Friday, July 17, 2009

Going Our Way? Class Actions, Punitive Damages & Due Process

Since the Supreme Court handed down Philip Morris USA v. Williams, 549 U.S. 346 (2007), we’ve posted twice – here and here – that we think Williams’ reaffirmation, in the specific context of punitive damages, of defendants’ rights to maintain all available legal defenses sounds the death knell for punitive damages class actions.

And not just in the blogosphere. One of us took this constitutional argument for a test drive in Dukes v. Wal-Mart (not a drug/device case), with encouraging results, as we discussed in greater detail, here. Briefly, before being exposed to our constitutional argument, the Ninth Circuit was quite content to affirm certification of a punitive damages class. Dukes v. Wal-Mart, Inc., 474 F.3d 1214, 1241 (9th Cir. 2007). We got into Dukes at the reconsideration stage, and the Ninth Circuit's new opinion strained mightily to avoid the punitive damages question entirely. Dukes v. Wal-Mart, Inc., 509 F.3d 1168, 1191 (9th Cir. 2007). A dissent called the majority out for dodging a specifically appealed issue, id. at 1197, and then the Ninth Circuit took the relatively unusual step of granting en banc review. We may win, we may lose. And either way Dukes may be headed eventually to the Supreme Court.

Anyway, we're back on this schtick because earlier this week an anonymous commentator (too bad, s/he’d have gotten a shout out) to our “taking stock” post mentioned a new law review article, J. Underwood, “Road to Nowhere or Jurisprudential U-Turn? The Intersection of Punitive Damage Class Actions & the Due Process Clause,” 66 Wash. & Lee L.R. 763 (2009) (online, here), disagreeing with our reading of Williams. Underwood is an associate professor at Baylor University School of Law in Waco, Texas.

That's cool. We’re always flattered when issues we raise in the blog make their way into the academic literature. So naturally we took a look.

So what do you know? It’s hard to feel flattered when we’re supposedly “tainted.” 66 Wash. & Lee L.R. at 792 (“arguably tainted views”). What we did to earn this sort of put down – something more appropriate to a blog than a law review – we’re not exactly sure. We don't mind people saying we're full of it, we couldn't be litigators if we did, but that should be decided on the strength of our arguments, not on which side of the "v" we reside. We don't think plaintiffs' lawyers, or even law professors' positions are less deserving of consideration because of the source, even when we think they're wrong.

So what's going on? We can't be sure, but since that part of the article distinguishes our views from those of “legal scholars,” we wonder if there's something about our blog's unapologetic airing of pro-defense positions in tort cases that riles up pro-plaintiff academics. After all, it wasn’t too long ago that another law review article claimed that it was somehow unethical for defense lawyers even to blog about pending cases.

We thought that that earlier article was hokum.

And we don’t think this one's that much better – at least that’s our “tainted” impression. Now let's defend it. We do that with some trepidation, since we only have a few hours of our spare time to deconstruct an article that Professor Underwood apparently took an entire sabbatical to write. 66 Wash. & Lee L.R. at 763 n.*.

First things first, we’ll review our our position.

We count five times that the Supreme Court has held that Due Process limits either the amount of punitive damages or the procedures for assessing them. See Williams, 549 U.S. at 343, 356-57; State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408, 422-25 (2003); BMW v. Gore, 517 U.S. 559, 574-75 (1996); TXO Produce Corp. v. Alliance Resolution Corp., 509 U.S. 443, 461-63 (1993); Pacific Mutual Life Insurance Co. v. Haslip, 499 U.S. 1, 18-19 (1991). The three most recent cases (Williams, Campbell, and Gore) all actually found Due Process violations that required vacation of punitive awards.

That's five Supreme Court decisions. At least by the definition that Judge Sotomayor was using at her confirmation hearing the other day, the proposition that Due Process imposes limitations on litigation seeking punitive damages should be considered “settled law.”


KOHL: . . .As you know, Judge, the landmark case of Griswold v. Connecticut guarantees that there is a fundamental constitutional right to privacy as it applies to contraception. Do you agree with that? In your opinion, is that settled law?

