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

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## Record

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

## Text

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_—

pec ¢ 2000 1) FILED
No. 99-2035 DEC 4 = 2000

IN THE SUPREME COURT OF THE UNIPED STATES! _-..

COOPER INDUSTRIES, INC..,
Petitioner,
v.

LEATHERMAN TOOL GROUP, INC.,
Respondent.

On a Writ of Certiorari to the United States
Court of Appeals for the Ninth Circuit

BRIEF OF THE AMERICAN TORT REFORM
ASSOCIATION, NATIONAL ASSOCIATION OF
MANUFACTURERS, CITIZENS FOR A SOUND

ECONOMY FOUNDATION, AMERICAN
CHEMISTRY COUNCIL, HEALTH INSURANCE
ASSOCIATION OF AMERICA, AMERICAN
ASSOCIATION OF HEALTH PLANS, AND
COALITION FOR ASBESTOS JUSTICE, INC.
AS AMICI CURIAE IN SUPPORT OF

PETITIONER
Of Counsel Victor E. Schwartz*
Mark A. Behrens
Sherman Joyce Leah Lorber
AMERICAN TORT REFORM CROWELL & MORING LLP
ASSOCIATION 1001 Pennsylvania Ave., N.W.
1850 M Street, N.W. Washington, D.C. 20004
Suite 1095 (202) 624-2500
Washington, D.C. 20036
(202) 682-1163 Attorneys For Amici Curiae

*Counsel of Record
(Additional Attorneys Listed On Inside Cover)

fo Bupreme Court, 5

Of Counsel

Jan S. Amundson
NATIONAL ASSOCIATION
OF MANUFACTURERS
1331 Pennsylvania Avenue, N.W.
Suite 600
Washington, D.C. 20004
(202) 637-3055

J.V. Schwan

CITIZENS FOR A SOUND
ECONOMY FOUNDATION

1250 Eye Street, N.W.

Suite 700

Washington, D.C. 20005

(202) 942-7695

David F. Zoll

Donald D. Evans

AMERICAN CHEMISTRY COUNCIL
1300 Wilson Boulevard
Arlington, VA 22209

(703) 741-5000

Jeffrey L. Gabardi

HEALTH INSURANCE ASSOCIATION
OF AMERICA

555 Thirteenth Street, N.W.

Washington, D.C. 20004

(202) 824-1600

Louis Saccoccio

AMERICAN ASSOCIATION OF HEALTH PLANS
1129 Twentieth Street, N.W.

Suite 600

Washington, D.C. 20036

(11)
TABLE OF CONTENTS

Page
TABLE OF AUTHORITIEG.................::ccceeee0 iv
INTEREST OF AMICI CURIAE ............00000++ l
STATEMENT OF THE CASE ...............e0eeee+0 4
SUMMARY OF ARGUMENT ..............::::eee08 4
AEA IRARIIE DE ..cccccccccccccccccccccccccercccccscscscorsecesesees 6
I. The Standard Of Review Has Been
Historically Dependent Upon The
Designation Of The Appellate Issue .... 6
II. The Determination That A
Punitive Award Is “Grossly
Excessive” Under The United
States Constitution Is A Mixed
Question Of Law And Fact
Requiring De Novo Review............-..++ 8
A. Whether A Punitive Damages
Award Is “Grossly Excessive”
Is A Mixed Question Of Law
MIE TTI... cccsacensacseucosevoneosossreges )

B. The Goals of Preserving
Individual Constitutional
Rights and Developing A Clear
And Consistent Constitutional
Punitive Damages Doctrine
Mandate De Novo Review .......... 11

Be

(iii) (iv)
III. State Appellate Courts Are UTH
Similarly Required To Adopt A ss iacamasr ns semen
De Novo Standard Of Review In
Order To Uphold Federal — ~~
Substantive Due Process Guarantees.. 15 Adams v. Murakami
54 Ce
IV. De Novo Review Will Help Assure mpshanamieaias .
The Development Of Clear Legal Alexander & Alexander v. B. Dixon
Standards And Regulate Runaway Evander & Assoc., 596 A.2d 687
Punitive Awards ..............:ccccsssseeee, ae 22 | Od. Ct. Spec. App. 1901) ..............cceccccsescessees 17-18
CIEE cxniiiccbiirnitnientacenidneneineemenenneciennennds 24 BMW of North America, Inc. v. Gore,
gg 8 eee passim

Bose Corp. v. Consumers Union
of United States, 466 U.S. 485 (1984)....... 11, 12, 14

Brewer v. Williams,
I 12

Brinegar v. United States,
ay CI ccicnlihiichtchiactidiiasiansitadiiaiibbaeitdnties 23

Browning-Ferris Industies of Vermont, Inc.
v. Kelco Disposal, Inc.,

I 20
Ciba-Geigy Corp. v. Murphree,
653 So. 2d 857 (Miss. 1995) ....................0...0062. 19
Crookston v. Fire Ins. Exch.,
ge ys ER ee 18-19
Daubert v. Merrell Dow Pharmaceuticals, Inc.,

BED UE. Ga CIGD cccccscccsscsccssescsssscssssssssessesesee 15

. ‘

(v)

Davis v. North Carolina,

| EEE en ees ence 12
Dickerson v. United States,

Eee 15-16
Erie R.R. Co. v. Tompkins,

TE eer ncn eee 20, 21
FDIC v. Hamilton,

122 F.3d 854 (10% Cir. 1997) ...................ceeeeee 15
Gamble v. Stevenson,

406 S.E.2d 350 (S.C. 1991) ................. eee 18, 20, 21
Gasperini v. Center for Humanities, Inc.,

I 1l
Guaranty Trust v. United States,

I a oe 21
Harris v. Rivera,

I 16
Harte-Hanks Communications v.

