Opposition Brief — Lowe Excavating Co. v. International Union of Operating Engineers Local 150 (No. 07-560)

CD FILED

No. 07-560 NOV 28 2007

eae Soe SSS

SURRE Cou ER

an The - o ’ U.S.

Supreme Court of the Anited States

¢

LOWE EXCAVATING CO.,

Petitioner,

v.

INTERNATIONAL UNION OF OPERATING

ENGINEERS, LOCAL 150, AFL-CIO,

Respondent.

¢

On Petition For Writ Of Certiorari

To The Supreme Court Of Illinois

+

RESPONDENT'S BRIEF IN OPPOSITION

TO PETITION FOR WRIT OF CERTIORARI

*

DALE D. PIERSON*

ELIZABETH A. LAROSE

IUOE, LOCAL 150, AFL-CIO

Legal Department

6140 Joliet Road

Countryside, IL 60525

Ph. 708/579-6663

Fx. 708/588-1647

R. MARK GUMMERSON

GUMMERSON & RAUSCH

101 South Benton Street, Suite 201

Woodstock, IL 60098

Ph. 815/337-7700

Fx. 815/337-7990

*Counsel of Record

COCKLE LAW BRIEF PRINTING CO. (800) 225-6964

OR CALL COLLECT (402) 342-2831

QUESTIONS PRESENTED

Whether Petitioner has presented this Court

with any compelling reason for review?

Whether Petitioner demonstrated that the Illi-

nois Supreme Court erred in finding the punitive

damages awarded by the Appellate Court to be

unconstitutional]?

Whether Petitioner established the existence of a

“small damages” exception to the Constitutional

analysis of punitive damages awards for which it

qualifies?

il

PARTIES BELOW

The parties in the proceedings before the Illinois

Supreme Court were Appellant, Cross-Appellee

International Union of Operating Engineers, Local

150, AFL-CIO and Appellee, Cross-Appellant Lowe

Excavating Co., Inc.

TABLE OF CONTENTS

QUESTIONS PRESENTED

PARTIES BELOW

TABLE OF CONTENTS

TABLE OF AUTHORITIES

JURISDICTION

CONSTITUTIONAL PROVISIONS INVOLVED...

COUNTER STATEMENT OF THE CASE

A. Procedural History

B. Statement of the Facts

REASONS FOR DENYING THE WRIT

I, PETITIONER HAS FAILED TO PRE-

SENT A COMPELLING REASON FOR

REVIEW

Il. THE ILLINOIS SUPREME COURT

CORRECTLY HELD THAT THE PUNI-

TIVE DAMAGES AWARDED IN THIS

CASE WERE UNCONSTITUTIONAL

A. The Illinois Supreme Court Properly

Reviewed the Award of Punitive

Damages De Novo

B. The Illinois Supreme Court Meticu-

lously Applied the Gore/Campbell

GIOIION i. scsrcistasesietatmeeciuaainenan 14

iv

TABLE OF CONTENTS - Continued

Page

1. The Illinois Supreme Court correctly

Found that Local 150’s Conduct Was

Not Sufficiently Reprehensible Un-

der the Gore/Campbell Guideposts to

Justify the Appellate Court Award

. The Disparity Between the Actual

Harm Suffered by Lowe and the

Punitive Damages Awarded Alone

Rendered The Award Unreason-

Ii]. THERE IS NO SMALL DAMAGE CASE

EXCEPTION TO THIS COURT'S CON-

STITUTIONAL ANALYSIS OF PUNI-

TIVE DAMAGES AWARDS

CONCLUSION

Vv

TABLE OF AUTHORITIES

Page

CASES

BMW of North America, Inc. v. Gore, 517 U.S.

559 (1996) passim

Cooper Industries v. Leatherman Tool Group,

Inc., 532 U.S. 424 (2001) 10, 11, 12, 13

Deters v. Equifax Credit Information Services,

Inc., 202 F.3d 1262 (10th Cir. 2000)

Diesel Machinery, Inc. v. B.R. Lee Industries,

Inc., 418 F.3d 820 (8th Cir. 2005)

Disorbo v. Hoy, 343 F.3d 172 (2d Cir. 2003)

Eden Electrical Ltd. v. Amana Company, 370

F.3d 824 (8th Cir. 2004)

Fabri v. United Techs International, Inc., 387

F.3d 109 (2d Cir. 2004)

Gasparini v. Center for Humanities, Inc., 518

U.S. 415 (1996)

International Union of Operating Engineers,

Local 150 v. Lowe Excavating Company, 225

Ill. 2d 456 (2006) , passim

Jones v. Rent-A-Center, Inc., 281 F.Supp. 2d

EF oie Se BE ievetidnchecncsasessisthadasteiianen 20, 23

Linn v. Plant Guard Workers, 383 U.S. 53

(1966)

Lowe Excavating Co. v. International Union of

Operating Engineers, Local 150, AFL-CIO,

327 Ill. App. 3d 711, 765 N.E.2d 21 (2nd Dist.

— - " —- rorsauant —— . - — . a

vi

TABLE OF AUTHORITIES — Continued

Page

Lowe Excavating Co. v. International Union of

Operating Engineers, Local 150, AFL-CIO,

358 Ill. App. 3d 1034 (2nd Dist. 2005)

Mathias v. Accor Economy Lodging, Inc., 347

F.3d 672 (7th Cir. 2003)

Pacific Mutual Life Insurance Co. v. Haslip,

499 U.S. 1(1991)

Parrish v. Solecito, 280 F. Supp. 2d 145 (S.D.

