Opposition Brief — IBP, Inc. v. Wilson

~ Supreme Court, U.S,

in FILED

AY

YUN I3 1997

No. 96-1813 _

fret ewe ow —

OFFICE OF IKE CLERH

In the yr reon ae

SUPREME COURT OF THE

UNITED STATES

OCTOBER TERM, 1996

IBP, Inc. and Diane Arndt,

Petitioners,

V.

Kevin Wilson,

Respondent.

On Petition for Writ of Certiorari

to the Supreme Court of Iowa

BRIEF IN OPPOSITION

David L. Brown

Counsel of Record

218 6th Ave., 8th Floor

Des Moines, Iowa 50311

(515) 244-2141

Randall J. Shanks

409 West Broadway

Council Bluffs, Iowa 51503

Counsel for Respondent

i

Counter-Statement of Questions Presented

Whether the Supreme Court of Iowa

correctly applied BMW v. Gore, 134

L.Ed.2d 809 (1996), to fix punitive damages

at $2 million given the intentional threat of

physical harm to Respondent’s health and

safety from Petitioner’s conduct?

Whether Petitioners’ claim that receipt by

the State Civil Reparations Trust Fund of

a portion of the punitive damage award

under Iowa Code § 668A.1(2)(b) violates

due process is properly before the Court

when it was not raised in the State courts?

il

Parties Involved and Rule 29.6 Statement

Following the decision below, the Civil Reparations

Trust Fund was granted permission to intervene. (App. p.

47a) The Trust Fund is created pursuant to lowa Code §

668A. 1(2)(b) (1995) and is under the control of the Governor

and four other elected executive officers of the State of Iowa.

Iowa Code § 7D.1 (1995) Funds are disbursed only for

indigent civil litigation or insurance assistance programs.

Iowa Code § 668A.1(2)(b) (1995).

ill

Table of Contents

Se OE Auioiiee Vv

Statutory Provision es... ]

Statement ofthe Case..........00000022 2 2

Course of Proceedings Below......__- 2

Factual Background ............ 3

Reasons for Denying the Writ ...........0000 7

A. The Supreme Court of Iowa correctly

applied the settled law of BMW V.

oe ee 7

The degree of reprehensibility

Supports the decision below .......__- 9

Ratio alone is not

determinative............000 13

There are no Statutory

sanctions which can be

Compared to IBP’s

misconduct ................. | 15

The Gore concurrence supports

the decision below ............___ 16

The need for deterrence

Supports the decision below ......__. 18

iv

B. The Petition depends on resolution of

disputed issues of fact and application of

OE SU 18 Eee os 19

The decision below is consistent with |

other federal and state cases ........... 20

CO

D. IBP has not preserved error regarding

its claim of a Due Process violation

in Iowa’s statutory allocation of the

punitive damage award .............. 21

E. IBP has limited the remedy it seeks

in this Court to a determination of

whether summary reversal is

ee er 24

Rae oe rte ere A Pen ee ome ae” 27

Vv

Table of Authorities

Cases

Adams v. Robertson, 65 U.S.L.W.

Bisninih ison) ee ae ee 22, 23

Adler v. Board of Education,

342 U.S. 485, 496 ae en ey a 22

BMW of North America v. Gore,

134 L.Ed.2d 809 (| _——— 6, 8, 9, 13, 16, 18, 2]

Board of Directors of Rotary

International v. Rotary Club of

Duarte, 481 U.S. 537, 549-50 SE sk Oe wv Creeks 22

Burke v. Deere & Co., 780 F.Supp.

1225 (S.D. Iowa 1991), rev'd on

other grounds, 6 F.3d 497 (8th Cir. 1993) ...... 0. 24

Continental Trend Resources, Inc. v.

OXY U.S.A., Inc., 101 F.3d 634

(10th Cir. 1996), cert. denied

(Docket No. 96-1546, May 27, 1997) .. 8, 10, 11, 16, 19

Cooper v. Casey, 97 F.3d 914

I TIPO ire Sic, ak vase 2G 14

Eaton v. City of Tulsa,

i adh | 26

Fernandez v. Curley,

463 N.W.2d 5 (Iowa PO ire ced nhs ete 24

v1

Lee v. Edwards, 101

ee ae, rear a 14, 15

Raley v. Ohio, 360

ee ee, EID. Gon ss nes es RO SS eee ous 22

Schweiker v. Hauser,

a arene eee arr 26

Spaur v. Owens-Corning

Fiberglas Corp., 510 N.W.2d

es a 5 wo « 6d wee Ales Cae le ee 23

Street v. New York,

ee I aw go wh @ aa Gee @ Rea mes 22

Yee v. City of Escondido,

nS eo ads book wo wi oie be ede tears 22, 20

Statutes

Le Ee ee. >| re ee er ere oar 1]

Iowa Code § 668A.1(1)(a) (1995) ................ 8

Supreme Court Rules

OE Wg 66, 6:0 tc ce sso eee eee aed 7

Supreme Court Rule 14(g)f1) . 0... cee 21

_ ee ee total stn'’

ee ee ene ee

No. 96-1813

IN THE SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1996

IBP, Inc. and Diane Arndt,

Petitioners,

V.

Kevin Wilson,

Respondent,

On Petition for Writ of Certiorar;

to the Supreme Court of Iowa

BRIEF IN OPPOSITION

Respondent Kevin Wilson (hereinafter "Wilson")

respectfully opposes the Petition for Writ of Certiorari to the

Supreme Court of Iowa.