Connaughton, 491 U.S. 657 (1989).................. 1l
Honda Motor Co., Ltd. v. Oberg,

I a passim
Ivy v. General Motors Corp.,

612 So. 2d 1108 (Miss. 1992) ......................2008 19
Keeney v. Tamayo-Reyes

| REISE SSE EE aera ere e ren raeee 7

(vi)
Kim v. Nash Finch Co.,

123 F.3d 1046 (8 Cir. 1997) .............ccccceeeeeeees 16
MacCrone v. Edwards Center,

980 P.2d 1156 (Or. App. 1999)......................04. 17
Mattison v. Dallas Carrier Corp.,

947 F.2d 96 (4 Cir. 1901) .........ccccccccccecsceesseess 21
Miller v. Fenton, 474 U.S. 104 (1985)................... 7,14
New York Times v. Sullivan,

I a a 11, 12
Norris v. Alabama,

I 12
Ornelas v. United States,

I tl passim
Pacific Mutual Life Insurance Co. v. Haslip,

ee passim
Pierce v. Underwood, 487 U.S. 552 (1988)...................... 8
Pullman-Standard v. Swint,

I ll passim
Salve Regina College v. Russell,

ESSE SERRE NTE eee passim
Schmitz v. Aston,

3 P.3d 1184 (Ariz. App. 2000)........................4. 17

Smith v. Phillips,
4 een 16

(vii)

Southwestern Tel. & Tel. Co. v. Danaher,

ee ee

Spaur v. Owens-Corning Fiberglas Corp.,

510 N.W.2d 854 (lowa 1994)..........c-ssessee000

Thompson v. Keohane,

RO

Townsend v. Sain,

Re Ce SD GED cenencnemancenmaseesnssmnesnenenes

TXO Production Corp. v. Alliance Resources

Corp., 509 U.S. 443 (19938)...................00008.

Waters-Pierce Oil Co. v. Texas,

Williams v. Aetna Finance Co..,
700 N.E.2d 859 (Ohio 1998),

cert. denied, 526 U.S. 1051 (1999)...............

OTHER REFERENCES AND AUTHORITIES

I I

Stephen Daniels & Joanne Martin, Myth
and Reality in Punitive Damages,

FO RD, Be, BERR. Sep eccnccevsscenevescscessencees

Douglas Harkin, BMW of North America,
Inc. v. Gore: A Trial Judge’s Guide to
Jury Instructions and Judicial Review
of Punitive Damages, 60 Mont. L. Rev.

Pe QD cesrecsscnsrerssecsvsenssssseeyeensnsevesvessnconees

pene 19

—_ 22

(viii)

Henry P. Monaghan, Constitutional Fact
Review, 85 Colum. L. Rev. 229 (1985)

No. 99-2035

IN THE SUPREME COURT OF THE UNITED STATES

COOPER INDUSTRIES, INC.,
Petitioner,
v.

LEATHERMAN TOOL GROUP, INC.,
Respondent.

On a Writ of Certiorari to the United States
Court of Appeals for the Ninth Circuit

INTEREST OF AMICI CURIAE

The American Tort Reform Association (““ATRA”),
founded in 1986 and based in Washington, D.C., is a
broad-based coalition of more than 300 businesses,
corporations, municipalities, associations, and
professional firms who have pooled their resources to
promote reform of the civil justice system with the
goal of ensuring fairness, balance, and predictability
in civil litigation.” For over a decade, ATRA has filed

* Pursuant to Rule 37, letters of consent from the
parties have been filed with the Clerk of the Court.
In accordance with Rule 37.6, amici state that no
counsel for either party has authored this brief in
whole or in part, and no persons or entities, other

(continued...)

2

amicus curiae briefs in cases before this Court that
have addressed important liability issues, including
punitive damages awards.

The National Association of Manufacturers
(“NAM”) — “18 million people who make things in
America” — is the nation’s largest and oldest multi-
industry trade association. The NAM represents
14,000 members (including 10,000 small and mid-
sized companies) and 350 member associations
serving manufacturers and employees in every
industrial sector and all 50 states. Headquartered in
Washington, D.C., the NAM has 10 additional offices
across the country.

The NAM’s mission is to enhance the
competitiveness of manufacturers and improve
American living standards by shaping a legislative
and regulatory environment conducive to U.S.
economic growth, and to increase understanding
among policymakers, the media and the general
public about the importance of manufacturing to
America’s economic strength.

Citizens for a Sound Economy Foundation
(“CSEF”’) is a nonprofit, non-partisan, grassroots
organization devoted to educating the public about
the benefits of the free market system and a less
intrusive government. CSEF’s 250,000 members
nationwide are everyday citizens who are concerned
that larger and larger punitive damages verdicts are
being rendered based on weak burdens of proof,
irrelevant and even prejudicial evidence, and often

than the amici, have made a monetary contribution
to preparation or submission of this brief.

