# Petition for Writ of Certiorari — Exxon Mobil Corp. v. Grefer (No. 07-1055) > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386010_0624%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 2007 ## Text oldies A ® 071055FEB1 4 2008 No. 07- OFFICE OF THE CLERK IN THE Supreme Court of the Gnited States EXXON MOBIL CORPORATION, Petitioner, Vv. JOSEPH GREFER ET AL., Respondents. On Petition for a Writ of Certiorari to the Louisiana Court of Appeal, Fourth Circuit PETITION FOR A WRIT OF CERTIORARI GLEN M. PILIE WALTER DELLINGER RONALD J. SHOLES (Counsel of Record) Louis C. LACOUR, JR. MATTHEW M. SHORS MARTIN A. STERN KATHRYN E. TARBERT® ADAMS AND REESE LLP O’MELVENY & MYERS LLP 4500 One Shell Square 1625 Eye Street, N.W. New Orleans, Louisiana Washington, D.C. 20006 70139 (202) 383-5300 (504) 581-3234 *Admitted only in Wisconsin; supervised by principals at the firm Attorneys for Petitioner i QUESTIONS PRESENTED Although a jury held ExxonMobil liable for purely economic harm to a $1.5 million piece of industrial property, it awarded $1 billion in punitive damages based entirely on the threat of physical harm to non- parties. The Court of Appeal reduced that punitive damages award to $112 million. This Court granted ExxonMobil’s petition for a writ of certiorari, vacated the Court of Appeal’s judgment, and remanded the case for reconsideration in light of Philip Morris USA v. Williams, 127 S. Ct. 1057 (2007). The Court of Appeal “st[oo]d by its initial decree.” The ques- tions presented are as follows: 1. Whether the Court of Appeal on remand de- nied due process when it continued to punish ExxonMobil for harm to nonparties, left intact a pu- nitive damages award without finding that Exxon- Mobil’s conduct was reprehensible as it affected plaintiffs, and held that the jury could “consider the harm suffered by both parties and non-parties re- gardless of the type or similarity of harm suffered.” 2. Whether, contrary to the decisions of other federal and state appellate courts, a court may rem- edy a concededly tainted punitive damages trial by affirming the maximum punitive damages award due process permits, rather than by ordering a new trial. 3. Whether due process permits punitive dam- ages twice the amount of compensatory damages in a case of economic injury when compensatory damages are $56 million and plaintiffs’ actual harm is no greater than $1.5 million. i PARTIES TO THE PROCEEDING Petitioner is Exxon Mobil Corporation, one of two defendants-appellants below. Intracoastal Tubular Services, Inc. was the other defendant-appellant be- low and is a respondent under this Court’s Rule 12.6. Other parties named as defendants in the trial court — none of whom were parties on appeal — were Alpha Technical Services, Inc.; Chevron, U.S.A., Inc.; Conoco, Inc.; Homeco Inc.; HuntPetroleum Corp.; Hassie Hunt Exploration Co.; Mobil Exploration & Producing Southeast, Inc.; Phillips Oil Co.; Sexton Oil & Mineral Corp.; Shell Offshore, Inc.; Shell Oil Co.; Shell Western E&P, Inc.; System Fuels, Inc.; Texaco, Inc.; Tubular Corp; OFS, Inc.; and Oilfield Testers, Inc. Plaintiffs-appellees below, Joseph Grefer, Camille Grefer, Rose Marie Grefer Hassi, and Henry Grefer, are respondents under this Court’s Rule 12.6. RULE 29.6 DISCLOSURE Exxon Mobil Corporation has no parent corpora- tion and no person or entity owns 10% or more of its stock. ili TABLE OF CONTENTS Page QUESTIONS PRESENTED............ccccccccocsscsescssrseeees i PARTIES TO THE PROCEEDING .................00c000008 ii RULE 29.6 DISCLOGURE .cccccscssessesesesesssesescocnccsescece li TATILAS OF AUFTRIO RE TG ccccccvcccsoscescesscnssesnscccccsecses Vv PETITION FOR A WRIT OF CERTIORARI............. 1 ee IIT winrininsitishiiesiiniscsmnsdannmipnpaenieiiaaanniansioen 1 NE sistsnetiiciistinaitdecselicthadtabiniscaianiiiniasnnnnanseigendben 1 CONSTITUTIONAL PROVISION IN- Re hashes hincsoastiabaincsinniaicsidiisiahls ens ceipitleihiigh sieandians nistaniigneie 1 STATEMENT OF THE CASE ...................2..ccceesereeees 1 A. CTE TIGOIG nannsccccenscsnsicessecesseccees 3 B. I ik ictal 5 REASONS FOR GRANTING THE PETITION........ 10 : THE JUDGMENT BELOW DEFIES THIS COURTS PRECEDENT BY AWARDING PUNITIVE DAMAGES FOR HARM TO NONPARTIES ..............00006 12 Il. THE LOUISIANA COURT OF APPEAL’S DECISION TO REDUCE THE PUNITIVE DAMAGES RATHER THAN ORDER A NEW _ TRIAL DEEPENS A CONFLICT AMONG THE SAPO ee SEE TDA seihinintnsaeieiniianiniiantianicnanneen 19 IIT. iv TABLE OF CONTENTS There Is A Conflict In The Lower Over The Proper Remedy When A Punitive Damages Award Is Tainted By Improper Evidence Or Instruc- I i snchniin This Court Should Hold That Judicial Reduction Of The Award To A “Constitutional Maximum” Is Not The Appropriate Remedy For An Award Based On Constitutionally Invalid Instructions. ............c.ccsscccsscsseese THE COURT OF APPEAL’S IMPOSITION OF A 2:1 RATIO OF PUNITIVE TO COMPENSATORY DAMAGES DEEPENS A DIVIDE IN THE LOWER COURTG......... hibscaliabiniaasadeienes 26 The Decision Below Disregards State Farm And Highlights A Split In The Lower Courts Regarding The Per- missible Ratio When Compensatory Damages Are Substantial. .................... This Court Should Grant Review And Instruct That In This Case of Substantial Compensatory Dam- ages, Punitive Damages Were Not Warranted At All, Much Less In A ee CONCLUSION SSSSSCHSTSESSEHSESSESHEEEECEHSESESHSHHHESSECESEEESESECESE SPOSSSHSSSSSOSSSSSHSHEFSEHTSSSHSOSHSSHOOHSEHHESEEEECEHRESESESENES Page ...20 124 ina 1009 Vv TABLE OF CONTENTS Page Appendix A: Louisiana Court of Appeal Opinion on Remand From United States Supreme Court, PU, Diy IE iinitiicscsnaniciaihinivcinanindinin piintiieansadpaninsntii la Appendix B: Louisiana Court of Appeal Opinion, SO Sas isan bisa aie ihc aes th cei thcaiads 36a Appendix C: Trial Court Judgment, I i EO axscihenaniaiitdaiscdginidtiaehainieiibaindednanan 108a Appendix D: Louisiana Court of Appeal Opinion Denying Rehearing, May 16, 2005.................. 113a Appendix E: Louisiana Supreme Court Order De- nying Certiorari Review, March 31, 2006........ 120a Appendix F: United States Supreme Court Order Granting Certiorari Review, Feb. 26, 2007...... 122a Appendix G: Louisiana Supreme Court Order De- nying Certiorari Review, Nov. 16, 2007........... 123a Appendix H: United States Supreme Court Order Denying Application for Stay, May 15, 2006 ...124a Appendix I: Jury Instructions ...............cccceseeees 125a vi TABLE OF AUTHORITIES Page CASES —_ Marine, Inc. v. Cont’l Carbon, ne., 481 F.3d 1302 (11th Cir. 2007) petition for cert. field, 76 U.S.L.W. 3082 (U.S. Aug. 24, 2007 (No. 07- 9 URNS TEE DES Se Sol SE Oe 28 Bach v. First Union Natl Bank, 149 F. App’x 354 (6th Cir. 2005)...................ceee 30 er; v. W.H. McLeod & Sons Packing 0., 766 F.2d 1817 (6th Cir. 1986) ........ccccccccoscccsseeees 27 Bettius & Sanderson, P.C. v. Nat'l Union Fire Ins. Co., 839 F.2d 1009 (4th Cir. 1988) .....................ccceee 27 Boerner v. Brown & Williamson Tobacco Co., 394 F.3d 594 (8th Cir. 2005)..........0.00.0000000.. 23, 28 BMW of North America, Inc. v. Gore, ee ee a icttiiiscsnticensenntonesice passim Bullock v. Philip Morris USA, Inc., --- Cal. Rptr. 3d ----, 2008 WL 240989 (Ct. App. Jan. 30, 2008).......... secssahanbioniaties 21 Cooper Indus. v. Leatherman Tool Group, Inc., SE es EE, SUI CIEE ccicncnicnccnssecnsccnentéconsnnnce 24 Estate of Moreland v. Dieter, BE Fe CAT CFO CAP. BOOB) q.ncnccccccceccocccccscosscese 28 Ford Motor Co. v. Ammerman, 705 N.E.2d 539 (Ind. Ct. App. 1999).................. 23 Gertz v. Robert Welch, Inc., gE ne O Ee 27 vii TABLE OF AUTHORITIES Hansen v. Boyd, I wits cisiissinvacespeneccensccnntsnadiipamnesen 21 Henley v. Philip Morris Inc., 9 Cal. Rptr. 3d 29, 71-72 (Ct. App. 2004) review granted, 88 P.3d 497 (Cal. 2004) review dismissed, 97 ee citintdatinicntncesesvncssncsccnssccestsasase 22 In re Harvey TERM Litigation, No. 01-8708 (La. Dist. Ct. Parish of a ssisesmanennnninaee 15 Lindsey v. Normet, A a ecilas 12 Marbury v. Madison, 6 U5. (1 Cramema) 137 (1808)........cccccccccccssccveceeee 24 Memphis Cmty. Sch. Dist. v. Stachura, ee I weieieiiciaectititnsterncssciccsesinacnenins 27 Merrick v. Paul Revere Life Ins. Co., 600 F.3d 1007 (Sth Cir. 2007) ...........ccccccccccsoccees 21 People v. Ault, Re is ID piidtcecintiinnsscasosensnenniniationiinn 22 Philip Morris USA v. Williams, | ee I CIEE F eitintntdccasneriernensscoscencs passim Rhone-Poulenc Agro, S.A. v. DeKalb Genetics Corp., 345 F.3d 1366 (Fed. Cir. 2003)..................ccc00000 29 Roman Catholic Church of the Archdiocese of New Orleans v. La. Gas Serv. Co., Es DD IT ENTTe 26 Romo v. Ford Motor Co., 6 Cal. Rptr. 3d 793, 805 (Ct. App. SI i dics facesias Sos sdateinnceicett balan aakaiaiaicaneistadinsnsesuinebabe 22 viii TABLE OF AUTHORITIES Page Sand Hill Energy, Inc. v. Smith, 142 S.W.3d 153 (Ky. 2004)............ccccccccccccssccsceee 21 Seltzer v. Morton, 354 POG GE Cibewit. BOGT) nc cccccccssccsccssecccssssssccnss 28 Smith v. Wade, I iaisirtiitenikntitenentsciccsennisinsamiinnnaniniartinn 25 Stamathis v. Flying J, Inc., 389 F.3d 429 (4th Cir. 2004) .........ccccsccccecccccssees 28 State ex rel. Chemtall Inc. v. Madden, 655 S.E.2d 161 (W. Va. Nov. 15, TED iniitiiitiidaliiahiicecdidiaitichinhiideiasiiiiddinannbsannebinenikasibtotn 16 State Farm Mutual Automobile Insurance Co. v. Campbell, RD SF Fe. I GD crncesncccsnnnstcnesecsccccecssocess passim United Food & Commercial Workers Local 100A v. John Hofmeister & Son, Inc., 950 F.2d 1340 (7th Cir. 1991)..............ccsesecceesees 18 White v. Ford Motor Co., 312 F.3d 998 (9th Cir. 2002) ............c eens 20, 25 White v. Ford Motor Co., 500 F.3d 963 (9th Cir. 2007) ..............:cseceseceeeeees 21 Williams v. ConAgra Poultry Co., 378 F.3d 790 (8th Cir. 2004) ........ cee eeeeeeeee 17, 22 Williams v. Philip Morris, CC 9705-03957; CA A106791; SC S051805, 2008 WL 256614 (Or. Jan. SF Se aden saca ahaa icles trsndiccsacinenepiaoadanion 16 Williams v. Philip Morris, Inc., 127 P.3d 1165 (Or. 2006).............. icisimenedelgldititalenaa 29 STATUTES La. Civ. Coto bit. Ba icikitscascttaaieiniecmeionon 7 ix TABLE OF AUTHORITIES Page OTHER AUTHORITIES 1 Dan B. Dobbs, The Law of Remedies, i GL, ETN cseccncssusnesesecoscccsccccssccccccetes 25 Amicus Curiae Br. of La. DEQ, Grefer v. Alpha Technical, No. 05-C-1590 (La. ET 30 Pet. for a Writ of Certiorari, BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (1996) (No. 94-896), 1994 WL 16011916 (Nov. 17, 1994)................... 19 Petr’s Br., BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (1996) (No. 94-896), 1995 WL 126508 (Mar. 23, 1995)....................... 19 CONSTITUTIONAL PROVISIONS Pe, MIL. SEW os ciccncseseseecsbesorersenen. 2000eee 1 PETITION FOR A WRIT OF CERTIORARI Petitioner Exxon Mobil Corporation (“ExxonMo- bil”) respectfully petitions for a writ of certiorari to review the judgment of the Louisiana Court of Ap- peal, Fourth Circuit, in this case. OPINIONS BELOW The opinion of the Court of Appeal on remand is reported at 965 So. 2d 511 and is reprinted in the Appendix to the Petition (“App.”) at la-35a. The first opinion of the Louisiana Court of Appeal is re- ported at 901 So. 2d 1117 and is reprinted at 36a- 107a. The final judgment of the trial court is unre- ported and is reprinted at App. 62a-66a. JURISDICTION The Court of Appeal issued its opinion on August 8, 2007. App. 3a. The Louisiana Supreme Court de- nied ExxonMobil’s timely petition for certiorari re- view on November 16, 2007. Justices Kimball and Victory would have granted the application. Id. at 123a. This Court has jurisdiction pursuant to 28 U.S.C. § 1257(a). CONSTITUTIONAL PROVISION INVOLVED The Fourteenth Amendment to the Constitution provides in pertinent part: “No State shall... de- prive any person of life, liberty, or property, without due process of law ....” STATEMENT OF THE CASE In Philip Morris USA v. Williams, 127 S. Ct. 1057 (2007), this Court held that “the Constitution’s Due Process Clause forbids a State to use a punitive 2 damages award to punish a defendant for injury that it inflicts upon nonparties or those whom they di- rectly represent, i.e., . . . those who are, essentially, strangers to the litigation.” Id. at 1063. This Court granted certiorari in this case, vacated the judgment affirming a $112 million award of punitive damages, and directed the Court of Appeal to reconsider its de- cision in light of Williams. App. 122a. In response to this mandate, the Court of Appeal reprinted a large section of its original opinion and insisted that it had anticipated Williams, despite having affirmed jury instructions that predicated punitive damages on a claimed risk to public health, see App. 9a-12a, and having rejected arguments that ExxonMobil could not be punished solely for the po- tential harm its conduct allegedly posed to nonparty employees, id. at 114a. The Court of Appeal deter- mined that ExxonMobil had acted reprehensibly based solely upon the physical harm allegedly suf- fered by nonparties to the litigation and held that the jury could “consider the harm suffered by both parties and non-parties regardless of the type or similarity of harm suffered as a result of defendant’s conduct.” App. 33a. The court’s clear disregard of this Court’s precedents and its order to reconsider in light of Williams warrants review. In addition, the decision below exacerbates a split among federal and state appellate courts as to whether a court may remedy a concededly tainted punitive damages trial by affirming the maximum substantive punitive damages award the Constitu- tion permits rather than by granting a new trial. Although the Court of Appeal recognized that the trial court erred in “allow[ing] the plaintiffs to argue 3 and present substantial evidence .. . of the potential and/or alleged actual harm” to the public, the court refused to grant ExxonMobil’s request for a new trial. App. 26a. Instead, the court reduced the puni- tive damages to the maximum award it believed con- stitutionally available as a matter of due process. That error provides this Court the opportunity to take up the unfinished business of Williams and BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996), and resolve a split among federal and state courts as to whether, when an award of punitive damages rests upon improper considerations, due process permits a court to’ remedy that error by awarding the maximum amount of damages due process permits. The decision below also exacerbates a divide in the lower courts over the amount of punitive dam- ages that may constitutionally be awarded where compensatory damages are already substantial. The court here awarded $112 million in punitive dam- ages on top of the $56 million plaintiffs received to compensate for and remediate the damage to their $1.5 million piece of property. That award was un- constitutional under this Court’s decision