

challenged on vagueness grounds is civil or criminal --

would suggest that a somewhat relaxed vagueness test

ought to be applied te the not-strictly-criminal state

laws at issue in this case. However, the quasi-criminal

nature of a large punitive damage award should not be

14

overlooked. As Justice O’Connor has noted, "The

Court’s cases abound with the recognition of the penal

nature of punitive damages. See Tull v. United States,

481 U.S. 412, 422, and n.7 (1987)." Browning-Ferris

Industries of Vermont, Inc. v. Kelco Disposal, Inc., 109

S.Ct. 2909, 2932 (1989)(O’Connor, J., dissenting). The

criminal/civii distinction becomes especially blurred

when, as here, the entity being sanctioned is a corpora-

tion. A corporation cannot be incarcerated; thus, the

sole criminal sanction that Alabama can impose on a

foreign corporation is a monetary fine -- precisely the

sanction imposed on Pacific Mutual here, but in an

amount greater than the fine provided for under any

Alabama criminal statute. Moreover, the stigmatizing

effect to a corporation of a large punitive damages

award may well prove to be as great as the stigmatizing

effect of a criminal conviction. See Wheeler, "The

Constitutional Case for Reforming Punitive Damages

Procedures,” 69 U. Va. L. Rev. 269, 280-83 (1983).

The third Hoffman factor -- whether the challenged

law includes a scienter requirement -- militates in favor

of application of a stricter vagueness test in this case.

Alabama imposed punitive damages on Pacific Mutual

without requiring a showing of scienter; rather, Pacific

Mutual was held vicariously liable for the conduct of a

non-managerial agent.”

* The fourth Hoffman factor -- threats to constitutionally pro-

tected mghts -- does not appear to be a major factor in this case.

The decision in this case is unlikely to inhibit the exercise of such

rights by Pacific Mutual. Nonetheless, the broad discretion granted

to Alabama juries to impose punitive damages could cause others

to refrain from exercising such rights. For example, newspapers

have much to fear from libel suits brought under Alabama's liberal

punitive damages provisions, notwithstanding the broad protection

afforded newspapers by Gertz.

15

Regardless of the level of strictness with which the

Court applies the void-for-vagueness test in this case,

the scheme under which Alabama permits the imposition

of punitive damages cannot meet that test. Alabama is

required under the Due Process Clause to provide some

guidance to potential defendants regarding the size of

punitive damage liability that may arise from a given

course of conduct. Application of a less strict vague-

ness test in this case would permit Alabama to provide

that guidance with less clarity (e.g., to specify that

punitive damage awards would fall somewhere within a

relatively broad range). However, there is no con-

Stitutional sanction for what Alabama has done in this

case: impose a huge punitive damage award against

Pacific Mutual without any advance notice.

fil. PROVIDING NOTICE OF POTENTIAL

PENALTIES IS JUST AS IMPORTANT AS

PROVIDING NOTICE OF PROHIBITED

CONDUCT

In addressing the requirement that defendants be

given fair warning, the great majority of this Court's

void-for-vagueness decisions have focused on the need

to provide defendants with a reasonable opportunity to

discem what conduct is prohibited. Nonetheless, the

Court’s case law is clear that the Due Process Clause

also requires that advance notice be provided regarding

potential penalties. Thus, in United States v. Batchelder,

442 US. 114, 122 (1979), the Court stated, "So too,

vague sentencing provisions may pose constitutional

questions if they do not state with sufficient clarity the

consequences of violating a given criminal statute.” See

also Bankers Life and Casualty Co. yv. Crenshaw, 108

S.Ct. at 1656 (O’Connor, J., concurring in judgment)

("[t]his grant of wholly standardless discretion to

16

determine the severity of puaishment appears inconsis-

tent with due process’).

Fair waming of the consequences of engaging in

prohibited conducted is particularly important when, as

here, the defendant is a corporation being held vicari-

ously liable for the acts of others. It could be argued

plausibly that an individual defendant has no cause for

complaint concerning his punishment if he knowingly

engages in prohibited conduct, even if he had no

advance warning of the potential consequences of his

conduct; one could argue that such an individual could

have avoided those consequences by adhering to known

rules of conduct.° That argument has no force, how-

ever, when the defendant is a corporation facing

vicarious liability for the acts of others. Such a

defendant cannot be said to have knowingly engaged in

prohibited conduct. The worst that can be said about

such a corporation is that it failed to take sufficient

steps to prevent wrongdoing by others.’ But the affir-

mative steps that a corporation will take to prevent

wrongdoing by others will necessarily depend im large

measure on the potential consequences to the corpora-

tion of others’ wrongdoing. Had Pacific Mutual known

that it would be subject to million-dollar-plus punitive

damage verdicts for any wrongful acts of its agents, one

can rest assured that Pacific Mutual would have done

* That argument, however, appears to ignore basic human rature.

To quote Anstotle: “The generality of men are naturally arm. to be

swayed by fear rather than by reverence, and to refrain from evil

rather because of the punishment that it brings than because of its

own foulness." Aristotle, Nichomachean Ethics bk. X, ch. 9 at 1.

” For example, in this case, the Alabama Supreme Court faulted

Pacific Mutual for not taking steps to rein in its agent upon first

leaming of complaints being filed against him. See Petition for

Wnt of Cermioran at Al4-15.

17

all it could to prevent such acts." Accordingly, there is

a fundamental unfairness in permitting Alabama _ to

sandbag Pacific Mutual by failing to disclose in advance

the dire consequences that could befall Pacific Mutual

for the misconduct of others.

