Opposition Brief — Shell Oil Co. v. Hebble

“Suprema Coun, US. |

FILED

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f ; NOY 2 |

“1 (\) | OY 19 2013 |

No. 10-349 OFFICE OF Vetie Li 3 CE GF TE Lin 3K

ATER NOIRE WOME ia I

IN THE

Supreme Court of the Anited States

SHELL OIL COMPANY; SWEPI, LP

(As Successor-in-Interest to

SHELL WESTERN E & P, INC.),

Petitioners,

V.

NANCY FULLER HEBBLE, et ai.,

Respondents.

On Petition for a Writ of Certiorari

to the Court of Civil Appeals

of the State of Oklahoma

BRIEF IN OPPOSITION

GuY A. FORTNEY RANDALL K. CALVERT

BREWSTER & Counsel of Record

DEANGELIS, P.L.L.C. CALVERT LAW FIRM

2617 East 21st Street 1041 NW Grand Boulevard

Tulsa, OK 74114 Oklahoma City, OK 73118

(918) 742-2021 (405) 848-5000

rcalvert@calvertlaw.com

Counsel for Respondents Nancy Fuller Hebble, et al.

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

QUESTIONS PRESENTED

This case involves an award of prejudgment inter-

est on unlawfully withheld proceeds from the sale of

oil and gas production using different statutory

interest rates in effect at different times. Oklahoma

courts have deemed such prejudgment interest

compensatory as a matter of state law. See, e.g., Fleet

v. Sanguine, Ltd., 854 P.2d 892 (Okla. 1993). The

statutory rates of prejudgment interest were histori-

cally reasonable.’ The questions presented are:

1. Whether the prejudgment interest component of

the jury’s award of state-law compensatory damages

of $13,205,916 should be deemed non-compensatory

as a matter of federal constitutional law and thereby

excluded from the ratio analysis under BMW of North

America, Inc. v. Gore, 517 U.S. 559 (1996).

2. Whether this Court should abandon the multi-

factor inquiry of Gore—applied by the lower courts in

this case and across the country as settled law—by

adopting a presumptive 1:1 ceiling on the constitu-

tionally permissible ratio of punitive to compensatory

damages.

' See infra note 1.

(i)

TABLE OF CONTENTS

Page

TICE FIT T RD one oiceesicccddccccerecessvesscsscacees i

"BABILES OF PALITRIORIT IEG coi ccciccéscceccecucccsucccoscercceccoees iv

PRELIMINARY STATEMENT .....<ccccoveccscccccescccovsrescsess 1

TIT Ch CAG ooo vec nviseccecccvacecccdcacencescsccacess

REASONS FOR DENYING THE PETITION. ..............--- 6

I. THE JURY'S AWARD OF PREJUDGMENT

INTEREST TO COMPENSATE OWNERS FOR

THE HARM INFLICTED By SHELL DOES

Not PRESENT A SUBSTANTIVE DUE

PROCESS ISSUE THAT WARRANTS THIS

er We ooo cscs ec cuocecnceccecciaccoseas 8

A. This Case Does Not Implicate Any

Be ae 8

B. Shell’s Constitutional Objection To

The Consideration Of Prejudgment

Interest In This Case Is Meritless...... 10

II. CERTIORARI IS UNWARRANTED TO RECON-

SIDER THE COURT'S CONSISTENT REFUSAL

To ADOPT RIGID MATHEMATICAL LIMITS

ON PUNITIVE DAMAGES AWARDS ............... 18

A. Shell Identifies No Certworthy Con-

flict Over Whether The Constitution

Limits Punitive Damages Awards To

An Amount Equal To ceased

PIII, Ais 26c2cd crest vecdecerstex cv mnnertiers 19

B. There Is No Basis For This Court To

Abandon Its Precedent And Estab-

lish An Arbitrary 1:1 Ratio................. 21

eT a” ERC AR neat ie tea CD TIT ATOR AR 22

iv

TABLE OF AUTHORITIES

CASES Page

Action Marine, Inc. v. Continental Carbon

Inc., 481 F.3d 1302 (11th Cir. 2007),

cert. denied, 128 S. Ct. 2994 (2008).......... 19

Amerigraphics, Inc. v. Mercury Cas. Co.,

107 Cal. Rptr. 3d 307 (Cal. Ct. App.

Ses atl a a ee oe 9

Bach v. First Union Nat. Bank, 486 F.3d

NN ES cic ccnccssndvccunspnenvnenensaeses 20

Bardis v. Oates, 14 Cal. Rptr. 3d 89 (Cal.

ns sa isacécanchbinavave 9

Blount v. Stroud, 915 N.E.2d 925 (Ill. App.

Ct. 2009), cert. denied, 79 U.S.L.W. 3007

I a aos cde luegetwouace 9

BMW of North America, Inc. v. Gore, 517

Re I cc ndes sua cdagssschadasocesaveninnces passim

Boerner v. Brown & Williamson Tobacco

Co., 394 F.3d 594 (8th Cir. 2005) ............. 20

Boyd v. Goffoli, 608 S.E.2d 169 (W. Va.

sis. saa pupdinaasdas 9

Bridgeport Music, Inc. v. Justin Combs

Publ’g, 507 F.3d 470 (6th Cir. 2007)....... 8, 9, 20

Burns v. Prudential Sec., Inc., 857 N.E.2d

621 (Ohio Ct. App. 20086) ............0cescrcssseees 8

Campbell v. State Farm Mut. Auto. Ins.

Co., 98 P.38d 409 (Utah 2004), cert.

denied, 543 U.S. 874 (2004)..................006 19

Casillas-Diaz v. Palau, 463 F.3d 77 (1st

ESR A Rc ee ee 21

Cent. Fla. Invs., Inc. v. Myers, No. 10-35,

2010 WL 3834443 (Oct. 4, 2010)... 18

Chandler v. Bombardier Capital, Inc., 44

Bee Od Cee GE, NE) oiiccncsccsecccancessosccccesees 15

Vv

TABLE OF AUTHORITIES—Continued

Clinchfield Coal Co. v. Fed. Mine Safety &

Health Review Comm’n, 895 F.2d 773

dod ccaspassuneieien

DiamlerChrysler Corp. v. Flax, No. 08-

1010, 129 S. Ct. 2433 (2009).................000

E.E.O.C. v. Erie County, 751 F.2d 79 (2d

ET ccd vc ccnciasesanasuenisunenseis celine cans

E.E.O.C. v. Guardian Pools, Inc., 828 F.2d

ee Be Sy BE sv scerdccatheadsceeccseisnenedas

Energen Resources Corp. v. Jolley, No. 08-

1001, 129 S. Ct. 1633 (2009).................456.