in State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408 (2003), which teaches that due process does not permit the award of any punitive damages when compensatory damages are sufficient to punish and deter and that the highest permissible ratio in a case of substantial compensatory damages is 1:1. A. Factual Background 1. Plaintiffs jointly own a 33-acre tract of indus- trial property in Harvey, Louisiana. See App. 46a & + n.8. That tract of land is worth at most $1.5 million. Id. at 4a, 46a, 66a. For decades, plaintiffs leased their land to ITCO, an oil and gas service company. App. 4la. ITCO’s services included the storage, handling, transporta- tion, inspection, cleaning, and threading of drill pipes used in oil production. Jd. Several oil compa- nies, including ExxonMobil, routinely sent their pipes to ITCO for cleaning. Jd. As part of cleaning the pipes, ITCO sometimes removed built-up “scale” from inside some of the pipes. Id. at 36a. Scale is caused by mineral salts, which precipitate as oil and gas flow through pipes from underground reservoirs to the surface. Id. at 48a-49a. Some of the scale in- volved here contained radium sulfate, and over sev- eral decades, the pipe cleaning activities led to the accumulation of naturally occurring radioactive ma- terial (“NORM”) on plaintiffs’ property. See App. 36a. 2. Although ExxonMobil and other oil companies sent pipes to ITCO for cleaning beginning in the early 1950s, it was not until 1986 that ExxonMobil learned that some of the scale in the pipes contained low levels of NORM. App. 43a-44a. After investigat- ing that discovery, ExxonMobil prepared a videotape and a letter advising pipe-cleaning contractors about the presence of NORM in its pipes and the risks as- sociated with it. Within nine months of the discov- ery, ExxonMobil notified ITCO and stopped shipping pipes to it for cleaning. Jd. at 44a. ITCO continued to store contaminated pipes on the property until 1992, when it ceased all operations on plaintiffs’ land. Id. at 4a, 24a, 46a. 5 B. Proceedings Below 1. In August 1997, plaintiffs sued ExxonMobil, other oil companies, other pipe-cleaning companies, and ITCO itself, claiming that their property had been damaged as a result of the cleaning and storage of pipes on the property. App. 47a-49a. Plaintiffs asserted claims for negligence, strict liability, abso- lute liability, nuisance, fraud, and breach of contract. Id. at 49a. Plaintiffs did not assert any personal injury claims or seek any medical monitoring relief, as they do not live near or make personal use of the prop- erty. Rather, plaintiffs sought damages for loss of use and remediation of the property and punitive damages. App. 49a Only the claims against ExxonMobil and ITCO went to trial. 2. During a five-week trial in April and May of 7 2001, plaintiffs urged the jury to award massive pu- nitive damages against ExxonMobil, based not on harm to plaintiffs’ property, but instead on the risks of physical harm allegedly posed to nonparties, in- cluding ITCO employees and the public. This campaign to punish ExxonMobil for poten- tial physical injury to nonparties pervaded the trial. In his opening statement, plaintiffs’ counsel de- scribed NORM as “a very, very, very fine powder” that will “blow all over the place,” R.32:17,! “travel towards the houses,” R.33:19, and infiltrate churches _and schools, R.33:200; R.34:38. Plaintiffs showed the 1 Citations to the trial court transcript are to the record filed with the Court of Appeal and take the form “R.[volume]:(page].” 6 jury a video of schoolchildren getting on and off a bus near their property, implying that the children had been exposed to harmful levels of radiation. R.33:191-99. Plaintiffs suggested that radium from plaintiffs’ property would enter the “food chain,” R.29:131, and would cause cancer and birth defects, R.29:137-41; R.32:131-36. Plaintiffs compared the conduct in this case to the Exxon Valdez oil spill and urged the jury to bring ExxonMobil “to an altar” again. R.56:43. In closing, plaintiffs argued that ExxonMobil left ITCO employees and the public “unprotected” by failing to tell them about risks posed by NORM. R.56:42. Although this evidence had nothing to do with the economic losses alleged by plaintiffs, they claimed it showed that NORM “threatened” ITCO employees and the public and thereby asked the jury to award massive punitive damages against Exxon- Mobil. R.33:193; see also R.29:108-09 (stating that the evidence went to “the quantum of punitive dam- ages”). ExxonMobil repeatedly objected to this in- flammatory and irrelevant evidence. The trial court overruled those objections. See, e.g., R.29:114, 138- 41; R.33:200; R.34:38. 3. Again over ExxonMobil’s objection, the trial court instructed the jury that it could award punitive damages against ExxonMobil if the company was “wanton or reckless in [its] disregard for public safety,” meaning that ExxonMobil knew that it was “highly probable that harm to the public would re- sult from [its] conduct.” App. 10a. The court refused to instruct the jury, as ExxonMobil requested, that it “fcould) only award exemplary damages” if Exxon- Mobil had engaged in wanton and reckless conduct 7 that damaged the plaintiffs. See id. at 9a-1la (quot- ing Exxon’s proposed instructions). Instead, the trial court described harm to the plaintiffs as “[aJnother factor” the jury could consider in determining the amount of the award. Jd. at 11a. 4. During deliberations, the jury foreperson “sent a note to the trial court inquiring as to whether any of the punitive damage award would go to com- pensate people in the community.” App. 99a n.26. Although the court responded that the entire puni- tive damages award would go to plaintiffs, the jury awarded $1 billion in punitive damages against ExxonMobil.2 App. 5a. The jury also awarded $56 million in remediation costs, which plaintiffs are not required to expend on their $1.5 million property, and $145,000 in general damages. Id. The trial court entered judgment against ExxonMobil for a staggering total of $1.056 billion, plus interest and costs. 5. ExxonMobil appealed. On March 31, 2005, the Fourth Circuit Court of Appeal affirmed the trial court’s judgment. It rejected ExxonMobil’s state-law arguments that would have reduced the compensa- tory damages award. See App. 52a-75a. 2 That massive punitive damages award was returned de- spite the fact that Article 2315.3 of the Louisiana Civil Code, the state law authorizing punitive damages, did not exist until September 1984, almost 30 years after ITCO started cleaning pipes for ExxonMobil, and was repealed in April 1996, one and one-half years before this lawsuit was filed. Because Exxon- Mobil stopped shipping pipes to ITCO by March 1987, App. 18a, the statute was only in effect for less than three years out of the decades of conduct at issue in this case. 8 In reviewing the constitutionality of the punitive damages verdict, the Court of Appeal purported to follow BMW, 517 U.S. 559, and State Farm, 538 U.S. 408. The court determined that ExxonMobil’s con- duct was reprehensible, not based on the “strictly economic harm” suffered by plaintiffs, but based on ExxonMobil’s “nine-month delay in notifying ITCO . . . of the dangers posed from handling NORM con- taminated equipment.” App. 94a (emphasis added). The Court of Appeal described ITCO, a co-defendant in the original action, as “the target of the conduct,” and found that ExxonMobil’s conduct “involve[d] an element of deceit” because the company withheld from ITCO information regarding the dangers of NORM. Zd. at 96a. The Court of Appeal “[nJext . . . considerfed] .. . the disparity between” the amount of punitive dam- ages awarded and plaintiffs’ actual harm. App. 96a. At this point, the court recognized that the jury’s de- liberations had been tainted by plaintiffs’ repeated references to alleged health risks to the public: Although the plaintiffs claimed only property damage, and no physical harm, the trial court allowed the plaintiffs to argue and present substantial evidence, over Exxon’s objections, of the potential and/or alleged actual harm to other persons who were not parties to this suit and whose claims were not before the jury. App. 98a. The court recognized that such evidence “was irrelevant and, more than likely, confused the jury, contributing to its exorbitant punitive damage award,” which was “neither reasonable nor propor- 9 tionate to the amount of harm to the plaintiffs and to the general damages recovered.” Id. at 99a-100a.5 Nevertheless, the Court of Appeal refused to or- der a new trial to remedy that error. Instead, and in the face of an admittedly “substantial” compensatory award, App. 98a, the court “reduce[d]” the jury’s award to “twice the general damage award,” which the court decided was the “highest figure” that could be awarded consisterit with due process. Jd. at 98a, 115a. The Court thus affirmed a punitive damages award of $112 million dollars — 75 times the value of the plaintiffs’ property and twice the $56 million in compensatory damages. App. 115a. 6. ExxonMobil petitioned for rehearing, arguing that the court erred in affirming the award of puni- tive damages because “harm to third parties cannot be punished.” Pet. Reh’g, Grefer v. Alpha Technical, No. 2002-CA-1237 8. The Court of Appeals rejected this argument as “an incorrect and exceedingly nar- row reading of” this Court’s decision in State Farm. App. 109a. 7. After unsuccessfully seeking review in the Louisiana Supreme Court, ExxonMobil petitioned this Court for a writ of certiorari. The Court granted the writ, vacated the judgment, and remanded for reconsideration of Williams, 127 S. Ct. 1057. App. 117a. The Court of Appeal instead “st[oo]ld by” the obvious errors in its initial decree. Jd. at 33a. First, the court concluded that the trial court “set forth a correct statement of the law” when, over ExxonMo- 3 The court did not reconcile this holding with its reliance on the harm to ITCO employees as a justification for the puni- tive damages verdict. See App. 94a-96a, 99a. 10 bil’s objection, it instructed the jury that it could award punitive damages for alleged risks to public health and safety. App. 10a, 12a. Next, the court reprinted approximately 7 pages of its original deci- sion that focused on the harm to ITCO employees, claimed that its original decision “t{ook] into account all of the objections and concerns raised by Exxon... in light of [Williams],” and insisted that potential . harm to nonparties could be considered regardless whether plaintiffs suffered the same kind of harm. App. 32a; see id. at 3l1a-33a. The court refused to or- der a new trial to remedy the introduction of the admittedly irrelevant evidence of alleged harm to the public. App. 27a. And the court again affirmed the $112 million punitive damages award. Id. at 35a. REASONS FOR GRANTING THE PETITION The jury awarded $1 billion in punitive damages based not on plaintiffs’ solely economic injury but on the potential physical harm ExxonMobil’s conduct allegedly posed to numerous individuals not before the court — qualitatively different harms against which ExxonMobil had no way to defend. The Court of Appeal compounded that error by affirming $112 million in punitive damages despite acknowledging the unfairness of the proceedings. This petition raises three important issues warranting review: First, this case offers the Court the opportunity to confirm, for those courts that have been unwilling to listen, that the Court meant what it said in Wil- liams: Due process does not allow a jury to punish a defendant for harm or potential harm that its con- duct has allegedly imposed upon nonparties to the litigation. This case also gives the Court the oppor- 11 tunity to eliminate any doubt that a nonparty’s dis- similar harm may not be the basis for finding that a defendant’s conduct toward the plaintiffs was repre- hensible and deserving of punishment. Second, even if the Court of Appeal otherwise ap- plied the Court’s punitive damages precedents cor- rectly, this case offers the Court the opportunity to consider whether due process permits a reviewing court to remedy a faulty instruction or jury’s im- proper consideration of evidence of nonparty harm with a reduction of the punitive damages award to the maximum amount the Constitution permits, rather than a new trial. There is a clear split in au- thority in the lower courts regarding whether such a reduction is a permissible remedy when the review- ing court cannot determine what portion of the award has been tainted by improper considerations. This Court granted review of that question in BMW, 517 U.S. 559, but did not resolve it there or in Wil- liams, see 127 S. Ct. at 1065. This case presents an ideal vehicle for resolving the conflict. Third, this case also provides a vehicle for the Court to consider the maximum punitive damages award (if any) that is permissible where compensa- tory damages are undeniably “substantial.” State Farm holds that, in cases of “substantial” compensa- tory damages, punitive damages in an amount “equal to compensatory damages” may be the maxi- mum permissible under the Constitution. 538 U.S. at 425. This case provides a striking example of the confusion in the lower courts over when that 1:1 ra- tio of punitive to compensatory damages is required. This Court should grant the petition to provide addi- tional guidance on that issue. 12 I. THE JUDGMENT BELOW DEFIES THIS COURTS PRECEDENT BY AWARDING PUNITIVE DAMAGES FOR HARM TO NONPARTIES. Plaintiffs sued ExxonMobil solely to recover the costs of property damage. They did not allege or prove that ExxonMobil exposed them to physical harm. And they did not seek personal injury dam- ages or medical monitoring. But the trial neverthe- less became a referendum on whether ExxonMobil should be punished for the alleged risk of health problems it may have imposed on individuals “not before the court.” Williams, 127 S. Ct. at 1060. The Court of Appeal held that the trial comported with Williams. App. 13a. The Court of Appeal is wrong. As this Court explained in Williams, “the Consti- tution’s Due Process Clause forbids a State to use a punitive damages award to punish a defendant for injury that it inflicts upon nonparties or those whom they directly represent, i.e., . . . strangers to the liti- gation.” 