This Court's consistent interpretation of the Ex Post

Facto Clauses of the Constitution’ strongly supports the

argument that the vagueness doctrine requires fair warn-

ing of penalties as well as prohibited acts. The Court's

first discussion of the ex post facto prohibition in 1798

made clear that the prohibition extended to after-the-fact

changes in criminal penalties. The Court discerned four

types of laws prohibited by the clauses:

Ist. Every law that makes an action done be-

fore the passing of the law, and which was

innocent when done, criminal; and punishes

such action. 2nd. Every law that aggravates a

crime, or makes it greater than it was, when

committed. 3d. Every law that changes the

punishment, and inflicts a greater punishment,

than the law annexed to the crime when com-

mitted. 4th. Every law that alters the legal

rules of evidence, and receives less, or different

testumony than the law required at the time of

the commission of the offense, in order to

convict the offender.

* For example, at a cost far less than the judgment entered in

this case, Pacific Mutual could have hired an additional team of

internal investigators whose full-time job it would have been to root

out fraudulent activity by agents. But such measures would make

economic sense only after a corporation has been given fair warn-

ing that it will be subject to million-dollar-plus punitive damage

awards !f such activity persisis

* U.S. Const. an. 1, § 9, cl 3: ant 1. 8 10, ch 1

18

Calder v. Bull, 3 U.S. (3 Dall.) 386, 390 (1798)(empha-

sis added). The Court repeatedly reaffirmed that broad

reading of the ex post facto prohibition in the suc-

ceeding 200 years. See, e.g., Cummings v. Missouri, 71

U.S. (4 Wall.) 277 (1867); Rooney v. North Dakota, 196

U.S. 319 (1905); Dobbbert vy. Florida, 432 US. 282

(1977); Weaver v. Graham, 450 U.S. 24 (1981).

The rationale underlying the Court’s broad reading

of the ex post facto prohibition is identical to one of

the rationales underlying the void-for-vagueness doc-

trine: that citizens be given fair. warning both of

prohibited conduct and of the consequences of engaging

in such conduct. Jd. at 29-30 ("[tjhrough [the ex post

facto) prohibition, the Framers sought to assure that

legislative Acts give fair warning of their effect and

permit individuals to rely on their meaning until

explicitly changed"). The Ex Post Facto Clauses have .

direct application only to explicitly criminal statutes and

thus appear not to be applicable in this case. Nonethe-

less, given the similarity between the rationale under-

lying those clauses and the rationale underlying the

void-for-vagueness doctrine, the Court S consistent

interpretation of those clauses as applying to punishment

as well as to conduct lends strong support to a similar

interpretation of the void-for-vagueness doctrine.

IV. PUNITIVE DAMAGE AWARDS IMPLICATE

DUE PROCESS CONCERNS REGARDLESS

WHETHER, AS HERE, THE PARTY RE-

CEIVING THE AWARD IS A_ PRIVATE

PARTY

Several of the cases in which this Court has applied»

the void-for-vagueness test in non-criminal matters were

cases in which the plaintiff was a governmental entity

19

See, e.g. Hoffman Estates, 455 U.S. 489 (1982):

Giaccio, 382 U.S. 399 (1966); Jordan v. DeGeorge, 341

U.S. 223 (1951). However, in none of those cases did

the Court indicate that the governmental status of the

plaintiff had any bearing on the applicability of due

process concerns to the statute at issue. To the con-

trary, this Court's case law makes clear that due process

concems are implicated whenever a state’s judicial

powers are invoked, regardless of the plaintiff's identity.

Logan vy. Zimmerman Brush Co., 455 U.S. at 429. Thus.

in Gertz v. Robert Weich, Inc.,418 U.S. at 349-50, the

Court held that a libel suit brought by a private party

involved sufficient state action that: the defendant was

entitled to invoke First Amendment protections ‘against

efforts by the plaintiff # recover punitive damages.

The Court has repeatedly held that state action is

present -- and thus that due process concerns are impli-

cated -- whenever the state courts use their enforcement

powers to transfer property from one person to another.

North Georgia Finishing, Inc. v. DiChem, 419 U.S. 601

(1975); Mitchell v. W. T. Grant Co., 416 US. 600

(1974), Fuentes v. Shevin, 407 U.S. 67 (1972); Sniadich

v. Family Financial Corp., 395 U.S. .337 (1969). See

Wheeier, supra, 69 U. Va. L. Rev: at 277.

It 1s true that the State of Alabama is not a party

to this action. Nonetheless, the Alabama courts have, at

Respondents’ instigation, directed Pacific Mutual to pay

damages of more than $1 million to Respondents. Ac-

cordingly, the actions of the Alabama courts are subject

to review in this case under the Due Process Clause.

As amici have demonstrated above, the Alabama courts’

imposition of punitive sanctions against Pacific Mutual

violated Pacific Mutual's due process rights because of

the absence of any warming to Pacific Mutual -- prior to

r 20

the events giving rise to this case -- regarding the

potential size of punitive damage awards.

CONCLUSION

Amici respectfully request that the decision of the

Alabama Supreme Court be reversed. The case should

be remanded to the Alabama Supreme Cewrt with direc-

tions to schedule a new trial on the issue of damages

(from which all punitive damage issues should be ex-

cluded).

Respectfully submitted,

DANIEL J. POPEO

RICHARD A. SAMP

(Counsel of Record)

WASHINGTON LEGAL

FOUNDATION

1705 N Street, N.W.

Washington, DC 20025

(202) 857-0240

Dated: June 1, 1990