# Amicus Curiae Brief — Cooper Industries, Inc. v. Leatherman Tool Group, Inc.

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0382%3A10

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2001
- **Citation:** 532 U.S. 424

## Text

Faron cod. v
rh FILi- i
Dp. :
pi ZG2ze0eo seca
No. 99-2035 CLERK
IN THE

Supreme Court of the United States

COOPER INDUSTRIES, INC..,
Petitioner,
Vv.

LEATHERMAN TOOL GROUP, INC.,
Respondent.

On Writ Of Certiorari
To The United States Court of Appeals
For The Ninth Circuit

BRIEF OF THE CALIFORNIA EMPLOYMENT
LAW COUNCIL, THE EMPLOYERS GROUP, AND
THE BOEING COMPANY AS AMICI CURIAE IN

SUPPORT OF PETITIONER
Of Counsel: WILLIAM J. KILBERG
BRYAN BAUMEISTER Counsel of Record
THE BOEING COMPANY THOMAS G. HUNGAR
2201 Seal Beach Blvd. GIBSON, DUNN & CRUTCHER LLP
Seal Beach, CA 90740 1050 Connecticut Avenue, N.W.
(562) 797-1016 Washington, D.C. 20036

(202) 955-8500

Counsel for Amici Curiae

—————_————_——eeeeeeeee ee

BH

QUESTION PRESENTED

What is the standard of review of a trial court’s ruling
on a challenge to the constitutionality of a punitive
damage award?

ii

TABLE OF CONTENTS

Page
QUES TIOIN PRRESIIOIN 2 EBD ccccscccsesssnsssseseninnsiaiiiuanaana i
TABLE OF AU TIRURRE BRR <cosesesvssssonsdsveienaniiananial iv
IN TEREST OF AACE CURRIES ccccsssssccsescceessnsinnnnne l
S TA TIME I .....:ccccorsecsnecsesepesseniuselinnnesinennnninninnnnnnnnnnE 2
SUMMARY OF ARGUMENT ..............cc:cccesssecessreeeeeees 3
ARRISUIEIEN TF .000ccsceccesesesneesseessesssnssniansnnninnnnnsnnnnnnnnnEEE 4

I. The Protection Against Excessive Punitive
Damages Is Firmly Rooted In The Constitu-
RROD ..200s0cccsccecesesessenenenesenenennsnnnelinninnninnnnnnnnnnnnnnnnnnnEEEE 4

II. Independent Appellate Review Of Excessive
Punitive Damages Is Necessary To Protect
The Rights Guaranteed Under The Due

PYOCSSS. CIBUBS......:cccsccecscecessonesestionsnineneinnnnnnnnnnnnnnnn 5
A. The Danger Of Excessive Awards Is Sig-
RRETECONEE ......0000esececsenssoesessnensennniininnnnnnnnnnnnn 6
B. The Absence Of Effective Appellate Re-
view Endangers Due Process .............:::csseeeeees 8

C. The Assessment Of Excessive Punitive
Damage Awards Is A Question Of Law

That Should Be Subject To Independent
RRO VES WY ......00ccccesseesesonsesessssenssienesnninnnnnnnnannnnnn 9

D. Even If The Excessivenss Inquiry Were
Not A Question Of Law, Independent
Review Would Still Be Required.................... 17

II]. The Factors Considered By Courts In Evalu-
ating Constitutionally Excessive Awards
Confirm The Need For Independent Review.......... 19

IV. The Court’s Due Process Jurisprudence Re-
veals No Special Deference To Trial Courts’
Excessiveness Determinations .................c0sssessseees 22

CONCLUSION

hhh ELE

iV

TABLE OF AUTHORITIES
Page(s)

CASES
Agosto v. INS, 436 U.S. 748 (1978)..........:cccccceeececeeeeees 17
Bose Corp. v. Consumers Union, 466 U.S.

GP Gee interne Deccinasiieiiiinaices 6,18
BMW of N. Am. v. Gore, 517 U.S. 559

EE sscccnsccenemionteniimmiaieainain 2,4,5,10,15,19,20,21,22
Browning-Ferris Industries v. Kelco

Disposal, Inc., 492 U.S. 257 (1989).........cccccceceees 7,16
California Retail Liquor Dealers Ass'n v.

Midcal Aluminum, Inc., 445 U.S. 97

Fel ictinciaesenmansinientiirensesmniahinnmieninnnmmpainticnnnesiiinnens 10
Cedar Rapids Gas Light Co. v. Cedar

LE | eee 19
Condon Auto Sales & Serv., Inc. v. Crick,

604 N.W.2d 587 (lowa 1999) ooo... eeceeeeeeeees 15,16
Conner v. Schrader-Bridgeport

International, Inc., 227 F.3d 179 (4th

uae COME wiccrnicsincinshnietciiasineinstaeciciniigaiaitaiabinitioaiiitiaisiaiaaiiaii 15
Day v. Woodworth, 13 How. 363 (1852)...............c00+0 20
Exxon Co., U.S.A. v. Sofec, Inc., 517 U.S.

I cnccennenniicinninsiiiaiinenainantinesdiiadainiaininnnicntins 10
FDIC v. Hamilton, 122 F.3d 854 (10th Cir.

FETE wcanenecersteinennisinanininineeieiaatiniateininitienniidbidnint 15
Gasperini v. Center for Humanities, Inc.,

ee a ee Ce cacirnepnnenictiniiiniciinntiniaiiaznien 15,16
Graver Tank & Mfg. Co. v. Linde Air

Products Co., 336 U.S. 271 (1949) .......ccccceceeseeees 10
High v. Rhay, 519 F.2d 109 (9th Cir. 1975) ................. 17

— -_-

Vv

Honda Motor Co. v. Oberg, 512 U.S. 415

See ennerecennintennemetniiaiitahenintinntiinenemeeees 2,4,5,8,9
Johansen v. Combustion Engineering, Inc.,

170 F.3d 1320 (11th Cir. 1999)... cece 14,15
Lee v. Edwards, 101 F.3d 805 (2d Cir. 1996) .............. 15

Lloyd A. Fry Roofing Co. v. Wood, 344 U.S.

