Civil Procedure Class Notes 10/30/03

Professor Fairman brought us candy!!!

We left off finishing Hatahley.

There were three elements of damages:

1. The loss of the horses and burros

2. The loss of use of the livestock

3. Pain and suffering

The district court made mistakes on each of these elements:

1. The district court should have sued the open market rule.

2. The district court failed to consider the mitigation principle.

3. The district court failed to individualize pain and suffering.

Hatahley dealt with a tort committed by the government. If that same tort had been committed by neighboring ranchers, punitive damages would also have been available. The two cases of today cover punitive damages.

Punitive damages

The purpose of punitive damages is to punish, which is not a traditional element of our civil justice system. Typically, civil lawsuits aren’t about punishment. Largely we leave punishment to criminal law. There are reasons why: there are significant differences in the way these cases are handled.

Who drives the civil legal action? It’s plaintiffs! In criminal cases, the prosecutor runs the show.

What’s the standard of proof? It’s preponderance of the evidence in a civil case. In criminal cases, the standard of proof is beyond a reasonable doubt (a higher threshold). That’s why you can still have civil lawsuits after criminal acquittals.

Who imposes punishment? In a criminal case, the judge assesses the punishment. In a civil case, the jury assesses punitive damages.

Honda Motor Co. v. Oberg

Oberg gets hurt in an ATV accident and gets lots of compensatory damages, and five times as much in punitive damages. Oberg gets a windfall in that he gets more than he needs to be put in the position he was in before he was hurt (according to the jury). The Supreme Court of Oregon affirms the judgment because Oregon doesn’t give its courts the power to review jury damage awards.

What were Oregon’s procedures for review of punitive damages? They didn’t have any! This is not common. The Court tell us that Oregon stands in “lonely eminence” as the only jurisdiction with no way at all of reviewing punitive damage jury awards.

Justice Stevens focuses on whether Oregon’s lack of judicial review violates the Fourteenth Amendment Due Process Clause. What does the Due Process Clause require according to Justice Stevens? What is Honda entitled to?

Oregon’s lack of judicial review, which goes against precedent and tradition, is presumed to violate the Due Process Clause. All jurisdictions, traditionally, had some check against the threat of arbitrary deprivations of property, and Oregon doesn’t.

If states deviate from what most states do, the Court will scrutinize them closely.

What are we afraid of? Juries! Why are we afraid that they’ll do something unconstitutional? They’re sort of a mystery. They’re unpredictable. When people get hurt, juries make decisions not necessarily according to the facts as presented or the law as they understand it.

What is the appropriate standard of review? They don’t say! The Court says that there must be a standard, but they refuse to set one out. They mention some that have been proposed, such as a finding of “passion and prejudice” on behalf of the jury, “gross excessiveness” of the award, a conclusion “against the great weight of the evidence”, or a finding that “no rational trier of fact could have reached the same verdict”.

What we learn from this case is not what the appropriate standard is, however, we learn that there must be some standard.

The Due Process Clause spawns two types of protections. This is the kind that we would call procedural due process. That means there must be a way to go about reviewing results. The other half is substantive due process, as found in BMW.

BMW of North America v. Gore

Dr. Gore sues BMW because some of their vehicles got acid rained on and they repainted the vehicles without disclosing they’d done so. Not all cases are fact-driven, but Fairman suggests that there’s a big difference between getting run over by an ATV and getting a bad paint job.

Gore gets $4,000 in compensatory damages and $4,000,000 in punitive damages. The theory was that there were about 1,000 car buyers who were wronged by BMW’s non-disclosure.

The Alabama Supreme Court cut the damages from $4,000,000 to $2,000,000 but BMW still wasn’t happy and it appealed to the Supreme Court. BMW bases their appeal on the Fourteenth Amendment, but they make a different argument than Honda did in the prior case. It’s not that Alabama doesn’t have a procedure, because they do. BMW argues that the Alabama Supreme Court’s punitive damages award is still too damn much.

Justice Stevens writes again!

There is a constitutional issue here. We might say that all that is required is a process. Alabama has a process; BMW just doesn’t like the results of that process. The Court finds that this is not sufficient. The constitutional issue is one of substantive due process.

Due process requires that you have notice that you might be deprived of your property. You also must have notice of how much you might be out for.

How do we check whether the award is constitutional?

1. Reprehensibility of conduct – Stevens says this is the most important indicator.

2. Ratio between compensatory damages and punitive damages

3. Comparison between punitive damages versus the awards in similar cases

Is BMW’s behavior terribly reprehensible? There’s no safety or performance issue. Painting over acid rain paint damaged cars, as opposed to producing unsafe ATVs, for example, is easy. Gore’s damages are only $4,000, and it’s purely economic harm.

What about Oberg? Was the conduct of Honda reprehensible? Is Oberg made whole? Arguably not. If punitive damages are tied to purely economic harm, they are given much more scrutiny than if they are tied to individual personal injury. Some argue that there should be no punitive damages for economic harm, since the injured party can be made whole purely through compensatory damages.

Why didn’t BMW remove to federal court? Gore sued the local dealer as well as the manufacturer and distributor. This anchors the action in state court.

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