Opposition Brief — State Farm Mutual Automobile Insurance v. Campbell
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—— ' AUG 23 204
No. 04-116 ro
we
IN THE
Supreme Court of the Gnited States
STATE FARM MUTUAL AUTOMOBILE INS. Co.,
Petitioner,
V.
INEZ PREECE CAMPBELL AND MATTHEW C. BARNECK,
SPECIAL ADMINISTRATOR AND PERSONAL REPRESENTATIVE
OF THE ESTATE OF CURTIS B. CAMPBELL,
Respondents.
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UTAH SUPREME COURT
BRIEF IN OPPOSITION TOA
PETITION FOR WRIT OF CERTIORARI
L. RICH HUMPHERYS LAURENCE H. TRIBE
ROGER P. CHRISTENSEN Counsel of Record
KARRA J. PORTER KENNETH J. CHESEBRO
CHRISTENSEN & JENSEN 1575 Massachusetts Ave.
50 South Main St. Cambridge, MA 02138
Salt Lake City, UT 84144 (617) 495-4621
(801) 323-5000
JONATHAN S. MASSEY
JONATHAN S. MASSEY, P.C.
3920 Northampton St., N.W.
Washington, D.C. 20015
(202) 686-0457
Counsel for Respondents
BATEMAN & SLADE, INC. BOSTON, MASSACHUSETTS
RE eg ee Ne I ey Per ey ay ee Pet en ey ee ae
ee ae a oe Oe re Oe oe,
COUNTER STATEMENT
OF QUESTION PRESENTED
Whether this Court should grant review to consider
the Utah Supreme Court’s factbound application of the
guideposts prescribed by this Court BMW of N. Am., Inc. v.
Gore, 517 U.S. 559 (1996), and explicated in the
circumstances of this very case only one Term ago in State
Farm Mutual Auto. Ins. Co. v. Campbell, 538 U.S. 408
(2003).
TABLE OF CONTENTS
COUNTERSTATEMENT OF QUESTION
PRESENCE? sicsccncscthinimn pain nee 1
TABLE OF AUTHORITIES .....0.ccsessccsssesssevssscossessssseseneses iV
STATEMENT OF THE CASE ..........cccccccscssssesssessesssssesnsoes 2
I The Initial State Proceedings ...............:08 2
y This Covrt’s DeCisi@th ..<csssevesscsencsssnssevesesssss 3
i The Utah Supreme Court’s Decision ........... 5
REASONS FOR DENYING THE WRIT ........:eceeeceeeeeeeees 6
I. THE UTAH SUPREME COURT
PROPERLY FOLLOWED THIS
COURT’S MANDATE ON
READ scesncsicsisavinstiiacacsemineantereionnennnen 8
II. THE UTAH SUPREME COURT’S
ANALYSIS OF |
REPREHENSIBILITY IS
CONSISTENT WITH THIS
COURT'S CIN cicssxscttsisereccteccsarienes 11
A. The Utah Supreme Court
Properly Followed This
Contr’ RCTS ccccnisnssvsencesnacisiccms 11
B. There Is No Merit To State
Farm’s Criticisms of the Utah
Supreme Court’s Application
of the Governing Legal
Standard To This Record ............... 12
il
Whether the harm was
economic or physical
Whether the Utah court
properly took the insurance
context into account in
assessing the reprehensibility
of State Farm’s misconduct
Ill. THE UTAH SUPREME COURT’S
ANALYSIS OF THE RATIO
GUIDEPOST IS ENTIRELY
CONSISTENT WITH THIS
<asbaebcentnsceaeanbeinadanannanmatcanaants 14
Indifference or reckless
disregard for the health
and safety of others ............ 15
Whether the target of
the conduct was
financially vulnerable ........ 15
Need to deter repetition
ace nisa call aciaaei aia conCveinaasinseian 17
State Farm’s lack of
PIE Sccnkanatnatsannctsnttesennad 19
Intentional trickery or
RIED seneinachaaecatsaneeassianeanas 21
State “values and
NINE nck siinstctadiviousicsty EM
TIC TY MIN EIE EIEN si ccsesacasssssasssenssaseceaiasess 23
ill
A. The Utah Court Properly
Followed This Court’s .
PRIN GA. sicacacacchebcn vskscedeciimudesnanes 24
B. The Utah Supreme Court
Properly Concluded That A
High Single Digit Ratio Was
i AR TT 25
IV. THE UTAH SUPREME COURT’S
ANALYSIS OF THE LEGISLATIVE
PENALTIES GUIDEPOST
COMPORTS WITH THIS COURT’S
Spe UIUN cosines paaianshasuaeicencassieamuticbercscoiee 26
V. THERE IS NO BASIS FOR
SUMMARILY REVERSING THE
UTAH SUPREME COURT’S
We NINE Senickcanioicaliccmecncantacemrchesicananelac 28
Span a Ma chsseccsccuninnneintienrnicca ecsucasauitaosievicsaRahasssabin 30
1V
TABLE OF AUTHORITIES
CASES
BMW of N. Am., Inc. v. Gore,
ok ¢ ide De CR IPED satnnnininchateonealwana rr passim
City of Los Angeles v. David,
538 U.S. 715 (2003) (per curiam) ................:00008 29
Cohen v. Cowles Media Co., 501 U.S. 663 (1991) ........... 23
Highland Farms Dairy, Inc. v. Agnew,
OOP OF. GEE CES FP isicersaccsntentanacseseceinnebudesamenicuen 23
Hollock v. Erie Ins. Exch., 842 A.2d 409
(PR, SEO, CE. BIO) wstcncayeivaeraianemncnieg 21
INS v. Ventura, 537 U.S. 12 (2002) (per curiam) .............. 29
Major League Baseball Players Ass'n v. Garvey,
DIE Wiehe Oe COTE) srpivusnsonsvinstuaadeaideesutpamemadien 29
Mathias v. Accor Econ. Lodging, Inc.,
587 F.36672 17 Ce I vec 21
Minnesota v. Clover Leaf Creamery Co.,
GOP LL.B. SIO TTI E) tnencssiddaaenem aan 23
Pacific Mut. Life Ins. Co. v. Haslip,
GPP UG. 1 GRIPES insntanncinenemetiamaecamnenee 23
Sao Paulo State of the Federative Republic of Brazil v.
Am. Tobacco Co., 535 U.S. 229 (2002)
CONE TEI Seccscssivciirntiionianannan 29
SEC vy. Lipson, 278 F.3d 656 (7th Cir. 2002) ................06. 20
Shelley v. Kraemer, 334 U.S. 1 (1948) ..........ccccccsscccsssseeeee 23
Slusher v. Ospital, 777 P.2d 437 (Utah 1989) ........... eee 3
State Farm Mutual Auto. Ins. Co. v. Campbell,
S90 Ui. BOC LARE) cuit cinwaneueens passim
CASES (continued)
TXO Prod. Corp. v. Alliance Resources Corp..,
509 U.S. 443 (1993) vccecccccsssssseceesseeeeseeeereeees 6, 23
United States v. Bass, 536 U.S. 862 (2002)
(DET CULIAIN) .occcsesessssssssseserceceveeseseseseseerssvecsvevercoses 29
MISCELLANEOUS
Fed. R. Evid. 801 wo... ecccscccssssceeeesesseeeeesssseeeeseeecseneeeees 20
U.S.S.G. § BEL. ccc ccccccssccesssececeeeesseeeeesseeesseeeeeeeenes 20
Robert L. Stern & Eugene Gressman, ef al.,
SUPREME COURT PRACTICE (8" ed. 2002) .....cecesses. 28
vl
BRIEF IN OPPOSITION TO PETITION FOR WRIT
OF CERTIORARI
Respondents Inez Preece Campbell and Matthew C.