AREER SE EER meee eee 10
MacCrone v. Edwards Ctr., Inc., 980 P.2d

Pe Ge GI Cp cticteiccniecitcinintsenoniomncnmeninniin 15
Miller v. Fenton, 474 U.S. 104 (1985) ................0000 9.10
Morse v. Southern Union Co., 174 F.3d 917

Sy TT eteiccdnnsetiiniieinainanaininsetiieneniiememiaund 15
New York Times Co. v. Sullivan, 376 U.S.

ST cictiniierrnntaiatiansiiatiacenicinteeapiaimeiel 6,17,18
Ornelas v. United States, 517 U.S. 690

EE enecioeeitieaeiennrecetannaainaiapaiiinsinaidiaitaslitaaniane teatime 12,13
Owens-Corning Fiberglass Corp. v.

Golightly, 976 S.W.2d 409 (Ky. 1998) 0.0.0.0... 16
Pacific Mutual Ins. Co. v. Haslip, 499 U.S. 1

ITED Uaicicnindsiinietulehiitieaaetaiehanasihihaciamatainieiindiaitinainiaiaiias 6,9,23
Pavon v. Swift Transportation Co., 192 F.3d

Ree names Or 15
Pullman-Standard v. Swint, 456 U.S. 273

eisai echinacea esata 9,19
Routh Wreckage Serv., Inc. v. Washington,

SED FS. WBE DED CAGE. 1996) nccccccccccesccceccecccccssccccsees 15
Salve Regina College v. Russell, 499 U.S.

Se cccisineiliiiteiciininciapsdisiaiipeniiiaiimainiininnsiibees 11,12
Seaboard Air Line R. Co. v. Seegers, 207

EE coer 4
Southwestern Tel. & Tel. Co. v. Danaher,

es Mc eciscnnseittinitaieidalcneniniatteaetatiannaes 4,5

vi
Strickland v. Washington, 466 U.S. 668
STITT sceiesuecenieecheinethaiiichieiagsiaaetittaiateiadetienaattahdlaiahlui 19
Thompson v. Keohane, 516 U.S. 99 (1995)............. 13,14
Turner v. Arkansas, 407 U.S. 366 (1972)..............000000 17
TXO Prod. Corp. v. Alliance Resources
Corp., 509 U.S. 443 (1993).........0.. 2,4,5,11,20,22,23

United Phosphorus, Ltd. v. Midland
Fumigant, Inc., 205 F.3d 1219 (10th Cir.

EATS SEES SSC Ee ce Tere 15
United States v. Big D. Enters., Inc., 184

fk een 15
United States v. John J. Felin & Co., 334

BT TTT cssesieriaciaineitcineneniimmaeaiemunneieinn 17,19
Verdine v. McDonnell Douglas, No.

B126205 (Cal. Ct. App. July 26, 2000) .........0......2.. 2
STATUTES AND RULE
Be is St TE ncrerasetersenencseennmnimncinindaneninianetenes 13
I ia lanier ikem tena 16
OTHER AUTHORITIES

James C. Goodale, Why Did the Enquirer
Pay $ 10 Million?, N.Y. L.J., Aug. 7,
iri hinsncnienuadiumeteteneneninmnneinetneemmenanetiieinnecnte 7

John Calvin Jeffries, Jr., A Comment on the
Constitutionality of Punitive Damages,
Be Ue ee EG CI ED crcctetesnniseenitcicnrnnmmennnes 7

MOoRE’S FEDERAL PRACTICE (3d ed. 2000) ............... 19

Russel Myles & Kelly Reese, Arbitration:
Avoiding The Runaway Jury, 23 AM. J.
TI 7

—_—_—— —— it. te

Vii

Victor E. Schwartz et al., Reining In Punitive
Damages “Run Wild”: Proposals For
Reform By Courts And Legislatures, 65
ee

=_— — ee —_

INTERES? OF AMICI CURIAE

The California Employment Law Council (“CELC”),
The Employers Group (“TEG”), and The Boeing
Company (“Boeing”) respectfully submit this brief
amici curiae in support of petitioners to assist the Court
in analyzing the important constitutional issues raised in
this case.! The purpose of this brief is to demonstrate
that in order to preserve and enforce the constitutional
prohibition against excessive punitive damage awards,
independent appellate review of punitive damages
verdicts is constitutionally required.

CELC is a voluntary, nonprofit organization that
promotes the common interests of employers and the
general public in fostering the development of
reasonable, equitable and progressive rules of
employment law. CELC’s membership includes more
than 60 private sector employers in the State of
California, which collectively employ well in excess of a
half-million Californians. This case is of great interest
and importance to CELC’s members. CELC is familiar
with the questions involved in this case, and believes
that the standard of review of constitutional challenges
to punitive damages awards is an issue that significantly
affects the rights of its members.

The Employers Group is one of the nation’s oldest
and largest human resources management associations,
representing nearly 5,000 companies of all sizes and
every industry, which employ approximately 2.5 million

| Pursuant to this Court’s Rule 37.6, amici state that no counsel
for any party authored this brief in whole or in part, and no
person or entity other than amici, their members, or their counsel
made a monetary contribution to the preparation or submission of
the brief Counsel of record for both petitioners and respondents
have consented to the filing of this amici brief in letters that have
been lodged with the clerk.

o)
—

employees. The Employers Group’s extensive
experience with the legal issues faced by business
enterprises of all shapes and sizes provides it with a
unique perspective that will hopefully assist the Court in
considering the important issues presented in this case.

Boeing is frequently sued in federal and state courts
by plaintiffs seeking punitive damages. The randomness
of the jury system sometimes results in the return of a
verdict awarding punitive damages. Accordingly,
Boeing has an interest in the proper resolution of the
question presented in this case. For example, Boeing
intends to file a petition for a writ of certiorari with this
Court seeking review of the decision of the California
Court of Appeal in Verdine v. McDonnell Douglas, No.
B126205, slip op. (Cal. Ct. App. July 26, 2000). In that
case, the court of appeal refused to conduct an
independent review of the constitutional validity of a $9
million punitive damage award in a single-plaintiff
employment case, and instead sustained the award under
a deferential standard of review.