127 S. Ct. at 1063. The Court could not have been clearer that the “potential harm” caused by the defendant’s conduct is relevant only to the ex- tent “that the potential harm at issue [i]s harm po- tentially caused the plaintiff.” Id. (emphasis in original). This is because “the Due Process Clause prohibits a State from punishing an individual with- out first providing that individual with ‘an opportu- nity to present every available defense.” Williams, 127 S. Ct. at 1063 (quoting Lindsey v. Normet, 405 U.S. 56 (1972)). A “defendant threatened with pun- ishment for injuring a nonparty victim has no oppor- tunity to defend against thlat] charge,” such as by 13 offering specific evidence to demonstrate that the nonparty victim was not injured. Id. Accordingly, the Court in Williams stressed that “it is constitutionally important for a court to provide assurance... . that juries are not asking the wrong question, i.e., seeking, not simply to determine rep- rehensibility, but also to punish for harm caused strangers.” Id. at 1064. States must “avoid proce- dure that unnecessarily deprives juries of proper le- gal guidance,” id., and offer “protection” where there is a “significant [risk]” that the jury might “seek to punish the defendant for having caused injury to others,” id. at 1065 (emphasis omitted). The risk of improper punishment here was over- whelming. Plaintiffs urged, and the jury returned, a punitive damages award of $1 billion based on every- thing except economic harm to plaintiffs’ property. “From their opening statements onward” and con- tinuing “throughout the litigation,” State Farm, 538 U.S. at 420-21, plaintiffs urged the jury to award punishment based on the threat of harm NORM al- legedly posed to the community at large, as well as risks allegedly posed to employees of ITCO and other pipe-cleaning contractors. The trial court did nothing to guard against the obvious fact that the jury might punish ExxonMobil for that nonparty harm. On the contrary, the court invited the jury to impose punishment for “probable .. . harm to the public.” App. 10a. That turns Wil- liams on its head, “addling] a near standardless di- mension to the punitive damages equation” that left “the jury .. . to speculate” as to harm ExxonMobil’s conduct may have caused an unknown number of 14 persons. Williams, 127 S. Ct. at 1063. ExxonMobil objected to the court’s instruction, just as it had ob jected to the evidence of alleged harm to nonparties that the instruction invited the jury to consider. But the trial court admitted the evidence and instructed the jury over ExxonMobil’s objections. The Court of Appeal recognized that the trial court erred in allowing the jury to consider “irrele- vant” and “confusling]” evidence “of the potential and/or alleged actual harm to [nonparties].” App. 26a. But the court did not go far enough. Instead, it insisted that “Exxon should be punished for its rep- rehensible conduct” toward ITCO employees. App. 32a; see 21a-24a (identifying as “reprehensible” only conduct that purportedly harmed ITCO employees). Where the Court of Appeals erred — and erred badly — was in refusing to acknowledge that punish- ing ExxonMobil for alleged harm to an ITCO em- ployee is no different from punishing ExxonMobil for harm to a neighbor. If anything, it is worse: After all, nonparties to this case had already then filed their own class action lawsuits against ExxonMobil, purporting to represent thousands of putative class 4 Although plaintiffs and the court relied on ExxonMobil’s nine-month delay in annovncing the presence of NORM to ITCO, the NORM was not a threat to plaintiffs’ health or safety, and the decades of NORM deposited on the property already required, before 1986, whatever remediation was ulti- mately necessary. Given the “potential for causing mass hys- teria in the community if the disclosure [of NORM] was made in less than a careful manner,” App. 104a, any decision to allow minimal additional contamination while ExxonMobil deter- mined the proper way to alert ITCO can in no way be deemed reckless, much less reprehensible, toward plaintiffs. 15 members, including pipe-cleaning employees, af- fected by the pipes on the plaintiffs’ property. See, e.g., In re Harvey TERM Litigation, No. 01-8708 (La. Dist. Ct. Parish of Orleans, Div. D). The award thus makes concrete the risk of duplicative punishment the Court guarded against in State Farm, 538 US. at 423, and Williams, 127 S. Ct. at 1064-1065. Whereas ExxonMobil will be able “to defend itself against the [employees] chargel[s]” in the separate suits by establishing that its actions did not harm workers, it had no such opportunity in plaintiffs’ case. See Williams, 127 S. Ct. at 1063.5 Thus, although Williams requires a “court to pro- vide assurance that the jury will ask the right ques- tion, not the wrong one,” 127 S. Ct. at 1064, the Court of Appeal affirmed instructions that awarded damages on the basis of “public . . . risk.” App. 10a. And although Williams limited the relevant “poten- tial harm” to “harm potentially caused the plaintiff,” 5 Although the Court of Appeal attempted to justify its fo- cus on the harm to ITCO employees as “done simply to show reprehensibility,” App. 32a, and not to provide a basis for pun- ishment, that claim is belied by the court’s own analysis. See App. 109a (rejecting as an “incorrect and exceedingly narrow reading” of State Farm ExxonMobil’s arguments that its con- duct toward ITCO employees could not serve as the basis for a punitive damages award); id. at 24a (following this Court’s in- struction to determine if “the harm” for which the defendant is being punished “was the result of . . . deceit,” State Farm, 538 U.S. at 419, by determining that the “danger” posed to the ITCO workers involved “an element of deceit”); id. at 22a (de- scribing ITCO as the “target” of the punishable misconduct, see State Farm 538 U.S. at 419); id. at 24a (deeming reprehensible Exxon’s failure to warn of the “direct danger to the physical health and safety of ([TTCO) workers” — a warning completely unrelated to plaintiffs’ harm). 16 127 S. Ct. at 1063 (initial emphasis omitted), the Court of Appeal instead focused on the reprehensi- bility of ExxonMobil’s actions toward, and harm done to, the ITCO employees. The Court of Appeal in all respects failed to “take[] into account . . . the objections and concerns raised by Exxon ... in light of [Williams],” either in its original opinion or on re- mand. Id. at 32a.6 Indeed, the constitutional violation in this case runs far deeper than in Williams, where the claimed harm to nonparties at least mirrored, and therefore “ha[d] a nexus to[,] the specific harm suffered by the plaintiff.” State Farm, 538 U.S. at 422. Here, by 6 Unfortunately, the Court of Appeal it is not alone in its wholesale refusal to follow Williams — although it is the most obvious. See, e.g., State ex rel. Chemtall Inc. v. Madden, 655 S.E.2d 161, 2007 WL 4098937 (W. Va. Nov. 15, 2007) (affirming decision to try and award punitive damages for a class before the class was defined or certified); id. at *7 (Benjamin, J., dis- senting in part) (explaining that a court that determines puni- tive damages before it selects its plaintiffs clearly contravenes Williams’ mandate, as it prevents the defendant “from present- ing every available defense” against the charges against it); Williams v. Philip Morris, No. CC 9705-03957; CA A106791; SC S051805, 2008 WL 256614 (Or. Jan. 31, 2008) (refusing, on re- mand, to offer the “protection” against the “significant [risk]” that the jury might “seek{] to punish the defendant for having caused injury to others” because, “even assuming that [defen- dant’s proposed limiting instruction] . . . clearly and correctly articulated the standard required by due process,” the instruc- tion “contained other parts that did not state the [state] law correctly”). These errors are indefensible and inexplicable un- der Williams, and this case provides the Court with the perfect opportunity to grant certiorari and make clear that the lower courts may not ignore its precedent at will. 17 contrast, there is a complete disconnect between the plaintiffs’ solely economic harm and the potential physical injuries allegedly caused to ITCO employees and the public. In State Farm, this Court held that, “to have rele- vance in the calculation of punitive damages,” evi- dence of a defendant’s conduct toward nonparties “need not be identical,” 538 U.S. at 423, but it “must be closely related.” Williams v. ConAgra Poultry Co.., 378 F.3d 790, 797 (8th Cir. 2004). This case presents the Court the opportunity to hold that the same is true in the context of nonparty harm: Where a de- fendant’s conduct cannot be judged reprehensible by virtue of harm it caused or potentially caused any party to the litigation, due process does not permit a plaintiff to predicate his bid for punishment solely upon dissimilar harm that may befall strangers to the litigation. As noted above, the Court made clear in Williams that the “potential harm” that may be considered for purposes of determining the reasonableness of a pu- nitive damages award is “harm potentially caused the plaintiff’ because “a defendant threatened with punishment for injuring a nonparty victim has no opportunity to defend against the charge.” 127 S. Ct. at 1063. A defendant faces that unconstitutional deprivation of process when confronted with an alle- gation that its conduct was reprehensible — “the most important indicium of the reasonableness of a punitive damages award,” BMW, 517 U.S. at 575 — because of dissimilar harm to a nonparty. The deci- sion to permit a plaintiff to argue reprehensibility for harms he did not suffer forces the defendant to anticipate and defend against a universe of injuries 18 when it has only been “charged” with one. Cf. United Food & Commercial Workers Local 100A v. John Hofmeister & Son, Inc., 950 F.2d 1340, 1344- 1345 (7th Cir. 1991). By the same token, allowing a plaintiff to rely upon potential, dissimilar harm that he has not suffered also makes intolerably likely the “possibility of multiple punitive damages awards for the same conduct.” State Farm, 538 U.S. at 423. Unlike most cases, therefore, the Court in this case may decide whether any punitive damages are constitutionally available because the allegedly rep- rehensible conduct purportedly harmed nonparties in a qualitatively distinct way from plaintiffs’ claimed injuries. Because plaintiffs failed to dem- onstrate, and the Court of Appeal never found, that ExxonMobil’s conduct toward them was in any way reprehensible, this Court should grant certiorari and hold that the court erred in awarding any punitive damages whatsoever.’ Il. THE LOUISIANA COURT OF APPEAL’S DECISION TO REDUCE THE PUNITIVE DAMAGES AWARD RATHER THAN ORDER A NEW TRIAL DEEPENS A CONFLICT AMONG THE LOWER COURTS. In the alternative, even assuming that the Court of Appeals properly applied State Farm and Wil- liams and was warranted in awarding punitive damages, this Court should grant the petition for certiorari to resolve another critical issue: whether a reviewing court may cure a procedural infirmity, 7 Given the Court of Appeal’s manifest failure to apply Wil- liams, the Court may wish to consider summary reversal. 19 such as a jury’s consideration of improper evidence, by reducing a jury’s punitive damages award to the Maximum amount allowed by due process rather than by granting a new trial. The question pre- sented by this case was accepted for review, but not ultimately addressed, by this Court in BMW.® 517 U.S. at 586. And the issue has arisen repeatedly since the Court’s decision in that case, provoking a conflict among the lower courts that was neither ad- dressed nor resolved by Williams, where the Court stated that application of the correct standard on remand “may lead to the need for a new trial, or a change in the level of the punitive damages award,” but did not clarify under what circumstances a new trial would be necessary. 127 S. Ct. 1065. - 8 BMW asked this Court to address “[w]hether the Alabama Supreme Court, having found that the jury's $4,000,000 puni- tive damages verdict unconstitutionally punished petitioner for hundreds of transactions that occurred entirely outside of Ala- bama, was obligated to provide a meaningful remedy for that constitutional violation.” Pet. for a Writ of Certiorari at i, BMW v. N. Am., Inc. v. Gore, 517 U.S. 559 (1996) (No. 94-896), 1994 WL 16011916 (Nov. 17, 1994) (first question presented). The Court granted review on that question, 513 U.S. 1125 (1995), and BMW argued that the Court could provide a “mean- ingful remedy” for the constitutional violation in one of two ways: It could either order a new trial on punitive damages, or it could order a remittitur that removed all of the extraterrito- rial punishment, the amount of which was clear from the pre- cise way in which the jury had calculated punitive damages. Petr’s Br. 23-26, BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (1996) (No. 94-896), 1995 WL 126508 (Mar. 23, 1995). The Court left the “appropriate remedy” for the constitutional error to “be addressed by the state court in the first instance,” BMW, 517 U.S. at 586, thereby leaving for that court the issue of rem- edy in that particular case. 20 A. There Is A Conflict In The Lower Courts Over The Proper Remedy When A Puni- tive Damages Award Is Tainted By Im- proper Evidence Or Instructional Error. The decision below exacerbates a conflict in the lower courts concerning the appropriate remedy in situations where, as here, a procedural violation tainted the fairness of the trial proceedings. 1. A number of courts, both before and after Williams, have held that a reviewing court must or- der a new trial when a jury’s award of punitive dam- ages is based either on improper evidence or instruc- tions. For example, in White v. Ford Motor Co., 312 F.3d 998 (9th Cir. 2002) (“White II”) the Ninth Cir- cuit held that merely reducing a punitive damages award to the maximum amount permitted by due process could not cure the constitutional error in that case (allowing the jury to award punitive dam- ages based on extra-territorial conduct) because the appellate court could not know what amount of dam- ages the jury would have awarded if limited to con- stitutional bounds: Possibly the jury would have chosen as large an award had it been told to vindicate only the rights of Nevadans, but possibly it would have chosen a substantially lower award. For all we know, the jury would have applied a much lower ratio than the thirty to one the [district] court chose, or the sixty-six to one that the jury initially chose. Id. at 1016. The court of appeals ordered the same remedy when it reconsidered White after Williams. Again, 21 the court “conclude[d] that a new trial on punitive damages [wa]s the proper remedy” for a district court’s failure to instruct the jury correctly. White v. Ford Motor Co., 500 F.3d 963 (9th Cir. 2007); see Merrick v. Paul Revere Life Ins. Co., 500 F.3d 1007, 1017-18 (9th Cir. 2007) (vacating punitive damages verdict for Williams violation and remanding for new trial; noting that it could use “remittitur [to] remedy a jury award deemed unconstitutionally excessive,” but deciding against that approach “where the con- stitutional error stems from misguidance regarding the way the jury may use evidence in setting an amount”); see also Hansen v. Boyd, 161 U.S. 397, 411-12 (1896) (remittitur is allowed only if the court can “clearly distinguish and separate” the “erroneous part” of the judgment). The California Court of Appeal echoed that ra- tionale in its recent decision in Bullock v. Philip Morris USA, Inc., --- Cal. Rptr. 3d ----, 2008 WL 240989 (Ct. App. 2d Dist. Jan. 30, 2008), where it rejected the plaintiffs argument that “the appropri- ate remedy for any instructional error with respect to punitive damages is for thle] court to reduce the amount of punitive damages awarded by the jury by way of remittitur.” Id. at *22. The court concluded that a remittitur “would be inappropriate” because the court “[could not] determine how the instruc- tional error that [it had] found affected the amount of the punitive damages award and [it could not] substitute [its] own assessment of the appropriate amount of punitive damages for that of a jury.” IJd.; accord Sand Hill Energy, Inc. v. Smith, 142 S.W.3d 153, 157 (Ky. 2004) (determining that only a new trial on punitive damages could remedy the jury’s 22 improper use of extra-territorial conduct in calculat- ing punitive damages, and providing model jury in- structions and verdict form to guarantee due process in new trial). 