We're excited to have a special Election 2004 featured discussion by hosting two contributors who are very well-versed in the topic of tort reform but come down on the opposite sides of the political fence. Dr. Ron Chusid, founder of Doctors for Kerry, and our own Ted Frank, a Bush supporter, will make the case for their respective candidates. Bookmark us here, so you can join the discussion as it develops!
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I wouldn't mind being proven wrong on any of these, but here are five tentative propositions on next Tuesday's vote:
1) Voters intend to punish Republicans for reasons that have little to do with litigation reform. I haven't run across any reports of campaigns in which a Democratic challenger has tried to make an issue of a GOP incumbent's support of the Class Action Fairness Act or med-mal reform, for example.
2) On the other hand, with a few exceptions as in the Pennsylvania Senate race, Republicans don't seem to be promoting national litigation reform as a campaign issue the way they did in previous cycles. One reason may be that it's hard to blame Democratic obstructionism when Congress and the White House have been in Republican hands so long, the GOP Senate having of course served as the longtime boneyard of federal legal reform proposals.
3) None of which makes the issue anything less than crucial as an underlying factor, sometimes behind the scenes and sometimes not, in races from coast to coast. It is lost on no one that Eliot Spitzer pulled off his meteoric rise by using the law to confront businesses. One cannot grasp the peculiar twists and turns in the Texas gubernatorial race except as reflecting the desire of prominent trial lawyers there to punish pro-reform incumbent Rick Perry by whatever means comes to hand. The issue remains hugely salient in statehouse politics from Tallahassee to Madison to Oklahoma City to Sacramento.
4) Even leaving aside the Spitzer example, we continue to live in the golden age of the activist state attorney general. Rhode Island's Sheldon Whitehouse, much criticized on this site for his lawsuits against former lead paint manufacturers, appears on his way to knocking off incumbent U.S. Senator Lincoln Chafee. Minnesota's Mike Hatch holds a narrow lead in his challenge to GOP incumbent Gov. Tim Pawlenty; Hatch's bad ideas have included suing companies that make cold medicines because meth abusers buy the stuff and cook it into their preferred drug. And Patricia Madrid of New Mexico, who has mounted a strong challenge to incumbent House member Heather Wilson -- among other races we'll discuss this week.
5) Of all the trends afoot, quite possibly the most significant as a setback for legal-reform prospects is one covered in today's NYT: Democrats are set to recapture control of many state legislatures from Republicans.
Here are some comments from reader Thomas Zak in Indiana:
I wanted to respond briefly to some of your comments in today's featured discussion. The numbers match up with your initial points.
1) I agree that litigation reform is a dead issue in this election, but I disagree that it was ever a serious issue to begin with. The med-mal caps suggested before were no more than a Band-Aid on a gunshot wound. No major party has ever come out strongly in favor of returning sanity to our system through either a restoration of the basic principle of �assumption of risk� or the more radical idea of loser-pays.
3) Eliot Spitzer has been able to pull off his activist AG stint by having the luck of NYC and Wall Street within his jurisdiction. By having an trillion dollar industry well known for financial shenanigans under his purview, he has been able to find real scandals which can be exposed (and exploited).
The other AGs are left with the crumbs. In many cases they have latched onto questionable �scandals� like the paint industry lead fiasco in order to create a scandal out of whole cloth.
5) Given that Democratic control of congress is a possibility and that many Republicans are also opposed to common sense reforms, we must understand that national legal reform is dead � until the next major scandal of a multi-billion dollar verdict against an innocent corporation. If the public ever realizes how these all too common cases affect their pocketbooks through lost jobs and higher prices, then litigation reform will have a chance.
The problem is that the connection is too weak for the public to see since most cannot even balance their checkbooks and are gullible enough to believe that speeding drunks that roll their trucks should be given millions in compensation for �design flaws� in traction control systems.
So the national debate is lost for now. The real question is what can be done at the state level. What comprehensive plan can be put in place to convince ANY state government to bring justice back to their justice system instead of just waiting for the next scandal and then tweaking the rules slightly?
There are plenty of initiatives on the ballot this year with implications for law and litigation. Twelve states will consider measures on eminent domain, ten will confront tobacco taxation and regulation, eight will vote on constitutional gay-marriage bans, and six will consider minimum-wage hikes, constitutionally inscribed or otherwise. The Initiative and Referendum Institute tracks the status of these and other measures in its latest election preview issue (PDF).
Notable for its absence: a flurry of tort-related initiatives, the kind we saw last time around. Possibly the backers of such measures have been scared off by the trial bar's long track record of organizing "revenge initiatives" aimed at inflicting as much pain as possible on whatever interest group is perceived as standing up to the lawyers. Or perhaps the backers have noticed that when voters approve a measure inconvenient to the lawyers, state courts like Florida's sometimes proceed to invalidate or gut the measure. So why put yourself through the trouble?
One minor exception to the general lull: Arizona voters will consider Proposition 102, which would prohibit illegal aliens from receiving punitive (as distinct from compensatory) damage awards in lawsuits. That measure is part of a package of proposals intended to toughen up enforcement of immigration laws, however, and doesn't seem to have much of a connection to wider efforts to reform punitive damages.
Two miscellaneous, dubious ballot proposals relate to children: Question 3 in Massachusetts, backed by the Service Employees International Union, would facilitate unionization of home-based child care workers. Both the Boston Globe and the Boston Herald oppose it. Measure 3 in North Dakota would mandate "shared parenting" and prescribe a default assumption of joint custody after divorce unless one parent could prove the other unfit; it would also limit support payments to those adequate to cover a child's "basic needs". (Proponents; opponents; AP summary; Wendy McElroy; Bismarck Tribune coverage and editorial).
P.S.: A couple of major omissions in the above list: the Michigan Civil Rights Initiative, discussed favorably by George Will and Stephen Chapman, and South Dakota's scary judge-bashing Amendment E, discussed by Ted here.
Speaking of lucky Democrats, here's the San Diego Union-Tribune's editorial endorsing the trial bar's most durable ally in Sacramento, Attorney General Bill Lockyer, in his race for state treasurer (via Taranto):
The Democratic candidate for treasurer, Bill Lockyer, has displayed a vicious partisan streak in his eight years as attorney general, using his powers to sandbag initiatives he doesn't like and to file frivolous lawsuits solely to score political points with unions and environmentalists. In his previous job, as Senate president, he was the epitome of the pay-to-play Sacramento culture, famously blocking a law meant to keep criminals out of California casinos and card clubs after taking hundreds of thousands of dollars in donations from the gambling industry.
Incredibly enough, we have no choice but to endorse him. His Republican opponent, Board of Equalization member Claude Parrish, is simultaneously flippant, uninformed and unfocused. Lockyer may be the devil, but he's a smart devil. Were Lockyer treasurer, it is incomprehensible that Californians might someday wake up to learn that the state had lost billions of dollars because he made complex financial decisions without due diligence. That is not the case with Parrish.
We set out to give Lockyer the most grudging election endorsement in the history of the printed word. We hope we have achieved our goal.
With much more in the pipeline -- several liability reform activists around the country have volunteered reports from the front line -- we're going to extend this roundtable past the usual five-day limit and let it run on into next week. It looks like there won't be any shortage of material, so stay tuned.
They don't come much nastier than the one in Georgia, where incumbent state supreme court justice Carol Hunstein, a favorite of the state's trial lawyers, is being challenged by former Bush Administration official Mike Wiggins, who's backed by business groups. See these stories from the Associated Press, Savannah Morning News, and Atlanta Journal-Constitution, and also this column from the AJC's Jim Wooten. You may want to take a shower afterward.
Incumbent Democratic Gov. Jim Doyle had been running comfortably ahead of his Republican challenger, U.S. Rep. Mark Green, but the latest poll suggests a tightening race, with Green only six points behind. Liability issues have been an important factor in the race since Gov. Doyle vetoed four civil justice reform bills last January, including curbs on lead-paint and gun lawsuits, a product-liability bill, and a measure that would have moved Wisconsin's lenient expert-evidence standards toward a Daubert standard. Not long before that, Gov. Doyle vetoed a measure that would have limited medical malpractice recoveries, although he later signed a less restrictive measure.
I promised an entry on the upcoming elections in and around Madison County, Illinois -- that infamous jurisdiction we've highlighted in 3 Manhattan Institute studies (here, here, and here) and our recent Trial Lawyers, Inc.: Illinois report. Rather than giving you my take, I'll give you this extensive look by Ed Murnane, who as the president of the Illinois Civil Justice League -- the main legal reform group in the state -- is very close to these races and has a view from the inside:
Perhaps the most disheartening aspect of Madison County Round II -- a.k.a. the judicial elections in Southern Illinois two years after the historic Karmeier-Maag race �- is the likelihood that Madison County Round III is only two years away....
That long-term forecast is likely to be reality because of the recent death of Illinois Appellate Judge Terrence Hopkins, who served on the Fifth District Appellate Court, based in Mount Vernon. That�s the same court where Gordon Maag served and where present Appellate Justice Stephen McGlynn is fighting to hold off Maag�s pals and win the seat for the next ten years.
It does not get easy in Southern Illinois.
But enough about the future (maybe a bit more later). The present is here and we're into the final critical days -- yikes, it's really only hours -- to learn if the success of 2004 will be repeated in 2006. At this stage in 2004 �- three days out -� we were virtually certain that Lloyd Karmeier was going to be elected to the Illinois Supreme Court.
