Petition for Writ of Certiorari — Diamant Boart, Inc. v. Martin

In The

SUPREME COURT OF THE UNITED STATES

October Term, 1997

Diamant Boart, Inc..,

Petitioner,

wa

Joyce Martin, Individually and as

Personal Representative of the Estate

of Harry O. Martin, deceased,

Respondent.

Petition for a Writ of Certiorari to the United States

Court of Appeals for the Fourth Circuit

PETITION FOR WRIT OF CERTIORARI

Dennis W. Cross Timothy W. Bouch

Counsel of Record Young, Clement,

Mary L. Barrier Rivers & Tisdale, L.L.P.

Lee T. Lauridsen 28 Broad Street

Morrison & Hecker L.L.P. Charleston, SC 29042

2600 Grand Avenue (803) 720-5488

Kansas City, MO 64108

(816) 691-2600

Counsel for Petitioner

September 3, 1997

QUESTIONS PRESENTED

l. Does the South Carolina common law, which

usurps the jury’s discretionary authority and requires the jury

to award punitive damages if the jury finds evidence of

reckless conduct, violate petitioners Seventh Amendment

right to trial by jury.

2. Does the trial court’ instruction, which

charged the jury to consider any statutory infraction, including

an innocent or technical one, evidence of reckless conduct

supporting an award of punitive damages, violate petitioner's

right to due process pursuant to the Fouiteenth Amendment.

PARTIES

In Martin v. Diamant Boart America, Inc., which was

before the Fourth Circuit as case number 96-1414,

plaintiff/appellee was Joyce Martin, individually and as

personal representative of the Estate of Harry O. Martin.

Defendant/appellant was Diamant Boart, Inc. (f/k/a Diamant

Boart America, Inc.) Therefore, the respondent in this case is

Joyce Martin, in both her individual and representative

capacities. Diamant Boart, Inc., is the sole petitioner.

“Diamant Boart America, Inc., is now known as Diamant Boart, Inc.

Diamant Boart, Inc.’s parent corporations is Diamant Boart, S.A. It has

no non-wholly owned subsidiaaries.

ll

TABLE OF CONTENTS

QUESTIONS PRESENTED ooo. ccccccscsssssssesseeeeeseeeeeccc. i

PN a i ss estneashinmarnarseeoeeece... li

TABLE OF AUTHORITIES ooo ccccccssseeeeeeeeeeeccc. Vv

a,c TR 2

So pe ey, EET! Se 2

CONSTITUTIONAL PROVISIONS INVOLVED..._ 2

STATEMENT OF THE CASE ooo cccccccsssssssssssseessssesesn 3

REASONS FOR GRANTING THE WRIT. 7

I. The unique South Carolina common

law which usurps the jury’s

discretionary authority and requires it

to award punitive damages is a

fundamental attack on rights preserved

by the Seventh Amendment and

deprived DBA of its right to a trial by

Fa catia isieiisassshansttsshesinesesstusvanensbecsscenpsseencieccnss 7

lii

Il. By permitting the jury to consider any

statutory violation, including an

innocent or technical infraction, as |

evidence supporting an award of

punitive damages, the district court's

instructions offend the minimum

culpability requirements imposed by

the Due Process Clause of the

Fourteenth Amendment. .0oo.o.o......ceceseseseeeseeees 1]

COI oasis ccssnsbbansstectonadiscsiabesnlinicinvinmmaapcontones es 17

PTI ossscsssarsvinisvcnctniipecceteeinassainiaainrnsntmsanatinainin la

iV

TABLE OF AUTHORITIES

CASES:

BMW of North America, Inc. v. Gore,

116 S. Ct. 1595 (1996)

Browning-Ferris v. Kelco Disposal,

EE. ED Si

Byrd v. Blue Ridge Rural Elec.

Cooperative, Inc., 356 U.S. 525 (1958) oe.

Campus Sweater and Sportswear Co. v.

M. B. Kahn Construction, 515 F.Supp. 64

RDA. EP TUD > ciccscsns ihbecanadenmiaeanmaemnes

SOC CH eee eee TEE EEE

Duckett v. Pool, 13 S.E. 542 (S.C. 1891).

Gagne v. Town of Enfield, 734 F.2d 902

EGE. Se catihnencncatenmannbauinnte, stan

Gamble v. Stevenson, 406 S.E.2d 350

I SUED siscsbislegiciccananlaaiamnatacuaeeaamaaacs

Gasperini v. Center for Humanities,

___ US. __, 116 S. Ct. 2211, 135 L. Ed. 2d

SP CED a oissssscncesceissceicandebaneteabuaiananasinas eames

Honda Motor Co. v. Oberg, 512 U.S. 415

(1994)

COPS SESE EEE EE EEE EE EE EEE EE EEE EEEEE SHOES EE EEETEEEEE EE EEEEEEEEEEESEEESEEEEEE EES

SEO CEE SHEET EEE E EES EEEEE SHEE EEEESEHEEE EE EEE

.

eeeeee

eeeeeees

eeeeeeee

erereeee

eeeeeee

eee

Johnson v. Hugo's Skateway, 974 F.2d 1408 :

(Cie, I g

Nunez v. Superior Oil Co., 572 F.2d 1119

LO. | EM Th Rn er ee ROME ce Ce 8

Pacific Mut. Life Ins. Co. v. Haslip,

G99 US. 1 CIRC) n:nat 9, 10, 12

Pickens v. South Carolina & G.R. Co.,

32 3.5. 567 GAG. TPR irs ae ee eh 13

Ravan v. Greenville County, 434 S.E.2d 296

(S.C. Agi. 1995) season ee er 15

Smith v. Wade, 461 U.S. 30 (1989) oo ceeseeseeeees * 42

Southwestern Telegraph & Telephone Company

v. Danaher, 238 U.S. 482 (1915) oo cecsssescssseseeeees 12, 13

TXO Productions v. Alliance Resources,

509 US. 443 (EID sii cca ee 12, 13

Tull v. United States, 481 U.S. 412 (1987)... 8,10

CONSTITUTIONAL PROVISIONS:

