# Opposition Brief — Combustion Engineering, Inc. v. McGill

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1999
- **Citation:** 528 U.S. 931

## Text

No. 99-252

IN THE

Supreme Court of the United States

COMBUSTION ENGINEERING, INC..
Petitioner.
V.
Lois A. MCGILL. ET AL..

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THI
UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUTI

BRIEF IN OPPOSITION TO
PETITION FOR A WRIT OF CERTIORARI

JOHN C. BELL, JR. WILLIAM A. PANNEL!
619 Greene Street Post Office Box 810
Augusta, GA 3090] Alpharetta, GA 30009
(706) 722-2014 (770) 619-0810

JOHN M.B. LEWIs, [V KENNETH J. CHESEBRO*
HUGUENIN, ANNAS & LEWIS JONATHAN S. MASSEY

4024 Washington Road 1600 Massachusetts Avenue
Augusta, GA 30917 Cambridge, MA 02138
(706) 855-5000 (617) 661-4423

Counsel for Respondents

* Counsel of Record

September 10, 1999

ore

TABLE OF CONTENTS

STATEMENT OF THE CASE ...............ccccccece..

A. Statement ofthe Facts ....................... 2
B Procedural History ............ccccccccccce. 1]
REASONS FOR DENYING THE PETITION ............. 15

I. THIS CASE IS NOT AN APPROPRIATE
VEHICLE FOR ADDRESSING THE
QUESTION PRESENTED BY COMBUSTION ....... 15

A. This Case Does Not Present the Question of the
Reasonableness of a $4 Million Punitive Award .. 15

B. The Question Framed by Combustion
Is Not Presented by This Case ................ 17

Il. IN ANY EVENT, THE $1 MILLION PUNITIVE
AWARD IN THIS CASE IS PLAINLY REASONABLE,
RENDERING THE “RATIO” ISSUE IRRELEVANT .. 22

A. The Award is Reasonable by Reference
to Combustion’s Actual Gain ................. 23

B. The Award is Reasonable by Reference
to Legislatively Approved Penalties ............ 28

C. The Award is Reasonable by Reference
to Combustion’s Size and Financial Position ..... 29

a SE OE He RS ne i SEES 30

TABLE OF AUTHORITIES

CASES: PAGE:

Big Apple BMW, Inc. v. BMW of North Am., Inc.,
974 F.2d 1358, 1361 (3d Cir. 1992), cert. denied,

See Se NE 5.0 65 54440 oe Od ee ERE el he 19
BMW vy. Gore, 517 U.S. 559 (1996) ..... 14, 16-20, 24-25, 28-30
Bogan v. Stroud, 958 F.2d 180 (7th Cir. 1992) ............. 26
Brooks v. Ready Mix Concrete Co.,

OG S..e £19 CR. AO TRSO) iv covoccdscsesecceevasns 24
Browning-Ferris Indus. v. Kelco Disposal, Inc.,

PE Ghia eT CE oe eect 4b ket 20, 27, 30
Coleman v. Kaye, 87 F.3d 1491 (3d Cir. 1996),

cart, Getlad, S19 US. TUBS CGS) cn ccccvvcccvvesseses 21

Combustion Chemicals, Inc. v. Spires, 433 S.E.2d 60

(Ga. App. 1993), cert. denied, 1993 Ga. LEXIS

Sr es Rc SEE 8 ko as eee eee eee 6, 7
Continental Trend Resources, Inc. v.

OXY USA, Inc., 101 F.3d 634 (10th Cir. 1996),

cart. Gamiad, $20 GB. VAS CUFGT) vc vivccccevciovivnsees 30
Cooper v. Casey, 97 F.3d 914 (7th Cir. 1996) .............. 21
Edwards v. Beach, 3 Day 447 (Conn. 1809) ................ 26
Elder v. Gaffney Ledger, Inc., 511 S.E.2d 383 (S.C. App. 1999) 21
Erie R.R. v. Tompkins, 304 U.S. 64 (1938) .............2008. 26

Hoffman v. Atlanta Gas Light Co., 426 S.E.2d 387

(Ga. App. 1992), cert. denied, 1993 Ga.

Lae Soe CC. AGP, © TFG) oboe secseencaeeneces 19, 24
Hudgins & Co. v. J & M Tank Lines, Inc.,

450 S.E.2d 221 (Ga. 1994), cert. denied,

1995 Ga. LEXIS 461 (Ga. Feb. 23, 1995) ........... 18,24
Hunt v. Washington State Apple Advertising Comm'n,
BSE UG: FIP CCD. 2.456 a6 es cannes ae 18

Jacque v. Steenberg Homes, Inc., 563 N.W.2d 154 (Wis. 1997) 20
Kingsley Mill Corp. v. Edmonds, 67 S.E.2d 111 (Ga. 1951) ... 23

Lee v. Edwards, 101 F.3d 805 (2d Cir. 1996) ............... 20
Lochner v. New York, 198 U.S. 45 (1905) ............-00e 26
Newport v. Fact Concerts, Inc., 453 U.S. 247 (1981) ....... 30

Mattison v. Dallas Carrier Corp., 947 F.2d95 (4th Cir. 1991) 27

(ii)

NTINUED): PAGE:
Pacific Mutual Life Insurance Co.

Fey Ge We CCIDPE) on wc cc ccc ccccvevece 20, 25, 30
Ponce de Leon Condominiums v. DiGirolamo,

SSe Dilaede G2 (GO. FTI) ow. ccc ccccccccccsecs 12, 18, 24
Quinones-Pacheco v. American Airlines, Inc.,

POUe a F CUUE Gs BUUED 5 vse ccvdeceedveccvewsreecs 26
Satterfield v. Rowan, 9 S.E. 677 (Ga. 1889) ................ 23
Schaffer v. Edward D. Jones & Co.,

992 N.W.2d 801 (S.D. 1996)... ccc ccc ccc cece 21
Sims v. Mulcahy, 902 F.2d 524 (7th Cir.),

cert. denied, 498 U.S. 897 (1990) .................005. 26
Southeastern Sec. Ins. Co. v. Hotle,

473 S.E.2d 256 (Ga. App. 1996) .......... 0... cccccee 20

Stevens v. Owens-Corning Fiberglas Corp.,
49 Cal.App.4th 1645 (1996), review denied,

1997 Cal. LEXIS 61 (Cal. Jan. 15, 1997) .......0..0.... 21
Thompson v. Consolidated Gas Utilities Corp.,

se 26
[XO Prod. Corp. v. Alliance Resources Corp.,

a Ot) 18, 20, 22, 25
United States v. Big D. Enterprises, Inc., 1999 U.S.

App. LEXIS 15121 (8th Cir. July 9, 1999) ............ 20-21
Walston v. Monumental Life Ins. Co.,

Pee Wo OP I, FOPOD ona cc nncccccccccncsccececs » ar
Will v. Comprehensive Accounting Corp., 776 F.2d 665

(7th Cir. 1985), cert. denied, 475 U.S. 1129 (1986) ..... 25-26
Wilson v. IBP, Inc., 558 N.W.2d 132 (Iowa 1996),

cert. denied, 118 S. Ct. $52(1997) oo. cc ccc ccc cee 20
STATUTES:
ee ie ew ep wane views 23
RSM EMEMPLUEED 5 ooo c cane ccuccevccscuccvucccenc 12
SM PRIUS on cece ca vecvccscrccccceccunecs 12
SRR UPEMMICINED 5 cen ccvvevevccvccccvcceccs 12, 28
Sl SE a 29
oak 7 29

(iii)

BOOKS:

PAGE:
Annotation, Punitive Damages: Reiationship to Defendant's
Wealth, As Factor in Determining Propriety
of Award, 87 A.L.R.4TH 141 (1995)
RESTATEMENT (SECOND) OF TORTS (1979)
| LAURENCE H. TRIBE, AMERICAN
CONSTITUTIONAL LAW (3d ed. 2000)
14B CHARLES ALAN WRIGHT, ARTHUR R. MILLER
& EDWARD H. COOPER, FEDERAL PRACTICE
AND PROCEDURE: JURISDICTION 3D (1998)

ARTICLES:

Guido Calabresi & A. Douglas Melamed, Property Rules,
Liability Rules, and Inalienability: One View of the
Cathedral, 85 HARV. L. REV. 1089 (1972) .............. 27

Ronald Dworkin, Js Wealth a Value?, in
A MATTER OF PRINCIPLE 237 (1985) ...........000-00ee

Thomas C. Galligan, Jr., Augmented Awards:

The Efficient Evolution of Punitive Damages,
Re ry erty emery

Anthony T. Kronman, The Value of Moral Philosophy,
SEE Pee. Ben Bes Ce CEE coc cross cweevescerneveda
Philip D. Oliver, Once is Enough: A Proposed Bar of the
Injured Employee's Cause of Action Against a Third
Party, 58 FORDHAM L. REV. 117 (1989) ................ 28
Richard A. Posner, The Problematics of Moral and Legal Theory,
POS Been ts es BPE CEE set eccncerseetsauneess
Symposium: Property Rules, Liability Rules,
. and Inalienability: A Twenty-Five-Year
Be Retrospective, 106 YALE L.J. 2081 (1997) .............. 27

28

28

(iv)

BRIEF IN OPPOSITION

Respondents Lois A. McGill, et a/., respectfully request that
this Court deny the petition for a writ of certiorari filed by
Combustion Engineering, Inc. (“Combustion’’) in this case.

