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Litigating Backwards

The Supreme Court has just declined to hear a challenge to procedures being applied in West Virginia to 700 lawsuits against the tobacco companies. The tobacco companies objected to the West Virginia courts' strange practice of considering punitive damages before any individual smoker has demonstrated liability or a compensable injury.

"Under the West Virginia trial plan, the first jury will determine liability questions that affect all the defendants. That same jury also will decide whether punitive damages are appropriate and, if so, establish a 'multiplier' that would be used to assess punitive damages once compensatory damages are measured for each smoker."

Only after that will individual trials be held to determine whether a tobacco company is liable to an individual smoker and how much compensatory damages it owes.

It is difficult to see how this procedure can be squared with Supreme Court decisions like State Farm v. Campbell, 533 U.S. 408 (2003).

For one thing, the West Virginia courts plan to set a punitive damages ratio in advance. But the State Farm decision didn't say the same ratio was appropriate in all cases, but rather set a ratio varying from 1-to-1 all the way up to 10-to-1 depending on the size of the compensatory damage award. It did say that the Constitution will seldom permit anything beyond a "single digit ratio between punitive and compensatory damages," effectively setting an upper bound of 10-to-1. But it also emphasized that "when compensatory damages are substantial, then a lesser ratio, perhaps only equal to compensatory damages, can reach the outermost limit" permitted by the Constitution.

So a court can hardly set a punitive damages ratio in advance, without knowing how "substantial" the compensatory damages will be.

As odd as the West Virginia courts' practice is, it is tame compared to some courts, which simply ignore the Supreme Court's State Farm decision by setting the ultimate dollar amount of punitive damages before deciding whether any compensatory damages will be awarded at all.

For example, multimillion dollar punitive damages were awarded in a high-profile sexual harassment case, before any compensatory damages were even awarded, despite the fact that harassment plaintiffs sometimes end up receiving no compensatory damages at all..

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Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.