US. Comat. Ane Fi ee passim

U.S. Const. Amend. XIV, Section 1 ooo passim

STATUTES AND RULES:

28 U.S.C. § EZIELD) .....sinccrseeninidiaseenieininicsintinsameiianeas 2

28 U.S.C. § 1332 2

PPUTTTTTITILIL Ieee eed

Ce I Be eiirsecicceciatinssstscnicinentarinscnstnsincnnas 4

OTHER AUTHORITIES:

Dobbs, The Law of Remedies Damages - Equity -

Restitution § 3.9 (1973) § 3.9 (1973) .. 1. eee eee eee ee eee 9

Restatement 2d Torts § 908 comment b oo eee eee 12

Restatement 2d Torts § 908 comment o.oo... essesecssesesneee 9

Vii

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1997

No.

DIAMANT BOART, INC.,

Petitioner,

V.

JOYCE MARTIN, Individually and as

Personal Representative of the Estate

of Harry O. Martin, deceased,

Respondent.

Petition for a Writ of Certiorari to the United States

Court of Appeals for Fourth Circuit

PETITION FOR WRIT OF CERTIORARI

The petitioner, Diamant Boart, Inc., respectfully prays

that a writ of certiorari issue to review the judgment of the

United States Court of Appeals for the Fourth Circuit in this

proceeding entered May 30, 1997.

OPINIONS BELOW

The opinion of the Court of Appeals in Martin v.

Diamant Boart America, Inc. (No. 96-1414) is not reported; it

is set forth in the Appendix at 1. The opinion of the United

States District Court for the District of South Carolina (No.

3:92-2982-0) is also not reported; it is set forth in the

Appendix at 10.

JURISDICTION

The jurisdiction of the district court was invoked under

28 U.S.C § 1332 because of diversity of citizenship. On

March 1, 1996, the United States District Court for the District

of South Carolina rendered its final judgment. App. at 9. The

judgment of the United States Court of Appeals for the Fourth

Circuit was entered on May 30, 1997. App. at 1. A timely

petition for rehearing was denied by an order entered on June

24, 1997. App. at 11. This Court's jurisdiction is invoked

under 28 U.S.C. § 1254(1).

CONSTITUTIONAL PROVISIONS INVOLVED

U.S. Constitution, Amendment XIV, Section 1:

All persons born or naturalized in the United States,

and subject to the jurisdiction thereof, are citizens of the

United States and of the State wherein they reside. No State

shall make or enforce any law which shall abridge the

privileges or immunities of citizens of the United States; nor

shall any State deprive any person of life, liberty, or property,

without due process of law; nor deny to any person within its

jurisdiction the equal protection of the laws.

ee

U.S. Constitution, Amendment VII:

In suits at common law, where the value in controversy

shall exceed twenty dollars, the right of trial by jury shall be

preserved, and no fact tried by a jury, shall be otherwise

reexamined in any court of the United States, than according

to the rules of the common law.

STATEMENT OF THE CASE

This lawsuit was brought by Joyce Martin ("Martin"),

individually and as the personal representative of the estate of

her deceased husband, Harry O. Martin (collectively referred

to as "the Martins"), against Diamant Boart America, Inc.’

The suit’s major allegations were: that ground water on the

Martin’ property contained excess levels of

tetrachloroethylene ("PCE") and trichloroethylene rue

that Harry Martin’s death from pancreatic cancer was caused

by exposure to PCE and TCE from the ground water; that

DBA, which owns and operates a plant that manufactures

engineered diamond products such as saw blades and drill bits

near the Martin’s property, was responsible for the PCE and

TCE contamination; and that DBA, thus, caused damage to

the Martin’s property and personal injury to Mr. Martin.

DBA acknowledged that it used an acid bath in some

of its processes, and that although the acid recovery system

was designed as a "closed loop," under actual conditions,

some acid solution was released. DBA employed workers to

neutralize this acid prior to its discharge or re-use, and no acid

or acid by- were found by petitioner or anyone else on

DBA’ property. DBA denied that the acid bath contained

either PCE or TCE; in fact, DBA denied that it used either

‘As noted, Diamant Boart America, Inc., is now known as Diamant

Boart, Inc. However, for the sake of convenience and consistency with the

lower court's opinions, petitioner shall be referred to herein as "DBA."

PCE or TCE in or near its plant. Tests conducted by both state

and federal regulators found no TCE in the soil or

groundwater on DBA’s property; although PCE was detected,

the levels were so minute that they had to be estimated.

The case was tried to a jury in the United States

District Court for the District of South Carolina on claims of

negligence, trespass, and nuisance. The South Carolina

Department of Health and Environmental Compliance, the

state regulatory body responsible for enforcing South

Carolina’s Pollution Control Act ("PCA"), does not believe

and never alleged that DBA was the source of any

contamination found in the Martin’ ground water. Over

DBA’s objection, however, Judge Matthew J. Perry, Jr.,

instructed the jury that under the PCA, it is:

unlawful for any person, directly or indirectly, to

throw, drain, run, allow to seep, or otherwise discharge

into the environment of the state organic or inorganic

matter, including sewage, industrial wastes, and other

wastes, except as in compliance with a permit issued

by the department.

(Citing S.C. Code Ann. § 48-1-90). Judge Perry specifically

emphasized that the PCA makes it unlawful to discharge "any

substance."