SOTOMAYOR: That is the precedent of the court, so it is settled law.

KOHL: Is there a general constitutional right to privacy. . .?

SOTOMAYOR: There is a right of privacy. The court has found it in various places in the Constitution, has recognized rights under those various provisions of the Constitution. . . .

KOHL: All right. Judge, the court’s ruling about the right to privacy in Griswold laid the foundation for Roe v. Wade. In your opinion, is Roe settled law?

SOTOMAYOR: The court’s decision in Planned Parenthood v. Casey reaffirmed the court holding of Roe. That is the precedent of the court and settled, in terms of the holding of the court.
Sotomayor Hearing Tr. (7/14/09), at 16, available here.

We're litigators, not law professors. We get to the Supreme Court on something more than a certiorari petition maybe once a decade if we're lucky. Thus, we tend to take Supreme Court precedent as given. We do so here with respect to the Court's punitive damages/Due Process jurisprudence.

That means we can essentially ignore the Part II of the Underwood article, entitled “Judicial Tort Reform of Punitive Damages.” It’s pretty much a screed attacking the settled law that Due Process limits what courts and juries can do with punitive damages. There may be other times that we’ve seen this much reliance on dissents in what passes for an explication of the law, but we can't think of any off the tops or our heads. We certainly wouldn’t do that in any brief we file – because we’re trying to win our cases.

Accepting that the Supreme Court meant what it said in Williams and Campbell, and following stare decisis, we see the Supreme Court’s punitive damages/Due Process precedent this way:

We start with Campbell. There the Supreme Court found a violation of Due Process for a single plaintiff’s punitive damages case to be a dumping ground for every supposedly nasty thing that a defendant ever did anywhere in the country. Rather, the conduct underpinning a punitive damages award “must have a nexus to the specific harm suffered by the plaintiff,” which the scattershot trial in Campbell lacked. 538 U.S. at 422.

[D]issimilar acts, independent from the acts upon which liability was premised, may not serve as the basis for punitive damages. A defendant should be punished for the conduct that harmed the plaintiff, not for being an unsavory individual or business. Due process does not permit courts, in the calculation of punitive damages, to adjudicate the merits of other parties’ hypothetical claims against a defendant under the guise of the reprehensibility analysis.

Id. at 422-23 (emphasis added). To us, that’s big, bold handwriting on the wall. The whole purpose of class actions is to aggregate the claims of a large number of plaintiffs. Thus, their inherent nature is to muddle the constitutionally-mandated “nexus” required by Campbell.

That’s only one piece of Campbell. The second prong of Campbell’s Due Process analysis (actually, more properly, Gore’s, since that’s where the test originated) is the ratio of compensatory to punitive damages. What’s a constitutionally permissible ratio isn’t fixed, but rather varies on a case-by-case basis depending on such things as if there’s “a particularly egregious act has resulted in only a small amount of economic damages,” or “the injury is hard to detect,” or “the monetary value of noneconomic harm might have been difficult to determine.” 538 U.S. at 425. This need for a case-by-case assessment of ratio is also fundamentally at odds with class action practice. Anything that “must be based upon the facts and circumstances of the defendant’s conduct and the harm to the plaintiff," as Campbell held is true of ratio analysis, id., can’t be decided on the proof-as-to-one-is-proof-as-to-all basis that is what class actions are all about. Class actions require "common" issues.

