# Petition for Writ of Certiorari — Combined Insurance Co. of America v. Ainsworth > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385020_0167%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1989 - **Citation:** 493 U.S. 958 ## Text AUG 17 1989 No. 89- JOSEPH F. sp | CLERK Ob Ue IN THE ae Supreme Court of the Gnited States OCTOBER TERM, 1989 COMBINED INSURANCE COMPANY OF AMERICA, Petitioner, V. THOMAS AINSWORTH, Respondent. PETITION FOR A WRIT OF CERTIORARI TO THE SUPREME COURT OF NEVADA *STEPHEN L. MorRIS M. KRISTINA PICKERING Of Counsel: LIONEL SAWYER & COLLINS 1700 Valley Bank Plaza CHARLES ALAN WRIGHT 300 South Fourth Street 727 East 26th Street Las Vegas, Nevada 89101 Austin, Texas 78705 (702) 383-8888 (512) 471-5151 GEOFFREY C. HAZARD, JR. 127 Wail Street . New Haven, Connecticut 06520 (203) 432-4971 ° Attorneys for Petitioner *Counsel of Record PRESS OF BYRON S. ADAMS, WASHINGTON, D.C. (202) 347-8203 cm ewe Cl ee Pee, eee Oe ae, i ele eek a a eee, Ce RO ee QUESTION PRESENTED Does the Due Process Clause permit states to give juries unlimited discretion to award punitive damages without established standards on how those damages are to be measured?* * The caption names all parties to this case. Pursuant to Rule 28.1 of the Rules of this Court, the following is a list of all parent companies, non-wholly owned subsidiaries, and affiliates of Combined: Aon Corporation is the parent of Combined. Com- bined’s affiliates and subsidiaries are Associated Home Life In- surance Company, FFRL Re Corp., Forth Financial Resources of Alabama, Inc., Lombard Ryan Dealer Services Limited, Ni- cholson Chamberlain Colls Limited, Production Life Insurance Company, Oak Brook Holding, Inc., and Comprehensive Health Consultants, Inc. ii TABLE OF CONTENTS OPINIONS BELOW ...............cccssccessecssceessseescesoesesees JURISDICTION ..ccccccsccsscecscvescnsccccsccsscsssccvscessncsscesenes CONSTITUTIONAL PROVISION INVOLVED ........... STATEMENT OF' THE CASE ........... icntnbintnannesqanthnes Be. Tie FG... svenessscsecsicinssevessvkasacasssssssvenpitnewneess B. The Trial Court’s Judgment Notwithstanding C. Trine WENGIIN, ‘-i ~ lal etl ins cl a NT, NTS AOE RNR 17 There is no reason to believe the law in this area will develop further without guidance from the Court. The question of ‘‘whether due process acts as a check on undue jury discretion to award punitive damages,”’ Browning-Ferris, 109 S. Ct. at 2921, is irresolvable, given the current state of the law, unless and until this Court acts.® Grace & Co., 691 F.Supp. 87, 97-102 (N.D.IIl. 1988), aff'd in part and rev'd in part, 877 F.2d 614 (7th Cir. 1989); Kociemba v. G. D. Searle & Co., 707 F.Supp. 1517, 1535-36 (D.Minn. 1989); Williams Pipe Line Co. v. City of Mounds View, 704 F.Supp. 914, 921 n.7 (D.Minn. 1989); Guy v. Commonwealth Life Ins. Co., 698 F.Supp. 1305, 1816 (N.D. Miss. 1988); Leonen v. Johns- Manville Corp., 1989 WL 75938 (D.N.J. July 5, 1989); Horowitz v. Schneider Nat'l, Inc., 708 F. Supp. 1573, 1578 (D.Wyo. 1989). The cases relied on by these courts for their unanimous rejection of the Due Process arguments advanced here include this Court’s _ decisions in Day v. Woodworth, supra, Curtis Publ. Co. v. Butts, supra, and Smith v. Wade, supra, and the California decision in Downey Savings & Loan Ass'n v. Ohio Casualty Co., 198 Cal. App. 3d 1072, 234 Cal. Rptr. 835 (1987), cert. denied, 108 S. Ct. 2023 (1988). The only exception to the cursory dismissal of Due Process challenges to punitive damages has been in the context of mass tort cases, which are sui generis. In re School Asbestos Litig., 789 F.2d 996, 1002-05 (8rd Cir.), cert. denied, 479 U.S. 915 (1986); Juzwin v. Amtorg Trading Corp., 708 F.Supp. 1053 (D.N.J. 1989); Leonen v. Johns-Manville, supra. These decisions overlook the fact that neither Day v. Woodworth nor Curtis Publ. Co. v. Butts considered whether Due Process permits discretionary punitive damages, or whether Due Process requires procedural safeguards in a punitive damage case. Wheeler, The Constitutional Case for Reforming Punitive Dam- ages, 69 Va. L. Rev. 269, 273-76 (1983) (the Court has not considered the procedural Due Process requirements of punitive damages). ® Issues similar to those presented by this petition are before the Court in Jordan v. Clayton Brokerage Co., 861 F.2d 172 (8th Cir. 1988), pet. for cert. filed, 57 U.S.L.W. 3696 (March 8, 18 B. Standardless Awards Of Punitive Damages Lead To Excessive Awards Wholly Disproporticnate To The Offense Or Actual Damages That Give Rise To Them. The punitive damages in this case are four times the gross revenues Combined derived from its Nevada operations in 1986, six times the largest punitive dam- age award ever previously upheld by the Nevada Supreme Court, 618 times the policy benefits (con- tractual