Barneck, Special Administrator and Personal Representative
of the Estate of Curtis B. Campbell, respectfully submit this
Brief in Opposition to the Petition for Writ of Certiorari filed
in this case.
This case involves a punitive award against State
Farm for its fraudulent and bad faith conduct in handling a
third-party insurance claim. Just one Term ago, this Court
reviewed this case on the merits and held that the Utah courts
could not consider State Farm’s nationwide claims-
processing policies in determining the size of a punitive
award needed to fulfill Utah’s legitimate interests in
deterrence and punishment. State Farm Mutual Auto. Ins.
Co. v. Campbell, 538 U.S. 408 (2003). This Court vacated
the $145 million punitive award and instructed the Utah
Supreme Court on remand to apply the guideposts prescribed
in BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (1996) — not
with reference to State Farm’s nationwide policies, but only
with regard to State Farm’s conduct in Utah that bore relation
to the harm suffered by the Campbells. The Utah Supreme
Court did exactly that in recalculating the award in
accordance with this Court’s mandate and entering an award
of approximately $9 million.
The Petition makes two principal points. First, it
repeatedly accuses the Utah court of “repudiat[ing] specific
findings by this Court” and of “refus[ing] to follow the
mandate of this Court.” Pet. 6, 28. Those charges are
unfounded and unfair. They rest on State Farm’s
mischaracterizations of the Utah Supreme Court’s opinion.
In fact, the Utah Supreme Court faithfully followed this
Court’s mandate and did not consider any out-of-state
conduct by State Farm in assessing the punitive award in this
case.
Second, the Petition seeks to re-argue the Utah
court’s factual findings. Even if there were merit to the
Petition’s arguments — and there is not — there would be no
reason for this Court to grant certiorari to decide the
factbound questions presented by State Farm. The Petition is
a textbook example of a factbound challenge to a lower
court’s application of a settled legal principle. The Petition
should be denied.
STATEMENT OF THE CASE
1. The Initial State Proceedings. In 1981, Curtis
Campbell was responsible for an automobile accident that
disabled Robert Slusher and killed Todd Ospital. At the
time, Mr. Campbell was insured by State Farm up to
$25,000. As this Court found, “[eJarly investigations did
support differing conclusions as to who caused the accident,
but ‘a consensus was reached early on by the investigators
and witnesses that Mr. Campbell’s unsafe pass had indeed
caused the crash.’” 538 U.S. at 413 (quoting the opinion of
the Utah Supreme Court).
Nonetheless, State Farm chose not to settle the case.
As this Court observed, State Farm “ignored the advice of
one of its own investigators and took the case to trial,
assuring the Campbells that ‘their assets were safe, that they
had no liability for the accident, that [State Farm] would
represent their interests, and that they did not need to procure
separate counsel.’”” Jd. (quoting the opinion of the Utah
Supreme Court).
At trial, Mr. Campbell was found 100 percent
responsible and a judgment was entered against him for
$135,849. State Farm refused to pay this amount, suggesting
instead that the Campbells put their house up for sale to pay
off the judgment. State Farm’s counsel told the Campbells:
“You may want to put for sale signs on your property to get
things moving.’” Jd. “Nor was State Farm willing to post a
supersedeas bond to allow Campbell to appeal the judgment
against him. Campbell obtained his own counsel to appeal
the verdict.” Jd.
During the pendency of the appeal, in late 1984,
Slusher, Ospital, and the Campbells reached an agreement
whereby Slusher and Ospital agreed not to seek satisfaction
of their claims against the Campbells. In exchange, the
Campbells agreed to pursue a bad faith action against State
Farm. Jd. The Utah Supreme Court affirmed the judgment
against Campbell. Slusher v. Ospital, 777 P.2d 437 (Utah
1989). State Farm ultimately paid the entire judgment.
The Campbells filed a complaint against State Farm
alleging bad faith, fraud, and intentional infliction of
emotional distress. At trial, the Campbells were permitted to
introduce evidence regarding State Farm’s nationwide
claims-processing policies. See 538 U.S. at 415 (quoting the
opinion of the Utah Supreme Court).
The jury awarded the Campbells $2,086.75 in special
damages, $2.6 million in compensatory damages, and $145
million in punitive damages. The trial judge remitted this
amount to $1 million in compensatory damages and $25
million in punitive damages. On appeal, the Utah Supreme
Court reinstated the original jury verdict of $145 million in
punitive damages, relying on the evidence of State Farm’s
nationwide claims-processing policies.
2. This Court’s Decision. On plenary review, this
Court vacated the punitive award and remanded the case to
the Utah Supreme Court. This Court’s holding rested on the
legal conclusion that the Utah court erred in considering
State Farm’s nationwide policies as a basis for punitive
damages. This Court found that the evidence “concerned
State Farm’s business practices for over 20 years in
numerous States. Most of these practices bore no relation to
third-party automobile insurance claims, the type of claim
underlying the Campbells’ complaint against the company.”
538 U.S. at 415. “This case .. . was used as a platform to
expose, and punish, the perceived deficiencies of State
3
Farm’s operations throughout the country. The Utah
Supreme Court’s opinion makes explicit that State Farm was
being condemned for its nationwide policies rather than for
the conduct direct[ed] toward the Campbells.” /d. at 420.
This Court therefore concluded that the Utah
Supreme Court’s reinstatement of the $145 million punitive
award was legal error. However, this Court did not exonerate
State Farm. To the contrary, this Court found that State
Farm’s conduct was “reprehensible,” id. at 419, and it
reiterated many of the factual findings made by the Utah
courts. /d. This Court suggested that, while State Farm’s
misconduct could not justify a $145 million award, it could
nonetheless justify a “more modest” award of punitive
damages: “While we do not suggest there was error in
awarding punitive damages based upon State Farm’s conduct
toward the Campbells, a more modest punishment for this
reprehensible conduct could have satisfied the State’s
legitimate objectives, and the Utah courts should have gone
no further.” Jd. at 419-20.
This Court opined that “[o]ur jurisprudence and the
principles it has now established demonstrate . . . that, in
practice, few awards exceeding a single-digit ratio between
punitive and compensatory damages, to a significant degree,
will satisfy due process.” Jd. at 425. “Nonetheless, because
there are no rigid benchmarks that a punitive damages award
may not surpass, ratios greater than those we have previously
upheld may comport with due process where ‘a particularly
egregious act has resulted in only a small amount of
economic damages.” /d. (citation omitted).
This Court commented that “[a]n application of the
Gore guideposts to the facts of this case, especially in light of
the substantial compensatory damages awarded (a portion of
which contained a punitive element), likely would justify a
punitive damages award at or near the amount of
compensatory damages.” Jd. at 429. However, this Court
did not purport to calculate the maximum award that the
4
a ee
-
Constitution would permit on this record. Rather, the Court
expressly left that task to the Utah Supreme Court on
remand: “The proper calculation of punitive damages under
the principles we have discussed should be resolved, in the
first instance, by the Utah courts.” Jd. “(T]he case is
remanded for proceedings not inconsistent with this
opinion.” Jd.
3. The Utah Supreme Court’s Decision. On
remand, State Farm argued that the appropriate punitive
damages award was $1,002,086.75. The Campbells sought
$17,455,663.00. The Utah Supreme Court rejected the
arguments of both parties, recomputed the punitive award
under the legal standard prescribed by this Court, and entered
a punitive award of $9,018,780.75. The Utah Supreme
Court’s decision was unanimous and included the votes of
two new members not on the original panel.
The Utah Supreme Court began by making clear that
its “duty in the face of a remand order demands unwavering
fidelity to the letter and spirit of the mandate.” A.2a. “We
take seriously the Supreme Court's direction that ‘the proper
calculation of punitive damages under the principles we have
discussed should be resolved, in the first instance, by the
Utah courts.’” Jd. “[W]e must properly identify and apply
the Supreme Court’s principles announced in Campbell II.”
A.4a.