So that’s how we see Campbell. And we’re not alone. A bunch of courts also view Campbell as killing off punitive damages class actions: In re Simon II Litigation, 407 F.3d 125, 139 (2d Cir. 2005) (Campbell mandates decertification of punitive damages class); Johnson v. Ford Motor Co., 113 P.3d 82, 94-95 (Cal. 2005) (Campbell precludes something called “aggregate disgorgement,” which the court analogized to punitive damages); Engle v. Liggett Group, Inc., 945 So.2d 1246, 1265 (Fla. 2006) (Campbell requires decertification of punitive damages class and reversal of $145 billion verdict) (full disclosure – Bexis was on the defense team in Engle); Macedonia Church v. Lancaster Hotel Limited Partnership, 270 F.R.D. 107, 122 (D. Conn. 2010) (Campbell precludes punitive damages class action);  EEOC v. International Profit Associates, Inc., 2007 WL 3120069, at *10 (N.D. Ill. Oct. 23, 2007) (Campbell bars mass actions, in addition to class actions, for punitive damages); Williams v. Telespectrum, Inc., 2007 WL 6787411, at *6 (E.D. Va. June 1, 2007) (Campbell precludes punitive damages class action); Colindres v. QuitFlex Manufacturing, 235 F.R.D. 347, 378 (S.D. Tex. 2006) (same); O’Neal, v. Wackenhut Services, Inc., 2006 WL 1469348, at *22 (E.D. Tenn. May 25, 2006) (same); Carlson v. C.H. Robinson Worldwide, Inc., 2005 WL 758602, at *16 (D. Minn. March 31, 2005) (individualized inquiry for punitive damages mandated by Campbell renders proposed class unmanageable).

The courts weren’t unanimous, of course – when are they ever? For one thing, there was first the district court and then the Ninth Circuit (at least initially) in Dukes.

Now we get to Williams. The Due Process holding is considerably more direct in Williams because the Court wasn’t undertaking excessiveness review à la Campbell. Rather, Williams holds rather bluntly that punitive damages cannot be based on anything other than the defendant’s conduct towards the specific plaintiff litigating the case. “We did not previously hold explicitly that a jury may not punish for the harm caused others. But we do so hold now.” Williams, 549 U.S. at 356-57. It’s pretty hard to square this holding with a class-wide determination of thousands of punitive damages claims in one fell swoop. Rather, that appears to be precisely what Williams held that Due Process prohibits. We think the Court meant what it said when it held that punitive damages cannot constitutionally be awarded on a “represent[ative]” basis:


[T]he Constitution’s Due Process Clause forbids a State to use a punitive damages award to punish a defendant for injury that it inflicts upon nonparties or those whom they directly represent, i.e., injury that it inflicts upon those who are, essentially, strangers to the litigation.
Williams, 549 U.S. at 353 (emphasis added). Last time we looked, just a few minutes ago, class actions were the epitome of a “representative” action. E.g., Amchem Products, Inc. v. Windsor, 521 U.S. 591, 623 (1997) (Rule 23 “legitimizes representative action”); General Telephone Co. v. EEOC, 446 U.S. 318, 326 (1980) (distinguishing EEOC enforcement actions from “representative actions subject to Rule 23”).

Put that together with Campbell, and you've got a pretty persuasive motion to strike punitive damages class action allegations – but there’s a second, equally important, thread in Williams. The Court went on to explain why litigating punitive damages in a representative fashion violates Due Process. In a holding that we, as defense counsel, think is self-evident, the Court specifically stated that defendants faced with “punishment” have a constitutional right to defend themselves. “[T]he Due Process Clause prohibits a State from punishing an individual without first providing that individual with ‘an opportunity to present every available defense.’” Williams, 549 U.S. at 353 (quoting Lindsey v. Normet, 405 U.S. 56, 66 (1972)) (emphasis added by us).

Just what was the Court referring to when it referenced “every available defense”? Well, in Williams the defenses that the Court considered constitutionally protected were a plaintiff’s knowledge (“knew that smoking was dangerous”) and reliance (“did not rely upon. . .defendant[]”). Id. Those are precisely the types of individualized defenses that, time and again, defeat class certification under the “predominance” rubric of Rule 23(b)(3). In Lindsey, which likewise held that “[d]ue process requires that there be an opportunity to present every available defense,” 405 U.S. at 66, the Court was dealing with a state-law forcible entry and wrongful detainer action. We don’t know squat about that, but it's some sort of landlord-tenant action. The Lindsey Court mentioned the following defenses: failure to maintain the premises, mental incompetence, forfeiture of lease, reformation of lease, breach of dependent covenant. Id. at 66 & n.11. That would seem to cover the waterfront.