STATEMENT OF THE CASE

This water pollution case involves a punitive damage award
of $1 million, not “a punitive award of over $4,000,000” as
Combustion suggests in the opening sentence of its petition. Pet.
1. The $1 million punitive award that Combustion has actually
brought before this Court is the last remaining judgment in a set of
13 separate judgments entered against Combustion as a result of
its pollution of Graves Mountain, Georgia. Combustion has
chosen to settle 12 of these 13 judgments, and it contests before
this Court only the $1 million punitive award held by respondents.

In light of these settlements — the discussion of which
Combustion relegates to a footnote in the middle of its petition,
see Pet. 10 n.3 — Combustion, through its own actions, has failed
to present a live controversy concerning the “punitive award of
over $4,000,000” that “the court of appeals sustained,” which is
the central focus of its petition. Pet. 1. The petition should be
denied for this reason alone.

The reasonableness of the $1 million punitive award still at
issue in this case is plain from the undisputed fact established at
trial that Combustion retained at least $6 million in extra profits
through its failure to employ proper remediation measures on its
Georgia minesite between 1987 and 1993. Tr. 1216-17.' Asa
result, the owners of the land surrounding Combustion’s minesite,
including respondents here, suffered from severe pollution in their
streams. This violated well-settled Georgia law, which gives the
surrounding landowners an absolute right against such a trespass

' The trial transcript, which appears in Volumes 9 and 10 of the record,
is cited throughout this opposition as “Tr. __.”. The transcript of the hearing
on the posttrial motions held on April 25, 1994, which appears in Volume 12
of the record, is cited as “4/25/94 Tr. _..”

on their riparian rights, even with reference to a mining company
such as Combustion that could derive enormous benefit from
polluting streams rather than cleaning up the pollution before it
reaches the streams in question.

In order to recover more than $250,000 each in punitive
damages, under controlling Georgia law plaintiffs were required
to demonstrate, by clear and convincing evidence, that Combus-
tion acted with specific intent to cause harm. The jury, district
court (twice), and the court of appeals (twice) all determined that
such specific intent to cause harm was shown.

To strike the punitive award would effectively give Combus-
tion and similarly situated wrongdoers a power of private eminent
domain to trespass intentionally on the property of others by
appropriating their waterways to serve as waste-disposal systems
for toxic materials. The relief Combustion seeks would undermine
the ability of the States to protect private property rights —
allowing defendants, backed by the federal judicial power, to
engage in government-enforced private takings of property that
would themselves raise serious questions under the “public use”
requirement of the Takings Clause. Thus, although the federal
Constitution is typically invoked as a constraint on damage
awards, here the Fifth Amendment affirmatively supports
upholding the punitive award as reasonable.

A. Statement of the Facts

During the relevant time period Combustion knew that,
absent concerted efforts both at reclamation (i.e., long-term
restoration) and remediation (i.e., immediate pollution treatment),
huge quantities of toxic pollutants would flow into the four
streams running onto the land of the surrounding landowners
(hereinafter, “plaintiffs”), which in this litigation have been
referred to as the Goldman, Long, Maloof, and McGill streams.
To keep as much profit as possible, Combustion for years made
only trivial reclamation efforts and no attempts at remediation, in
the process retaining at least $6 million in extra profits. Not until

Se

1991, five years after mining stopped, did Combustion begin
remediation efforts on any of plaintiffs’ streams. Even then,
Combustion acted only because it was ordered to do so by state
authorities and had already been sued by plaintiffs. The vast
majority of Combustion’s cleanup efforts occurred after suit was
brought in this case in August 1991, and after the State of Georgia
cited Combustion for a violation of law — a point not mentioned
by Combustion in its continuing effort to claim credit for efforts
taken under compulsion. See Pet. 3-5. Moreover, virtually all of
the cleanup efforts that Combustion did make were focused on
dismantling its plant and on relatively cheap reclamation efforts
on its own land that did not benefit plaintiffs. The evidence at trial
showed that Combustion made no serious effort to use readily
available, effective measures to remediate the acid mine drainage
being released onto plaintiffs’ property, despite full knowledge
that plaintiffs’ streams were being polluted.

1. Combustion deliberately refused for years to adopt
adequate cleanup measures. When mining ceased on Graves
Mountain in 1986, the site had been reduced to a cratered, rock-
strewn plateau whose sides were pock-marked with at least 166
acres of open ditches, dams, and tailings ponds. See DX-12 at I,
4-5: see also PX-3 (aerial photo of minesite taken in 1991).

The tailings in these open storage pits contained large
quantities of pulverized pyrite which, when exposed to water and
oxygen, creates sulfuric acid. Tr. 178-79. Through its failure to
follow the standard industry practice of reclaiming the land while
the mining was ongoing, Tr. 941, 1217, Combustion had created
a “continuous supply . . . of sulfuric acid” that caused the water to
become dangerously acidic (by lowering its pH) and to dissolve
and transport heavy metals like iron, manganese, and aluminum.
Tr. 99. 177-79. Streams were more prone to erosion and flooding.
Tr. 181-82. Expert testimony established that “[y]ou have acid
mine drainage coming from the old tailing and pyrite ponds and
much of that is coming from the seepage from those areas and sub-
surface flow. So it is not just a problem that you have when there

4.

is a rainfall event.” Tr. 107-08. It is this water — thousands of
times more acidic than normal, and laced with toxic heavy metals
— that has regularly flowed onto plaintiffs’ property. £.g., Tr.
108-10, 111-12, 178-82, 185, 190-92; PX-12 at 2.

Combustion failed to make any cleanup efforts for at least
two years after mining ended in 1986, despite its obligation under
a cleanup plan filed with state regulatory officials in 1985. See
Court’s Exhibit |. The plan was designed to “protect[] adjacent
watersheds” (cover page), and it specifically promised state
regulators that no water “will be allowed to leave or flow from
affected lands without proper treatment” meeting state and federal
effluent standards (e.g., pH no lower than 6.0). /d at 9. In
particular, “to protect contiguous natural resources from
suspended or dissolved solids,” id., the plan required Combustion
to employ “timely and sufficient” remediation and reclamation
techniques. The plan required that the cleanup be completed
within 18 months, id. at 5 — a time limit that is standard industry
practice. Tr. 717.

Combustion did not meet this deadline, and internal company
memoranda showed that the delay was intentional. One memo,
dated October 27, 1987, stated that the Georgia Department of
Natural Resources (“DNR”) was greatly concerned with acid mine
drainage. PX-23, at 1. Rather than proposing action, the memo
stated that Combustion’s “relationship” with regulators “has been
and should continue to be cultivated.” Jd. at 2. Another memo
explained that the DNR official in charge of Graves Mountain —
who had been pursuing the matter vigorously — was being
replaced. The memo reported that the personnel change was
“good news for [Combustion] because of the good working
relationship we have established” with the replacement official.
PX-39, at 1.

Even so, the DNR repeatedly raised concerns with
Combustion about the pollution problem. For example, as a
Combustion official summarized an October 1987 meeting:

«$e

The single most important concern of the DNR is
present and potential acid run-off. Mr. Tinley [a DNR
official] produced a map on which had been noted
several pH readings from streamlets in the area with
origins both from the site works and natural springs.
Although the natural springs from the area exhibited
relatively low pH’s of around 5, the water from the site
works showed pH’s of around 2.25 to 3 (hundreds of
times more acidic than the natural streams].

PX-23 at 3. The DNR conducted some 70 pH tests; almost half
demonstrated pH levels 1,000 times more acidic than normal. PX-
7, PX-9. Despite this notice, by early March 1988 — when
Combustion was supposed to have finished cleaning up Graves
Mountain — the sum total of its supposed response had been to
take a total of 10 pH readings from unimpacted streams and
certain ditches and ponds, and to contemplate “plans” for future
action. Tr. 947; PX-39; DX-5.