The Utah Supreme Court declined to consider any
out-of-state evidence concerning State Farm’s nationwide
claims-processing policies in assessing punitive damages.
A.5a-6a. Therefore, the Utah Supreme Court carefully
limited its focus to State Farm’s in-state conduct that bore
relation to the harms suffered by the Campbells. A.6a. The
Utah court heeded this Court’s observation that punitive
awards bearing a single-digit ratio with compensatory
damages are more likely to satisfy due process. A.l5a. The
Utah court held that “State Farm’s behavior toward the
Campbells was so egregious as to warrant a punitive
5
damages award of $9,018,780.75, an amount nine times
greater than the amount of compensatory and_ special
damages.” A.19a.
The Utah Supreme Court issued a measured, balanced
opinion that rejected the Campbell’s requested damages and
ruled in State Farm’s favor in an important respect with
respect to the ratio guidepost. On remand, the Campbells
argued that the total “compensable harm” for ratio purposes
should be treated as $1,939,518.10 (meaning that the relevant
ratio in this case would be calculated not as 9:1 but as
approximately 4.6:1). On the basis of 7XO Prod. Corp. v.
Alliance Resources Corp., 509 U.S. 443, 449 (1993), the
Campbells contended that costs and attorney fees, as well as
the excess portion of the verdict not covered by insurance,
should be included as part of the denominator in computing
the ratio between compensatory and punitive damages. But
the Utah Supreme Court rejected the Campbells’ argument
on the ground that it was foreclosed by this Court’s opinion
in Campbell. A.18a. Thus, the Utah Supreme Court strove to
honor this Court’s mandate and refused to accept the
arguments of either party that it believed departed from that
mandate.
REASONS FOR DENYING THE WRIT
In State Farm Mutual Auto. Ins. Co. v. Campbell, 538
U.S. 408 (2003) (“Campbell”), this Court vacated the
previous punitive damage award in this case because “(t]he
Utah Supreme Court’s opinion makes explicit that State
Farm was being condemned for its nationwide policies rather
than for the conduct direct[ed] toward the Campbells.” /d. at
420. This Court did not have the benefit of the Utah courts’
view of the proper punitive award based solely on State
Farm’s conduct in Utah with respect to the Campbells.
Accordingly, this Court corrected the Utah courts’ erroneous
consideration of nationwide claims-processing policies and
instructed the Utah Supreme Court to undertake “[t]he proper
calculation of punitive damages under the principles we have
6
as penne siliias
oy
discussed.” /d. at 429. On remand, the Utah court
recalculated the award “based solely on [State Farm’s]
behavior that affected the Campbells and took place within
Utah.” A.6a. The Utah Supreme Court properly applied the
legal standard this Court outlined, and there is no reason for
this Court to review its judgment.
State Farm disagrees with the Utah Supreme Court’s
factual findings. The Petition repeatedly seeks to re-argue
the evidence in this case. See, e.g., Pet. 10 (arguing about
what inferences “the record” permits); id. at 11 (Utah court’s
finding “inconsistent with” “the record in this case’’); id. at
12 (“the record does not support” Utah court’s finding); id. at
12-13 (recounting trial testimony at length); id. at 14 (“[t]he
record in this case” allegedly shows no need for deterrence);
id. at 14 n.7 (“unrebutted testimony of State Farm’s regional
vice president” allegedly undermines Utah courts’ findings);
id. at 15 (Utah courts’ findings allegedly wrong “[i]n view of
the record’’).
State Farm impermissibly asks this Court to sit as
fact-finder to second-guess the factual determinations of the
lower courts. The Petition dredges up inadmissible and
uncorroborated hearsay. E£.g., id. at 16 n.8. The Petition
relies on evidence that was not before the jury or trial court.
Id. at 15 n.7, 16 n.8. The Petition goes so far as to dispute
this Court's previous finding that State Farm told the
Campbells to put a for-sale sign on their house. Compare
Pet. 13 n.6 with 538 US. at 419. :
State Farm’s description of the record in this case is
not accurate. More to the point, however, State Farm’s
attempt to retry the facts of the case demonstrates the
Petition’s lack of merit. This Court’s scarce resources and
distinctive capacities are not sensibly devoted to a fact-
finding mission of the sort State Farm evidently
contemplates. Rule 10 states that “[a] petition for writ of
certiorari is rarely granted when the asserted error consists of
erroneous factual findings or the misapplication of a properly
7
stated rule of law.” This Petition, which ignores Rule 10, is a
classic attempt to challenge a lower court’s factbound
application of a settled legal rule.
Nor would granting the Petition provide any
appreciable assistance to the lower courts. This Court has
already provided ample guidance regarding the due process
factors that govern punitive damage awards. Just one Term
ago, this Court issued its decision in Campbell explicating
the constitutional factors previously announced in BMW of N.
Am., Inc. v. Gore, 517 U.S. 559 (1996). There is no reason to
review the punitive award in this case yet again. The lower
courts are still absorbing this Court’s decision only one Term
ago vacating the initial punitive award in this very case.
After the BMW decision, this Court waited six years for the
lower courts to sort out the implications of that decision,
before granting certiorari in Campbell. Further percolation in
the lower courts would enable this Court to decide what
additional guidance, if any, is appropriate. It is much too
soon for this Court to revisit ground so recently tilled. The
Petition should be denied.
I. THE UTAH SUPREME COURT PROPERLY
FOLLOWED THIS COURT’S MANDATE ON
REMAND.
On remand, the Utah Supreme Court faithfully
followed this Court’s mandate. The Petition is demonstrably
wrong in asserting that “(t]he Utah Supreme Court flatly
refused to honor the spirit and letter of this Court’s opinion.”
Pet. 25. The Utah court made clear that “our duty in the face
of a remand order demands unwavering fidelity to the letter
and spirit of the mandate.” A.2a. “[W]e must properly
identify and apply the Supreme Court’s principles announced
in Campbell II.’ A.4a. The Utah court explained that this
Court “narrow[ed] the scope of relevant evidence which we
may consider in evaluating the reprehensibility of State
Farm’s conduct, and . . . provid[ed] more detailed guidance
for determining the relationship between compensatory and
8
punitive damages.” A.5Sa. “We have carefully considered the
scope of the Supreme Court’s mandate and have endeavored
scrupulously to confine ourselves to it.” A.18a.
The primary focus of this Court’s opinion in
Campbell was the Utah court’s improper consideration of
extraterritorial evidence. On remand, the Utah Supreme
Court recomputed the award without reference to State
Farm’s nationwide claims-processing policies. Instead, the
court limited its focus to State Farm’s in-state conduct that
bore relation to the harms suffered by the Campbells. A.6a
(‘We are mindful that it was our consideration of irrelevant
extra-territorial evidence concerning reprehensibility which
attracted most of the Supreme Court’s criticism in Campbell
II. We therefore reevaluate State Farm’s conduct based
solely on its behavior that affected the Campbells and took
place within Utah.”). In imposing a punitive award that was
nine times the amount of compensatory damages, the Utah
court heeded this Court’s admonition that punitive awards
bearing a single-digit ratio with compensatory damages are
more likely to satisfy the BMW guideposts as a matter of due
process. 538 U.S. at 425.
State Farm focuses on this Court’s comment in
Campbell that “{a]n application of the Gore guideposts to the
facts of this case, especially in light of the substantial
compensatory damages awarded (a portion of which
contained a punitive efement), likely would justify a punitive
damages award at or near the amount of compensatory
damages.” 538 U.S. at 429. However, the quoted language
is a prediction (“likely would justify”), not a holding or a
directive.