Moreover, although Martin neither alleged nor had any

claim under this South Carolina statute, the district court

improperly emphasized the statute by pointedly referring to it

as an important statement of public policy. For example, the

court emphasized that "South Carolina, through the enactment

of this and related statutes, has declared the public policy in

favor of a clean environment [and] a clean water supply . . . ."

The district court also directly instructed the jury to

consider a negligent or other non-reckless violation of the

PCA as evidence supporting a finding of recklessness. In

particular, the district court instructed the jury that any

violation of the terms of a statute such as the PCA can support

the imposition of punitive damages. For example, the district

court instructed:

Now, earlier I told you, when I was talking

about negligence, that the violation of a statute

setting forth a certain duty and standard and

policy consideration is negligence per se . . . .

Now, the violation of a statute does not

in and of itself prove recklessness, willfulness,

or wantonness in and of itself, but is evidence

that the jury may consider in arriving at its

conclusion whether the defendant acted

recklessly, willfully, and wantonly . ...

(Emphasis added).

The district court gave the jury no further guidance

concerning the use of a statutory violation as evidence of

recklessness. In particular, the court did not instruct the jury

that to consider a statutory violation as evidence of reckless

conduct, the jury must also find that DBA appreciated the

danger of injury to the Martins or their property at the time the

statute was violated.

The district court further charged the jury that it had no

discretion to refuse to award punitive damages if it found that

DBA had been reckless (under the court’s flawed instructions).

Rather, the court instructed the jury that if it found that DBA

had been "reckless," including presumably by negligent

violation of the PCA, "it will be your duty to award punitive

damages." (Emphasis added). The district did not, however,

provide the jurors any instruction to assist them in determining

the appropriate amount of such damages.

DBA vigorously objected to all of the court’

instructions concerning the standard for determination of

liability for, and of the amount of, punitive damages.

The jury returned a verdict in favor of DBA on all

personal injury and negligence claims. On the trespass and

nuisance claims, the jury awarded Martin a total of $31,000 in

actual damages for injury to property. The jury also awarded

Martin $1,000,000 in punitive damages. DBA filed a motion

for judgment notwithstanding the verdict or, in the alternative,

for a new trial, and further requested that the court reduce the

excessive punitive damages award. On March 1, 1996, the

district court denied DBA’s motion in its entirety.

On appeal, DBA argued that the district court’

instructions, among other things, violated DBA’s rights under

the Seventh Amendment and under the Due Process Clause of

the Fourteenth Amendment. DBA also sought review and

remittitur of the amount of the punitive damages award. The

United States Court of Appeals forthe Fourth Circuit affirmed

the district court’s decision on the Seventh Amendment and

due process issues, and remanded DBA’ motion for review

and remittitur of the punitive damages award for

reconsideration under the standards set forth in Gasperini v.

Center for Humanities, __ U.S. ___, 116 S. Ct. 2211, 135 L.

Ed. 2d 659 (1996). App. at 7.

The Court of Appeals failed to address the Seventh

Amendment issue. The Fourth Circuit agreed with the district

courts finding that South Carolina "is one of the few

jurisdictions" which removes all discretion from a jury and

requires an award of punitive damages upon a finding of

Because the district court denied DBA’ remittitur motion before this

Court issued its ruling in Gasperini, the district court did not apply South

Carolina law to determine whether the verdict was excessive.

aE

"reckless" conduct. App. at 6 Because the Court of Appeals

concluded any error was harmless, it did not address the

impact this instruction on DBA’s right to a jury trial. App. at

6.

Similarly, the Court of Appeals failed to address the

district court’s erroneous equation of a violation of the PCA

with willful, wanton, or reckless conduct. Nor did the Fourth

Circuit discuss the impact of these instructions on DBA’s due

process rights. App. at 7.

A petition for rehearing was denied by an order entered

June 24, 1997. App. at 11.

REASONS FOR GRANTING THE WRIT

I. The unique South Carolina common law which

usurps the jury’ discretionary authority and

requires it to award punitive damages is a

fundamental attack on rights preserved by the

Seventh Amendment and deprived DBA of its

' right to a trial by jury.

The Fourth Circuit conceded that South Carolina "is

one of the few jurisdictions" that removes all discretion from a

jury and requires an award of punitive damages upon a finding

of "reckless" conduct. App. at 7. (In fact, petitioner is aware

of no state or jurisdiction other than South Carolina that

similarly has removed the decision whether to award punitive

damages from the jury.) The Fourth Circuit failed to directly

address petitioner's argument that the South Carolina rule

violates the Seventh Amendment right to a trial by jury, and its

affirmance of the district court’s judgment is inconsistent with

the terms and requirements of the Seventh Amendment. This

issue presents an important issue of federal constitutional law

that must be settled by this Court.

The Seventh Amendment, a comerstone of the Bill of

Rights, governs proceedings in federal courts and guarantees

the right to a jury trial. Gasperini,__ U.S. ___, 116 S. Ct.

2211, 135 L. Ed. 2d at 668. This Court long has emphasized

that any curtailment of that night should be "scrutinized with

the utmost care." Dimick v. Schiedt, 293 U.S. 474, 486

(1934).

In federal courts, the Seventh Amendment mandates

that federal law governs the allocation of issues between a

judge and jury.’ Gasperini, _ U.S. __, 116 S. Ct. 2211,

135 L. Ed. 2d at 677; Byrd v. Blue Ridge Rural Elec.

Cooperative, Inc., 356 U.S. 525 (1958); Nunez v. Superior Oil

Co., 572 F.2d 1119, 1125 (Sth Cir. 1978). When federal rules

entitle litigants to a jury determination of an issue, a federal

court may not yield to a contrary state practice. Byrd, 356

U.S. at 538; Nunez, 572 F.2d at 1125

To determine the scope of the Seventh Amendment,

this Court has stressed the importance of examining common

law principles governing the role of the jury. See, e.g.,

Dimick, 293 U.S. at 487. Thus, in Tull v. United States, 481

U.S. 412 (1987), the Court recognized that the appropriate

allocation of issues between judge and jury is based upon the

common law. /d. at 417. The Court long has emphasized that,

under the Seventh Amendment, federal courts should be

reluctant to stray from traditional common law standards.