Statutory Provision Involved

Iowa Code § 668A. 1 (1995) Punitive or exemplary

damages

1. In a trial of a claim involving the request for

punitive or exemplary damages, the court shall instruct the

jury to answer special interrogatories or, if there is no jury,

shall make findings, indicating all of the following:

2

a. Whether, by a preponderance of clear,

convincing, and satisfactory evidence, the conduct of the

defendant from which the claim arose constituted willful and

wanton disregard for the rights or safety of another.

b. Whether the conduct of the defendant was

directed specifically at the claimant, or at the person from

which the claimant’s claim is derived.

2. An award for punitive or exemplary damages

shall not be made unless the answer or finding pursuant to

subsection 1, paragraph "a", is affirmative. If such answer or

finding is affirmative, the jury or court if there is no jury,

shall fix the amount of punitive or exemplary damages to be

awarded, and such damagers shall be ordered paid as follows:

a. If the answer or finding pursuant to subsection 1,

paragraph "b", is affirmative, the full amount of the punitive

or exemplary damages awarded shall be paid to the claimant.

b. If the answer or finding pursuant to subsection 1,

paragraph "b", is negative, after payment of all applicable

costs and fees, an amount not to exceed twenty-five percent

of the punitive or exemplary damages awarded may be

ordered paid to the claimant, with the remainder of the award

to be ordered paid into a civil reparations trust fund

administered by the state court administrator. Funds placed

in the civil reparations trust shall be under the control and

supervision of the executive council, and shall be disbursed

only for purposes of indigent civil litigation programs or

insurance assistance programs.

3. [This provision relating to discovery of

defendant’s wealth is omitted.]

Statement of the Case

Course of proceedings below

On May 27, 1997, IBP filed a notice of appeal to the

3

Supreme Court of Iowa from the entry of judgment in the

Iowa District Court for Pottawattamie County dated April 30,

1997. A copy of the notice of appeal from the judgment

entry is reprinted in the appendix to this brief in Opposition.

Factual Background

Pursuant to Supreme Court Rule 15(2), Wilson objects

to the factual summary presented by IBP.

The Supreme Court of lowa determined that IBP had

engaged in a course of willful and wanton conduct which

threatened the health and safety of Wilson. (Slip. Op. at

Petitioner’s Appendix p. 2la-22a) (hereinafter "App.") This

conduct was part of a larger practice of manipulating the

health care received by injured employees by using economic

pressure to force doctors to avoid expensive procedures and

high disability ratings, punishing employees who complained

about their treatment, and falsifying reports of injuries in

internal reporting and to the Occupational Health and Safety

Administration. (App. p. 21a-22a)

IBP, a self-insured employer under the Iowa Workers’

Compensation Acct, began its control over the treatment of

injured employees by selecting only those doctors who were

“ultra-conservative," meaning they would avoid surgery.

(App. p. 21a) Surgical procedures are expensive themselves

and often mean that the worker will be assigned a disability

rating which is compensable under the workers’

compensation system. (App. p. 21a)

After this selection process occurred, IBP would

pressure doctors to limit treatment costs by refusing to refer

new patients to doctors who did not prescribe inexpensive

treatment. Specifically, one of Wilson’s treating doctors, Dr.

Agarwal, lost all referrals because he was not conservative

enough in his treatment. He met with IBP and agreed to be

more conservative in exchange for future referrals. (Tr. pp.

4

70-74) Dr. Agarwal was ultimately fired by IBP for ordering

too many surgeries, but at the time he saw Wilson he was

still in the good graces of IBP. (Tr. pp. 73-76, 101)

Diane Arndt was the IBP employee who was

responsible for administering this workers’ compensation

program. Following his back injury, Wilson was sent to Dr.

Agarwal who initially prescribed only bed rest. (App. p. 2a)

After complaining about the lack of treatment, Wilson was

sent to Dr. Hamsa. (Tr. pp. 101, 25) Although Amdt

admitted at trial that she knew the injury was legitimate,

when she learned that Dr. Hamsa ordered Wilson off work

for two more weeks, her response was, "we'll see about that."

(App. p. 19a)

After Wilson’s condition failed to improve, Dr.

Hamsa ordered three more weeks of bed rest with the

understanding that without improvement, surgery would be

necessary. (App. p. 19a) It was at this time, the Supreme

Court of Iowa determined, that Arndt made good on her

promise and intervened to avoid this increased expenditure.

In a telephone conversation Arndt told Dr. Hamsa that IBP

had videotaped Wilson "working on his car and out doing

other activities without any apparent distress." (App. p. 19a)

Of course, no such tape existed', Arndt knew this, admitted

as much to her co-worker, Karen Beam, and intended with

' Although IBP refers to a video tape existing (Pet. p. 13, n. 4), this

is not a videotape showing what Amdt claimed. IBP denied during

discovery that any videotape existed. (Tr. 235-36, Ex. 13) About four

weeks before trial IBP produced a tape showing Wilson walking (which

was consistent with doctor’s orders), but not doing any strenuous activity.

(Ex. 17) There was no date imprinted on the tape or any report generated

to show when the videotape was made. (Tr. pp. 229-30) There was

sufficient evidence for the jury to conclude that IBP had fabricated this

videotape for the purpose of furthering the "cover-up." This conduct,

therefore, is certainly relevant to determining an appropriate sanction

through a punitive damage award.