If this Court had intended to hold in Campbell that a
1:1 ratio between punitive and compensatory damages was
the constitutional maximum in this case, it would have
directed entry of judgment for that amount. Instead, this
Court’s mandate was completely different. This Court did
not purport to calculate the maximum award that the
9
Constitution would tolerate on this record. Rather, this Court
expressly left that task to the Utah Supreme Court on
remand: “The proper calculation of punitive damages under
the principles we have discussed should be resolved, in the
first instance, by the Utah courts.” Jd. “(T]he case is
remanded for proceedings not inconsistent with this
opinion.” Jd. Further, this Court twice underscored the
“discretion” that states possess “over the imposition of
punitive damages,” within the constraints of due process.
Campbell, 538 U.S. at 416, 417 (internal quotation marks
omitted).
State Farm improperly seeks to recast the language of
the mandate in Campbell from that of constrained guidance
to that of ministerial directive. State Farm’s interpretation
conflicts with this Court’s customary practice, which is to
announce the governing legal standard and remand to the
appropriate lower court for application of that standard to the
facts of the particular case, and not to employ the lower court
as a mere calculator or scribe. In BMW of North America,
Inc. v. Gore, 517 U.S. 559 (1996), for example, this Court
instructed the Alabama Supreme Court to undertake on
remand an “independent determination” of an appropriate
punitive damages award consistent with the guideposts
erected by this Court. /d. at 586.
It is therefore most implausible to construe this
Court’s prior opinion as holding that a 1:1 ratio was the
constitutional maximum in this case. Such a const-uction
would be especially implausible in light of the prior
proceedings here, for the focus of this Court’s Campbell
opinion was whether the Utah Supreme Court could consider
the nationwide scope of State Farm’s claims-processing
policies, or whether instead the Utah court was required to
limit its attention to State Farm’s conduct within Utah that
“bore .. . relation to the Campbells’ harm.” 538 USS. at 422.
That was the sole legal question on which State Farm sought
this Court’s review. Pet. in No. 01-1289 at i (award “is based
upon the defendant’s alleged business practices nationwide
10
Over a twenty year period”). State Farm affirmatively
represented that this Court would not need to thoroughly
analyze the evidence of this case in order to resolve the
question presented. See, e.g., Reply Brief filed April 10,
2002, at 5 (“Plaintiffs attempt to dissuade this Court from
granting review by claiming incorrectly that State Farm is
asking the Court to conduct a fact-intensive review as to
whether the 27,000 page record supports the $145 million
punitive damages award by the jury in this case.”’).
Accordingly, even if this Court had examined every
page of the voluminous record in this case in deciding State
Farm v. Campbell, it would have done so through an aperture
that posed one particular question: whether State Farm’s
nationwide conduct could properly be considered in
justifying a $145 million award. This Court never asked the
question necessarily posed by State Farm’s latest petition:
what would be the highest allowable award upon considering
only State Farm’s conduct that (a) occurred in Utah and (b)
relates to the harm suffered by the Campbells? This Court
left that question for the Utah court to resolve in the first
instance.
II. © THE UTAH SUPREME COURT’S
ANALYSIS OF REPREHENSIBILITY IS
CONSISTENT WITH THIS COURT’S
OPINION.
A. The Utah Supreme Court Properly
Followed This Court’s Mandate.
The Utah Supreme Court explained that, in assessing
reprehensibility, it would “reevaluate State Farm’s conduct
based solely on its behavior that affected the Campbells and
took place within Utah.” A.6a. The Utah court concluded
that, under this standard, State Farm’s misconduct was highly
reprehensible. A.8a-14a.
That conclusion, and the subsidiary factual findings
that composed it, are completely consistent with this Court’s
11
mandate. In fact, this Court specifically found that State
Farm’s conduct was “reprehensible” (538 U.S. at 419) and
re-affirmed many of the findings of the Utah courts. This
Court noted, for instance, that “[t]he trial court found that
State Farm’s employees altered the company’s records to
make Campbell appear less culpable. State Farm disregarded
the overwhelming likelihood of liability and the near-certain
probability that, by taking the case to trial, a judgment in
excess of the policy limits would be awarded. State Farm
amplified the harm by at first assuring the Campbells their
assets would be safe from any verdict and by later telling
them, postjudgment, to put a for-sale sign on their house.”
538 U.S. at 419. This Court opined that, while such
misconduct could not justify a $145 million award, it was
nothing short of “reprehensible” and could certainly justify
punitive damages: “While we do not Suggest there was error
in awarding punitive damages based upon State Farm’s
conduct toward the Campbells, a more modest punishment
for this reprehensible conduct could have satisfied the State’s
legitimate objectives, and the Utah courts should have gone
no further.” Jd. (emphasis added). Thus, this Court invited
the Utah courts to calculate a “more modest” punishment
than the original $145 million judgment. On remand, the
Utah Supreme Court did exactly that. 3
B. There Is No Merit To State Farm’s
Criticisms of the Utah Supreme Court’s
Application of the Governing Legal
Standard To This Record.
The Petition argues that the Utah Supreme Court
misapplied the reprehensibility guideposts in a number of
respects. None of State Farm’s arguments has merit. In any
event, State Farm’s objections are obviously so fact-specific
that they present no question warranting certiorari.
1. Whether the harm was economic or physical.
State Farm accuses the Utah Supreme Court of
“directly contradict[ing] this Court’s analysis” as to whether
12
the Campbell’s harm was economic or physical. Pet. 9. To
the contrary: the Utah Supreme Court expressly stated that
“[w]e are mindful of the Supreme Court’s observation that
‘the harm [in this case] arose from a transaction in the
economic realm, not from some physical assault or trauma.’”
A.9a (quoting 538 U.S. at 426) (emphasis added). Tellingly,
this Court did not opine that the Campbells’ injury as
disclosed by this record was purely “economic.” It bears
repeating that this Court stated only that the injury “arose
from a transaction in the economic realm,” 538 U.S. at 426,
as indeed it did. The Utah Supreme Court’s recognition that
the harm suffered by the Campbells here extended beyond
that ordinarily associated with a purely financial misdeed and
encompassed the personal anxiety and the emotion-charged
risk they faced as a result of State Farm’s conduct is
therefore entirely consistent with this Court’s opinion.
The state court properly found that “the gravity of
harm which an insurer may potentially inflict on an insured is
unique to the nature of the product and service that insurance
provides.” A.9a. “Peace of mind clearly plays a central role
in accounting for the appeal of liability insurance.” A.10a.
“When an insurer decides to delay or to deny paying benefits,
the policyholder can suffer injury not only to his economic
well-being but to his emotional and physical health as well.”
A.10a (internal quotation marks omitted). Surely State Farm
is not asking this Court to grant certiorari in order to upset
that factual conclusion.
Emblematic of the Petition’s misstatements of the
record is State Farm’s assertion that, “as the trial court found,
the record was devoid of ‘objective evidence of emotional or
mental distress.’” Pet. 10 (citation omitted). To the contrary,
the trial court denied State Farm’s motion for judgment on
the Campbells’ claim for intentional infliction of emotional
distress, finding that there was substantial evidence to
support the claim. JA3359a-62a. The trial court opined that
“there was ample competent evidence that the Campbells did
suffer substantial emotional damages as a proximate result of
13
State Farm’s wrongful conduct.” JA3364a. “Many
witnesses, including high-ranking State Farm officials,
acknowledged at trial that an excess verdict alone (even if
never executed on, in the end) would likely cause mental
distress and would traumatically affect the insured.” JA
3367a. Witnesses described the 65-year-old Campbell as
“devastated,” “distraught,” “tied up in knots” — so “fragile”
and “greatly distressed” that they feared that he might suffer
another stroke or a heart attack. JA 813a-14a, 821la, 825a-
29a, 1586a-87a, 1660a. The Utah Supreme Court properly
concluded that the noneconomic dimensions of the injury
suffered by the Campbells were “profound.” A.12a.
2. Whether the Utah court properly took the
insurance context into account in assessing the
reprehensibility of State Farm’s misconduct.