On March 15, 1988, Broughton Caldwell, a DNR scientist,
visited the mountain to do more tests. He confirmed that pH
values were highly acidic; that “iron precipitate” coated the leaves
in the stream at one site; and that insect communities at each site
were close to nonexistent. He concluded that the lack of biological
diversity or abundance was related “in large part to the low pH
values” and resulting “strongly acidic” water. PX-7. The day
after Caldwell completed his study, DNR officials met with
Combustion and reemphasized their concerns about “controlling
_. . water discharge.” PX-39. Combustion then agreed to begin
some “preliminary work” “next week” and submit a “reclamation
program and schedule . . . to the DNR.” Id.

Yet after being notified in 1987 and 1988 by the DNR of the
severe pollution flowing into plaintiffs’ streams, Combustion
failed to continue testing the streams, neglecting even to monitor
the level of acid mine drainage that it knew was flowing onto
plaintiffs’ property. Tr. 372-73, 374, 391-92. Not until the end of
1988 — more than two years after the cessation of mining — did

. Ss

Combustion adopt a revised reclamation plan. A county-environ-
mental health specialist testified that the measures consisted of
“smooth{[ing] up the roads, plant{[ing] some grass,” Tr. 539, which
would clear up the pollution in plaintiffs’ streams only indirectly
and only after many years. Revegetation is necessarily a long-
term cleanup measure because the vegetative cover has little, if
any, effect on the pollution problem until it reaches the requisite
thickness and maturity. Tr. 1017. John Brett, a top Combustion
executive personally in charge of the site, testified that his hope
was no more than that these reclamation measures would
“evenually” stop the flow of pollution. Tr. 952.

Plaintiffs’ expert witness, Dr. Claude Terry, testified that
Combustion’s efforts were “trivial.” Tr. 748. Indeed, Dr. Terry
testified that, in practice, Combustion did not follow its own plan.
Tr. 737. For example, Combustion attempted to avoid its obliga-
tion under the 1985 reclamation plan to bury the tailings and pyrite
ponds under four feet of topsoil to prevent oxidization of the
pyrite, by starting the “West Pond |” project, a futuristic
greenhouse experiment in which Combustion scientists attempted
to grow a kind of “miracle grass” — ground cover that could
somehow thrive on bare mill tailings (toxic pulverized rock) that
contained “considerable acidity” and were “almost devoid of
nutrients essential to plant growth.” DX-15 at 1, 3. Not surpris-
ingly, this experiment failed; at the time of trial, nothing was
growing on these areas, which Combustion had simply left bare.
PX-3.

Combustion failed to correct the pollution problem even after
a lawsuit was filed in May 1988 by other neighbors of Combustion
on Graves Mountain. Combustion Chemicals, Inc. v. Spires, 433
S.E.2d 60 (Ga. App. 1993), cert. denied, 1993 Ga. LEXIS 969
(Oct. 12, 1993). The issue was brought into special focus at trial
through the testimony of John Brett, who testified that the sole
reason that remediation measures were not started prior to
plaintiffs’ suit in August 1991 was that “we never had reason to
believe there was a problem there.” Tr. 965. Brett was ultimately
forced to concede that Combustion knew of the acid mine drainage

zs

problem at least as early as May 1988, because plaintiffs’ counsel
confronted him with the fact that the Spires lawsuit had been filed
at that time and that Brett had actually sat through the Spires trial.
Tr. 291.

The jury also heard the test results of environmental consul-
tants hired by Combustion in 1989 during Spires, which confirmed
the existence of pollution and demonstrated that Combustion knew
of the acid mine drainage problem long before plaintiffs filed their
lawsuit in 1991. The first study, conducted by Dames & Moore
in 1989, compared three of the streams running across plaintiffs’
property (the McGill, Long, and Goldman streams) to a reference
stream unimpacted by mining activity. Plaintiffs’ three streams
had pH levels as low as 2.6, thousands of times more acidic than
the water sampled at the unpolluted reference stream; specific
conductivity levels as high as 2,210, approximately 18 times
higher than normal; and dissolved iron levels up to 199 milligrams
per liter, over 200 times those of the reference stream. PX-12 at
2. The second study commissioned by Combustion in 1989,
conducted by Drs. Arnold and Miller (two agronomy professors
at the University of Georgia), focused on the Long stream and
produced similar results. PX-13.

2. Combustion’s 1991 cleanup efforts were initiated only
under heavy pressure on two fronts. \n the summer of 1991,
Combustion finally began addressing the pollution that had been
flowing into plaintiffs’ streams, essentially unchecked, since
mining operations ended on Graves Mountain in 1986. Even
Combustion’s 1991 limited cleanup efforts directed toward
plaintiffs’ streams, which began five years behind schedule, came
about only based on the pressure exerted by plaintiffs through their
lawsuit, and by the DNR through its administrative action.

In June 1991, the DNR cited Combustion for “a violation of
law” (the Georgia Water Quality Standards) involving acid mine
drainage with a pH of 2.9 — more than 1,000 times more acidic
than normal water — “coming from the pyrite pond and leaving
the mine site,” and discharges from the holding pond with a pH of

-8-

3.2. Tr. 984-85; see also Tr. 109.- These discharges violated
Combustion’s permit. Tr. 984-85.

After plaintiffs filed the instant suit in August 1991,
Combustion entered into a consent decree with the DNR in
September 1991 in which Combustion was compelled to adopt
certain remediation measures. By Combustion’s own calculation,
it had spent only $700,000 on reclamation measures between 1986
and June 1991. Tr. 389, 949-50. Uncontroverted evidence at trial
established that by taking inadequate cleanup measures between
1987 and 1993, Combustion was able to retain additional profits
of $6 million. Tr. 1216-17.

Moreover, Combustion did not take sufficient steps to ensure
that even its new cleanup efforts were adequate. For example, the
environmental consultant hired by Combustion to plan reclamation
of the minesite, Jerry Williams, warned the company in a 1989
proposal that water would eventually leach away “most of the
acidity from the material” in the tailings ponds and that this
“would probably contribute to problems downstream,” requiring
liming and other remediation techniques. DX-15 at 3. Combus-
tion, however, hired Williams solely to “revegetate” its own
minesite; Williams was not asked to test or otherwise address the
acid mine drainage going into plaintiffs’ nearby streams. Tr.
1009-11, 1014. Nor was anyone else. Paul Hall, the Combustion
official in charge of Graves Mountain between 1986 and 1990,
admitted that Combustion’s efforts were not aimed at addressing
“whether or not there was acid mine drainage going on to the
property of adjacent landowners.” Tr. 392. This policy continued
for the next four years after John Brett replaced Hall, through the
time of trial in 1994. Tr. 311-15, 338-39, 990-92.

Dr. Terry, plaintiffs’ expert witness, testified that it has been
common knowiedge witlun the mining community since the 1970s
that both reclamation and remediation measures are necessary to
stop acid mine drainage. Tr. 737, 1217-18. Dr. Terry further
testified that the minesite was “treatable by a number of
technologies.” Tr. 192. Dr. Terry testified without contradiction
that, to effectively reclaim the area, Combustion would have had

-9.

to: (1) “strip and reclaim the area as you go,” which “typical” mine
reclamation plans entail, Tr. 1217; see also Tr. 941; (2) add lime
to the soil in the reclaimed area so that “when you do have
flooding in an area [it] will increase the pH of any run off,” Tr.
1217; (3) “use... clay caps” “to keep oxygen from coming into
contact with potentially acidic materials such as pyrite,” id.; and
(4) build wetlands to “disrupt the flow” of water from the site,
raise the water’s pH and filter out dissolved heavy metals. Tr.
714-21. Combustion adopted none of these measures.

Even at the time of trial in June 1993, Combustion had failed
to use the measures recommended by Dr. Terry to “remediate [the]
toxic discharge.” Tr. 734. Combustion’s remediation efforts were
limited to the water flowing into only one stream (the Goldman
stream) of the four streams flowing across plaintiffs’ property.
Expert testimony established that these limited efforts did not stop
the pollution in even this stream. Tr. 112-13, 170-71, 1043. A
team of expert hydrologists found in 1992 that, despite
Combustion’s “treat{ing] the water coming out of the holding
pond” into the Goldman stream, this stream showed a content of
dissolved solids that was abnormally high, sulfate levels over 40
times higher than normal, a “tremendous amount of sediment,”
and “periodic releases of very low pH water from [the mine]site.”
Tr. 112-13, 170-71, 1043; PX-10.