Browning-Ferris v. Kelco Disposal, 492 U.S. 257, 280 n.26

(1989).

There can be no clearer mandate from the common

law than this principle of law: it is the province of the jury to

decide whether to award punitive damages. See

*The allocation between the judge and jury of fact finding responsibility

is a procedural matter. Johnson v. Hugo's Skateway, 974 F.2d 1408, 1416

(4th Cir. 1992). A state court assessing punitive damages may apportion

fact finding responsibility between the judge and jury. Jd. However, when

the same issue is presented in federal court, federal law controls. Jd.

RESTATEMENT 2D TORTS § 908 comment d ("Whether to

award punitive damages and the determination of the amount

are within the sound discretion of the trier of fact, whether

judge or jury."); Gagne v. Town of Enfield, 734 F.2d 902 (2nd

Cir. 1984) ("Whether punitive damages are to be awarded and

in what amount is for the trier of fact . . . ."); DOBBS, THE LAW

OF REMEDIES DAMAGES - EQUITY - RESTITUTION § 3.9 (1973)

("Punitive damages are not given as of right in any state... .

If the plaintiff proves sufficiently serious misconduct on the

defendant's part, the question whether to award punitive

damages is left to the jury which may or may not make such

an award.").*

This Court's prior decisions concerning the role of the

jury under the common law are in accord. See, e.g., Pacific

Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 24-25 (1991) (Scalia,

J., concurring) (traditional practice of “American courts [is] to

leave punitive damages . . . to the discretion of the jury."); Day

v. Woodworth, 54 U.S. (13 How.) 363, 370 (1852) (whether to

award punitive damages, and the amount of such damages,

"has always been left to the discretion of the jury"). Indeed, in

Smith v. Wade, 461 U.S. 30 (1989), the Court stated that

punitive damages "are never awarded as a matter of right, no

matter how egregious the defendant's conduct." If the plaintiff

proves sufficiently serious misconduct on the part of the

defendant, the question is then put to the jury whether to

award punitive damages. Jd. at 52.

Not surprisingly, this Court expressly has

acknowledged that, under the Seventh Amendment, the

question of whether to award punitive damages is a legal claim

“As late as 1891, the common law of South Carolina similarly provided

that the jury had the discretion whether to impose punitive damages upon a

finding of recklessness. Duckett v. Pool, 13 S.E. 542 (S.C. 1891 ("where

the testimony satisfies the jury that the defendant acted maliciously,

willfully, or in a wanton disregard of the rights of the plaintiffs, the jury

may . . . {award punitive or exemplary damages].") (emphasis added).

10

that must be decided by the jury. Tull, 481 U.S. at 422 (citing

Curtis v. Loether, 415 U.S. 189, 197 (1974)). Thus, in Tull,

the Court held that it is for the jury to determine liability for

civil penalties. Jd. at 427. In so holding, the Court specifically

stressed that this rule must be followed to "preserve the

substance of the common-law right of trial by jury." Jd. at 426

(citing Colgrove v. Battin, 413 U.S. 149, 157 (1973)).

The present South Carolina law in question, thus,

violates the Seventh Amendment. By requiring the tral court

to direct the jury to award punitive damages if recklessness is

established, the South Carolina rule usurps the traditional

common law and federal rule that such a determination

exclusively is in the province of the jury. In short, the South

Carolina rule represents a gross departure from the common

law and the express holdings of this Court concerning the

standards imposed by the Seventh Amendment.

The Fourth Circuit viewed this breach of the Seventh

Amendment as, at most, a "harmless" instructional error. That

view blatantly eviscerates the requirements of the Seventh

Amendment. It certainly does not comply with this Court’

admonition that any abridgement of the right to a trial by jury

must be "scrutinized with the utmost care." Dimick, 293 U.S.

at 486. Nor is it consistent with this Court’s holdings that if

federal rules entitle a litigant to a jury determination of any

issue, a federal court may not submit to a contrary state

practice. Byrd, 356 U.S. at 538.°

‘The Fourth Circuit suggested that the instruction requiring the jury to

award punitive damages was harmless because "[i]t is difficult to imagine

that setting the minimum amount of damages at zero dollars instead of one

dollar would have affected the final verdict in the slightest." App. at 7.

Even if deprivations of constitutional rights could ever be justified based on

such speculation, the Fourth Circuit's statement ignores several important

factors. First, as Justice OConnor noted in Haslip, 499 US. at 43,

“[mJultimillion dollar losses are inflicted on a whim." (OConnor, J.,

dissenting). Second, because the jury was instructed that it was required to

award punitive damages if it found that DBA had been reckless, the jury

lacked the discretion to chose to award nothing. Under these

1]

Petitioner can point to no conflict in the law of the

various circuits on this issue precisely because no state other

than South Carolina has attempted to deprive citizens of the

right to a jury determination on the issue of whether punitive

damages should be awarded. That fact, however, does not

diminish the importance of the issue to petitioner and every

other defendant in a federal civil trial applying South Carolina

law. Because the Fourth Circuit has demonstrated that it will

not enforce the right of defendants to a jury trial on this issue,

petitioner (and other defendants in the future) must rely on the

supervisory power of this Court to enforce the fundamental

Seventh Amendment right to a trial by jury.

Il. By permitting the jury to consider any statutory

violation, including an innocent or technical

infraction, as evidence supporting an award of

punitive damages, the district court’

instructions offend the minimum culpability

requirements imposed by the Due Process

Clause of the Fourteenth Amendment.