N.Y. 2003)

Philip Morris v. Williams, __

S. Ct. 1057 (2007)

Planned Parenthood of the Columbia/Willamette

Inc., v. American Coalition of Life Activists,

422 F.3d 949 (9th Cir. 2005)

Routh Wrecker Service, Inc. v. Washington, 335

Ark. 232, 980 S.W. 2d 240 (1998)

State Farm Mutual Automobile Insurance

Company v. Campbell, 538 U.S. 408 (2003).... passim

United States v. Bajakajian, 524 U.S. 321

(1998)

CONSTITUTIONAL PROVISIONS

Seventh Amendment

Eighth Amendment

Fourteenth Amendment, Section 1

vil

TABLE OF AUTHORITIES — Continued

RULES

Sup. Ct. R. 10

OTHER AUTHORITIES

Chief Justice Fred M. Vinson, Work of the

Federal Courts, Address Before the American

Bar Association (Sept. 7, 1949) in 69 S. Ct. at

H. W. Perry, Jr., Deciding to Decide: Agenda

Setting in the United States Supreme Court

(Harvard University Press, 1991)

¢: —

1

JURISDICTION

Respondent’s agree that Petitioner’s statement of

jurisdiction is correct.

CONSTITUTIONAL PROVISIONS INVOLVED

Respondent’s agree with Petitioner’s citation to

the Fourteenth Amendment, Section 1 of the Consti-

tution which provides:

All persons born or naturalized in the United

States, and subject to the jurisdiction

thereof, are citizens of the United States and

of the State wherein they reside. No State

shall make or enforce any law which shall

abridge the privileges or immunities of citi-

zens of the United States; nor shall any

State deprive any person of life, liberty, or

property, without due process of law; nor

deny to any person within its jurisdiction the

equal protection of the laws.

Respondent does not agree that the Seventh or

Eighth Amendments to the United States Constitu-

tion should play any part in this appeal.

*

2

COUNTER STATEMENT OF THE CASE

A. Procedural History.

In Lowe Excavating Co. v. International Union

of Operating Engineers, Local 150, AFL-CIO, 327

Ill. App. 3d 711, 725, 765 N.E.2d 21 (2nd Dist. 2002)

(“Lowe II”), the Illinois Appellate Court affirmed an

award of $4,680 in actual damages for Plaintiff Lowe

Excavating, and remanded the case to the Circuit

Court to consider evidence of Lowe’s attorneys’ fees “if

it decided to award punitive damages.” On remand,

the Circuit Court awarded Lowe $325,000 in punitive

damages, later increased to $525,000. On appeal, the

Appellate Court affirmed the award of punitive

damages, but modified it by returning to the original

$325,000 awarded by the Circuit Court. Lowe Exca-

vating Co. v. International Union of Operating Engi-

neers, Local 150, AFL-CIO, 358 Ill. App. 3d 1034 (2nd

Dist. 2005) (“Lowe III”).

In International Union of Operating Engineers,

Local 150 v. Lowe Excavating Company, 225 Ill. 2d

456 (2006), the Illinois Supreme Court found the

award of $325,000 in punitive damages was unconsti-

tutional under the decisions of the United States

Supreme Court in BMW of North America, Inc. uv.

Gore, 517 U.S. 559 (1996), and State Farm Mutual

Automobile Insurance Company v. Campbell, 538 U.S.

408 (2003). In State Farm, the Court explained that

the “Due Process Clause of the Fourteenth Amend-

ment prohibits the imposition of grossly excessive or

arbitrary punishments on a tortfeasor.” 538 U.S. at

3

418. The Court added that while there was no “bright

line ratio,” which a punitive damage award could not

exceed, “single-digit multipliers are more likely to com-

port with due process,” 538 U.S. at 424; while “an award

of more than four times the amount of compensatory

damages might be close to the line of constitutional

impropriety.” Id. at 425. Indeed, “few awards exceed-

ing a single-digit ratio between punitive and compen-

satory damages... will satisfy due process.” Jd.

B. Statement of the Facts.

Respondent International Union of Operating

Engineers, Local 150, AFL-CIO is an unincorporated

voluntary association and labor organization repre-

senting heavy equipment operators and other em-

ployees in the construction, excavating and material

production industries (C. [I 000392). Colin “Bob”

Darling is a business agent employed by the Union

(R. V 000531; C. II 000392).

Petitioner Lowe Excavating Co. (“Lowe”) is an

Illinois corporation doing business in Illinois as an

excavation contractor (R. VII 000989). Its principal

office is located in Cary, McHenry County, Illinois (R.

