Reply Brief — Owens-Illinois, Inc. v. Roby

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Supreme Court, U.S.

, reh. ED

No. 92-423 ~~ | OCT 14 1992

OFFICE OF THE CLERK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1992

OWENS-ILLINOIS, INC.,

Petitioner

FREDERIC E. ROBY and FRANCES A. SOLLY,

Respondents

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Sixth Circuit

PETITIONER’S REPLY BRIEF

Of Counsel: JAMES D. MILLER *

PHILIP MCWEENY KING & SPALDING

DAVID L. GRAY Suite 1200

OWENS-ILLINOIS, INC. 1730 Pennsylvania Avenue, N.W.

One SeaGate Washington, D.C. 20006

Toledo, Ohio 43666 (202) 737-0500

(419) 247-1004 RoBert A. BUNDA

THERESA R. DEWITT

RICHARD A. PAPURT

BUNDA, STUTZ, & DEWITT

One SeaGate, Suite 650

Toledo, Ohio 48604

(419) 247-2777

* Counsel of Record

Attorneys for Petitioner

WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

BEST AVAILABLE COPY

QUESTIONS PRESENTED

1. Do repetitive awards of punitive damages for the

same course of conduct violate the Due Process Clause

under the principles announced in Pacific Mutual Life

Insurance Co. v. Haslip, 111 S. Ct. 1032 (1991)?

2. Is appellate review of a jury’s award of punitive

damages adequate under due process where neither the

factors identified by the Court in Haslip, nor any similar

factors, are taken into account?

8. Does Fed. R. Civ. P. 16 permit the admission of

prejudicial evidence in direct contravention of a pretrial

order?

(i)

RULE 29.1 STATEMENT

The statement required by Rule 29.1 was included in

Petitioner’s petition for certiorari.

TABLE OF AUTHORITIES

CASES Page

Dunn v. HOVIC, 1992 U.S. App. LEXIS 22749

en I a ceuteamuiamsabansie ue

EFichenseer v. Reserve Life Ins. Co., 934 F.2d 1377

SERIE AG a ce 2

Johnson v. Hugo’s Skateway, 1992 U.S. App.

LEXIS 21065 (4th Cir. Sept. 8, 1992) (en

| Ase te Rails se eA 1,3

Juzwin v. Amtorg Trading Corp., 718 F. Supp.

a. 5

Mason v. Texaco Inc., 948 F.2d 1546 (10th Cir.

1991), cert. denied, 112 S. Ct. 1941 (1992)........ 2

Pacific Mutual Life Insurance Co. v. Haslip, 111

Re I IID ooo vicpecncassnadsdecasssucncecnnonsneniccaseaed passim

STATUTES

sar ncnkecbaahacichabciie 3

MISCELLANEOUS

Restatement (Second) of Torts (1977) ................ 2

(iii)

IN THE

Supreme Court of the United States

OCTOBER TERM, 1992

No. 92-423

OWENS-ILLINOIS, LNC.,

Petitioner

FREDERIC E. ROBY and FRANCES A. SOLLY,

Respondents

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Sixth Circuit

PETITIONER’S REPLY BRIEF

1. An important conflict among the federal and state

courts has developed following this Court’s decision in

Pacific Mutual Life Insurance Co. v. Haslip, 111 S. Ct.

1032 (1991). The Sixth Circuit’s decision below is in

conflict both with the Third Circuit’s recent decision in

Dunn v. HOVIC, 1992 U.S. App. LEXIS 22749 (3d Cir.

Sept. 18, 1992), and with the Fourth Circuit’s en banc

decision in Johnson v. Hugo’s Skateway, 1992 U.S. App.

LEXIS 21065 (4th Cir. Sept. 8, 1992). Had the Sixth

1 Hugo’s Skateway was decided the day Petitioner filed its peti-

tion for certiorari, while Dunn was decided ten days afterwards.