Meaningful appellate review is a cornerstone of this
Court’s jurisprudence and provides an_ essential
protection against unreasonable jury awards. Amici are
concerned that any standard less rigorous than inde-
pendent review would denigrate the important concerns
identified by this Court in BMW of North America v.
Gore, 517 U.S. 559 (1996); Honda Motor Co. v. Oberg,
512 U.S. 415 (1994); and TXO Production Corp. v. Alli-
ance Resources Corp., 509 U.S. 443 (1993), and provide
inadequate protection for defendants subjected to uncon-
stitutionally excessive punitive damages awards.
Accordingly, amici are well situated to assist the Court
in resolving the important issues presented in this case.

STATEMENT

Respondent Leatherman Tool Group, Inc., brought
this action against petitioner Cooper Industries, Inc., in
the United States District Court for the District of

3

Oregon, asserting claims for violation of the Lanham
Act and common law claims for unfair competition,
false advertising, and “passing off.” Pet. App. 32a.
Respondent alleged that petitioner had improperly used
respondent’s tool in some promotional materials
purporting to feature petitioner’s product. The case
proceeded to a jury trial and the jury awarded
respondent $50,000 in compensatory damages and $4.5
million in punitive damages, solely with respect to the
common law claims. Petitioner filed a post-trial motion
in the district court arguing that the punitive damage
award, amounting to ninety times the compensatory
damage award, was unconstitutionally excessive under
the Due Process Clause. Pet. App. 24a. After the
district court refused to reduce this verdict, the Ninth
Circuit engaged in a deferential review for abuse of
discretion and found that, in light of the evidence at trial,
the district court did not abuse its discretion in finding
the award permissible. Pet. App. 3a-4a. This Court then
granted certiorari to decide whether appellate courts are
required to independently review alleged constitutional
violations of due process stemming from the assessment
of punitive damages.

SUMMARY OF ARGUMENT

In numerous contexts, this Court has repeatedly
ensured that constitutional protections are fully observed
by requiring appellate courts to rely on their own
independent review of constitutional matters of law.
This Court has also extended independent review to
certain “constitutional facts” in an effort to guarantee
that important constitutional protections are not
undermined by inadequate provisions for searching
judicial review. The same principles require application
of independent appellate review in the area of excessive
punitive damage awards.

Punitive damages may properly be imposed by States
and the federal government to further governmental

4

interests in punishing unlawful conduct and deterring its
repetition. This Court has made clear, however, that this
power is limited, because if punitive awards are “grossly
excessive,” they enter a “zone of arbitrariness that
violates the Due Process Clause of the Fourteenth
Amendment.” BMW of N. Am. v. Gore, 517 U.S. 559,
568 (1996). Despite this Court’s announcement of the
federal constitutional limits on punitive damage awards,
the incidence of constitutionally unreasonable punitive
damages is on the rise. Unless the Court ensures
meaningful appellate review of jury awards, the
constitutional protections recognized in BMW will be
undermined. Meaningful review requires independent
appellate review, regardless of whether the
excessiveness inquiry is viewed as a question of law (as
it should be), as a question of constitutional fact, or as a
mixed question of law and fact. Independent appellate
review would enhance, and is fully consistent with, the
analysis laid out by this Court in prior cases.

ARGUMENT

I. The Protection Against Excessive Punitive
Damages Is Firmly Rooted In The Constitution

This Court has repeatedly held “that the Due Process
Clause of the Fourteenth Amendment imposes substan-
tive limits ‘beyond which penalties may not go.’” TXO
Prod. Corp. v. Alliance Resources Corp., 509 U.S. 443,
454 (1993) (plurality opinion) (quoting Seaboard Air
Line R. Co. v. Seegers, 207 U.S. 73, 78 (1907)); see
Honda Motor Co. v. Oberg, 512 U.S. 415, 420 (1994)
(“the Constitution imposes a substantive limit on the
size of punitive damage awards”). The constitutional
prohibition against excessive punitive awards and sanc-
tions has long been recognized in this Court’s Due Proc-
ess Clause jurisprudence. See Southwestern Tel. & Tel.
Co. v. Danaher, 238 U.S. 482, 491 (1915) (setting aside
a penalty imposed on a telephone company because it
was so “plainly arbitrary and oppressive” as to violate

5

the Due Process Clause). Justice Kennedy’s concur-
rence in 7XO aptly describes the important and weighty
interests involved in the imposition and review of puni-
tive damage awards:

[The Constitution’s] fundamental guarantee is that
the individual citizen may rest secure against
arbitrary or irrational deprivations of property.
When a punitive damages award reflects bias,
passion, or prejudice on the part of the jury, rather
than a rational concern for deterrence and
retribution, the Constitution has been violated, no
matter what the absolute or relative size of the
award.

509 U.S. at 467.

Accordingly, the Court’s jurisprudence in this area
has recognized that the Constitution provides an upper
limit on punitive damages so a defendant has “fair notice
not only of the conduct that will subject him to punish-
ment but also of the severity of the penalty that a State
may impose.” BMW of N. Am. v. Gore, 517 U.S. 559,
574 (1996); see Honda Motor Co., 512 U.S. at 420.
This protection against excessive punitive awards is a
fundamental and important part of our constitutional
panoply of rights.

II. Independent Appellate Review Of Excessive
Punitive Damages Is Necessary To Protect The
— Guaranteed Under The Due Process

ause

In order to preserve the constitutional protections un-
derlying this Court’s due process jurisprudence in the
area of punitive damage awards, meaningful judicial re-
view of punitive damage awards is required at both the
trial and appellate level. Meaningful appellate review
aids the development of the law, but more fundamen-
tally it acts as an essential layer of support for those val-
ues we hold dear. Because constitutional rights are our

6

most cherished rights, courts have always had an un-
flagging obligation to make certain they are not in-
fringed upon. The importance of rigorous appellate re-
view in the constitutional context is illustrated by this
Court’s discussion in Bose Corp v. Consumer Union,
466 U.S. 485 (1984):

The requirement of independent appellate review
reiterated in New York Times Co. v. Sullivan, [376
U.S. 254 (1984)] is a rule of federal constitutional
law. It emerged from the exigency of deciding
concrete cases; it is law in its purest form under
our common-law heritage. It reflects a deeply held
conviction that judges—and particularly Members
of this Court—must exercise such review in order
to preserve the precious liberties established and
ordained by the Constitution .... Judges as
expositors of the Constitution, must independently
decide whether the evidence in the record is
sufficient to cross the constitutional threshold... .