VII 000989). Marshall Lowe is the owner, president

and chief executive of the Company (R. VII 000988).

According to Lowe, from the time the Company first

went into business in 1970, until the mid-1980s, its

wage and benefit package totaled “something less”

than that earned by Local 150 operating engineers

(R. XI 001343-1344).

+

In the latter part of 1987, Lowe Excavating had

at least two construction projects in progress (R. VII

000870-871): Ballashire Hall and Canterbury Place (R.

VII 000870). Canterbury Place was a planned retire-

ment community (R. VII 000869). The Ballashire Hall

Project involved the construction of a nursing home

(R. VII 000870). Marshall Lowe readily conceded that

prior to the Ballashire Hall Project begun in 1988, he

did not pay his employees prevailing wages or wages

and benefits standard to the area (R. XI 001381).

Lowe likewise acknowledged that when he began the

Ballashire Hall portion of the Canterbury Place

Project, it was the very first prevailing wage project

his Company had ever undertaken (R. XI 001344-

1345).

On February 15, 1988, Local 150 began picketing

the Company at the Canterbury Place jobsite (R. V

000550-551, R.V 000556, R. V 000878). Soon after the

Union began picketing the Company at the Canter-

bury site, Brad Brei, President of FAMCO, requested

that Lowe Excavating leave the job (R. VII 000882-

883, R. XI 001317-1318; C. 1 00008).

In April 1988, the Company agreed to have its

payroll books and records audited by the Union’s

certified public accountants, for the first quarter of

1988 (R. XI 001395-1396, R. IX 001223). The audit

findings revealed that the Company’s fringe benefit

costs were substandard.

5

On August 15, 1988, Marshall Lowe signed a

collective bargaining agreement with the Congress of

Independent Unions (“CIU”), a non AFL-CIO affiliate

which was purportedly retroactive to April 15, 1988

(R. VI 000654-656). A comparison of the wage rates

between the CIU and Local 150 contracts shows that

the periodic wage increase for employees covered by

the CIU contract lagged ten months behind the wages

of the employees covered by the Local 150 contract

(Union Trial Ex. 1 at 4; Union Trial Ex. 2; R.V

000611, R. VI 000684-689, R. VI 000695-700, R. VI

000833). It is undisputed that for the period of June

1, 1988 to April 15, 1989, the Company paid wage

rates below that of Local 150 (R. VI 000695-696, R. VI

000700).

In September 1988, the Company resumed work

at the Canterbury Place project (R. VII 000915-916).

It is uncontested that the wage and benefit rates paid

Lowe employees under the CIU contract at that time

were below the rates paid to Local 150 operators (R.

VI 000695-696, R. VI 000700).

On October 19, 2000, the Circuit Court of the

Nineteenth Judicial Circuit, McHenry County, IIli-

nois, found in favor of Defendant International Union

of Operating Engineers, Local 150, and against

Plaintiff Lowe Excavating Company on its claims for

defamation and tortious interference (C. III 000741-

757). On January 11, 2002, the Appellate Court re-

versed in part and remanded the case to the Circuit

Court, finding that Defendant Local 150 defamed the

6

Company and affirming an award of $4,680 in compen-

satory damages. Lowe II, 327 Ill. App. 3d at 724. In

that opinion, the Court directed the Trial Court to

consider “evidence of Lowe’s attorneys’ fees,” “if [the

Trial Court] decides to award punitive damages.” Jd.

at 725.

On December 16, 2002, Lowe filed its “Motion for

Prejudgment Interest and Post-Judgment Interest”

(A. 1). On April 3, 2003, the Court denied Lowe’s

Motion for Prejudgment Interest, but granted the

Motion for Post-Judgment Interest, and expressly

stated that “Judgment is entered in favor of Plaintiff

in the amount of $4,680 and against Defendant nunc

pro tune as of October 19, 2000.” After a full hearing

into Lowe’s Motion for Punitive Damages, on January

12, 2004, the Court awarded Lowe $325,000 in puni-

tive damages (C. VI 001643).

On or about January 20, 2004, Lowe filed a

Motion for Partial Reconsideration and Modification

of Order on Punitive Damages (C. VI 001647). Mean-

while, on February 8, 2004, Local 150 filed its Notice

of Appeal of the January 12, 2004 Opinion with the

Appellate Court. On February 18, 2004, Lowe Exca-

vating filed its Notice of Cross-Appeal of the Order

on Punitive Damages entered on January 12, 2004.

On February 24, 2004, the Court considered Lowe’s

Motion and increased the punitive damage award to

$525,000. The Court denied Local 150’s Motion for

Reconsideration of that award on April 16, 2004.