2. Other courts like the court below, however, have reached the opposite conclusion by holding that a jurys consideration of improper evidence or im- proper instructions may properly be remedied by simply reducing the award of punitive damages to the maximum amount due process permits. For ex- ample, in Henley v. Philip Morris Inc., 9 Cal. Rptr. 3d 29, 71-72 (Ct. App. ist Dist. 2004), review granted, 88 P.3d 497 (Cal. 2004), review dismissed, 97 P.3d 814 (Cal. 2004), the jury heard “substantial evidence of wrongful conduct outside California,” and the court nonetheless decided that “any error in the consideration of this evidence [would be] suffi- ciently redressed” by reducing the $50 million award to $9 million, the amount it believed a properly in- structed jury would choose. 9 Cal. Rptr. 3d at 71-72; see Romo v. Ford Motor Co., 6 Cal. Rptr. 3d 793, 805, 812 (Ct. App. 2003) (holding award not limited to party harm would be cured by a reduction to the amount “a properly instructed jury likely would award”), overruled in part on other grounds by Peo- ple v. Ault, 95 P.3d 523 (Cal. 2004). Similarly, in Williams v. ConAgra Poultry Co., 378 F.3d at 797-98, the Eighth Circuit reduced to the constitutional maximum an award of punitive dam- ages that was based on “evidence of [racial] harass- ment not suffered by [the plaintiff].”° 9 More recently, Eighth Circuit Judge Bye has criticized that approach, arguing that “[t]he proper remedy for instruc- 23 In Ford Motor Co. v. Ammerman, 705 N.E.2d 539, 559-62 (Ind. Ct. App. 1999), the Indiana Court of Appeals likewise approved the reduction of a puni- tive damages award based on extra-territorial con- duct, concluding that the error would be cured by “reducling] the $58 million award to $13.8 million, which represented Ford’s retooling costs [to make the Bronco II more stable], along with an additional $54.00 representing the cost for additional hardware installed on each vehicle” — a calculation that was never even presented to the jury as an option. Id. at 559. There is thus a significant conflict among the cir- cuits and the state courts over the proper remedy for improper consideration of nonparty harm. The Court should grant the petition and resolve this re- curring question on which it granted review in BMW. B. This Court Should Hold That Judicial Reduction Of The Award To A “Constitu- tional Maximum” Is Not The Appropriate Remedy For An Award Based On Consti- tutionally Invalid Instructions. In this case, the appellate court reduced the puni- tive damages award to the “highest figure” it deemed tional error is a new trial on damages.” See Boerner v. Brown & Williamson Tobacco Co., 394 F.3d 594, 606-607 (8th Cir. 2005) (Bye, J., concurring in result) (explaining that he “[d]id not believe the punitive damages instruction . . . sufficiently limited the jury’s consideration to the damages suffered by [the plaintiff],” and arguing that “a remittitur normally should not be used to cure an instructional error” unless a defendant has agreed to it). 24 consistent with due process, App. 110a, as if the only - defect in the jury's award was that it was too high. But the award was tainted because it was based on improper evidence, and that problem should have -been remedied through a new punitive damages trial. When the Constitution has been violated, courts must provide a remedy that redresses that violation. See, e.g., Marbury v. Madison, 5 U.S. (1 Cranch) 137, 161-63 (1803). A reduction of punitive damages to the highest amount allowed under the Constitution does not cure — or even address — the constitutional violation. The proper redress is in- stead to allow an untainted jury to decide the proper amount of punitive damages. This Court’s precedents compel that conclusion. As this Court has held in Williams, State Farm, and BMW, an award can violate due process either be- cause it exceeds the due-process maximum, or be- cause it impermissibly bases punitive damages on conduct that did not harm plaintiffs. See Williams, 126 S. Ct. at 1062-63; State Farm, 538 U.S. at 416- 17; BMW, 517 U.S. at 574-75. These two limitations on punitive damages require different remedies. In the first situation - substantive excessiveness — a reviewing court may remedy an excessive award by reducing it, because the court knows how much the (properly charged) jury awarded, and it is the re- viewing court’s responsibility to determine the con- stitutional maximum. See Cooper Indus. v. Leatherman Tool Group, Inc., 532 U.S. 424, 436 (2001) (mandating de novo review of the constitu- tionality of punitive damages awards). But in the second situation — improper evidence or instructions — a reduction in the award to the con- 25 stitutional maximum does little to remedy the error because the reviewing court has no way of knowing what weight the jury gave to the improper consid- erations and thus what portion of the verdict is in- fected. See, e.g., White II, 312 F.3d at 1016. The jury’s tainted verdict, of course, provides no helpful starting point. Attempting to “cure” a jury’s consid- eration of improper conduct in awarding punitive damages by reducing the amount of the award is no less unsatisfying than remedying the use of a co- erced confession in a criminal trial by reducing the defendant’s ultimate sentence. The reduction of a tainted award cannot cure the procedural errors the trial court made here. Even assuming that there was evidence of harm to plain- tiffs that could have justified an award of punitive damages, the jury might have decided to award no punitive damages — or at least an amount signifi- cantly under the constitutional maximum — based solely on the harm to plaintiffs’ property. See 1 Dan B. Dobbs, The Law of Remedies, § 3.11(1), at 458 (2d ed. 1993); see also, e.g., Smith v. Wade, 461 U.S. 30, 52 (1983) (a jury generally has the discretion to award zero punitive damages, even when it finds that the factual predicate for punitive damages has been established). When a jury’s verdict is infected by the consideration of improper evidence, reduction of the verdict to the maximum allowed by due proc- ess does nothing to ensure that the defendant has not been punished based on unconstitutional consid- erations. This Court should grant certiorari and hold that a new trial is the appropriate remedy. i. THE COURT OF APPEAL’S IMPOSITION OF A 2:1 RATIO OF PUNITIVE TO 26 COMPENSATORY DAMAGES DEEPENS A DIVIDE IN THE LOWER COURTS. Apart from the Court of Appeal’s error in failing to identify and remedy the jury’s consideration of ir- relevant harm to nonparties, the punitive damages award in this case is excessive. This Court recog- nized in State Farm that compensatory damages have a deterrent function, and that when compensa- tory damages are substantial, a State miay have no further interest in punishing and deterring a defen- dant. See 538 U.S. at 419. If punitive damages may be awarded at all in cases of substantial compensa- tory damages, the Court suggested, the maximum permissible ratio of punitive to compensatory dam- ages is 1:1. Yet the lower courts remain confused regarding when the 1:1 upper limit is appropriate. This Court should grant the petition to provide clar- ity on this issue. A. The Decision Below Disregards State Farm And Highlights A Split In The Lower Courts Regarding The Permissible Ratio When Compensatory Damages Are Substantial. The punitive damages award of $112 million was affirmed despite the fact that plaintiffs were awarded $56 million in remediation costs, which far exceeded the actual loss of the $1.5 million value of their property.!° The Court of Appeal’s approval of a 10 Louisiana law permits a jury to award as damages the cost of remediating a property, even if that cost exceeds the value of the property itself. See App. 63a-67a (discussing Ro- man Catholic Church of the Archdiocese of New Orleans v. La. Gas Serv. Co., 618 So. 2d 874 (La. 1993)). 27 2:1 ratio of punitive damages cannot be squared with State Farm, which teaches that, at most, a 1:1 ratio is appropriate in this case. In State Farm, this Court addressed the purposes served by punitive damages awards: punishment and deterrence. It recognized that, where “compen- satory damages are substantial,” there is significant punishment and deterrence even before any amount of punitive damages are awarded. 538 U.S. at 425 (finding substantial $1 million compensatory award). In the amount of a “substantial” compensatory award, therefore, “[i]t should be presumed a plaintiff has been made whole for his injuries by compensa- tory damages, so 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.” 538 U.S. at 419 (emphasis added).1 11 Indeed, this Court has made clear that, where the State’s legitimate interest in punishment and deterrence is fully vindi- cated by a compensatory award, a court has no legitimate basis on which to award punitive damages at all. See Memphis Cmty. Sch. Dist. v. Stachura, 477 U.S. 299, 307 (1986) (“(djeterrence .. . operates through the mechanism of damages that are compensatory”); Beliz v. W.H. McLeod & Sons Packing Co., 765 F.2d 1317, 1332-33 (5th Cir. 1985) (deterrence “may be achieved without awarding exemplary damages” if compensa- tory damages are large); see also Gertz v. Robert Welch, Inc., 418 U.S. 323, 349-50 (1974) (holding punitive damages uncon- stitutional in certain defamation actions because they are “wholly irrelevant to the state interest that justifies a negli- gence standard for private defamation actions”); Bettius & Sanderson, P.C. v. Natl Union Fire Ins. Co., 839 F.2d 1009, 1016-17 (4th Cir. 1988) (punitive damages unrecoverable against insurance company where a different doctrine of state 28 But even assuming that some punitive damages are necessary for punishment and deterrence even after a substantial compensatory verdict, State Farm teaches that “a lesser ratio, perhaps only equal to compensatory damages, can reach the outermost limit of the due process guarantee.” 538 U.S. at 425. The lower courts have given varying weight to this aspect of State Farm, with some strictly adhering to a maximum ratio of 1:1 in cases of substantial com- pensatory damages, and others disregarding it en- tirely. For example, several courts have limited the ratio of punitive to (substantial) compensatory dam- ages to roughly 1:1, even in cases involving serious physical harm or intentional misconduct. See, e.g., Estate of Moreland v. Dieter, 395 F.3d 747, 757-58 (7th Cir. 2005) ($27.5 million in punitives on $29 million in compensatories for beating and death); Boerner, 394 F.3d at 602-03 ($5 million in punitives on $4 million in compensatories for design defect that caused illness and death); Stamathis v. Flying J, Inc., 389 F.3d 429, 443 (4th Cir. 2004) ($350,000 in punitives on $250,000 in compensatories for defamation and malicious prosecution). By contrast, other courts have sanctioned much higher ratios, effectively ignoring State Farm. See, e.g., Action Marine, Inc. v. Cont Carbon, Inc., 481 F.3d 1302 (11th Cir. 2007) (ratio of over 5:1 based on $3.2 million in compensatories for claims of trespass and misrepresentation based on company’s emission of pollutant), petition for cert. filed, 76 U.S.L.W. 3082 (U.S. Aug. 24, 2007) (No. 07-257); Seltzer v. Morton, law already “punishe[d] the insurer for its bad faith .. . and deter|red) similar conduct by other insurance companies”). 29 154 P.3d 561 (Mont. 2007) (ratio of over 18:1 based on $1.1 million in compensatories for abuse of proc- ess and malicious prosecution); Rhone-Poulenc Agro, S.A. v. DeKalb Genetics Corp., 345 F.3d 1366, 1371- 72 (Fed. Cir. 2003) (3:1 ratio based on $15 million in compensatories for patent infringement and related claims); Williams v. Philip Morris, Inc., 127 P.3d 1165, 1182 (Or. 2006) (97:1 ratio based on $800,000 in compensatories for fraud). B. This Court Should Grant Review And In- struct That In This Case Of Substantial Compensatory Damages, Punitive Dam- ages Were Not Warranted At All, Much Less In A Ratio Of 2:1 The Court should use this case as a vehicle to clarify where the outermost limit of due process lies when compensatory damages based on economic harm are unquestionably substantial. In this case, the $112 million punitive damages award affirmed by the Court of Appeal far exceeds the limits of punishment and deterrence allowed un- der the Due Process Clause. It is undisputed that plaintiffs suffered only economic injury, App. 55a, and the $56 million compensatory award allows (but does not require) them to completely remediate their $1.5 million property to their own standards — stan- dards far above anything that even the Louisiana Department of Environmental Quality (“DEQ”) deemed necessary.!2 Given the solely economic in- 2 The DEQ entered this litigation in support of ExxonMobil to point out that the “faillure) to follow or apply DEQ regula- tions in cases involving environmental remediation” results in inflated compensatory damages awards like the one here, 30 jury and the substantial compensatory damages award that afforded “complete compensation” — and then some — this is the paradigm case in which no punitive damages are necessary to punish or deter. State Farm 538 U.S. at 426. Certainly the amount awarded bears no “reason- able relationship” to plaintiffs’ injury. BMW, 517 U.S. at 580. As the Court explained in State Farm, the careful balancing between punitive and compén- satory damages is intended to ensure that any pun- ishment imposed is proportionate to the “harm suf- fered by the plaintiff.” 