There are lots of defenses to punitive damages. A lot of jurisdictions require liability – that is, there can be no punitive damages unless the defendant is first liable on the underlying action. That’s where reliance and knowledge in Williams came in, as well as defenses such as the statute of limitations, assumption of the risk, warning causation, medical causation, and product misuse, to name a few. Most jurisdictions also incorporate some sort of proportionality requirement as a matter of state substantive law (as opposed to the Gore ratio element). That brings the amount of an individual plaintiff’s compensatory damages into play.

Since Williams, not only has the Dukes court backtracked, but more courts have declared that class actions for punitive damages run afoul of Due Process. In re Conagra Peanut Butter Products Liability Litigation, 251 F.R.D. 689, 701-02 (N.D. Ga. 2008); Nelson v. Wal-Mart Stores, Inc., 245 F.R.D. 358, 376 (E.D. Ark. 2007); see also EEOC v. International Profit Associates, Inc., 2007 WL 3120069, at *10-11 (N.D. Ill. Oct. 23, 2007) (requiring, in an EEOC mass action, that punitive damages be determined individually). Another court, State ex rel. Chemtall, Inc. v. Madden, 655 S.E.2d 161, 167 (W. Va. 2007), imitated the Dukes panel’s strategy of punting the issue down the road.

Thus, we don’t think that the requirements of the Due Process Clause - specifically as applied to punitive damages in Williams - can be squared with the “predominance” of “common issues” necessary to maintain a class action under Rule 23(b)(3).

And there’s still more. Williams is a gift that keeps on giving. It’s hard to see that classwide punitive awards encompassing absent class members who never appear in court can escape being held “standardless” and “speculative” in violation of Due Process. Williams held:

To permit punishment for injuring a nonparty victim would add a near standardless dimension to the punitive damages equation. How many such victims are there? How seriously were they injured? Under what circumstances did injury occur? . . .The jury will be left to speculate. And the fundamental due process concerns to which our punitive damages cases refer – risks of arbitrariness, uncertainty, and lack of notice – will be magnified.

549 U.S. at 354 (citations omitted). Thus, juries may not punish a defendant for harm to those who never set foot in the courtroom. Id. at 355 (“a jury may not go further. . .and use a punitive damages verdict to punish a defendant directly on account of harms it is alleged to have visited on nonparties”).

With respect to absent class members, juries do not – indeed, cannot – hear the answers to the questions the Court posed in Williams. Any attempt at class-wide adjudication of punitive damages necessarily “magnifies” the “fundamental due process concerns” that led to the unconstitutionality findings in Williams, Campbell, and Gore.

Anyway, that’s our position. Now we’ll look at the holes the Underwood article tries to punch in it, and maybe we'll punch a few holes ourselves.

The article certainly likes class actions a lot, describing them as “offer[ing] an unparalleled and unique joinder device that permits a multitude of claimants’ claims to be adjudicated.” 66 Wash. & Lee L.R. at 779-80. “[T]he primary motivating principle underlying this group litigation device was one of efficiency. Id. at 781 (emphasis original). Class actions are “the HOV lane of litigation traffic.” Id.

Okay, we might debate that point (given their size and expense, class actions could equally be called the SUVs of litigation traffic), but we don’t see the point of it. That class actions might be “efficient” is, in this context, a non sequitur. We don’t dispense with constitutional rights on grounds that they are inefficient. It would probably be most "efficient" not to allow defendants to put on a defense at all – but it’s not constitutional. Williams and other Supreme Court precedent hold that defendants cannot constitutionally be deprived of any defense to which the law entitles them. We're not going to play "what if" games with controlling Supreme Court precedent.

We trudge onward.