DBA’ rights under the Due Process Clause of the

Fourteenth Amendment were violated by the district court's

instructions to the jury, which virtually compelled the jury to

award punitive damages without the necessary finding of

willful or reckless conduct. Although the district court's

instructions nominally included the direction that punitive

damages should not be imposed absent a finding of

recklessness, the court’s instructions permitted the jury to

equate "reckless" conduct with a violation of the PCA, even if

DBA’ violation of that statue was innocent or merely

negligent. The court then required the jury to award punitive

damages against DBA if it found that DBA was "reckless"

circumstances, the manner in which the duty to award damages impacted

the amount of the award can never be determined.

12

under its flawed definition. Those instructions dramatically

deviated from the procedural and substantive safeguards of the

common law and permitted, if they did not require, the

arbitrary imposition of punitive damages against DBA without

fair or reasonable warning.

This Court has emphasized that "[a] decision to punish

a tortfeasor by means of an exaction of exemplary damages is

an exercise of state power that must comply with the Due

Process Clause of the Fourteenth Amendment." Honda Motor

Co. v. Oberg, 512 U.S. 415, 434-35 (1994). That clause

prohibits the arbitrary, lawless, or biased imposition of civil

penalties or punitive damages. See, e.g., id. at 120; and

Southwestern Telegraph & Telephone Company v. Danaher,

238 U.S. 482 (1915).

Arguably the most fundamental common law

safeguard against an arbitrary, lawless, or biased award of

punitive damages is the requirement that punitive damages

only be awarded for willful, intentional, or reckless conduct;

mere negligent conduct is not sufficient or relevant. See, e.g.,

Woodworth, 54 U.S. (13 How.) at 370 (common law requires

showing of malice, wantonness, or oppression to justify award

of punitive damages); Smith v. Wade, 461 U.S. 30, 59 (1983)

(Rehnquist, C.J., dissenting) (punitive damages are quasi-

criminal in nature); Restatement 2d Torts § 908 comment b

("Punitive damages are not awarded for mere inadvertence,

*In the past several years, this Court has addressed several significant

issues relating to the appropriate constitutional standards for, and

limitations on, the award of punitive damages. See, e.g., Honda Motor Co.

v. Oberg, 512 U.S. 415 (1994) (due process requires judicial review of the

size of punitive damages award); TXO Productions v. Alliance Resources,

509 U.S. 443 (1993)\discussing due process limits on size of punitive

damages awards); Haslip, 499 U.S. 1 (analyzing constitutional status of

punitive damages). It has not, however, squarely addressed the limits

imposed by the Due Process Clause on the requisite conduct necessary to

support an award of punitive damages. This case provides the Court an

important opportunity to decide that issue.

13

mistake, errors of judgment and the like, which constitute

ordinary negligence"); Pickens v. South Carolina & G.R. Co.,

32 S.E. 567, 570 (S.C. 1899) ("Willfulness is the foundation

of a recovery for exemplary damages, and such damages are

not recoverable unless the wrongful act was willful or

intentional.").

As early as the decision in Southwestern Telegraph,

238 U.S. 482, this Court recognized the necessary relationship

between the Due Process Clause and the requirement that

punitive damages or other civil penalties be imposed only

upon a finding of genuinely culpable conduct. In holding that

a civil penalty violated the Due Process Clause, the Court

stated:

[T]he question remains whether, in the circumstances,

penalties aggregating $6,300 could be imposed

without departing from the fundamental principles of

justice embraced in the recognized conception of due

process of law. In our opinion the question must be

answered in the negative. There was no intentional

wrongdoing, no departure from any prescribed or

known standard of action, and no reckless conduct . . .

. In these circumstances to inflict upon the company

penalties aggregating $6,300 was so plainly arbitrary

and oppressive as to be nothing short of a taking of its

property without due process of law.

Id. at 490 (emphasis added).

Similarly, in BMW of North America, Inc. v. Gore, ___

U.S. __, 116 S. Ct. 1589 (1996), the Court reaffirmed that, to

justify the imposition of punitive damages, the Due Process

Clause requires a showing of genuinely reprehensible conduct.

In addressing an award of punitive damages that the Court

held violated the defendant’s substantive due process rights,

the Court stated:

14

Perhaps the most important indicium of the

reasonableness of a punitive damages award is the

degree of reprehensibility of the defendant’s conduct.

As the Court stated nearly 150 years ago, exemplary

damages imposed on a defendant should reflect "the

enormity of his offense... . " (citing Day v.

Woodworth, 13 how. 363, 371 (1852). This principle

reflects the accepted view that some wrongs are more

blameworthy than others.

___ USS. at___, 116 S. Ct. at 1599.

In addition, the Due Process Clause embodies several

procedural safeguards. In determining whether procedural due

process rights have been afforded, this Court consistently has

adhered to the rule that "traditional practice provides a

touchstone for constitutional analysis." Honda Motor, 512

U.S. at 430. Thus, in Honda Motor, the Court held that in the

context of punitive damages the due process analysis should

focus upon a state’s departure from traditional procedures. /d.

at 421 (discussing Pacific Mutual Life Insurance Co. v.

Haslip, 499 U.S. 1 (1991), and TXO Productions v. Alliance

Resources, 509 U.S. 443 (1993)). If the procedure employed

by the trial court deviates from well established common law

procedural safeguards, there is a presumption that the Due

Process Clause has been violated. Honda Motor, 512 U.S. at

430.

One of the fundamental procedural safeguards is the

role played by proper jury instruction. Jd. at 433. Proper

instruction of the jury is necessary to protect against arbitrary,

lawless, or biased punitive damages verdicts. Jd.

