Opposition Brief — Chicago Title Insurance Corp. v. Magnuson (No. 07-649)

— a SE ee ee ES Sete a aE

QB a JAN 2

No. 07-649 OFFICE OF Rn i

IN THE ;

Supreme Court of the Gnited States

CHICAGO TITLE INSURANCE CORP.,

Petitioner,

v.

FIRST AMERICAN TITLE INSURANCE CoO.

AND JAMES A. MAGNUSON,

Respondents.

On Petition For A Writ of Certiorari

To The United States Court Of Appeals

For The Sixth Circuit

BRIEF IN OPPOSITION

ROBERT P. DUCATMAN CHAD A. READLER

JONES DAY . (Counsel of Record)

North Point, 901 MATTHEW A. KAIRIS

Lakeside Ave. G. ROGER KING

Cleveland, OH 44114 JONES DAY

Tel: (216) 586-3939 325 John H. McConnell

Blvd., Suite 600

DAVID L. HORAN P.O. Box 165017

JONES DAY Columbus, OH 43216

2727 N. Harwood St. Tel: (614) 469-3939

Dallas, TX 75201

Tel: (214) 220-3939

Counsel for Respondents

WILSON-EPES PRINTING CO., INC. — (202) 789-0096 — WASHINGTON, D. C. 20002

i

QUESTIONS PRESENTED

The petitioner in this matter raises the following

issues (Petition for Writ of Certiorari at i):

1. Whether the due process guideposts govern

only the size of punitive damages awards, or

whether—despite this Court’s overruling of Lochner

v. New York, 198 U.S. 45 (1905)—the guideposts also

license federal judicial interference with-a State’s

considered judgment that certain types of misconduct

are sO egregious as to warrant punitive liability in

the first instance. |

2. Whether the “reprehensibility” guidepost of

Gore and State Farm can support an assessment of

punitive damages when the defendant’s tortious

conduct was malicious. or whether that guidepost

requires a showing of an additional aggravating

factor, such as the financial vulnerability of the

plaintiff or the risk of physical harm.

3. Whether a defendant qualifies as a “repeated

wrongdoer” (for purposes of the “reprehensibility”

guidepost of Gore and State Farm) if it commits

multiple reprehensible acts within a_ single

transaction with the plaintiff, or whether the

“repeated wrongdoer’ test requires that additional

acts be committed against parties other than the

plaintiff.

il

PARTIES TO THE PROCEEDING AND RULE 29.6

CORPORATE DISCLOSURE STATEMENT

The parties in the United States Court of Appeals

for the Sixth Circr.it were (a) Chicago Title Insurance

Corporation, (b’ First American Title Insurance

Company, and (:) James A. Magnuson.

First American Corporation, a publicly held

company, is the parent company of Respondent First

American Title Insurance Company. No other

publicly held company owns ten percent or more of

First American Title Insurance Company’s stock.

ill

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED ..............cccccccccssorssessseeces i

PARTIES TO THE PROCEEDING AND

RULE 29.6 CORPORATE DISCLOSURE

ST etiiledita cteeaietd Cektacehesécdediainaesmusttncidndneveinicnes il

De Fe RE ED sewsenenersntnttesesenencetitensniacs vi

TE, wittilisceidisnaditnceiiiplaineiteldaiicistneancnciianiniitiiniwennts 1

I. DISTRICT COURT PROCEEDINGG................ 2

I]. APPEAL TO THE SIXTH CIRCUIT............... 3

A. Compensatory Damages......................0c0000 3

ESE TO 4

REASONS FOR DENYING THE WRIT .................. 6

I. THE CASE DOES NOT SQUARELY .

RAISE THE QUESTIONS PRESENTED ........ 6

A. The Remand Below For A New Trial

On Compensatery Damages Precludes

The Court’s Review Of Punitive

SD Hic csistettis cosepenniensacestcarctevecoes 6

B. A Threshold State-Law Issue Makes

This Case A Poor Candidate For

ee 7

1V

TABLE OF CONTENTS

(Continued)