On July 8, 2005, the Illinois Appellate Court

affirmed the award of punitive damages, but modified

it by reducing it to $325,000. On November 30, 2006,

the Illinois Supreme Court likewise affirmed the

award of punitive damages to Lowe. The Court

added, however, that based upon the principles of

State Farm, Gore, and other controlling case law (225

Ill. 2d at 490-491):

We hold that a punitive damages award

of $325,000 at a ratio of approximately 75 to

1, is unconstitutionally excessive in light of

the Union’s conduct in the instant case. We

find that an award of punitive damages

against the Union in the amount of $50,000

for a double-digit ratio of approximately 11 to

1, would be reasonable and constitutional. As

our analysis demonstrates, the Union’s con-

duct was minimally reprehensible, and the

appellate court’s award of punitive damages

far exceeded awards given in other cases

where the conduct exhibited was much more

egregious. Furthermore, Lowe did not pre-

sent evidence demonstrating that it sus-

tained any injury to its reputation that

extended beyond its strained and ultimately

reconciled relationship with FAMCO. We

cannot presume such damage, as the evi-

dence does not warrant it. Indeed, the evi-

dence shows that Lowe was a non-union

company paying less than the prevailing

wage from 1969 until 1988. While Lowe’s

business decisions in this regard have no bear-

ing on the issue before us, it stands to reason

that companies that did business with Lowe

8

were aware of its practices, and remained

Lowe customers nonetheless.

+

REASONS FOR DENYING THE WRIT

PETITIONER HAS FAILED TO PRESENT A

COMPELLING REASON FOR REVIEW.

The Supreme Court of the United States will only

grant a petition for a writ of certiorari for compelling

reasons. Sup. Ct. R. 10. This Court will grant certio-

rari where there are conflicting decisions in the

United States Court of Appeals on the same impor-

tant matter; where a court of appeals has departed or

sanctioned the departure from the accepted and usual

course of judicial proceedings; where a state court of

last resort has issued a decision conflicting with

another state court of last resort or with a United

States court of appeals; or a state court or United

States court of appeals has decided an important

question of federal law that should be decided by this

Court. Sup. Ct. R. 10; H. W. Perry, Jr., Deciding to

Decide: Agenda Setting in the United Siates Supreme

Court (Harvard University Press, 1991). Review will

be granted only in cases presenting “tremendously

important principles, upon which are based the plans,

hopes and aspirations of a great many people

throughout the country.” Chief Justice Fred M. Vin-

son, Work of the Federal Courts, Address Before the

American Bar Association (Sept. 7, 1949) in 69 S. Ct.

at v, vi. Lowe does not and cannot demonstrate that

its Petition presents any of these compelling reasons.

a

9

This Court only considers decisions of a state

court of last resort on an important federal question

which conflict “with the decision of another state

court or of a United States court of appeals” Sup. Ct.

R. 10. Here, Lowe asserts no conflict with another

state court of last resort. Nor does Lowe claim conflict

with the Seventh Circuit. At most, Petitioner argues

that the Seventh Circuit decision in Mathias v. Accor

Economy Lodging, Inc., 347 F.3d 672, 677 (7th Cir.

2003), was given “no consideration in the Illinois

Supreme Court’s conclusion” (Petition for Writ of

Certiorari, hereinafter “Petition,” at 20),

Lowe’s assertion is simply inaccurate. The Illinois

Supreme Court specifically noted “the observations of

the Seventh Circuit set forth in Mathias” in making its

decision. Local 150, 225 Il. 2d at 489. “With all these

principles in mind,” the Court said, “we hold that a

punitive damages award of $325,000 at a ratio of

approximately 75 to 1, is unconstitutionally excessive in

light of the Union’s conduct in the instant case.” Id. at

490. Rule 10 specifically states that “a petition for a

writ of certiorari is rarely granted when the asserted

error consists of erroneous factual findings or the

misapplication of a properly stated rule of law.” Re-

spondent Local 150 submits that the Illinois Supreme

Court both properly stated and applied this Court’s

teachings in a now well developed line of cases concern-

ing the constitutionality of punitive damages awards.

Nothing said by the Illinois Supreme Court deviates

from those principles.

10

THE ILLINOIS SUPREME COURT COR-

RECTLY HELD THAT THE PUNITIVE

DAMAGES AWARDED IN THIS CASE WERE

UNCONSTITUTIONAL.

A. The Illinois Supreme Court Properly

Reviewed the Award of Punitive Dam-

ages De Novo.

In Cooper Industries v. Leatherman Tool Group,

Inc., 532 U.S. 424 (2001), this Court held that review

of the constitutionality of the award of punitive

damages is de novo. There, the Court of Appeals

upheld a $4.5 million punitive damage verdict where

only $50,000 had been awarded in compensatory

damages. On review, the Court of Appeals concluded

that the District Court did not abuse its discretion in

declining to reduce the amount. The issue considered

by the Supreme Court was “whether the Court of

Appeals applied the wrong standard of review in

considering the constitutionality of the punitive

damages award.” Id. at 426.

This Court concluded that the less exacting

abuse-of-discretion standard was in fact wrong and

held that “the constitutional issue merits de novo

review.” Id. at 431. There, the Court offered at least

three reasons for de novo appellate review. First, the

precise meeting of certain concepts such as gross

excessiveness is fluid and cannot be articulated with

precision. Jd. at 436. Next, such legal rules “acquire

content only through application,” and it is necessary

for appellate courts to maintain control of and clarify

legal principles. Jd. Finally, as these rules acquire

11

meaningful content through case-by-case application,

the appellate courts give them uniformity. Jd.