The district court’s jury instructions in this case met

neither the substantive nor procedural requirements of the Due

Process Clause. Contrary to the requirements of that clause,

the district court directly instructed the jury that it could use

15

evidence of a violation of the PCA to support a finding of

recklessness, even in the absence of any evidence that DBA’s

violation of that statute was grossly negligent, willful, wanton,

or otherwise genuinely reprehensible. In particular, the district

court charged the jury:

Now, earlier I told you, when I was

talking about negligence, that the violation of a

statute setting forth a certain duty and standard

and policy consideration is negligence per se . .

The court then immediately instructed the jury that any

violation of the terms of a statute, regardless of the defendant's

mental state, can support a finding of reckless conduct:

Now, the violation of a statute does not

in and of itself prove recklessness, willfulness,

or wantonness in and of itself, but is evidence

that the jury may consider in arriving at its

conclusion whether the defendant acted

recklessly, willfully, and wantonly ... .

(Emphasis added). Perhaps most significantly, and contrary to

South Carolina law, the court failed to instruct the jury that a

violation of a statute such as the PCA cannot support a finding

of recklessness unless the jury concluded that DBA

“appreciated the likelihood of harm to the [petitioner] and

acted with indifference to the requirements of the regulation."

Ravan v. Greenville County, 434 S.E.2d 296, 303 (S.C. App.

1993).

These instructions fall far short of the minimum

requirements imposed by the Due Process Clause. Rather than

requiring a jury to find award punitive damages based on

reckless or wanton conduct, as constitutionally required, the

instructions affirmatively invited the jury to find DBA liable

for punitive damages based on a negligent or other non-

16

reckless violation of the PCA. Indeed, because the district

court failed to instruct the jury that a violation of the PCA

cannot equate with reckless conduct and support punitive

damages unless the petitioner also proved that DBA knew that

its conduct posed a substantial danger to the Martins, the

instructions allowed the jury to consider a violation of the

PCA as substantial evidence of recklessness, even if the jury

affirmatively believed that DBA was not indifferent to the

terms of the statute or was not aware that the violation of the

statute posed any danger to the Martins.

It is extremely significant in this regard that the jury’s

verdict that DBA was liable for trespass does not establish that

the jury believed that DBA had acted willfully or wantonly.

As the district court properly instructed the jury, under South

Carolina law, a defendant may be liable for trespass even if it

acted "innocently," so long as it "intended" to perform some

act that resulted in a trespass; there is no requirement that the

defendant know of, appreciate, or intend to commit the

trespass, or even that any injury result.

In short, the district court’s instructions violated DBA’s

due process rights by instructing the jury to consider evidence

of non-reckless conduct to support a finding of recklessness.

Even if the jury was convinced that DBA "innocently" or

"technically" violated the PCA, the jury was instructed to

consider the PCA violation as substantial evidence DBA had

acted recklessly, and, then, if "reckless" conduct (i.e., technical

statutory violation) was present, it was required to award

punitive damages. By so instructing the jury, the district court

fundamentally departed from the requirements of the Due

Process Clause and this Court’s precedents. Accordingly, this

case presents a significant opportunity for the Court to clarify

and firmly establish the constitutional limits imposed by the

Due Process Clause on the minimum conduct necessary to

support an award of punitive damages.

17

CONCLUSION

The South Carolina common law rule that requires the

jury to award punitive damages in all cases in which any

"reckless" conduct is found impermissibly nullifies the jury’s

discretionary authority to decide whether to award punitive

damages. This radical departure from the role traditionally

accorded the jury under the common law violated petitioner’s

Seventh Amendment guarantee of a trial by jury. Moreover,

by instructing the jury to award punitive damages based on

conduct that potentially was neither willful, wanton, or

reckless, the district court’s instructions diluted fundamental

common law safeguards against the arbitrary and lawless

award of punitive damages. This Court’s guidance is, thus,

necessary to clarify and emphasize the minimum conduct

required to support an award of punitive damages consistent

with due process of law. Accordingly, the Court should grant

this petition for certiorari.

Respectfully submitted,

DENNIS W. CROSS

Counsel of Record

MARY L. BARRIER

LEE T. LAURIDSEN

MORRISON & HECKER

2600 Grand Avenue

Kansas City, MO 64108

(816) 691-2600

18

TIMOTHY W. BOUCH

YOUNG, CLEMENT, RIVERS

& TISDALE, LLP

28 Broad Street

Charleston, SC 29402

(803) 720-5488

Counsel for Petitioner

September 3, 1997

APPENDIX

la

APPENDIX

UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 96-1414

JOYCE MARTIN, Individually and as

personal representative of the

Estate of Harry O. Martin, deceased,

Plaintiff-Appellee,

DIAMANT BOART AMERICA, INC.,

Defendant-Appellant.

Appeal from the United States District Court

for the District of South Carolina, at Columbia.

Matthew J. Perry, Jr., Senior District Judge.

Argued: May 6, 1997 Decided: September 17, 1997

Before WILKINSON, Chief Judge, WILKINS, Circuit Judge,

2a

and TRAXLER, United States District Judge for the District

of South Carolina, sitting by designation.

Affirmed in part and remanded in part by unpublished per

curiam opinion.

ARGUED: Timothy William Bouch, Young, Clement, Rivers

& Tisdale, L.L.P., for Appellant. James Marcus Whitlark,

Fedor, Massey, Whitlark & Ballou, Columbia, South Carolina,

for Appellee. ON BRIEF.- Stephen P. Groves, W. Jefferson

Leath, Stephen L. Brown, Young, Clement, Rivers & Tisdale,

L.L.P., Charleston, South Carolina; Mary L Barrier, Morrison

& Hecker, Kansas City, Missouri, for Appellant David A.

Fedor, Paul C. Ballou, Fedor, Massey, Whitlark & Ballou,

Columbia, South Carolina; James B. Richardson, Jr., Svalina,

Richardson & Larson, Columbia, South Carolina, for

Appellee.