State Farm relatedly accuses the Utah Supreme Court
of unjustifiably “inflat[ing] its estimate of reprehensibility.”
Pet. 11. The court did no such thing. The court simply
recognized the realities of the insurance context. “When an
insurer callously betrays the insured’s expectation of peace of
mind, as State Farm did to the Campbells, its conduct is
substantially more reprehensible than, for example, the
undisclosed repainting of an automobile which spawned the
punitive damages award in Gore.” A.lla. Plainly, some
injuries “arising in” the economic realm are more
reprehensible than others. State Farm provides no authority
to support its strange claim that all such injuries must be
considered without regard to the particular circumstances of
the individual case. State Farm does not identify any circuit
split on the issue. Nor does it offer any other reason for this
Court to review the matter.- Even if State Farm’s “irrelevance
of context” argument had merit, the matter would plainly
benefit from further percolation in the lower courts. There is
no occasion now for this Court’s review.
14
—
3. Indifference or reckless disregard for the health
and safety of others.
The Utah Supreme Court found that “{t]here is little
doubt that State Farm could reasonably have known that its
conduct would cause stress and trauma to a policyholder.
State Farm was clearly indifferent to this result, evincing a
reckless disregard for the Campbells’ peace of mind.” A.12a.
State Farm contends that this factor must be limited to
instances of physical injury or danger, Pet. 11, but it offers
no analysis of why a defendant’s culpable indifference to
devastating emotional injuries must be treated as irrelevant to
the reprehensibility guidepost. Nor does State Farm establish
any relevant conflict among lower court decisions requiring
this Court’s intervention. In fact, in BMW this Court opined
that “infliction of economic injury, especially when done
intentionally through affirmative acts of misconduct, .. . can
warrant a substantial penalty.” 517 U.S. at 576.
4. Whether the target of the conduct was
financially vulnerable.
The Utah Supreme Court found that “not only were
the Campbells financially vulnerable, but their vulnerability
enabled, if not motivated, State Farm’s conduct.” A.12a.
The trial court specifically found that “State Farm was
aware of the Campbells’ vulnerability and fragility, and of
the complete trust the Campbells had placed in State Farm
and its agents. State Farm intentionally and fraudulently
betrayed this trust and took advantage of the Campbells’
vulnerability.” JA 3361a (emphasis added).
On this crucial point, State Farm resorts to re-arguing
the record evidence supporting the Utah courts’ factual
findings. Pet. 12-13. Plainly; however, this Court does not
sit as a factfinder to second-guess factual determinations
made by the lower courts. In any event, there was ample
record evidence of the Campbells’ vulnerability and of how
State Farm exploited that vulnerability. “At the time of State
15
SSRN SS AEA Gee er a ee a, A eo ed a
Farm’s wrongful conduct, the Campbells were elderly and
Mr. Campbell has residuary effects from a stroke and
Parkinson’s disease.” JA 3360a. “The Campbells were
economically vulnerable, having suffered previous financial
setbacks and having meager financial resources.” Jd. “Mr.
Campbell had previously experienced severe emotional
trauma, including the murder of his first wife, the desertion
of his second wife after his stroké, and the death of his third
wife from cancer less than two years after their marriage.
Mrs. Campbell had gone through a bitter divorce. The
Campbells’ home had previously gone into foreclosure and
one of their cars had been repossessed due to the wrongful
actions of Mrs. Campbell’s ex-husband.” JA 336la. “The
Campbells were quiet, unassuming, and trusting individuals.”
JA. 3366a.
State Farm argues that this Court has somehow
already rejected the Utah courts’ findings regarding the
Campbells’ vulnerability simply because “[t]his Court in its
opinion did not address this factor’ as part of its
“reprehensibility analysis.” Pet. 12. But even if such silence
could constitute an implicit finding, the fact is that this Court
did address the Campbells’ vulnerability when it reiterated
the Utah courts’ finding that “State Farm amplified the harm
by at first assuring the Campbells their assets would be safe
from any verdict and by later telling them, postjudgment, to
put a for-sale sign on their house.” 538 U.S. at 419. The
Utah Supreme Court pointed to this very episode as support
for its finding that State Farm exploited the Campbells’
vulnerability: “It is difficult to imagine State Farm making
this statement to a sophisticated insured whom State Farm
believed to have the wherewithal to protect himself from its
predations.” A.12a.
That this Court in its prior opinion did not engage in a
more elaborate analysis of the Campbells’ vulnerability only
goes to show that this Court focused on correcting the Utah
courts’ erroneous consideration of State Farm’s nationwide
claims-processing policies, not on the proper punitive award
16
based solely on State Farm’s conduct in Utah. Now that the
Utah Supreme Court on remand has manifestly applied the
proper legal standard, there is no reason to review its
factbound judgment.
5. Need to deter repetition.
The Utah court found that “State Farm’s obdurate
insistence that its treatment of the Campbells was proper
clearly calls out for vigorous deterrence.” A.13a. State Farm
accuses the Utah Supreme Court of “subverting” this Court’s
opinion, Pet. 14. But the Utah Supreme Court did no such
thing. It explained that “the Supreme Court expressly found
that we erred in determining that State Farm was a recidivist”
and that “we are bound by the Supreme Court’s finding that
State Farm was not a recidivist.” A.13a. The Utah court
focused not on recidivism but on State Farm’s propensity to
commit further misconduct in the future — a matter that is
separate from (and not foreclosed by) this Court’s finding
that State Farm was, at the time of trial, not a recidivist. The
Utah Supreme Court explained that “[w]e will not and,
consistent with our duty on remand, cannot invoke deterrence
as a justification for punitive damages based on conduct
dissimilar to that which State Farm inflicted on the
Campbells. We can, however, find ample grounds to defend
an award of punitive damages in the upper range permitted
by due process based on our concern that State Farm's
defiance strongly suggests that it will not hesitate to treat its
Utah insureds with the callousness that marked its treatment
of the Campbells.” A.13a (emphasis added). The Utah
court’s approach is entirely consistent with this Court’s
opinion and also amply supported by the record. See Part II-
B-6, infra.
State Farm argues that there were no “similar
subsequent bad acts” in Utah after its mistreatment of the
Campbells. Pet. 14. But State Farm misstates the evidence,
and in any event its argument does not undermine the Utah
Supreme Court’s finding of propensity for future misconduct.
17
At trial, State Farm was forced to acknowledge there were at
least seven excess verdict third-party cases in Utah between
1978 and 1995, JA 288a-89a, and was unable to refute the
proof that this figure is likely to be a dramatic
understatement. Because State Farm deliberately stopped
tracking adverse verdicts in the mid-1970s as a defensive
measure, 65 P.3d at 1147 (4 26), 1148 (4 30); JA 1346a-50a;
JA 1412a-18a, its estimate at trial was indisputably little
more than a conservative guess. To arrive at the figure of
seven excess verdict cases, a State Farm official did nothing
more than make phone calls to various company employees
and defense counsel in Utah, asking if they happened to
remember any excess verdicts involving State Farm insureds.
JA 287a-89a. And this figure was reached only after a court-
ordered recount. In the initial count, State Farm’s sworn
discovery response was that its Utah management knew of no
other excess verdicts. R. 10270:134-35; R. 10285:205-07.
Not surprisingly, State Farm’s own statistical expert said, “I
would have a tendency to be afraid of that data.” R.
10283:204. In observing that “(t]he Campbells have
identified scant evidence of repeated misconduct of the sort
that injured them,” 538 U.S. at 423, this Court did not “find,”
contrary to the record at least as understood below, that the
Campbells’ was the only State Farm excess verdict third-
party case in Utah.
State Farm also relies on supposed “state of mind”
letters that it sought to submit after the trial in this case. Pet.