Fed. Sav. & Loan Ins. Corp. v. Quality

Inns, Inc., 876 F.2d 353 (4th Cir. 1989)...

Fleet v. Sanguine, Ltd., 854 P.2d 892

oe SPREE eee ener ee

Fortis Ins. Co. v. Mitchell, No. 09-854, 130

Bs ee, NE RE Deca sictntevcdaccnasesnnccasncnnensines

General Motors Corp. v. Devex Corp., 461

CN I esi sicnnsadindcwunsicuncamonacioens

Gibson v. Moskowitz, 523 F.3d 657 (6th

I saulaementunie

Goodall v. Trigg Drilling Co., Inc., 944

Fe BOM CCPMIR, LOT ) vcscccsncccosccsconevsenesevees

Graden v. Conexant Sys., Inc., 496 F.3d

BE Te IE Bika ssccoisssdcoceenesexersesssassenss

ITT Corp. v. United States, 17 Cl. Ct. 199

ic MR I cla vas es atin sxaetaedincdccanisnana sacks

Jacobs v. United States, 290 U.S. 13

Se a iE

JCB, Inc. v. Union Planters Bank, N.A.,

539 F.3d 862 (8th Cir. 2008).....................

Jurinko v. Medical Protective Co., 305 Fed.

Appx: £3 (Sd Cir. ZO08)..............ccccsesseseness

Page

18-19

16

11

v1

TABLE OF AUTHORITIES—Continued

Page

Leck v. Continental Oil Co., 800 P.2d 224

(Cin. SO visited sce See 3

Loeffler v. Frank, 486 U.S. 549 (1988)......... 11

Maxwell v. Samson Res. Co., 848 P.2d

REGS CLIMB, BO a kesenessitsnsnsaivovterenetineens 14

McClain v. Ricks Exploration Co., 894

P.2d 422 (Okla. Civ. App. 1994)............... 14

Mendez-Matos v. Municipality of

Guaynabo, 557 F.3d 36 (1st Cir. 2009) .... 20

Miller v. Robertson, 266 U.S. 243 (1924)..... 12

Modern Mgmt. Co. v. Wilson, 997 A.2d 37

CF, Bee sisidcosuneiaa eee 9

Okland Oil Co. v. Conoco, Inc., 144 F.3d

LAOS CLOG CAL. BOD seccscisctcxssscczemane 13, 14

Pac. Mut. Life Ins. Co. v. Haslip, 499 U.S.

D URIBE) ixcdnicsccierierscee eee 21-22

Perez v. Z Frank Oldsmobile, Inc., 223 F.3d

617 (7th Cir. 2000), cert. denied, 531 U.S.

LIBS COPA iecccsoennuisaccaniaeeee 9

Peters v. Rivers Edge Mining, Inc., 680

S.B.20 791 CW. Ve. BOOB) vcacevcsccscscccsensarenes 8

Planned Parenthood of Columbia/ Willa-

mette Inc. v. Am. Coal. of Life Activists,

422 F.3d 949 (9th Cir. 2005), cert.

denied, 547 U.S. 1111 (2006).................... 19

Quigley v. Winter, 598 F.3d 938 (1st Cir.

ED hats scasvsasacenésteuceenateswstananieees cous 21

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

Genetics Corp., 345 F.3d 1366 (Fed. Cir.

2003), cert. denied, 540 U.S. 1183 (2004) 19

Roby v. McKesson Corp., 219 P.3d 749

COTA, NI si cnccussscesnrsunssisuscesaceuepeneeeeen ate 9

Vii

TABLE OF AUTHORITIES—Continued

Page

Romanski v. Detroit Entm't, L.L.C., 428

F.3d 629 (6th Cir. 2005), cert. denied,

UE EE CUNIIDD ss cca vevsssessiccccossacesesennoe 19

Stark v. Sandberg, Phoenix & von Gon-

tard, P.C., 381 F.3d 793 (8th Cir. 2004),

cert. denied, 544 U.S. 1027 (2005)............ 19

State Farm Mut. Ins. Co. v. Campbell, 538

SE AMICI Ds cocsuscasecevecsceocscsesenees 18, 19, 21, 22

State of Kan. v. State of Colo., No. 105,

Original, 2000 WL 34508307 (U.S. Aug.

ec nd ac cus ain sscencakaaninensent 15

Stroud v. Blount, No. 09-1572, 79 U.S.L.W.

EE 2, 9-10

Superior Highwall Miners, Inc. v. Frye,

No. 09-1017, 130 S. Ct. 2354 (2010)......... 18

Tony Gullo Motors I, L.P. v. Chapa, 212

S.W.3d 299 (Tex. 2006)............:cccccccceeeeeees 9

Trinity Evangelical Lutheran Church &

School-Freistadt v. Tower Ins. Co., 661

N.W.2d 789 (Wis. 2003), cert. denied,

SCs RUPE CUPID cc conseccnenencncacsvenenesecesee 19

Union Pacific R.R. Co. v. Barber, 149

S.W.3d 325 (Ark. 2004), cert. denied, 543

ST 19

United Int'l Holdings, Inc. v. Wharf

(Holdings), Ltd., 210 F.3d 1207 (10th

srs rcdcsk sic viscekdasthssctassbscesabesiasanes 8

Waite v. United States, 282 U.S. 508 (1931) 1]

West Virginia v. United States, 479 U.S.

TG oaks ceicioacsnchssausnsnesscanveubussteesse 11

Williams v. ConAgra Poultry Co., 378 F.3d

EE IRE, SPE) sc cssscvecccavssencsstsccsnsuvesesis 20

Vill

TABLE OF AUTHORITIES—Continued

Page

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

Co., 399 F.3d 224 (3d Cir. 2005)............... 7)

Young v. West Edmond Hunton Lime Unit,

275 P.2d 304 (Okla. 1954) .............c eee 3

Zhang v. American Gem Seafood’s, Inc.,

339 F.3d 1020 (9th Cir. 2003), cert.

denied, 541 U.S. 902 (2004)...................... 19

STATUTES

CORT A. EOPAT: GE. BB: Be Tae eo 0 ee ok esseccisccsennes ]

COREA, TT, Cats Bis OF We on ccnsadansecsoncctczascses 13

CORA. EOUAT, GEG. Bits Te cade caviccccavesacnsccnnseses 5

OKLA. STAT. tit. 52, § 540B (West 1981)...... 12

OKLA. STAT. tit. 52, § 540D (West 1991)...... 12

OKLA. STAT. tit. 52, § 570.10 (formerly

MED cosa sca cavgcachanaernineaaadinaiemetesmcanetveanaeie l

OKLA. STAT. tit. 52, § 570.10D................c0008 15

Production Revenue Standards Act, OKLA.