Unpublished opinions are not binding precedent in this circuit.

See Local Rule 36(c).

OPINION

PER CURIAM:

Harry and Joyce Martin sued Diamant Boart America

("DBA’) claiming that DBA had illegally dumped hazardous

chemicals, contaminating the Martins’ property. The case was

tried before a jury, which awarded $31,000 in damages for

trespass and $1,000,000 in punitive damages. DBA appeals,

arguing that there was insufficient factual support for the

verdict, that the jury was improperly instructed as to punitive

3a

damages, and that the district court failed to review DBA’

motion for remittitur according to South Carolina law as

required by Gasperini v. Center for Humanities, 116 S. Ct.

2211 (1996). We find that the jury’s verdict was supported by

the evidence. We therefore affirm the district court on the

issue of liability. The punitive damages instructions also

comported with South Carolina law. However, we remand the

issue of remittitur for reconsideration in light of Gasperini.

I.

DBA operates a plant in Richland County, South

Carolina, which manufactures engineered diamond products

such as saw blades, drill bits, and grinding wheels. Hazardous

chemicals used as degreasers are left over from the production

process.

In 1990, Harry and Joyce Martin, who lived around

400 feet from DBA’ property, discovered that their well was

contaminated with trichloroethylene (“TCE”),

tetrachloroethylene ("PCE"), and other hazardous chemicals.

Other wells in the area were also contaminated. The South

Carolina Department of Health and Environmental Control

advised the Martins and others to cease using their wells for

drinking, bathing, or cooking.

In early 1992, Harry Martin was diagnosed as suffering

from pancreatic cancer. Prior to his death in October 1992,

Harry Martin and his wife filed suit against DBA claiming

personal injury and property damage. At trial, DBA denied

using TCE at its plant. Martin countered this contention with

testimony from a salesman who had sold TCE to DBA and

with testimony from ex-DBA employees that DBA had both

used and improperly dumped large amounts of hazardous

chemicals.

DBA responded to this evidence with studies which

4a

concluded that DBA was not the source of the contamination

of the Martins’ property. Indeed, there was conflicting

evidence as to whether TCE was even detected in significant

quantities in the samples taken from DBA’ property and

samples taken from the property between DBA and the

Martins’ property. Martin explained the low level of contami-

nation on DBA’ land with expert testimony that the

contaminants had "migrated" from DBA'’s property over time,

and that the low levels of contaminants resulted from recent

changes in DBA’ waste disposal measures.

Following a three-week trial in September and October

of 1995, the jury found for DBA on all personal injury and

negligence claims, but awarded Joyce Martin $31,000 for

nuisance and trespass and punitive damages of $1,000,000.

The district court denied DBA’s motion for judgment as a

matter of law and DBA’s motion for a new trial or remittitur.

DBA appeals.

i.

As an initial matter, DBA contends that there was

insufficient evidence to support the trespass verdict. It

primarily argues that the testimony of Dr. Jack Parker,

Martin’s expert witness, was shown to have no factual

underpinning and that it should not have been admitted under

Daubert v. Merrell-Dow Pharmaceutical, Inc., 113 S. Ct.

2786 (1993). DBA argues that Dr. Parker’s testimony was

fatally flawed because his theory of how contaminants had

migrated to the Martins’ property from DBA was contradicted

by the evidence. For example, DBA maintains that at most

there were low levels of TCE on its own property and the

property between the DBA plant and the Martins’ property.

Thus, it concludes that the DBA plant could not have been the

source of TCE and PCE contamination.

However, for every contention raised by DBA, Martin

Sa

was able to offer a reasonable explanation or provide evidence

to the contrary. First, Martin proffered evidence which

showed that TCE and PCE were indeed found in DBA’s

groundwater. She further explained the absence of hazardous

chemicals in the samples taken from the intervening property

by noting that those wells were shallow, and that the

chemicals TCE and PCE are "sinkers" which tend to migrate

to the lowest point of the aquifer.

While the facts presented by DBA certainly could have

done much to undermine the weight of Dr. Parker's. testimony,

his basic theory of how chemicals migrated to the Martins’

property was not inadmissible. Indeed, his "mounding" theory

of migration appears to have some acceptance in the field of

hydrogeology. In fact, it was initially developed in the 1950s

by one of DBA’s own expert witnesses. We therefore

conclude that the tnal court did not abuse its discretion by

allowing Dr. Parker's testimony into evidence. United States

v. Dorsey, 45 F.3d 809, 814 (4th Cir. 1995) (decision to admit

or exclude expert testimony under Daubert reviewed for abuse

of discretion). 7

DBA also contends that the testimony of former DBA

employees as to DBA’s dumping of chemical waste should

have been excluded as evidence of past acts under Fed. R.

Evid. 404(b). This contention is meritless. The testimony of

the former employees was not, as DBA alleges, evidence of

past acts designed to show that DBA was "once a polluter,

always a polluter." Rather the testimony was necessary to

establish that DBA had dumped large quantities of the

hazardous chemicals in question and was indeed the source of

the contaminants found on the Martins’ property.

As to DBA’s other arguments regarding the factual

support of the jury’s verdict, suffice it to say that our review of

the record reveals no dearth of evidence to support a verdict

for either party. Both parties were able to present their case to

6a

the jury, and it was for the jury as fact finder to assess the

complex evidence and reach a verdict. While reasonable

minds may have come to a different conclusion than the one

the jury ultimately reached, we cannot say that no reasonable

juror could have returned a verdict for Martin. Brinkly-Obu v.

Hughes Training, Inc., 36 F.3d 336, 351 (4th Cir. 1994).

Therefore, we affirm as to DBA’ liability.

Il.