15 n.7. The trial court ruled that these letters were “not in the
trial record” and were “stricken from the record,” and State
Farm did not appeal. R. 10292, 10090-91, 10213-15. On
rehearing in the Utah Supreme Court, State Farm appended
alleged “state of mind” letters to its petition, without any
affidavit attesting that they had actually been sent or any
identification of recipients. The Utah Supreme Court denied
rehearing without making the letters part of the record or
even mentioning them: In 1996 and 1997, State Farm flatly
denied the existence of any “peace of mind” policy in two
18
CN Pd OL NO Ct Me i
cases. R. 9179-80, 9190-9203 (attorney affidavit). In 1998,
State Farm failed to send any “peace of mind” letter in yet
another case. Campbells’ Obj. to Rehearing Pet. in Utah S.
Ct. at 5 & Exh. 2. By 1999, according to two Utah attorneys
formerly employed at the company, State Farm had
“revok[ed]” any “policy of sending ‘peace of mind’ letters.”
Id. at 5 & Exh. 1, J 25(e).
6. State Farm’s lack of remorse.
A related point arises in connection with the Utah
Supreme Court finding that State Farm “has not voiced so
much as a whisper of apology or remorse” and has not
“forsworn the conduct that caused the Campbells’ injury.”
A.12. State Farm complains that, by referring to its lack of
remorse, the Utah court punished it impermissibly for its
“appellate briefing.” Pet. 23. This complaint is baseless.
The Utah Supreme Court did not ground the punitive
award on State Farm’s decision to appeal the verdict. Rather,
it grounded that award on State Farm’s conduct toward the
Campbells and on the fact that State Farm exhibited no
contrition or other sign that it would modify its conduct in
the future. The Utah court pointed to trial testimony, not
simply to appellate briefing, to make that point. A.12a-13a.
The finding of lack of remorse was supported not merely by
testimony that State Farm was “proud” of the way it treated
the Campbells (contra Pet. 24 n.12), but also by the
testimony of a State Farm claims adjuster that he had not
seen anything in State Farm’s conduct relating to the
Campbells that violated State Farm guidelines or-policies, JA
2712a; by testimony that State Farm subsequently failed to
instruct its employees not to engage in the offending conduct,
JA 2454a; and by testimony that State Farm failed to
discipline any employee. JA 2455a. In BMW, this Court
indicated that whether a defendant has taken corrective action
can be “significant” in assessing a punitive award. 517 U.S.
at 579 & n.31. Here, by contrast, State Farm showed no
contrition or willingness to reform.
19
Clearly, State Farm could have exhibited contrition
completely outside the courtroom while continuing to press
its constitutional objections in court and on appeal with.
undiluted vigor. In any event, courts routinely draw adverse
inferences from parties’ judicial submissions (or from gaps in
those submissions), with no suggestion that they are
“penalizing” the party for its use of the judicial process. E.g.,
Fed. R. Evid. 801(d)(2)(D) (attorney’s oral or written
statements may be admissible against client).
State Farm’s “remorse” argument, if taken seriously,
would invalidate the “acceptance of responsibility” provision
of the Sentencing Guidelines, under which a defendant who
fails to show remorse will receive a longer sentence than one
who does. U.S.S.G. § 3E1.1. Courts have uniformly rejected
due process challenges to this provision, and to the
consideration of remorse in sentencing generally, on the
obvious ground that “acceptance of responsibility for illegal
conduct is a routine and unexceptionable feature even of
criminal, let alone of civil, punishment. The criminal who in
the teeth of the evidence insists that he is innocent, that
indeed not the victims of his crime but he himself is the
injured party, demonstrates by his obduracy the likelihood
. that he will repeat his crime, and this justifies the imposition
of a harsher penalty on him.” SEC v. Lipson, 278 F.3d 656,
664 (7th Cir. 2002) (Posner, J.). Precisely that analysis
disposes fully of State Farm’s argument.
State Farm claims a conflict in this connection with
two decisions by intermediate appellate courts in California
(notably, not by the California Supreme Court). Pet. 22. But
there is no conflict. Unlike the parties in those cases, State
Farm was not punished for its “trial tactics and litigation
conduct” (id.); it was punished in view of the likelihood that
it would repeat its misconduct in the future. The remaining
cases cited in the Petition (at 22) prove the opposite of what
State Farm asserts; they show that, even if punitive damages
are imposed based in part on a defendant’s litigating strategy
(which was not the case here), such damages have nothing to
20
do with penalizing the right to a defense. Rather, they
compensate for the under-deterrence caused by such a
defendant’s efforts “to make litigating against it very costly,
which in turn may make it difficult for the plaintiffs to find a
lawyer willing to handle their case.” Mathias v. Accor Econ.
Lodging, Inc., 347 F.3d 672, 677 (7"™ Cir. 2003) (Posner, J.).
See also Hollock v. Erie Ins. Exch., 842 A.2d 409, 421 (Pa.
Super. Ct. 2004) (“an extremely aggressive defense . . . in
turn can prove very costly to a plaintiff and potentially deter
it from pursuing the matter”). There is no lower court
conflict and no reason for this Court’s review.
7. Intentional trickery or malice.
The Utah Supreme Court properly found that “the
substantial emotional damages sustained by the Campbells”
were “no mere accident” but instead were the result of State
Farm’s intentional malice, trickery, and deceit. A.14a. In its
special verdict, the jury found for the Campbells on their
fraud claim, and the Utah Supreme Court held that the fraud
claim provided ‘an independent basis” for the verdict. 65
P.3d at 1166 (§ 113). The finding of fraud, and the finding
that the verdict could independently rest on fraud, are both
amply supported by the record. This Court expressly noted
with apparent approval the trial court’s finding that “State
Farm’s employees altered the company’s records to make
Campbell appear less culpable.” 538 U.S. at 419. “For
example, State Farm manager Bob Noxon instructed
Summers to manufacture the false story that Todd Ospital,
who was killed in the automobile accident for which Mr.
Campbell was found to be at fault, was speeding because he
was on his way to see a pregnant girlfriend. “In truth, there
was no pregnant girlfriend, nor was Mr. Ospital even
speeding; this story was invented only to cause prejudice in
the record. This deceitful conduct can only be explained as
part of a scheme to reduce State Farm’s economic exposure.”
A.14a. (State Farm’s attempt to excuse its misconduct relies
on uncorroborated hearsay deposition testimony from a State
Farm employee known to have repeatedly placed false
21
'
i AME AREA SRL AI ae ti ADEN te 2 POE. me Ca.
information in files. R. 10268, 10275, 10281, 10284. The
deposition was not presented to the jury or trial court. Pet.
16 n.8). The record also makes clear that, while this case
was pending, State Farm held a meeting in Utah at which in-
house counsel instructed Utah claims managers “to search
their offices and destroy a wide range of material of the sort
that had proved damaging in bad-faith litigation.” Trial ct.
opinion 8/3/98 4 55. The record overwhelming supports the
Utah Supreme Court’s finding of intentional trickery and
malice.
8. State “values and traditions.”
State Farm argues that the Utah Supreme Court’s
reference to “Utah’s values and traditions” (A.7) represents a
violation of federal due process. Pet. 16-20. That argument
is wide of the mark. The remark simply underscored the
seriousness with which the court viewed State Farm’s
misconduct. This Court’s own opinion in Campbell reveals
that punitive damages jurisprudence has not erased Our
Federalism in the manner that State Farm suggests. “A basic
principle of federalism is that . . . each State alone can
determine what measure of punishment, if any, to impose on
a defendant who acts within its jurisdiction.” 538 U.S. at
422. “The States need not, and in fact do not, provide such
protection in a uniform manner.” Jd. (internal quotation
marks omitted). This Court thus reaffirmed the states’
autonomy to make policy choices about the relative
reprehensibility of conduct within their own respective
borders.
