Reply Brief — American General Life & Accident Insurance v. Miller

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Su, J.S.

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MAY 1 1986

No. 85-1429 JC - GPANIOL, JR.

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IN THE

Supreme Court of the Gnited States

OCTOBER TERM, 1985

AMERICAN GENERAL LIFE AND ACCIDENT INSURANCE

COMPANY,

Appellant,

CAROLYN MILLER AND MARVIN RAMSEY MILLER, Snr..

Appellees.

On Appeal From The Supreme Court of Mississippi

REPLY MEMORANDUM

*THEODORE B. OLSON

LARRY L. SIMMS

MELANIE STEWART CUTLER

Of Counsel: GIBSON, DUNN & CRUTCHER

1050 Connecticut Avenue,

N.W.

S. WAYNE EASTERLING Washington, D.C. 20036

CAREY R. VARNADO (202) 955-8500

EASTERLING & VARNADO- Attorneys for Appellant

P.O. Box 3270

Hattiesburg, Mississippi *Couwnsel of Record

39401

(601) 544-8900

PRESS OF BYRON S. ADAMS, WASHINGTON, D.C. (202) 347-8203

TABLE OF CONTENTS

AR coke ee Oe See a ay a ee 1

1. Presentation of the Federal Constitutional

Challenge to the Punitive Damage Award

2. Presentation of the Federal Constitutional

Challenge to Miss. Code Ann. § 11-3-23

I IE (os sngccsancensasioGeatasaaxanmaessisnnnmucenins 5

a eakeunuas S

TABLE OF AUTHORITIES

CASES: Page

Aetna Life Insurance Co. v. Lavoie, No. 84-1601

(April 22, 19GG) ccssssccccsenssegcedenneeeeeeeeenen 1

Affholder, Inc. v. Southern Rock, Inc., 746 F.2d 305

(Sth Cir, 19GG) nccsesscscsccstussnueeeeeeeeneenenaa 6

Bankers Life and Casualty Co. v. Crenshaw, No. 85-

1765 (appeal docketed April 25, 1986) ........... 8

Barr v. City of Columbia, 378 U.S. 146 (1964) _... 3

Burlington Northern R. Co. v. Woods, No. 85-1088

(cert. granted, March 24, 1986) ........eceeeeeeeeees 6

Central of Georgia Railway Co. v. Steed, 287 Ala.

64, 248 Sa.2d 130 (2072). \xcooneeuene 6

Collins v. North Mississippi Savings and Loan As-

sociation, 445 So.2d 828 (Miss. 1984) _............ 6

Cunningham v. Cunningham, 423 So.2d 136 (Miss.

19GZ) _.....negssneesoenssdinssel oneness nanan 7

Dewey v. Des Mowines, 173 U.S. 193 (1899) _ .......... 2

Hathorn v. Lovorn, 457 U.S. 255 (1982) ............ 2, 3, 5

Illinois v. Gates, 462 U.S. 213 (1983) ......... eee 6

Lumbermens Mutual Casualty Co. v. Rhodes, 459

So.20d 244 (iiiae. TBD“ ~.:cssccoscncaeuaneiasesiaen 7

South Central Beli Telephone Co. v. Aden, 474 So.2d

584 (Mites. TG) inisssssccssecseneeeeeaaes 7

Tigner v. McGehee, 60 Miss. 242 (1882) ............0.. 5

Treadwell Ford, Inc. v. Campbell, A-749 ....ccceeeees. 8

Wallace v. Jones, 360 So.2d- 932 (Miss. 1978) ........ 5, 7

Walters v. Inexco Oil Co., 725 F.2d 1014 (5th Cir.