Lowe asks this Court to reexamine its decision in

Cooper Industries.’ The basis for this assertion is

essentially that bench trials are different from jury

trials. As Lowe explains (Petition at 27):

In the case at bar, a bench trial was con-

ducted where the trial judge held hearings

that were transcribed and issued a written

decision setting forth findings of fact and

conclusions of law describing why punitive

damages should be awarded and the consid-

erations from the evidence that informed his

decision to impose punitive damages and

how the amount was essentially arrived at.

The Illinois Supreme Court rejected essentially the

same arguments. There the court explained (Local

150, 225 Ill. 2d at 469):

Lowe argues that Cooper and State Farm,

and the cases upon which they relied, do not

require that this Court utilize a de novo

' Lowe’s third question presented is (Petition at ii):

Whether a trial judge’s award of punitive damages

based on specific findings of fact after a state court

bench trial is subject to the same de novo standard of

review as awards made by juries under Cooper Indus-

tries and Philip Morris |v. Williams, ____ U.S. __, 127

S. Ct. 1057 (2007)] or an abuse of discretion standard

of review for excessive awards as in Gasparini v. Cen-

ter for Humanities, Inc., 518 U.S. 415, 434-435, 436

(1996).

12

standard of review because those cases in-

volved punitive damages awarded by a jury in-

stead of a judge after a bench trial. We find

this distinction to be of no consequence.

Whether punitive damages were awarded by a

judge or a jury has no impact on the reasons

articulated in Cooper for applying a de novo

standard, such as unification of precedent and

stabilization of the law. Accordingly, we re-

view the constitutional question before us de

novo,

Lowe’s first error in its argument that the consti-

tutionality of punitive damages awards are not

reviewed de novo is in its assertion that such a stan-

dard only applies to jury awards. Nowhere in Cooper,

Gore, or Campbell did the Supreme Court make the

distinction between jury and bench trials offered by

Lowe here. In fact, in Cooper, the Supreme Court

expressly compared the “institutional competence of

trial judges and appellate judges” in applying the

three Gore guideposts. Moreover, the actual applica-

tion of the Gore and Campbell factors by the courts of

appeal most often come up in review of trial judge

determinations of post-trial remittitur motions, see,

e.g., Diesel Machinery, Inc. v. B.R. Lee Industries, Inc.,

418 F.3d 820 (8th Cir. 2005); Eden Electrical Ltd. v.

Amana Company, 370 F.3d 824 (8th Cir. 2004), or after

remand. See, Planned Parenthood of the Columbia/

Willamette Inc., v. American Coalition of Life Activ-

ists, 422 F.3d 949, 952-953 (9th Cir. 2005). Hence, the

appellate courts have made no distinction between

jury and bench determinations of punitive damages.

13

Lowe’s next mistake in arguing for a lesser

standard of review is in its insistence that punitive

damages are a factual determination measured

against an abuse of discretion or clearly erroneous

standard (Petition at 22-23, 31). In Cooper, the Court

expressly considered and rejected the notion that the

level of punitive damages was a question of fact to be

determined by the jury. 532 U.S. at 432, 437 (“Be-

cause the jury’s award of punitive damages does not

constitute a finding of fact,” no Seventh Amendment

concerns are raised). Relying on its decision in United

States v. Bajakajian, 524 U.S. 321 (1998), the Court

stated that an appellate court review of the exces-

siveness of a damage award should be “de novo” and

not for an abuse of discretion. Cooper Industries, 532

USS. at 435.

Finally, the retribution and deterrence purposes

behind punitive damages do not involve factual

determinations. As the Supreme Court explained in

Cooper Industries, “a jury’s assessment of the extent

of a plaintiff’s injury is essentially a factual determi-

nation, whereas its imposition of punitive damages is

an expression of its moral condemnation.” 532 U.S. at

432. In other words, while an assessment of actual

damages is often an objective calculation, punitive

damages are measured by policy concerns.

Even assuming the Illinois Supreme Court failed

to defer to the trial court on its factual determina-

tions, those findings offer Lowe no support for its

punitive damages. The trial court ruled in favor of

Local 150 after trial on the merits, entering judgment

14

for the Union on all counts. Lowe IJ, 327 Ill. App. 3d

at 719. As it stated in its “Order on Punitive Dam-

ages,” punitive damages are justified “because the

Appellate Court has found that the evidence in the

case establishes that the Defendant’s actions consti-

tuted actual malice” (Lowe Appendix at 70a) (empha-

sis added). Moreover, the trial court denied Lowe’s

motion to reopen discovery (C-805, 1324-1325); and

denied Lowe’s offer of proof of “an affidavit and

documents to prove that the Defendant engaged ‘in

other instances of activities in reckless disregard for

the truth since 1988 and in further support to Plain-

tiff’s Motion for Punitive Damages’” (Order on Puni-

tive Damages, Lowe Appendix 68a-73a). The Trial

Court conducted no further evidentiary proceedings

with respect to the punitive damage claim.