STAT. tit. 52, $§ 570.1-570.16.................08 12

MISCELLANEOUS

1996-1 C.B. 660 (Table 6).......c.cccccssssecsesscesse 5

Bureau of Labor Statistics, CPI Databases

(All Urban Consumers) http://www.bls.

II ar issnisciscacivers ci ieeereimiapniaaninieaaion 15

Federal Reserve Statistical Release (Data

Download Program) http://www.federal

reserve.gov/datadownload/Choose.aspx?

SON 5

RESTATEMENT (SECOND) OF TRUSTS § 207

Re or nc 2 nce een 16

SEC EDGAR System, http://www.sec.gov/

edgar/searchedgar/webusers.htm............. 15

IN THE

Supreme Court of the United States

No. 10-349

SHELL OIL COMPANY; SWEPI, LP

(As Successor-in-Interest to

SHELL WESTERN E & P, INC.),

Petitioners,

Vs

NANCY FULLER HEBBLE, et al.,

Respondents

On Petition for a Writ of Certiorari

to the Court of Civil Appeals

of the State of Oklahoma

BRIEF IN OPPOSITION

PRELIMINARY STATEMENT

This case involves a unique series of state statutes

that set prejudgment interest rates for unlawfully

withheld oil and gas proceeds at historically reason-

able rates of return,’ and a punitive-to-compensatory

‘The court properly instructed the jury to use the interest

rate in effect at each time period (i.e., 6% simple prior to 1980,

12% simple from 1980 to 1989, and 12% compound after 1989)

OKLA. STAT. tit. 52, § 570.10 (formerly § 540). Shell ignores that

from 1986 to 2008 the Oklahoma judgment interest averaged

more than 9%. OKLA. STAT. tit. 12, §§ 727-727.1

2

damages ratio of approximately 4:1 that the state

trial and appellate courts upheld only after applying

the settled guideposts set forth in BMW of North

America, Inc. v. Gore, 517 U.S. 559 (1996).

Through its first question presented, Shell seeks

to federalize state law definitions of compensatory

damages by asking this Court to comprehensively

and definitively distinguish the compensatory from

the punitive for due-process purposes in a dizzying

variety of contexts, from attorney fees, to treble

damage awards, to disgorged profits, to damages for

mental anguish, to—finally—the prejudgment inter-

est at issue in this particular case. Pet. at 22-24.

However, Shell never offered any general-- much less

workable—standard below, nor does it do so here.

Through its second question presented, Shell invites

this Court at worst to reduce Gore's case-sensitive

multi-factor inquiry to a mechanical 1:1 ratio, or at

best to engage in fact-bound error-correction of the

lower courts’ unremarkable application of Gore and

its progeny. Neither question implicates a clear split

in authority. The latter question runs contrary to

this Court’s approach in punitive damages cases.

See, e.g., Gore, 517 U.S. at 582 (noting that this Court

has “consistently rejected the notion that the consti

tutional line is marked by a simple mathematical

formula”). The petition should be denied. Cf. Stroud

v. Blount, No. 09-1572, 79 U.S.L.W. 3007, 3019

(Nov. 1, 2010) (denying certiorari on the question of

whether an award of attorney fees constitutes

compensatory damages for due-process purposes).

3

STATEMENT OF CASE

Respondents, Nancy Fuller Hebble, et al. (“Owners”)

were individuals residing in Texas, California, and

North Carolina.” The Owners own one-fourth of an

oil and gas lease in Oklahoma (“the Crews Lease”).

Pet. App. 2a. The Petitioners (“Shell”) operated three

units producing oil and gas from the Crews Lease

until 1985. Jd. at 2a-4a. As the operator of the units,

Sheil sold the oil and gas and received the proceeds

therefrom in trust to distribute to Owners. Under

Oklahoma law, Shell had a fiduciary duty to correctly

administer and distribute Owners’ oil and gas

proceeds. Jd. at 6a-7a.®

From 1973 to 1985, Shell kept substantially all of

Owners’ oil and gas proceeds. Plaintiffs’ Tr. Exh.

P250. Shell sent monthly statements to Owners for

twelve years that fraudulently showed that Owners

had earned very little from the Crews Lease, thus

concealing $14 million of oil and gas production. Tr.

56. Shell also sent various letters that concealed the

misappropriation and contained affirmative state-

ments that were false. See, e.g., Plaintiffs’ Tr. Exhs.

P36, P45, P57, P59, and P74. Shell misappropriated

Owners’ share of the unreported oil and gas produc-

tion that had been entrusted to it. Pet. App. 4a.

At the same time Shell was writing to Owners to

conceal its fraud, Shell was communicating with a

successor operator of the Crews Lease that continued

*The Owners owned their interests individually or were

beneficiaries of trusts that owned the interests.

3 See also Goodall v. Trigg Drilling Co., Inc., 944 P.2d 292,

295-96 (Okla. 1997) (Summers, J., concurring); Leck v. Conti-

nental Oil Co., 800 P.2d 224, 228-29 (Okla. 1989); Young v. West

Edmond Hunton Lime Unit, 275 P.2d 304, 309-10 (Okla. 1954).

4

Shell’s pattern of misappropriating Owners’ oil and

gas proceeds. Plaintiffs’ Tr. Exh. P70, P73, P136, and

P137. The successor operator, Maynard Oil Company,

continued the misappropriation of Owners’ oil and

gas proceeds for ten years. Pet. App. 4a. In 1993,

Nick McGalliard, an independent petroleum land

manager, discovered Maynard’s and Shell’s fraudu-

lent conduct during a conversation with a Maynard

land manager. McGalliard informed Owners about

Shell’s fraudulent conduct. Tr. 433, 440, 443-48.

In 1995, Owners brought suit in Stephens County,

Oklahoma, against Maynard and Shell for breach of

fiduciary duty and fraud. Pet. App. 4a. Owners

settled with Maynard, and the case proceeded

against Shell. Jd. The case was tried to a jury in

May 2008. Shell stipulated to the value of the oil and

gas proceeds in its possession that belonged to

Owners. Plaintiffs’ Tr. Exh. P253. The court found

that Shell had a fiduciary duty to faithfully report

and distribute the proceeds. Pet. App. 2a. The jury

found that Shell violated its fiduciary duty to Owners

by taking Owners’ oil and gas proceeds and conceal-

ing that fact over a twenty-year period. The jury also

found that Shell’s conduct constituted fraud. Jd. at

5a.