— LLL it iii iggy

3

multiple times against the same defendant for the
same activity. CSEF’s mission includes efforts to
restore predictability and fairness in punitive
damages law, so that such awards are not meted out
in a “litigation lottery’ characterized by
excessiveness and arbitrariness.

The American Chemistry Council (“ACC”) is a
nonprofit trade association whose member
companies produce, market, and use industrial
chemicals. ACC’s member companies comprise more
than ninety percent of the productive capacity for
basic industrial chemicals in the United States.

The Health Insurance Association of America
(“HIAA”), based in Washington, D.C., is one of the
largest associations of health insurance companies in
the world. HIAA is an advocate for the private,
market-based health insurance system. Its more
than 290 members provide medical expense and
supplemental insurance, as well as long-term care
insurance and disability income protection to more
than 123 million Americans. HIAA develops and
advocates federal and state policies which build upon
our health care system’s quality, affordability,
accessibility and responsiveness.

The American Association of Health Plans
(“AAHP”) is a national association for the managed
health care community. AAHP’s' membership
includes health maintenance organizations (HMOs),
preferred provider organizations, third party health
benefits administrators, health care utilization
review organizations, prepaid limited health service
plans, and other integrated health care delivery
systems. AAHP represents more than 1000 health
plans serving nearly 140 million Americans.

4

The Coalition for Asbestos Justice, Inc.
(“Coalition”) was formed in 2000 as a nonprofit
association to address and improve the asbestos
litigation environment. Established by property and
casualty insurers, the Coalition’s mission is to
encourage fair and prompt compensation to
deserving current and future asbestos litigants by
seeking to reduce or eliminate the abuses and
inequities that exist under the current civil justice
system.! The Coalition files amicus curiae briefs in
important cases before state courts of last resort and
the United States Supreme Court that may have a
significant impact on the asbestos litigation
environment.

STATEMENT OF THE CASE

Amici adopt and _ incorporate Petitioner’s
statement of the case.

SUMMARY OF ARGUMENT

This Court’s jurisprudence has firmly established
that punitive damages awards must satisfy the due
process requirements of the United States
Constitution. Now, the Court must allow federal
appellate courts to exercise the exacting type of

1 The Coalition for Asbestos Justice includes the
following insurers: ACE-USA, Chubb & Son, CNA
service mark companies, Fireman's Fund Insurance
Company, The Hartford Financial Services Group,
Inc., Kemper Insurance Companies, Liberty Mutual
Insurance Group, and the St. Paul Fire and Marine
Insurance Company.

——

5

ensure that those constitutional guarantees are not
simply empty platitudes.

In other contexts, federal appellate courts have
traditionally conducted an independent review of the
record when determining whether constitutional
guarantees are violated in individual factual
circumstances. This type of review allows for the
preservation of a litigant’s constitutional rights and
encourages reasoned development of constitutional
jurisprudence. The same careful review using a de
novo standard should be required when a federal
appellate court considers whether a _ punitive
damages award is “so grossly excessive as to amount
to a deprivation of property without due process of
law.” TXO Production Corp. v. Alliance Resources
Corp., 509 U.S. 443, 454 (1993) (quoting Waters-
Pierce Oil Co. v. Texas, 212 U.S. 86 (1909)). Without
such careful review, defendants are subject to the
whims of juries or personal predilections of trial
courts. Permitting a discretionary standard of
review would give trial judges extraordinary latitude
in determining whether punitive damages awards
are excessive. This latitude will substantially
weaken the due process protections established by
this Court — or even render them meaningless.

Because the excessive nature of a punitive award
violates a defendant’s fundamental constitutional
rights, a de novo standard of review must be used by
state appellate courts as well as federal circuits.
Indeed, without directly imposing such a standard
on the states, this Court already has encouraged
state court use of a more exacting review standard.
It did so by suggesting that an adequacy of appellate
review by state courts is essential to assure that
punitive damages awards satisfy procedural due

6

process. See Pacific Mutual Insurance Company v.
Haslip, 499 U.S. 1, 18 (1991). Adopting a deferential
standard of review for federal appellate courts while
promoting a more exacting standard for state
appellate courts will result in inconsistent results
and encourage forum shopping.

A de novo standard of review would further help
assure protection of fundamental constitutional
rights. Under a discretionary standard, some federal
trial judges may feel that they have the liberty to act
as they choose with little regard for appellate
scrutiny. On the other hand, under a de novo
standard, trial judges are likely to self-police their
decisionmaking on the constitutionality of punitive
damages. Not only will this enhance individual
litigants’ constitutional protections, it will also
encourage consistency and predictability in the
development and interpretation of precedent
regarding the constitutionality of punitive damages
awards. In this way, a de novo standard will reduce
the need for appeals and ultimately send litigants
the message that filing lawsuits is not a direct path
to a windfall award — thus helping to ensure that
punitive damages will no longer “run wild.” Haslip,
499 U.S. at 18.

| ARGUMENT

I. Th n f i
Historically Dependent Upon The
Desi i

In the absence of any specific legislative directive,
this Court has _ historically determined the
appropriate standard for appellate review through
its characterization of the issue on appeal. There
have been four primary designations in this regard:

7

historic fact, law, mixed question of law and fact,
and matters of discretion. While the means by
which the Court categorizes the individual issue is
not always clearly defined, the applicable standard
of review is always dependent on the designation
given to the individual issue.