Page

II. THE SIXTH CIRCUIT APPLIED

SETTLED LAW TO THE UNIQUE

PAT BERN Ce cov cnceneescserecsecvescecesweseess 9

III. THE DECISION BELOW DOES NOT

CREATE A CIRCUIT SPLIT................ ee 11

A. The Sixth Circuit Established No

Bright-Line Rule For The

Reprehensibility Guidepost .................000+ 11

B. The Decision Below Is Not in Tension

With Other Courts’ Decisions.......... Seaa ee 12

IV. THE SIXTH CIRCUITS ANALYSIS OF

THE “REPEATED CONDUCT” FACTOR

PRESENTS NO CONFLICT

WARRANTING REVIEW ...00...... eee eeeeeeeeeeeee 13

A. There Is No Split Over The “Repeated

B. The Sixth Circuit’s Analysis Of The

“Repeated Conduct” Factor Is

Consistent With This Court’s

EE RR AAI aed ee AS en 15

C. There Is No Evidence Of Repeated ©

Misconduct By First American In This

Vv

TABLE OF CONTENTS

(Continued)

Page —

V. THIS CASE HAS NO RELATIONSHIP

TO THE PENDING DECISION IN

EXXON SHIPPING CO. V. BAKER........:...-+: 16

CONCLUSION ............... a wali yeaiosinebebakennaiaiceianceeeel 17

—

vi

TABLE OF AUTHORITIES

Page

Cases

BMW of N. Am., Inc. v. Gore,

Be iy See ER canccuceenccnvoccecnocesntnesees 4,5, 7, 15

CGB Occupational Therapy, Inc. v. RHA

Health Servs., Inc., 499 F.3d 184 (3d Cir.

8 ER Se a a aR 14, 16

Century Sur. Co. v. Polisso,

43 Cal. Rptr. 3d 468 (Ct. App. 2006).................. 14

Diesel Mach., Inc. v. B.R. Lee Indus., Inc.,

418 F.3d 820 (8th Cir. 2005) .......................0ee00e. 12

Eden Elec., Ltd. v. Amana Co.,

S70 F.3E S24 (BER Cie. BOOS) ...cocccccccccsccccccccccsesss 12

Exxon Shipping Co. v. Baker,

128 S. Ct. 492 (Oct. 29, 2OO7T).....ccccccccccccccesesveeese 16

Hayes Sight & Sound, Inc. v. ONEOK, Inc.,

BI ee Be CI, BOD sccveccrecvaceetecsceseosscescccees 15

Hutchinson v. Proxmire, 443 U.S. 111 (1979)......... 8

Int’ Union of Operating Eng'rs, Local 150 v.

Lowe Excavating Co., 870 N.E.2d 303 (II.

2006), petition for cert. filed, 76 U.S.L.W.

3240 (No. 07-560, Oct. 26, 2007) ...................04. 14

Lee v. Edwards, 101 F.3d 805 (2d Cir. 1996) ........ 15

Lochner v. New York, 198 U.S. 45 (1905).......... 9,11

vil

TABLE OF AUTHORITIES

(Continued)

Page

Malone v. Courtyard by Marriott L.P.,

659 N.E.2d 1242 (Ohio 1996) ...............ccccccceeeeeeees 6

Mathias v. Accor Econ. Lodging, Inc.,

BAT F.SGE STE CIE Cir. BOOB) .cccceccccovccccccccsessescese 13

Motorola Credit Corp. v. Uzan,

Be ee Oe Ce Ce: BO ccc ccvceccecsrevccsccsseccensens 12

Philip Morris USA v. Williams,

— § A Mg, RRS Ur Renee one 15

Planned Parenthood of Columbia/Willamette

Inc. v. Am. Coal. of Life Activists, 422 F.3d

949 (9th Cir. 2005), cert. denied, 547 U.S.

2 2 LIRR OER Aes eee ee See 13

Preston v. Murty, 512 N.E.2d 1174 (Ohio 1987).....8

Rhone-Poulenc Agro, S.A. v. DeKalb Genetics

Corp., 345 F.3d 1366 (Fed. Cir. 20038).......... 10, 12

Southern Union Co. v. Southwest Gas Corp.,

415 F.3d 1001 (9th Cir. 2005), cert. denied,

yi

I sn a acadueaes 14

State Farm Mut. Auto. Ins. Co. v. Campbell,

Se ek Me I tinesisticesccnseeneuiniinemaniosuenes passim

Superior Fed. Bank v. Jones & Mackey Constr.