5

her deception to stop Wilson from getting needed surgery.

The Supreme Court of Iowa expressly found that "Arndt

knew this was a lie" regarding her statement to Dr. Hamsa.

(App. p. 19a)

Karen Beam testified that Arndt asked her, after

Wilson had hired a lawyer, to help create a cover-up story

about confusing Wilson’s case with another where a

videotape existed. (App. at 20a-21a) Beam also warned

Amdt about the dangers of interfering with medical

treatment, but Arndt assured her that Dr. Hamsa would not

mention the conversation. (App. at 20a)

Arndt admitted at trial that her lie "assisted" a change

in Dr. Hamsa’s plan of treatment for Wilson. (App. p. 20a)

Dr. Hamsa confronted Wilson and accused him of lying. (Tr.

pp. 32, 41, 46) Dr. Hamsa thereafter advised against surgery,

ordered Wilson back to light duty, (Tr. pp. 91, 273, 276) and

refused to provide any further treatment for the back injury.

(Tr. pp. 36, 47, 287-88)

Wilson was ultimately treated by a neurosurgeon who

performed surgery to correct the ruptured disc and impinged

nerve condition. (Tr. pp. 35-38) Wilson settled his workers’

compensation claim and instituted the case at bar seeking

damages for breach of fiduciary duty and defamation.

At trial in the Iowa District Court IBP chose to

present no evidence in its defense. (Tr. p. 322) The jury

determined that IBP’s actions toward Wilson were not

isolated, but part of IBP’s program to reduce workers’

compensation costs. A "safety award system" had been

instituted whereby employees of divisions of IBP with low

injury statistics would receive gifts or cash bonuses. (App.

p. 20a) One way in which statistics were improved was to

require employees to punch in at work soon after being

disabled by an injury. (App. p. 20a-21a) Although the

employee would then return home to convalesce, these days

would not be counted as lost due to injury. Wilson, for

6

example, was ordered in to work only three days after

rupturing a disc in his back. (App. p. 21a) The Supreme

Court of Iowa found that IBP required other workers to

punch in on the same day as having surgery, (App. p. 21a) or

the day after having his finger amputated. (App. p. 21a)

This practice of falsifying records carried over to

illegally under reporting lost days-to OSHA and reporting

injuries incorrectly in internal documents so that they would

not have to be forwarded to OSHA under applicable

regulations. (App p. 21a)

IBP’s callous attitude toward its employees was

demonstrated by Arndt’s "openly low opinion of workers,

referring to them as ‘idiots’ and ‘jerks.” She made remarks

to doctors that other injured IBP workers were lying about

their injuries," (App. p. 20a) and told treating physicians that

"this guy’s full of shit." (App. p. 20a.)

One method to encourage employee submission to

IBP was to force those workers who complained about

treatment decisions to work unpleasant light duty jobs

including watching gauges in the rendering plant (where

animal parts are boiled to produce byproducts). (App. p.

22a) The monotony of the work was compounded by the

terrible smell associated with this type of animal processing.

(App. p. 22a)

As the Supreme Court of Iowa stated:

This climate of suspicion toward the

legitimacy of injuries to workers and their

treatment, well known to Arndt, could be

found by a reasonable juror to corroborate a

finding of willful and wanton disregard for the

rights and safety of Wilson.

(App p. 22a)

The application of BMW of North America v. Gore

7

134 L.Ed.2d 809 (1996), must be considered against this

factual background and in light of the decision by the

Supreme Court of Iowa to order a remittitur of $13 million

(striking nearly 87% of the jury’s award) based on both Gore

and state law principles. Although certainly under these

facts, IBP’s deliberate and harmful conduct would have

justified a substantially higher award than $2 million, the

decision by the Supreme Court of Iowa is well within the due

process parameters of Gore.

Reasons for Denying the Writ

A. The Supreme Court of Iowa

Correctly Applied BMW _v. Gore

Supreme Court Rule 10 provides:

Review on a writ of certiorari is not a matter

of right, but of judicial discretion. A petition

for a writ of certiorari will be granted only for

compelling reasons....A petition for a writ of

certiorari is rarely granted when the asserted

error consists of erroneous factual findings or

the misapplication of a properly stated rule of

law.

The Petition does nothing more than dispute how the

Supreme Court of Iowa found facts and applied Gore. Under

the long-established standards of this Court, these grounds do

not give rise to a compelling reason to grant the writ.

This Court announced three principles in Gore which

guide an inquiry into whether an award of punitive damages

has been rendered consistent with the Due Process Clause of

the Fourteenth Amendment. These settled principles of law

were applied in the decision below after a thoughtful review

of the facts in the record.

First, a state may not allow a jury verdict which

punishes conduct occurring in another state. Gore, 134

L.Ed.2d at 825. Of concern in Gore was that the disclosure

policy at issue in the suit was legal in many other

jurisdictions. Unlike in Gore, IBP’s conduct would be

tortious in any jurisdiction. Furthermore, conduct which

occurred outside the state may be properly considered in "the

determination of the degree of reprehensibility of the

defendant’s conduct." Id. at 825, n. 21

All of the tortious conduct suffered by Wilson was

perpetrated in Iowa. IBP made no objection to the

jurisdictional nature of the evidence at trial or on appeal to

the Supreme Court of Iowa.