Pollution continued to flow into all four of plaintiffs’ streams
as of the time of trial, Tr. 111-13, 158-59, 167-68, 175, 308-11,
517, 695-97, 725, as Combustion admitted. Tr. 126-27, 309, 1215-
16. Plaintiffs’ hydrology experts who examined the streams
between January and September 1992 concluded that there was a
“constant” “problem[] with acid mine drainage” flowing from the
minesite (not merely a problem resulting only occasionally from
rainfall). Tr. 107-08. The experts concluded that the streams
“ha[d] been severely impacted” by acid mine drainage flowing
from Combustion’s property. Tr. 109-13, 121-122, 159, 161-62,
166-68, 170-71; PX-10. These conclusions were corroborated by
the findings of a professor of stream ecology at the University of
Georgia, who examined the streams in April 1992. Tr. 1043.

x eee oe

-10-

3. Combustion made no serious response to pre-1991
complaints that put it on notice of the pollution. Combustion
asserts that plaintiffs rarely complained to it during the close to 20
years that it conducted mining operations on Graves Mountain,
and that when owners of downstream properties did complain
about escaping water, silt build-up or other problems, it responded
decisively to remedy those problems. Pet. 3. Here, again, Com-
bustion distorts the record.

The record reflects that, as early as the 1970s, the father of
two plaintiffs (and their predecessor in title), repeatedly called
Combustion’s site manager to complain about untreated mine
waste draining from one of the tailings ponds into the Maloof
stream. Tr. 401, 414, 419-20. In 1982, an investigator from the
DNR relayed complaints to the minesite manager about a large
berm (earthen dam) underneath the west tailings pond that had
leaked “[f]or years and years” and flowed across Hepzibah Church
Road into the Long stream. Tr. 516. Another neighbor wrote to
the county health department in 1986, complaining of fish dying
in his stream, Tr. 538; his complaint was referred to the minesite
manager. Tr. 539. A county health department official talked to
Combustion’s manager “numerous times” about problems with the
streams, Tr. 539, and in 1991 conveyed his concerns to
Combustion’s attorneys as well. Tr. 539.

After it retook possession of the site in 1986, Combustion
would likely have received even more complaints but for the fact
that it has no office on Graves Mountain, receives no mail there,
and stations no representative there to receive complaints. Tr. 990.
The closest employee is 75 miles away. Tr. 991. Of course, as
already discussed, Combustion was further put on notice of the
pollution problems in 1988 and 1989 as a result of litigation
brought against it by plaintiffs’ neighbors, during which
Combustion received reports from its own _ consultants
documenting the high levels of pollution. See pp. 6-7, supra.

With respect to Combustion’s assertion that it has diligently
responded to all complaints, the record shows that Combustion, in
general, responded to complaints by doing only “enough to

at.

pacify” the neighbors so that they would “stay home and shut up.”
Tr. 420. For example, a county environmental official testified
that he complained to Combustion about a leaky berm as long ago
as 1977, but “[{t]he leak is still there because they never did
anything . . . to it” except to try to plug it with dirt and grass. Tr.
535-36. “The water still runs down through there.” Tr. 517; see
also Tr. 725 (“water is flowing again”). Combustion never even
tested the water flowing from the seeps for which it received
complaints. Tr. 992, 997, 1010, 1014. Further, Combustion made
no effort to notify its neighboring landowners of the levels of
pollutants being released into their streams, not even when there
were sudden overflows of millions of gallons of polluted water
(events of which plaintiffs only learned during discovery in this
case). PX-10, Tr. 474, 481, 484, 1211-13.

B. Procedural History

Plaintiffs filed this suit against Combustion on August 9,
1991. As provided under Georgia law, plaintiffs elected to sue
only for injunctive relief, together with compensation for loss of
use and enjoyment, declining to press a claim for damages to the
value of their property. This permitted them to preserve their
ability to obtain injunctive relief and other future remedies with
respect to the pollution of their streams.

A ruling in Combustion’s favor on a motion in limine,
entered on June 4, 1993, granted Combustion all the relief it
sought against the introduction of supposedly prejudicial evidence,
including evidence of regulatory violations by Combustion. R5-
64.2 During trial, Combustion objected to plaintiffs’ attempt to
introduce evidence on the value of the property polluted by
Combustion. In so doing, Combustion agreed not to raise any
future objection concerning the absence of such evidence, Tr. 622-

2 For citations to the record, the number immediately following the “R”
is the volume number; the number after the dash is the docket entry number;
if another number appears after a dash, it refers to a particular page in the
document referenced.

NM ae

aa

ESRI (OY ee ae ae ee

ee * oY eS. St Ale e MY not Pa me?
ke Ste ee ae ‘

a.

23, 631-32, a promise that it has now forgotten. See p. 17, infra.
The trial was bifurcated so that the jury did not even consider
punitive damages until it had first awarded compensatory damages
— a method even more favorable to Combustion than the method
provided for in Georgia state court by O.C.G.A. § 51-12-5.1(d).
See 4/25/94 Tr. 57-58, 94. The jury awarded the plaintiffs a total
of $47,000 for Combustion’s interference with their right to the
enjoyment and possession of their land, Tr. 1172-74, plus
uncontested out-of-pocket expenses of $137,000 and attorney’s
fees of $90,000. Tr. 352, 1191. The $227,000 in expenses and
fees was based on the jury’s finding (never appealed) that
Combustion had acted in “bad faith,” see, e.g., Ponce de Leon
Condominiums v. DiGirolamo, 232 S.E.2d 62, 64 (Ga. 1977).

During the jury’s deliberations on punitive damages, the
district court announced its factual findings concerning the claim
for equitable relief based on “the same evidence that the jury has
heard.” Tr. 1244. The district court found that Combustion had
“committed a trespass against the land of the named plaintiffs,”
causing “substantial injury to the neighboring property.” Tr. 1252.
The court specifically noted the jury’s finding that “the defendant
had acted in bad faith.” Tr. 1245.

To recover any punitive damages at all, plaintiffs were
required as a matter of Georgia law — regardless of the federal
Constitution — to prove by clear and convincing evidence that
Combustion’s actions “showed willful misconduct, malice, fraud,
wantonness, oppression, or that entire want of care which would
raise the presumption of conscious indifference to consequences.”
O.C.G.A. § 51-12-5.1(b). To recover more than $250,000 each,
plaintiffs were required to demonstrate, again by clear and
convincing evidence, that Combustion acted “with the specific
intent to cause harm.” /d. at § 51-12.5.1(f). Asked to return an
award that would “take the profit out of polluting” and deter and
punish similar wrongdoing, Tr. 1240-41, the jury awarded punitive
damages in the amount of $3 million to each of the 15 sets of
plaintiffs (or their heirs) who owned the 16 parcels of land at
issue, for a total of $45 million. Tr. 1255-57; Pet. App. 3a.

“

~t%.

In ruling on Combustion’s posttrial motions, the district court
found the jury’s $45 million award to be excessive, but held that
$15 million would not be excessive and offered plaintiffs the
option of electing a remitted award of that amount, in lieu of a new
trial. The district court rejected Combustion’s post hoc “theory to
the effect that this defendant . . . had consistently followed, abided
by and complied with all state laws and regulations and licensing
requirements, [but] had been called to task in this courtroom and
brought over a barrel.” 4/25/94 Tr. 103. The court bluntly stated:
“(T]hat’s not the case.” /d. The court further observed that the
jury was entitled to conclude that the cleanup money spent by
Combustion prior to plaintiffs’ suit was “peanuts,” simply
designed to be “a cheap way of buying time,” especially in light of
“powerful evidence” that Combustion had spent the money not out
of any concern for plaintiffs’ riparian property rights, but only
when compelled to do so by state regulators. /d. at 104-05.

The district court properly did not “abrogate the jury's verdict
in its entirety” or “write it down to an insignificant” level. Id. at
109. The court recognized that, “if I am to preside over jury trials,
take their time, take them away from their home, their offices and
their labors, I have an obligation to support and defend their
efforts.” Jd. at 108. Accordingly, the court announced that it
would do “what the jury said to do, but I will do it in an amount
that is sufficient, but not superfluous.” /d. at 109. The court
explained that a punitive award of $1 million would be “a mere
inconvenience” — “as much corporate blood as a mosquito would
draw.” Jd. The court made clear that it did not arrive at the $15
million figure lightly; to the contrary, the judge revealed that “I
don’t think that there has been a single 48-hour period that’s gone
by since June 25th, 1993, that I haven’t thought about the amount
of punitive damages in this case.” Jd. at 106.

The district court expressly held that the jury’s verdict was
not infected by passion or prejudice and categorically rejected any
suggestion that “these proceedings were, in any way, contaminated
or permeated by any aspects of prejudice or bias or favor or
affection for or against either party.” Jd. at 92-93. “There is no

-14-

way that I can make a finding that this trial was fundamentally
unfair on the basis of any suggestion or intonation of prejudice or
bias or regional or national favoritism. It wasn’t.” Jd. at 95.