Today, it is not as certain that Justice Steve McGlynn will hold on to the Appellate seat he was appointed to by Karmeier.
As in 2004, the dollars are huge and costly television ads have been competing with ads for statewide candidates. Since Southern Illinois is primarily served by non-Illinois television markets, voters in Missouri, Kentucky, and Indiana are once again learning about Illinois judicial candidates, just as Illinoisans are learning about governors and senators from strange places.
Here's the situation: Steve McGlynn, a St. Clair County lawyer, was appointed to the Appellate Court by Justice Lloyd Karmeier to fill the vacancy created by the ouster of Appellate Judge Gordon Maag. (The appointment authority is one of the best aspects of being a Supreme Court justice.) According to the law and the process, McGlynn served until the next election (that's this year) and then has to seek a full ten-year term. Judicial elections in Illinois are partisan so the Republican McGlynn is looking to the same traditional Republican sources for financial support. And the Democratic challenger, a Saline County judge named Bruce Stewart, is looking to the same traditional sources that Southern Illinois Democrats always look to: organized labor and plaintiffs' attorneys. Did we mention plaintiffs' attorneys?
Stewart has a few things going for him that McGlynn does not. He has been a trial judge for the past ten years, while McGlynn has been practicing law. And he is from Saline County in the very southern reaches of the state (almost to Kentucky) while McGlynn is from St. Clair County �- the junior partner of the despicable "Madison and St. Clair Counties" axis.
It was not happenstance that a non-Madison-St. Clair candidate was selected by the still-powerful plaintiffs' lawyers. They can read tea leaves, as well as public sentiment and voter instincts, so they selected a non-Madison-St. Clair candidate, especially after Justice Karmeier selected McGlynn of St. Clair County, even if McGlynn has nothing to do with the problems of St. Clair County.
Both sides have pumped thousands of dollars into the fray, although on a slightly smaller scale than the 2004 festivities. Most of the Karmeier supporters (ourselves included) have contributed heavily to McGlynn and the plaintiffs' lawyers are solidly with Stewart.
Adding to the mix in 2006 is a handful of other judicial elections that all revolve around the same issue, i.e. fixing what's wrong in Madison and St. Clair counties (if there is anything wrong, a question answered firmly in the negative by the establishment forces).
One of the critical and entertaining second tier elections is for a circuit court (trial court) seat in Madison County. Justice Karmeier appointed a former Madison County state's attorney to fill the vacancy and seek a full term this year. The Democrat-trial lawyer establishment picked a prominent local asbestos lawyer as their candidate. Republican Donald Weber and Democrat David Hylla are setting spending records for an Illinois circuit court seat, as are McGlynn and Stewart at the appellate court level.
One Madison County plaintiffs' firm, SimmonsCooper, already has contributed more than $160,000 to Hylla's campaign. Weber has no such sugar-daddy (we're helping as much as we can) and is being vastly outspent. But if Weber is able to remind voters in Madison County that the same dark forces they fought in 2004 �- and defeated -� are back again, he can win.
Another interesting Madison County battle is the fight for "retention" being waged by three sitting judges who must win the approval of 60 percent of the voters to stay on the bench. The three, including Chief Judge Ann Callis, a former plaintiffs' attorney and daughter of one of the legends in Madison County, Lance Callis, have promised reforms in the courthouse. They have acknowledged problems and mistakes and actually seem to be sincere. Our political action committee decided not to take a stand -� recommending neither a "vote yes" nor a "vote no." We'll let the local voters decide if they think the trend is in the right direction.
Just south of Madison County, in St. Clair County, a circuit court race of a different kind is taking place. Judge Lloyd Cueto decided he could not get the 60 percent needed to be retained so he is running in a contested race for his own seat. Although not as closely tied to the plaintiffs' lawyers in Madison County, Cueto is none-the-less friendly to them and reform-minded activists want him out. He is being challenged by a relatively unknown but courageous lawyer named Paul Evans, who doesn't have a lot of money but looks like he could pull it off. We are doing everything we can to help him.
There are 100 other counties in Illinois �- Madison and St. Clair are not the only two. We have a large one named Cook County with a fairly major city as its county seat. There are more than 80 judicial candidates running in Cook, mostly from Chicago but some from the suburbs, and we are watching them closely.
But somehow, none of it ever seems as interesting and significant as what happens in Madison and St. Clair Counties. And after the ink dries on this year�s ballots, they�ll be lining up and raising bucks for the 2008 installment: Madison County Round III.
Those interested in more information on the Illinois races should check out the Illinois Civil Justice League's IllinoisJudges.net, which promises information today, tomorrow, and through tomorrow night on these and other races in the Prairie State.
Bob Dorigo Jones, president of Michigan Lawsuit Abuse Watch, sends in this update on tomorrow's elections in the Wolverine State:
The big news in the Michigan Supreme Court election this year is that there is no big news. The two incumbents who are running for election--one nominated by Republicans and one nominated by Democrats--are considered likely to be re-elected and have spent only a fraction of what incumbents have spent in recent years.
Altogether, the five candidates for the two seats on the state Supreme Court (2 Democrats, 2 Republicans and 1 Libertarian) have spent about $214,000 on their campaigns according to a report in the Detroit Free Press last week. Compare that to the nearly $15 million spent by all parties (including interest groups) in 2000 when there were three seats up for election, and it is clear that this election is much different from the heated, high-stakes elections we have seen in recent years.
The difference is that the trial bar believes it doesn't have a chance to change the balance on the court in this election. There is a 5-2 split on the court with the four justices having solid records on limiting the spread of liability beyond what the legislature authorizes and putting the clamps on frivolous lawsuits, and one being in that camp most of the time.
Of the two justices considered more pro-plaintiff, the one who is up for re-election, Michael Cavanagh, has been on the court for 23 years. A former Republican legislator who was chair of the House Judiciary Committee is running for the seat and would make a very good member of the high court. However, he faces an uphill race and considerable competition for funding from the two other high-profile statewide races for governor and U.S. Senate.
The GOP-nominated incumbent who is up for re-election, Maura Corrigan, is an excellent judge with a solid record on civil and criminal matters. She has also distinguished herself as a champion for children and families, and the plaintiffs' bar has not mounted a serious challenge to her seat. Instead, the plaintiffs' bar is spending heavily to re-elect the incumbent governor, Jennifer Granholm, who has already rewarded them by appointing members of the Michigan Trial Lawyers Association to the state Court of Appeals in her first term.
Because of the low likelihood of a change in the Supreme Court, and because so much money and attention is being focused on the gubernatorial election, Michigan's top political pundit, Bill Ballenger, characterized the election for Supreme Court in Michigan this way: "We're back to the sleepy old races we had in the early 1990s."
For those of us who are pleased with the make-up of the Supreme Court in Michigan and eager to stay heading in the same direction, that is a good thing.
Can prosecutors be made to pay a price at the ballot box for malfeasance? Durham, North Carolina, county district attorney Mike Nifong is up for re-election, and has run well in polls despite his hounding of three Duke lacrosse players -- perhaps the year's banner case of abusive prosecution (see Oct. 11, Oct. 12, Oct. 30, etc.). One challenger, County Commissioner Lewis Cheek, "has said he won't serve if elected, instead allowing Gov. Mike Easley to appoint a new prosecutor"; a third candidate, Steve Monks, has been waging a write-in campaign. (Ray Gronberg, "Durham DA race is hot", Durham Herald-Sun, Nov. 6; Ruth Sheehan, "Turning the tide in Durham", Raleigh News & Observer, Oct. 30). For some recent developments in the case, incidentally, see here, here and here (witnesses say accuser soon after incident performed dances inconsistent with alleged injuries), here (Nifong never interviewed accuser), and here ("Go ahead, put marks on me")(cross-posted from Overlawyered).
"The irony in Virginia is that conservatives fearful of an out-of-control judiciary are in fact inviting the judiciary to get involved in micro-managing family law." (David Boaz, "Marriage measure is an amendment too far", Examiner.com, Oct. 30). For more of the many, many reasons to vote no, see Overlawyered Sept. 20, 2006, May 31 and Nov. 2, 2004, etc., etc. (cross-posted from Overlawyered).
John Sullivan, president of the Civil Justice Association of California, alerts us to the dangers looming if Golden Staters approve Proposition 89:
Californians are today voting on a list of statewide initiatives that includes Proposition 89, a proposal that if passed would do grave harm to legal reform in the Golden State. Pitched as "campaign finance reform," this initiative comes at a time when we are making great strides in reforming California�s civil justice system�-a system that has for far too long been rife with frivolous lawsuits and abuse. If 89 passes, business and civil justice reform advocates will effectively be precluded from participating in the political process in California.
The Civil Justice Association of California board voted months back to oppose Proposition 89.
Proposition 89, would prohibit a corporation from directly or indirectly contributing to an independent expenditure election campaign, which is the only constitutional way a company has to make its views on candidates known to voters.
Equally devastating would be the $10,000 corporate contribution limit on supporting or opposing initiatives.
Personal injury lawyers and other plaintiffs' lawyers are largely unaffected by these limits. (The big trial lawyer players are Limited Liability Partnerships.) This mismatch would set plaintiffs' lawyers up to elect their picks to the Legislature. It would set them up for ballot campaigns to undo voter-passed laws like Proposition 64 of 2004 and win ballot campaigns to further their agenda.