At trial, Shell admitted most of the critical facts

sufficient to establish Owners’ claims for fraud and

breach of fiduciary duty, stipulating, among other

things, to the amount of oil and gas proceeds it

had taken. Plaintiffs’ Tr. Exh. P253. Shell argued

instead that it should retain the proceeds of its

unlawful conduct because, in its view, Owners knew

or should have known of Shell’s fraud years earlier.

Pet. at 4a-5a. The jury unanimously rejected Shell’s

limitations defense and entered judgment in Owners’

+)

favor. Jd. at 5a. The jury awarded compensatory

damages in the amount of $13,205,916. Id.

The compensatory award presumably was based

upon Owners’ expert witness’s damages calculation,

which used the statutory interest rates in effect at

the various dates: 6% simple interest from 1973

through July 1, 1980, then 12% simple interest

through July 1, 1989, and 12% compound interest

after July 1, 1989. Jd. at 12a-13a and Plaintiffs’ Tr.

Exh. P250. These rates compare favorably to the

interest-rate environment over the thirty-five-year

period. Prior to 1989, damages were calculated using

simple interest, while market interest rates ranged

from 8% to 19% compound.‘ In 1980, when Okla-

homa enacted a 12% simple interest rate for unpaid

oil and gas proceeds,° the prime rate was over 15%,°

mortgage rates were over 13%,’ and the “IRS rate”

was 12%.° The effective compound rate of interest

over the entire period of the compensatory damage

calculation was 9.9%. The interest rates used to

calculate the compensatory damage award did not

operate as a penalty; they were fair rates that

compensated for the time value of money.

In bifurcated proceedings, the trial court indepen-

dently found clear and convincing evidence that

Shell’s conduct constituted fraud, non-disclosure, con-

cealment, and deceit. Pet. App. 14a-15a, and 27a-

30a. Accordingly, it returned the case to the jury

“Federal Reserve Statistical Release (Data Download Pro-

gram) http/Avww.federalreserve.gov/datadownload/Choose.aspx?

rel=H.15.

5 OKLA. Stat. tit. 52, § 540.

® Supra, note 5

"Id.

* 1995-1 C.B. 560 (Table 5).

6

to determine the appropriate amount of punitive

damages to award, if any. Id. at 29a. The factors the

jury was instructed to consider included: (1) degree of

wrongfulness of the misconduct; (2) how long the

misconduct lasted; (3) evidence of similar misconduct;

(4) attempts to conceal the misconduct; (5) benefit

from the misconduct; and (6) need to discourage

others from similar misconduct. Jury Instruction 1,

Second Stage. Shell did not ask the court to instruct

the jury that its punitive damages award should take

into account any allegedly punitive aspect of the

interest already awarded. Nor did Shell ask the

court to instruct the jury to award punitive damages

in any particular ratio to compensatory damages.

The jury returned a punitive damages award in

the amount of $53,625,000, constituting a ratio of

approximately 4:1. Pet. App. 2a.

The Oklahoma Court of Civil Appeals found

that the reprehensibility of Shell’s conduct was

heightened because Shell was in a position of trust

and authority when the fraud was perpetrated. Pet.

App. 15a. The court found that the compensatory

damages were reasonable compensation for the harm

suffered by Owners and that the punitive damages

award was not grossly excessive. Jd. at 13a-16a. The

Oklahoma Supreme Court denied Shell’s petition for

certiorari. Jd. at 32a.

REASONS FOR DENYING THE PETITION

Neither question presented warrants this Court’s

review. The first question invites this Court to reject,

as a federal constitutional matter, a settled state law

determination that statutory prejudgment interest

for unlawfully withheld oil and gas proceeds is a

component of compensatory damages. But there is no

7

clear split in this particular context, as no federal

court or state court of last resort has held that

prejudgment interest of any sort—much less the kind

here that compensates for the time-value of money at

historically reasonable rates—cannot be considered

compensatory under Gore. Nor are lower courts in

conflict more broadly over how to distinguish the

compensatory from the punitive for due-process pur-

poses, regardless of whether the context is attorney

fees, treble damage awards, disgorged profits, dam-

ages for mental anguish, or prejudgment interest.

Pet. at 22-24. Lower courts properly have confined

their due process analysis to case-specific application

of the guideposts set forth in Gore rather than

engaging in “wide-ranging” federal lawmaking that

categorically displaces state lines between compensa-

tory and punitive damages. Pet. at 16. This Court

too should avoid that anchorless endeavor.

The second question calls on this Court either to

reduce the case-specific, multi-factored Gore inquiry

to a one-size-fits-all ratio of 1:1, a mathematical

approach which this Court and the lower courts have

consistently rejected, or to engage in fact-bound error

correction of a 4:1 ratio, which both the trial and

appellate courts found to be supported by clear

and convincing evidence of fraud, non-disclosure,

concealment, and deceit by Shell over the course of

decades. This question also is not certworthy.

8

I. THE JURY'S AWARD OF PREJUDGMENT

INTEREST TO COMPENSATE OWNERS FOR THE

HARM INFLICTED BY SHELL DOES NOT

PRESENT A SUBSTANTIVE DUE PROCESS ISSUE

THAT WARRANTS THIS COURT'S REVIEW.

A. This Case Does Not Implicate Any

Circuit Conflict.

Shell alleges “a wide-ranging conflict” across the

lower courts on what kinds of awards should be

considered as part of the Gore ratio. Pet. at 16. But

the cases Shell cites demonstrate that there is no

conflict on the issue of prejudgment interest, and no

basis for this Court to grant certiorari in this case to

resolve alleged conflicts regarding other kinds of

awards.

1. Prejudgment Interest. Sheil recognizes that an

interest award representing a rational estimation of

the time vaiue of money is compensatory. See Pet. at

24. Shell then contradicts itself by asserting that

“ordinary prejudgment interest” should not be

treated as compensatory under Gore, citing decisions

from three federal circuits, one state court of last

resort, and one intermediate appellate state court.