Co., LLC, 219 S.W.3d 643 (Ark. Ct. App.

viii

TABLE OF AUTHORITIES

(Continued)

‘Page

Willow Inn, Inc. v. Pub. Serv. Mut. Ins. Co.,

SBD F.3d B24 (Sd Car. ZOOG) ..cccoccseveresccesceseses 12, 16

Statutes & Rules

CORD BET. SS BRIE cccerccnsstvnsssnianeuseneuen 6

Re Er i et kcnnceascihacidamiienanicetcetaicanasiannette ae 2

Miscellaneous

Petition for a Writ of Certiorari, Exxon

Shipping Co. v. Baker, 2007 WL 2383784

(U.S. Aug. 20, 2007)(No. 07-219).............cceeeeeeeee 16

ROBERT L. STERN, ET AL., SUPREME COURT

PRACTICE GHEE OE. i iesstsibtatsaneniacinbaacsates 7

BRIEF IN OPPOSITION FOR RESPONDENTS

STATEMENT

In this breach of contract and tort diversity action

brought under Ohio law, plaintiff Chicago Title

Insurance Corporation seeks review of an

unexceptional application of the Court’s holding in

State Farm Mutual Automobile Insurance Co. v.

Campbell, 538 U.S. 408 (2003). 'n the decision below,

the Sixth Circuit reversed a $43.2 million judgment,

remanding the matter for a new trial on

compensatory damages and holding that the facts of

the case, when measured against State Farm’s due

process guideposts, could not support a punitive

damages award.

This factbound decision does not merit the Court’s

attention. As an initial matter, the case is a poor

vehicle for reviewing issues regarding punitive

damages due to the remand for a new trial on

compensatory damages. Because compensatory

damages are a necessary predicate under Ohio law

for a punitive damages award, there is no basis at

this stage for the Court to consider issues regarding

punitive damages. Equally true, because the Sixth

Circuit left unanswered whether state law would

even permit a punitive damages award in this case,

there are independent and adequate state law

grounds for resolving these punitive damages issues

in the lower courts, should compensatory damages

ultimately be awarded.

In addition to these vehicle problems, today’s case

does not present any issue or circuit split meriting

the Court's review. At bottom, plaintiff challenges

2

the Sixth Circuit's application of the Court’s

unbroken precedent addressing due _ process

limitations in the punitive damages context, a setting

that rarely attracts the Court’s attention. See SUP.

CT. R. 10 (the Court typically does not review

“asserted errors consist[ing] of erroneous factual

findings or misapplication of a properly stated rule of

law”).

I. DISTRICT COURT PROCEEDINGS

Chicago Title, a leader in the title insurance

industry, brought breach of contract and tortious

interference claims against First American Title

Insurance Company and James A. Magnuson

(collectively, “First American”) based upon

Magnuson’s decision to leave Chicago Title to work

for competitor First American. Pet. App. 2a-4a.

Chicago Title’s claims turned on a non-compete

clause in Magnuson’s employment contract with

Chicago Title, which the district court interpreted to

be effective for a period of five years beyond the

contract's expiration. Pet. App. 2a-3a.

The district court granted summary judgment for

Chicago Title as to liability on its contract claim

against Magnuson and its tort claim against First

American. Pet. App. 4a. At trial, the district court

granted Chicago Title’s motion for judgment as a

matter of law on the ground that it was a “lost

volume seller,” exempting it from the general duty to

mitigate its damages. Pet. App. 2la. Having been

instructed that Chicago Title had no duty to mitigate

its asserted damages, the jury returned a verdict

3

awarding Chicago Title $10.8 million’ in

compensatory damages and $32.4 million in punitive

damages. Pet. App. 4a-5a.

I]. APPEAL TO THE SIXTH CIRCUIT

Before the Sixth Circuit, First American argued,

among other things, that (1) the non-compete clause

was not enforceable through the five-year period after

Magnuson’s contract expired; (2) the district court

erred in granting summary judgment on Chicago

Title’s claims; (3) there is no basis under Ohio law for

the award of punitive damages; (4) the punitive

damages award is unconstitutional; and (5) the

district court erroneously failed to instruct the jury

on Chicago Title’s duty to mitigate. Pet. App. 5a.