damages) involved, and 5,939 times the $1,000 fine the Nevada legislature has specified for acts by insurers identical to those Combined was found guilty of having committed here. Nev. Rev. Stat. §§ 686A.183(a\(1), 686A.310 ($1,000 per offense to maximum of $10,000). Some states tie punitive dam- ages to compensatory damages. See, e.g., Cal. Prob. Code § 10381 (West 1988) (fraudulent sale of dece- dent’s property); Bankers Life, 108 S. Ct. at 1651 n.38. Nevada has rejected that restriction in cases in- volving insurers, both by statute and in judicial de- cision. See A.B. 307; Nev. J.I. 10.20 comment (Michie 1986). ‘“(E]ven where a statute sets a range of possible civil damages that may be awarded to a private lit- igant, the Due Process Clause forbids damages awards that are ‘grossly excessive,’ Waters-Pierce Oil Co. v. Texas, 212 U.S. 86, 111 (1909), or ‘so severe and oppressive as to be wholly disproportioned to the of- fense and obviously unreasonable,’ St. Louis, I. M. & S. R. Co. v. Williams, 251 U.S. 68, 66-67 (1919).” 1989) (No. 88-1483), Longview Fibre Co. v. Jeannette Paper Co., 378 Pa. Super. 148, 548 A.2d 319 (1989), pet. for cert. filed, 58 U.S.L.W. 3021 (June 17, 1989) (No. 88-2051), and Elam v. Al- colac, Inc., 765 S.W.2d 42 (Mo. App. 1988), pet. for cert. filed, 58 U.S.L.W. 3013 (June 8, 1989) (No. 88-1992). oon ncuanlaraihnibanasionasnada ent Dee « sei Ain Saints it lady ten sellin whi seoninatt 19 - Browning-Ferris, 109 S. Ct. at 2923 (Brennan & Mar- shall, JJ, concurring). This case presents the same issue. “C. Standardless Awards Of Punitive Damages Deny Due Process Of Law To Targeted Defendants. The $5,939,500 award in this case could as easily have been the $3,500,000 amount awarded by an Al- abama jury in Aetna, the $1,600,000 amount awarded by a Mississippi jury in Bankers Life, or the $22,500,000 chosen by another Reno, Nevada, jury in Hires v. Republic Insurance Co., Case No. 87-2917, Second Judicial District Court in and for the State of Nevada, noted in Sella, The 10 Largest Jury Ver- dicts of 1988, 75 A.B.A.J. 45 (1989). These verdicts and many others manifest a system out of control. Nothing in Nevada law warned Combined that by contesting coverage of Mr. Ainsworth’s insurance pol- icies it would commit a tort for which it would pay a penalty of almost $6 million. In Nevada, as in many states, “‘the assessing of punitive damages is wholly subjective.” Nevada Cement Co. v. Lemler, 89 Nev. 447, 452, 514 P.2d 1180, 1183 (1978); ef. Bankers Life, 108 S. Ct. at 1656 (O’Connor & Scalia, JJ, concur- ring). Even if Combined had intended to violate Ne- vada’s punitive damages statute, Nev. Rev. Stat. § 42.010, it would have had no idea of the penalty for doing so. The punishment would have been left to the ‘‘wholly standardless discretion” of the jury, as it was here. This ‘‘appears inconsistent with due process.”’ Id; see United States v. Batchelder, 442 U.S. 114, 123 (1979) (consequences of violating a criminal statute should be stated); Giaccio v. Pennsylvania, 382 U.S. 399, 403 (1966) (notwithstanding court-im- posed standards for application of statute, jurors must 20 determine issue on their “notions of what the law should be,”’ which violates Due Process). The law must enable citizens to conform their conduct to articulated requirements of the law and permit “meaningful ju- dicial review.”’ Roberts v. United States Jaycees, 468 U.S. 609, 629 (1984). The law of punitive damages in Nevada does not permit either. This case also confirms what is common knowl- edge—that “[a]wards of punitive damages are sky- rocketing.” Browning-Ferris, 109 S. Ct. at 2924 (O’Connor & Stevens, JJ, concurring and dissenting); M. Peterson, S. Sarma, & M. Shanley, Punitive Dam- ages: Empirical Findings at vii, 14, 42 (Rand 1987) (in California between 1980 and 1984, the median punitive damage award in bad faith actions was $336,000; the average was $1.6 million; in Cook County, Illinois, ‘{tJhe total amount of money awarded as punitive damages increased by 800% ... during the 1980’s, even after adjusting for inflation’’). Com- bined is only one of many “‘targets’’ trying to cope with a system of punishment where guilt and penalty are adjudicated without reference to ascertainable standards. The standardless instruction of juries on punitive damages exposes potential defendants to uncon- strained sanctions based on their corporate status and their wealth. As one prominent plaintiff's attorney put it, ‘“‘The wealth of the defendant should be the primary focal point of punitive damages.’”’ Levine, Demonstrating and Preserving the Deterrent Effect of Punitive Damages in the Insurance Bad Faith Ac- tions, 13 U.S.F. L. Rev. 618, 634 (1979). “[P]Junitive damages are imposed by juries guided by little more than an admonition to do what they think is best.”’ 21 Browning-Ferris, 109 S. Ct. at 2923 (Brennan & Mar- shall, JJ, concurring). As the Nevada Supreme Court itself said twenty-seven years ago: One cannot avoid thinking that the general rules offered to explain the reviewing court’s decision [in a punitive damages case] are tai- lored to fit its feeling about the particular case before it. If that court does not approve the verdict it will state that the jury was motivated by passion or prejudice; or that a ‘reasonable relationship’ between the punitive and compensatory awards does not exist; or that the amount of the award is ‘enormous.’ On the other hand, the reviewing court in affirming the award may rely upon the con- verse of the reasons just mentioned, or upon a strong presumption in favor of the verdict as confirmed by the trial judge in refusing a new trial, or some other equally plausible statement. It is evident that such generali- zations do not provide a workable standard in most cases. Miller v. Schnitzer, 78 Nev. 301, 310, 371 P.2d 824, 829 (1962), criticized in Ace Truck, 746 P.2d at 136 (citations omitted). Ace Truck notwithstanding, these statements in Miller remain true today. “‘[A]ppellate courts have no meaningful standard to apply in deciding whether to uphold punitive damages awards.’’ Wheeler, Zhe Con- stitutional Case for Reforming Punitive Damages Pro- cedures, 69 Va. L. Rev. 269, 290 (1983); see also Owen, Civil Punishment and the Public Good, 56 U.S.C. L. Rev. 103, 121 (1982) (“[aJs the law of punitive dam- 22 ages has been developed and applied, much in both fairness and efficiency has been left aside’). The ‘law’ of punitive damages encourages juries to “‘pun- ish without regard to the true harm threatened » a defendant’s conduct.”” American College of Trial Law- yers, Report of the Task Force on Litigation Issues 4 (1986); see Tort Policy Working Group, An Update on the Liability Crisis 47-52 (U.S. Dept. Justice 1987). Permitting juries to levy fines at will for the benefit of private plaintiffs under the ‘gentle rule that they not be excessive’ does not advance a substantial state interest. Gertz v. Robert Welch, Inc., 418 U.S. 328, 349-50 (1974). Juries are invited to use ‘‘punitive dam- ages ... to punish unpopular defendants,”’ Jnt’l Broth- erhood of Electrical Workers v. Foust, 442 U.S. 42, 50-51 n.14 (1979), such as insurers who, in dealing with debatable claims, ‘‘have no easy task.’’ Aetna, 475 U.S. at 821. The essence of Due Process of Law is that it pro- tects against governmental arbitrariness. Daniels v. Williams, 474 U.S. 327, 331 (1986). The present sys- tem of awarding punitive damages, in Nevada as in most of the United States, is justice by whim rather than by the rule of law. Defendants in civil cases are subject to awards that need bear no relation to any harm defendants may have inflicted and that cannot be meaningfully reviewed by appellate courts. Vast and unpredictable awards by lay jurors who are ad- monished only to ‘‘do what they think is best” are the epitome of arbitrariness. We have long since aban- doned the notion of measuring justice by the Chan- cellor’s foot—but at least the Chancellor, unlike members of juries, was learned in the law. 23 To hold that the Due Process Clause requires mean- ingful standards for punitive damages does not mean that this Court will have to review for excessiveness every award of punitive damages. It does not mean that the states are to be put in a straitjacket on what they may permit by way of punitive damages. The Due Process Clause does not impose on the states any particular rule about punitive damages. It says only that there must be some law by which they are measured and evaluated. CONCLUSION There is much to be said for establishing a common, coherent starting point from which to continue the analysis and reform of a system that now permits unpredictable and unlimited punitive damages for va- guely defined misconduct. This Court “should serv- tinize carefully the procedures under which punitive damages are awarded in civil lawsuits’’ to provide the Due Process bedrock for that effort. Bankers Life, 108 S. Ct. at 1655 (O’Connor & Scalia, JJ, concur- ring). This case presents the Court with an unblem- ished opportunity to do so. 24 Respectfully submitted, *“STEPHEN L. MORRIS M. KRISTINA PICKERING Of Counsel: LIONEL SAWYER & COLLINS 1700 Valley Bank Plaza CHARLES ALAN WRIGHT 300 South Fourth Street 727 East 26th Street Las Vegas, Nevada 89101 Austin, Texas 78705 (702) 383-8888 (512) 471-5151 — GEOFFREY C. HAZARD, JR. 127 Wall Street : New Haven, Connecticut 06520 (203) 482-4971 Attorneys for Petitioner *Counsel of Record en See eT ae Oe ee ee Re ee = i see i it 7 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385020_0167%3A1. Public record. Not legal advice.