Proposition 89 would, in the legal reform arena, mean unilateral disarmament for us in the very political areas where we've been able to make gains and restore balance. At the same time, the scales would be hugely tilted in favor of those who want to more aggressively use the civil justice system as a revenue raising and social tool against businesses and government entities. If the provisions of Proposition 89 had been in place, none of the following would have been possible:
Passage of Proposition 64 (2004). Businesses of all sizes banded together to pass Proposition 64, which stopped personal injury lawyers who had been using state unfair competition law to extort settlements.
The defeat of Propositions 30 and 31 (2000). These trial lawyer-sponsored schemes would have allowed two lawsuits for every insurance claim, costing the insurance industry and eventually all insureds millions of dollars.
The defeat of Proposition 211 (1996). This was securities class action lawyer Bill Lerach's unsuccessful scheme to end-run federal securities litigation reform and open California courts to his brand of "strike" suits based on stock price changes.
The election of moderate Democrats in recent election cycles, sending to Sacramento more lawmakers who understand the need for a fair civil justice system and are not beholden to the plaintiffs' bar.
Thanks John. We'll be watching the fate of Prop 89, with our fingers crossed.
[This post will be periodically refreshed and updated to reflect incoming results.]
As of 12:05 a.m. Wednesday Eastern time, here are results on some races mentioned in posts above, winner in ALLCAPS:
U.S. Senate: Ct., LIEBERMAN/Lamont; Pa., CASEY/Santorum; R.I. WHITEHOUSE/Chafee.
House of Reps.: Iowa, BRALEY/Whalen; N.M., Madrid trails Wilson.
Governorships: Ark., BEEBE/Hutchinson; Fla., CRIST/Davis; Minn., PAWLENTY/Hatch; N.Y., SPITZER/Faso; Tex., PERRY/Bell; Wisc., DOYLE/Green.
AG-ships: Ark., MCDANIEL/DeLay; Del., BIDEN/Wharton; Fla., MCCOLLUM/Campbell; Md., GANSLER/Rolle; N.Y., CUOMO/Pirro; Okla., EDMONDSON/Dunn.
Judgeships: Ga., HUNSTEIN/Wiggins; Ill., STEWART/McGlynn and HYLLA/Weber (D wins), EVANS/Cueto (R wins).
Ballot measures: Ariz. Prop. 102 (no award of punitive damages to illegal aliens) passes; Calif. Prop 89 (campaign finance) loses; Michigan Civil Rights Initiative wins; N.D. Measure 3 loses; S.D. Amendment E defeated by 9-1 margin; "marriage protection" amendments lose 49-51 Ariz., win 52-48 in S.D., pass by larger margins elsewhere.
Misc.: Nifong re-elected Durham D.A.
In another exception to the overall disastrous night for Ohio Republicans, voters gave the GOP a 7-0 majority on the state's high court (although two of the incumbent justices behave more like Democrats). Jonathan Adler has details.
I had a mixed reaction to the Court's recent Philip Morris decision. On the one hand, there is a crisis of excessive punitive damages. On the other, no one who agress with the late Justice White (dissenting in Moore v. East Cleveland) that "[t]he Judiciary, including this Court, is the most vulnerable and comes nearest to illegitimacy when it deals with judge-made constitutional law having little or no cognizable roots in the language or even the design of the Constitution" can greet with complete delight the opening of yet another vein of substantive due process. Yet this is what the Court has done in BMW v. Gore, State Farm v. Campbell, and now in Philip Morris v. Williams.
That the Court has its hand in the substantive-due-process cookie jar in these cases cannot really be doubted. The Court's claim to address only the "procedural" question of the instruction on harm to nonparties was no doubt intended to deflect this argument, but it did not convince Justice Thomas ("the 'procedural' rule is simply a confusing implementation of the substantive due process regime this Court has created for punitive damages"), and it does not convince me.
At the dawn of the first s.d.p., the same confusion occurred. See e.g. Chicago Milwaukee & St. Paul RR v. Minnesota, 134 U.S. 418 (1890). Railroads objecting to ratemaking couched their claims in procedural terms: the regulating agency did its ratemaking without giving us a special hearing, see, and all we want is that hearing. Piffle! They were going for a court-mandate role in setting rates; once the Court was convinced to strew procedural banana peels along the path of regulation, as requirements of due process, it was a short leap to declaring the regulations themselves unconstitutional.
Philip Morris v. Williams supposedly avoids the question of excessive fines, and imposes a merely "procedural" requirement that the trial judge should be clearer about the role that harm to nonparties should playing in the jury's punitive damages calculation. Why a juror should find the Court's clarification any clearer than the instrution actually given, I'm sure I don't know, but the point here is, this "procedural" rule imposes a substantive requirement: that the Due Process Clause of the 14th Amendment prohibits civil juries from punishing defendants separately for harm to nonparties. I don't find that in the Due Process Clause. I'd be glad if it were there, but I can't find it.
The next post on this issue will be by Prof. Michael Krauss, who taught me everything I know about tort law, and with whom I expect I'll be in complete policy agreement about the general goshawfulness of heavy punitive damages.
David M. Wagner
Regent University School of Law
Well, it is an honor and a pleasure for this lawprof to be featured along with his illustrious student. I suppose this should make me feel quite old, but it doesn't! My only complaint is that, after my earlier featured discussion on firearm liability, "Smoking Guns" (and a book I wrote on tobacco and firearms, entitled "Fire and Smoke") this featured discussion is entitled "Smoke and Mirrors." Enough with the smoke already, it is clouding my eyes!! Nonetheless, I hope I will be able to see clearly through the maze that our Supremes have set up for us in Philip Morris USA v Williams.
The plaintiff in Williams was the widow of a long-time smoker. This widow alleged that Philip Morris deceived her husband into not quitting smoking. According to the wife, the late Mr. Williams said that ��the tobacco companies don�t even say they�re cancer sticks, so I can smoke them.�� Although his wife helpfully pointed to the warning labels on cigarette packages and told her husband that cigarettes would kill him, Mr. Williams allegedly responded: �This is what the Surgeon General says, it�s not what [the] tobacco company says.� According to his wife, Williams gave no credence to the Surgeon General�s warnings because he believed that the tobacco companies would simply not sell a harmful product. �[H]e would say �Well, honey, you see I told you cigarettes are not going to kill you, because I just heard this so-and-so guy on TV, and he said that tobacco doesn�t cause you cancer!�� Now, I don't know about you all, but I know of no one on earth who talks like the decedent allegedly did, and I know of no one who thinks that no seller could possibly fib about the quality of the product he was selling. Of course, the jury can choose to believe whom it will, and to no one's surprise it chose to believe Ms. Williams. [Is the jury interested in buying a bridge in Brooklyn from me?] What possible motive could the plaintiff have to "embellish", after all?
That said, tobacco companies' behavior over the years has certainly been reprehensible on many different levels. Thank You For Smoking is a nice caricature of Big Tobacco's awful behavior. But awful behavior does not tort damages merit! Tort damages are awarded following proof of wrongdoing, causation, and damages. Causation was established when the jury believed the astounding rendition by Ms. Williams. As to damages, well, punitive damages are essentially awarded in cases of intentional tort. Here, I guess, fraud is the intentional tort du jour.
Are there limits on punitives? My own writings, which David likely knows, claim that punitive damages cross the line between private ordering [tort, contract, property, self-determination among and between individuals] and public ordering [relations between Big Brother and lil' ol' citizens, criminal law and the like]. Not for nothing is the state subject to constitutional limitations when public ordering is involved.
As to the constitutional limitation of "due process", I like David think it is phoney-baloney (but he put this in a much more scholarly way -- since I am not a constitutional scholar, but just a torts guy, I will resort to plain English). I personally preferred "excessive fines", considered but (in my opinion very unwisely) rejected by the Supreme sages in Browning Ferris v Kelco some years back. I think the Supremes have been atoning for their sins ever since, trying desperately to find a constitutional measure to rein in out-of-control punitives after they had rejected the most obvious candidate. [And in a future installment I will explain why Williams was tailor-made for this.] At least Justice Stevens, dissenting, expressed regret about the rejection of the Excessive Fines theory.
So that's my initial volley. Like David, I think states have police power to regulate and do all sorts of silly things. Perhaps unlike David, I don't think those things include taking money from (out-of-state) corporations without providing constitutional protections.
But I don't think the Supremes in Williams gave any real guidelines about what is verboten and what is allowed. Much more litigation to follow, I'm afraid, with no one gaining but we lawyers. More on all this anon.
Till tomorrow, David.
Michael I. Krauss
Professor of Law
George Mason University
Browning-Ferris is a case that only recently came within my ken. One admirable aspect of it is that both the majority and the partial dissent relied on original intent, historically recovered. They reach different conclusions, of course, but no one ever said originalism always provides an easy answer: only that it provides legitimacy.
The dissent in B-F argued that "amercements" were within the range of what Magna Carta limited, and therefore also of what the English Bill of Rights and our Eighth Amendment limited, and that amercements were civil rather than criminal. This claim is worth researching further. (Beyond that, all I can say right now about B-F is that the majority scores by having Scalia on its side, but the dissent wins the Shakespeare-cite event by quoting one of my favorite characters, the Prince of Verona in Romeo and Juliet.)