A. Compensatory Damages

After affirming the grant of suwnmary judgment,

Pet. App. 2a, 5a-18a, 29a, the Sixth Circuit reversed

the $10.8 million compensatory damages award. Pet.

App. 19a-2la. Because the district court erred in

holding that Chicago was a lost-volume-seller as a

matter of law, the Sixth Circuit remanded the case

for a new trial at which the jury could consider

whether Chicago Title was a lost-volume seller and, if

not, whether it mitigated its damages. Pet. App. 19a-

21a, 29a.

The Sixth Circuit also remanded the case for a new

trial on compensatory damages on the additional

ground that the district court may have erred in

instructing the jury that Magnuson’s non-compete

clause was in effect for five years after his contract’s

expiration. Pet. App. 2la-23a. While the-Sixth-—————

4

Circuit found that the covenant not to compete was

reasonable for at least two years, it remanded for

further factual development regarding whether it

was reasonable to enforce the covenant for up to five

years, the period the jury considered in awarding

compensatory damages. Pet. App. 22a-23a.

B. Punitive Damages

Applying the Court’s decisions in State Farm and

BMW of North America, Inc. v. Gore, 517 U.S. 559

(1996), in’ particular the command that appellate

courts “overturn[] jury verdicts awarding punitive

damages that are so large that they constitute

‘grossly excessive or arbitrary punishments,” Pet.

App. 23a (quoting State Farm, 538 U.S. at 416), the

Sixth Circuit also reversed the $32.4 million punitive

damages award. Pet. App. 23a-29a. Noting that

“punitive damages should only be awarded if the

defendant's culpability, after having paid

compensatory damages, is so reprehensible as to

warrant the imposition of further sanctions to

achieve punishment or deterrence,” Pet. App. 25a,

29a (quoting State Farm, 538 U.S. at 419), the Sixth

Circuit found that State Farm’s “three guideposts

{for} considering the constitutionality of a punitive

damage award” could not justify any award in this

case. Pet. App. 23a.

Starting with the reprehensibility guidepost, the

“most important indicium of the reasonableness of a

punitive damages award,” Pet. App. 24a (quoting

Gore, 517 U.S. at 575), the Sixth Circuit observed

that “[t]he harm here was economic, not physical, and

5

the health or safety of others were not in danger.”

Pet. App. 25a; see also State Farm, 538 U.S. at 419.

“[A]ssum[ing], for sake of argument, that First

American acted maliciously rather than by accident,”

Pet. App. 25a, given the district court’s finding that

First American tortiously interfered with the contract

at issue, the Sixth Circuit focused on “Chicago Title’s

financial vulnerability [and] whether First

American’s conduct was repeated.” Pet. App. 25a. As

to the former, the Sixth Circuit found that, “[o]n

these facts,” “it would violate the plain meaning of

the term to hold that Chicago Title was financially

vulnerable.” Pet. App. 26a. And as to the latter, the

Sixth Circuit, citing Gore, reasoned that the

“repeated conduct” factor “require[d] that the similar

reprehensible conduct be committed against various

different parties rather than repeated reprehensible

acts within the single transaction with the plaintiff.”

Pet. App. 26a (internal quotation marks omitted).

Because there was no evidence “that First American

engaged in the same type of tortious behavior against

other competitors that it displayed against Chicago

Title,” this reprehensibility factor also was not met.

Pet. App. 27a.

After twice quoting State Farm's instruction that

{t]he existence of any one of these factors weighing

in favor of a plaintiff may not be sufficient to sustain

a punitive damages award; and the absence of all of

them renders any award suspect,” Pet. App. 24a, 28a

n.8 (quoting State Farm, 538 U.S. at 419), the Sixth

Circuit held that the evidence was “insufficient to

support a finding that First American’s behavior was

aac

6

sufficiently reprehensible for an award of punitive

damages” in any amount. Pet. App. 28a.

REASONS FOR DENYING THE WRIT

I. THE CASE DOES NOT SQUARELY RAISE THE

QUESTIONS PRESENTED.

A. The Remand Below For A New Trial On

Compensatory Damages Precludes The Court’s

Review Of Punitive Damages Issues.

