# Amicus Curiae Brief — Pacific Mutual Life Insurance v. Haslip > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_0717%3A33 ## Record - **Collection:** Supreme Court brief - **Document type:** Amicus Curiae Brief - **Published:** January 1, 1991 - **Citation:** 499 U.S. 1 ## Text | Svoreme Court, W.5, 51) i! FILeD ee ! No. 89-1279 ate ee eye ie oe CLERK — 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 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 ee ee ee ee eee ere ee oe oe ee ee er Ee Os ee ee ee ee Oe 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 “ 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 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_0717%3A33. Public record. Not legal advice.