Second, the defendant must receive fair notice of what

conduct will subject him to punishment. Although there was

some question in Gore regarding the different types of

disclosure laws in the several States, there can be no doubt

that IBP was aware that a breach of fiduciary duty and

defamation would subject it to liability. Iowa Code §

668A.1(1)(a) provides for punitive damages based on conduct

"constitut[ing] willful and wanton disregard for the rights or

safety of another." A similar statute was found by the Tenth

Circuit to provide sufficient notice of the possibility of

punitive damages in a case involving interference with

contractual relationships and prospective business advantage.

Continental Trend Resources, Inc. v. OXY USA, Inc., 101

F.3d 634, 638 (10th Cir. 1996), cert. denied (Docket No. 96-

1546, May 27, 1997).

The third factor is whether the defendant has notice

of the severity of the punitive damage award which may

result. Gore, 134 L.Ed.2d at 826. Three "guideposts" are set

forth to analyze: the degree of reprehensibility of the

defendant’s conduct, the ratio of the punitive award to the

actual harm inflicted on the plaintiff, and the comparison

9

between the punitive award and the civil or criminal penalties

that could be imposed for comparable misconduct. Id.

The degree of reprehensibility supports the

decision below

The Court in Gore identified the degree of

wrongdoing as "perhaps the most important indicum of the

reasonableness of a punitive damage award." Id. at 826.

"This principle reflects the accepted view that some wrongs

are more blameworthy than others." Id. "The flagrancy of

the misconduct is thought to be the primary consideration in

determining the amount of punitive damages." Id. at n. 23

(citing Owen, A Punitive Damages Overview: Functions,

Problems and Reform, 39 Vill. L. Rev. 363, 387 (1994)).

The Gore decision also noted that Dr. Gore suffered

“purely economic" damages. Id. at 827. The conduct did not

"effect [the] performance or safety features, or even its

appearance for at least nine months after his purchase.

BMW’s conduct evinced no indifference to or reckless

disregard for the health and safety of others." Id. Factors

such as "trickery and deceit" and "intentional malice" were

also cited as allowing for higher punitive damage awards

consistent with due process requirements. Id.

In every way which BMW’s conduct could be

characterized as less wrongful, IBP’s is more so. The harm

here was physical, not just economic. IBP lied deliberately

about a critical fact, whereas BMW believed the damage to

the car was immaterial as a matter of law. This is not a case

of a doctor with a damaged luxury car; it is of an injured

worker in need of medical care who was victimized by a

corporate policy of deception and abuse. The difference is

stark and cries out for a remedy.

The Tenth Circuit, applying the Gore decision,

summarized the analysis of the level of misconduct as an

10

inquiry into:

whether a defendant’s behavior: causes

economic rather than physical harm; would be

considered unlawful in all states; involves

repeated acts rather than a single one; is

intentional; involves deliberate false statements

rather than omissions; and is aimed at a

vulnerable target.

OXY, 101 F.3d at 638.

Applying this analysis to the facts at bar demonstrates

the reasonableness of the decision of the Supreme Court of

Iowa. IBP caused physical harm in the manipulation of the

medical care provided Wilson by delaying his needed back

surgery. Although Wilson was fortunate that his disc did not

rupture further and cause more neurological problems during

IBP’s period of malfeasance, the type of conduct is markedly

more serious than the loss of value in a luxury car.

The tortious behavior in this case is recognized as

wrongful in every jurisdiction. The Court in Gore was

concerned that BMW was punished for a disclosure policy

which was legal in many states. Such is not a concern here.

The record demonstrates a pattern of conduct by IBP

in pursuing lower workers’ compensation expenditures

regardless of the human cost. The Supreme Court of Iowa

determined:

The evidence indicated that Wilson’s treatment

as an injured worker was not a one-time or

isolated instance. The interference with the

diagnosis and treatment of his injury could

have resulted in a pronounced worsening of an

already serious condition. Other workers with

injuries could be profoundly affected as a

1]

result of the policy actions carried out by

Arndt and IBP.

(App. p. 32a) This case is squarely within the concept of

"repeated acts" of wrongdoing and merits a higher award.

The conduct here was intentional as well, both in the

implementation of the general business policy and in the

deliberate falsehood told by Arndt to Dr. Hamsa. Although

the specific nature of the deliberate conduct in OXY

consisted of business torts rather than slander, there is

nothing in that case to suggest a distinction between these

types of misconduct.

Finally, IBP’s actions were aimed at a highly

vulnerable target. Aside from the manifest imbalance of

power associated with the employee-employer relationship,

IBP enjoyed statutory authority to control Wilson’s medical

care through the workers’ compensation system. See, Iowa

Code § 85.27 (1995). Furthermore, the jury determined that

a fiduciary relationship existed between Arndt and Wilson at

the time she lied to Dr. Hamsa. (App. pp. 9a-10a) It is also

worth noting that the OXY court found vulnerable plaintiffs

in the business competitors with the larger defendants. OXY,

101 F.3d at 639. As an individual, Wilson is even more

vulnerable under this standard.

The flagrant misconduct of IBP is markedly different

from the business decision made by BMW. When presented

with the understandably difficult task of explaining away this

damaging factor, IBP does nothing more than ignore the

factual findings made by the jury, ignore the express

statements of the Supreme Court of Iowa as to the state of

the appellate record, and ignore those factors which were

relevant in finding egregious conduct meriting a severe

punishment.