Because an award of compensatory damages is a

necessary predicate for an award of punitive

damages, this case is a poor vehicle for effectively

addressing the questions presented. For one thing,

the result of the new trial on compensatory damages

may render the punitive damages analysis moot. If

the jury decides to award compensatory damages of

$0 in this diversity action, Ohio law would not permit

a punitive damages award. See OHIO REV. CODE

§ 2315.21(B), (C); Malone v. Courtyard by Marriott

L.P., 659 N.E.2d 1242, 1248 (Ohio 1996).

For another thing, without knowing the amount of

compensatory damages or the precise basis for the

award, the Court could not complete its review under

the State Farm guideposts. “The precise [punitive]

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,” State Farm, 538 U.S.

at 425, and not until the jury reconsiders the case

will the underlying factual record be complete.

Equally true, the lack of a compensatory award

makes it impossible to calculate the ratio of

compensatory damages to punitive damages. See id.

7

(‘few awards exceeding a single-digit ratio between

punitive and compensatory damages, to a significant

degree, will satisfy due process”). Although Chicago

Title attempts to cast this case as a natural successor

to Gore and State Farm, those cases do not resemble

this one, largely because the compensatory damages

awards there were not subject to change or challenge

at the time the Court reviewed the punitive damages

award. See id. at 415; Gore, 517 U.S. at 565.

In view of the uncertainty of the outcome at the

new trial, accepting review at this stage would be

premature at best. See ROBERT L. STERN, ET AL.,

SUPREME COURT PRACTICE § 4.18, at 258 (8th ed.

2002) (discussing the Court’s practice of denying

certiorari at an interlocutory stage where the case

may take on a different aspect as it proceeds in the

trial court). Unlike cases in which “Supreme Court

intervention may serve to hasten or finally resolve

the litigation,” such as reviewing the denial of

summary judgment or a motion to dismiss, a review

of the punitive damages award here will not

abbreviate, much less end, this case. See id. at 260

(citing cases).

B. A Threshold State-Law Issue Makes This Case

A Poor Candidate For Review. |

The Court’s review is unwarranted for the

additional reason that there is an independent and.

adequate state law ground for resolving’the punitive

damages issues in this case. First American argued

below that Chicago Title was not entitled to punitive

damages- as a matter of state law in this

8

business/economic injury case because Chicago Title

did not meet the Ohio standard for “malice,” which

permits a punitive damages award only where an

individual’s “rights and safety” are at issue. Preston

v. Murty, 512 N.E.2d 1174, 1174, 1176 (Ohio 1987)

(defining “malice” to include conduct reflecting “a

conscious disregard for-the rights and safety of other

persons that has a greater probability of causing

substantial harm”). The Sixth Circuit, however,

opted to resolve this case on federal due process

grounds, expressly leaving unanswered whether state

law even authorized a punitive damages award here.

Pet. App. 29a n.9 (“Since punitive damages are

inappropriate in this case due to _ insufficient

reprehensibility of First American’s conduct, a

number of its additional arguments are now

irrelevant: .... (2) that Ohio law and the state

constitution prohibit punitive damages in this

case....”). As such, it is not even clear that state law

would authorize an award in this case.

These independent state-law grounds may also

support the Sixth Circuit’s judgment, which makes

the case all the more inappropriate for review. After

all, were the Court to grant review, it might be left to

simply remand to the Sixth Circuit to address the

unanswered state-law issue, to avoid the unnecessary

resolution of federal constitutional questions. See

Hutchinson v. Proxmire, 443 U.S. 111, 122 (1979)

(absent “special considerations,” the Court’s “practice

is to avoid reaching constitutional questions if a

dispositive nonconstitutional ground is available”

and, where appropriate, to “remand to the Court of

9

Appeals to review [a] state-law question which it did.

not consider’).

Il. THE SIXTH CIRCUIT APPLIED SETTLED

LAW TO THE UNIQUE FACTS OF THIS CASE.