Pet. at 23. Unsurprisingly, the cases Shell cites do

not state that prejudgment interest is not compensa-

tory. Instead, each simply ignores prejudgment

interest in analyzing the Gore ratio. See, e.g., JCB,

Inc. v. Union Planters Bank, N.A., 539 F.3d 862, 876

(8th Cir. 2008); Bridgeport Music, Inc. v. Justin

Combs Publ’g, 507 F.3d 470, 488-89 (6th Cir. 2007);

United Int'l Holdings, Inc. v. Wharf (Holdings), Ltd.,

210 F.3d 1207, 1232-34 (10th Cir. 2000); Burns uv.

Prudential Sec., Inc., 857 N.E.2d 621, 649-54 (Ohio

Ct. App. 2006); Peters v. Rivers Edge Mining, Inc.,

680 S.E.2d 791, 803 & n.10, 823-26 (W. Va. 2009).

9

Shell thus has not identified any decision from any

circuit or state supreme court’ addressing the ques-

tion it presents here, much less any decision resolv-:

ing that question in conflict with the decision in this

case.

2. Other Types of Awards. The other cases invoked

by Shell all involve legal questions that are not pre-

sent im this case. Shell cites cases involving: (1)

attorney fees;’® (2) disgorged profits;'' (3) statutory

treble damages awards; and (4) damages for mental

anguish.'* This Court recently denied certiorari to

resolve the alleged conflict regarding attorney fees.

Stroud v. Blount, No. 09-1572, 79 U.S.L.W. 3007,

* Shell cites one case from a state intermediate appellate

court in which the court held that prejudgment interest is not

compensatory damages includable in the ratio. Amerigraphics,

Inc. v. Mercury Cas. Co., 107 Cal. Rptr. 3d 307, 329 (Cal. Ct.

App. 2010). Significantly, the authority cited in Amerigraphics,

Bardis v. Oates, 14 Cal. Rptr. 3d 89 (Cal. Ct. App. 2004), holds

that prejudgment interest should be included on the compen-

satory side of the Gore/State Farm ratio. See id. at 100-01. In

any event, unless and until the California Supreme Court

adopts the rule of Amerigraphics as its own, the error or conflict

within a state judicial system does not warrant this Court’s

intervention.

Willow Inn, Inc. v. Pub. Serv. Mut. Ins. Co., 399 F.3d 224,

233-37 (3d Cir. 2005); Jurinko v. Medical Protective Co., 305

Fed. Appx. 13, 27 n.16 (3d Cir. 2008); Amerigraphics, 107 Cal.

Rptr. 3d at 329; Blount v. Stroud, 915 N.E.2d 925 (Til. App. Ct.

2009), cert. denied, 79 U.S.L.W. 3007, 3019 (Nov. 1, 2010).

'' See Bridgeport Music, 507 F.3d at 489.

See Modern Mgmt. Co. v. Wilson, 997 A.2d 37, 57 (D.C.

2010); Perez v. Z Frank Oldsmobile, Inc., 223 F.3d 617, 621-23

(7th Cir. 2000), cert. denied, 531 U.S. 1153 (2001).

'S Boyd v. Goffoli, 608 S.E.2d 169, 182-84 (W. Va. 2004); Roby

uv. McKesson Corp., 219 P.3d 749, 797-98 (Cal. 2009); Tony Gullo

Motors I, L.P. v. Chapa, 212 S.W.3d 299, 308-10 (Tex. 2006).

10

3019 (Nov. 1, 2010). These cases do not set forth any

general approach to distinguish between compensa-

tory and punitive damages that would put them at

odds with each other, this Court, or this case. Nor

would deciding this case shed any significant light on

the proper treatment of attorney fees, treble dam-

ages, disgorgement, or damages for mental anguish.

Indeed, as discussed below, Shell’s proposed constitu-

tional rule—allowing courts to consider, as part of

compensatory damages, awards that represent “a

historically accepted and currently reasonable esti-

mate of the ‘concrete loss that the plaintiff suffered

by reason of the defendant’s wrongful conduct,” Pet.

at 24 (citation omitted)—-does not provide any addi-

tional guidance in this case, much less dictate the

proper treatment of, for example, attorney fees or

damages for mental anguish.“

B. Shell’s Constitutional Objection To

The Consideration Of Prejudgment

Interest In This Case Is Meritless.

Shell is also wrong in insisting that review is

warranted here because the Oklatioma courts contra-

4 Shell also alleges that, in deciding cases about attorney

fees, disgorgement, treble dataages, and damages for mental

anguish, courts have given different weight to how state legis-

latures have characterized the function of a particular kind of

award. See Pet. at 16-18. None of the cases Shell cites involve

awards of prejudgment interest. Nor, contrary to Shell’s sugges-

tion, Pet. at 15, did the decision in this case establish any legal

principle in Oklahoma that statutory labels are conclusive for

purposes of resolving a federal due process challenge to a

punitive damages award. Compare Pet. App. 13a (adverting to

statutory label in rejecting Shell’s state law claim that punitive

damages award was duplicative of allegedly punitive interest

award) with Pet. App. 15a-16a (resolving constitutional claim

without any reference to labels).

11

vened this Court’s decisions by mischaracterizing the

interest award in this case as compensatory damages

for purposes of the Gore ratio analysis. That argu-

ment fails at its premise — Shell’s characterization of

the jury’s award of prejudgment interest as a “heigh-

tened penalty,” see Pet. at 21 (citation omitted), finds

no support in the decisions of this Court, the Okla-

homa statute, state and federal decisions interpreting

that statute, or general principles governing pre-

judgment interest.

This Court has repeatedly explained that prejudg-

ment interest “is an element of [plaintiffs] complete

compensation.” West Virginia v. United States, 479

U.S. 305, 310 (1987); see also id. at 310 n.2 (“Prejudg-

ment interest serves to compensate for the loss of use

of money due as damages from the time the claim

accrues until judgment is entered, thereby achieving

full compensation for the injury those damages are

intended to redress.”); Loeffler v. Frank, 486 U.S. 549,

558 (1988) (stating that “[p]rejudgment interest, of

course, is ‘an element of complete compensation”)

(quoting West Virginia v. United States, 479 U.S. at

310); General Motors Corp. v. Devex Corp., 461 U.S.

648, 655 n.10 (1983) (explaining in a patent case

that “[a] rule denying prejudgment interest not only

undercompensates the patent owner but may also

grant a windfall to the infringer and create an

incentive to prolong litigation” and that “[t]here is no

reason why an infringer should stand in a better

position than a party who agrees to pay a royalty and

then fails to pay because of financial difficulties”);

Jacobs v. United States, 290 U.S. 13, 16-17 (1933)

(holding that interest from time of the taking is

necessary to constitute adequate compensation under

the Fifth Amendment); Waite v. United States, 282

U.S. 508, 509 (1931) (Holmes, J.) (holding that

12

interest should be allowed in order to make compen-

sation “entire”); Miller v. Robertson, 266 U.S. 243,

258 (1924) (holding that prejudgment interest may be

awarded “to arrive at fair compensation”).