There is, therefore, no need to defer to factual

findings of the trial court because it made none in

support of Lowe. The Illinois Supreme Court properly

reviewed the lower courts’ punitive damages awards

de novo. It found that award unconstitutional and

this Court should likewise so find.

B. The Illinois Supreme Court Meticulously

Applied the Gore/Campbell Guideposts.

In State Farm Mutual Automobile Insurance

Company v. Campbell, 538 U.S. 408 (2003), this

15

Court held that the imposition of an excessive puni-

tive damages claim by a state court was unconstitu-

tional. There, the Court explained that the “Due

Process Clause of the Fourteenth Amendment prohib-

its the imposition of grossly excessive or arbitrary

punishments on a tortfeasor.” 538 U.S. at 418. Rely-

ing on BMW of North America, Inc. v. Gore, 517 U.S.

559 (1996), the Court in Campbell noted that it had

(538 U.S. at 418):

instructed courts reviewing punitive dam-

ages awards to consider three guideposts: (1)

the degree of reprehensibility of the defen-

dant’s misconduct (2) the disparity between

the actual or potential harm suffered by the

plaintiff and the punitive damages award;

and (3) the difference between the punitive

damages awarded by the jury and the civil

penalties authorized or imposed in compara-

ble cases.

Faithfully following these “guideposts,” the Illinois

Supreme Court held that the award of punitive dam-

ages to Lowe was unconstitutionally excessive. Noth-

ing in that decision compels reversal by this Court.

1. The Illinois Supreme Court correctly

Found that Local 150’s Conduct Was

Not Sufficiently Reprehensible Un-

der the Gore/Campbell Guideposts to

Justify the Appellate Court Award.

Under Gore, “the most important indicium of the

reasonableness of a punitive damages award is the

16

degree of reprehensibility of the defendant’s conduct.”

517 U.S. at 575. To determine whether a defendant’s

conduct is reprehensible, the Supreme Court directed

courts to consider whether (Campbell, 538 U.S. at

419, citing Gore, 517 U.S. at 576-577):

the harm caused was physical as opposed to

economic; the tortious conduct evinced an in-

difference to or reckless disregard of the

health or safety of others; the target of the

conduct had financial vulnerability; the con-

duct involved repeated actions or was an iso-

lated incident; and the harm was the result

of intentional malice, trickery, or deceit, or

mere accident.

As the Illinois Supreme court observed, “Lowe

concedes that the Union’s conduct created a harm

that was economic rather than physical, and that the

Union’s conduct did not evince a reckless disregard or

indifference to the health and safety of others.” Local

150, 225 Ill. 2d at 471-472. Lowe’s failure to satisfy

either of the first two elements of the reprehensibility

guideposts should not be underestimated.

As the Court explained (in Campbell, 538 U.S. at

575-576) (internal quotes and citations omitted):

This principle reflects the accepted view that

some wrongs are more blameworthy than

others. Thus, we have said that non-violent

crimes are less serious than crimes marked

by violence or the threat of violence...

Those Courts to have considered the Gore/Campbell

factors have concluded that physical injury is the

17

most significant of the reprehensibility factors.

Hence, physical harm is “highly reprehensible,”

Disorbo v. Hoy, 343 F.3d 172, 187 (2d Cir. 2003)

(police brutality generally found highly reprehensi-

ble); while the absence of physical injury usually

justifies remittitur. Fabri v. United Techs Interna-

tional, Inc., 387 F.3d 109, 125-126 (2d Cir. 2004);

Parrish v. Solecito, 280 F. Supp. 2d 145, 163 (S.D.

N.Y. 2003) (punitive damages reduced from $500,000

to $50,000 where no physical injury and compensa-

tory damages only $15,000).

The second of the reprehensibility factors set out

by the Supreme Court in Campbell requires review-

ing courts to determine whether “the tortious conduct

evinced an indifference to or reckless disregard of the

health or safety of others.” 538 U.S. at 419. Local

150’s fight with Lowe was a private, garden variety

labor dispute. The absence of an impact on others

thus weighed against the reprehensibility finding.

Nor did the Illinois Supreme Court agree with

the Appellate Court that Lowe met the “financial

vulnerability element of the reprehensibility analy-

sis.” As the Illinois Supreme Court stated (Local 150,

225 Ill. 2d at 472):

Contrary to Lowe’s contentions and the ap-

pellate court’s findings, we conclude that the

record in this case is devoid of evidence dem-

onstrating that Lowe was financially vulner-

able. Lowe claims that the record shows that

it was forced to “engage in odd jobs” after the

picketing. However, the portion of the record

18

Lowe cites merely demonstrates that, some

four to six years after the Ballashire Hall

Project, FAMCO contacted Lowe to perform

snow removal work. Lowe cites to nothing in

the record indicating that it was required to

do such work to “stay afloat,” as it now con-

tends.