All of this is a bit to one side of Philip Morris v. Williams, which bypasses the Eighth Amendment altogether and bases its holding directly on 14th Amendment Due Process. Michael and I probably agree that it would be more constitutionally legitimate (assuming the incorporation doctrine!) to curb punitive damages through the "excessive fines" clause of the Eighth Amendment than to do so through Due Process tout court.
Michael has rightly moved a key issue into center place: just what is the tort/crime boundary, and do punitive damages defy it? They are awarded in tort cases, but a common-lawyer of the time of, say, Coke could easily figure that whatever is designed to "punish" must pertain to the criminal justice system.
There is a case for deconstructing the tort-crime boundary. The modern administrative state these days often lays heavy hands on citizens through procedures that are outside the criminal justice system, and therefore, outside the constraints that the Constitution places on that system. Perhaps punitive damages are of this nature, and perhaps we should rethink the assumption that criminal-procedure restraints apply only when the government is willing to admit that a given cases is "criminal."
But, as the old Alka-Seltzer commercial said, that's a spicy meatball. The criminal justice system evolved from the early-medieval tort system for good reasons as well as bad: yes, kings wanted to be in charge of justice. But also, people wanted to be able to rely on the king's peace, not just their own ability to sue their tortfeasors. Browning-Ferris can be read as a refusal to reverse this evolution, and until the issue is thought out further, I can't quite say the majority was wrong about this.
Thanks for the thoughtful comments, David. Let me address the way I see the general boundary between private and public ordering in today's edition, then tomorrow perhaps I will indicate why the Philip Morris case was an excellent candidate to establish that boundary.
[NB These thoughts replicate to some extent a much more extensive discussion in Engage, the Federalist Society's academic journal. That article can be found here (scroll to page 118).]
Wrongful behavior without damages creates no corrective justice requirement. Driving home while drunk is negligent, and exposes others on the road to undue danger. It is good, I think, that DUI is a crime and that the state sanctions misbehavior with fines and/or imprisonment. So, if a drunk driver makes it home without hitting anyone, he has no tort liability toward anyone. Note that he may have committed a crime � but that is a matter for public ordering, with all the protections provided when the power of the state is involved (constitutional protection against self-incrimination, double jeopardy rule, strong presumption of innocence). The drunk who makes it home safe owes compensation to no one, because his conduct, though wrongful, did not harm anyone. It is the precise conjunction of wrongfulness and harm caused thereby that creates the tort obligation. Typically, that tort obligation consists of compensation, of righting the wrong and making good the loss - no more, no less. Compensation, moreover, has to be full. This is a definitional requirement of corrective justice, and a fundamental proposition of the common law of tort. Thus a man who negligently burns down a house worth $50,000 is liable in tort to pay $50,000 to make the home-owner whole. If the house and its contents were worth $1 million dollars, then he is liable in tort to pay $1 million to make the home-owner whole. This is not because tort favors the rich, but because tort equally respects poor and rich. All must be returned to their former state - that far but no further - when they are wrongfully harmed. Punitive damages do not fit the scheme of tort law because, by definition, punitive damages are overcompensatory. Nevertheless, in one superficial and one real form, punitive damages were present at the conception of tort law. Both of these forms can be usefully summarized here:
Superficial - In medieval days criminal and tort trials were held at the same time. For what we today call intentional torts, such as battery and trespass, there was at the same time a crime committed and a tort suffered, and both of these were adjudicated in the same judicial proceeding. So, a battery may have caused $10 in harm, payable to the plaintiff, but in the days before police forces and criminal tribunals the plaintiff could also pursue the equivalent of a criminal fine. He was in a sense the private attorney general, prosecuting the criminal case, and the fine went into his coffers. Today, though, we have county proscecutors, and fines are collected solely in a criminal setting. Those fines are subject to cherished American constitutional protections such as:
-Double jeopardy prohibition of more than one fine for the same offense;
-5th amendment protection against self-incrimination;
-8th amendment protection against excessive fines.
A tort trial offers none of those protections (compulsory discovery is self-incrimination, one tort committed against many people leads to many lawsuits, etc.). So in this superficial form, punitive damages are an anachronism with no place in tort today, having been replaced by public ordering via criminal law with all its apparatus.
Concrete - Punitives were granted as symbolic damages when there was deliberate wrongdoing but de minimis damages. If A slandered B, but B could not prove that she had lost any business because of the slander, A might nonetheless be condemned to pay B $1. If A deliberately and flagrantly trespassed on B�s land, but didn�t trample any of B�s crops, B could still sue A for nominal, symbolic damages. The damages in this case were symbolic � they recognized that one party was in the right, had been wronged by the other party, and won the suit. Suits like this might be filed both to vindicate one�s self and one�s rights, and because a �loser-pays rule� (in effect
outside America) means that the tortfeasor would have to pay his victim�s lawyer�s costs. It would not cost much to vindicate one�s rights in this way. Thus "punitives" classically were either disguised criminal fines (before the state criminal apparatus was organized), or small symbolic sums meant to vindicate inconsequential violations of a plaintiff�s rights. Since criminal fines require constitutional protections, all that should logically remain are the small symbolic vindication sums.
The survival of large punitive awards is a product of confusion between private and public ordering. That is why four states� supreme courts (Louisiana, Nebraska, Washington and Massachusetts) have declared that their common law of tort does not permit punitive damages today. A fifth state (New Hampshire) has abolished punitives by statute. Any state in the union could abolish punitive damages if it wished. Many states, like Virginia, allow punitive damages for intentional torts and gross negligence, but have a statutory cap on punitive damages. Other states have no limitation on punitives at all. Yet in all states punitive damages were not really a problem, in that they were mostly symbolic until the great torts explosion of the 1980s. Up to 1976, the highest punitive damages award in the entire country was $250,000, a sobering observation in light of recent billion-dollar judgments.
I've likely bored readers enough. David, perhaps in tomorrow's edition we can sketch the way the Supremes dealt with punitives from Pacific Mutual v Haslip through State Farm v Campbell. Then on Friday we can get into the nitty gritty of the Williams.
Back at GMUSL, Prof. Bill Bishop used to warn us that, despite his open-book rule, "those who attempt original research in the exam-room will be at a disadvantage." I think I'm under that disadvantage as I weigh Michael's arguments in light of both the majority and dissenting historical analyses in Browning-Ferris.
Michael and Justice O'Connor (who includes her former clerk, Peter Huber, in her cites) make persuasive points about the incomplete (to say the least) distinction between tort and crime during the Common Law's earliest formative era, i.e. from the Conquest to Magna Carta. Since we're all originalists on the day B-F was decided, the question becomes, which is the correct historical mise-en-scene for solving the question? If the equation U.S. Bill of Rights = English Bill of Rights = Magna Carta is more or less correct, at least where the "excessive fines" language is concerned, then the relevant understanding is the one that prevailed at the time of Magna Carta, and therefore Justice O'Connor and Michael are right.
But when push comes to shove it's the U.S. Constitution that we're construing, not the documents on which some its text is admittedly based, so perhaps the correct historical moment for capturing its meaning is the period in which it was drafted and ratified. And as to that, the majority has produces persuasive authority to the effect that the the fines/damages distinction had solidly taken hold well before 1791, and that the word "damage" was available to the drafters if they had wanted to include it alongside "fines" in the Eighth Amendment.
It always risky to predict the counter-arguments of people smarter than oneself, but I'll take that risk and imagine Michael replying something like this: look again at the historical development of punitive damages as described in the previous post, and now imagine that we could assemble every drafter and ratifier of the Eighth Amendment today and show them the meshugass that's going on today in the name of punitive damages, they would say "Well OF COURSE that's part of what we meant by 'excessive fines'!" This argument is strengthened by the fact that (as Michael points out) this is very RECENT meshugass, and therefore scores lower (because less rooted in tradition) on the standard Scalian scale (see Michael H. v Gerald D).
But for text-based originalists, it's always a stretch to base a decision on what the Framers "surely would have" said, instead of what they actually said. (Cf. Justice Thomas's concurrence in U.S. v. Lopez, rejecting the argument that the Framers surely would have blessed the "substantial effects" test for Congress's interstate commerce power, since the clause they actually wrote can be shown from originalist evidence not to have had any such broad range.) That's the ground of my caution on the "excessive fines" clause as a limitation on punies. Yet I could be persuaded that the dissent was right on the "excessive fines" issue in B-F; as to the Due Process holding in Philip Morris, not so much.
As to Haslip -- I'll probably have more to say about it later, but short take: it's regrettable that the challenge there sounded only in Due Process, rather than attempting to revive the Eighth Amendment/excessive fines argument. The late-19th century railroad lawyers were not so timid: they kept nudging the Court toward substantive due process until they got it. Advocates of "excessive fines" limitations on punitive damages should be no less persistent, the more so since their argument is better than mere substantive due process. I note with pleasure the state legislative developments that Michael cites: we originalists nearly always prefer state legislation to federal litigation!
Since Browning-Ferris had not made a timely Fourteenth Amendment claim (who knew that was the hook the Supremes would hang their hat on?), the Supreme Court expressly reserved ruling on the due process argument. In fact, Justices Brennan and Marshall hinted strongly that they thought this kind of punitive award did violate due process. But these Justices would soon leave the court.
Subsequent to the Browning Ferris decision, several states modified their statutes to provide that a certain percentage of punitive damages (up to 60% in some instances, notably in Oregon, home of Philip Morris v Williams, according to a recent Washington Post report) must henceforth be payable to the state government, not to the plaintiffs. Gee, sort of undercuts the majority's view in Browning Ferris that punitives cannot be paid to the state, so cannot be fines, doesn't it? This makes the state an explicit accomplice in the increasing acceleration of punitive awards, and puts the lie to the claim that punitives are not fines.