Shell has not shown that some special feature of

the prejudgment interest statute specific to this case

so departs from ordinary legislative attempts to

compensate victims for the time value of their lost

money that it must be treated as punitive for

purposes of the Gore analysis.

In 1980, Oklahoma enacted OKLA. STAT. tit. 52,

§ 540B (West 1981) in order to establish guidelines

for reporting oil and gas production and to require

prompt distribution of oil and gas proceeds. The

statute required operators to pay twelve percent

(12%) per annum simple interest on oil and gas

proceeds that were improperly withheld. In 1989, the

statute was amended to provide interest at the rate

of twelve percent (12%) per annum to be compounded

annually. OKLA. STAT. tit. 52, § 540D (West 1991)."°

This interest is “an element of the . . . legal damage

for the operators default in payment.” Fleet v.

Sanguine, Ltd., 854 P.2d 892, 900 (Okla. 1993). In

1980, when § 540 was enacted, the prime rate was

over 15%, mortgage rates were over 13%, and the

“IRS rate” was 12%.’"* The 12% interest rate did not

operate as a penalty; it was a fair rate to compensate

for the time value of money.

Shell nonetheless insists that “there can be no

claim that 12% interest compensates for [Owners’]

© OKLA. STAT. tit. 52, § 540 was recodified in 1991 as part of

the Production Revenue Standards Act, OKLA STAT. tit. 52,

§§ 570.1-570.15 (“PRSA”).

'6 See supra notes 5, 7, 8, and 9.

13

harm or represents the lost time-value of money,”

Pet. at 19, for several reasons, none of which has any

merit.

First, Shell points out that the legislature at one

point labeled the rate a “penalty.” Jd. But Shell

itself insists that due process analysis cannot depend

on “the label the State chooses to attach” to the inter-

est award. Id. at 20. The Constitution is concerned

with substance, not labels.

Second, Shell cites a decision from the Oklahoma

Supreme Court characterizing the rate as intended to

“compel compliance” in addition to provide “compen-

sation.” Jd. at 19. But the fact that a rate provides

an incentive to properly distribute trust funds does

not, in itself, render an interest rate punitive — it

simply reflects that any rate that does not at least

provide full compensation for the time value of money

gives wrongdoers a financial incentive to delay

payment.

In fact, the purposes and application of PRSA

interest are completely different from the purpose

and application of punitive damages. Punitive

damages may be awarded under OKLA. STAT. tit. 23,

§ 9.1 only if the jury finds by clear and convincing

evidence that the defendant has acted with reckless

disregard for the rights of others or has acted inten-

tionally and with malice toward others. See id. § 9.1

B, C. In contrast, PRSA interest is awarded to a

plaintiff without a showing of recklessness, intent,

or malice. Okland Oil Co. v. Conoco, Inc., 144 F.3d

- 1308, 1320 (10th Cir. 1998).

Thus, the PRSA’s 12% prejudgment interest serves

to compel compliance with the statute’s requirement

for prompt distribution of oil and gas proceeds. See

14

McClain v. Ricks Exploration Co., 894 P.2d 422, 431-

32 (Okla. Civ. App. 1994). Punitive damages, on the

other hand, are intended to provide “a punishment

for the benefit of society as a restraint upon the

transgressor, and a warning and example serving as

a deterrent to commission of like offenses in the

future.” Maxwell v. Samson Res. Co., 848 P.2d 1166,

1172 (Okla. 1993) (quoting Oller v. Hicks, 441 P.2d

356, 360 (Okla. 1967)). There is no overlapping

purpose between the award of PRSA compensatory

interest and punitive damages awards such that they

are duplicative.

Accordingly, in a case not cited by Shell, the

Tenth Circuit determined Oklahoma PRSA interest

is compensatory. Okland Oil, 144 F.3d at 1317. The

Tenth Circuit concluded that “the jury may award

prejudgment interest on top of the principal amount

in order to compensate for the detriment caused by the

deprivation of the money.” Id. (emphasis added).

Third, in the end, Shell relies principally on the

fact that another Oklahoma statute provides a lower

rate for different kinds of cases. Pet. at 19. But,

again, Shell itself recognizes that the Constitution

cannot possibly impose different caps on punitive

damages depending on the accident of what other

rates each state provides for different kinds of claims.

Id. at 20-21.

Nor can Shell seriously claim that 6% simple inter-

est constitutes the maximum constitutionally allowa-

ble measure of the time value of Owners’ money."’

'’ In footnote 4, Pet. at 19, Shell incorrectly states that under

the PRSA defendants who justifiably withhold payment based

on a legitimate dispute over title pay only six percent simple

interest rather than twelve percent compound interest. In fact,

15

After 35 years of inflation, the dollar that Shell took

in 1974 was worth only 22 cents in 2008.'"" Using

only simple interest (not compovnd interest), it would

have require 10.3% interest just to keep pace with

the rate of inflation (inflation is compound) from 1974

to 2007.’ An interest rate barely above inflation

“simply ensures that inflation does not erode the

value of money;” it does nothing “to compensate for

the lost use of the money in the intervening time.””’

As Shell’s own financial experience demonstrates,

Owners would have earned greater returns had the

money been distributed to them on time when the oil

and gas was produced.”’

the PRSA provides: “Where such proceeds are not paid because

the title thereto is not marketable, such proceeds shall earn

interest at the rate of six percent (6%) per annum to be

compounded annually.”. OKLA. STAT. tit. 52, 570.10D (emphasis

added).

'’ Bureau of Labor Statistics, CPI Databases (All Urban Con

sumers) http://www.bls.gov/cpi

' Simple interest is calculated on the original principal amount,

therefore the same amount of interest is carned every year

on the principal. The rate of simple interest required just to

compensate for inflation is calculated as follows: the CPI index

(1967=100) for January 1974 is 139.7, the index for December

2007 is 629.17; adjusted for inflation, a 1974 dollar is worth

$4.50 (629.17/139.7); the $3.50 difference equals .103 per year

($3.50 / 34 = .103), or 10.3% per annum

” State of Kan. v. State of Colo., No. 105, Original, 2000 WL

34508307, at *37 (U.S. Aug. 31, 2000) (quoting United States v

City of Warren, Mich., 138 F.3d 1083, 1096 (6th Cir. 1998)); see

also Chandler v. Bombardier Capital, Inc., 44 F.3d 80, 84 (2d

Cir. 1994) (same); Clinchfield Coal Co. v. Fed. Mine Safety &

Health Review Comm'n, 895 F.2d 773, 780 (D.C. Cir. 1990)

(same)