Even if this case were a proper vehicle to address

punitive damages issues, Chicago Title presents no

issues meriting the Court’s review. The Sixth Circuit

properly adhered to the Court’s decision in State

Farm, applying the reprehensibility guidepost factors

to this business tort case involving economic injury

and holding that no punitive damages award is

permitted here. Significant to the Sixth Circuit's

analysis was the Court's instruction that “the

existence of any one of th[e reprehensibility] factors

weighing in favor of a plaintiff may not be sufficient

to sustain a punitive damages award; and the

absence of all of them renders any award suspect.”

State Farm, 538 U.S. at 419. The Sixth Circuit found

that no amount of punitive damages was appropriate

based on the particular facts of this case. Pet. App.

24a-29a. Put another way, the Sixth Circuit held

that the “size” of an award in this case must be $0.

Pet. 9.

Invoking Lochner, Chicago Title characterizes the

decision below as abrogating the State of Ohio’s

decision to authorize punitive damages in cases

involving “malice.” Setting aside whether Ohio law

would even authorize an award here, see supra, there

is nothing to support Chicago Title’s dramatic

reading of the Sixth Circuit’s holding as interfering

with a State’s discretion over when to authorize

10

punitive damages, specifically by barring punitive

damages in business tort cases. Even in those cases

where a plaintiff is eligible to receive a punitive

damages award under state law, federal courts have

a role in reviewing “both the severity of recognized

misconduct for which punitive damages may be

imposed and the amount of such penalty that may be

constitutionally awarded for particular offenses.”

Rhone-Poulenc Agro, S.A. v. DeKalb Genetics Corp.,

345 F.3d 1366, 1369-70 (Fed. Cir. 2003) (emphasis

added) (citing State Farm, where “the Supreme Court

elaborated on the constraints placed by the Due

Process Clause on the discretion of juries and

courts”). Indeed, “[w]hile States possess discretion

over the imposition of punitive damages, it is well

established that there are procedural and substantive

constitutional limitations on these awards.” State

Farm, 538 U.S. at 416.

Today’s case places no limits on a state’s ability to

authorize a factfinder to consider whether to impose

punitive damages. Once that determination is made,

due process in some instances will not permit an

award greater than $0. Put differently, in certain

cases any punitive award would be “grossly

excessive.” Jd. In instructing that punitive damages

“should only be awarded if the defendant’s

culpability ...is so reprehensible as to warrant the

imposition of further sanctions to achieve

punishment or deterrence,” id. at 419 (emphasis

added), State Farm clearly envisions instances where

a court, applying State Farms due _ process

limitations, would hoid that no punitive damages are

11

appropriate. While Chicago Title artfully

characterizes this case as a “return to Lochnerism”

(Pet. 11), the decision is better understood as a

reasonable application of recent Court precedent.

Ill. THE DECISION BELOW DOES NOT CREATE

A CIRCUIT SPLIT. |

A. The Sixth Circuit Established No Bright-Line

Rule For The Reprehensibility Guidepost.

To justify its second question presented, Chicago

Title describes the panel decision as one that

established a bright-line, two-factor-minimum rule

for the State Farm reprehensibility guidepost. In

truth, the Sixth Circuit neither set up nor applied

any bright-line rule but rather concluded that the

award here was unconstitutional given the virtual

absence of any of State Farm's reprehensibility

factors as well State Farm's instruction that “[t]he

existence of any one of these [reprehensibility]. factors

weighing in favor of a plaintiff may not be sufficient

to sustain a punitive damages award.” Pet. App.

24a, 28a n.8 (quoting State Farm, 538 U.S. at 419).

Indeed, considering that the appeals court merely

assumed malice “for sake of argument,” Pet. App.

25a, it is not clear that the evidence supported even a

showing of “intentiona/ malice,” one reprehensibility

factor, let alone multiple factors. In the end, the

Sixth Circuit properly concluded that First

American’s conduct was not so reprehensible as to

warrant an award of punitive damages. Pet. App.

28a-29a. |

12

B. The Decision Below Is Not In Tension With

Other Courts’ Decisions.

The factbound decision below did not create a split

among the circuits. Chicago Title’s cited cases (Pet.

21-27) represent nothing more than instances of

other courts’ applying State Farm’s due process

inquiry to different facts and holding, based upon

those facts, that the conduct there did support a

punitive damages award. For example, the Third

Circuit in Willow Inn, Inc. v. Public Service Mutual

Insurance Co., 399 F.3d 224, 232-33 (3d Cir. 2005),

determined that three of the reprehensibility factors

contributed to establish sufficient reprehensibility to

support punitive damages there. In addition, both

the Eighth Circuit in Diese/ Machinery, Inc. v. B.R.