Next, the article discusses “limited fund” class actions. 66 Wash. & Lee L.R. at 783-86. This is another tangent. Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999), essentially killed off mandatory limited fund classes in mass torts. The article cites two cases, In re Simon II Litigation, 211 F.R.D. 86 (E.D.N.Y. 2002), which was reversed by one of the cases we’ve cited, and In re Exxon Valdez, 270 F.3d 1215 (9th Cir. 2001). We know what happened in Exxon Valdez – the Supreme Court shaved an already reduced punitive damages award down to $507.5 million. Exxon Shipping Co. v. Baker, 128 S. Ct. 2605, 2634 (2008) (non-constitutional basis for reduction). Somehow, we don’t think that an award of that size could justify calling the largest oil company in the world a “limited fund.”

Anyway, limited fund class actions are not the point. Our Williams argument is concerned primarily with Rule 23(b)(3) class actions like Dukes, or we're confronted with in the mass tort world where we practice.

The Underwood article finally gets to Rule 23(b)(3), beginning on page 786. But it meanders. It doesn’t get to punitive damages class actions in the Campbell/Williams era until page 791.

That’s when it calls us “tainted.”

After 35 pages of prologue, the rubber finally meets the road beginning on page 796. Professor Underwood’s first proposition is that Campbell “reaffirms that the common focus in punitive damage adjudication remains on the defendant and also shows the advantages class treatment offers for punitive damages in scenarios involving multiple potential claimants.” 66 Wash. & Lee L.R. at 796-97. There are over 200 footnotes in this article, but this key proposition doesn’t have one. That’s because Campbell doesn’t deal with “common focuses” or “multiple claimants.” It’s a one-plaintiff case.

The Court in Campbell does quote Gore’s statement that “the most important indicium of the reasonableness of a punitive damages award is the degree of reprehensibility of the defendant’s conduct.” 538 U.S. at 419. Maybe that’s what's being referred to. But that’s in the context of Due Process analysis – it doesn’t say anything one way or another about the merits of punitive damages claims. That's where, among other things, our right to "every defense" comes in.

The article then makes the true statement – for the Supreme Court anyway – that “the Court has never applied these due process constraints in the context of a class action.” 66 Wash. & Lee L.R. at 797. Okay, but a whole lot of lower courts since Campbell have done so, and found its Due Process analysis directly applicable to class actions. Why then, is that position “hyperbole”? Id. It’s hard to say, except that the author doesn’t like that result.

The article argues that equating unnamed class members with “strangers” to litigation is inapt because “class members are clearly bound by the result[].” Id. This claim hides the ball. We've already block quoted (with emphasis) that precise passage above. The evil the Supreme Court was addressing in Williams when it mentioned "strangers" to litigation was a defendant’s inability to present defenses specific to those strangers’ claims. 549 U.S. at 353. That same problem exists – is inherent in – class actions. Also, the article fails to mention that the Court refered to representative litigation in the same sentence. Add in what the article omits from this part of Williams and it's pretty clear that the case stands for exactly the opposite of what the article states.

Next proposition: “[O]ne must bear in mind that due process is flexible and calls for such procedural protections as the particular situation demands.” 66 Wash. & Lee L.R. at 797 (citation and quotation marks omitted). As a general proposition that's true, but Williams addressed what Due Process “demands” in the specific context of punitive damages – “an opportunity to present every available defense.” 549 U.S. at 353. So, where punitive damages are concerned the bounds of "flexibility" are delineated by Williams. As for finagling, well, the article doesn’t even try to describe a class action scenario that preserves “every available defense” against each class member's punitive damages claim. It can’t be done. That's why we've said class actions and punitive damages are unconstitutional together.

The article moves on to the purposes of punitive damages, stating (among a lot of other things) that “the Court has not retreated from the concept of states’ legitimate use of punitive damages for the purpose of providing general deterrence from abhorrent behavior.” 66 Wash. & Lee L.R. at 798.

This argument is a textbook example of raising a straw man. We don’t argue that the underlying purposes of punitive damages aren’t still punishment and deterrence. That’s not relevant because we’re not taking the position (at least not here) that punitive damages – in and of themselves – are unconstitutional. Due Process is about process. To illustrate, let’s take another form of punishment. The death penalty is constitutional, but that doesn’t justify stringing people up to the nearest tree, or burning them at the stake. Umm. . .maybe there has to be a Waco exception to that second example.