This set the stage for act 2 of the Supremes' Punitives Saga: Pacific Mutual Life Ins. Co. v. Haslip.
Lemmie Ruffin (I am not making that name up) was an insurance agent. He worked for a lot of insurance companies, including Pacific Mutual Life. As a Pacific Mutual agent, Lemmie sold �major medical� health insurance policies to a group of female civic employees in Alabama. They paid monthly premiums to Lemmie, and he was to forward these premiums to the company. The employees thought they had health insurance. In reality, Lemmie stopped sending money to Pacific Mutual Life, and kept the money for himself. So the insurance company gave Lemmie warning letters to give to the women (to pay their overdue premiums or have their policies cancelled) � of course Lemmie never transmitted those letters, he just kept deceiving the insurance company and the employees. Finally the women�s policies lapsed, and when one got very sick, she found she was not covered anymore. Needless to say, she sued Pacific Mutual Insurance for its �bad faith.� An Alabama jury found bad faith and inadequate supervision of Lemmie by the (out-of-state�) insurance company. The jury held that Pacific Mutual Life had to pay Ms. Haslip $230,000 to cover her hospital bills. But Ms. Haslip was not yet done with Pacific Mutual � she asked for punitive damages. Alabama�s punitive damages scheme gave a jury virtually complete discretion: it merely required a jury to make two distinct decisions: (1) whether or not to impose punitive damages against the defendant, and (2) if so, in what amount. It provided no standard for decision (1), and no method of calculation for decision (2). On the threshold question of whether to impose punitive damages, the trial court instructed the jury as follows: �Imposition of punitive damages is entirely discretionary with the jury, that means you don�t have to award it unless this jury feels that you should do so.� There was, in my opinion, absolutely no law here. Can there be "due process of law" when there is NO law? Do you agree on this theoretical point, David?
The jury condemned Pacific Mutual to $1 million in punitives. The company appealed all the way to the US Supreme Court, on the grounds that it was deprived of due process by the standardless discretion invested in the hometown jury, and by the huge amount of punitives when clearly the company had had no malice whatsoever � it was just as tricked by Lemmie Ruffin as the plaintiff had been. Pacific Mutual lost its appeal, 7-1. Again only Justice O�Connor dissented. The due process claim that everyone had thought so promising after the Browning Ferris case flubbed, as the two Justices who had espoused it had left the court. The Alabama jury instruction was deemed precise enough (!) that the jury would have legal guidance about what to do. The punitive award of 4 times compensatory damages was not so exorbitant as to violate due process standards, said the majority. They did say it was �close to the line,� however. This is utterly unprincipled, sez me -- rejecting the sound "no law" argument while intimating that higher damages might somehow violate Due Process. After the rejection of the Excessive Fines rationale in Browning Ferris, Haslip represents a further slide into unintelligibilty as regards punitives.
But the darkest hour had not yet been reached. It would come, in 1993. That is act 3, TXO Production Corp. v. Alliance Resources Corp.
TXO and Alliance were engaged in a complex series of negotiations so that TXO could get oil and gas rights to land owned by Alliance. They were bickering back and forth over what royalty rate would be paid to Alliance. During these negotiations, a third party claimed that it owned the rights to Alliance�s land by virtue of an obscure deed. TXO expressed concern that any title it might get to the oil and gas rights was vulnerable; because of this it asked for a reduction in its royalty rate to cover itself from possible claims by this third party. After more complex and ambiguous declarations on both sides, TXO claimed that a deal had been reached, but Alliance denied it. TXO sought a declaratory judgment from the West Virginia Circuit Court that, through all these negotiations, it had finally acquired resource rights over the land.
Alliance defended against this claim, and countersued for what Alliance called �slander of title,� (an old English tort that had never once been recognized in West Virginia�s entire history), asserting that TXO was falsely diminishing public belief that Alliance had full property rights. At bottom, this suit was little more than an episode in rather hardball contractual dispute about royalty rates. That is, until the West Virginia courts got through with it. The trial judge rejected TXO�s claim that a deal had been reached. The judge let a jury decide whether Alliance�s title had been slandered. The jury accepted Alliance�s slander of title suit, and condemned TXO to pay $19,000 to Alliance for damages, which represented its lawyer�s costs in defending against the declaratory suit by TXO. Alliance had no other losses.
So far, so good, I guess � the case was a close call in a hardball contracts dispute. I have not mentioned that Alliance was a local West Virginia company, while TXO was a fully-owned subsidiary of U.S. Steel. That explains, perhaps, why the jury also condemned TXO to ten million dollars in punitive damages, or 526 times the compensatory award. TXO appealed, and had great confidence in the appeal. Recall that in Haslip punitives were �only� 4 times compensatories and the court said that was �close to the line.� Moreover, West Virginia�s instructions to the jury on punitives were so totally devoid of standards as to make a mockery of the Supreme Court�s pious command to the states in Haslip to henceforth guide the jury with some precision. Here was the standard as stated by the West Virginia Supreme Court, when it heard the TXO appeal: we know we are now compelled by the United States Supreme Court to set punitive damages standards if our decision is to pass constitutional scrutiny, so we hereby distinguish between the �really mean� defendant and the �really stupid� defendant. For the really stupid defendant, punitives can be 10 times compensatories. For the really mean defendant, punitives can be 500 times compensatories. Since this defendant �failed to conduct [itself] as a gentleman�, the �really mean� standard applies, and 526 times punitives is close enough to 500, so we uphold the award.
[pause to allow readers to gasp]
The Supreme Court affirmed the West Virginia Supreme Court, 6-3, saying that its standard passed constitutional scrutiny. Justices White and Souter joined Justice O�Connor in dissent this time. On the one hand, O�Connor was no longer alone in thinking that there were some punitive damage awards that could not pass constitutional muster. On the other hand, this case looked like MOPA (the mother of all punitive awards), and if six Justices found it constitutional, one wondered what could possibly fail to pass muster. Again, in my opinion, the WV court called the Supremes on their incoherent Haslip jurisprudence.
Tomorrow I will deal with Gore and Campbell, wherein the Supremes seemed to decide to rescue tort law from the abyss perhaps approached through its poor Browning Ferris and Haslip jurisprudence.
Where has this left us? Are there any disagreements between David and me? Perhaps we disagree about whether "condemn the defendant to any amount you please" satisfies Due Process of Law requirements? And as David suggested, we may disagree (though David's jury seems still out on this onw) about the Excessive fines issue. But we surely agree that by TXO the Supremes were in it up to here...
Haslip: Lemmie Ruffin. The excessive fines issue: Lemmie See. The Due Process analysis by the majority in Haslip: Lemme Attem! But first, let me clarify a side-issue that keeps coming up: the out-of-state impact of punitive damages. I and all MI fans, I'm sure, are convinced by Walter Olson's argument that the interstate impact of punitive damages creates an interstate commerce issue without coming anywhere close to the Wickard frontier, and therefore, Congress can enact tort reform under the Intersate Commerce Clause.
Whether out-of-state impact is relevant to a Due Process analysis of punitive damags, I'm not so sure. The constitutional remedy that tort reformers need may better be found in the "negative commerce power" doctrine, or for those who share Scalia's scepticism about the negative commerce doctrine, then perhaps in Article IV privileges and immunities. Michael's frequent references to out-of-state defendants being turned over and shaken for loose change by state courts suggest that those courts are engaging in a sort of protectionism that would be clearly unconstitutional if done by a state legislature. This should be further explored. (Btw, what prevents defendants in such cases from removing to federal court on diversity grounds? Perhaps because of Erie the advantage of doing so is limited, but at least they might get less biased jury instructions.)
OK now, about the Haslip instruction and verdict. Michael says: "There was, in my opinion, absolutely no law here. Can there be "due process of law" when there is NO law? Do you agree on this theoretical point, David?" I want to, but: the presence of discretion, w/o more, is not lawlessness. Prosecutors have discretion in bringing cases; federal administrative agencies (sometimes) get Chevron deference; the Supreme Court insists (perhaps wrongly) that no unconstutional delegation of lawmaking power has occurred when Congress gives agencies no guidance more specific than "fairness," or when it tells EPA to give us clean air but allows that to mean (re particulate matter) "anything from zero to the London Killer Fog," as Doug Ginsburg memorably put it.
How this applies to punitive damages, and to instructions about them, depends on the state of the law in 1868. Scalia, in his Haslip concurrence (which rejects the majority's reasoning as solidly as Michael does), concedes that punitive damages had their vigorous critics. One notices, moreover, that many of the criticisms Scalia cites are similar to the one Michael makes: that punitive damages belong in the criminal justice system (public ordering) and not in the tort system (private ordering). But he also concludes (and I know nothing to the contrary -- perhaps Michael does) that these critics lost: they were in the minority. "In 1868, therefore, when the Fourteenth Amendment was adopted, punitive damages were undoubtedly an established part of the American common law of torts. It is just as clear that no particular procedures were deemed necessary to circumscribe a jury's discretion regarding the award of such damages, or their amount."