Id. at 510-511.

While Bose arose in the First Amendment context, the
Bose Court’s analysis applies with equal force in cases
involving enforcement of the Due Process Clause’s pro-
hibition against grossly unreasonable punitive damage
awards. The need for searching review is most acute
when constitutional interests are at stake.

A. The Danger Of Excessive Awards Is
Significant

Many members of the Court have expressed concern
about the due process implications of runaway jury ver-
dicts, especially the potential that juries will be left with
no meaningful standards to constrain excessive punitive
damage awards. In Pacific Mutual Ins. Co. v. Haslip,
499 U.S. 1, 9 (1991), for example, the Court stated that
it and many “individual Justices thereof on a number of
occasions in recent years ha[d] expressed doubts about

7

the constitutionality of certain punitive damages
awards.” In the earlier case of Browning-Ferris Indus-
tries v. Kelco Disposal, Inc., 492 U.S. 257 (1989), Jus-
tice Brennan remarked that “[wJithout statutory (or at
least common-law) standards for the determination of
how large an award of punitive damages is appropriate
in a given case, juries are left largely to themselves in
making this important, and potentially devastating deci-
sion.” Jd. at 281 (Brennan, J., concurring). Also in
Browning-Ferris, Justice O’Connor cogertly observed
that “[a]wards of punitive damages are skyrocketing

. | adhere to my comments .. . regarding the vague-
ness and procedural due process problems presented by
juries given unbridled discretion to impose punitive
damages.” Jd. at 282-83 (O’Connor, J., concurring in
part and dissenting in part).

The Court is not alone in its recognition of the in-
creasing frequency of punitive damage awards. Numer-
ous commentators have also addressed this issue. See,
e.g., Russel Myles & Kelly Reese, Arbitration: Avoiding
The Runaway Jury, 23 AM. J. TRIAL ADvoc. 129
(Summer 1999); Victor E. Schwartz et al., Reining In
Punitive Damages “Run Wild”: Proposals For Reform
By Courts And Legislatures, 65 BROOK. L. REV. 1003
(1999); John Calvin Jeffries, Jr., A Comment On The
Constitutionality Of Punitive Damages, 72 VA L. REV.
139 (1986) (“As everyone who reads the newspapers
must know, the American civil liability system is ap-
proaching a crisis. One prominent aspect of this crisis is
the problem of punitive damages. In my view, punitive
damages are out of control.”); James C. Goodale, Why
Did the Enquirer Pay $ 10 Million?, N.Y. L.J., Aug. 7,
1998, at 3 (discussing how fear of an outrageous verdict
may have caused huge settlement). These realities only
enhance the need to provide adequate procedural protec-
tions to prevent encroachment on the fundamental liber-
ties guaranteed under the Due Process Clause.

8

B. The Absence Of Effective Appellate Review
Endangers Due Process

The decisions of this Court indicate that the absence
of effective judicial review of punitive damage awards
can threaten the integrity of a jury award so fundamen-
tally as to amount to a violation of due process. In
Honda Motor Co., the Court considered the constitu-
tional validity under the Fourteenth Amendment of a
state constitutional provision that barred judicial review
of the amount of punitive damages awarded by a jury
unless there was “no evidence to support the verdict.’”
512 U.S. at 418 (citation omitted). The jury in that case
had awarded $5 million in punitive damages, and the
lower state courts refused to reduce the award despite
Honda’s argument that it violated the Due Process
Clause. See id. The Oregon Supreme Court affirmed,
holding that there was no constitutional requirement that
state courts always review punitive damage awards for
excessiveness. See id. at 419.

On review, this Court began by recognizing the fed-
eral constitutional right to be free from excessive puni-
tive damages, and then turned to the question whether
judicial review is required as a matter of due process.
The Court found that “[{jJudicial review of the size of
punitive damage awards has been a safeguard against
excessive verdicts for as long as punitive damages have
been awarded,” id. at 421, and that the need for such
review had only increased as “the rise of large, interstate
and multinational corporations has aggravated the
problem of arbitrary awards and potentially biased
juries.” Jd. at 431. The Court then concluded that the
Oregon procedure could not pass constitutional muster.
See id. at 430-32. The Court explained that judicial re-
view of punitive damages was “one of the few proce-
dural safeguards which the common law provided
against” the “acute danger of arbitrary deprivation of
property.” Jd. at 432. Accordingly, the “denial of judi-

9

cial review of the size of punitive damage awards vio-
lates the Due Process Clause.” /d.

The Honda decision built on the Court’s earlier rec-
ognition in Haslip that a post-verdict judicial review of
punitive damage awards is a crucial component of a
permissible scheme for the imposition of punitive dam-
ages. In Haslip, the Court recognized “that unlimited
jury discretion—or unlimited judicial discretion for that
matter—in the fixing of punitive damages may invite
extreme results that jar one’s constitutional sensibili-
ties.” 499 U.S. at 18. The Court permitted the award to
stand in Haslip only because it found that “[t]he Ala-
bama Supreme Court’s postverdict review ensure[d] that
punitive damages awards [we]re not grossly out of pro-
portion to the severity of the offense and ha[d] some un-

derstandable relationship to compensatory damages.”
Id. at 22.

Accordingly, meaningful appellate review is not only
advisable, but constitutionally necessary to ensure due
process. It is only with judicial review that the rights
— in the Constitution can be effectively pre-
served.

C. The Assessment Of Excessive Punitive
Damage Awards Is A Question Of Law That
Should Be Subject To Independent Review

_ To obtain this meaningful review with regard to puni-

tive damage awards, independent judicial consideration
of their amount and validity should be required. The
resolution of punitive award cases turns on questions of
law that traditionally have been subject to independent
review.

“[T]}he Court has yet to arrive at ‘a rule or principle
that will unerringly distinguish a factual finding from a
legal conclusion."” Miller v. Fenton, 474 U.S. 104, 113
(1985) (quoting Pullman-Standard v. Swint, 456 U.S.
273, 288 (1982)). “Perhaps much of the difficulty in

10

this area stems from the truth that the decision to label
an issue a ‘question of law,’ a ‘question of fact,’ or a
‘mixed question of law and fact’ is sometimes as much a
matter of allocation as it is of analysis.” Miller v. Fen-
ton, 474 U.S. at 113-14 (citation omitted). The Court
has frequently made the classification based on its as-
sessment of whether one judicial actor is better suited to
the task than another. See id. at 114. For example, the
Court has sometimes treated questions as presenting is-
sues of fact when witness credibility is important, or has
classified questions as issues of law when the role of a
federal appellate court as the expositor of law was
threatened, as with the issue of “actual malice” in the
First Amendment context. See id.