That punitive damages serve a legally valid purpose doesn’t change Williams' and Campbell's Due Process requirements, or any any Due Process requirements. Every legal proceeding, no matter how justified, must be conducted in accordance with Due Process in that particular context, and in the case of punitive damages that means Campbell and Williams. No amount of flag-waving for punitive damages can make Due Process go away.

We're not sure why, but the article next goes back to “limited fund” mandatory certification. 66 Wash. & Lee L.R. at 799-800. It offers a block quote from In re Simon II, 407 F.3d 125 (2d Cir. 2005). Sorry, that’s the wrong quote about the wrong subject. In Simon II the court specifically discussed both Campbell (Williams hadn’t been decided yet) and Due Process. There’s thus no need to infer anything. The court held:


[W]e have an additional concern that warrants some discussion. It seems that a punitive award under the circumstances articulated in the Certification Order is likely to run afoul of the Supreme Court’s admonitions in [Campbell], a decision handed down several months after the Certification Order issued. In certifying a class that seeks an assessment of punitive damages prior to an actual determination and award of compensatory damages, the district court's Certification Order would fail to ensure that a jury will be able to assess an award that, in the first instance, will bear a sufficient nexus to the actual and potential harm to the plaintiff class, and that will be reasonable and proportionate to those harms. . . .

Although the Court was considering an award in an individual, not a class, action, it noted that punishment on any basis that does not have a nexus to the specific harm suffered by the plaintiff “creates the possibility of multiple punitive damages awards for the same conduct; for in the usual case nonparties are not bound by the judgment some other plaintiff obtains.” [Campbell, 538 U.S.] at 423. In addressing the punitive award to the Campbells, the Court stated, “we have been reluctant to identify concrete constitutional limits on the ratio between harm, or potential harm, to the plaintiff and the punitive damages award. We decline again to impose a bright-line ratio which a punitive damages award cannot exceed.” Id. at 424-25 (citation omitted). Recognizing that “there are no rigid benchmarks,” the Court noted that greater ratios may be warranted “where a particularly egregious act has resulted in only a small amount of economic damages” or “where the injury is hard to detect or the monetary value of noneconomic harm might have been difficult to determine.” Id. at 425 (internal quotations omitted). “In sum,” the Court concluded, “courts must ensure that the measure of punishment is both reasonable and proportionate to the amount of harm to the plaintiff and to the general damages recovered.” Id. at 426.

Furthermore, with respect to the evidence to be considered at the punitive damages stage, [Campbell] indicates that a jury could not consider acts of as broad a scope as the district court in this case anticipated. . . . [Campbell] made clear that conduct
relevant to the reprehensibility analysis must have a nexus to the specific harm suffered by the plaintiff, and that it could not be independent of or dissimilar to the conduct that harms the plaintiff. 538 U.S. at 422-23. Harmful behavior that is not “correlatable” with class members and the harm or potential harm to them would be precluded under [Campbell].
Simon II, 407 F.2d at 138-39 (various citations and block quotes omitted).

Appellate Advocate’s Rule #1 – don’t cite cases that kill you.

The article’s next argument, once it gets back to Rule 23(b)(3) class actions, is that class certification of punitive damages is “superior” “when viewed through the prism of the multiple punishment concern.” 66 Wash. & Lee L.R. at 800. That is, class actions should be certified so that defendants aren’t saddled with “redundant punishment in multiple, distinct civil cases.” Id.

Talk about crocodile tears. Pul-eese, Professor Underwood, don’t try to do defendants any favors. This argument is either supremely cynical or astonishingly naïve (but not tainted). Earlier, when the article was criticizing the Court in Williams, it speculated, “one must wonder how much experience the Justices in the majority have had watching how jury trials are conducted.” 66 Wash. & Lee L.R. at 777.