Lee Industries, Inc., 418 F.3d 820, 839 (8th Cir.

2005), and the Second Circuit in Motorola Credit

Corp. v. Uzan, 388 F.3d 39, 63-64 (2d Cir. 2004),

concluded that punitive damages were appropriate

based upon the existence of two of the

reprehensibility factors.

Unlike this case, many of the cases cited in the

petition involved a vulnerable victim, actual fraud, a

finding of “trickery, or deceit,” and/or nominal or low

compensatory damage awards. For example, in

Rhone-Poulenc Agro, 345 F.3d at 1371, the defendant

“materially misrepresented a past or existing fact” as

part of its underlying fraud. Eden Electrical, Ltd. v.

Amana Co., 370 F.3d 824, 828 (8th Cir. 2004),

similarly involved an affirmative “scheme to defraud”

that led the district court to remark that it “can

hardly think of a more reprehensible case of business

13

fraud.” In another case involving a motel chain that

exposed guests to painful bites from bedbugs

infesting its rooms and then lied to them about the

room conditions, “[t]he defendant’s behavior was

outrageous but the compensable harm done was

slight.” Mathias v. Accor Economy Lodging, Inc., 347

F.3d 672, 677 (7th Cir. 2003). And Planned

Parenthood of Columbia/Willamette Inc. v. American

Coalition of Life Activists, 422 F.3d 949, 959 (9th Cir.

2005), cert. denied, 547 U.S. 1111 (2006), involved

“intentional intimidation of physicians, aimed at

forcing them to quit practicing out of fear for their

lives.”

All of these cases, in sum, stand in contrast to this

one, which lacks “sufficiently reprehensible” conduct

to support a punitive damages award. Pet. App. 28a.

IV. THE SIXTH CIRCUITS ANALYSIS OF THE

“REPEATED CONDUCT” FACTOR PRESENTS

NO CONFLICT WARRANTING REVIEW.

The Sixth Circuit’s application of the State Farm

“repeated conduct” reprehensibility factor does not

create a split among the circuits justifying certiorari

review. The Sixth Circuit’s analysis, moreover, is

entirely consistent with the Court’s decisions.

A. There Is No Split Over The “Repeated

Conduct” Factor That Warrants Review.

In assessing whether there were instances of past

misconduct that could be considered as part of a

reprehensibility analysis, the Sixth Circuit

constrained its analysis to “similar reprehensible

conduct [ ] committed against various different

14

parties,” as opposed to “repeated reprehensible acts

within the single transaction with the plaintiff.” Pet.

App. 26a (internal quotation marks omitted). Few

circuit courts have addressed whether the “repeated

actions” that satisfy this reprehensibility factor can

include repeated misconduct against the plaintiff,

and Chicago Title at best has identified the

shallowest (1-to-1) of splits over this issue, with the

possible addition of a few state courts on one side of

the issue. Compare Pet. App. 26a with CGB

Occupational Therapy, Inc. v. RHA Health Servs.,

Inc., 499 F.3d 184, 191 (3d Cir. 2007) (rejecting

argument that “repeated conduct” evidence must be

limited to “similar tortious acts against ... entities”

other than the plaintiff).! Chicago Title’s remaining

cases merely apply the “repeated conduct” factor to

repeated acts against a plaintiff and/or other persons

without further analysis of whom must be the target

of the “repeated actions.” E.g., Southern Union Co. v.

Southwest Gas Corp., 415 F.3d 1001, 1010 (9th Cir.

2005), cert. denied, 546 U.S. 1175 (2006); Century

' See also Int] Union of Operating Eng’rs, Local 150 v. Lowe

Excavating Co., 870 N.E.2d 303, 318-19 (Ill. 2006) (“courts are

permitted to consider a defendant's conduct towards the

plaintiff in question, as well as similar conduct extending

beyond the plaintiffs case, when determining whether a

defendant can be labeled a recidivist for reprehensibility

purposes’), petition for cert. filed, 76 U.S.L.W. 3240 (No. 07-560,

Oct. 26, 2007); Superior Fed. Bank v. Jones & Mackey Constr.