TGBE) —.cancscennsnaicecsunuensialnaeenaaaieneaannananaNaenas 6

CONSTITUTION, STATUTES AND RULES

UNITED STATES CONSTITUTION:

Eighth Amendment, Clause 2

(Excessive Fines Clause) ..............cccecceceeeeeees passim

ill

Table of Authorities Continued

Page

Fourteenth Amendment, Section 1

CERO PHOCESS CURIS) cccccccscccccccccccccccscscccccceoes passim

Fourteenth Amendment, Section 1

(Equal Protection Clause) ...........::ccsssseeeeeeeeeees 1, 8

StaTE STATUTES AND RULES

Section 11-3-23, Mississippi Code Annotated (Supp.

SII died iaislailces sau psenénbgbeneéenecssnsancenensnnssuiaascosegses 5, 6, 7

Rule 14, Rules of the Supreme Court of Mississippi

TIMID - sdssssionsresonsisshensescashssasseensansssconsoqubenssastonsees 3, 4

Rule 33, Rules of the Supreme Court of Mississippi

TEND sasnccnstssnscsicnnessdenaheestossecsncsnnpnecbasssncessosooses

Section 12-22-72, Code of Alabama (1975) ...........++. 6, 8

REPLY MEMORANDUM

INTRODUCTION

Appellees’ Motion to Dismiss (‘‘Motion’’) advances ar-

guments which were generally anticipated and addressed

in appellant’s Jurisdictional Statement (“‘Juris. Stat.’’). Ac-

cordingly, this Reply will correct various mischaracteri-

zations and unwarranted inferences by appellees concerning

the facts of record and Mississippi law and practice re-

garding the proper presentation of federal questions.

In their Motion, appellees concede, as they must in light

of this Court’s recent opinion in Aetna Life Insurance Co.

v. Lavoie, No. 84-1601 (April 22, 1986), that the federal

constitutional questions presented in this appeal are sub-

stantial. As this court stated in Aetna, the questions pre-

sented in this case—the unconstitutionality of the punitive

damage award under the Excessive Fines Clause of the

Eighth Amendment and the Due Process Clause of the

Fourteenth Amendment, and the unconstitutionality of

Mississippi's mandatory appeal penalty statute under the

Equal Protection Clause—‘“raise important issues which,

in an appropriate setting, must be resolved ....’’ Jd., slip

op., at 14.!

Instead, appellees argue that neither of the federal ques-

tions presented in this appeal were properly presented to

the court below. These arguments both distort Mississippi

law and practice and ignore or misstate the relevance of

clear contrary precedent in this Court.

‘ Appellees’ ‘“‘Statement of the Case’’ consumes nearly five pages with

“facts’’ drawn for the most part not from the record but a library

book and a portion of the opinion of the Supreme Court of Mississippi,

both of which speculate on the possibilities for unethical practice in the

insurance industry generally. The rather transparent emotional appeal

and conjecture about appellant’s motives and procedures in the conduct

of its business from outside the record are irrelevant to the question

of this Court’s jurisdiction.

1. Presentation of the Federal Constitutional Challenge

to the Punitive Damage Award

Appellees do not dispute that in post-trial motions and

on direct appeal to the Supreme Court of Mississippi, Juris.

Stat., at 8, appellant squarely challenged the excessiveness

of the $350,000 punitive damage award. Nor do appellees

contend that the “‘excessiveness’’ argument advanced again

at the rehearing stage was somehow a “different’’ argu-

ment simply because at that stage appellant specifically

relied upon the Eighth and Fourteenth Amendments in

support of its “excessiveness” argument. Thus, appellees

do not dispute that Dewey v. Des Moines, 173 U.S. 193

(1899), is controlling on the question of this Court’s power

to decide this question in this case.

Appellees presumably do not challenge appellant's reli-

ance on Dewey because, even if the excessiveness challenge

had not been raised post-trial and on direct appeal, it is

clear that it could have been raised for the first time in

the Supreme Court of Mississippi by post-affirmance mo-

tion and, under this Court’s holding in Hathorn v. Lovorn,

457 U.S. 255 (1982), would still be regarded as having

been properly presented as regards this Court’s jurisdic-

tion.