On appeal, Combustion challenged the award on both state
law and federal constitutional grounds. Combustion argued that
there was insufficient evidence of willful misconduct and specific
intent to cause harm. Yet the Eleventh Circuit soundly rejected
Combustion’s excessiveness objection, affirming the $15 million
award in all respects without opinion, just one week after oral
argument. 67 F.3d 314.

On petition for certiorari, this Court first held the petition
(No. 95-1072) in abeyance pending BMW v. Gore, 517 U.S. 559
(1996), then vacated the judgments and remanded the case to the
Eleventh Circuit, 517 U.S. 1217 (1996), which in turn remanded
the case to the district court. The scope of the remand was limited
to the effect of Gore on the judgments

The district court on remand reduced the punitive award to
a total of $4.35 million, while acknowledging that “‘a review of the
evidence shows that the jury must have inferred specific intent [to
cause harm] from a finding of deliberate indifference.” R8-266-6.

The Eleventh Circuit affirmed. It found that “the Georgia
statutes provided fair notice to [Combustion] that it might be
subject to a substantial penalty for pollution of the streams running
through its property.” Pet. App. 27a. The court of appeals also
noted that “(t]he actual damages awarded were relatively small;
yet the state’s interest in deterring the conduct — environmental
pollution — is strong. In order to achieve this goal, ratios higher
than might otherwise be acceptable are justified.” /d. at 26a. The
court further held that the punitive award was “justified by the
need to deter this and other large organizations from a ‘pollute and
pay’ environmental policy.” /d. at 27a.

Subsequently, Combustion completed its settlements of 12
of the 13 judgments in this case, leaving only the $1 million
punitive judgment held by the respondents.

.. 3

REASONS FOR DENYING THE PETITION

Combustion’s petition makes extensive reference to other
cases in an effort to persuade this Court that this case should be
used to resolve the question of whether a 100-to-1 ratio between
punitive and compensatory damages is reasonable. Combustion’s
extensive reliance on other cases points to the first reason for
denying the petition: this particular case is not an appropriate
vehicle to review the question that Combustion has presented
given factual peculiarities attributable to Combustion’s tactical
choices during this litigation.

Further, from the record of this case there is little reason to
believe that the “ratio” arguments on which Combustion seeks
plenary review, even if accepted, would affect the result of this
case — providing a second reason why this Court should deny
review in this case and address these “ratio” arguments further, if
at all, in one of the cases in which such arguments might actually
matter.

I. THIS CASE IS NOT AN APPROPRIATE
VEHICLE FOR ADDRESSING THE
QUESTION PRESENTED BY COMBUSTION

The inappropriateness of this case as a means of reviewing
the question presented by Combustion is clear in two separate
respects: (a) Combustion seeks review of the court of appeals’
decision “sustain{ing] a punitive award of over $4,000,000,” Pet.
1, yet it has settled the large bulk of this dollar total; and (b)
Combustion’s petition sets out a factual predicate for review that
simply does not square with the record of this case. We discuss
each in turn.

A. This Case Does Not Present the Question of the
Reasonableness of a $4 Million Punitive Award

Combustion begins its petition by asserting that “the court of
appeals sustained a punitive award of over $4,000,000.” Pet. l.

tit

This statement is highly misleading. As Combustion well knows,
it has deliberately chosen to settle 12 of the 13 punitive awards in
the case. The remaining judgment, held by respondents, is for
only $1 million, Pet. App. 39a — less than 25% of the total of
$4.35 million in punitive judgments recently sustained below.

In and of themselves, these settlements make this case an
unsuitable candidate for this Court’s review. Combustion has
strategically decided to resolve 12 of the 13 judgments against it,
and to present only one for this Court to examine. Such artificial
engineering will hamper a fair resolution in this case. The posture
in which Combustion seeks to present this case to this Court is
dramatically different from the posture in which the case was tried
before a jury in 1993; from the posture in which the district court
conducted its first posttrial review in 1994; from the posture in
which the first appeal was heard in 1996; from the posture in
which this Court vacated the then-extant judgments in light of
BMW vy. Gore; from the posture in which the district court
conducted its second posttrial review in 1997; and from the
posture in which the court of appeals heard the case below.

In short, the record in this case has been assembled, and the
decisions below have been rendered, in a different setting from the
one that Combustion now seeks to present to this Court. Both
constitutional and prudential principles of justiciability strongly
counsel against reviewing Combustion’s arguments focusing on
the “punitive award of over $4,000,000” that “the court of appeals
sustained,” Pet. 1, after which Combustion settled all but one of
the judgments, thus mooting the issues earlier posed by the $4.35
million in punitive damages. See, e.g., | LAURENCE H. TRIBE,
AMERICAN CONSTITUTIONAL LAW §§ 3-7, 3-8, 3-11 (3d ed. 2000).

Furthermore, the $1 million award remaining in this case is
a poor candidate for assessing the ramifications of BMW v. Gore
for punitive awards. The $1 million judgment held by respondents
was produced by the district court as part of its 1994 weight-of-
the-evidence remittitur procedure. See pp. 13-14, supra. The
award has been untouched since that time. It was not produced by
the district court’s application of the Gore factors during its 1997

at

second posttrial review and it was left unchanged by the court of
appeals’ review of the judgments under the Gore factors.

B. The Question Framed by Combustion
Is Not Presented By This Case

The question framed by Combustion is “whether a punitive
award that is 100 times the compensatory damages is constitu-
tionally permissible when the compensatory damages are more
than nominal and the defendant’s conduct is not reprehensible.”
Pet. i. This question is not in fact presented by this case for
several reasons.

1. The ratio between punitive and compensatory damages
in this case relied on by Combustion is largely meaningless, given
unique aspects of the record created by Combustion’s own tactical
litigation choices. The award of use-and-enjoyment damages in
this case simply cannot be viewed as representing compensation
for all of “the actual harm inflicted on the plaintiff[s],” which this
Court has instructed is the relevant focus. Gore, 517 U.S. at 580.

The $10,000 compensatory award for respondents’ loss of
use and enjoyment of their land reflects only one minor element of
the actual harm caused by Combustion. Under Georgia law,
plaintiffs were forced to waive their claim for loss of market value
in order to preserve their right to injunctive relief. Tr. 17, 622-23,
629-32: R-3-63 at 13-17. The damages awarded plaintiffs thus do
not include the injury done to the value of plaintiffs’ land, or the
cost of repairing the wrongs intentionally inflicted by Combustion.
Tr. 629-30. In fact, at trial Combustion objected to plaintiffs’
tender of evidence of the value of the land, Tr. 622-23, and the
district court excluded such evidence based on Combustion’s
agreement that it would “not be heard, within the confines of this
lawsuit, ever to complain that there has been a failure or an
absence of any showing of fair market value or any disparity
between the present polluted and non-polluted fair market value.”
Tr. 631-32. Combustion has effectively renounced this agreement
and now seeks to have the matter both ways.

St

—_s

-18-

Under this aspect of Gore, any “ratio” evaluation of the
punitive award must also place a value on the claim for injunctive
relief, given that awards of nominal damages or equitable relief,
without any recovery of compensatory damages, are enough to
support an award of punitive damages under Georgia law. Ponce
de Leon Condominiums v. DiGirolamo, 232 S.E.2d 62, 64 (Ga.
1977); Hudgins & Co. v. J & M Tank Lines, Inc., 450 $.E.2d 221
(Ga. 1994), cert. denied, 1995 Ga. LEXIS 461 (Ga. Feb. 23,
1995). For example, the courts have long recognized that a claim
for injunctive relief should be regarded as having monetary value
for purposes of meeting jurisdictional amount requirements. See
Hunt v. Washington State Apple Advertising Comm'n, 432 U.S.
333, 347-48 (1977); 14B CHARLES ALAN WRIGHT, ARTHUR R.
MILLER & EDWARD H. COOPER, FEDERAL PRACTICE AND PROCE-
DURE: JURISDICTION 3D § 3708, at 239 (1998).

Moreover, the actual ratio between the punitive and compen-
satory awards here is approximately 4-to-1, not 100-to-1 as
Combustion erroneously suggests. Respondents’ compensatory
award was not limited to $10,000 for the loss of the use and
enjoyment of their land. It also included $227,000 awarded to all
the plaintiffs (including respondents) for their out-of-pocket
expenses and attorneys’ fees based on the jury’s finding (never
appealed) that Combustion had acted in “bad faith.” See p. 12,
supra. In TXO Prod. Corp. v. Alliance Resources Corp., 509 U.S.
443 (1993), this Court considered the plaintiffs’ litigation costs, as
awarded by the jury, in computing the ratio between punitive and
compensatory damages. /d. at 451, 453 (plurality opinion).
Considering those costs here, which were a specific item of
damages awarded by the jury to plaintiffs, produces a ratio of $1
million divided by $237,000, or about 4.2-to-1, not 100-to-1.