So, back to the question: can there be "due process of law" when there is NO law?" But there was a trial, a judge, a jury, and an appeals process. So I can't agree that there was NO law (as distinct from BAD law, which there assuredly was). Due process of law entitles defendants to those PROCEDURES that are part of the law of the land, and Pacific Mutual got those.
Scalia's critique of the majority opinion in Haslip parallels Michaels: the Court decides only "that Alabama's particular procedures (at least as applied here) are not so 'unreasonable' as to 'cross the line into the area of constitutional impropriety[.]' This jury-like verdict provides no guidance as to whether any other procedures are sufficiently 'reasonable,' and thus perpetuates the uncertainty that our grant of certiorari in this case was intended to resolve." The Court is being coy with millions of dollars and incalculable downstream economic effects at stake. It flutters its eyelids in Haslip over SOME punitive damages being perhaps too much for Due Process. But then the TXO decision comes along and says, nope, 526 x compenatories still doesn't get you to the limit.
It's like the pre-Smith Free Exercise regime: your religiously motivated conduct is protected by the compelling state interest test -- and when we find a state interest that isn't compelling, we'll let you know. Same here with punitive damages: supposedly there's a Due Process limit; somewhere over the rainbow....
I'd say these cases ask the wrong question: How much is too much? To an opponent of substantive due process, the only question is: What part of no don't you understand?
Let me suggest some ways to break the impasse. As Michael has noticed, I for one may be willing to buy the doctrine of the Browning-Ferris dissent. As a medievalist (which I was before I took up law), the appeal of a Magna-Carta-based opinion is undeniable; and when you have a clause (excessive fines) that can be dated back earlier than the tort-crime division, simply announcing the tort-crime division may not be an adequate answer.
But I have another suggestion to make: the Scalia view in Haslip and TXO is heavily grounded in history: "text and tradition." But earlier in this thread, Michael pointed to the historically anomalous nature of modern punitive awards. Could a case be made that there is a principled distinction, and not just a distinction of degree, between the punitive damages that were part of American tort law in 1868, and the kind that debuted only in the 1980s? If it's only a distinction of degree, Scalia won't buy, as his Haslip concurrence shows. But perhaps it's a distinction of kind...? Of course, whether Scalia buys may be irrelevant if a solid majority of the Court now believes there are Due Process limits (w/o regard to the Eighth Amendment) on punitive damages. But a principled answer to "how much is too much" would be desirable for its own sake, and for predictability in tort law.
In this, my closing comment, I first pay tribute to David. I think he HAS identified a Due Process claim on originalist grounds (since, as he almost concedes, modern punitives are qualitatively different from the symbolic damages of yore; and "bet the company" damages based on jury whim is standardless and lawless). Diversity jurisdiction is easy to defeat (just sue the local retailer), so that out doesn't exist. So Due Process is available, though not for the reasons given in the cases dealt with in my last comment.
Let's see if the Court did any better Post-TXO. That case was perhaps the Supremes' darkest hour concerning punitives. The dam broke in Gore. But did it break in a good way?
BMW of North America, Inc. v. Gore
Mr. Gore purchased a new BMW from an authorized Alabama dealer. He loved his car. But when he took it in for service, he was informed by one of the mechanics that a panel of the car had been repainted. It turned out the car had been scratched during boat transport from Germany. BMW had followed a nationwide policy of repairing predelivery paint chips and scratches to new cars, so long as the cost of repair did not exceed 3% of the car�s suggested retail price. [If repairs cost over 3% of the value of the car, it was removed from new vehicle inventory and given to the sales team to use as a demonstrator, then sold at auction.] This particular paint job cost way under the 3% limit, and it was also under the Alabama consumer protection limit, as that law had always been understood. So BMW shipped the car to its Alabama dealer, who sold it new.
Gore brought this suit for compensatory and punitive damages against BMW, alleging, inter alia, that his car had a lower resale value because of the repainted part; he considered himself a victim of the tort of fraud. Again, local plaintiff, out-of-state defendant. The jury returned a verdict finding BMW liable for compensatory damages of $4,000, the alleged difference in resale value between a �concourse� car and one that had a repainted panel [But wait -- did BMW sell the car for "concourse" purposes? Sigh...] . The jury also assessed $4 million in punitive damages, on the grounds that BMW had likely repainted 1000 cars over the years and should pay $4K for each. Alabama appellate courts reduced the punitive award to $2 million, which they decided was not �grossly excessive� under TXO, because that amount constituted a mere 500 times compensatories (less than the 526 multiple that passed muster in TXO).
A bare majority of the court had had enough. By a 5-4 margin (Stevens, O�Connor, Souter, Breyer, and Kennedy) the court held that a combination of the lack of real wrongdoing by BMW, the lack of notice that any punitive award was possible or even that BMW's practice was illegal in Alabama, the jury's consideration of non-Alabama touch-ups which were surely not violations of Alabama law, and the huge discrepancy between compensatories and punitives all combined to make this award unconstitutional. The court didn�t give any boundaries as to what would be a maximum limit, but said this case was beyond that limit. Three dissenters, Chief Justice Rehnquist, Justices Thomas and Ginsburg, essentially held that the federal constitution did not place any limits on states in determining punitives. Justice Scalia denied that due process could ever affect damages, in federal or state court. Hmmm... it's unconstitutional, we don't know exactly why, it's a "multi-factor test", but this one is beyond the pale. Unless punitives are like obscenity (as opposed to saying "unless punitives are obscene), this decision appears rather lawless.
State Farm Insurance v. Campbell (Utah 2003)
In 1981, Curtis Campbell was driving with his wife in Cache County, Utah. He decided to pass, all at once, six vans traveling ahead of him on a two-lane highway. Todd Ospital was driving a small car approaching from the opposite direction, at a speed in excess of the speed limit. Campbell did not have enough space to pass all six vans. He was headed right toward Ospital. To avoid a head-on collision with Campbell, Ospital swerved onto the shoulder, lost control of his automobile which came back onto the road, and collided with a vehicle driven by Robert G. Slusher. Ospital was killed, and Slusher was rendered permanently disabled. The Campbells escaped unscathed; in fact, they never even collided with anyone � they got back in their lane safe and sound just in the nick of time thanks to Ospital�s sacrificial decision to leave the road.
In the ensuing tort suits against Campbell by Ospital�s estate and by Slusher, Campbell insisted he was not at fault since he never collided with anyone (!) and since Ospital was speeding. Campbell�s insurance company, State Farm Mutual Automobile Insurance Company (State Farm), decided to contest liability and declined offers by Slusher and Ospital to settle their suits for the measley policy coverage limit of $50,000 (i.e., $25,000 per plaintiff). State Farm also ignored the advice of one of its own investigators and took the case to trial, assuring the Campbells that �their assets were safe, that they had no liability for the accident, that [State Farm] would represent their interests.� To the contrary, a jury determined that Campbell was 100 percent at fault, and a judgment was returned for $185,849, way more than the amount of Campbell�s coverage. At first State Farm refused to cover the $135,849 in excess liability (recall that Campbell had purchased only $50,000 of coverage). State Farm�s lawyer told the Campbells, �You may want to put for sale signs on your property to get things moving.� Nor was State Farm willing to post the required bond to allow Campbell to appeal. Campbell thus hired his own lawyer to appeal the verdict. While this appeal was pending, in late 1984, Slusher and Ospital's estate contacted Campbell. The three reached an agreementwhereby Slusher and the estate agreed not to execute their judgment against the Campbells� property. In exchange the Campbells agreed to pursue a bad faith tort suit against State Farm and to be represented by Slusher�s and Ospital�s attorneys. The Campbells also agreed that Slusher and Ospital would have a right to play a part in all major decisions concerning the bad faith suit. No settlement between Campbell and State Farm could be concluded without Slusher�s and Ospital�s approval, and Slusher and Ospital would receive 90 percent of any verdict Campbell obtained against State Farm. In some jurisdictions this might be seen as a fraud on the court.
In 1989, the Utah Supreme Court denied Campbell�s appeal. State Farm then decided to pay the entire $185 thousand. There were now NO pecuniary damages suffered by the Campbells.
The Campbells nonetheless filed (as they had promised the Slushers and the Ospital estate they would) a complaint against State Farm alleging the torts of fraud and intentional infliction of emotional distress. The trial court initially granted State Farm�s motion to dismiss that suit because State Farm for lack of damages, but that ruling was reversed on appeal. Now State Farm had to defend itself. In the first phase the jury determined that State Farm�s decision not to settle for $50,000 was unreasonable. The second phase of the trial would determine damages. Remember that there were NO pecuniary damages (because State Farm had paid all the excess award). There was arguably emotional distress during the short period when the Campbells thought they were going to lose their home. Emotional distress, however, is not usually recoverable unless it was intentionally inflicted, and no one can seriously claim that State Farm is a sadistic company bent on inflicting emotional distress on its clientele. State Farm argued during phase II of the trial that its decision to take the case to trial was, in retrospect, an �honest mistake,� and that it certainly did not warrant punitive damages. The Campbells introduced evidence that State Farm�s decision to take the case to trial was a result of a national scheme to meet corporate fiscal goals (read, O HORROR, TO MAXIMIZE PROFITS) by capping payouts on claims.