538 U.S. at 418 (emphasis added). That balancing requires an accurate as- sessment of the plaintiffs harm, not rote multiplica- tion of a “compensatory” award that does far more than compensate. See id. at 426 ( “The compensa- tory damages for the injury suffered . . . likely were based on a component which was duplicated in the punitive award.”); Bach v. First Union Nati Bank, 149 F. App’x 354, 366 (6th Cir. 2005) (describing ra- tio of over 6:1 “alarming” and noting that “much of the compensatory damage award must be attribut- able to [plaintiffs] pain and suffering,” which “com- pelfled] the conclusion that the punitive damage award [wa]s duplicative”). Allowing punitive dam- ages to be based on the multiplication of an already- exaggerated award distorts the balance between which in turn result in inflated punitive damages awards. Amicus Curiae Br. of La. DEQ 5, Grefer v. Alpha Technical, No. 05-C-1590 (La. June 23, 2005). The cost to remediate plaintiffs’ property to DEQ standards for unrestricted use was far less than the $56 million award: $46,000 according to ExxonMobil’s expert and $1,387,310 according to one of plaintiffs’ witnesses. App. at 35-36a. 31 punishment and compensation and allows plaintiffs to circumvent the limitations of State Farm and BMW by seeking inflated compensatory damages in the first instance. | In this case, plaintiffs’ actual harm for ratio pur- poses is at most the value of the $1.5 million prop- erty, not the $56 million awarded for plaintiffs might use to remediate it. At any rate, no additional pun- ishment or deterrence is necessary beyond the $56 million “compensatory” award. If this Court’s precedent does permit punishment beyond the compensatory damages awarded here, certainly the maximum permissible ratio is 1:1. The Court of Appeal recognized that the $56 million award is undeniably “substantial” within the mean- ing of State Farm, acknowledged State Farm’s teach- ing that a 1:1 ratio is the maximum allowed under such circumstances, and all but sanctioned a 1:1 ra- tio of punitive to compensatory damages when it stated that, in light of the “substantial” compensa- tory award and the fact that “plaintiffs claimed only property damage,” “a punitive damages award cioser to the amount of compensatory damages” was ap- propriate. Jd. at 25a, 26a. The Court of Appeal nonetheless imposed, without any explanation, a 2:1 ratio instead. That award cannot be justified by any need for punishment or deterrence, and this Court should grant certiorari to reiterate that State Farm does not permit it. * * * The punitive damages award in this case defies Williams and raises serious constitutional questions left unanswered by Williams, BMW, and State Farm. 32 Those questions have percolated in the lower courts for a number of years and created significant splits in authority. This Court should grant. the petition and (1) hold that plaintiffs are not entitled to any award of punitive damages when the alleged harm that served to make the defendant’s conduct repre- hensible was suffered (if at all) only by nonparties to the case and not by plaintiffs; (2) set forth the proper remedy for improper reliance upon harms to nonpar- ties; and (3) consider the substantive limits on an award of punitive damages when compensatory damages are substantial. Given the Court of Ap- peal’s manifest failure to apply Williams, this Court could summarily reverse. 33 CONCLUSION The petition for a writ of certiorari should be granted. Respectfully submitted, GLEN M. PILIE WALTER DELLINGER RONALD J. SHOLES (Counsel of Record) LOUIS C. LACOUR, JR. MATTHEW M. SHORS MARTIN A. STERN KATHRYN E. TARBERT* ADAMS AND REESE LLP O’MELVENY & MYERS LLP 4500 One Shell Square 1625 Eye Street, N.W. New Orleans, Louisiana Washington, D.C. 20006 70139 (202) 383-5300 (504) 581-3234 “Admitted only in Wisconsin; supervised by principals at the firm February 14, 2008 la APPENDIX A LOUISIANA COURT OF APPEAL OPINION ON REMAND FROM UNITED STATES SUPREME COURT No. 2002-CA-1237 COURT OF APPEAL, FOURTH CIRCUIT STATE OF LOUISIANA * AK KOK JOSEPH GREFER, CAMILLE GREFER, ROSE MARIE GREFER HASSI AND HENRY GREFER, V. ALPHA TECHNICAL, ET AL. KKK * APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH NO. 97-15004, DIVISION “A” HONORABLE CAROLYN GILL-JEFFERSON, JUDGE * KOK Ok JUDGE LEON A. CANNIZ- ZARO, JR. ke KK HH (COURT COMPOSED OF JUDGE MICHAEL E. KIRBY, JUDGE MAX N. TOBIAS, JR., JUDGE LEON A. CANNIZZARO, JR.) 2a ON REMAND FROM THE SUPREME COURT OF THE UNITED STATES ANDREW B. SACKS JOHN K. WESTON LAW OFFICES OF ANDREW B. SACKS AND AS- SOCIATES 114 OLD YORK ROAD JENKINTOWN, PA 19046 AND STUART H. SMITH MICHAEL G. STAG SMITH & STAG, L.L.C. 365 CANAL STREET 2850 ONE CANAL PLACE NEW ORLEANS, LA 70130 AND STEPHEN B. MURRAY ARTHUR M. MURRAY MURRAY LAW FIRM 909 POYDRAS STREET SUITE 2550 NEW ORLEANS, LA 70112-4000 AND RON A. AUSTIN AUSTIN & ASSOCIATES, L.L.C. 400 MANHATTAN BOULEVARD HARVEY, LA 70058-4442 3a AND JACK W. HARANG HARANG & BARKER, L.L.C 3500 NORTH HULLEN STREET METAIRIE, LA 70002 AND RALPH R. ALEXIS III PORTEOUS, HAINKEL & JOHNSON, LLP 704 CARONDELET STREET NEW ORLEANS, LA 70130-3774 COUNSEL FOR PLAINTIFFS, JOSEPH GRE- FER, ET AL. GLEN M. PILIE RONALD J. SHOLES LOUIS C. LACOUR, JR. MARTIN A. STERN ADAMS AND REESE LLP 701 POYDRAS STREET 4500 ONE SHELL SQUARE NEW ORLEANS, LA 70139 COUNSEL FOR APPELLANTS, EXXON MOBIL CORPORATION AMENDED, AND AS AMENDED, AFFIRMED AUGUST 8, 2007 4a The Supreme Court of the United States (“U.S. Supreme Court”) vacated our judgment previously rendered in Grefer v. Alpha Technical, 2002-1237 (La. App. 4 Cir. 3/31/05), 901 So. 2d 1117, and re- manded the matter for our further consideration in light of its decision in Philip Morris USA v. Wil- liams, 549 U.S.___, 127 S. Ct. 1057 (2007). Factual Summary and Procedural History The plaintiffs, Joseph Grefer, Camille Grefer, Rose Marie Grefer Haase and Henry Grefer (“the Grefers”), filed suit in August of 1997 against the de- fendants, Exxon Mobil Corporation (“Exxon”) and Intracoastal Tubular Services, Inc. (“ITCO”), among others, to recover damages for the contamination of a 33-acre tract of land with radioactive material.2 Be- tween 1968 and 1992, ITCO, an oil field service com- pany, had leased the land from Mrs. Camille Grefer for its business operations, which included the clean- ing, inspecting, testing, threading, transporting and storage of oil well tubulars (pipe) for Exxon and other oil companies. The Grefers asserted causes of action in negli- gence, strict liability, absolute liability, nuisance, 1 Exxon Mobil Corporation. v. Grefer, 549 U.S. ____—, 127 S.. Ct. 1371, 167 L. Ed. 2d 156 (2007). 2 The immovable property at issue was part of a larger tract of land purchased by the plaintiffs’ great grandfather in 1875 and since then has remained in the Grefer family. The plaintiffs acquired the naked ownership of three-fourths (3/4ths) of the immovable property in February 1945 upon the death of their father, Archibald J. Grefer, Sr., and full ownership of the entire tract in March 1996 upon the death of their mother, Camille Claire Antoine Grefer. 5a - fraud, and breach of contract. They sought compen- satory damages for the loss of use and remediation of the property as well as punitive damages pursuant to La. C.C. art. 2315.3.3 After a five-week trial, the jury returned a verdict in favor of the Grefers and awarded them compensatory damages in the amount of $ 56,145,000.00, which included $ 145,000.00 in general damages and $ 56,000,000.00 in restoration costs (special damages), as well as exemplary (puni- tive) damages in the amount of one billion dollars. The jury allocated 85% of the fault to Exxon, 5% to ITCO, and 10% to two absent defendants. The jury also found that “ITCO [was] entitled to recover ‘rom Exxon all amounts awarded against ITCO under its counterclaim against Exxon[.]” After the trial court held a separate hearing to consider the merits of an exception of prescription filed by Exxon, the trial judge rendered a judgment denying the exception and a judgment in accord with the jury’s verdict. Exxon, ITCO and the Grefers appealed. On appeal, we amended the judgment reducing the one billion dollar punitive award to $ 112,290,000.00, an 3 La. C.C. art. 2315.3 was originally enacted as La. C.C. art. 2315.1 by Acts 1984, No. 335, § 1. It was redesignated as Arti- cle 2315.3 under the authority of the Louisiana State Law In- stitute in 1986. It was repealed by Acts 1996, lst Ex. Sess., No. 2, § 1, effective April 16, 1996. Article 2315.3 had provided: In addition to general and special dam- ages, exemplary damages may be awarded, if it is proved that plaintiffs injuries were caused by the defendant’s wanton or reckless disregard for pub- lic safety in the storage, handling, or transporta- tion of hazardous or toxic substances. As used in this Article, the term hazardous or toxic sub- stances shall not include electricity. 6a amount equal to twice the compensatory award, and affirmed the judgments in all other respects. See Grefer, supra. The Grefers and Exxon applied for Writs of Certiorari to the Louisiana Supreme Court, which were denied. Exxon subsequently filed motions to stay the exe- cution of the judgment with both the Louisiana Su- preme Court and the U.S. Supreme Court, which were denied. Thereafter, Exxon applied to the U.S. Supreme Court for a Writ of Certiorari, which the Court granted, vacating our decision and remanding the matter for further consideration. See n. 1, infra. The Philip Morris case In Philip Morris, the U. S. Supreme Court va- cated the decision of the Oregon Supreme Court that had upheld an award of punitive damages against Philip Morris. The U.S. Supreme Court found that although a plaintiff who seeks punitive damages may show harm to others who are nonparties to the litigation as a means of demonstrating the reprehen- sible nature of the defendant’s conduct, a jury may not use punitive damages to punish a defendant “di- rectly on account of harms it is alleged to have vis- ited on nonparties.” Philip Morris, 549 U.S. at___, 127 S. Ct. at 1064. The Court additionally found that the Due Process Clause of the United States Constitu- tion requires that the States make assurances that 4 Grefer v. Alpha Technical, 2005-1590, 2005-1259 (La. 3/31/06), 925 So. 2d 1248. 7a juries are not basing punitive damage awards on improper precepts. That is, although a jury may con- sider the reprehensibility of the defendant’s conduct in determining that punitive damages are war- ranted, it may not consider and ultimately punish a defendant for the harm caused to those who are not parties to the litigation. The Philip Morris case arose out of the death of Jesse D. Williams, a heavy cigarette smoker. The plaintiff, Mr. Williams’ widow, Mrs. Mayola Wil- liams, represented his estate in the lawsuit filed in Oregon state court against Philip Morris, the manu- facturer of Marlboro, the decedent’s favorite brand of cigarette. The plaintiff sought compensatory and pu- nitive damages against Philip Morris. At the conclusion of the trial, Philip Morris had requested that the trial court give to the jury an in- struction with regard to punitive damages. The re- quested instruction prohibited the jury from making an award of punitive damages for the impact of the defendant’s alleged misconduct on other persons who may bring their own lawsuits in which juries can re- solve their claims and award punitive damages for those harms as such juries see fit. The trial court re- fused to give the instruction and Philip Morris ob- jected. This was the sole basis upon which the U.S. Supreme Court granted Philip Morris’ writ applica- tion. We are to now consider the Philip Morris deci- sion in resolving Grefer as the U.S. Supreme Court directed. The jury instructions in Grefer At the trial in Grefer, Exxon proposed two jury 8a instructions with respect to exemplary damages. The first, Exxon’s Proposed Instruction 17, reads as fol- lows: EXEMPLARY DAMAGES -- GENERALLY In this particular case, Louisiana law permits you to consider an additional element of damages called exemplary damages (or called “punitive dam- ages” in other states). You may only award exemplary damages if the plaintiffs prove, by a preponderance of the evidence, that: (1) the defendant’s conduct was wanton and reckless; (2) the danger created by the de- fendant’s wanton and reck- less conduct threatened or endangered public safety; (3) the defendant’s wanton and reckless conduct occurred in the storage, handling, or transportation of hazardous or toxic substances; and (4) the plaintiffs’ damages were caused by the defendant’s wanton and reckless conduct. The phrase “wanton and reckless” means a con- scious indifference to consequences, amounting al- most to a willingness that harm to the public safety would follow. Stated another way, wanton and reck- less conduct is that which amounts to intentional 9a and deliberate action that has the character of out- rage frequently associated with crime. Unless you find that the defendant acted with almost a willingness that harm to the public safety would follow, then you may not award exemplary damages. Even if you decide that the plaintiffs are entitled to exemplary damages, you may not award such damages for conduct that the defendants engaged in before 1984 or after 1996. Under Louisiana law, the plaintiffs are not entitled to exemplary damages for conduct that the defendants engaged in before 1984 or after 1996. [footnote omitted] The second instruction, Exxon’s Proposed In- struction 18, states, EXEMPLARY DAMAGES -- DISCRETIONARY Exemplary damages are within your discretion. This means that even if you find that the defendants’ conduct was wanton or reckless, you are not required to award exemplary damages to the plaintiffs. [foot- note omitted] The trial judge rejected the aforementioned in- structions proposed by Exxon and instructed the jury on exemplary damages as follows:5 5 For ease of reference, we have numbered the paragraphs in the jury instructions. 