For all these reasons, the ratio cannot be computed based
solely on respondents’ $10,000 use-and-enjoyment award.

2. The ratio computed by Combustion is also meaningless
because the use-and-enjoyment damages sustained by plaintiffs
were difficult to quantify. The evidence showed that the injury

-19-

sustained by plaintiffs was severe, both economic and non-
economic. | Combustion’s pollution rendered the streams
unsuitable for “normal usage or recreational or farm purposes,” Tr.
161, and it interfered with plaintiffs’ attempts to raise cattle, Tr.
400, 403-05, 427, 429, 430, 432, 499, 554; rent their land, Tr. 576,
577, 580, 644, grow timber, Tr. 442, 592, 606, 616; fish in the
streams, Tr. 442, 448, 598; drink from them, Tr. 484-85; swim in
them, Tr. 480; and pass the land down to their children and
grandchildren in a pristine state. Tr. 329, 442, 454, 465, 482, 502,
554.3 Thus, Combustion is incorrect in insisting that there is no
evidence of “diminution in property value, damage to crops or
animals, or other economic loss.” Pet. 7. In any event, this Court
in Gore explained that the non-economic dimension of an injury
gives greater (not less) validity to a punitive award, because “the
monetary value of noneconomic harm might have been difficult to
determine.” 517 U.S. at 582.

> Combustion suggests that any harms were the result of the mining
operations that had ceased in 1986 and hence fell outside the statute of
limitations. That is false. The evidence at trial showed that Combustion’s
pollution persisted from 1987 to the time of trial. See pp. 4-9, supra.
Moreover, under Georgia law, liability for tortious acts that cause continuing
pollution within four years of the filing of the suit is not barred by the statute
of limitations even though the acts causing the continuing trespass occurred
more than four years before suit. Hoffman v. Atlanta Gas Light Co., 426
S.E.2d 387, 389-90 (Ga. App. 1992), cert. denied, 1993 Ga. LEXIS 336 (Ga.
Apr. 8, 1993).

Further, Combustion misstates the relevance of the statute of limitations.
Throughout its two decades of mining on Graves Mountain, Combustion
knew that, absent concerted efforts at reclamation (i.e., long-term restoration)
and remediation (i.e., immediate pollution treatment), its operations would
inevitably produce huge quantities of toxic pollutants that would flow into
plaintiffs’ streams. Evidence of Combustion’s pre-1987 knowledge was at
minimum admissible under Fed. R. Evid. 404(b) to establish state of mind
and to show that Combustion has long been on notice of the need for effective
action. See, e.g., Big Apple BMW, Inc. v. BMW of North Am., Inc., 974 F.2d
1358, 1361 (3d Cir. 1992), cert. denied, 507 U.S. 912 (1993); see also TXO,
509 U.S. at 450 n.10, 457, 461 (plurality opinion) (relying on evidence of
fraud and other misconduct not part of plaintiff's slander of title claim).

-20-

3. More generally, the appropriate ratio between punitive
and compensatory damages in a particular case is not a legal
talisman, but an inherently fact-bound issue which is not suitable
for this Court’s review. In Gore, this Court held that the ratio
between punitive damages and “the actual harm inflicted on the
plaintiff’ was one factor for a reviewing court to consider. /d. at
580. But the Court made clear that “we have consistently rejected
the notion that the constitutional line is marked by a simple
mathematical formula, even one that compares actual and potential
damages to the punitive award.” /d. at 582 (emphasis in original);

see also TXO, 509 U.S. at 459-62 (1993) (upholding 526-to-1 ratio

between punitive and compensatory damages); Pacific Mutual Life
Ins. Co. v. Haslip, 499 U.S. 1, 23 (1991) (200-to-1 ratio between
punitive damages and out-of-pocket expenses); Browning-Ferris
Indus. v. Kelco Disposal, Inc., 492 U.S. 257, 262 (1989) (ratio of
punitive to compensatory damages over 100-to-1). In fact, Gore
explained that a high ratio between punitive and compensatory
damages may be appropriate in some cases:

[L]ow awards of compensatory damages may properly
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.
A higher ratio may also be justified in cases in which
the injury is hard to detect or the monetary value of
noneconomic harm might have been difficult to
determine.

517 U.S. at 582 (emphasis added). In the wake of Gore, some
courts have permitted high ratios between punitive damages and
compensable harm,‘ while others have not, see, e.g., Pet. 13-15,

* See, e.g., Jacque v. Steenberg Homes, Inc., 563 N.W.2d 154, 164-65
(Wis. 1997) (100,000-to-1); Lee v. Edwards, 101 F.3d 805, 810-13 (2d Cir.
1996) (75,000-to-1); Southeastern Sec. Ins. Co. v. Hotle, 473 S.E.2d 256,
260-61 (Ga. App. 1996) (45,000-to-1); Wilson v. IBP, Inc., 558 N.W.2d 132,
148 (Iowa 1996), cert. denied, 118 S. Ct. 52 (1997) (500-to-1); United States

a oe

i.

depending on the particular facts of individual cases. In upholding
a punitive damage award with a 12-to-1 ratio, for example, Chief
Judge Posner explained that “a mechanical ratio, such as two to
one or three to one or four to one or even ten to one, would not
make good sense.” Cooper v. Casey, 97 F.3d 914, 919 (7th Cir.
1996). “The smaller the compensatory damages, the higher the
ratio of punitive to compensatory damages has to be in order to
fulfill the objectives of awarding punitive damages.” Jd.‘

v. Big D. Enterprises, Inc., 1999 U.S. App. LEXIS 15121, *15-*17 (8th Cir.
July 9, 1999) (100-to-1); Stevens v. Owens-Corning Fiberglas Corp., 49
Cal.App.4th 1645, 1652, 1658-68 (1996), review denied, 1997 Cal. LEXIS
61 (Cal. Jan. 15, 1997) (78-to-1); Schaffer v. Edward D. Jones & Co., 552
N.W.2d 801, 817 (S.D. 1996) (30-to-1); Elder v. Gaffney Ledger, Inc., 511
S.E.2d 383, 390 (S.C. App. 1999) (30-to-1); Walston v. Monumental Life Ins.
Co., 923 P.2d 456, 468 (Ida. 1996) (26-to-1); Coleman v. Kaye, 87 F.3d 1491,
1506 (3d Cir. 1996), cert. denied, 117 S. Ct. 754 (1997) (23-to-1).

Combustion discounts some of these cases that have upheld high ratios
as involving “nominal or very low damages,” see Pet. 20 n.5, but does not
explain why this is a distinction with a difference. Combustion asks this
Court to set out numerical ratio guidelines to govern when compensatory
damages “are more than nominal,” Pet. i, and it offers ratios that it believes
should control where compensatory damages fall “between $10,000 and
$50,000,” as in this case. Pet. 13. Combustion offers no justification for such
categories, which lend themselves more to the practice of numerology than
the practice of law.

* See also Thomas C. Galligan, Jr., Augmented Awards: The Efficient
Evolution of Punitive Damages, 51 LA. L. REV. 3, 65 (1990) (“The greater the
divergence between the compensatory damages awarded and the actual costs
the conduct imposes upon society, the greater the need for an award greatly
exceeding the compensatory damages.”); Philip D. Oliver, Once is Enough:
A Proposed Bar of the Injured Employee’s Cause of Action Against a Third
Party, 58 FORDHAM L. REV. 117, 153-54 n.136 (1989) (“[I]t seems that low
compensatory damages would require a greater deterrent in the form of puni-
tive damages than necessary when compensatory damages are high. ... [I]f
A and B engage in equally wrongful conduct, but A causes $100,000 in harm
and B $1,000,000, by what logic is it held that B, having paid ten times as
much in compensatory damages, now should be held liable for greater
punitive damages than A?”).

Reo

4. The award in this case is necessary to achieve deterrence
by removing Combustion’s wrongful gain. A punitive damage
award in this case on the order of a few times the $10,000 in use-
and-enjoyment damages collected by respondents would give a
wrongdoer such as Combustion no incentive to institute necessary
remediation and reclamation efforts in a timely fashion, knowing
that it stands to save $6 million by doing nothing. As in 7XO,
here a high ratio is constitutionally unobjectionable, especially
when the punitive award is compared with the economic gain from
the wrongdoing. In this case, the ratio between respondents’ $1
million punitive award and Combustion’s $6 million actual gain
from its intentional, bad-faith trespass is only 1-to-6 (that is, only
a small fraction of actual gain) — sixty times lower than the 10-to-
| ratio that this Court in XO suggested would be reasonable. 509
U.S. at 459-62. No case or legal principle cited by Combustion
remotely establishes that a punitive damage award of a fraction of
an intentional wrongdoer’s illicit gain should be considered
grossly excessive under the Fifth Amendment.