Just before the second phase of the trial the Supreme Court decided Gore. Based on that decision, State Farm moved for the exclusion of evidence of all out-of-state conduct. The trial court denied State Farm�s motion. The jury then, amazingly, found $2.6 million dollars in emotional distress for the Campbells, who (to repeat) had not lost one cent. Likely the jury knew that 90% ($2,340,000) of this amount was going to the Slusher and Ospital families, and it wanted to give $260,000 to the Campbells � but this would be totally illegal if done explicitly, because the other two families had settled their suit and had no cause of action against State Farm. In addition the jury awarded $145 million in punitives, to punish State Farm for its aggressive practices throughout the country. The trial court reduced the compensatories to $1 million and the punitives to �only� $25 million, under the
TXO �really mean� standard. The Utah Supreme Court then reinstated the original $145 million punitives award. State Farm appealed to the Supreme Court.
This time the decision was 6-3. Chief Justice Rehnquist abandoned his previous position and joined the majority, leaving Justices Scalia, Thomas, and Ginsburg alone in dissent. The majority this time tried to provide an indication that certain trial court activity would no longer be tolerated:
-Don�t ever again use legal out-of-state behavior to calculate punitive damages. Out-of-state behavior can be invoked to establish a pattern of bad faith or maliciousness, but in that case it has to be the same behavior as the behavior being impugned;
-Don�t ever give more than nine times compensatories as punitive damages, the court said, unless there is a �particularly egregious act that has resulted in only a small amount of economic damages.�
-Moreover, in cases like this one, where the compensatory damages adjudged by the jury are extremely generous, do not let punitives exceed compensatories.
Philip Morris v Williams [Oregon 2007]
As is now well known, Justice Breyer (writing for four others) held that the Due Process Clause does not permit a jury to award punitive damages for harm caused to individuals other than the plaintiff, even in a case of egregious conduct (fraud -- yet see my very first comment in this series -- if you believe there was fraud I have that bridge for sale...). Yet in Gore the Supremes had apparently allowed a jury to award punitive damages for harm caused to individuals other than the plaintiff (so long as the other individuals were in-state). Without this rule, the Court held, defendants would be subjected to a �standardless� damages determination, without fair notice of the punishment to be imposed, and without the opportunity to fully refute the alleged harm to nonparties. But why were the Supremes suddenly concerned about "standardless" interpretation -- this issue had not troubled them in Haslip, TXO and maybe even Gore. Harm to others would be allowed in evidence to ALLOW FOR punitives, but not to CALCULATE punitives. How would the court know that the jury had danced this delicate dance correctly? We just don't know, the Supremes never tell us. Coyly Justice Breyer at one point lets slip that if the punitives were LOWER, we might know that juries were correctly instructed and followed their instructions. But clearly there was no majority to cap punitives once and for all --
Courts will now have to craft jury instructions on this issue. We can look forward to years of litigation and circuit splits trying to sort out what the Court hath wrought.
And so we come to the end of a very rocky and unsettled road. The Supremes have no coherent view of punitive damages. Justice Stevens seemed to admit as much when he harkened for the good ol' days of Excessive Fines (recall that Oregon takes 60% of Williams' booty). This is a mess, a royal mess, and we're in for much more to come. Stay tuned folks, and thanks for reading this far.
James R. Copland
Anyone who's been following the news cycle even casually has heard about Harvard Law professor and U.S. Senate candidate Elizabeth Warren's ill-documented claims of (trace) Native American ancestry. Harvard faculty, including Reagan solicitor general Charles Fried, have been quick to claim that Warren's appointment was based on her academic and teaching credentials, rather than to further faculty "diversity"--a claim that at least on the surface seems to undercut the legitimacy of diversity hirings in the first instance.
As someone who was a student and active campus participant at elite academic institutions in the 1990s, I saw first-hand the significant pressure placed on administrators by students eager to diversify faculties that were overwhelmingly white and male (a composition one would expect in that era for bodies of lifetime-appointed professors). At the University of North Carolina, a key rallying cry for campus activists in the early 90s--and a regular agenda item on the student advisory committee to the Dean of the College of Arts and Sciences, on which I served--was the call for a "Native American faculty member." Any member, in any discipline, with essentially any record. At Yale Law School, which sponsored a free-speech wall in which students could voice their signed opinions in the days before blogs, Internet message boards, and social media, certain students grabbed a significant portion of the available space by blowing up the profile pictures of the entire faculty to emphasize its whiteness and maleness. (My bold red counter-poster, "diversity is more than skin deep," asked how many of the faculty were registered Republicans, Evangelical Christians or Latin-Mass Catholics, or the like? It proved provocative, though it did highlight the "dirty little secret" of the true agenda of those calling for diversity.) As vigorous as the student protesters were at my own alma maters, they had nothing on the student protesters at Harvard Law School around the time Elizabeth Warren was offered tenure, who stormed the dean's office and won a seat at the table with the faculty appointments committee.
To discuss the issue of faculty diversity, particularly as it relates to law schools, we're thrilled to welcome back our founding editor, my friend and former colleague Walter K. Olson. Since leaving MI for the Cato Institute in 2010, Walter has released his fourth book, Schools for Misrule: Legal Academia and an Overlawyered America, which as its title suggests makes him eminently qualified to opine on this subject.
In addition to Olson, we are excited to welcome the Competitive Enterprise Institute's Hans Bader, where he serves as senior attorney and counsel for special projects. Hans was formerly a senior counsel with the Center for Individual Rights, which has led many of the legal challenges to government affirmative-action programs.
Opposite Olson and Bader, we are happy to welcome Texas Law professor Gerald Torres, a former president of the Association of American Law Schools and a leading proponent of Critical Race Theory. Among Professor Torres's many writings about race and diversity is his 2002 book, co-authored with Lani Guinier, The Miner's Canary: Enlisting Race, Resisting Power, Transforming Democracy.
We hope you will visit back over the ensuing days to see what our distinguished participants have to say, in what promises to be a fascinating discussion.
Walter K. Olson
Little-known fact: Harvard lawprof Elizabeth Warren once gave a speech to a Manhattan Institute luncheon crowd on the topic of asbestos bankruptcy trusts. As I recall, she gave a deft account of this abstruse but important subject, and I much doubt it would have improved anything had the Institute asked her to address the topic from the special vantage point of a female scholar. Much less did anyone imagine that Warren might bring some special insight to bear from her family tradition of remote Cherokee lineage, which has lately furnished so much grist for critics.
For many readers, the Warren-as-Cherokee brouhaha has been their first close look at the matrix of identity politics in which law schools operate. When HLS administrators began to claim Warren as a minority hire, they were under intense pressure for not having any female minority professors. These days, the relevant pressure is likely to take the form not so much of student occupiers but of relentlessly screw-turning accreditation agencies, a process well described by Gail Heriot.
Is this a mere identity spoils system, or does it amount to something nobler and more high-minded? The strong claim I want to focus on here is that diversity hiring improves the quality of scholarship in the traditional law curriculum by bringing distinctive minority insights that straight white Anglo abled males would not or could not have contributed. (I will leave for another post the question of how it might influence scholarly development on topics that do relate to identity, such as discrimination law.)
There's no definitive way to resolve this claim, I suppose, without agreeing on how to evaluate the now-vast literature advancing (e.g.) feminist approaches to torts, the "queering" of intellectual property law, and so on. I can only say that I must not be reading the right papers in this genre, because the papers I've read haven't impressed me. Given that criticizing identity-studies literature seems to be a good way to get fired from one's writing gig, I'd better stop there.
To me, time has vindicated the basic position staked out by Stephen Carter of Yale in his Reflections of an Affirmative Action Baby. Carter writes of the "Dear Minority Colleague" letters presuming he holds correct views on various topics, and the resentment aimed at minority faculty like himself who choose to specialize in scholarly topics having little or nothing to do with identity. Twenty years later it remains true that many of the minority lawprofs to have made the biggest impact on the outside world have been those who've largely avoided identity themes in their intellectual work, such as Carter himself and Stanford's William Gould, to whose number might be added Elizabeth Warren (to the extent she counts as minority) and Chicago's Barack Obama.
As I put it in reviewing Carter's book: "It doesn't take a white or a black mind to explode a fallacy: it takes a mind."
Professor Gerald Torres
There are many claims in Walter Olson's brief post, some empirical, some not, most simply unexceptional. Let's agree that the dust up around Professor Warren has to be understood in the context of a partisan political contest for the US Senate and a bureaucratic choice by one law school or another. So, for purposes of the discussion about diversity in the workplace it is a non-issue.
Let's also agree that the faculty members of color in American law schools are scarcely of one mind on any subject except perhaps the idea that having a more diverse academy is good for the academy and the profession. Even on this one there is probably little agreement about what the exact contours of diversity entail. Nonetheless, the question of whether having a diverse faculty and a diverse student body is a net good might revolve around any number of poles really, but certainly at least two. Those two poles are central to the mission of law schools and they are whether such diversity is better for training lawyers and whether it improves the quality of legal scholarship. Again, the answers to these questions are empirical and I think it is clear that where the empirical investigation is undertaken (and unfortunately here the bulk of the evidence comes from the business school and business literature), it tends to point in the direction of supporting diverse learning environments. Why would this be true?
Scott E. Page, a professor of complex systems at the University of Michigan, suggests a number of compelling reasons for maintaining a diverse learning environment. When looking at the ways groups solve problems Professor Page noticed something we all intuitively understand: if you approach a problem with a wide variety of tools the chances of achieving an optimal solution are increased. When people with diverse perspectives work together and capitalize on their individual expertise, they are more likely to produce innovative solutions to complex problem than do lone thinkers.