We could say the same thing here. If the author really believes that defendants are better off facing punitive damages class actions than possible “redundant” punitive awards in separate litigation, we wonder how much practical experience he has with mass tort litigation – or any mass litigation. Every defendant we’ve ever represented has fought certification of punitive damages class actions tooth and nail. Why? Look at Engle (cited earlier), where the trial court did exactly what the article advocates. The result? A $145 billion punitive damages award that, had it not been declared an unconstitutional violation of Due Process, would have bankrupted the defendants. We know very few defendants willing to take that kind of a risk. Thus we think punitive damages class actions are a form of litigation terrorism.

After quoting a “commentator” – a law review article that no court anywhere has ever cited – the author claims that “[t]he American Law Institute similarly recognizes the significance of this redundant punishment danger." 66 Wash. & Lee L.R. at 801 (citing and quoting ALI, Reporters’ Study, Enterprise Responsibility For Personal Injury 260–61 n.5 (1991)).

That's not so. We can tell by the name of the source.

We're both members of ALI, so we've had to learn the Institute's nuances. A “Reporter’s Study” is just that – the views of the reporters, not the view of ALI itself. Only documents voted on by the ALI’s full membership – chiefly Restatements and Principles Projects – constitute the position of the Institute.

Regular readers of this blog know that just last May the ALI did take a position on class action issues, voting to approve the Principles of the Law of Aggregate Litigation. We discussed that here. At one point, a draft of the Principles advocated punitive damages class actions. We criticized that aspect of the draft, here, stating :


The draft continues to advocate deciding punitive damages on an aggregate, classwide basis. After Philip Morris USA v. Williams, 127 S. Ct. 1057 (2007), that has to come out, since Williams expressly recognized that defendants are constitutionally entitled to raise all individualized defenses prior to being hit with punitives.
Guess what? The offending discussion was removed from the Principles project. The final draft - the one ALI's membership approved - doesn’t reference punitive damages classes at all, except in the Reporters' Notes as an historical an example of a “limited fund.” And "reporters notes" are not the position of the ALI either. We'd link to that final draft, but as loyal ALI members we can't. You can buy it from the ALI.

In short, the ALI does not support punitive damages class actions.

Next argument please: That the “dictate” in Williams that a “jury may consider harm to third-parties only for purposes of reprehensibility but not for the purpose of punishing the tortfeasor defendant” somehow supports use of a class action. 66 Wash. & Lee L.R. at 801. In this way, the article asserts, Williams “creates a significant risk of future reversals of punitive damage verdicts based upon nit-picky review of jury instructions.” Id. at 802.

If one considers defendants’ constitutional rights “nit-picky,” then maybe the argument makes some sense.

“Group litigation,” according to the article, supposedly solves this problem “[b]y converting other victims of the tortfeasor’s misconduct from ‘strangers’ into class members.” We've already debunked this point - “strangers” isn't the only word the Court used; in the same position are “those whom [are] directly represent[ed]” in litigation. In either case, defendants must be given their constitutional right to assert “every defense” to which they are legally entitled. Williams, 549 U.S. 353. That includes the many individualized defenses to punitives that are incompatible with determining claims of thousands (or more) of people at the same time. See Appellate Advocate’s Rule #1, above.

Then what? The article quotes at length from a 23-year-old (that is, before any of the relevant Supreme Court precedent) ABA recommendation “that a defendant faced with multiple punitive damage claims be permitted to request class treatment in federal court.” 66 Wash. & Lee L.R. at 803. Since that source predates even Haslip by five years, the ABA's proposal obviously says nothing about Due Process and punitive damages. And it’s predicated on a defendant’s request. As we said before, don’t purport to do our side any favors. We can take care of ourselves – we’ve got Williams and Campbell now.

Then, how about this howler?
[F]or every court that has declared class treatment of punitive damages no longer constitutional, one can find another example of a court detecting no constitutional barriers to treating punitive damages as a common class issue.
66 Wash. & Lee L.R. at 803. At least there’s a footnote, so we can take a look at the supporting cites. There’s the first Dukes opinion. But not only was that opinion superseded on reargument, the reargued opinion was then withdrawn by the grant of en banc review. That's not a case we'd even think of citing in a brief. Then there’s Ellis v. Costco Wholesale Corp., 240 F.R.D. 627, 643 (N.D. Cal. 2007), which neither cites Campbell nor mentions Due Process. Ellis is thus cited for a “constitutional” proposition it didn’t even discuss. Then there are two pre-Campbell cases.