Issues of fact determined by a jury are given
deferential review in accordance with the Seventh
Amendment of the United States Constitution.
When determined by a trial court, factual findings
are reviewed for clear error. See Fed. R. Civ. Pro.
52(a). As this Court explained:

By “issues of fact” we mean to refer to
what are termed basic, primary, or
historical facts: facts “in the sense of a
recital of external events and the
credibility of their narrators... .”

Townsend v. Sain, 372 U.S. 293, 310 n.6 (1963)
(overruled on other grounds by Keeney v. Tamayo-
Reyes, 504 U.S. 1 (1992)) (citation omitted). Issues of
law, on the other hand, are reviewed de novo. See
Salve Regina College v. Russell, 499 U.S. 225, 231-33
(1991) (citing 28 U.S.C. § 1291).

Mixed questions of law and fact, like issues of
law, have been historically examined through de
novo review. See Miller v. Fenton, 474 U.S. 104, 112
(1985). Such mixed questions arise where:

the historical facts are admitted or
established, the rule of law is
undisputed, and the issue is whether
the facts satisfy the [relevant]

standard, or, to put it another way,
whether the rule of law as applied to

8

the established facts is or is not
violated.

Ornelas v. United States, 517 U.S. 690, 696-97 (1996)
(quoting Pullman-Standard v. Swint, 456 U.S. 273,
289 n.19 (1982)). Deferential review of mixed
questions of law and fact may, however, be
warranted where “probing appellate scrutiny will not
contribute to the clarity of legal doctrine.” Russell,

499 U.S. at 233. In this situation, a lower court’s .

exercise of discretion is afforded great deference and
is reviewable only to determine whether the court
abused its discretion. See Pierce v. Underwood, 487
U.S. 552, 558 (1988).

Il. The Determination That A _ Punitive

This Court has repeatedly emphasized that
excessive punitive damages awards may violate due
process rights guaranteed by the United States
Constitution. See, e.g., BMW of North America, Inc.
uv. Gore, 517 U.S. 559, 562 (1996); Pacific Mutual Life
Insurance Co. v. Haslip, 499 U.S. 1, 19 (1991); see
also TXO., 509 U.S. at 454; cf. Honda Motor Co., Ltd.
v. Oberg, 512 U.S. 59 (1996) (prohibition of judicial
review of amount of jury’s punitive damages award
violates the Due Process Clause of Fourteenth
Amendment). Punitive damages are subject to
substantive due process protection because, as this
Court has previously recognized,

lellementary notions of fairness
enshrined in our _ constitutional
jurisprudence dictates that a person

9

receive fair notice not only of the
conduct that will subject him to
punishment, but also of the severity of
the penalty that a State may impose.

Gore, 517 U.S. at 574 (emphasis added); see also
TXO, 509 U.S. at 454 (Due Process Clause imposes
substantive limits “beyond which penalties may not
go”); Southwestern Tel. & Tel. Co. v. Danaher, 238
U.S. 482, 491 (1915) (setting aside penalty imposed
on telephone company because it was so “plainly
arbitrary and oppressive” as to violate the Due
Process Clause). Because of the substantive due
process rights involved, de novo review is required.

A. Whether A _ Punitive Damages
Award Is “Grossly Excessive” Is A

Mixed Question of Law and Fact
The Court’s assessment of the constitutionality of
a punitive damages award requires a careful
balancing of the competing legal interests at stake.
On the one hand, the Court has recognized the
fundamental due process right of citizens to be free
from arbitrary and oppressive government action.
See TXO, 509 U.S. at 454. On the other hand,
governments must be able to fashion damages that
are reasonably necessary to vindicate society's
legitimate interests in punishment and deterrence.
See Gore, 517 U.S. at 568. Recognizing this balance,
this Court has ruled that “[o]nly when an award can
fairly be categorized as ‘grossly excessive’ in relation
to these interests does it enter the zone of
arbitrariness that violates the Due Process Clause of
the Fourteenth Amendment.” Jd. See also id. at 586
(Breyer, J., concurring) (constitutional
determination focuses on whether award is “grossly

10

excessive” in relation to legitimate punitive damages
objectives). Therefore, whether an award is “grossly
excessive” becomes the ultimate question to be
resolved in determining whether a constitutional
violation has occurred.

Balancing the dual interests of the individual and
the State requires a two-part process comporting
with the test for ascertaining the existence of mixed
questions of law and fact as set forth by this Court in
Pullman-Standard v. Swint, 456 U.S. 273, 289 n.19
(1982); see also Ornelas, 517 U.S. at 696. First, the
factfinder must determine the “historical facts” of
the existence and nature of the defendant’s bad acts
that give rise to the punitive award. See Swint, 456
U.S. at 289 n.19 (“the historical facts are admitted or
established...”). Once such underlying factual issues
have been resolved, the second step requires that the
Court make a legal judgment about those facts. See
id. (“[T)]he issue is whether the facts satisfy the
[relevant constitutional] ... standard”).