Next, DBA complains that the jury instruction as to

punitive damages was flawed, and therefore the jury’s verdict

on this issue must be reversed. We disagree. While the

instructions in this case were extensive, the fundamental

prerequisite for punitive damages was properly set forth by the

district court. The court instructed the jury that they should

award punitive damages only if DBA had acted recklessly,

willfully, or wantonly. This comports with the threshold stan-

dard for an award of punitive damages under South Carolina

law. See Wise v. Broadway, 433 S.E.2d 857, 859 (S.C. 1993).

DBA further complains that the instruction was

erroneous because it stated that a finding of a willful, wanton,

and reckless violation required an award of punitive damages

in some amount South Carolina, however, is one of the few

jurisdictions where the instruction is correct. See Sample v.

Gulf Oil Refinery, 191 S.E. 209, 214 (S.C. 1937); see also

Campus Sweater and Sportswear Co. v. M. B. Kahn

Construction, 515 F.Supp. 64, 104 (D.S.C. 1979) (following

Sample). In any event, even if there had been error in this

instruction it was surely harmless. The jury in the case was

free to award punitive damages in an amount far less than one

million dollars. It is difficult to imagine that setting the

minimum amount of damages at zero dollars instead of one

dollar would have affected the final verdict in the slightest.

_

Ta

IV.

Finally, we turn to DBA’s contention that the district

court improperly denied its motion for a new trial or remittitur.

In Gasperini v. Center for Humanities, the Supreme Court

clearly instructed that a district court sitting in diversity must

apply state law standards to determine whether a verdict is

excessive. 116 S. Ct. at2224-25. The district court in this

case denied DBA’s motion before Gasperini was decided, and

consequently did not provide an opinion indicating whether or

how it followed South Carolina law when it made its ruling.

Because of its greater intimacy with the case, the trial court is

in a preferable position to determine the propriety of damages.

Id. at 2225; see also Steinke v. Beach Bungee, Inc., 105 F.3d

192, 198 (4th Cir. 1997). We therefore remand this case so

that the district court may apply the standards set forth in

South Carolina law.

The leading South Carolina case on determining

whether punitive damages are excessive is Gamble v.

Stevenson, 406 S.E.2d 350 (S.C. 1991). In that case, the South

Carolina Supreme Court set out eight factors to consider:

(1) defendant’s degree of culpability; (2) duration

of the conduct; (3) defendants awareness of

concealment; (4) the existence of similar past conduct;

(5) likelihood the award will deter the defendant or

others from like conduct; (6) whether the award is

reasonably related to the harm likely to result from

such conduct; (7) defendant's ability to pay; and finally

(8) ... other factors deemed appropriate.

Id. at 354.

On remand, the district court should apply these

factors and should "look to South Carolina cases to determine

the range of damages in cases analogous to the one at hand."

8a

Steinke, 105 F.3d at 198. A reasoned decision by the district

court following this approach will "reduce the risk of caprice

in large jury awards and will assure a reviewing court that the

trial court exercised its considered discretion wader the

applicable state law." Id.' ?

eS

"We affirm the judgment of the district court as to the

issue of DBA’ liability. We remand the issue of punitive

damages to the district court for consideration of appellants’

motion for remittitur under South Carolina law.

AFFIRMED IN PART, REMANDED IN PART

' In light of the remand on the punitive damages issue. We need not reach

DBA‘ contention that the jury’s verdict exceeded the constitutional

standards set forth in BMW of North America, Inc. v. Gore, 116 S. Ct. 1595

(1996).

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF SOUTH CAROLINA

COLUMBIA DIVISION

JOYCE MARTIN, INDIVIDUALLY __)

AND AS PERSONAL )

REPRESENTATIVE OF THE ESTATE )

OF HARRY O. MARTIN, DECEASED ) CIVIL ACTION

NO.3:92-2982-0

Plaintiffs,

Vv.

©

6

mH

7m

DIAMANT BOART AMERICA, INC.

Defendant.

This matter is before the Court pursuant to the

defendant’s Motions for judgment as a matter of law or in the

alternative, for a new trial (remittitur or absolute) as to the jury

findings on nuisance and trespass, for a stay in enforcement of

judgment, and for relief from judgment., Also pending before

the Court is the Plaintiffs’ motion for costs and the Defendant's

bill of costs.! These matters were argued before the Court on

January 10, 1996 and taken under advisement.

Accordingly, upon consideration of the arguments of

counsel and the memoranda submitted the Court is of the

opinion that the defendant’s motions should be and are hereby

‘The plaintiff filed a motion for costs with an attached exhibit setting

forth the costs sought. The plaintiff is directed to refer to Local Rule 28.00

(D.S.C.) for the proper method of submitting costs to the Court.

2at the hearing the Plaintiff agreed to submit an agreed upon bill of costs

to the Court.

10a

denied. The revised costs submitted to the Court by the

plaintiff by letter dated February 28, 1996 is hereby approved.”

IT IS SO ORDERED.

MATTHEW J. PERRY

SENIOR UNITED STATES

DISTRICT JUDGE

Columbia, South Carolina,

March 1, 1996.

*The plaintiff is directed to file an amended bill of costs with the Clerk

of Court reflecting the agreed upon costs of $1,085.85.

lla

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 96-1414

JOYCE MARTIN, Individually and as

personal representative of the

Estate of Harry O. Martin, deceased,

Plaintiff-Appellee,

V.

DIAMANT BOART AMERICA, INC.,

Defendant-Appellant.

On Petition for Rehearing

with Suggestion for Rehearing In Banc

The appellant’s petition for rehearing and suggestion

for rehearing in banc were submitted to this Court. As no

member of this Court or the panel requested a poll on the

suggestion for rehearing in banc, and

As the panel considered the petition for rehearing and

is of the opinion that it should be denied,

IT IS ORDERED that the petition for rehearing and

suggestion for rehearing in banc are denied.

For the Court,

CLERK