For example, IBP goes on at length citing cases

approving of the practice of putting injured workers under

12

surveillance. (Pet. pp. 11-12) IBP ignores the fact that there

was no surveillance of Wilson which showed him violating

his restrictions. It was the lie that was told about the

existence of a videotape showing such a violation which lead

to the decision here, not the idea of surveillance in general.

IBP’s argument is nothing more than a "red herring."

IBP attempts to cast the statements by Arndt to Dr.

Hamsa as being "in large part true." (Pet. p. 11) IBP fails,

again, to tell the whole story. The Supreme Court of Iowa

specifically rejected the argument that the "gist or sting" of

the defamatory statement was true:

We agree with the trial court in that the

essence of the alleged defamatory statement

was that Wilson was faking the severity of his

injury and was being untruthful to his doctor,

i.e., that he was a liar. It was not, as

defendants suggest, that he was working on

his car or driving his children to school.

(App. p. 13a)

This deception is made worse by the attempt to smear

Wilson further by throwing in the fact that he was in jail

during part of the time he was on medical restrictions. The

trial court sustained the motion in limine made by the

plaintiffs but allowed IBP to present evidence on a violation.

The trial court simply ruled that the location of the alleged

violation could not be mentioned.

IBP cannot avoid the fact that its version of events

was not believed by the jury or the Supreme Court of Iowa.

Nor can it ignore that the record which stands before this

Court paints a damning picture of IBP’s conduct, conduct

which threatened the health and safety of Wilson and every

other employee of IBP. This most important factor in

determining reasonableness has been satisfied many times over.

13

Ratio alone is not determinative

IBP fundamentally misreads Gore by its reliance on

the ratio factor as grounds for summary reversal. Gore does

not require a particular ratio as the upper constitutional limit

in isolation from other facts in the case. In fact, the Gore

decision recognized that "low awards of compensatory

damages may properly support a higher ratio than high

compensatory awards, if, for example, a_ particularly

egregious act has resulted in only a small amount of

economic damages." Gore, 134 L.Ed.2d at 831. The Court

also stated it:

cannot draw a mathematical bright line

between the constitutionally acceptable and the

constitutionally unacceptable that would fit

every case. We can say however that [a]

general concer[n] of reasonableness

properly enter[s] into the constitutional

calculus.

Id. (citing Pacific Mutual Life Ins. Co. v. Haslip, 499 U.S. 1,

18 (1991)). The 500:1 ratio present in this case is of little

use in assessing the constitutionality of the decision below.

The Seventh Circuit recognized the difficulty in

applying ratio analysis in a civil rights action where each

plaintiff received $5,000 in compensatory damages and

$60,000 in punitive damages:

The smaller the compensatory damages, the

higher the ratio of punitive to compensatory

damages has to be in order to fulfill the

objectives of awarding punitive damages ...

The compensatory damages were low here

in part because of the inherent difficulties of

14

fixing a dollar equivalent for subjective

injuries, such as fright and pain. An award of

punitive damages proportioned to the low

compensatory damages that were awarded

would have a very meager deterrent effect,

would fail to signal to the prison authorities

that savage treatment of prisoners will not be

tolerated, and would not be commensurate

with the moral gravity of the defendant’s

action.

Cooper _v. Casey, 97 F.3d 914, 919-20 (7th Cir. 1996)

(Posner, J.) (internal citations omitted).

The Second Circuit applied similar logic in another

civil rights claim, one based on malicious prosecution, where

the jury awarded $1 compensatory damages and $200,000 in

punitive damages.

The court stated:

In Gore, a 500 to 1 ratio was "breathtaking."

However, in a § 1983 case in which the

compensatory damages are nominal, a much

higher ratio can be contemplated while

maintaining normal respiration. Since the use

of a multiplier to assess punitive damages is

not the best tool here, we must look to the

punitive damages awards in other civil rights

cases to find limits and proportions.

Lee v: Edwards, 101 F.3d 805, 811 (2d Cir. 1996). The

court, after analyzing other awards in civil rights cases and

the manner in which the jury had been instructed on who

would pay the damages, ordered a remittitur of $125,000.

It should be noted that this 75,000 to 1 ratio was

approved in a case where the malicious prosecution claim

15

"entailed little overt violence" and was based on a detention

of two hours. Id. at 810. "[T]he jury ... was obviously

unimpressed by Lee’s claim to have suffered harm...." Id.

IBP is highly critical of the Supreme Court of lowa’s

statement that the ratio was of "minor significance." (Pet. p.

14) IBP fails to recognize, however, that the Gore decision

emphasized the degree of reprehensibility factor and qualified

the application of ratio analysis when a low award of

compensatory damages is based on an egregious act causing

little economic harm. This is exactly the case at bar. The

reduction of the $15 million award to a 500:1 ratio is

therefore entirely consistent with Gore, and, indeed, a higher

ratio would be justified given IBP’s actions here. No valid

basis to overturn the methodical review of previous punitive

damage cases by the Supreme Court of Iowa has been

demonstrated.

There are no statutory sanctions which can

be compared to IBP’s misconduct

In Gore, the Court was able to compare the punitive

damage award to the consumer protection measures of

Alabama law which provided penalties for non-disclosure of

damage to a new car before safe. Here, however, the

conduct at issue is not covered by any statutory measure

because IBP violated common law tort duties. IBP has cited

no provision of the lowa Code or Iowa Administrative Code

which, if applied to this case, would provide an adequate

remedy for its misconduct. This factual difference limits the

applicability of the third Gore factor.