Circuit below applied Haslip as have the Third and

Fourth Circuits, then the punitive damages award here

could not have withstood appellate review.

The award of punitive damages against Owens-Illinois,

Ine. (“Owens-Illinois”) in this case was not subject to

any substantive review for excessiveness by the trial or

appellate courts. The trial court summarily denied

Ower ;-Illinois’ motion for remittitur of the punitive dam-

ages award on the grounds that “passion, prejudice or

prejudicial error” apparently did not affect the verdict.

See, Petitioner’s Appendix at 38a (hereinafter ‘Pet.

App.”). On appeal, the Sixth Circuit did not apply any

substantive standards, see Pet. App. at 13a-14a, thereby

joining the Tenth and Fifth Circuits in failing to apply

Haslip. See Mason v. Texaco Inc., 948 F.2d 1546, 1560 (16th

Cir. 1991) (punitive damages award reviewed only by

application of a “shock the conscience’ measure for ex-

cessiveness), cert. denied, 112 8. Ct. 1941 (1992); Hich-

enseer v. Reserve Life Ins. Co., 934 F.2d 1377, 1385 (5th

Cir. 1991) (approving punitive damages award as “‘rea-

sonable’ without applying Haslip substantive standards).

The Third Circuit in Dunn performed what it described

as an “analogous function” to the review by the Alabama

Supreme Court that this Court approved in Haslip. Dunn,

1992 U.S. App. LEXIS 22749, at *55. This careful re-

view using Haslip factors, and in particular the existence

of other punitive awards against the appellant, led the

Third Circuit to conclude that “the maximum amount

of punitive damages that could reasonably have been

awarded in this case is $1 million’”—one-half the amount

permitted by the district court. Jd. at *76. While the

court upheld the district court’s review as basically con-

sistent with Haslip, it also “recommen[ed] that in the

future district courts explicitly assess the amount of a

punitive damages award in light of the factors set out in

comment e of the Restatement.” Jd. at *53 n.22 (citing

Restatement (Second) of Torts § 908 emt. e (1977) ) (em-

phasis added). The Restatement factors are parallel to

the Haslip factors. The Third Circuit’s application of the

Haslip factors is in sharp contrast to the essentially

standardless review employed by the Sixth Circuit.

In Johnson, the Fourth Circuit en banc vacated and

remanded an award of punitive damages as inconsistent

with the standards announced in Haslip. That court ob-

served that substantive review by the state trial and

appellate courts was “critical” to this Court’s approval

of Alabama law in Haslip, and determined that while

Virginia law might provide sufficiently careful review,

the federal court sitting in diversity is prohibited by the

Seventh Amendment from applying those standards

(which necessarily require taking new evidence) on re-

view of a jury verdict. In the court’s view, the “limited

scope of review” afforded in federal court pursuant to

Fed. R. Civ. P. 59 denied defendant due process. The

court concluded that due process requires federal courts

in diversity actions to compensate for this limited review

by including in instructions to the jury substantive fac-

tors like those applied on review of an award of punitive

damages awards by Alabama courts and approved in

Haslip. Johnson, 1992 U.S. App. LEXIS 21065 at *9.

This split among the circuits illustrates that litigants

are subject to widely different standards on review of

awards of punitive damages for excessiveness. Yet re-

spondents argue that this case—which provided no sub-

stantive review of an award of punitive damages despite

the fact that a second jury heard the same evidence at

the same time and did not award punitive damages—is

not worthy of this Court’s consideration because “‘no ap-

plicable federal appellate decisions conflict on any point

raised” by the petition. See Brief in Opposition at 11.