The key to Professor Page's analysis is what he calls toolbox diversity. Without suggesting that race or ethnicity is a way to predict in advance how any particular person might think, it is not a stretch at all to think that how someone grows up might affect how he or she approaches problems. Thus taking those facts into account as you construct a group will help produce a richer problem solving, learning and teaching environment. For example, growing up Indian on a reservation might give you a different perspective on the meaning of sovereignty than growing up in Washington, D.C. or growing up in one of the fifty states or Puerto Rico.
Consider another example paraphrased from Scott Page: if you can only hire two people and three people apply and you give them all a test in which John gets seven of ten questions right, and Ryan gets six of the ten questions right and Jamal gets five of the ten questions right, you might not want merely to rely on the number of questions the applicants got right. If, for example, Jamal got the three questions right that John got wrong, it might make more sense to hire John and Jamal, even though Jamal got the fewest answers correct than it would be to hire John and Ryan if those two missed the same questions. By hiring John and Jamal you have increased the tool box diversity of your group. This improves the likelihood that your group will be able to solve the problem confronting them as well as to solve a greater range of problems.
Elizabeth Warren's campaign claimed she was 1/32 Cherokee, although the documentary evidence cited for this claim turned out to be non-existent. Ironically, Warren is descended from a militiaman who helped round up the Cherokee in the notorious trail of tears, in which perhaps 1/3 of the Cherokee died in one of the most infamous episodes of ethnic cleansing in American history. People on the law-school hiring committees that selected Warren unsurprisingly claim they didn't take her race into account, only her qualifications. But they would say that even if it weren't true.
Like the character in Casablanca who claimed to be shocked to find gambling in a casino, race-conscious hiring officials invariably claim they didn't consider race when they hired a particular colleague. It's legally risky to admit discriminating. It also devalues the credentials of the beneficiary of the discrimination. Admitting you hired a colleague based on her race would be viewed as rude, insulting, and stigmatizing. But for some reason, many journalists and bloggers are taking at face value claims by a couple members of law school hiring committees that law professor Elizabeth Warren's purported Native American ancestry played no role in their decision to hire her.
After earlier denying that she ever claimed to be Native American in professional circles, Warren has now admitted doing so, supposedly just to "make friends," a claim that a law professor at Cornell says doesn't "add up." Warren's only basis for claiming to be Native American was a great-great-great grandmother, which would have made her at most 1/32 Native American (assuming that ancestor had been a full-blooded Indian). Claiming Native American ancestry based on such a thin reed is absurd. I have reviewed thousands of college applications and admissions decisions, and never saw a candidate get a plus in admissions based on so little Native American ancestry, especially one with Warren's lack of cultural ties to any tribe (unless you count her bogus "Native-American" crab recipes that were apparently plagiarized from a French restaurant in Manhattan). Moreover, the press routinely characterizes people with far more non-white ancestry than Warren as white.
Warren did not "tell the truth," says the University of Virginia political analyst Larry Sabato "It's pretty obvious she was using (the minority listing) for career advancement." Paul Bedard of the Washington Examiner has argued that Warren's race was likely a factor in her hiring at Harvard, since no one with her non-prestigious alma mater in fact ended up at a place like Harvard. Harvard Law School was under heavy pressure to hire women and minorities at the time that Warren was hired, as I described earlier. As law professor Ann Althouse observes, "Harvard was under a lot of pressure at that time to do something about the lack of racial diversity on the faculty, and I'm skeptical of the claim that Warren's minority status never came up during the hiring process."
While a few members of these hiring committees may not have taken her purported race into account, most probably did, given the pervasive presence of affirmative action in law school hiring (as I noted earlier, one law school had large preferences for Native American applicants), and the demand by law school accreditors that law schools engage in affirmative action. But if they are smart, hiring committee members won't publicly admit it, because of the legally unsettled nature of how much you can use race in hiring to promote "diversity." Unlike using race in admissions (which the Supreme Court has blessed, to a certain extent, in its University of Michigan decisions, which upheld a law school's affirmative action policy, but struck down the undergraduate affirmative action policy at the very same university for using race too heavily), using race in hiring to promote diversity is still a legal gray area. Civil-rights agencies favor using race, and the American Bar Association pressures schools to use race, but two federal appeals courts have rejected it.
At the same time, however, if school officials publicly admit they used race in hiring, that could trigger a reverse discrimination lawsuit by whites. A school board that used race as a tie-breaker in layoffs, resulting in the layoff of a white teacher,was found guilty of racial discrimination in Taxman v. Board of Education of Piscataway Township, 91 F.3d 1547 (3d Cir. 1996). For people involved in law school hiring to admit Elizabeth Warren's race was a factor in her hiring could expose them to liability for reverse discrimination (including personal liability, under 42 U.S.C. 1981, which allows not just institutions, but individual college decision makers to be held liable for damages, and which my former employer, the Center for Individual Rights, once used to sue individual school officials for reverse discrimination.
Sad to say, the safest path for some college hiring committee members in liberal areas of the country is to consider race in hiring, but lie about it. Using race appeases liberal civil-rights bureaucrats and law-school accreditors, but not admitting it effectively prevents lawsuits by critics of affirmative action like the Center for Individual Rights (CIR), which lack the resources to sue over anything but the most blatant and obvious forms of reverse discrimination. Although there are many civil-rights agencies and liberal interest groups that favor affirmative action, there are only a small number of entities like CIR that sue over affirmative action
In our different ways, Prof. Torres and I both aim to advance diversity -- in my case, diversity between institutions. If universities were made genuinely autonomous tomorrow, I expect some would extend systematic preferences to minorities, others none at all. Some (as with Hastings in the old days) would develop a specialty in older faculty hires, others the young and inexpensive, and so forth. The resulting competitive institutional ecology might help test some of the business-school and HR theories about whether a specific kind of demographic diversity is uniquely suited to collegial achievement in scholarship (I suspect it isn't, since some great intellectual institutions over the centuries have been hyper-diverse, others hyper-un-diverse, and many in between.) At the same time, were competing approaches to diversity permitted, newcomers would be more likely to find an institution that suits their own desired experience: some would seek a pledge that advancement would be race- and sex-blind, others an assurance of encountering colleagues from backgrounds very different from their own.
Of course that's not the world we live in. In our actual world, all law schools must conform to a prescribed format. Accreditation officials will haul up any institution that tries to be race-blind, and HLS will scramble to claim hiring credit for Prof. Warren's vague family lore of Cherokee ancestry.
Should outsiders care? One reason to care might be if the prevalence of identity politics tends to reinforce the problem (assuming it is a problem) of ideological imbalance in the legal academy. In Schools for Misrule I conclude that it does, though only as one of many contributing factors.
One clue is that the ideological tilt varies so much from field to field. As Prof. Leiter's citation rankings confirm, there is much closer to a left-right balance (or, alternatively, a lack of strong political identification) in such fields as tax, business law, inheritance, and intellectual property. The closer one approaches to the identity-politics minefields, the stronger the liberal-to-Left dominance: in a field like employment discrimination law, setting aside one book by Richard Epstein, there is far less visible a bench of "defense-oriented" writers than there is in torts or antitrust. Are any rising academics doing work on disabled rights or Indian law that's systematically skeptical of expansive ADA interpretations or tribal powers? I hope Prof. Torres can name them, because I can't.
To be sure, a fair number of legal academics do write in opposition to the claims of feminism and gay rights. But since most of them are clustered at institutions like Brigham Young, Notre Dame, and Regent, I'd call that an exception that tends to confirm the pattern: religion has successfully managed to stake out its own identity-politics turf.
I'm not one to join the doomsayers. My book argues that identity politics in the law schools has tended to loosen its grip over the past decade or two, and that over the same period schools have opened themselves to more diversity of viewpoint. I hope that trend continues.
First, I would like to thank Mr. Olson for making my point. Without his response I would not have seen how he fundamentally misunderstood the point I was making. This is evident in his second paragraph where he responds to an argument I didn't make or assumes that I share views in common with people with whom he has disagreed in the past. Without this diversity of viewpoints I would not have understood this. Moreover, it suggests a line of conversation that might enlighten us both. Here I am imagining a discussion informed by the work of Professor Banaji on implicit bias, for example.
Second, as to the claims Mr. Olson makes in his first paragraph I can only conclude that he is unfamiliar with the experimental and cognitive psychology studies that would provide the data he is seeking. He needs but to look. I would recommend the work of Professor Sommers on juries, Professor Loyd and Phillips on the impacts of diversity on group process and information sharing, or the work of Professor Claude Steele as well as the previously referenced work by Professor Page. There is a great deal of research being done right now. It is useful and instructive even if not completely dispositive.
FEATURED DISCUSSION ARCHIVE:
Obamacare Decision: Reactions, July 2012
Law School Faculty Diversity, May-June 2012
Class Actions, May 2012
Constitutionality of Individual Mandate, March 2012
Human Rights and International Law, February-March 2012
The constitutionality of President Obama's recess appointments, January 2012
Do caps on medical malpractice damages hurt consumers?, December 2011
Trial Lawyers Inc.: State Attorneys General, October 2011
Wal-Mart v. Dukes, April 2011
Kagan Supreme Court nomination, May-June 2010
Election roundtable, November-December 2006
Who's the boss, September 2006
Medical judgement, July 2006
Lawyer Licensing, May 2006
Contingent claims, April 2006
Smoking guns, July 2004
Center for Legal Policy at the