Behrens_MGuest Commentary

by Mark A. Behrens, Shook, Hardy & Bacon L.L.P.*

On September 9, the Supreme Court of Missouri struck down the state’s legislative limit on the amount of punitive damages that can be imposed on defendants. Under the cap, punitive damages could not exceed the greater of $500,000 or five times the net amount of the judgment. Lewellen v. Franklin arose from an unremarkable fraudulent misrepresentation and unlawful merchandising suit. In finding that the statutory damages cap violated Lewellen’s right to a jury trial, the Court followed a 2012 decision invalidating the state’s cap on non-economic damages in medical liability cases, Watts v. Lester E. Cox Medical Centers.

This holding is an extreme outlier.  Virtually every other state court that has considered the constitutionality of punitive damages caps has held that such laws do not violate the jury trial right because the jury’s fact-finding function is preserved.  The jury continues to resolve disputed facts with respect to liability and assessment of legally available remedies.  Once the jury has decided these issues, the constitutional mandate is met—or at least is virtually every other state in the country.  Nationally, both state and federal courts consistently have upheld the constitutionality of punitive damages caps.

For example, the Virginia Supreme Court in Pulliam v. Coastal Emergency Services of Richmond, Inc., 509 S.E.2d 307 (Va. 1999), upheld a total cap on medical malpractice damages—compensatory and punitive—finding that the statute did not violate the right to a jury trial.  The court reaffirmed Etheridge v. Med. Ctr. Hosps., 376 S.E.2d 525 (Va. 1989), which held that “[o]nce the jury has ascertained the facts and assessed the damages, . . the constitutional mandate is satisfied [and thereafter], it is the duty of the court to apply the law to the facts.”  Id. at 529.  The total damages cap, the court said, “does nothing more than establish the outer limits of a remedy; remedy is a matter of law and not of fact; and a trial court applies the remedy’s limitation only after the jury has fulfilled its fact-finding function.”  Pulliam, 509 S.E.2d at 312 (citing Etheridge).

Concerning the right of trial by jury under the Seventh Amendment, the U.S. Court of Appeals for the Fourth Circuit followed the Virginia Supreme Court’s reasoning in Pulliam and Etheridge that it is not the role of the jury but of the legislature to determine the legal consequences of the jury’s factual findings.  The Fourth Circuit in Boyd v. Bulala, 877 F.2d 1191, 1196 (4th Cir. 1989), gave an additional reason for upholding the damages cap against an argument that it violated the jury trial right:

It is by now axiomatic that the Constitution does not forbid the creation of new rights, or the abolition of old ones recognized by the common law, to attain a permissible legislative object….   If a legislature may completely abolish a cause of action without violating the right of trial by jury, we think it permissibly may limit damages recoverable for a cause of action as well.

The Alaska Supreme Court in Evans ex rel. Kutch v. State, 56 P.3d 1046, 1051 (Alaska 2002), upheld a comprehensive civil justice reform law including caps on noneconomic and punitive damages.  The Court said, “We agree with Davis, Pulliam, and the other decisions that have held that damages caps do not violate the constitutional right to a trial by jury.”  The Court noted the distinction between the jury’s exclusive province of fact-finding, and the legislature’s power to alter the legal remedies available to the jury.

The Ohio and North Carolina Supreme Courts found punitive damages caps to be constitutional, including with respect to the right to jury trial, in Arbino v. Johnson & Johnson, 880 N.E.2d 420 (Ohio 2007) (punitive damages cap satisfied right to jury trial and numerous other provisions of the Ohio Constitution), and Rhyne v. K-Mart Corp., 594 S.E.2d 1 (N.C. 2004) (punitive damages cap did not violate right to jury trial or other provisions of the North Carolina Constitution).

The Kansas Supreme Court in Smith v. Printup, 866 P.2d 985 (Kan. 1993), upheld a law requiring courts to determine the amount of punitive damages to be awarded.  The Court said that “[a]lthough the amount of punitive damages may be regarded as a fact question, punitive damages are different from compensatory damages,” because “there is no right to punitive damages.”  Id. at 994.  The Court added:  “Because a plaintiff does not have a right to punitive damages, the legislature could, without infringing upon a plaintiff’s basic constitutional rights, abolish punitive damages.  If the legislature may abolish punitive damages, then it also may, without impinging upon the right to trial by jury, accomplish anything short of that, such as requiring the court to determine the amount of punitive damages or capping the amount of the punitive damages.” Id.

A Texas appellate court in Seminole Pipeline Co. v. Broad Leaf Partners, Inc., 979 S.W.2d 730, 758 (Tex. Ct. App.-Hous. 1998), said that while plaintiffs “may be motived to pursue this public purpose [of punishment and deterrence] in the hope of securing punitive damages, such proceeds are a windfall and not a matter of right.”  The court held that “[b]ecause the statutory cap on punitive damages affects only public punishment interests, it does not infringe upon any constitutional right…”  Id..

The absence of relevant case law to the contrary is striking.  Although the Court in Henderson v. Alabama Power Co., 627 So. 2d 878 (Ala. 1993), held that a punitive damages cap violated the right to a jury trial under the Alabama Constitution, that decision was properly overruled by Ex Parte Apicella, 809 So. 2d 865, 874 (Ala. 2001), to the extent that Henderson restricted the legislature from removing from the jury the unbridled right to punish.  In Oliver v. Towns, 738 So. 2d 798, 804 n.17 (Ala. 1999), the Alabama Supreme Court added that “[g]iven the post-Henderson developments in the concept of due-process law [from the United States Supreme Court] and the forceful rationale of the dissents in Henderson, we question whether Henderson remains good law.”) (internal citations omitted).  The Arkansas Supreme Court invalidated a punitive damages limit in Bayer CropScience LP v. Schafer, 385 S.W.3d 822 (Ark. 2011), but that decision turned on a unique provision of the Arkansas Constitution barring limits on recovery outside of the employment context.

*Mr. Behrens is a partner in the law firm’s Public Policy Group, a Member of the American Law Institute, and serves on Washington Legal Foundation’s Legal Policy Advisory Board.