“See Shell Oil Company annual reports, SEC EDGAR

System, http//www.sec.pov/edgar/searchedgar/webusers.htm; see

also Plaintiffs’ Tr. Exh. P240.32

16

Shell attacks the use of compound interest without

any attempt to relate its argument to the harm

suffered by Owners. It cites two 19th century trea

tises for the proposition that compound interest is

punitive. See Pet. at 20 n.5. But compound interest

is the reality of today’s financial markets — even a

child’s savings account earns compound interest.” It

is settled law that fiduciaries like Shell are responsi

ble for compound interest on funds improperly

withheld from their beneficiaries when the fiduciary

has earned profits in excess of the interest amount

RESTATEMENT (SECOND) OF TRUSTS § 207 (1959).*"

Accordingly, the State’s 6% simple interest rate is

plainly less than what is necessary to provide victims

complete compensation for their financial injuries.“

That a defendant might receive a windfall with

respect to interest in some cases says nothing about

what the Constitution permits or prohibits with

respect to punitive damages in this one

Fourth, setting aside its plainly meritless reliance

on the 6% simple interest provision, Shell has pro

duced no evidence below, or in its petition here,

establishing what constitutes the maximum rational

measure of the time value of money. It apparently

““The court is prepared to take judicial notice that com

pound interest is a market or commercial reality for any

corporation that does business in the United States.” 77°7' Corp

v. United States, 17 Cl. Ct. 199, 242 (CL. Ct. 19489)

“ See Fed. Sav. & Loan Ins. Corp. v. Quality Inns, Inc., 876

Feo2d 353, 359 (4th Cir. 1989) Clollowing the Restatement and

holding that defendant “is liable as a trustee for compound

prejudgment interest”)

“Shell thus earned much more from the use of Owners’

funds than the jury’s verdict for compensatory damages. Sve

note 22

’

supra

17

expects this Court to intuit this figure from the

Constitution itself, resolving a contentious matter of

perennial debate among economists by judicial notice

(or, more aptly, judicial fiat). And because the figure

undoubtedly varies from state to state, and over time,

Shell must expect that lower courts (supervised by

this Court) will develop and maintain a constitutional

interest matrix, something of a judicial version of the

Consumer Price Index.

Even if courts were suited for such a task—which

they obviously are not—it would make no difference

here, because the Oklahoma legislature could ration-

ally conclude that the 12% interest rate represents a

reasonable compensatory measure. That interest

rate falls within the range of rates used throughout

the law for that purpose. For example, courts use the

prime interest rate,” return on a prudent investment

account,” and the IRS rate.””

Shell’s claim thus fails even under its own pro-

posed constitutional standard. Having asserted a

*S See, e.g., E.E.O.C. v. Erie County, 751 F.2d 79, 82 (2d Cir.

1984) (“Since the goal of a suit under the FLSA and Equal Pay

Act is to make whole the victims of the unlawful underpayment

of wages, and since the adjusted prime rate has been adopted as

a good indicator of the value of the use of money, it was well

within the discretion of the district court to order that the rate

of prejudgment interest to be paid by the defendants on the

backpay awards be the adjusted prime rate.”).

* Graden v. Conexant Sys., Inc., 496 F.3d 291, 301 (3d Cir.

2007) (holding in an ERISA case that “the measure of damages

is the amount that affected. accounts would have earned if

prudently invested”).

2? F.E.O.C. v. Guardian Pools, Inc., 828 F.2d 1507, 1512 (11th

Cir. 1987) (“direct{ing] the district court to calculate an award of

[prejudgment] interest based upon the IRS prime rates”).

18

novel constitutional claim, Shell was required at the

very least to come forward with evidence that the

prejudgment interest award in this case exceeded the

“historically accepted and currently reasonable esti-

mate of” the injury inflicted upon Owners by virtue of

the loss of the use of their money over the decades.

Pet. at 24. It has not done so. If the Court is to iden-

tify a constitutional limit on cognizable prejudgment

interest, it should await a case with a properly devel-

oped record and the likelihood that the Court's

constitutional decision would make a difference to the

outcome.

II. CERTIORARI IS UNWARRANTED TO RECON-

SIDER THE COURT’S CONSISTENT REFUSAL TO

Apopr RIGID MATHEMATICAL LIMITS ON

PUNITIVE DAMAGES AWARDS.

Shell asks this Court to ignore the Gore multi-

factor analysis and establish a presumptive cap on

punitive damages equal to the amount of any com-

pensatory damages award in a case. Pet. at :. This

Court has “consistently rejected invitations to invent

a constitutional line marked by a simple mathemati-

cal formula, even one that compares actual and

potential damages to the punitive award.” Gore, 517

U.S. at 582 (emphasis in original); see also State

Farm Mut. Ins. Co. v. Campbell, 538 U.S. 408, 425

(2003) (“We decline again to impose a bright-line

ratio which a punitive damages award cannot ex-

ceed.”). And it has consistently denied petitions

asking the Court to reconsider that position. See,

e.g., Cent. Fla. Invus., Inc. v. Myers, No. 10-35, 2010

WL 3834443 (Oct. 4, 2010); Superior Highwall

Miners, Inc. v. Frye, No. 09-1017, 180 S. Ct. 2354

(2010); Fortis Ins. Co. v. Mitchell, No. 09-854, 130 S.

Ct. 1896 (2010); DiamlerChrysler Corp. v. Flax, No.

19

08-1010, 129 S. Ct. 2433 (2009); Energen Resources

Corp. v. Jolley, No. 08-1001, 129 S. Ct. 1633 (2009).*

Shell provides no basis for a different result here.

A. Shell Identifies No Certworthy Con-

flict Over Whether The Constitution

Limits Punitive Damages Awards To

An Amount Equal To Compensatery

Damages.

Shell alleges that the courts are “squarely divided,”

Pet. at 27, over the application of this Court’s state-

ment in State Farm that “[w]hen compensatory

damages are substantial, then a lesser ratio, perhaps

*8The Court has likewise consistently denied certiorari in

other cases, including some cited by Shell, raising excessiveness

challenges. See, e.g., Action Marine, Inc. v. Continental Carbon

Inc., 481 F.3d 1302, 1321-22 (11th Cir. 2007) (affirming a 5:1

ratio), cert. denied, 128 S. Ct. 2994 (2008); Romanski v. Detroit

Entm't, L.L.C., 428 F.3d 629, 645-50 (6th Cir. 2005) (reducing to

a ratio of 2,150:1), cert. denied, 549 U.S. 946 (2006); Planned

Parenthood of Columbia/ Willamette Inc. v. Am. Coal. of Life

Activists, 422 F.3d 949, 963 (9th Cir. 2005) (reducing to a ratio

of 9:1), cert. denied, 547 U.S. 1111 (2006); Stark v. Sandberg,

Phoenix & von Gontard, P.C., 381 F.3d 793, 798, 802-03 (8th

Cir. 2004) (reinstating a ratio of 224:1), cert. dented, 544 U.S.