In Hathorn, this Court considered and rejected the ar-

gument that a question raised for the first time by the

petitioner at the rehearing stage and not addressed in the

decision of the Supreme Court of Mississippi must be re-

garded as having been improperly presented. This Court,

assuming that the denial of the petition for rehearing with-

out comment could have constituted a decision that the

presentation of that federal question came too late, never-

theless concluded that that federal question had been prop-

erly presented. This holding was based on the fact that

the Supreme Court of Mississippi either has no rule against

presentation of new federal questions at the rehearing

stage or that, if it does, that rule was not “strictly or

————————————

regularly” followed, Barr v. City of Columbia, 378 U.S.

146, 149 (1964), so as to provide a basis for depriving this

Court of its power to review a substantial federal question.

Hathorn v. Lovorn, 457 U.S., at 263. This Court concluded

in Hathorn that the denial of rehearing in that case ‘‘must

have rested either upon a substantive rejection of

petitioners’ federal claim or upon a procedural rule that

the state court applies only irregularly.”’ Jd., at 264-65

(footnote omitted). ~!

In its opinion in Hathorn, this Court examined a number

of cases in which the court below decided questions which

had been raised for the first time at the rehearing stage.

Id., at 263-64 & n.14. Appellees do not even suggest that

the court below has departed from its practice of enter-

taining and deciding questions raised for the first time at

the rehearing stage. Instead, appellees make the facile

argument that this substantial federal question cannot be

considered by this Court because this federal question was

not, as allegedly required by Rule 14 of the court below,

“distinctly set forth’ in appellant’s Petition for Rehearing.

Thus, appellees urge that this Court must assume that this

question could not have been entertained by the court

below.”

On November 26, 1985, appellant filed a “Petition for

Rehearing” in which it set forth, in five numbered sen-

tences, its grounds for seeking a rehearing. J.S. App., at

26a. Those five numbered sentences were taken verbatim

from the five headings found in appellant’s Brief in Sup-

*In advancing this argument regarding the alleged deficiencies in

appellant's petition, appellees conveniently ignore the fact that, without

regard to the petition itself, the excessiveness of the punitive damage

award had already been expressly challenged on direct appeal to the

Supreme Court of Mississippi. Juris. Stat., at 109a-110a. Appellees can-

not escape the fact that the excessiveness of the punitive damage award

has been hotly contested from the time that award was made by the

jury.

port of Petition for Rehearing filed that same day. J.S.

App., at 30a, 32a, 33a, 34a and 35a. It is the apparent

position of appellees that the language chosen by appellant

to capture the essence of its challenge to the excessiveness

of the punitive damage award set forth under heading “‘A”’

in its Brief in Support of Petition for Rehearing, J.S. App.,

at 30a, was either inartful or otherwise deficient. In sup-

port of this transparently frivolous argument, appellees

cite no case interpreting Rule 14, much less a case holding,

or even remotely suggesting, that the words “briefly and

distinctly set forth the grounds” in Rule 14 require lawyers

practicing in Mississippi to select a particular combination

of words by which to describe the bases on which they

seek rehearing. Nor do appellees cite a single case in the

court below suggesting that failure to choose the “right’’

words in a Petition for Rehearing—even assuming such a

choice were required by Rule 14 and even if appellant

could be thought to have selected the “wrong’’ words—

could ever deprive the court below of its power to enter-

tain and decide issues identified more fully and briefed in

the required accompanying brief in support of that petition.

Nor do appellees attempt to articulate any substantial, or

even insubstantial, state purpose which might be served

by the issuance of a rule which would achieve the result

urged by appellees.’ Rule 14 does not achieve such a result

in this case, nor has it ever led to such a result in any

reported or unreported case of the court below brought

to this Court’s attention by appellees or known to appel-

lant.

* Mississippi, like most other States, has largely abandoned highly

technical rules of pleading. Rule 33 of the rules of that court expressly

provides that the “design [of the Rules] is to facilitate business and

advance justice ... ."" The interpretation placed on Rule 14 by appellees

on the facts here would do neither.