As the Tenth Circuit stated when faced with the same

issue:

OXY’s misconduct involved a violation of

common law tort duties that do not lend

16

themselves to a comparison with statutory

penalties. The fundamental question 1s

whether OXY had reasonable notice that its

tortious interference with contracts and

prospective business advantage could result in

such a large punitive award.

OXY, 101 F.3d at 641.

The problem with IBP’s analysis, as already stated, is

that the wrongs committed here were not statutory in nature.

The common law, not the Iowa legislature, provides the

remedy to IBP’s actions. IBP cannot possibly claim that they

did not know manipulating with medical care, defamation and

maintaining a culture of lying could result in a significant

jury verdict.

The Gore Concurrence supports the

decision below

The three concurring Justices in Gore recognized that

if "fair procedures were followed, a judgment that is a

product of that process is entitled to a strong presumption of

validity." Gore, 134 L.Ed.2d at 833 (Breyer, J., concurring).

This system of fair procedures, "need not be precise;"

however, it "must offer some kind of constraint upon a jury

or court’s discretion, and thus protection against purely

arbitrary behavior." Id. at 834.

IBP expressly accuses the Supreme Court of Iowa of

being blind to previous decisions of that court in determining

that a $13 million remittitur was warranted. (Pet. p. 14)

IBP’s disrespectful argument that this unanimous, en banc,

decision of the Supreme Court of Iowa ignored the law of

Iowa is flatly inconsistent with the state law standards

expressed by the court:

17

In 1994, we decided Spaur .... We quoted the

standards of Haslip and applied them on the

posttrial review process. Id. at 867. Also in

1994, we had occasion to again consider a

punitive damage award in Ezzone [v. Riccardi,

525 N.W.2d 388 (Iowa 1994)]. The suit

involved an action against a bank for

interference with shareholders’ rights. Citing

the Supreme Court case of Honda Motor Co.

[v. Oberg, 512 US. 415 (1994)] as

establishing due process requirements, we

structured our review process as follows: ...

Awards will be tested with a view of the

extent and nature of the outrageous conduct,

the amount necessary for future deterrence,

and with deference to the relationship between

the punitive award and plaintiff's injury, as

reflected in any award for compensatory

damages. In addition to these traditional

factors, we shall consider all circumstances

surrounding the conduct and relationship

between the parties. Any provocation of the

conduct by plaintiff will be a factor. We take

the provocation to include participation in the

conduct complained of.

(App. pp. 30a-3 1a)

The decision below was based on a comprehensive

review of both federal and state law concerning punitive

damages. IBP has couched its reasons for granting the writ

in broad and argumentative terms without any showing of

how the presumption of validity is overcome in this case.

The Court should properly deny the petition as the Supreme

Court of Iowa has faithfully applied due process analysis in

ordering a remittitur of $13 million already and in so doing

18

set a level of punitive damages which reflects the outrageous

conduct of IBP.

The need for deterrence supports the

decision below

The Court in Gore recognized that when a "defendant

has repeatedly engaged in prohibited conduct while knowing

or suspecting that it was unlawful [it] would provide relevant

support for an argument that strong medicine is required to

cure the defendant’s disrespect for the law." Gore, 134

L.Ed.2d at 827. IBP’s actions here were found by the

Supreme Court of Iowa to be part of a repeated pattern of

unlawful conduct and that the deterrent effect of punitive

damages would be well served here. (App. p. 32a)

IBP argues that the use of the defendant’s wealth by

the Iowa court to aid in the determination of what level of

punitive damages would be reasonable was inconsistent with

Gore. (Pet. pp. 15-16) The Gore opinion simply held that

a defendant’s size does not alter the requirement of fair

notice. "While each State has ample power to protect its own

consumers, none may use the punitive damages deterrent as

a means of imposing its regulatory policies on the Nation."

Id. at 833.

Here, however, the size of the defendant is not being

used to justify a lack of fair notice, it is being used to

determine what is fair punishment. As the Tenth Circuit

stated:

From [Gore] we conclude that a large punitive

award against a large corporate defendant may

not be upheld on the basis that it is only one

percent of its net worth or a week’s corporate

profits. Yet wealth must remain relevant,

because $50,000 may be awesome punishment

19

for an impecunious individual defendant but

wholly insufficient to influence the behavior

of a prosperous corporation...

A rich defendant may act oppressively

and force or prolong litigation simply because

it can afford to do so and a plaintiff may not

be able to bear the costs and the delay. We

have held that the costs of litigation to

vindicate rights is an appropriate element to

consider in justifying a punitive damages

award.

OXY, 101 F.3d at 641-42 (citations omitted). A substantial

award of punitive damages is the only way to get the

attention of IBP and have it realize its pattern of abusive

conduct was and is completely unacceptable.

B. The Petition depends on resolution of

disputed issues of fact and

application of settled law to facts

Much of Petitioners’ disagreement with the decision

below rests on disputed assertions of fact. The Petition, for

example, criticizes the Supreme Court of Iowa’s conclusion

that IBP’s treatment of Wilson was "not a one-time or

isolated instance." (Pet. p. 12) It complains of other claimed

factual inaccuracies in the decision below. (Pet. p 13, n. 4)

Although the Petition seeks to couch this argument in an

assertion that the lower court "flouted" the guidelines in Gore

(Pet. p. 10), the heart of Petitioners’ argument is that the

record does not support the Supreme Court of lIowa’s

application of the Gore factors to the facts of the case. (Pet.

pp. 10-16)

The court found that IBP created a "climate of

suspicion toward the legitimacy of injuries to workers and

20

their treatment" which a reasonable juror could find

corroborated a finding of "willful and wanton disregard for

the rights and safety of Wilson." (App. p. 22a) Yet, IBP

characterizes Arndt’s statements as "allegedly slanderous,"

being "in large part true," and claims that the conduct at

issues was simply "legal conduct designed to preclude

workers’ compensation waste and fraud." (Pet. pp. 10-11)

Note four on page 13 of the Petition complains about

"several fundamental inaccuracies" in the facts of the case.