Other questions may lack a specific classification, but
the Court’s approach indicates the nature of the inquiry.
In BMW, for example, although the Court never stated
whether it considered the excessiveness issue to present
an issue of law or fact, the circumstances make clear that
the Court was treating the case as presenting a question
of law. BMW arose out of the review of an Alabama
state court proceeding. See 517 U.S. at 563. This Court
has repeatedly reaffirmed its unwillingness to review
fact finding by state courts. See California Retail Liq-
uor Dealers Ass'n v. Midcal Aluminum, Inc., 445 U.S.
97, 111-12 (1980) (“we customarily accept the factual
findings of state courts in the absence of ‘exceptional
circumstances’”) (citing Lloyd A. Fry Roofing Co. v.
Wood, 344 U.S. 157, 160 (1952)); see also Exxon Co.,
U.S.A. v. Sofec, Inc., 517 U.S. 830, 841 (1996) (“A
court of law, such as this Court is, rather than a court for
correction of errors in fact finding, cannot undertake to
review concurrent findings of fact . . . in the absence of a
very obvious and exceptional showing of error.””’) (quot-
ing Graver Tank & Mfg. Co. v. Linde Air Products Co.,
336 US. 271, 275 (1949)). Consequently, the BMW
Court must have been engaging in review as a matter of
law.

1]

Similarly, in T7XO, the Court’s extensive discussion
about the parties’ interest in differing bright-line tests
for excessiveness reveals that the Court considered the
excessiveness question as a matter of law. See 509 U.S.
at 453-62. Thus, the Court’s jurisprudence demonstrates
that the constitutional excessiveness inquiry is a ques-
tion of law that should be subjected to independent judi-
cial review.

The Court’s discussion in Salve Regina College v.
Russell, 499 U.S. 225 (1991), is particularly instructive
regarding the need for independent judicial review of
these sorts of questions of law. In Salve Regina, the
Court addressed the question whether the courts of ap-
peals were required to independently review district
courts’ determinations of state law. See id. at 227.
Finding a split among the circuits regarding the appro-
priate deference owed to a district court’s interpretation
of state law, the Court decided that independent de novo
review was appropriate. See id. at 231.

The Court began by noting the following general
principle: “The obligation of responsible appellate ju-
risdiction implies the requisite authority to review inde-
pendently a lower court's determinations.” Id. (empha-
sis added). The Court then catalogued some of the diffi-
culties caused by affording trial courts more deference
than is appropriate. The Court noted that trial judges of-
ten preside over fast-paced trials and out of necessity
devote much of their time to reviewing evidence and
hearing witnesses. See id. at 231. As the Court ex-
plained, “trial judges often must resolve complicated le-
gal questions without benefit of extended reflection [or]
extensive information.” /d. at 232 (internal quotation
omitted; alteration in original). By contrast, courts of
appeals are “structurally suited to the collaborative ju-
ridical process that promotes decisional accuracy.” /d.

The Salve Regina Court also described the benefits of
independent appellate review, many of which apply with

12

equal force to the question of constitutionally excessive
punitive damage awards:

Independent appellate review necessarily entails a
careful consideration of the district court’s legal
analysis, and an efficient and sensitive appellate
court at least will naturally consider this analysis in
undertaking its review....Amy expertise
possessed by the district court will inform the
structure and content of its conclusions of law and
thereby become evident to the reviewing court .
... [AJn appropriately respectful application of de
novo review should encourage a district court to
explicate with care the basis for its legal
conclusions.

Id. at 232-33. Lastly, the court rejected the notion that
deference was owed to the trial court because it might be
more familiar with state law. See id. at 238-39.

This case reveals two fundamental principles essential
to the Court’s resolution of the standard of review in
punitive damage cases: (1) independent appellate review
contributes significantly to meaningful review, and
(2) independent appellate review is warranted when the
issue before the court requires reflective, analytical, and
objective analysis more properly suited to the skills and
functional duties of appellate courts.

This Court has long applied independent appellate re-
view of analogous constitutional questions that, like ju-
dicial review of excessive punitive awards, involve ap-
plication of a legal standard to the totality of the circum-
stances presented. For example, the Court has held that
independent appellate review is required with respect to
determinations of probable cause and reasonable suspi-
cion under the Fourth Amendment. Like the assessment
of constitutional reasonableness for punitive awards, this
area of the law is not easily subject to bright-line rules
because it “is not possible” to “[a]rticulat[e] precisely’
what these standards mean. Ornelas v. United States,

—_—_—— oa

13

517 U.S. 690, 695 (1996). Instead, the decisionmaking
process involves application of “fluid concepts that take
their substantive content from the particular contexts in
which the standards are being assessed.” Jd. at 696.

Given these aspects of the legal standards, the Orne-
las Court concluded that independent appellate review
of probable cause and reasonable suspicion was neces-
sary. Jd. at 697 (“We think independent appellate re-
view of these ultimate determinations of reasonable sus-
picion and probable cause is consistent with the position
we have taken in past cases. We have never, when re-
viewing a probable-cause or reasonable-suspicion de-
termination ourselves, expressly deferred to the trial
court’s determination.”). The Court explained that the
relevant legal rules for probable cause and reasonable
suspicion “acquire content only through application.”
Id. Crucial to the development of such rules was inde-
pendent appellate review: “Independent review is there-
fore necessary if appellate courts are to maintain control
of, and to clarify, the legal principles.” Jd.