10a (1) Under our law, in addition to the award of damages to compensate a plaintiff for the injuries suffered, you may award ex- emplary damages against a defendant when the plaintiff shows that the defendants were wanton or reckless in their disregard for pub- lic safety in the storage, handling or trans- port of hazardous or toxic substances. (2) For the purposes of awarding exem- plary damages, “wanton” and “reckless” mean something more than mere negligence. The defendant must have known that public safety was at risk or should have known it was highly probable that harm to the public would result from his conduct. In other words, in order to find “wanton” or “reckless” conduct, a plaintiff must prove the defen- dant’s alleged acts and omissions of negli- gence were accompanied by a conscious indif- ference to consequences amounting almost to a willingness that harm to the public safety would follow. (3) Exemplary damages are regarded as a fine or penalty for the protection of the public interest. Such damages are given to the plaintiff over and above the full compensa- tion for the plaintiffs losses for the purpose of punishing the defendant, of teaching the defendant not to do it again, and of deterring others from following the defendant’s exam- ple. Exemplary damages are not awarded to benefit the injured party but to compel the wrongdoer to have due and proper regard for the rights of the public. You should award an amount of exemplary damages which you lla feel will be reasonably likely to accomplish that purpose in this case. (4) Another factor you may consider in de- termining the amount of exemplary damage award is the nature and the extent of the harm to the plaintiffs. You may also consider each defendant’s financial position when de- termining the amount of exemplary damages to be awarded because the award is meant to be meaningful enough to actually deter wrongful conduct. (5) Even if you decide that the plaintiffs are entitled to exemplary damages, you may not award such damages for conduct that the defendants engaged in before 1984 or after 1996. (6) Exemplary damages are within your discretion. This means if you find that the defendant’s conduct was wanton or reckless, you are not required to award exemplary damages to the plaintiffs. Discussion The trier of fact may consider the following fac- tors in awarding exemplary damages:(1) the nature and extent of the harm to the plaintiff; (2) the repre- hensibility of the defendant’s conduct; (3) the wealth or financial position of the defendant; (4) the imposi- tion of punishment on the defendant; (5) the deter- rent effect, i.e. whether it will deter future or similar conduct by the defendant and others. See Cooper In- dustries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 439, n. 12, 121 S. Ct. 1678, 1688, n. 12, 149 12a L. Ed. 2d 674 (2001); Restatement (Second) of Torts § 908, Comment e (1979). In instructing the jury with respect to whether exemplary damages should be awarded to the Gre- fers, the trial judge set forth a correct statement of the law. The trial judge referred to harm or the po- tential (risk of) harm to nonparties resulting from the defendant’s conduct when she referred to the public safety in her explanation of “wanton” and “reckless” conduct. As the reprehensible nature of the defendant’s conduct is a factor which the jury may consider in deciding whether exemplary dam- ages are warranted and, if so, the amount that should be awarded, this instruction was permissible under the standards set forth by the U.S. Supreme Court in Philip Morris (a plaintiff may show harm to others in order to demonstrate reprehensibility). The trial judge’s only other reference to nonpar- ties occurred when she instructed the jury that ex- emplary damages were awarded not to benefit the plaintiff but to punish the defendant, to compel the defendant to have “proper regard for the rights of the public,” and to deter others from following the de- fendant’s example. The U.S. Supreme Court has found no constitutional violation in imposing puni- tive damages “to further a State’s legitimate interest in punishing unlawful conduct and deterring its repetition.” Philip Morris, 549 U.S. at ____ , 127 S. Ct. at 1062, citing BMW of North America, Inc., v. Gore, 517 U.S. 559, 568, 116 S. Ct. 1589, 134 L. Ed. 2d 809 (1996). Thus, the trial court’s reference to nonparties within the context of the public’s interest and safety did not violate the defendant’s rights to due process. Essentially, paragraphs two and three of the trial 13a judge’s instructions on exemplary damages ex- plained reprehensibility, i.e. “wanton” and “reckless” conduct as well as informed the jury that the award should punish the defendant and deter similar con- duct. All three of these factors are permissible under the standards set forth by the U.S. Supreme Court and the courts of this state. Lastly, in paragraphs four, five and six, the trial judge charged the jury that they were to consider the harm done to the plaintiff, the defendant’s financial condition, the time periods for which exemplary damages were to apply, and that an award for such damages was solely within their discretion. None of these factors is objectionable or prohibited. When we consider the totality of the trial court’s jury instructions on exemplary damages, we find they are both permissible and constitutional. More- over, even though the record does not include the ob- jections made by Exxon to the instructions during the jury charge conference, two facts should be noted. First, unlike the defendant in Philip Morris, Exxon raised no assignment of error on appeal as to either the trial court’s jury instructions or to the trial court’s refusal to give Exxon’s proposed jury in- structions. Second, for all intents and purposes, the trial court’s instructions tracked almost verbatim Exxon’s proposed instructions. Thus, we find the trial court’s jury instructions herein pass constitu- tional muster. The question we are ultimately asked to decide is whether Exxon received a fair trial. In other words, in light of Philip Morris, was Exxon afforded all of the constitutional protections available under the Due Process Clause of the U.S. Constitution? We answer this “yes.” 14a Exxon’s Wanton and Reckless Conduct Exxon argued in the first appeal that the jury’s award of exemplary damages must be vacated be- cause the record does not support a finding that Exxon engaged in wanton and reckless conduct as required under La. C.C. art. 2315.3. The statute providing for exemplary damages for wanton and reckless disregard for public safety in the storage, handling or transportation of hazardous or toxic substances must be strictly construed, as it imposes a penalty. Bonnette v. Conoco, Inc., 2001- 2767, p. 27 (La. 1/28/03), 837 So. 2d 1219, 1236-37. To obtain an award of exemplary or punitive dam- ages under La. C.C. art. 2315.3, the plaintiff must prove:(1) that the defendant’s conduct was wanton and reckless by proving that “the defendant pro- ceeded in disregard of a high and excessive degree of danger, either known to him or apparent to a rea- sonable person in his position,” or that the defendant engaged in “highly unreasonable conduct, involving an extreme departure from ordinary care, in a situa- tion where a high degree of danger is apparent;” (2) that the danger created by the defendant’s wanton or reckless conduct threatened or endangered public safety; (3) that the defendant’s wanton or reckless conduct occurred in the storage, handling or trans- portation of hazardous or toxic substances; and (4) that the plaintiffs injury was caused by the defen- dant’s wanton or reckless conduct. Id.; Billiot v. B.P. Oil., Co., 93-1118, pp. 16-17 (La. 9/29/94), 645 So. 2d 604, 613. As set forth in our prior opinion, our review of the record disclosed sufficient evidence to support the jury’s finding that Exxon had engaged in wanton and 15a reckless conduct. Exxon first learned of NORM§ con- tamination in oilfield drilling equipment in 1981, when Occidental Petroleum, another oil company, discovered it on its platforms in the North Sea. At that time, Dr. Andrew Lloyd Smith, a Scottish envi- ronmental consultant, was working for Occidental Petroleum in the U.K., and following the discovery, was a member of the United Kingdom Offshore Op- erators Association (UKOOA) Safety Committee that drafted and published the UKOOA safety guidelines and Reference Manual that were given to all oil companies operating in the North Sea. ITCO offered Dr. Smith as a health and safety expert witness at trial. According to Dr. Smith, the reference manual was extensive and covered both the identification of radioactive scale and the procedure to follow up on such identification. The guidelines, promulgated by the oil and gas industry and approved by the U.K.’s National Radiological Protection Board (“NRPB”), recommended the specific steps to minimize or eliminate the effect of NORM on public health and the environment. Though Exxon was abreast of the problem, it took no action to survey its wells elsewhere. The deposi- tions of Mr. John Rullman, Director of Exxon’s East- ern Division Environmental and Regulatory Affairs, and of Mr. Everett C. Hutchinson, Exxon’s Assistant Director of Environmental and Regulatory Affairs, were introduced into evidence and read to the jury at trial. Mr. Rullman testified that he had obtained a copy of the UKOOA safety guidelines and found they were very onerous, restrictive, and inflexible. He also 6 “NORM” is the acronym for Naturally Occurring Radioactive Material. l6a admitted that he was not sure if at that time Exxon had the same problem in the U.S. Mr. Hutchinson, too, believed the UKOOA guidelines were unreason- able for Exxon’s production operations in the U.S. Mr. Booher, Exxon’s industrial hygienist, admitted that if Exxon had surveyed its wells prior to the Chevron discovery in the U.S. in 1986, then it would have discovered radium in its wellheads much sooner.’ In May 1986, after learning of Chevron’s NORM discovery in Mississippi, Exxon surveyed its Missis- sippi well sites and found radiation accumulation in its equipment. Twice Exxon officials were notified that the cleaning contractors had to be informed of the radioactivity, as it posed a health and safety hazard, but they still did nothing to warn them. The evidence further disclosed that by August 1986 Exxon was clearly worried about governmental regulation and losing the produced water exemption, which allowed it to dispose of the by-product in an unregulated manner. A memo written on August 28, 1986, by Mr. Howard Collier, Exxon’s director of En- vironmental and Regulatory Affairs, stated, “Chev- ron has taken a very high profile approach to han- dling their discovery of radiation in Mississippi and many agencies are now involved.” Mr. Collier ex- pressed an interest in “[getting] the industry and the regulatory agencies to slow down.” Then he admit- ted, Chevron’s discovery is nothing new. After all, if there wasn’t some radiation in down-hole 7 On April 10, 1986, Chevron identified radium-266 in oil filed equipment at a well site in Brookhaven, Mississippi. 17a formations, it would be difficult to run a gamma ray log. My primary concern is the current investigation and analysis not un- duly influence the EPA who is in the process of deciding under RCRA [Resource Conserva- tion Recovery Act] whether produced water should be classified as a hazardous waste and handled as such. Mr. Booher’s notes taken from comments made by Mr. Collier at an Exxon NORM meeting in Houston on January 8, 1987, indicate the cost of losing the RCRA exemption for produced water as $ 750 million in the first year and $ 150 million for each year thereafter. At that same meeting, several Exxon offi- cials concluded that notifying the cleaning contrac- tors would be “premature.” The evidence also disclosed that Exxon was con- cerned about litigation arising from the NORM dis- covery in Mississippi. Street, Inc., a pipe yard com- pany in Mississippi, had filed suit against Chevron and other oil companies (not Exxon), for $ 35 million, claiming negligence for failure to advise that pipe delivered to it was contaminated with radioactive material. Mr. Hutchinson, in an internal memo cop- ied to Mr. Rullman, recognized the possible “need to manage the disposal of large accumulations of con- taminated scale, such as could occur at a pipe yard.” Mr. Rullman, in a confidential memo dated October 14, 1986, noted ITCO was a potential “look alike” to Street, Inc., and stated, “If potential exists for radio- active material accumulation, perform low key ra- diation exposure measurements;” “Coordinate ITCO plan with Eastern Division;” and “Consider advisory letter to ITCO with Headquarters involvement.” 18a Still, Exxon did nothing to notify ITCO. Eventually, Exxon sent the letter notifying the cleaning contractors of the NORM problem in March 1987, ten months after it had identified the problem at its domestic well sites. On March 27, 1987, Exxon representatives met with Mr. John Hooper, presi- dent of ITCO, and other ITCO employees and gave them a video and a set of procedural guidelines to follow when handling NORM contaminated equip- ment. According to Mr. Hooper, Exxon’s videotape made the health risks associated with NORM scale sound minor and the safety procedure guidelines merely suggested taking precautions to avoid breath- ing or ingesting airborne dust. At that time, Exxon’s representatives made no mention of the likely buildup of radioactive scale on ITCO’s premises even though Exxon knew the pipe scale had been accumu- lating on the premises for years and had learned in June 1986 that it was hazardous. Exxon maintained that no reasonable juror could have concluded that it knew about the NORM buildup in domestic oil production tubing before 1986. We disagreed. Although the 1981 discovery of NORM inside drilling equipment was limited to the North Sea area, by that time Exxon already knew that Shell Oil had found radioactive material in equipment at a refinery in the U.K. The jury could have concluded that Exxon knew or should have known of the likelihood of NORM contamination in domestic oilfield production equipment well before Chevron’s Mississippi discovery in 1986 based on Exxon’s knowledge that radioactive material had been found in both drilling and refining equipment in the North Sea region coupled with the fact that just a few years earlier Exxon had discovered radio- 19a active deposits inside equipment at several Texas gas plants. Also, in view of Mr. Collier’s August 28, 1986 memo, stating, “Chevron’s discovery is nothing new,” the jury reasonably could have concluded that Exxon knew about the NORM deposits in its domes- tic oilfield equipment before 1986, and its failure to act sooner was wanton and reckless. Exxon argued, too, that it acted to protect the public safety after Chevron’s 1986 NORM discovery. Exxon emphasized that after the discovery it had conducted a nationwide NORM survey of all its fa- cilities; it began screening used tubing for NORM at production sites and the contaminated tubing was stored -- not cleaned; it began to screen tubing at central storage facilities like ITCO; it recommended safety procedures; and it began to develop a new cleaning process that would allow for the previously- stockpiled, NORM contaminated pipe to be cleaned safely. We found no merit to Exxon’s argument. Clearly, the evidence indicated that the action taken by Exxon after the Chevron discovery was to benefit Exxon, not the general public. As a result of the dis- covery, Exxon was faced with unprecedented