State Farm acknowledges that a state’s legislative
enactments may serve as an appropriate source of state
“values and traditions,” but it maintains that state courts
cannot be permitted to invoke “values and traditions” on their
own. Pet. 18-19. State Farm has evidently confused the
reprehensibility guidepost with the legislative penalties
guidepost of BMW. The latter is by definition tethered to
state legislative enactments. But this Court has never
22
a tnetl
SOE A cee Nt ARM eta a
SS a ee PE Ee a > mek ee
suggested that, in assessing reprehensibility, state courts are
limited to considering state statutes. E.g., BMW, 517 U.S. at
585 (“we of course accept the Alabama courts’ view”
regarding “the state interest in protecting its citizens from
deceptive trade practices”) (emphasis added). Indeed, the
day has long passed when the Constitution was thought to
distinguish the law made by state judges from that made by
state legislators. See, e.g., Cohen v. Cowles Media Co., 501
U.S. 663, 668 (1991); Shelley v. Kraemer, 334 U.S. 1, 19
(1948). It is a corollary that federal law has precious little to
say on the degree to which a state makes its law through its
courts or through its legislature. See Highland Farms Dairy,
Inc. v. Agnew, 300 U.S. 608, 612-13 (1937); see also
Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456, 480-
81 (1981) (Stevens, J., dissenting).
State Farm’s argument that including judge-made
factors in the reprehensibility analysis “produces an ad hoc,
subjective inquiry” (Pet. 19) is flatly foreclosed by this
Court’s precedents. See TXO, 509 U.S. at 465-66 (plurality
opinion) (common law rule satisfied notice component of due
process); Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 22
(1991) Gudge-made factors “impose[] a sufficiently definite
and meaningful constraint on the discretion of Alabama
factfinders in awarding punitive damages”). In any event,
State Farm fails to establish any circuit conflict on the issue
or any need for this Court’s review.
Ill. THE UTAH SUPREME COURT’S ANALYSIS
OF THE RATIO GUIDEPOST IS ENTIRELY
CONSISTENT WITH ~~ THIS COURT’S
DECISION.
In Campbell, this Court held that the Utah Supreme
Court’s prior analysis of the ratio guidepost was flawed
because it was premised on out-of-state conduct, as well as
on State Farm’s wealth and other improper factors. 538 U.S.
at 426-27. On remand, the Utah Supreme Court corrected
these errors by focusing solely on State Farm’s conduct with
23
respect to the Campbells. A.15a. State Farm nonetheless
accuses the Utah Supreme Court of “refus[ing] to follow the
mandate of this Court” with respect to the ratio guidepost.
Pet. 28. State Farm’s accusation of bad faith is as groundless
as it is insulting.
A. The Utah Court Properly Followed This
Court’s Mandate.
In Campbell, this Court opined that it has “been
reluctant to identify concrete constitutional limits on the ratio
between harm, or potential harm, to the plaintiff and the
punitive damages award.” 538 U.S. at 425. “We decline
again to impose a bright-line ratio which a punitive damages
award cannot exceed.” Jd. (emphasis added). However, the
Court’s “jurisprudence and the principles it has now
established demonstrate . . . that, in practice, few awards
exceeding a single-digit ratio between punitive and
compensatory damages, to a significant degree, will satisfy
due process.” Jd. Nonetheless, this Court emphasized that
“(t]he precise award in any case, of course, must be based
upon the facts and circumstances of the defendant's conduct
and the harm to the plaintiff.” Jd. (emphasis added).
The Utah Supreme Court faithfully followed this
Court’s opinion. The Utah court took as a given this Court’s
admonition that, “‘when compensatory damages are
substantia!, then a lesser ratio [of compensatory to punitive
damages], perhaps only equal to compensatory damages, can
reach the outermost limit of the due process guarantee.’”
A.14a (quoting 538 U.S. at 425). The Utah court treated
itself as bound by this Court’s conclusion that the Campbells”
compensatory award was “substantial,” and did not purport
to question this Court’s observation that the compensatory
damages likely had been based on a component which was
duplicated in the punitive award. A.14a.
But that binding general frame of reference did not
preclude the Utah Supreme Court’s factual determination,
24
A A pe At at iad dl
based on “the circumstances of the compensatory damages
award in this case,” that the trial judge’s remittitur of
compensatory damages ensured that they did not in fact
contain a punitive element. A.15a (emphasis added). The
jury had originally awarded the Campbells $2.6 million in
compensatory damages. State Farm argues that this award
contained a punitive element. Pet. 26 n.13. But the trial
court granted State Farm’s motion for remittitur and reduced
the award to $1 million: $600,000 for Mr. Campbell and
$400,000 for Mrs. Campbell. A.15a. The trial court engaged
in an exhaustive review of the evidence in the case and the
emotional harm suffered by the Campbells. JA 3364a-68a.
The Utah Supreme Court observed that “[t]he trial court’s
ruling was supported by extensive and detailed findings
explaining the basis for the reduced compensatory damages
award. Based on this thorough record, we conclude that the
trial court’s compensatory damages award was purged of
elements which may have been more properly placed in the
category of punitive damages.” A.15a.
The Utah Supreme Court’s analysis accurately
applied the legal framework set forth by this Court to the
particular circumstances of this case and this trial record. It
is, of course, a question purely of Utah law ‘just what
constituted the legally compensable injury to the Campbells
in this case, State Farm never having sought review in this
Court on any of the components of that definition of
compensable injury. Therefore, the question of what
“Gnjuries” the award received by the Campbells
“compensat::d” was a matter within the sole purview of the
Utah courts.
B. The Utah Supreme Court Properly
Concluded That A High Single Digit Ratio
Was Appropriate.
The Utah Supreme Court reasonably determined that
a high single-digit ratio was warranted in this case because
the Campbells suffered significant noneconomic injury in the
25
form of emotional distress and because State Farm’s conduct
toward the Campbells was highly reprehensible. A.16a. The
Campbells were forced to live in fear of financial ruin for 18
months, which is exactly the kind of hard-to-measure, non-
economic harm that this Court has noted would justify a
higher ratio than usual. See Campbell, 538 U.S. at 425;
BMW, 517 U.S. at 582. The Utah court’s conclusion is
completely consistent with this Court’s mandate, and State
Farm’s factbound challenges to that conclusion simply
recapitulate arguments already addressed in the context of the
reprehensibility guidepost. See Part II, supra.
IV. THE UTAH SUPREME COURT’S ANALYSIS
OF THE LEGISLATIVE PENALTIES
GUIDEPOST COMPORTS WITH ~ THIS
COURT?’S OPINION.
In Campbell, this Court held that the Utah Supreme
Court’s prior analysis of the legislative penalties guidepost
was improper because it rested on out-of-state conduct. See
538 U.S. at 428 (“here again [the Utah court’s] references
were to the broad fraudulent scheme drawn from evidence of
out-of-state and dissimilar conduct.”). On remand, the Utah
Supreme Court corrected this error by focusing solely on
State Farm’s conduct with respect to the Campbells, without
considering any out-of-state or dissimilar acts. A.16a-17a.
In Campbell, this Court pointed to a potential $10,000
fine for fraud as “the most relevant civil sanction” to which
State Farm was exposed for its conduct toward the
Campbells. 538 U.S. at 428; see also Utah Code Ann. §
31A-26-303 (2003). This Court did not decide the question
of State Farm’s exposure under the Utah statute — an issue
that is purely a matter of Utah law. See BMW, 517 USS. at
577 (“only state courts may authoritatively construe state
statutes”).
The Utah Supreme Court properly followed this
Court’s mandate by analyzing the statutory penalty for fraud
in relation to this case. The Utah court opined that, “while a
26
eee ee ee
$10,000 fine for fraud may appear modest in relationship to a
multi-million dollar punitive damages award, it is identical to
the maximum fine which may be imposed on a person in
Utah for the commission of a first degree felony, the
Classification assigned our most serious crimes.” A.17a
(citing Utah Code Ann. § 76-3-301 (2003)). The statutory
penalty for fraud faced by State Farm reflects the
legislature’s determination that the company’s misconduct
was very serious indeed.