The applicable rule of law for assessing a
punitive damages award is undisputed. In BMW of
North America, Inc. v. Gore, 517 U.S. 559 (1996), this
Court set forth a three-part standard to guide lower
courts in determining whether a punitive award is so
“grossly excessive” under the circumstances as to
violate due process. First, and most importantly, the
award must take into account “the degree of
reprehensibility of the defendant’s conduct.” Id. at
575. Next, the award must reflect proportionality
between the punitive damages award and the actual
harm sustained by the plaintiff. See id. at 580.
Finally, a reviewing court must consider the civil or
criminal penalties that could be imposed for
comparable misconduct. See id. at 583. The

ll

question then becomes whether, under this
standard, the facts contained in the record are
legally sufficient to support the amount of punitive
damages awarded. See id. at 585; see also Ornelas,
517 U.S. at 696-97.

The process set out by this Court in Gore seeks to
place historical facts within a legal framework. It is
not a re-determination of historical facts themselves.
See Gasperini v. Center for Humanities, Inc., 518
U.S. 415, 459 (1996) (Scalia, J., dissenting) (“Unlike
the measure of actual damages suffered which
presents a question of historical or predictive fact,
the level of punitive damages is not really a ‘fact’
‘tried’ by the jury.”). Such a mixed question of law
and fact requires de novo review. See Ornelas, 517
U.S. at 696.

B. The Goals Of Preserving Individual

De novo review of mixed questions of law and fact
by federal appellate courts does not impermissibly
invade the province of the jury. See New York Times
v. Sullivan, 376 U.S. 254, 285 n.26 (1964) (Seventh
Amendment does not preclude Court from
independently reviewing mixed questions of facts
and law). Moreover, this Court has long held that
where facts implicate constitutional issues, the
federal appellate court may make an “independent”
review of the _ record. See Harte-Hanks
Communications v. Connaughton, 491 U.S. 657
(1989); Bose Corp v. Consumers Union of United
States, 466 U.S. 485 (1984) (First Amendment

12

issues). And similarly, except in cases involving
issues of limited precedential value, such as
individual juror bias, the Court has consistently
accorded de novo review to issues which arise as a
result of Fourth, Fifth or Sixth Amendment
challenges. See, e.g., Ornelas, 517 U.S. at 697 (1996)
(ultimate determinations of reasonable suspicion
and probable cause require independent appellate
review); Thompson v. Keohane, 516 U.S. 99 (1995)
(in Fifth Amendment context, rejecting argument
that “in-custody” determination should be accorded a
presumption of correctness); Davis v. North
Carolina, 384 U.S. 737 (1966) (voluntariness of
confession); Brewer v. Williams, 430 U.S. 387 (1977)
(waiver of Sixth Amendment right to counsel).

The reason for de novo review in such
circumstances is clear. As the Court explained in
Bose, federal judges have:

a constitutional responsibility that
cannot be delegated to the trier of fact,
whether the fact-finding function be
performed in the particular case by a
jury or by a trial judge.

466 U.S. at 501. This responsibility requires the
appellate court “in proper cases, [to] review the
evidence to make certain that [constitutional]
principles have been constitutionally applied.” New
York Times, 376 U.S. at 285; see also Norris uv.
Alabama, 294 U.S. 587, 590 (1935) (Court’s duty is
“to inquire not merely whether a_ [federal
constitutional right] was denied in express terms but
also whether it was denied in substance and effect.
If this requires an examination of evidence, that
examination must be made.”).

13

The use of a discretionary standard to assess the
constitutional limits ci punitive damages awards
will relegate the adjudication of furdamental
constitutional rights to individual trial judges.
While the professionalism and dedication of the
federal judiciary is unquestioned, the notion of
vesting individual judges with such sweeping power
is disconcerting:

One must concede 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 sensibilities.

Haslip, 499 U.S. at 18 (emphasis added). By
contrast, independent de novo review creates a full
and meaningful system of checks and balances to
help preserve individual constitutional rights.

In addition to helping assure that an individual’s
substantive due process rights are preserved,
independent de novo review of excessive punitive
awards by federal appellate courts is necessary to
define the contours of the “grossly excessive” test
established in Gore. See Henry P. Monaghan,
Constitutional Fact Review, 85 Colum. L. Rev. 229,
279 (1985) (de novo review is particularly important
where there is a need for development of a
constitutional norm); Douglas Harkin, BMW of
North America, Inc. v. Gore: A Trial Judge’s Guide
to Jury Instructions and Judicial Review of Punitive
Damages, 60 Mont. L. Rev. 367, 390-91 (1999)
(discussing need for additional guidance on
application of Gore standards).

14

As with other ultimate questions bearing on an
individual’s federal constitutional rights, the “grossly
excessive” principle is a “fluid concept” that takes its
substantive content from the particular context in
which the standard is being assessed. Ornelas uv.
United States, 517 U.S. 690, 696 (1996) (standards
for constitutional determination of reasonable
suspicion and probable cause to search cannot be
reduced to a neat set of legal rules); Bose, 466 U.S.
at 506 n.25 (constitutional standards regarding
. suppression of communications do not readily lend
themselves to generalized definitions). Particularly
in such situations, where

the relevant legal principle can be
given meaning only through its
application to the particular
circumstances of a case, the Court has
been reluctant to give the trier of fact’s
conclusions presumptive force and, in
so doing, strip a federal appellate
court of its primary function as an
expositor of law.