Il. IN ANY EVENT, THE $1 MILLION PUNITIVE
AWARD IN THIS CASE IS PLAINLY REASONABLE,
RENDERING THE “RATIO” ISSUE IRRELEVANT

Even if the question framed by Combustion were actually
presented, this Court’s review would be unwarranted because a $1
million punitive award in this case is plainly reasonable. The
court of appeals held that the punitive award was “justified by the
need to deter this and other large organizations from a ‘pollute and
pay’ environmental policy.” Pet. App. 27a. The Eleventh Circuit
was correct: Combustion retained an illicit gain of $6 million in
this case, and a substantial punitive award was justified. The
award is also reasonable in light of legislatively authorized
penaltics in Georgia, which put Combustion on notice of its
potential liability, and in light of Combustion’s size and financial
position.

Thus, the court of appeals’ judgment would not change even
if Combustion’s argument about ratios between punitive and
compensatory damages had any merit. Review should be denied
because the “ratio” argument, which is the basis of Combustion’s
question presented, would not affect the proper constitutional
analysis in this case.

A. The Award is Reasonable by Reference
to Combustion’s Actual Gain

An expert witness called by plaintiffs, whose qualifications
and methodology for reaching his opinion were unchallenged,
testified that Combustion was able to save $6 million between
August 1987 and the 1993 trial by failing to adopt proper
measures to correct the problems with acid mine drainage entering
plaintiffs’ property. Tr. 1216-17. This figure does not include
pre-1987 profits, such as the gain to Combustion from failing to
reclaim while mining operations were ongoing, which in itself was
contrary to standard industry practice. Tr. 941, 1217. Combustion
had ample opportunity to respond to this testimony but did not
rebut it.

Plainly, the imposition of a $1 million punitive award to
redress an illicit gain of $6 million is hardly irrational. If
anything, the award should have been greater. Under Georgia law,
plaintiffs are lower riparian owners who have the absolute right
“to have water flow upon [their] land in its natural state free from
adulteration,” Kingsley Mill Corp. v. Edmonds, 67 S.E.2d 111, 112
(Ga. 1951), regardless of whether mining is more profitable than
other uses of the land. See Satterfield v. Rowan, 9 S.E. 677, 679
(Ga. 1889) (“[Plaintiff] was entitled to have the water flow upon
his land from [defendant mining company’s] land in its natural
state . . . whether the stream of water was more useful for the
purpose of mining than it was for domestic purposes”).*

° See also O.C.G.A. § 51-9-7 (“The diverting of the stream in whole or
in part from its natural and usual flow, or the obstructing thereof. . ., or the

-24-

The Georgia courts have repeatedly held that the failure
properly to remediate pollution constitutes a trespass, subjecting
the trespasser to punitive damages, and that a defendant cannot
immunize itself merely by showing that it made some half-hearted
efforts at remediation.’ The jury found at trial that Combustion
trespassed on plaintiffs’ riparian rights with full knowledge that it
was doing so, with “specific intent” to continue trespassing, and
in “bad faith.” These findings remain the law of the case.

Accordingly, this Court’s decision in BMW y. Gore fully
supports, rather than undermines, the punitive damage award here.
Gore specifically upheld the power of a State to impose punitive
damages “to further a State’s legitimate interests in punishing
unlawful conduct and deterring its repetition” in order to “protect[]
its own consumers and its own economy.” 517 U.S. at 568, 572.
In 7XO, which was reaffirmed in Gore, a plurality noted, “in
addition to TXO’s vast wealth, the tremendous financial gains that
TXO hoped to achieve” and “the lucrative stream of royalties” that
TXO hoped to win. 509 U.S. at 461-62. This Court indicated that

polluting thereof so as to lessen its value to the owner of such land shall
constitute a trespass upon the property”); Brooks v. Ready Mix Concrete Co.,
96 S.E.2d 213, 214-16 (Ga. App. 1956) (citing Gainesville, J. & S. R. Co. v.
Edmondson, 29 S.E. 213 (Ga. 1897)) (reaffirming ancient and absolute right
against trespass caused by defendant’s use of its real property as distinguished
from, for example, a railroad’s negligent discharge of sparks incident to its
operation of a train along a right of way).

” See Ponce de Leon Condominiums v. DiGirolamo, 232 S.E.2d 62, 64
(Ga. 1977) (punitive damages warranted even though defendant relied on
expert advice that its activities would cause no water run-off problem, and
subsequently “made some effort to alleviate” the effects of problem);
Hudgins & Co. v. J&M Tank Lines, Inc., 450 S.E.2d 221, 222 n.1 (Ga. App.
1994), cert. denied, 1995 Ga. LEXIS 461 (Ga. Feb. 23, 1995) (a knowing
failure to effectively remediate pollution, even if defendant “did take some
actions to remediate,” is willful misconduct that warrants punitive damages);
Hoffman v. Atlanta Gas Light Co., 426 S.E.2d 387, 389-91 (Ga. App. 1992),
cert. denied, 1993 Ga. LEXIS 336 (Ga. Apr. 8, 1993) (knowing failure to
clean up hydrocarbon spillage from pipeline constitutes continuing trespass,
even after the leaks have been fixed, permitting award of punitive damages).

an.

an award of even ten times the size of TXO’s expected gain would
be reasonable. In Haslip, which was also reaffirmed in Gore, the
Court approved consideration of “the profitability to the defendant
of the wrongful conduct and the desirability of removing that
profit and of having the defendant also sustain a loss” as a factor
in judging the reasonableness of an award. 499 U.S. at 22.

Combustion’s real quarrel is with substantive Georgia law.
It contended below that it should not be punished in any
substantial amount for polluting plaintiffs’ land, because the cost
of cleaning up its streams containing acid mine drainage before
they reach plaintiffs’ land was supposedly greater than the
diminution in the alleged market value of plaintiffs’ land. This
argument is triply flawed.

1. Combustion’s argument is inconsistent with the jury
instructions in this case. The jury was instructed as follows:

In considering whether you will award punitive
damages and in what amount: Such award is not meant
to be compensation, but should be fixed in an amount
necessary to deter future acts of a similar nature. It is
an amount, as measured by the enlightened conscience
of an impartial jury, which will be required to deter
future wrongful acts.

Tr. 1195 (emphasis added). The jury was not instructed that
punitive damages should be limited by the value of plaintiffs’ land
or any similar factor. Instead, consistent with the jury instructions
focusing on deterrence of future wrongful acts, the jury was urged
in closing argument — without objection — to “take the profit out
of polluting” and to render a verdict that would “restore the dignity
of property rights.” Tr. 1240-41.

Whether the punitive award is excessive must be measured
by applying the jury instructions to the factual record, which are
now law of the case, not by asking whether the facts would
support the award under some alternative version of the law. See,
e.g., Will v. Comprehensive Accounting Corp., 776 F.2d 665, 675

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(7th Cir. 1985), cert. denied, 475 U.S. 1129 (1986); see also
Quinones-Pacheco v. American Airlines, Inc., 979 F.2d 1, 4 & n.3,
5 (Ist Cir. 1992); Bogan v. Stroud, 958 F.2d 180, 183-84 (7th Cir.
1992); Sims v. Mulcahy, 902 F.2d 524, 535-36 (7th Cir.), cert.
denied, 498 U.S. 897 (1990).

2. Combustion’s argument is simply off limits to a federal
court under Erie R.R. v. Tompkins, 304 U.S. 64 (1938).
Combustion contends that, whatever substantive Georgia law has
to say on this subject, the federal Constitution somehow
commands that a State can never impose a penalty on a polluter
who trespasses on the property owned by another, if that penalty
is linked not to the fair market value of the land (a “pollute and
pay” system), but is instead designed to deter the polluter from
causing the harm in the first place, by setting the penalty in
reference to the level of the financial benefit the polluter receives
from refusing to implement the necessary cleanup measures.
Combustion’s argument is nothing short of Lochnerism. Georgia
is no more required to adopt Combustion’s view of economics
than it is required to adopt “Mr. Herbert Spencer’s Social Statics.”
Lochner v. New York, 198 U.S. 45, 75 (1905) (Holmes, J.,
dissenting). Further, “pollute and pay” is inconsistent with the
traditional ~approach to property rights in this country.
“{O]therwise, a person so disposed might forcibly dispossess
another of any article of property at his pleasure, and compel the
owner, however unwilling, to accept of the value in its stead.”
Edwards v. Beach, 3 Day 447, 450 (Conn. 1809). Indeed, giving
polluters like Combustion what is, in effect, a judicially
enforceable power of private eminent domain would raise serious
constitutional questions under the “public use” requirement of the
Takings Clause. E.g., Thompson v. Consolidated Gas Utilities
Corp., 300 U.S. 55, 77-80 (1937) (Brandeis, J.).