The Utah Supreme Court further noted that, although
this Court rejected a $145 million punitive award as
excessive, this Court indicated at the same time that what this
Court called a “more modest” award, such as $1 million,
would be reasonable — notwithstanding the fact that, as the
Utah court observed, such an award would be “one hundred
times greater than the $10,000 fine.” A.17a. “Thus,
somewhere between $1 million and $145 million,” the Utah
Supreme Court properly inferred from this Court’s opinion,
“the difference between the $10,000 civil penalty and the
punitive damages award becomes so great that the latter
‘dwarfs’ the former.” Jd. As to State Farm’s assertion “that
[this] Court impliedly found that the civil penalty would be
dwarfed by a $17 million punitive damages award,” the Utah
court rightly refrained from offering any opinion, finding it
sufficient to express its “conviction that a punitive damages
award of $9,018,780.75 is in line with the third Gore
guidepost.” /d. Because the Utah court reached this
conclusion, it did not inquire into other potential penalties
faced by State Farm, A.18a, although the court made plain its
view — as a matter of state law obviously not reviewable by
this Court — that “State Farm’s behavior,” especially given
the company’s insistence that such behavior was nothing it
need feel remorse over and the consequent risk that it might
“become a pattern in Utah, may indeed be justification for
termination of its license, a penalty that surely would cost it
more than $10,000.” A.17a n.8 (emp.iasis added).
27
These findings are fully consistent with this Court’s
mandate. There is simply no basis for State Farm’s assertion
that the Utah court “improperly discounted the importance of
the comparable penalties” and “disparage[d]” that guidepost.
Pet. 29. To the contrary, the Utah court explained that “[t]he
nature of a civil or criminal penalty provides some useful
guidance to courts when fixing punitive damages because it
reflects ‘legislative judgments concerning appropriate
sanctions for the conduct at issue.” A.17a (quoting
Browning-Ferris Indus. v. Kelco Disposal, Inc., 492 U.S.
257, 301 (1989) (O’Connor, J., concurring in part and
dissenting in part)). The Utah court’s observation that “the
quest to reliably position any misconduct within the ranks of
criminal or civil wrongdoing based on penalties affixed by a
legislature can be quixotic,’ A.17a, far from signaling
resistance to this Court’s legislative penalties guidepost,
merely echoed this Court’s parallel observation that “(t]he
existence of a criminal penalty does have bearing on the
seriousness with which a State views the wrongful action.
When used to determine the dollar amount of the award,
however, the criminal penalty has less utility.” Campbell,
538 U.S. at 428 (emphasis added). The Utah court simply
recognized, as did this Court in Campbell, that the
excessiveness inquiry cannot be reduced to a rote arithmetic
calculation.
V. THERE IS NO BASIS FOR SUMMARILY
REVERSING THE UTAH SUPREME COURT’S
JUDGMENT.
The Petition seeks summary reversal of the Utah
Supreme Court’s judgment. There is no basis for such a
request. Principles of federa!’» counsel that the judgment
of a state’s highest court shewid not be summarily reversed
absent exceptional circumstances. Robert L. Stern & Eugene
Gressman, et al., SUPREME COURT PRACTICE 323 (8" ed.
2002). That test cannot be met here. The Utah Supreme
Court faithfully followed this Court’s mandate. State Farm’s
contrary claim rests on improper second-guessing of the state
28
A LA ANNI Oa Mlle Se Perret
court’s factual determinations, on the basis of extra-record
“non-evidence.” E.g., Pet. 15 n.7, 16 n.8. State Farm also
tries to convert this Court’s Campbell decision into a fixed
1:1 ratio rule, which is precisely the opposite of what this
Court made plain it was holdimg — rejecting, as it has
repeatedly rejected, any rigid rstaematical rule in assessing -
punitive awards. See Campbell, 538 U.S. at 425; BMW, 517
USS. at 582.
This Court’s practice supports summary reversal only
where a lower court has committed a clear error of law that
conflicts with a decision of this Court or other well-
established principle. E.g., City of Los Angeles v. David, 538
U.S. 715, 716 (2003) (per curiam) (“the Ninth Circuit’s
holding runs contrary to well-settled principles of
constitutional law”); JNS v. Ventura, 537 U.S. 12, 16 (2002)
(per curiam) (“well-established principles of administrative
law”); United States v. Bass, 536 U.S. 862, 863 (2002) (per
curiam) (lower court decision “is contrary to [United States vy.
Armstrong, 517 U.S. 456 (1996),] and threatens the
‘performance: of a core executive constitutional function””)
(citation omitted); Sao Paulo State of the Federative
Republic of Brazil v. Am. Tobacco Co., 535 U.S. 229, 232
(2002) (per curiam) (lower court -used improper legal
standard to decide recusal issue).
In this case, however, State Farm’s argument comes
down to the proposition that the Utah Supreme Court erred in
finding the pertinent facts revealed by the record in the
course of applying the BMW guideposts. Even if the Utah
court made a factual mistake — which it did not — no such
factual error could justify summary reversal. See, e.g., Major
League Baseball Players Ass'n v. Garvey, 532 U.S. 504, 513
(2001) (Stevens, J., dissenting) (“‘factbound determination[s]”
inappropriate for summary reversal). Nor has State Farm
even -attempted to argue that the Utah Supreme Court is an
outlier among the lower courts in the way in which it has
interpreted this Court’s mandate.
29
In any event, the extensive, 27,000-page record below
would make it impossible for this Court to déspose of this |
case summarily. In the previous Campbell proceeding before
this Court, the focus was on whether the Utah Supreme Court
erred in considering State Farm’s nationwide claims-
processing policies. The briefing and joint appendix were
prepared with that focus in mind. Thus, if this Court were to
review the Utah Supreme Court’s application of the BMW
guideposts to this factual record with respect to in-state Utah
conduct, the Campbells would clearly be entitled to argue all
the law and facts that support a $9 million punitive award on
this record — including evidence that was not (because it did
not have to be) identified in Campbell or included in the joint
appendix. See, e.g., Campbells’ Opening Br. on Remand in
Utah S. Ct. at 12-15 & n.12 (June 9, 2003); Reply Br. 24 &
n.13, 27-28 (July 16, 2003). In short, plenary briefing and
argument would be unavoidable.
Notably, the Petition does not contend that summary
reversal in this case would provide any appreciable guidance
to the lower courts on punitive damages issues. Nor would
such a contention be plausible. For this Court has recognized
that “[t]he precise award in any case, of course, must be
based upon the facts and circumstances of the defendant’s
conduct and the harm to the plaintiff” Campbell, 538 U.S. at
425. “[{T]here are no rigid benchmarks that a punitive
damages award may not surpass.” Jd. Accordingly, even if
this Court were to engage in an exhaustive review of the
evidentiary record to decide the reasonableness of the
punitive award, the exercise would be of little or no value to
lower courts considering different punitive awards based on
different factual records. The fact-intensive review urged by
the Petition would therefore be a singularly inappropriate use
of this Court’s necessarily finite resources. -
CONCLUSION
The petition for writ of certiorari should be denied.
Respectfully submitted.
30
L. RICH HUMPHERYS
ROGER P. CHRISTENSEN
KARRA J. PORTER
CHRISTENSEN & JENSEN
50 South Main St.
Salt Lake City, UT 84144
(801) 323-5000
LAURENCE H. TRIBE
Counsel of Record
KENNETH J. CHESEBRO
1575 Massachusetts Ave.
Cambridge, MA 02138
(617) 495-4621
JONATHAN S. MASSEY
JONATHAN S. MASSEY, P.C.
3920 Northampton St., N.W.
Washington, D.C. 20015
(202) 686-0457
Counse’ for Respondents
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