Similarly, in Thompson v. Keohane, 516 U.S. 99
(1995), the Court considered the question whether “in
custody” determinations in the habeas corpus context
were questions of law subject to de novo review or ques-
tions of fact entitled to a presumption of correctness un-
der 28 U.S.C. § 2254(d). See id. at 106-07. The Court
ultimately concluded that the “in custody” determination
should be reviewed de novo as a question of law. See
id. at 112. The Court reasoned that two discrete inquir-
ies were essential to the “in custody” decision: “first,
what were the circumstances surrounding the interroga-
tion; and second, given those circumstances, would a
reasonable person have felt he or she was not at li
to terminate the interrogation and leave.” Jd. The court
concluded that “[o]nce the scene is set and the players’
lines and actions are reconstructed, the court must apply
an objective test to resolve the ultimate inquiry.” /d. (in-

14

ternal quotation omitted). Accordingly, the Court held
that independent appellate review was required. See id.

Essentially the same considerations compel the
conclusion that independent appellate review is required
in the punitive damages context. As is true of the “in
custody” or “voluntariness” inquiry, an appellate court
reviewing an excessiveness claim in a punitive damages
case is presented with a trial court record that sets the
scene and reconstructs “the players’ lines and actions,”
and the only role of the appellate court is to consider and
apply the legal factors identified by the Court in BMW,
Honda Motor Co., TXO, and Haslip, to decide whether
the award is constitutionally excessive. Thus, the appel-
late court “must apply an objective test to resolve the ul-
timate inquiry,” Thompson v. Keohane, 516 U.S. at 112,
and de novo review is therefore appropriate.

The Eleventh Circuit in Johansen v. Combustion
Engineering, Inc., 170 F.3d 1320 (11th Cir. 1999),
offered a congent and persuasive analysis of this issue
in the punitive damages context. The question
presented in that case was whether a judicial reduc-
tion of a punitive damages award as excessive consti-
tuted a violation of the Seventh Amendment. In
resolving that question, the court examined the role of
a court in reviewing the amount of a punitive damage
award and concluded that this role entailed the
resolution of a question of law, not one of fact.2 See
id. at 1330-31. The court explained: “No one would
dispute that the court, not the jury, has the
responsibility for determining the constitutional limit.
Courts decide questions of law, not juries.” Jd. at
1331. Having determined that the excessiveness
inquiry presented a legal question, the Eleventh

2 The court of appeals did review certain underlying facts
involved in the BMW analysis for clear error. See Johansen, 170
F.3d at 1334.

15

Circuit then concluded that independent review was
required:

A constitutional reduction ... is a determination
that the law does not permit the award. Unlike a
remittitur, which is discretionary with the court
and which we review for an abuse of discretion . . .
a court has a mandatory duty to correct an uncon-
titutionally excessive verdict so that it conforms to
the requirements of the due process clause.

Id. (citing Gasperini v. Center for Humanities, Inc., 518
U.S. 415, 435 (1996); BMW, 517 U.S. at 585).

As noted in the petition, several other courts of
appeals have reached the same conclusion. See e.g.,
Conner v. Schrader-Bridgeport International, Inc., 227
F.3d 179, 202 (4th Cir. 2000) (“Whether the jury’s
award was excessive is a question of law, which we
review de novo.”); United Phosphorus, Ltd. v. Midland
Fumigant, Inc., 205 F.3d 1219 (10th Cir. 2000)
(applying de novo standard of review for punitive
damages assessed against company president) (citing
FDIC v. Hamilton, 122 F.3d 854, 857 (10th Cir. 1997));
United States v. Big D. Enters., Inc., 184 F.3d 924, 932-
33 (8th Cir. 1999) (“Appellants characterize the award
as ‘grossly excessive’ and claim that it violates their due
process rights . . . . We review the district court’s
conclusions de novo.”’).3

3 Other courts of appeals have reached the opposite conclusion.
See e.g., Pavon v. Swift Transportation Co., 192 F.3d 902, 909
(9th Cir. 1999); Morse v. Southern Union Co., 174 F.3d 917, 926
(8th Cir. 1999); Lee v. Edwards, 101 F.3d 805, 808-09 (2d Cir.
1996). State courts are similarly split. Compare MacCrone v.
Edwards Ctr., Inc., 980 P.2d 1156, 1165 (Or. Ct. App. 1999) (en
banc) (construing BMW to require an independent appellate
review); Routh Wreckage Serv., Inc. v. Washington, 980 S.W.2d
240, 244-45 (Ark. 1998) (applying de novo review) with Condon
Auto Sales & Serv. Inc. v. Crick, 604 N.W.2d 587, 595 (lowa
[Footnote continued on next page]

16

Most of the lower court decisions reaching a contrary
conclusion rely to some degree on Browning-Ferris v.
Kelco Disposal, Inc., 492 U.S. 257 (1989), or Gasperini
v. Center for Humanities, Inc., 518 U.S. 415 (1996).
Browning-Ferris does not compel this conclusion,
however, because in that case the Court held that the due
process challenge to the allegedly excessive punitive
damage award was not properly before the Court. See
Browning-Ferris Indus., 492 U.S. at 277. In that case,
the petitioner’s central contention (which the Court
rejected) was that the Eighth Amendment’s Excessive
Fines Clause applied to constrain awards of punitive
damages in private civil suits. See id. at 275. The
Court’s discussion of a deferential standard of review
was clearly addressed only to the defendant’s motion for
a new trial or remitittur under FED. R. CIV. P. 59, not to
a due process excessiveness challenge. See id. at 279.
Accordingly, Browning-Ferris does not resolve the
question of the appropriate standard of review for claims
of unconstitutionally excessive punitive damages awards
in violation of the Due Process Clause.

Gasperini is equally inapposite, because it addressed
only compensatory damages and did not involve any
constitutional challenge to the size of a damages award.
See Gasperini, 518 U.S. 415 (assessing the validity of
New York statute authorizing appellate review of
compensatory damages that deviate materially from
reasonable compensation and applying an abuse of
discretion standard for use by federal appellate courts).
Thus, the clear weight of the relevant caselaw supports
the application of an independent review standard for
these questions of law.