Further, the fact that Lowe is a “small busi-

ness” does not, by itself, prove financial vul-

nerability. While we agree with the Appellate

Court that small businesses often rely on

reputation to maintain and attract custom-

ers, the evidence presented in this case dem-

onstrated that Lowe temporarily lost only

one customer, FAMCO, as a result of the Un-

ion’s conduct. The evidence also demon-

strated that Lowe operated as a non-union

company paying less than the prevailing

wage rate for the area without incident from

1969 until 1988 when the Union picketed the

Ballashire Hall site. There is no evidence

that Lowe lost any other business as a result

of the Union’s conduct. Moreover, the only f-

nancial loss proven was the $4,680 in lost

profits stemming from the Ballashire Hall

Project. Lowe provided no other financial in-

formation which would demonstrate its vul-

nerability.

Nor did the Illinois Supreme Court agree with the

Illinois Appellate Court on the question of whether

the Union’s conduct was repeated. The Illinois Su-

preme Court pointed out that “the repeated conduct

factor of the reprehensibility test is grounded in the

a...

19

Supreme Court’s opinion in Pacific Mutual Life

Insurance Co. v. Haslip, 499 U.S. 1” (1991). Local 150,

225 Ill. 2d at 476. In Haslip, this Court stated that

reprehensibility was in part measured by “the duration

of that conduct ... and the existence and frequency of

similar past conduct.” Id., quoting 499 U.S. at 21.

After reviewing relevant case law, the Illinois Su-

preme Court concluded that although the Union’s

conduct was repeated on at least one occasion, “there

is no evidence before this Court demonstrating that

the Union falsely picketed Lowe, or anyone else, as a

matter of course.” Local 150, 225 Ill. 2d at 480. Hence

there was no pattern of misconduct which typified

recidivists in other cases, leading the Illinois Su-

preme Court to give this factor “little weight in our

overall assessment of reprehensibility.” Id.

Finally, the Illinois Supreme Court found that

the Union’s conduct was intentional.’ Nevertheless,

* Lowe claims to have identified another incident of false

picketing some ten years after the events giving rise to the

claims here (Petition at 18). The Illinois Courts below uniformly

refused to consider the belated proffer of affidavit evidence of

subsequent conduct. This Court should not either. Lowe’s

reliance on the Kinney affidavit to establish alleged subsequent

misconduct in support of its punitive damage claim also runs

afoul of this Court’s more recent decision in Philip Morris uv.

Williams, __ U.S. __, 127 S.Ct. 1057, 1063 (2007) (“the

Constitution’s Due Process Clause forbids a State to use a

punitive damages award to punish a defendant for injury that it

inflicts upon nonparties... ”).

* The Union stands by the trial court’s original determina-

tion that Lowe did not pay area standard wages and benefits,

and that its picketing was therefore not false. Although the

(Continued on following page)

20

the Court concluded that this determination was the

single factor to support a finding of reprehensibility.

Local 150, 225 Ill. 2d at 483.

As the Illinois Supreme Court recognized, Lowe

Excavating is a corporation, not a human being. It

can suffer no hurt feelings or emotional! distress. To

the extent it can suffer an injury to its business

reputation, that injury is measurable in lost revenues

and/or profits. The Company offered evidence of

neither. Such a showing is required both by the rules

governing defamation claims brought in the context

of a labor dispute as articulated in Linn v. Plant

Guard Workers, 383 U.S. 53 (1966), and the Gore/

Campbell guideposts. Cf., Routh Wrecker Service, Inc.

v. Washington, 335 Ark. 232, 980 S.W. 2d 240 (1998)

(punitive damage ratio of 75-to-1 constitutionally

permissible where plaintiff suffered humiliation as a

result of abuse of process); Deters v. Equifax Credit

Information Services, Inc., 202 F.3d 1262 (10th Cir.

2000) (punitive damage award in 59-to-1 ratio per-

missible because plaintiff’s sexual harassment dam-

ages “primarily personal”); Jones v. Rent-A-Center,

Inc., 281 F. Supp. 2d 1277 (D. Kan. 2003) (punitive

damage ratio of 29-to-1 permissible where sex har-

assment damages primarily personal and therefore

difficult to quantify). Inasmuch as the Company

received all the actual damages which it proved, it is

Appellate Court found that the Union “should have known” that

its picket signs were false — suggesting a finding of negligence -

the Ilinois Supreme Court rejected this argument as well. Local

150, 225 Ill. 2d at 482-483.

21

not up to the courts to make up for Lowe’s bad judg-

ment through an enhanced punitive damages award.

2. The Disparity Between the Actual

Harm Suffered by Lowe and the Pu-

nitive Damages Awarded Alone Ren-

dered The Award Unreasonable.

Based on the evidence at trial, the trial court

found and the Illinois Appellate Court approved a

judgment against Local 150 of actual compensatory

damages in the amount of $4,680. Despite this rela-

tively modest amount of actual damages, the appel-

late court affirmed an award of punitive damages of

$325,000. Such an amount was plainly unconstitu-

tional under Gore and Campbell. In Campbell, this

Court declined to establish a “bright line ratio which

a punitive damages award cannot exceed.” 538 U.S.

at 424. The Court then stated (id.) (citations omitted):

Single-digit multipliers are more likely to

comport with due process, while still achiev-

ing the State’s goals of deterrence and retri-

bution, than awards with ratios in the range

of 500-to-1, or in this case, of 145-to-1.