envi- ronmental, legal, economic, and financial challenges. It had no choice but to act. In any event, we found Exxon’s most egregious act was failing to notify ITCO of the NORM hazard immediately after it tested the Exxon Mississippi wells and discovered NORM at the well sites. Although Exxon’s represen- tatives claimed that to notify the cleaning contrac- tors immediately would have been “premature” until they knew the extent of the problem and they did not want to “alarm” the public, we concluded that their failure to do so was inexcusable. Exxon executives 20a had been warned that NORM posed a human safety hazard to anyone exposed to it, but they waited nine months to send the warning letter to the contractors and to meet with ITCO. Exxon’s delay in notifying ITCO of the danger was wanton and reckless. Upholding the jury’s finding that punitive dam- ages were warranted in this case, we then consid- ered whether the jury’s one billion dollar award was constitutional. Constitutionality of Punitive Damage Award Exxon had assigned as error in the first appeal that the $ 1 billion punitive damage award was un- constitutional as it violated Exxon’s Fourteenth Amendment right to due process of law. In recent years, the U.S. Supreme Court has con- sidered several cases raising exemplary damage is- sues. In BMW of North America, Inc. v. Gore, 517 U.S. 559, 116 S. Ct. 1589, 134 L. Ed. 2d 809 (1996), the Court ruled that exemp’ary damage awards that are “grossly excessive” violate the Due Process Clause of the Fourteenth Amendment. The Court then provided three “guideposts” for gauging when an exemplary damage award crosses the constitu- tional line:(1) the reprehensibility of the defendant’s conduct; (2) the ratio between the exemplary damage award and the harm the defendant’s conduct caused, or could have caused; and (3) the size of any civil or criminal penalties that could be imposed for compa- rable misconduct. The constitutional constraints on the amount of exemplary awards were again considered in Cooper Industries, Inc., supra, 532 U.S. 424, 121 S. Ct. 1678, wherein the Court ruled that state and federal ap- pellate courts must conduct a de novo review of ex- emplary damage awards challenged as being grossly 2la excessive under the Due Process Clause of the Four- teenth Amendment to the United States Constitu- tion. Id. at 433-434, 121 S. Ct. at 1685-1686. In mandating a de novo review, the Court reasoned that “[uJnlike the measure of actual damages suf- fered, which presents a question of historical or pre- dictive fact, the level of punitive damages is not really a ‘fact’ ‘tried’ by the jury.” Jd. at 437, 121 S. Ct. at 1686. In State Farm Mutual Automobile Insurance Company v. Campbell, 538 U.S. 408, 123 S. Ct. 1513, 155 L. Ed. 2d 585 (2003), the Court further tightened the permissible limits of exemplary awards, holding that appellate “courts must ensure that the measure of punishment is both reasonable and proportionate to the amount of harm to the plaintiff and to the general damages recovered.” Id., 538 U.S. at 426, 123 S. Ct. at 1524. Keeping in mind the principles outlined in BMW of North America, Inc., v. Gore, the U.S. Supreme Court’s decision in State Farm Mutual Automobile Insurance Company v. Campbell, we conducted a de novo review of the jury’s exemplary damage award. Our findings as a result of that de novo review were set forth in our prior opinion and read as follows. “(T]he most important indicium of the reasonableness of a punitive damages award is the degree of reprehensibility of the defen- dant’s conduct.” Gore, supra, at 575, 116 S. Ct. 1589. In determining the reprehensibility of a defendant, courts are instructed to con- sider whether: the harm caused was physical as opposed to economic; the tortious conduct evinced an indifference to or a reckless dis- regard of the health or safety of others; the 22a target of the conduct had financial vulner- ability; the conduct involved repeated actions or was an isolated incident; and the harm was the result of intentional malice, trickery, or deceit, or mere accident. 517 U.S. at 576- 577, 116 S. Ct. 1589. The 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. It should be presumed a plaintiff has been made whole for his injuries by compensatory damages, so punitive damages should be awarded only if the defendant’s culpability, after having paid compensatory damages, is so reprehensible as to warrant the imposi- tion of further sanctions to achieve punish- ment or deterrence. Jd. at 575, 116 S. Ct. at 1589. In this case, it is undisputed that the plaintiffs suffered strictly economic harm, i.e., property damage. While Exxon’s conduct resulted in 10 physical harm to them, it cer- tainly evinced an indifference to or reckless disregard of the health and safety of others. As stated above, Exxon’s nine-month delay in notifying ITCO and the other cleaning contractors of the dangers posed from han- dling NORM contaminated equipment cer- tainly put their employees at risk. Even though ITCO no longer cleaned NORM con- taminated piping/tubulars after March 1987, Exxon was well aware that NORM contami- nated equipment remained stockpiled on 23a ITCO’s property. This posed a health hazard to those on the premises. We also find that the target of the con- duct was financially vulnerable. ITCO had leased the property from the Grefer family for many years and during that period oper- ated a very successful business cleaning oil- field equipment. After Exxon discovered the NORM contamination in its drilling equip- ment and finally realized the extent of the problem, the oil company sought to wipe its hands clean and leave ITCO with the mess. Notably, on April 19, 1989, Mr. Rullman sent a memo to Mr. Roger Koerner, Exxon’s top manager for the Eastern Division, regarding “ITCO Contract Recommendations.” The memo stated in part: RAE [Exxon’s Regulatory Affairs Engineering] concurs with the sugges- tion to screen other contractors to as- certain their abilities to decontami- nate NORM material, ...The develop- ment of alternative cleaning/disposal options would help soften their stance [on contract negotiations] and may be needed anyway if the ITCO procedure does not provide sufficient cleaning. The continued use of the ITCO yard could complicate any potential per- sonal injury liability claims since it would be difficult to determine when the exposure occurred that caused the injury. Resuming cleaning with a new contractor would clearly establish the earliest date of potential exposure, 24a and Exxon could better contractually minimize its exposure with the new contractor. This would not, however, help Exxon with any claims from past activities at ITCO. - Shortly thereafter, ITCO’s business steadily declined while Exxon sent its used oilfield equipment to new cleaning contrac- tors. After ITCO ceased operations, termi- nated its lease and vacated the premises, Exxon’s NORM scale remained on the prem- ises. In addition to ITCO’s failure, the Gre- fers are now financially burdened with the task of remediating the property. Furthermore, we find Exxon’s repeated conduct from 1985 through 1992, when ITCO finally shut down, did involve an element of deceit. Again, as mentioned above, from June 1986 to March 1987 Exxon officials inten- tionally withheld information regarding NORM contamination in the piping/tubulars even though they knew the scale posed a di- rect danger to the physical health and safety of those workers who continued to handle the NORM contaminated equipment on a daily basis. Also, after learning of the danger posed by the NORM contaminated scale, Exxon took no step to remove the radioactive material from ITCO’s premises. In our opin- ion, Exxon’s conduct was reprehensible. Next we consider the second Gore guide- line, the disparity between actual or poten- tial harm suffered by the plaintiff and the punitive damage award. For potential harm 25a properly to enter into the ratio, it must be di- rectly attributable to the misconduct and not to lawful or unrelated causes. See Cooper In- dustries, 532 U.S. at 441, 121 S. Ct. at 1688. In Campbell, the Utah Supreme Court justified a punitive award of $ 145 million in a case in which the plaintiff was awarded $ 1 million in compensatory damages for State Farm’s bad-faith failure to settle, fraud, and intentional infliction of emotional distress. On appeal, the U.S. Supreme Court consid- ered the award under the Gore guideposts and concluded that the award was neither reasonable nor proportionate to the wrong committed, and it was an irrational and arbi- trary deprivation of the property of the de- fendant. Campbell, 538 U.S. at 429, 123 S. Ct. at 1526. While the Court declined to im- pose a bright-line ratio which punitive dam- ages cannot exceed, it noted that its juris- prudence and the principles set forth therein demonstrate that, in practice, few awards exceeding a single-digit ratio between puni- tive and compensatory damages will satisfy due process. The Court recognized that al- though “there are no rigid benchmarks,” a higher ratio could be justified only if “a par- ticularly egregious act has resulted in only a small amount of economic damages.” Jd., 538 U.S. at 425, 123 S. Ct. at 1524. The Court also noted that the converse is true, “[w]hen compensatory damages are substantial, then a lesser ratio, perhaps only equal to compen- satory damages, can reach the outermost limit of the due process guarantee.” Jd. The 26a Court found the compensatory award of $ 1 million was “substantial,” and concluded that the Gore guideposts “would [only] justify a punitive damages award at or near the amount of compensatory damages.” Id., 538 U.S. at 429, 123 S. Ct. at 1526. The Court also rejected the Utah Supreme Court’s ref- erence to State Farm’s enormous wealth to justify the award, stating, “[t]he wealth of a defendant cannot justify an otherwise uncon- stitutional punitive damages award.” Jd., 538 US. at 427, 123 S. Ct. at 1525. This case leaves little doubt that there is a presumption against an award that has an 18 to 1 ratio. In our opinion, the compensa- tory award in this case was substantial; the Grefers were awarded $ 56,145,000.00 for a piece of property worth at most $ 1,500,000.00. Although the plaintiffs claimed only property damage, and no physical harm, the trial court allowed the plaintiffs to argue and present substantial evidence, over Exxon’s objections, of the potential and/or al- leged actual harm to other persons who were not parties to this suit and whose claims were not before the jury. For example, in their opening statement, the plaintiffs’ coun- sel referred to the “community” and “churches immediately next to” the Grefer property. He described radium particles in “a very, very, very fine powder” being blown “all over the place.” A video was shown to the jury that depicted elementary school children getting on and off a bus. Witnesses were then asked questions designed to foment the fear 27a of a radium dust cloud blowing over houses, churches, and schools near the Grefer prop- erty. The trial court also allowed plaintiffs’ counsel to question witnesses about the po- tential harm of radiation to children and un- born children even though this case is strictly a claim for damage to immovable property. Likewise, the trial court allowed plaintiff, Rose Grefer Haase, a former nurse, to testify regarding the effects of x-ray radia- tion and the protections taken by those work- ing with x-ray machines to avoid personal in- jury. The trial ended with a neighbor, Ms. Thelma Benjamin, testifying on rebuttal about the DEQ and Exxon failing to test her property or the property of others in the neighborhood. Plaintiffs’ counsel likened the harm suffered by the Grefers with damages caused in the 1989 EXXON-VALDEZ oil spill. Much of this evidence was irrelevant and, more than likely, confused the jury, con- tributing to its exorbitant punitive damage award. (footnote omitted) The plaintiffs also put on substantial evi- dence regarding Exxon’s wealth. The jury heard that Exxon is the largest corporation in the world and had assets of $ 251 billion; that its revenue for the year 2000 was $ 228.439 billion; and that its total net worth in 2000 was $ 173 billion. In addition, evi- dence was presented of the salaries, bonuses, stock options, etc., of Exxon’s corporate ex- ecutives. The jury heard that the only way to punish a big corporation like Exxon for its reprehensible behavior was to hit its bank 28a account. Plaintiffs’ counsel stated that Exxon could satisfy a large punitive judgment in very little time with the interest that accrues on its $ 72 billion in shareholders’ equity and that it likely would never feel the effect of the judgment because it would be passed on to the consumers at the gas pumps. Counsel also pointed out that Exxon recently had been cast in judgment for several other large punitive damage awards, including a case in which an Alabama jury awarded the plain- tiffs punitive damages of $ 3.4 billion and compensatory damages of $ 87 million. Such assertions bore no relationship to the harm suffered by the plaintiffs. Although the jury could consider Exxon’s wealth, the company’s wealth could not provide an open-ended ba- sis for inflating the punitive award. With this in mind, we find the $ 1 billion dollar punitive damage award is neither reasonable nor proportionate to the amount of harm to the plaintiffs and to the general damages re- covered. Considering the substantial com- pensatory damages awarded in this case, in our opinion a lesser single-digit ratio would be appropriate. The third guidepost in Gore is the dispar- ity between the punitive damages awarded and the civil penalties authorized or imposed in comparable cases. The Court in Campbell noted that criminal penalties may also be considered, as the existence of a criminal penalty does have bearing on the seriousness with which a State views the wrongful ac- tion. Campbell, 538 U.S. at 428, 123 S. Ct. at 29a 1526. When used to determine the dollar amount of the award, however, the criminal penalty has less utility. Jd. Great care must be taken to avoid use of the civil process to assess criminal penalties that can be im- posed only after the heightened protections of a criminal trial have been observed, in- cluding, its higher standard of proof. Id. Pu- nitive damages are not a substitute for the criminal process, and the remote possibility of a criminal sanction does not automatically justify a punitive award. Id. Exxon argues that it did not violate any state laws or regulations because the DEQ did not establish NORM regulations until 1989 (footnote omitted) and therefore the punitive damage award is not warranted. It also argues that the maximum civil penalty under Louisiana law for willful conduct would not exceed $ 1,000,000.00, and thus if punitive damages are imposed, the amount should not exceed $ 1,000,000.00. In the case of In re New Orleans Train Car Leakage Fire Litigation, 2000-0479, p. 1 (La. App. 4 Cir 6/27/01), 795 So. 2d 364 (hereinafter “CSX”), we affirmed the trial court’s reduction of a jury’s punitive damage award from $ 2.5 billion to $ 850 million. That case involved personal injury claims by 8,047 class members for injuries arising out of a burning train car carrying a hazardous substance. In reaching our result, we recog- nized the large number of claimants, their personal injury, the potential that many city blocks could have been destroyed by an ex- 30a plosion, and the evacuation of thousands during the night because of the danger posed by burning chemicals. Like Exxon, the de- fendant argued in CSX that because the maximum civil penalty under Louisiana law for its violation was slightly more than $ 1,000,000.00 that should have been the amount of the jury’s punitive award. We dis- agreed, noting that “the BMW Court did not select and use the term ‘guideposts’ without reason”, and that term does not “connote or suggest a cumulative series of three ‘tests’ or ‘elements’ which must be met.” CSX, at p. 33, 795 So. 2d at 386. We then specifically re- jected the notion “that the third guide. . ‘caps’ punitive damages.” Jd. at p. 33, 795 So. 2d at 386-87. The plaintiffs point to various criminal fines for violations of Louisiana statutes and regulations and give examples in which fines of tens of thousands of dollars a day would be imposed every day for the years Exxon was in violation of the law. Notably, in Cooper, the Court rejected an effort, similar to the plaintiffs’ here, to suggest that the maximum fine provided by an Oregon statute would have been imposed each time a piece of pro- motional literature was distributed, 532 U.S. at 442-43, 121 S. Ct. at 1689, while in Campbell the Court rejected an attempt to justify a large award based on speculation about whether, in a criminal prosecution, the defendant might have lost its business, li- cense, been imprisoned, or been required to disgorge all profits. 