Miller, 474 U.S. at 114; see also Ornelas, 517 U.S. at
697 (independent review is “necessary if appellate
courts are to maintain control of, and to clarify, legal
principles”).

The federal circuit courts, as the “expositors of
law,” are best situated to carry out the “dual goals of
doctrinal coherence and economy of judicial
administration.” See Russell, 499 U.S. at 231. They
are also uniquely “structurally suited to the
collaborative juridical process that promotes
decisional accuracy,” as they can devote their
attention to comprehensively analyzing and

ee ee eee

15

resolving legal issues without concern for developing
the record. Jd. at 232. Finally, since this Court
hears only a small fraction of the cases heard by
federal appellate courts, the circuit courts are given
the primary responsibility of shaping the contours of
the constitutional limitations on excessive punitive
damages awards. As a result, the circuit courts
must have the independence to exercise their
responsibilities through use of de novo review.

Ill. State Appellate Courts Are Similar]
R ir A r
Review I r T ral

iv P r

As discussed, the Court’s determination of the
appropriate standard of review for the amount of
punitive damages awards has an _ important
constitutional dimension; it is more than an exercise
of the Court’s supervisory powers over the lower
federal courts. Compare Daubert v. Merrell-Dow
Pharmaceutical Co., 509 U.S. 579 (1993) (exercising
Court’s supervisory powers and establishing factors
for ascertaining admissibility of scientific evidence in
federal courts). Because the excessiveness of a
punitive damages award can violate a defendant’s
due process rights, state appellate courts, as well as
federal tribunals, must review this fundamental
issue de novo.? See Dickerson v. United States, 120

2 When liability is based on state law, judges must
assess and review a punitive damage award under
both the federal constitutional standards in Gore and
applicable state guidelines. See FDIC v. Hamilton,
122 F.3d 854, 861 (10% Cir. 1997) (whether a

(continued...)

16

S. Ct. 2326, 2333 (2000) (with respect to state court
proceedings, United States Supreme Court has
authority to “enforc[e] the commands of the United
States Constitution”); Harris v. Rivera, 454 U.S. 339,
344-45 (1981) (“Federal judges may... require the
observance of . . . special procedures” in state courts
“when necessary to assure compliance with the
dictates of the Federal Constitution.”); cf. Smith v.
Phillips, 455 U.S. 209, 221 (1982) (“Federal courts
hold no supervisory authority over state judicial
proceedings. . .”) (emphasis added).

Requiring state appellate courts to engage in de
novo review of trial court rulings on _ the
constitutionality of punitive damages awards under
the United States Constitution will preserve
constitutional rights and encourage uniform
application of the principles enunciated in this
Court’s punitive damages jurisprudence.

This Court already has ruled that meaningful
appellate review of a punitive damages award is a
critical part of a constitutionally valid state punitive
damages scheme, see Haslip, 499 U.S. at 21; see also
Honda, 512 U.S. at 432. In Haslip, the Court upheld
Alabama’s scheme for awarding punitive damages
against a charge that punitive awards in Alabama

“punitive damage award violates the Federal
Constitution is a question separate and apart from
Oklahoma state law.”). When liability is based
solely on federal law, only Gore factors apply. See
Kim v. Nash Finch Co., 123 F.3d 1046 (8 Cir. 1997)
(action for employment discrimination under 42
U.S.C. § 1981).

—— _ SS ee

17

had become the product of “unbridled jury
discretion,” in violation of the Due Process Clause.
The Court ruled that although the jury instructions
gave the jury “significant discretion,” this discretion
was properly constrained by Alabama’s
requirements for exacting post-verdict and appellate
reviews and thus “did not cross the line into the area
of constitutional impropriety.” Haslip, 499 U.S. at
24.

State courts have differed in their understanding
and application of MHaslip and this Court’s
subsequent punitive damages jurisprudence. Some
state courts have consistently interpreted Haslip
and Gore as setting forth a “clear. . . constitutional
mandate for meaningful judicial scrutiny of punitive
damage awards” at the appellate level. Honda, 512
U.S. at 418 (citing Adams v. Murakami, 54 Cal. 3d
105, 118 (1991)) (absence of particular evidence
frustrates “fully informed” and “meaningful
appellate review” of reasonableness of size of award
required by Haslip); see Spaur v. Owens-Corning
Fiberglas Corp., 510 N.W.2d 854, 857 (Iowa 1994)
(Haslip requires “substantive” review of punitive
award by appeals court); Schmitz v. Aston, 3 P.3d
1184, 1205 (Ariz. App. 2000) (Haslip requires
independent consideration of substantive criteria by
appellate court); MacCrone v. Edwards Center, 980
P.2d 1156, 1165 (Or. App. 1999) (Gore requires
appeals court to “make an independent assessment
of the jurys award to determine whether it is
constitutionally excessive and in violation of Due
Process under the [Gore] guideposts without regard
to the trial court’s reasoning’) (emphasis added).