[Footnote continued from previous page]
1999) (using abuse of discretion standard); Owens-Corning
Fiberglass Corp. v. Golightly, 976 S.W.2d 409, 413-15 (Ky.
1998) (clear error).

ee ee

ee eae -_

17

D. Even If The Excessivenss Inquiry Were Not A
Question Of Law, Independent Review Would
Still Be Required

Even if the Court were to conclude that the assess-
ment of excessive awards is an essentially factual in-
quiry, independent judicial review would still be neces-
Sary as a prophylactic measure to guard against the dan-
ger of unconstitutional deprivations. See Agosto v. INS,
436 U.S. 748, 753 (1978) (de novo judicial determina-
tion required for claims of American citizenship in de-
portation proceedings); Turner v. Arkansas, 407 U.S.
366, 368 (1972) (“Collateral estoppel is part of the Fifth
Amendment’s double jeopardy guarantee, and it is a
‘matter of constitutional fact (this Court) must decide
through an examination of the entire record.””) (citation
omitted); United States v. John J. Felin & Co., 334 US.
624, 639-40 (1948) (plurality opinion) (“when this Court
reviews State court judgments involving constitutional
issues it ‘must review independently both the legal
issues and those factual matters with which they are
commingled.’”) (citation omitted); High v. Rhay, 519
F.2d 109, 114 (9th Cir. 1975) (“Constitutional facts must
be reviewed de novo on appeal .. ..”). Adoption of de
novo review in this area would be consistent with the
approach long followed by this Court in the First
Amendment context.

In New York Times Co. v. Sullivan, 376 U.S. 254
(1964), this Court adopted the “actual malice” standard
for public-figure defamation cases, and made clear that
independent appellate review of the record is required in
defamation cases “to assure . . . [that] a forbidden intru-
sion on the field of free expression” has not occurred.
ld. at 285. The Court’s rationale for requiring independ-
ent appellate review in such cases was not limited to the
issue of “actual malice” or the area of First Amendment
law. Instead, the Court expressed a considerably
broader rationale, describing the independent review re-
quirement as one arising from the Court’s duty “in

18

proper cases ... to make certain that [constitutional ]
principles have been constitutionally applied.” /d. The
case before it was “such a case” in the Court’s view,
“since the question is one of alleged trespass across ‘the
line between speech unconditionally guaranteed and
speech which may legitimately be regulated.’” Jd. (cita-
tion omitted).

The Court recently reaffirmed the independent review
requirement for constitutional facts in Bose Corp. v.
Consumers Union, 466 U.S. 485 (1984). The Court
stated: “The simple fact is that First Amendment
questions of ‘constitutional fact’ compel this Court’s de
novo review.” Id. at 508 n.27. The Bose Court charac-
terized the independent review requirement as applying
“in cases raising First Amendment issues,” noting that in
such cases the Court has “repeatedly held that an appel-
late court has an obligation to ‘make an independent ex-
amination of the whole record’ in order to make sure
that ‘the judgment does not constitute a forbidden intru-
sion on the field of free expression.” /d. at 499 (citation
omitted). The rationale for the independent review re-
quirement rests upon the fundamental obligation of
courts to guard zealously the boundary between consti-
tutionally protected and unprotected speech. See id. at
505.

If the Court decides that the review of punitive
damage awards essentially involves a factual determi-
nation, the Court should apply an independent review
requirement, because, as in the First Amendment con-
text, searching scrutiny by appellate courts is essential in
order to draw the line between constitutional and
unconstitutional action. The drawing of this line should
be the product of independent appellate review, which
creates precedent and uniformity, rather than the result
of inevitably conflicting and inconsistent trial court
determinations that lack precedential effect and are
reviewed only under a deferential standard.

19

The use of independent appellate review would also
be warranted if the Court found the excessiveness
determination to involve a mixed question of law and
fact. Mixed questions of law and fact exist in situations
where the law is clear, the facts undisputed, and a
court's task is to assess whether the facts satisfy the
legal standard. See Pullman-Standard, 456 U.S. at 289
n.19. In general, this Court’s precedents support the
conclusion that mixed questions of law and fact are
reviewed de novo. See MOORE’S FEDERAL PRACTICE
§ 206.04, (3d ed. 2000) (citing Strickland v. Washington,
466 U.S. 668, 698 (1984)); see also United States v.
John J. Felin & Co., 334 U.S. at 639-40 (plurality
opinion) (“Where the conclusion is a ‘composite of fact
and law,’ this Court may certainly hold that as a matter
of law the findings are erroneous.”) (quoting Cedar
Rapids Gas Light Co. v. City of Cedar Rapids, 223 U.S.
655, 668 (1912)). Additionally, all of the concerns
identified above as warranting independent review of
constitutional facts would apply with even greater force
to mixed questions of law and fact. Accordingly, this
Court should require appellate courts to conduct an
independent review regardless of whether the
assessment of constitutionally excessive punitive
damage awards is a question of law, a question of
constitutional fact, or a mixed question of law and fact.

Ill. The Factors Considered By Courts In
Evaluating Constitutionally Excessive Awards
Confirm The Need For Independent Review

This Court’s decisions regarding punitive damage
awards have created a legal framework to be applied by
courts in evaluating whether a punitive award is “grossly
excessive.” BMW, 517 U.S. at 568. The nature of this
inquiry further militates in favor of independent review.
Under BMW, courts must look to three “guideposts” in
deciding whether a punitive damage award is unconsti-
tutionally excessive. Jd. at 574. These guideposts are:
(1) the “degree of reprehensibility” of the wrongdoing:

20

(2) “the disparity between the harm or potential harm
suffered” by the plaintiff and the award; and (3) “the dif-
ference between this remedy and the civil penalties au-
thorized or imposed in comparable cases.” Jd. at 575.
Despite the presence of these guideposts, however, the
Court has repeatedly resisted invitations to fashion
bright line rules, preferring instead to focus on general
“reasonableness” concerns when evaluating whether a
certain award is “grossly excessive.” TXO, 509 U.S. at
458. A review of these necessarily flexible factors leads
to the inescapable conclusion that appellate courts are
best suited to the task of independently evaluating them.

The most important of these guideposts is the first
factor. See BMW, 517 U.S. at 575. “As the Court stated
nearly 150 years ago, exemplary damages imposed on a
defendant should reflect ‘the enormity of his offense.”’
Id. (quoting Day v. Woodworth, 13 How. 363, 371
(1852)). Several underlying concerns should be re-
viewed by a court: (1) whether the harm was primarily
or entirely economic in nature; (2) whether the defen-
dant’s conduct displayed a recklessness or indifference
to others’ health and safety; and (3) whether an injury, if
~ economic in nature, was the result of intentional acts of
misconduct or acts targeted to financially vulnerable in-
dividuals. See id. at 575-76. These are not factors that
are unique to the perspective of trial courts. Rather, ap-
pellate courts routinely assess, by comparison to other
cases and fundamental tenets, the reprehensibility of de-
fendants’ conduct. In fact, this Court and other appellate
courts around the country have engaged in this type of
analysis with regard to punitive damages on numerous
occasions without difficulty or objection. The Court has
merely evaluated the factors and in the process demon-
strated appellate courts’ ability, and indeed superior
ability, to conduct such analysis.