That’s it.

In this post, we’ve cited two state supreme court cases, one federal appellate decision, and eight federal district courts – all refusing to certify class actions explicitly for constitutional reasons since Campbell. At this point there is exactly one case going the other way – In re Tobacco Litigation, 624 S.E.2d 738 (W.Va. 2005). We could point out how “narrow” that court described its holding – limiting it to the reverse bifurcation question – but we won’t bother. We’ll give Professor Underwood West Virginia.

We do note that since the West Virginia Supreme Court’s 2005 decision refusing to grant extraordinary relief against a trial plan, the underlying cases apparently have yet to be tried – so the core Due Process issue of deprivation of defenses hasn’t been litigated, only the Red Queen (“Sentence first—verdict afterwards”) trial plan.

That’s essentially it. The article finishes by once again claiming that class action treatment of punitive damages does defendants a favor by sparing our clients the risk of “repeated, separate punitive damage verdicts. 66 Wash. & Lee L.R. at 806.

Once again, we expect that most defendants will continue to decline this offer of assistance.

Anyway, that’s our view of the Washington & Lee Law Review Article. We take the Supreme Court's precedent as a given, thus we’ve found nothing in the article that warrants us reconsidering the views on class actions and punitive damages that we’ve expressed in our prior blog posts – but we had some fun critiquing it.

We hope our readers have, too.

7 comments:

Sean said...

Geez guys! I know he started it with the 'tainted' comment, but come on. He's just a professor (those who can't teach). Anyway, nice to read a well-reasoned can of whoop a#$.

Brian Perryman said...

I'm the unshouted-out commentator. That's OK, I'll take a rain check. Great post. But any reason you've never mentioned the unpublished In re Chevron Fire Cases, 2005 WL 10771516 (Cal. Ct. App. 2005), other than the obvious reason that it can't be cited in California courts? Seems on point, and some of the appellate briefing appears to be by Jones Day.

If you put out another of these posts, would you update your rapt audience on the pending cases/appeals you're aware of in which this issue has been raised? I'm familiar with your work in the Dukes v. Wal-Mart amicus briefs.

Beck/Herrmann said...

We don't generally cite to the unreported California intermediate appellate decisions for the reasons you've stated.

Anonymous said...

I'm very late to this party, but if you are still reading these comments, I'm curious to know what you make of Exxon Shipping, in which the Supreme Court affirmed a punitive damages award in a class action?

Beck/Herrmann said...

We discussed the Exxon case here:

http://druganddevicelaw.blogspot.com/2008/06/exxon-valdez-punitive-damages-award.html

Brian Perryman said...

A few more belated thoughts to add to your post. The degree of reprehensibility of the defendant's conduct is the most important indicium of the reasonableness of a punitive damages award. Campbell, 538 U.S. at 419. To assess this factor, courts must consider whether, inter alia, “the target of the conduct had financial vulnerability," and "the conduct involved repeated actions or was an isolated incident.” Id. These are inherently individualized questions. How can any jury or court determine "financial vulnerability" in a class filled with Bob Cratchits and Warren Bufftets? Also, the jury must consider how many times the defective product or service was sold to the particular class member. Was it a "repeated action" vis-a-vis the claimant?

TxLawyer said...

Actually I am told Prof. Underwood is not your typical ivory tower academic. He practiced law--on the defense side for 15 years--and was a partner at Akin Gump (Dallas) where he defended putative class actions. Also, if you look at some of his other publications (e.g., "The Late Great Diversity Jurisdiction", 57 Case West. Reserv. L. Rev. 179; "Rationality, Multiplicity & Legitimacy: Federalization of the Interstate Class Action", 46 S. Tex. L. Rev. 391) you'll see he tends toward the conservative pro-defendant side in these debates. Your ad hominem attacks show your taint and are actually quite inaccurate, in this case. Your substantive arguments are interesting though.