3la The fact that Louisiana had no regula- tions governing NORM until 1989 does not excuse Exxon’s reprehensible action. And Louisiana’s maximum civil penalty for will- ful misconduct, alone, cannot limit a punitive damage award. Nonetheless, based on our review of the record, we find that $ 1 billion punitive award in this case is exorbitant and must be reduced. In summary, we find that an application of the Gore guideposts to the facts of this case, especially in light of the substantial compensatory damages awarded, likely would justify a punitive damages award closer to the amount of compensatory dam- ages. The punitive damage award of $ 1 bil- lion, therefore, was neither reasonable nor proportionate to the wrong committed, and it was an irrational and arbitrary deprivation of Exxon’s property. Therefore, we will amend the jury’s award to reduce it to an amount that we have determined is both reasonable and proportionate to the amount of harm suffered by the Grefers and to the general damages of $ 56,145,000.00, which is $ 112,290,000.00 or twice the general dam- age award. Grefer, supra, 2002-1237 at p. 46-53, 901 So. 2d at 1148-1152. Clearly, as noted above, the conduct of Exxon sat- isfied the wanton and reckless requirement, i.e. it was reprehensible. Any reference to harm suffered by nonparties, which Exxon finds objectionable, was used in the foregoing discussion merely to demon- 32a strate the reprehensibility of Exxon’s conduct and nowhere in the opinion do we use any evidence of harm suffered by nonparties as the basis to award an amount for exemplary damages to the Grefers. Again, any discussion of harm to nonparties was done simply to show reprehensibility. The record amply supports the finding that Exxon’s conduct was reprehensible. Second, our opinion takes into account all of the objections and concerns raised by Exxon herein in light of Philip Morris. We noted those objections and essentially sustained them in our review. We find that many of the improper arguments and evidence contributed to the verdict which in no way reflected the harm suffered by the plaintiffs and the compen- satory damages which were awarded. Third, our de novo review resulted in a drastic reduction of the jury’s $ 1 billion punitive damage award. In reviewing the matter de novo, we disre- garded the evidence of and references to harm suf- fered by nonparties and considered only the harm done to the Grefers in determining the amount of the punitive damage award. Fourth, although our de novo review essentially awards exemplary damages based on the State Farm multiplier and the compensatory award, we still con- sider the reprehensibility of Exxon’s conduct as well as the degree of reprehensibility in our award of ex- emplary damages. Additionally, the punitive damage award rightfully takes into account the fact that Exxon should be punished for its reprehensible con- duct and deterred from repeating it. The fact that Exxon is one of the wealthiest companies in the world was another factor that we properly consid- ered. 33a Summary In this opinion we elaborate and expand on the thought process that went into our earlier opinion. But after reviewing this record and the Philip Morris decision, we stand by our initial decree with regard to the award of exemplary damages. We interpret the remand from the U.S. Supreme Court to affect our decision as it relates to the exem- plary damages and it is our opinion that the decision in no way mandated that we review the remaining assignments of error urged by Exxon and that it in no way affects our initial decision with regard to the compensatory award. Furthermore, the U.S. Su- preme Court remand and the Philip Morris decision do not mandate that we order a new trial but instead allow us to correct any procedural and or substantive errors by our constitutionally delegated authority of de novo review. This court is constitutionally allowed to review both law and facts. La. Const. art. V, § 10 (B). As a final thought on the issues of reprehensibil- ity and harm to the plaintiff, we note that during the oral argument, Exxon’s attorney suggested that with regard to harm to nonparties, when considering rep- rehensibility, the trier of fact can only consider the harm to nonparties that is similar to the harm or in- jury suffered by the plaintiff. That analysis is not supported by Philip Morris, State Farm, or BMW. In determining the reprehensibility of the defen- dant’s conduct for the purpose of awarding exem- plary damages, the trier of fact may consider the harm suffered by both parties and nonparties re- gardless of the type or similarity of harm suffered as a result of that conduct. On the other hand, the trier 34a of fact may consider the nature and extent of the harm suffered by the plaintiff only in determining the amount of exemplary damages to award that particular plaintiff. Finally, Exxon cites the decision in Embry v. Geo Transportation of Indiana, Inc., 478 F. Supp. 2d 914 (E.D. Ky. 2007), arguing that the punitive damage award cannot stand in this case because Exxon’s de- lay in warning persons of the NORM danger did not cause the plaintiffs property damage but rather only potential harm to nonparties. In Embry, the defendant’s truck crossed the me- dian into oncoming traffic and caused multiple deaths and injuries. The defendant truck driver ad- mitted that after taking a sip of coffee he choked and lost control of the truck, causing the accident. The plaintiffs argued that the defendant truck driver had fraudulently concealed his negative medical history on his job application, including that he was a recov- ering alcoholic, and alleged on this basis that the de- fendants were liable for punitive damages.® Citing Philip Morris, the court granted summary judgment dismissing the plaintiffs’ punitive damage claims ex- plaining that none of the alleged fraudulent acts or omission proximately caused the plaintiffs’ damages and, therefore, did not satisfy the “constitutional nexus requirement.” Jd. at 924. The Embry case is distinguishable from the case before us. The court clearly recognized that the de- fendant truck driver’s failure to disclose his medical ® Punitive damages are available under Kentucky law if a plaintiff proves by clear and convincing evidence that a defen- dant acted with oppression, fraud or malice. Ky. Rev. Stat. Ann. § 411.184(2) (West 2006). 35a history in applying for his job and commercial driver’s license several years earlier did not cause the accident. The court also noted that the plaintiffs failed to demonstrate that it was foreseeable from the fraudulently concealed medical information that the defendant would choke on coffee while driving, so as to establish that the fraud was a proximate cause of the accident. Here, we found that Exxon’s failure to disclose the NORM hazard to ITCO in 2 timely manner demonstrated the reprehensibility of its conduct, a factor we could consider in awarding exemplary damages to the Grefers. Although Exxon’s delay in disclosing the NORM hazard did not cause the Grefers physical harm, it increased their eco- nomic damages by allowing the continual accumula- tion of NORM scale on their property. DECREE Accordingly, for the reasons set forth herein, the judgment of the trial court rendered in accord with the jury verdict in favor of the Grefers is amended, in part, to reduce the $ 1 billion award for punitive iiamages to $ 112,290,000.00 to comply with the Due Process Clause of the Fourteenth Amendment of the United States Constitution. In all other respects, the judgment is affirmed. Furthermore, the trial court judgment denying Exxon’s exception of prescription is affirmed. AMENDED AND, AS AMENDED, AFFIRMED 36a APPENDIX B LOUISIANA COURT OF APPEAL OPINION No. 2002-CA-1237 COURT OF APPEAL, FOURTH CIRCUIT STATE OF LOUISIANA * OK OK JOSEPH GREFER, CAMILLE GREFER, ROSE MARIE GREFER HASSI AND HENRY GREFER, V. ALPHA TECHNICAL, ET AL. ROKK APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH NO. 97-15004, DIVISION “A” HONORABLE CAROLYN GILL-JEFFERSON, JUDGE ** KK JUDGE LEON A. CANNIZZARO, JR. *** * * (COURT COMPOSED OF JUDGE MICHAEL E. KIRBY, JUDGE MAX N. TOBIAS, JR., AND JUDGE LEON A, CANNIZZARO, JR.) MARCH 31, 2005 ANDREW B. SACKS JOHN K. WESTON 37a SACKS, WESTON, SMOLINKSKY, ALBERT & LUBER 510 WALNUT STREET SUITE 400 PHILADELPHIA, PA 19106 AND STUART H. SMITH MICHAEL G. STAG SMITH & STAG 365 CANAL STREET 2850 ONE CANAL PLACE NEW ORLEANS, LA 70130 AND STEPHEN B. MURRAY ARTHUR M. MURRAY MURRAY LAW FIRM 909 POYDRAS STREET SUITE 2550 NEW ORLEANS, LA 70112-4000 AND RON A. AUSTIN SPEARS & SPEARS 1555 POYDRAS STREET SUITE 1710 NEW ORLEANS, LA 70112 AND WILLIAM A. PORTEOUS, III PORTEOUS, HAINKEL & JOHNSON, L.L.P. 704 CARONDELET STREET NEW ORLEANS, LA 70130-3774 AND 38a JACK W. HARANG HARANG & BARKER, LLC 365 CANAL STREET SUITE 2850 NEW ORLEANS, LA 70130 COUNSEL FOR PLAINTIFFS, JOSEPH GRE- FER, ET AL. SAM A. LEBLANC, III RON A. SHOLES GLEN M. PILIE LOUIS C. LACOUR, JR. MARTIN A. STERN ROBERT N. MARKLE ADAMS AND REESE LLP 701 POYDRAS STREET 4500 ONE SHELL SQUARE NEW ORLEANS, LA 70139 AND MITCHELL J. LANDRIEU 1100 POYDRAS STREET SUITE 2950 NEW ORLEANS, LA 70163 COUNSEL FOR DEFENDANT, EXXON MOBIL CORPORATION THOMAS A. BALHOFF JUDITH R. ATKINSON ROEDEL PARSONS KOCH BLACHE BALHOFF & MCCOLLISTER 8440 JEFFERSON HIGHWAY SUITE 301 BATON ROUGE, LA 70809-7652 39a COUNSEL FOR DEFENDANT, = INTRA- COASTAL TUBULAR SERVICES, INC. HERMAN ROBINSON, GENERAL COUNSEL PERRY M. THERIOT APRIL SNELLGROVE LOUISIANA DEPARTMENT OF _ ENVIRON- ‘MENTAL QUALITY LEGAL AFFAIRS DIVISION P.O. BOX 82282 BATON ROUGE, LA 70884-2282 AMICUS CURIAE, DR. HALL BOHLINGER, SECRETARY OF THE DEPARTMENT OF EN- VIRONMENTAL QUALITY AND MURPHY J. FOSTER, JR., GOVERNOR, STATE OF LOU- ISIANA AMENDED AND, AS AMENDED, AFFIRMED The defendants, Exxon Mobil Corporation (“Exxon”) and Intracoastal Tubular Services, Inc. (“ITCO”), and the plaintiffs, Joseph Grefer, Camille Grefer, Rose Marie Grefer Haase,! and Henry Grefer (“the Grefers”), appeal from a district court judgment rendered in accord with a jury verdict, awarding the Grefers compensatory and punitive damages as a re- sult of the defendants’ contaminating their immov- able property? with radioactive material. Exxon also 1 The plaintiffs’ original petition refers to Rose Marie Gre- fer Haase as Rose Marie Grefer Hassi. 2 The immovable property at issue was part of a larger tract of land purchased by the plaintiffs’ great grandfather in 1875 and since then has remained in the Grefer family. The plain- tiffs acquired the naked ownership of three-fourths (3/4ths) of 40a appeals from the district court judgment denying its exception of prescription. BACKGROUND HISTORY The operations of most major oil companies are integrated to include exploration and production, re- fining, and marketing of oil and gas. In the produc- tion phase, a well is drilled down to oil bearing sand, casing is cemented in the hole, tubing is run down the hole, and the tubing and casing are perforated at the level of the oil bearing sand to help bring the oil and natural gas to the surface. A section of the tub- ing is 2 to 3 inches in diameter and 30 feet long. The tubing is screwed together, and depending on the depth of the hole, could involve a string of tubing thousands of feet deep. Pressure underground forces oil and gas through the perforated casing and tubing up to the wellhead at the surface. At that point, separator tanks are used to separate the oil and gas, the oil is piped to a refinery for further processing into gasoline, diesel fuel, jet fuel, etc., and the natu- ral gas is sent to a gas processing plant to separate the various components. As time goes by, water from underground also mixes with and comes to the surface with the oil and gas. The water usually only appears in mature fields since it is heavier than oil and is generally not “produced” until much of the oil reservoir has be- come depleted. This water is referred to as “pro- duced water” since it is “produced” up through the well. “Produced water” historically has been their father, Archibald J. Grefer, Sr., and full ownership of the entire tract in March 1996 upon the death of their mother, Camille Claire Antoine Grefer. 4la pumped back into the ground, or discarded in estuar- ies. In the early 1900s, the oil industry discovered that the underground water leached certain mineral salts out of the earth’s crust and the “produced wa- ter” then carried those mineral salts in solution up the tubing toward the surface. As the water came through the perforations and rose up the tubing, the change in pressure and temperature caused those mineral salts to precipi [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386010_0624%3A1. Public record. Not legal advice.