In Alexander & Alexander v. B. Dixon Evader &
Assoc., 596 A.2d 687, 711 (Md. Ct. Spec. App. 1991),

18

the Maryland Court of Special Appeals relied on
Haslip when it vacated an excessive punitive
damages award as violative of due process. The
court rejected Maryland’s previous punitive damages
rule generally precluding appellate review of the
excessiveness of a punitive damages award. The
court noted that prior to Haslip, Maryland appellate
courts could review a trial court’s grant or refusal of
a remittitur only “under extraordinary
circumstances,” using an abuse of discretion
standard of review. Alexander & Alexander, 596
A.2d at 710. But the Maryland court ruled that
under Haslip:

[t]he Supreme Court may well have
made a wider degree of appellate
review than heretofore practiced in
Maryland necessary. If faced with a
punitive award that was entered upon
proper procedure but which
nonetheless contravenes due process
because it is out of all proportion to
both the harm caused and the
perniciousness of the conduct, we
could not, on the ground of judicial
impotence, allow the unconstitutional
award to stand.

Id. The Maryland court then proceeded to
independently review the punitive damages award.

Moreover, some states have altered their punitive
damages schemes to tighten up post-verdict review
procedures. See, e.g., Gamble v. Stevenson, 406
S.E.2d 350, 354 (S.C. 1991) (announcing substantive
factors to be considered in post-trial review of
punitive awards); Crookston v. Fire Ins. Exch., 817

19

P.2d 789, 811 (Utah 1991) (tightening post-trial
review standards in order to permit more
substantive analysis of factors warranting punitive
awards on appeal).

Conversely, other states have decided that such
exacting appellate review of a punitive damages
award is not necessary under Haslip. In such cases,
the courts have ruled that an abuse of discretion
standard applies and the award will stand if it “is
not the result of passion and prejudice. ae
Williams v. Aetna Finance Co., 700 N.E.2d 859, 871
(Ohio 1998) (deferring to judgment of jury), cert.
denied, 526 U.S. 1051 (1999); Ivy v. General Motors
Acceptance Corp., 612 So. 2d 1108 (Miss. 1992)
(despite Court’s statements in Haslip, Mississippi
punitive damages scheme is constitutional where it
preserves award unless it “evinces passion, bias and
prejudice of the part of the jury so as to shock the
conscience”) (citation omitted); see also Ciba-Geigy
Corp. v. Murphree, 653 So. 2d 857, 867 (Miss. 1995)
(Supreme Court’s statements in Haslip regarding
constitutionality of Mississippi's punitive damages
system were “unwarranted concerns”); cf. Haslip,
499 U.S. at 21 n.10 (punitive damages scheme
requiring application of detailed substantive
standards on review by Alabama Supreme Court
“distinguishes Alabama’s system from the.
Mississippi scheme[] about which [the] Justices
[have] expressed concern”). A uniform de novo
standard of review will resolve the uncertainties
created by diverse application of this Court’s
punitive damages law.

Interestingly, it is against this backdrop of post-
Haslip state court precedent that this Court must
consider the standard of review applicable to federal

20

appellate courts reviewing the constitutionality of a
punitive damages award. Federal courts, sitting in
diversity, must apply the substantive law of the
state on punitive damages, see Erie R.R. Co. v.
Tompkins, 304 U.S. 64 (1938), but must also abide
by federal procedural rules when reviewing the jury
verdict. See Browning-Ferris Industries of Vermont,
Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 279 (1989).8
As a result, requiring federal courts to use a
deferential standard of review while many state
courts apply an independent standard of review
would create incongruities. Compare Gamble, 406
S.E.2d 350 (establishing elaborate post-trial review

3 The Browning-Ferris Court stated:

In reviewing an award of punitive
damages, the role of the district court
is to determine whether the jury’s
verdict is within the confines set by
state law, and to determine, by
reference to federal standards
developed under Rule 59, whether a
new trial or remittitur should be
ordered.

492 U.S. 257, 279 (1989). While the Court also
suggested that such review should be conducted
under an abuse of discretion standard, the Court’s
Browning-Ferris opinion predated its determination
in Gore that “grossly excessive” punitive damages
awards may violate substantive due process rights.
Amici believe, as discussed supra, that rulings on
the constitutional issue implicated by excessive
awards should be reviewed de novo.

-— —-.

21

for South Carolina courts to avoid due process
violations) with Mattison v. Dallas Carrier Corp.,
947 F.2d 95 (4% Cir. 1991) (noting that while
Gamble’s new South Carolina post-trial review
procedures appeared similar to those held
constitutional under Haslip, “a federal court cannot
apply the Gamble post-verdict review process,
leading to the anomalous result that a decision on a
claim for punitive damages could be significantly
different depending on whether the case was tried in
a federal court.”). These incongruities are contrary
to the policies behind the Erie doctrine. As the
Court has stated previously, “the nub of the policy
that underlies Erie R. Co. v. Tompkins is that for the
same transaction, .. a suit... in a federal court
instead of in a State court a block away should not
lead to a substantially different result.” Guaranty
Trust v. United States, 326 U.S. 99, 109 (1945).