Co., LLC, 219 S.W.3d 643, 650-51 (Ark. Ct. App. 2005) (finding

“repeated conduct” factor satisfied by “several

statements...made by [defendant] in what seemed to be a

continuing effort to inflict harm” on plaintiff).

15

Sur. Co. v. Polisso, 43 Cal. Rptr. 3d 468, 499-500 (Ct.

App. 2006); Hayes Sight & Sound, Inc. v. ONEOK,

Inc., 136 P.3d 428, 447 (Kan. 2006); see also Lee v.

Edwards, 101 F.3d 805, 809 (2d Cir. 1996) (applying

“repeated misconduct” factor from Gore). In short,

there is little, if any, division among the lower courts.

B. The Sixth Circuit’s Analysis Of The “Repeated

Conduct” Factor Is Consistent With This

Court’s Guidance.

In any event, the Sixth Circuit’s decision regarding

the “repeated conduct” factor is consistent with Gore

and State Farm. While Chicago Title suggests that

“conduct within a _ single transaction with the

plaintiff’ is enough to satisfy the “repeated conduct”

reprehensibility factor, the Court has limited its

considerations in this setting to penalizing parties

engaging in “recidivist” conduct, where “the conduct

in question replicates the prior transgressions.”

‘State Farm, 538 U.S. at 423 (citing Gore, 517 U.S. at

577). And to be a recidivist based upon a prior

transgression, a party must have misbehaved

previously in another setting, not in the same single

transaction with the same plaintiff. That conclusion

is consistent with the Court’s recent decision in

Philip Morris USA v. Williams, which held that “a

plaintiff may show harm to others in order to

demonstrate reprehensibility.” 127 S. Ct. 1057, 1063-

65 (2007) (holding, however, that “a jury may not go

further than this and use a punitive damages verdict

to punish a defendant directly on account of harms it

is alleged to have visited on nonparties”). Indeed,

notwithstanding its decision in CGB Occupational

16

Therapy, 499 F.3d 184, even the Third Circuit has

acknowledged that this Court has looked only to

“specific instances of similar conduct by the

defendant in relation to other parties” when applying

this factor. Willow Inn, 399 F.3d at 232.

C. There Is No Evidence Of Repeated Misconduct

By First American In This Case.

Even if State Farm's reprehensibility guidepost

allowed for consideration of a party’s repeated

misconduct in the same transaction with the same

plaintiff, that type of evidence is absent here. At

bottom, First American’s conduct involved tortiously

inducing one employee to breach one contact.

V. THIS CASE HAS NO RELATIONSHIP TO THE

PENDING DECISION IN EXXON SHIPPING

CO. V. BAKER.

Finally, this case bears little resemblance to Exxon

Shipping Co. v. Baker, No. 07-219, and the punitive

damages issues Chicago Title raises here will not

inform, and will not be informed by, the Court’s

pending decision there. Exxon Shipping presents

issues of federal common law and_ statutory

interpretation, primarily whether punitive damages

are authorized in the first instance under maritime

law. Notably, the Court denied the petitioner’s

request for review of the award as a matter of

constitutional due process. Exxon Shipping Co. v.

Baker, 128 S. Ct. 492 (Oct. 29, 2007) (No. 07-219);

Petition for a Writ of Certiorari, Exxon Shipping Co.

v. Baker, 2007 WL 2383784 (U.S. Aug. 20, 2007) (No.

07-219).

17

CONCLUSION

The petition should be denied.

ROBERT P. DUCATMAN

JONES DAY

North Point, 901

Lakeside Ave.

Cleveland, OH 44114

Tel: (216) 586-3939

DAVID L. HORAN

JONES DAY

2727 N. Harwood St.

Dallas, TX 75201

Tel: (214) 220-3939

January 2, 2008

Respectfully submitted,

CHAD A. READLER

(Counsel of Record)

MATTHEW A. KAIRIS

G. ROGER KING

JONES DAY

325 John H. McConnell

Blvd., Suite 600

P.O. Box 165017

Columbus, OH 43216

Tel: (614) 469-3939

Counsel for Respondents