The inconsistency between the Solly and Roby punitive

damages verdicts surely would have been corrected if sub-

ject to the review given punitive damages awards in the

Third, Eighth and Eleventh Circuits, or if the juries had

been instructed as carefully as required in federal courts

in the Fourth Circuit. The lack of care taken in the “re-

view” of the Roby award is demonstrated by the Sixth

Circuit’s significant mischaracterization of the evidence:

in weighing the sufficiency of the evidence in support of

the award of punitive damages, the court describes a let-

ter to Owen-Illinois that characterized Kaylo (Owens-

Illinois’ product) as a hazard to employees engaged in its

manufacture and in installation. Pet. App. at 13a. Re-

spondents repeat this misstatement. Brief in Opposition

at 4-5. In fact, the letter to which both the Sixth Circuit

and respondents refer was a letter from Owens-Illinois

to a laboratory asking whether the product presented a

hazard.

This inaccurate portrayal of the evidence is but one

example of the haphazard review conducted of the Roby

award of punitive damages. The lack of substantive re-

viev at the trial and appellate levels, together with the

disparity in the jury verdicts, make this case an appro-

priate vehicle for this Court to clarify the principles an-

nounced in Haslip and remedy the disparate treatment of

punitive damages litigants.

2. Respondents argue that any due process limitation

on multiple awards of punitive damages for the same

course of conduct will undermine a state’s interest in pun-

ishing and deterring wrongful conduct. Brief in Opposi-

tion at 18. Respondents assume that a due process limita-

tion will result in one punitive damages award to the

lucky plaintiff who first obtains a verdict. See id. at 19

(“If only one punitive damage recovery were allowed, a

defendant could calculate the award into the cost of doing

business.” ).

Respondents’ argument misconstrues the application of

a limitation on repeated awards of punitive damages for

a single course of conduct: while one amount might be

assessed as the total sum of punitive damages appropri-

ate, the plaintiffs harmed by the conduct would obtain a

share of that sum. The state’s interest in safeguarding

the rights or its citizens is fully protected by the division

of a punitive damages award among all injured parties.

Respondents’ position fails to consider this Court’s de-

termination in Haslip that due process requires that

punitive damages awards not exceed the amount neces-

sary to serve the societal goals of retribution and deter-

rence. Pacific Mutual Life Ins. Co. v. Haslip, 111 S. Ct.

1082, 1044-45 (1991). Without a uniform rule to ensure

that a defendant is assessed only the amount of punitive

damages. necessary to punish and deter a single course of

conduct, courts lack the means necessary to weigh other

awards with the confidence that awards (and litigants)

in other states will be subject to the same process. See

Juzwin v. Amtorg Trading Corp., 718 F. Supp. 1233, 1235

(D.N.J. 1989) (concluding that multiple awards of puni-

tive damages violate due process but allowing award to

stand since lack of nation-wide uniformity leaves court

“nowerless to fashion a remedy which will protect the due

process rights of the defendant’).

Respondents also argue that the record in this case is

insufficient to determine whether previous punitive dam-

ages awards paid by Owens-Illinois “reach|] the maxi-

mum tolerable under due process.” Brief in Opposition

at 15. Respondents acknowledge that Owens-Illinois sub-

mitted evidence of these awards to the trial and appellate

courts below. See Brief in Opposition at 5, 15 (affidavits

submitted testifying to payment of two awards -totalling

$1.3 million). The trial court apparently did not consider

this evidence at all, and the Sixth Circuit determined that

it did not need to do so, since it rejected Owens-Illinois’

due process challenge to repeated punishment for the

same course of conduct. As evidenced by this failure to

consider prior awards, respondents’ argument overlooks

the fact that there is no mechanism in Ohio law to permit

the court to weigh the payment of other punitive dam-

ages awards and determine “the maximum tolerable un-

der due process.”

The Roby punitive damages award is unconstitutional

because Owens-Illinois already has paid punitive dam-

ages for the course of conduct alleged in this case. Mul-

tiple awards violate the due process principles announced

in Haslip, and this case presents the appropriate vehicle

for this Court to consider the due process concerns im-

plicated by repetitive awards of punitive damages for a

single course of conduct.

Respectfully submitted,