The possible post-Haslip incongruity between
state and federal courts creates significant
opportunities for forum-shopping on the part of both
plaintiffs and defendants, resulting in wasteful and
time-consuming litigation. It also would increase
the “notice problems” created by the already well-
documented unpredictability of punitive damages
awards. See Gore, 517 U.S. at 574. This incongruity
can — and shwvuld — be eliminated through use of the
de novo standard of review by both state and federal
courts considering the constitutionality of punitive
damages awards.

22

IV. De Novo Review Will Help Assure The
Development Of Clear Legal Standards
And Regulate R Punitive A
This Court has recognized that punitive damages
have “run wild” in the American legal system,
jeopardizing fundamenta! constitutional rights.
Haslip, 499 U.S. at 18. This is, in part, a result of
the free-for-all lottery-like aspect of punitive
damages awards. Plaintiffs can “roll the dice” and
try their luck with juries, who, with little guidance
on assessing punitive awards, often award windfall
amounts. This casino-like atmosphere is encouraged
by the lack of a clear set of legal principles governing
the excessiveness of these awards.

The size of punitive damages awards already
vary dramatically from jurisdiction to jurisdiction —
even for the same or similar conduct. If the
constitutionality of punitive awards is reviewed only
for “abuse of discretion,” the development of clear
precedent to guide future courts in their assessments

4 A study of 47 counties in 11 states over a several-
year period showed a high degree of variability:
Punitive damages were awarded in about 25 percent
of the successful verdict cases in some counties and
not awarded at all in others. Median verdicts
ranged from less than $10,000 in some areas to as
much as $204,000 in others. See Stephen Daniels &
Joanne Martin, Myth and Reality in Punitive
Damages, 75 Minn. L. Rev. 1, 31-32, 42 (1990).

23

of such damages will be prevented. As this Court
noted in another constitutional context:

[a] policy of sweeping deference would
permit, “fijn the absence of any
significant difference in the facts,” the
Fourth Amendment’s incidence [to]
tur{n} on whether different trial
judges draw general conclusions that
the facts are sufficient or insufficient
to constitute probable cause.

Ornelas, 517 U.S. at 697 (quoting Brinegar v. United
States, 338 U.S. 160, 171 (1949)).

The resulting lack of clear legal standards will
frustrate the twin goals of punitive damages —
deterrence and retribution. Absent consistent legal
standards on the constitutional excessiveness of
punitive damages awards, defendants have little
notice of the punishment they are likely to receive
under certain circumstances. Arbitrary and
inconsistent punishments with little discernible
relationship to a defendant’s activities provide little
incentive for the defendant to change its behavior.

De novo review will allow federal appellate courts
to develop clear guidelines for the lower courts as to
when a punitive award becomes “grossly excessive.”
“[A]n appropriately respectful application of de novo
review should encourage a district court to explicate
with care the basis for its legal conclusions.”
Russell, 499 U.S. at 233. Trial courts would thus be
required to apply concrete standards in reviewing
those decisions. This should ultimately decrease the
number of appeals of punitive awards. As a state
trial judge wrote:

24

If there are clearly defined guidelines
on the awarding of punitive damages,
the awards of lower courts would more
likely be sustained and needless
litigation of the amounts of the awards
would be reduced.

Douglas Harkin, BMW of North America, Inc. v.
Gore: A Trial Judge’s Guide io Jury Instructions and
Judicial Review of Punitive Damages, 60 Mont. L.
Rev. 367, 383 (1999).

Most importantly, the consistent application of
clear legal standards developed through de novo
review “helps to assure the uniform general
treatment of similarly situated persons that is the
essence of law itself.” See Gore, 517 U.S. at 587
(Breyer, J., concurring).

CONCLUSION

For the foregoing reasons, amici request that this
Court mandate a de novo standard for appellate
review of the excessiveness of punitive damages
awards.

Respectfully submitted,

Victor E. Schwartz*

Mark A. Behrens*

Leah Lorber

CROWELL & MORING LLP
1001 Pennsylvania Ave., N.W.
Washington, D.C. 20004
(202) 624-2500

Attorneys for Amici Curiae

25
* Counsel of Record

Sherman Joyce

AMERICAN TORT REFORM
ASSOCIATION

1850 M Street, N.W.

Suite 1095

Washington, D.C. 20036

(202) 682-1163

Jan S. Amundson
NATIONAL ASSOCIATION

OF MANUFACTURERS
1331 Pennsylvania Ave., N.W.
Suite 600
Washington, D.C. 20004
(202) 637-3055

J.V. Schwan

CITIZENS FOR A SOUND
ECONOMY FOUNDATION

1250 Eye Street, N.W.

Suite 700

Washington, D.C. 20005

(202) 942-7695

David F. Zoll

Donald D. Evans

AMERICAN CHEMISTRY COUNCIL
1300 Wilson Boulevard
Arlington, VA 22209

(703) 741-5000

26

Jeffrey L. Gabardi

HEALTH INSURANCE ASSOCIATION
OF AMERICA

555 Thirteenth Street, N.W.

Washington, D.C. 20004

(202) 824-1600

Louis Saccoccio
AMERICAN ASSOCIATION
OF HEALTH PLANS
1129 Twentieth Street, N.W.
Suite 600
Washington, D.C. 20036

Of Counsel

Dated: December 4, 2000

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0382%3A11. Public record. Not legal advice.