The nature of the second “guidepost”—the ratio of
the harm suffered to the punitive damage award im-
posed—also supports independent appellate review.

21

This analysis is often conducted by comparing the com-
pensatory damage award with the punitive damage
award. See id. at 580-83. However, the test is not “a
simple mathematical formula, even one that compares
actual and potential damages to the punitive award,” be-
cause “low awards of compensatory damages may prop-
erly support a higher ratio than high compensatory
awards, if, for example, a particularly egregious act has
resulted in only a small amount of economic damages.”
Id. at 582. Although this analysis depends on the factual
circumstances of a defendant’s misconduct, it also relies
significantly on an objective analysis of general reason-
ableness. See id. at 583. This objective analysis is best
suited to the capabilities of appellate courts, with their
consideration of many varied factual situations and their
ability to better promote uniformity and consistency
through the development of binding precedent.

The third guidepost, comparison to legislative evalua-
tions of the reprehensibility of the conduct, is also not
uniquely within the ability of trial courts. The briefing,
argument, and multiple judge format of appellate court
decision making enhances the likelihood that an appel-
late court will correctly determine the amount and type
of penalties imposed by legislatures for similar conduct.

Accordingly, the nature of the inquiry required to as-
sess possible due process violations counsels in favor of
independent review. Appellate courts are at least as able
as trial courts to review these types of considerations,
and with regard to some factors, appellate courts are
likely to have a distinct advantage. Moreover, the use of
independent appellate review would complement the
case-by-case approach the Court has adopted in this area
and further the objects of due process. The case-by-case
analysis properly relies on the expertise of courts in
evaluating awards. However, the expertise of courts
will not be fully brought to bear on this problem unless
appellate courts are required to make their own inde-
pendent reviews of punitive awards. Allowing appellate

22
courts to defer to the varied predilections of trial judges
across the country may be expedient, but it threatens the
effectiveness and uniformity of the excessiveness stan-
dard adopted by this Court to implement the Due Proc-
ess Clause.

IV. The Court’s Due Process Jurisprudence Reveals
No Special Deference To Trial Courts’ Exces-
siveness Determinations

It is also noteworthy that the Court’s decisions ad-
dressing punitive damage awards have not indicated in
any way that appellate courts should accord trial courts
deference in reviewing a punitive damage award. See
BMW, 517 U.S. 559 (containing little or no discussion =
the trial court’s ruling on the due process issue an
giving no deference to that decision), TXO, 509 U.S.
443 (showing no indication of special deference to the
trial court’s resolution of the due process issue).

In 7XO, for example, this Court’s review of a $10
million dollar punitive damages award upheld by the
West Virginia state courts included scant discussion of
the trial court’s ruling.4 Instead, this Court actively re-
viewed the trial record, the conduct of the defendant,
and the applicable law. See TXO, 509 U.S. at 454-62.
This approach parallels the independent-review standard
advocated by petitioner in this case. In the penultimate
portion of the opinion addressing the validity of the pu-
nitive award, the 7XO Court made no reference to the
trial court. Rather, the Court stated that “[o]n the record,

4 The Court’s only significant discussion of the tnal court's
review was in response to the petitioner's contention that the
court had failed to properly articulate its reasons for denying the
motion alleging a constitutional violation. Read in context, it Is
quite apparent that this discussion arose as a result of petitioner's
argument and not any underlying deference on the part of the
Court.

23

the jury may reasonably have determined that [ peti-
tioner] set out on a malicious and fraudulent course to
win back, either in whole or in part, the lucrative stream
of royalties that it had ceded to Alliance.” Jd. at 462.
The Court then concluded that it was “not persuaded that
the award was so ‘grossly excessive’ as be beyond the
power of the State to allow.” /d. This analysis strongly
Suggests that the Court was directly reviewing the jury’s
action, not assessing whether the trial court abused its
discretion.

In Pacific Mutual Life Insurance Co. v. Haslip, 499
U.S. 1 (1991), the Court discussed the function of judi-
cial review of punitive awards without making any dis-
tinction between trial and appellate judges, stating that
after the verdict, “(t]he jury’s determination is then re-
viewed by trial and appellate courts to ensure that it is
reasonable.” /d. at 15-16. Moreover, the Court's dis-
cussion recognized the value of rigorous appellate re-
view. See id. at 21 (“appellate review makes certain that
the punitive damages are reasonable in their amount and
rational in light of their purpose”). Again, the Court's
analysis eschewed any deference to the trial court’s as-
sessment. Instead, the Court’s decision to uphold the
award was due to its own thorough review as well as
that of the Alabama Supreme Court and the trial court.
See id. at 23-24. In short, this Court's precedents pro-
vide further support for the principle of independent ap-
pellate review in this context.

CONCLUSION

The Court should take this opportunity to make clear
that nothing short of independent appellate review will
sufficiently guarantee defendants’ constitutional rights
to be free of excessive awards of punitive damages. In
order to ensure adequate protection for this important
constitutional right, the Nation's appellate courts must
scrutinize punitive damage awards with care to make
sure they satisfy the requirements of due process. The

24

judgment of the court of appeals should therefore be
vacated, and the case remanded for independent
appellate review of the punitive damages award.

Respectfully submitted.

OF Counsel WILLIAM J. KILBERG

BRYAN BAUMEISTER Counsel of Record

THE BOEING COMPANY THOMAS G. HUNGAR

2201 Seal Beach Bivd. GIBSON, DUNN & CRUTCHER LLP
Seal Beach, CA 90740 1050 Connecticut Avenue, N.W.
(562) 797-1016 Washington, D.C. 20036

(202) 955-8500

Counsel for Amici Curiae

December 4, 2000

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0382%3A10. Public record. Not legal advice.