2. Presentation of the Federal Constitutional Challenge

to Miss. Code Ann. § 11-3-23 (Supp. 1982)

As discussed above, this Court has squarely determined

that the Supreme Court of Mississippi has no practice of

refusing to entertain questions presented for the first time

at the rehearing stage. Hathorn v. Lovorn, 457 U.S., at

263-65. Indeed, if that court has a “strictly or regularly”

followed practice, it appears to be to consider and resolve

issues presented for the first time in petitions for rehear-

ing. Id., at 263 n.14.4 Hathorn would thus appear to be

dispositive of appellees’ contention that appellant’s chal-

lenge to the constitutionality of Mississippi’s appeal penalty

statute had to be raised on direct appeal before the judg-

ment was affirmed by the court below.

Passing this point, appellees do not, because they can-

not, cite a single case in the court below which suggests

that a question involving § 11-3-23 is not timely presented

at the rehearing stage.

Since at least 1882, the Supreme Court of Mississippi

has recognized that questions regarding the implementa-

tion of § 11-3-23 and its predecessor statutes are appro-

priately raised by way of a post-affirmance motion in that

court. Tigner v. McGehee, 60 Miss. 242 (1882). The court

below entertained and rejected in post-affirmance pro-

ceedings an identical federal constitutional challenge to

§ 11-3-23 in Wallace v. Jones, 360 So.2d 932 (Miss. 1978).

No case in the court below suggests that this challenge

to §11-3-23 was not timely presented as a matter of state

law. The same is true in every other court which has been

‘The holding in Hathorn that no Mississippi procedural bar could be

invoked to preclude this Court’s jurisdiction is in no way qualified, in

the opinion of Justice O’Connor for the Court, by the several mean-

ingless distinctions appellees attempt to draw, Motion, at 7 n.4. The

holding of Hathorn is that the Supreme Court of Mississippi does not

itself regularly invoke such a procedural bar on any sufficiently regular

basis, if indeed such a bar even exists.

called upon to apply § 11-3-23 or its Alabama_counterpart,

§ 12-22-72, Code of Alabama (1975).° Thus, the failure of

the court below expressly to rule on this federal consti-

tutional cnailenge to § 11-3-23 in no way undermines this

Court’s appellate jurisdiction over this case. See Illinois v.

Gates, 462 U.S. 218, 220 n.2 (1983).

Appellees’ reliance on Collins v. North Mississippi Sav-

ings and Loan Association, 445 So.2d 828 (Miss. 1984), is

misplaced. In that case, the Supreme Court of Mississippi

affirmed a decree below which had dismissed a complaint

alleging that an appeal had been taken in bad faith. Section

11-3-23 was not put in issue, and the court below enun-

ciated no rule concerning the proper time for challenging

the application of that statute.

The other cases cited by appellees are equally irrelevant

to and unsupportive of their argument. None of those cases

appears to have involved any challenge, on appeal or post-

* Although the question when a challenge to § 11-3-23 must be raised

in order to be considered by the court below is technically an issue of

Mississippi law, appellant’s assertion that such a challenge should be

raised by post-affirmance motion is not only not contradicted by any

case in the court below but is also recognized as appropriate by the

only other court which has been called upon to apply § 11-3-23. Thus,

the Fifth Circuit has entertained and decided in post-affirmance pro-

ceedings various questions arising out of application of § 11-3-23 to

diversity cases coming to it on appeal from the federal district court

in Mississippi. See, e.g., Affholder, Inc. v. Southern Rock, Inc., 746 F.2d

305 (5th Cir. 1984) (on motion to assess damages for appeal; motion

denied); Walters v. Inexco Oil Co., 725 F.2d 1014 (5th Cir. 1984) (post-

affirmance motion in district court to assess penalty; motion granted).