3. Third, Combustion’s argument is also profoundly flawed
as a matter of elementary legal principle because it confuses
property rules with liability rules. Some rights and assets, such as
the entitlement to be free from breaches of contract or negligently

27

caused accidents, are protected only by liability rules. A defendant
who violates such an entitlement need pay only ordinary
compensatory damages. But the distinguishing characteristic of
a “property right,” such as the right under Georgia law to
unpolluted water, see pp. 23-24 & n.6, supra, is that “someone
who wishes to remove the entitlement from its holder must buy it
from him in a voluntary transaction.” Guido Calabresi & A.
Douglas Melamed, Property Rules, Liability Rules, and
Inalienability: One View of the Cathedral, 85 HARV. L. REV.
1089, 1092 (1972); see also Symposium: Property Rules, Liability
Rules, and Inalienability: A Twenty-Five-Year Retrospective, 106
YALE L.J. 2081 (1997).

Even if social welfare would be increased if the property
right in question — here, the right to control the level of pollution
in plaintiffs’ streams on Graves Mountain — were in the hands of
Combustion rather than plaintiffs, that would be no reason to
allow Combustion unilaterally to decide to pollute and pay merely
compensatory damages. This property right, initially vested in
plaintiffs under well-settled Georgia law, can easily be transferred
to Combustion through legitimate avenues of market exchange.
Indeed, Combustion’s settlements with respect to 12 of the 13
judgments effectuated this very type of property transfer.

If Combustion had bargained with plaintiffs, the purchase
price would have been determined by the value of the property to
plaintiffs (which was not in evidence before the jury)* and the

* Combustion asserted below that the estimated aggregate fair market
value of plaintiffs’ land (which of course might be less than the value of the
land to plaintiffs personally) was $1.347 million. But this figure was never
introduced into evidence at trial. Indeed, on Combustion’s own motion, all
evidence of the land’s value was barred as irrelevant to the case. Tr. 622:10-
623:7, 631:18-632:14, 659:21-660:9. Combustion explicitly waived any
argument that might depend on the value of plaintiffs’ land. Tr. 17, 622-23.
629-32; R-3-63 at 13-17. A federal court “cannot, consistent with the
Seventh Amendment, evaluate a jury’s verdict based on evidence that the
jury was not permitted to consider at trial.” Mattison v. Dallas Carrier
Corp., 947 F.2d 95, 108 (4th Cir. 1991): see also Browning-Ferris Indus. v.
Kelco Disposal, 492 U.S. 257, 280 n.26 (1989),

-28-

value of the property to Combustion (at least $6 million).
Permitting Combustion to escape such a bargaining process by
authorizing it to trespass at the price of paying only compensatory
damages would improperly allow it to retain all the gains from
exchange that would have been divided between the parties had
they freely bargained over the sale of the property.’

B. The Award is Reasonable By Reference
to Legislatively Approved Penalties

In Gore, this Court made clear that “[c]omparing the punitive
damage award and the civil or criminal penalties that could be
imposed for comparable misconduct” provides another test for
judging excessiveness. 517 U.S. at 583 (emphasis added). This
factor demonstrates the reasonableness of the award in this case.

First, this Court in Gore considered the size of awards “that
would be permissible under [state tort-reform] statutes.” /d. at 582
n.36. Here, it is notable that this case was tried under a Georgia
statute capping punitive damages at $250,000 except where a
plaintiff can prove specific intent to cause harm. O.C.G.A. § 51-
12-5.1(f). Thus, the Georgia legislature has decided not to impose
a limit on punitive damages in cases like this one. It has singled
out such cases as ones in which severe punishment is warranted.

In addition, this action was brought by 23 separate plaintiffs
owning 16 different plots of land. Even if each plaintiff had
received no more than the $250,000 allowed by the Georgia

* It bears emphasis that even if the property right in question could not
easily be transferred, there is no obvious basis for questioning the policy
judgment under Georgia law that mining companies such as Combustion still
may not pollute the streams in question, even if such pollution could increase
societal wealth. See, e.g., Richard A. Posner, The Problematics of Moral and
Legal Theory, 111 HARV. L. REV. 1637, 1669-70 & n.62 (1998) (observing
that to rely on principles of economics to justify a societal goal of wealth
maximization is a “doomed effort”). See also Ronald Dworkin, /s Wealth a
Value?, in A MATTER OF PRINCIPLE 237, 242-44 (1985); Anthony T.
Kronman, The Value of Moral Philosophy, 111 HARV. L. REV. 1751, 1752 &
n.5 (1998).

-29.

legislature in cases not involving specific intent to harm, the total
punitive damage award in this case permitted under Georgia law
would have been $5.75 million. In this case, of course, the jury
found that Combustion acted with specific intent to cause harm, a
finding that was upheld in the earlier appeal. Hence, the Georgia
legislative scheme provides additional support for the award.

Also relevant in assessing the reasonableness of the instant
award is the Georgia Water Control Act, which Combustion
violated. Tr. 984-86. Under this Georgia statute, civil penalties
of up to $100,000 per violation per day may be assessed for
repeated violations. O.C.G.A. § 12-5-52(a). In addition, the Act
carries criminal penalties; knowing violations are punishable as
felonies. O.C.G.A. § 12-5-53(a) & (c). The district court acknow-
ledged that, if the maximum legislatively authorized penalty had
been imposed on Combustion, it would have faced a $146 million
fine. R8-266-10. Gore instructs a focus on the “maximum civil
penalt[ies]” “that could be imposed,” 517 U.S. at 583-84 (empha-
sis added), not on the patterns of administrative enforcement.

C. The Award is Reasonable by Reference
to Combustion’s Size and Financial Position

The punitive award is also eminently reasonable in light of
Combustion’s 1990 purchase price of $1.6 billion. Tr. 1199. The
district court previously explained that this was “one of the most
apposite cases” for considering the defendant’s financial position,
since an award of “one million dollars” would be “a mere
inconvenience” — “as much corporate blood as a mosquito would
draw.” 4/25/94 Tr. 109.

This Court has repeatedly noted the “well-settled law” that
the size of a punitive damage award may be justified as constitu-
tionally reasonable by reference to a defendant’s wealth. TXO,
509 U.S. at 462 n.28 (plurality opinion). Justice Breyer, joined by
Justices O’Connor and Souter, explained in Gore that “one can
understand the relevance of this factor to the State’s interest in
retribution.” Gore, 517 U.S. at 591 (concurring opinion); see also

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-30-

Haslip, 499 U.S. at 21-22; Browning-Ferris, 492 U.S. at 300
(O’Connor, J., joined by Stevens, J., concurring in part and
dissenting in part); Newport v. Fact Concerts, Inc., 453 U.S. 247,
270 (1981) (evidence of wealth “is traditionally admissible as a
measure of the amount of punitive damages that should be
awarded”); Continental Trend Resources, Inc. v. OXY USA, Inc.,
101 F.3d 634, 641-42 (10th Cir. 1996), cert. denied, 117 S. Ct.
1846 (1997) (conciuding that wealth remains relevant under
Gore); RESTATEMENT (SECOND) OF TORTS § 908(2) & comment e
(1979); Annotation, Punitive Damages: Relationship to
Defendant's Wealth, As Factor in Determining Propriety of
Award, 87 A.L.R.4TH 141, 151 (1995) (noting that the “vast
majority of courts” permit wealth to be considered).

CONCLUSION
The petition for a writ of certiorari should be denied.

Respectfully submitted.

JOHN C. BELL, JR. WILLIAM A. PANNELL

619 Greene Street Post Office Box 810
Augusta, GA 30901 Alpharetta, GA 30009
(706) 722-2014 (770) 619-0910

JOHN M.B. LEwis, [V KENNETH J. CHESEBRO*
HUGUENIN, ANNAS & LEWIS JONATHAN S. MASSEY

4024 Washington Road 1600 Massachusetts Avenue
Augusta, GA 30917 Cambridge, MA 02138
(706) 855-5000 (617) 661-4423

Counsel for Respondents

* Counsel of Record

September 10, 1999

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386005_1010%3A2. Public record. Not legal advice.