Had the trial court awarded Lowe punitive damages

in the 4-to-1 ratio of Gore — $18,720 — that award

would likely be reasonable. But the trial court’s

$525,000 punitive damage award to Lowe required

the use of a triple-digit multiplier, over 100 times the

amount of actual damages awarded. In reducing that

22

award, the appellate court explained that a triple-

digit ratio (115 to 1) was “exceedingly disproportion-

ate.” Lowe III, 358 Ill. App. 3d at 1044. However, the

Court went on to conclude that a “double-digit” ratio

of 75-to-1 was “constitutionally acceptable.” Id. at

1045.

The Illinois Supreme Court properly found this

conclusion in error. As the Court explained (Local

150, 225 Ill. 2d at 487):

The Union’s conduct in the instant case is

not comparable to the conduct of the Defen-

dants in Routh, Deters and Jones. Here,

Lowe did not suffer a physical or emotional

injury, and the injury sustained was not of a

personal nature, as a corporation cannot be

personally affronted. Lowe’s injury cannot be

compared to the humiliation suffered by in-

dividuals who endure sexual harassment in

the workplace, and is also not comparable to

the injury sustained by an individual who is

arrested at his workplace for a crime he did

not commit, handcuffed, and placed in a cell.

While ratios ranging from 75 to 1 to 29 to 1

may have been appropriate under those cir-

cumstances, we cannot conclude that a ratio

in that range is appropriate here where the

Union’s conduct was much less egregious.

This Court’s admonition in Campbell bears repeating:

“An award of more than four times the amount of

compensatory damages might be close to the line of

constitutional impropriety.” 538 U.S. at 425. It follows,

therefore, that any double-digit multiplier — over twice

23

the multiplier that “might be close” — must necessar-

ily be over that line. As such, the Illinois Supreme

Court properly found the 75-to-1 multiplier unrea-

sonable and unconstitutional.‘

Ill, THERE IS NO SMALL DAMAGE CASE EX-

CEPTION TO THIS COURTS CONSTITU-

TIONAL ANALYSIS OF PUNITIVE DAMAGES

AWARDS.

In seeking to carve out an exception for “small

damage” cases, Lowe offers its failure to prove a

significant economic injury as a basis for an enhanced

punitive damage award. It suggests that in order to

be “made whole,” punitive damages are necessary

(Petition at 20). The simple fact remains that as the

Illinois Supreme Court observed, “the only financial

loss proven was the $4,680 in lost profits stemming

from the Ballashire Hall Project.” Local 150, 225

Ill. 2d at 473. There is no evidence that Lowe lost any

other business as a result of Local 150’s conduct and

the one customer it did lose, FAMCO, it lost only

“temporarily.” Id. at 472-473.

At no point has this Court recognized a “small

damage” exception to its constitutional analysis of

punitive damage awards. In State Farm, the Court

“ The Illinois Supreme Court did not consider the third

Gore/Campbell guidepost because there is no legislative judg-

ment in Illinois on this issue. Local 150, 225 Ill. 2d at 489. Lowe

apparently does not disagree with this element of the analysis.

24

did acknowledge that where “a particularly egregious

act has resulted in only a small amount of economic

damages, ratios greater than those previously upheld

may comport with due process.” 538 U.S. at 425. But

that is not this case. Nor is this a case where the

injury is “hard to detect” or the monetary value of

non-economic harm “difficult to determine.” Gore, 517

U.S. at 582. Lowe’s injury was hardly hard to detect.

The company was picketed in broad daylight, which

led to the temporary loss of the Ballashire Hall

Project. Nor did it suffer a difficult to determine non-

economic harm. Lowe’s harm was economic — calcu-

lated precisely at $4,680 in lost profits. It proved no

non-economic harm despite ample opportunity to do

so. To the extent Lowe’s damages were small, it is

because $4,680 is all the company lost. Punitive

damages cannot be awarded as compensatory dam-

ages or attorneys fees in disguise.

* ‘

CONCLUSION

For all the feregoing reasons, Respondent Local

150 respectfully requests that this Court deny Peti-

tioner Lowe’s Petition for Writ of Certiorari in its

entirety. Petitioner has failed to identify any compel-

ling reasons for review, and the Illinois Supreme

Court faithfully applied this Court’s “guideposts”

in measuring the punitive damages awarded here.

25

Nor has the Petitioner established the existence of a

“small damages” exception, or its applicability here.

Dated: November 28,2007 Respectfully submitted,

DALE D. PIERSON R. MARK GUMMERSON

Counsel of Record GUMMERSON & RAUSCH

ELIZABETH A, LAROSE 101 South Benton Street,

TUOE, Loca. 150, AFL-CIO Suite 201

Legal Department Woodstock, IL 60098

6140 Joliet Road Ph. 815/337-7700

Countryside, IL 60525 Fx. 815/337-7990

Ph. 708/579-6663

Fx. 708/558-1647