The issue of the videotape, however, was fully addressed by

the decision below. The Supreme Court of Iowa found that

there was never any videotape showing a violation of

restrictions by Wilson. (App. p. 19a) (See, supra p. 4, n. 1)

The remaining inaccuracy alleged by IBP is that Karen Beam

was not really a nurse. IBP fails to cite any decision of this

Court suggesting that it will grant a writ of certiorari, much

less a summary reversal, on the basis of this kind of

allegation of error. No compelling basis exists under

Supreme Court Rule 10 for the exercise of the Court’s

judicial discretion when the claim of error is founded on

factual determinations, especially those which are immaterial

to the real issue of how IBP threatened Wilson’s health and

safety.

C. The decision below is consistent with

other federal and state cases

IBP cites several cases in which Gore was applied to

reduce punitive damage awards. None of the cases cited

involve the type of wrongdoing involved in the case at bar.

IBP was found to have engaged in conduct which threatened

health and safety in addition to defaming Wilson. IBP offers

cases dealing with business torts or, at worst, discrimination

claims. Not one even remotely approaches IBP’s misdeeds.

Furthermore, the above argument demonstrates that

21

each case must be carefully analyzed on its own merits to

determine if the award violates the due process clause. There

is no meaningful way for IBP to summarize each case in a

few words or sentences and compare it to the instant case.

Indeed, the Gore opinion stresses that due process analysis

cannot be reduced to a bare comparison to previous punitive

damage cases. Gore, 134 L.Ed.2d at n. 37.

D. IBP has not preserved error regarding

its claim of a due process violation in

the receipt of some of the punitive

damages awarded to the Civil

Reparations Trust Fund

IBP’s argument that the provisions of lowa Code §

668A.1 which require apportionment to the state’s Civil

Reparations Trust Fund of a portion of the punitive damage

award is not properly before the court because IBP raises this

issue for the first time in their petition.

Supreme Court Rule 14(g)(i) requires the Petitioner to

make a:

specification of the stage in the proceeding,

both in the court of first instance and in the

appellate courts, when the federal questions

sought to be reviewed were raised; the method

or manner of raising them and the way in

which they were passed on by those courts;

and pertinent quotations of specific portions of

the record or summary thereof, with specific

reference to the places in the record where the

matter appears...so as to show that the federal

question was timely and properly raised and

that this Court has jurisdiction to review the

22

judgment on a writ of certiorari.

IBP has utterly failed to make the required

specification. There has been no allegation that this issue has

ever been raised and it was plainly not addressed by the

Supreme Court of Iowa. It is, therefore, not properly before

the Court.

It is a fundamental rule of Supreme Court practice

that a federal claim cannot be considered by the Court unless

it has either been raised in the state court or considered and

resolved in the state court. Yee v. City of Escondido, 503

U.S. 519, 532 (1992). When the state court fails to pass

expressly upon a federal question "it will be assumed that the

omission was due to want of proper presentation in the state

courts, unless the aggrieved party in this Court can

affirmatively show the contrary." Street v. New York, 394

U.S. 576, 582 (1969). See, Board of Directors of Rotary

International v. Rotary Club of Duarte, 481 U.S. 537, 549-50

(1987), Adler v. Board of Education, 342 U.S. 485, 496

(1952), Raley v. Ohio, 360 U.S. 423, 434-36 (1959).

"This rule [requiring raising of the issue in the state

court] serves an important interest of comity." Adams v.

Robertson, 65 U.S.L.W. 4180, 4181 (1997). "It would be

unseemly in our dual system of government to disturb the

finality of state judgments on a federal ground that the state

court did not have occasion to consider." Id. (internal

quotation marks omitted) (citing Webb v. Webb, 451 U.S.

493, 500 (1981)).

The necessity to properly raise issues below is not

insignificant:

Our traditional standard also reflects practical

considerations relating to this Court’s capacity

to decide issues. Requiring parties to raise

issues below not only avoids unnecessary

23

adjudication in this Court by allowing state

courts to resolve issues on state law grounds,

but also assists us in our deliberations by

promoting the creation of an adequate factual

and legal record.

Adams, 65 U.S.L.W. at 4181-82. Here, there is no

information in the record or the decision below with which

the Court could make a thoughtful analysis. The Court

would be left to speculate regarding the validity of IBP’s

claim of abuse.

In addition to this fatal procedural posture, IBP has

also failed to cite in its Petition the leading Iowa case

upholding the constitutionality of Iowa Code § 668A.1

against a challenge on due process, double jeopardy and

excessive fines grounds. See, Spaur_v. Owens-Corning

Fiberglas Corp., 510 N.W.2d 854 (Iowa 1994). The Spaur

court found:

a clear distinction between the [Civil

Reparations Trust] Fund and the general state

treasury. The damage awards are not

commingled with state revenues and are to be

disbursed only for the "purposes of indigent

civil litigation programs or _ insurance

assistance programs."