fhe same understanding also governs with respect to challenges to

Alabama’s virtually identical appeal penalty statute, § 12-22-72, Code of

Alabama (1975), in both the Alabama courts, see, e.g., Centrai of Georgia

Railway Co. v. Steed, 287 Ala. 64, 248 So.2d 110 (1971) (federal con-

stitutional challenge in post-affirmance proceedings to § 12-22-72 de-

cided against the challenge), and in the Eleventh Circuit, Burlington

Northern R. Co. v. Woods, No. 85-1088 (cert. granted, March 24, 1986)

(post-affirmance federal constitutional challenge denied sub silentio).

appeal, to the imposition of a penalty under § 11-3-23.°

Even if these cases said what appellees contend they say—

namely, that an appropriate ‘‘technique’’ to contest the

imposition of the appeal penalty is on direct appeal—at

most they would stand for the proposition that an appellant

may elect to challenge the potential application of the

appeal penalty statute prior to its actual imposition.

Appellees do not point to a single line in any of these

cases suggesting that an appellant must challenge the

applicability of § 11-3-23 on direct appeal in order to be

heard.

Neither can appellees summarily dispose of Wallace v.

Jones on the ground that the federal constitutional chal-

lenge was raised by the appellant only after the appellee

had sought to have the appeal penalty imposed. Motion,

®* Cunningham v. Cunningham, 423 So.2d 136 (Miss. 1982), for ex-

ample, appears to have involved a request by the appellee for imposition

of a penalty on appeal of a case from the county (trial) court to the

circuit court. Because the Supreme Court of Mississippi found that no

appeal was effectively taken below, much iess affirmed, § 11-3-23 did

not authorize statutory damages. There is no suggestion that appellee

had raised the issue of the penalty at the time of the original appeal

in anticipation that appellant would be unsuccessful.

In South Central Bell Telephone Co. v. Aden, 474 So.2d 584 (Miss.

1985), a workers’ compensation case, the Supreme Court of Mississippi

affirmed an order of the Workers’ Compensation Commission. The court

did impose a penalty pursuant to § 11-3-23, but there is nothing what-

soever in the opinion to suggest that it did so upon the request of the

appellee, or that appellant challenged the application of the statute on

its appeal. Rather, the court appeared to be implementing § 11-3-23

sua sponte as a natural consequence of the decision to affirm. 474

So.2d, at 598.

Similarly, while the Supreme Court of Mississippi imposed a penalty

under § 11-3-23 in Lumbermens Mutual Casualty Co. v. Rhodes, 459

So.2d 244 (Miss. 1984), it also appears to have done so on its own

motion as a consequence of the decision to affirm the judgment of the

lower court in a garnishment proceeding. There is absolutely no sug-

gestion in the opinion that the applicability or non-applicability of the

statute was raised by either of the parties on appeal.

at 7-9. Appellees understandably do not suggest wh: t state

purpose might be advanced by such a rule, because there

would be no purpose other than to require all litigants to

brief every conceivable question regarding § 11-3-23 on di-

rect appeal of cases in which that statute might have some

possible application.

CONCLUSION

The jurisdiction of this Court over this case is well es-

tablished by decisions of this Court and the court below.

This case should be held for consideration together with

the appeals in Bankers Life and Casualty Company v.

Crenshaw, No. 85-1765, and Treadwell Ford, Inc. v. Camp-

bell, A-749.7

May 1, 1986

7 Bankers Life presents both of the questions presented in this appeal

and would also permit the Court to address the question whether the

retrospective application of a newly formulated substantive rule of law

violates the Contract Clause and Due Process Clause of the Fourteenth

Amendment. Treadwell Ford, Inc. presents an Eighth and Fourteenth

Amendment challenge to a punitive damage award pursuant to an Al-

abama statute interpreted by the Alabama courts to authorize punitive

damages, as well as a challenge to Alabama’s appeal penalty statute,

§ 12-22-72, Code of Alabama (1975). The Court may want to consider

setting Bankers Life and Treadwell Ford, Inc. for argument in tandem

in order to present the broadest range of considerations raised by these

cases. Should the Court do so, this case should be held pending dis-

position of Bankers Life and Treadwell Ford, Inc.

Respectfully submitted