1027 (2005); Rhone-Poulenc Agro, S.A. v. DeKalb Genetics Corp.,

345 F.3d 1366, 1872 (Fed. Cir. 2003) (affirming a ratio of over

3:1), cert. denied, 540 U.S. 1183 (2004); Zhang v. American

Gem Seafood’s, Inc., 339 F.3d 1020, 1044-45 (9th Cir. 2003)

(affirming a ratio of slightly more than 7:1), cert. denied, 541

U.S. 902 (2004); Unton Pacific R.R. Co. v. Barber, 149 S.W.3d

325, 347-50 (Ark.) (affirming a ratio of approximately 5:1), cert.

denied, 543 U.S. 940 (2004); Campbell v. State Farm Mut. Auto.

Ins. Co., 98 P.3d 409, 417-18 (Utah) (affirming a ratio of 9:1),

cert. denied, 543 U.S. 874 (2004); Trinity Evangelical Lutheran

Church & School-Freistadt v. Tower Ins. Co., 661 N.W.2d 789,

803-04 (Wis.) (affirming a ratio of 7:1), cert. denied, 540 US.

1074 (2003).

20

only equal to compensatory damages, can reach the

outermost limit of the due process guarantee.” 538

U.S. at 425. In particular, Shel] alleges that the

decision in this case conflicts with the law of the

First, Sixth, and Eighth Circuits which, Shell claims,

enforce a “l-to-1 benchmark as the presumptive

constitutional norm where compensatory damages

are substantial.” Pet. at 27.

But each of the cases Shell cites applies the three

Gore guideposts for assessing punitive damage

awards: “the reprehensibility of defendants’ conduct,

the disparity between plaintiffs’ harm and the award,

and a comparison of the award and civil penalties

in comparable cases.” Bridgeport Music, 507 F.3d at

486; see also Bach, 486 F.3d at 153 (applying the

three guideposts); Mendez-Matos, 557 F.3d at 52

(same); Williams, 378 F.3d at 796-S9 (same); Boerner,

394 F.3d at 602 (same). None purports to establish

the constitutional rule Shell asks the Court to apply

here. For example, the Sixth Circuit panel in Bach

noted, “/W/e would be wary of any attempt to graft our

ruling here onto another set of facts. Ascertaining the

constitutionally correct amount of punitive damages

in a given case is a highly fact-intensive exercise, and

the facts before us drive our conclusion in this case.”

486 F.3d at 156 (emphasis added).

Indeed, it requires little effort to find cases

from the same circuits Shell cites upholding punitive

damages awards above the alleged 1:1 “presumptive

*” Pet. at 27-28 (citing Bridgeport Music, 507 F.3d 470; Bach

v. First Union Nat. Bank, 486 F.3d 150 (6th Cir. 2007); Mendez-

Matos v. Municipality of Guaynabo, 557 F.3d 36 (1st Cir. 2009);

Williams v. ConAgra Poultry Co., 378 F.3d 790 (8th Cir. 2004);

and Boerner v. Brown & Williamson Tobacco Co., 394 F.3d 594

(8th Cir. 2005)).

21

constitutional norm.” Pet. at 27; see Quigley v. Win-

ter, 598 F.3d 938, 954 (1st Cir. 2010) (concluding that

a ratio of 4:1 was appropriate); Gibson v. Moskowitz,

523 F.3d 657, 664-65 (6th Cir. 2008) (upholding a

ratio of 2:0); Casillas-Diaz v. Palau, 463 F.3d 77, 85-

86 (1st Cir. 2006) (upholding a ratio of 3.33:1).

Far from creating a “presumptive constitutional

norm,” Pet. at 27, these cases simply reflect a case-

specific application of Gore and State Farm. In every

circuit and state, cases can be found carefully apply-

ing the fact-intensive complexity of the Gore guide-

posts and the State Farm considerations for repre-

hensibility with a variety of results, all within the

framework provided for constitutionally acceptable

punitive damage awards. The efforts of these courts

do not represent conflict but thought’ asideration

post-State Farm.

B. There Is No Basis For This Court To

Abandon Its Precedent And Establish

An Arbitrary 1:1 Ratio.

From the inception of this Court’s recognition of a

substantive due process limitation on the size of

punitive damages awards, the Court has instructed

lower courts to consider the particular facts at hand,

with reference to general guideposts, including the

degree of reprehensibility of the conduct at issue, the

disparity between the harm or potential harm

suffered by a plaintiff and the punitive damages

award, and the difference between the award and the

civil penalties authorized. Gore, 517 U.S. at 575.

Thus, the Court has repeatedly held that it “need not,

and indeed we cannot, draw a mathematical bright

line between the constitutionally acceptable and the

constitutionally unacceptable.” Pac. Mut. Life Ins.

22

Co. v. Haslip, 499 U.S. 1, 18 (1991); see also Gore, 517

U.S. at 582 (same) (quoting Haslip).*°

Shell makes no pretense that any constitutional

text or historic tradition would justify creation of a

new constitutional right against punitive damages

exceeding the amount of a compensatory award.

Indeed, any such principle would call into question

the constitutionality of the “long legislative history,

dating back over 700 years and going forward to

today, providing for sanctions of double, treble, or

quadruple damages to deter and punish,” State Farm,

538 U.S. at 425, the very tradition this Court relied

upon to justify consideration of ratios in the first

place. See Gore, 517 U.S. at 580-81.

CONCLUSION

For the foregoing reasons, the Petition should be

denied.

Respectfully submitted,

GUY A. FORTNEY RANDALL K. CALVERT

BREWSTER & Counsel of Record

DEANGELIS, P.L.L.C. CALVERT LAW FIRM

2617 East 21st Street 1041 NW Grand Boulevard

Tulsa, OK 74114 Oklahoma City, OK 73118

(918) 742-2021 (405) 848-5000

rcalvert@calvertlaw.com

Counsel for Respondents Nancy Fuller Hebble, et al.

*° If the Court were to grant certiorari in this case, it should

effirm the decision below on the alternative ground that Shell’s

challenge is premised on precedent (Gore and State Farm) that

should now be overruled in order to return the regulation of the

size of punitive damages awards to the rightful control of the

states and Congress.