We explained in Shepard [Components v.

Brice Petrides et al., 473 N.W.2d 612 (Iowa

1991)] that "a plaintiff is a fortuitous

beneficiary of a punitive damage award

simply because there is no one else to receive

it." Section 668A.1 "was designed to divert a

portion of a resulting punitive damage award

to a public purpose."

24

Id. at 868-69. The same result occurred in an excessive fines

challenge in federal court. See, Burke v. Deere & Co., 780

F.Supp. 1225 (S.D. Iowa 1991), rev'd on other grounds, 6

F.3d 497 (8th Cir. 1993).

IBP incorrectly characterizes how the punitive damage

award is apportioned in the statement of questions presented.

It is not correct that "the State collects a 75 percent share of

the punishment and pays the plaintiff's attorney’s fees out of

the punishment." (Pet. p. i) Under the Supreme Court of

lowa’s conclusive interpretation of lowa §668A.1, the State

of Iowa only recovers punitive damages after the plaintiff has

received 25 percent of the award and all applicable fees and

costs have been paid, including attorney’s fees. See,

Fernandez v. Curley, 463 N.W.2d 5 (1990). The decision

below applied the Fernandez rule. (App. pp. 33a-34a)

IBP has offered no explanation of how a private

prosecution occurs given the divergence of interests between

Wilson (who wants the entire punitive damage award) and

the Fund (which wants its share). IBP wants nothing more

than to have the Supreme Court rule that such a provision is

per se unconstitutional. This argument has been waived,

lacks support in the record, and is internally inconsistent.

E. IBP has limited the remedy it seeks

in this Court to a determination of

whether summary reversal is

warranted

IBP has presented the Court with a petition

specifically limited? to seeking summary reversal of the

>

IBP expressly requests summary reversal in the questions

presented. (Pet. p. i), the reasons for granting the writ (Pet. pp. 10, 16)

and in its conclusion. (Pet. p. 22) In contrast, IBP requests plenary

(continued...)

25

unanimous, en banc, decision of the Supreme Court of Iowa.

The only question before the Court in considering the correct

application of Gore is, therefore, whether the Court may

exercise the extreme remedy of summary reversal, not

whether plenary review may be granted.

It is up to the petitioner to phrase the questions

presented for review. The Court has stated previously:

A litigant seeking review in this Court of a

claim properly raised in the lower courts thus

generally possesses the ability to frame the

question to be decided in any way he chooses,

without being limited to the manner in which

the question was framed below.

Yee, 503 U.S. at 535. The freedom granted by the Court

carries with it the necessity to phrase the questions precisely,

and define those issues on which review is sought:

The framing of the question presented has

significant consequences...because under this

Court’s Rule 14.1(a), "[oJnly the question set

forth in the petition, or fairly included therein,

will be considered by the Court." While

"[t]he statement of any question presented will

be deemed to comprise every subsidiary

question fairly included therein," ibid., we

ordinarily do not consider questions outside

those presented in the petition for certiorari.

Id. (citing Berkemer v. McCarty, 468 U.S. 420 (1984)).

?(...continued)

consideration of its claim that lowa Code § 668A.1 violates the due

process clause. (Pet. pp. 18, 22).

26

Under this principle, IBP has waived any claim to

plenary review as to whether the lower court decision was

consistent with Gore. While a request for plenary

consideration might include the subsidiary question of

whether summary disposal on the merits would be

appropriate, the reverse is not true. As the late Justice

Marshall wrote:

A summary reversal is a rare disposition,

usually reserved by this Court for situations in

which the la’~’ is settled and stable, the facts

are not in dispute, and the decision below is

clearly in error.’

Schweiker v. Hauser, 450 U.S. 785, 791 (1981) (Marshall, J.,

dissenting). Because IBP has only sought the subcategory of

options for review, summary reversal, it has foregone any

claim to plenary consideration on this issue. Although the

decision of the Supreme Court of Iowa survives even the

normal standard for granting the petition contained within

Petitioner cites the language of then-Justice Rehnquist that

"summary reversal is appropriate in ‘palpably clear cases of constitutional

error.’" (Pet. p. 10) This citation somewhat disingenuously turns the

standard expressed on its head. The full quote is:

This Court each year reviews thousands of cases from

the state courts, many of which, like this one, are

characterized by less than perfect records. Reversal of

state court judgments of conviction, especially in

summary fashion, without argument, should be reserved

for palpably clear cases of constitutional! error.

Eaton v. Tulsa, 415 U.S. 697 (1974) (Rehnquist, J., dissenting).

Thus, as with the language of Justice Marshall in Schweiker, the

rule of when summary reversal is appropriate is generally cast in negative

terms, not the positive rule cited by Petitioner.

27

Supreme Court Rule 10, IBP’s petition must be reviewed

under the more stringent and extraordinary step of summary

disposition.

Under this standard, and in light of the detailed and

thorough application of the correct principles of law in the

decision below, summary disposition is manifestly

inappropriate. The petition should be denied.

Conclusion

Wilson respectfully requests the Court deny the

Petition for Writ of Certiorari to the Supreme Court of Iowa.

David L. Brown

Counsel of Record

218 6th Ave., 8th Floor

Des Moines, Iowa 50311

(515) 244-2141

(515) 244-2931 (facsimile)

Randall J. Shanks

409 West Broadway

Council Bluffs, Jowa 51503