Adjunct Law Prof Blog

Editor: Mitchell H. Rubinstein
New York Law School

Wednesday, November 18, 2015

On Peevyhouse v. Garland Coal & Mining Co.

Last week in class we discussed the famous case Peevyhouse v. Garland Coal & Mining Co., 382 P.2d 109 (1962).  The case involved a contract wherein the Peevyhouses allowed Garland to strip-mine on their farm property.  In lieu of the standard $3,000 up-front payment for surface damages, the Peevyhouses negotiated a clause requiring Garland to perform certain "restorative and remedial work" on the property after completing their mining operations.  Garland mined the property and extracted their profits, then breached the restoration provision.  The Peevyhouses sued for breach of contract.  The evidence at trial apparently provided the cost to perform the work would be $29,000 -- but that the diminution in property value resulting from the breach was only $300.  The jury split the difference, sort of, by awarding the Peevyhouses $5,000, an amount the Oklahoma Supreme Court declared to be "more than the total value of the farm even after the remedial work is done." 

The Oklahoma Supreme Court modified the judgment for the Peevyhouses, awarding $300 -- the value lost.  To say the least, the decision remains a controversial one.  In 2008, at PrawfsBlawg, Eric E. Johnson (North Dakota) conducted a survey to name "The Most Screwed Victims in Case-Law History."  Willie and Lucille Peevyhouse won that competition in a landslide.   Twenty years ago, Judith Maute published a comprehensive article on the case, Peevyhouse v. Garland Coal & Mining Co. Revisited:  The Ballad of Willie and Lucille in the Northwestern Univ. Law Review.  Maute's article is fascinating for many reasons, not the least of which is the section on the Oklahoma Supreme Court bribery scandal that followed the case.  Whether that scandal contributed to the Peevyhouse result remains, it seems, an open question.

Peevyhouse exemplifies the "economic waste doctrine" -- a contract law doctrine memorialized in the Restatement[1].  The doctrine finds its origins in Jacob & Youngs, Inc. v. Kent, 129 N.E. 889 (9121).  There, a homeowner sued the home builder for using Cohoes plumbing pipe when the contract required Reading brand pipe.  Reversing the trial court's decision to exclude diminution of value evidence, the Court held that cost to complete is the proper damages measure unless, "the cost of completion is grossly and unfairly out of proportion to the good to be attained.”  The defendant in Jacobs & Young appear to have the better of the argument -- in Peevyhouse, not so much (hence perhaps the result in Johnson's poll, above).  Scholars have written to distinguish the two cases and better define the economic waste doctrine's contours.  A good starting point is Carol Chomksy, "Of Spoil Pits and Swimming Pools:  Reconsidering the Measure of Damages for Construction Contracts," 75 Minn. L. Rev. 1445 (1991) (download link).

More recently, the Oregon Supreme Court discussed its economic waste doctrine at some length in Montara Owners Assoc. v. La Noue Development, Inc., 353 P.3d 563 (Or. 2015) in a case ultimately decided on harmless error grounds.  For its own part, the Oklahoma Supreme Court affirmed the Peevyhouse holding on certified question in  Schneberger v. Apache Corp., 890 P.2d 847 (1994).

Craig Estlinbaum

[1] Restatement (Second) Contracts, sec. 348, cmt. c (1981).

November 18, 2015 in Contract Issues, Interesting Cases, Remedies | Permalink | Comments (1)

Wednesday, October 21, 2015

When Both Sides Can Recover Attorney's Fees

The general rule in American jurisdictions does not permit a victorious party to recover attorney's fees or litigation costs from the losing party.  There are exceptions to this rule -- courts typically enforce fee-shifting provision in contract and most if not all states have statutes that allow prevailing parties to recover fees in some situations.  Some such statues provide for "one-way" fee shifting whereby only a prevailing claimant may recover fees.  Others are "two-way" fee shifting statutes allowing either plaintiff or defendant to recover. 

Courts have created rules on fee-shifting deisgned to achieve fairness and fidelity to the American rule, however, these rules can and have led to "a second major litigation," or to "years of protracted appellate review."  Perdue v. Kenny A., 559 U.S. 542, 572 (2010) (Breyer, J., dissenting).  One such rule requires attorneys to segregate attorney's fees and expenses between recoverable and unrecoverable claims.  For example, if a party sues in contract and tort in a jurisdiction that enforces a fee-shifting provision in the contract but does not provide for fee-shifting in tort, a prevailing plaintiff must segregate the nonrecoverable attorney's fees incurred solely to prosecute the tort claim from the recoverable fees incurred for the contract claim and fees incurred as to both claims.  See e.g., Tony Gullo Motors, Inc. v. Garcia, 212 S.W.3d 299 (Tex. 2006).  Likewise, when the prevailing party wins only in part, the party must segregate fees between the successful and unsuccessful claims to the extent fee-shifting applies as to the successful claims.  See Fox v. Vice, 563 U.S. 826 (2011).

What happens when each side in a lawsuit prevails in part with each party prevailing on a claim entitling it to attorney's fees pursuant to a fee-shifting provision?  A California court answered this question in Sharif v. Mehusa, Inc., No. B255578, 2015 W.L. 5969679 (October 14, 2015, Cal. Ct. App.).  In this case, the plaintiff prevailed on her state Equal Pay Act claim and the defendant prevailed on its plaintiff's overtime and wage claim.  Each party filed a motion for attorney's fees under the applicable statute.  The trial court awarded both sides its attorney's fees as to the claim upon which each prevailed,  with the plaintiff obtaining a small fees award after offset.

The California appellate court affirmed.  The court held that "when there are two fee shifting statutes in separate causes of action, there can be a prevailing party for one cause of action and a different prevailing party for the other cause of action."  Ms. Sharif argued that because she prevailed on the Equal Pay Act claim and received a money judgment on that claim, she was the "prevailing party," and was subject only to reduction in the fee claim for the unsuccessful overtime and wage claim.  The court agreed Sharif was a prevailing party in part, but added that Mehusa, Inc. was a prevailing party also as to a claim including a two-way fee shifting provision.  The court stated it made no sense for the defendant to be able to recover on the overtime and wage claim if the two claims here were brought in separate actions but not if the two claims were consolidated into one action.

We cover attorney fees recovery in our Damages class.  It is important for new attorneys to develop good habits about tracking time in cases, even when representation is for a flat or contingent fee.  I cannot imagine anything more mind-numbing (or more filled with ethical risks) than having to recreate an attorney's fees statement on short notice at a lengthy and complicated case's end.  Here is a recent essay with useful tips about substantiating attorney's fees in litigation.

Craig Estlinbaum

October 21, 2015 in Interesting Cases, Litigation, Remedies | Permalink | Comments (0)

Monday, October 27, 2014

Ward Farnsworth at Volokh Conspiracy

Ward Farnsworth will be guest-blogging at The Volokh Conspiracy in the coming days regarding is new book, "Restitution: Civil Liability for Unjust Enrichment"  He posted his first substantive contribution, "Restitution law: Interesting and useful to the few who understand it" earlier today.  I have been teaching Damages at South Texas since 2004 and the chapter on Resitution is one of my favorites.  I am looking forward to his contributions at TVC and to reading the book.

Craig Estlinbaum

October 27, 2014 in Blogs, Faculty, Books, Remedies | Permalink | Comments (0)

Friday, May 10, 2013

Dittfurth: Restitution in Texas

David Dittfurth's (St. Mary's) article "Restitution in Texas: Civil Liability for Unjust Enrichment" appears in the latest South Texas Law Review (Winter 2012).  On first read, I am impressed with this article, which is comprehensive and makes a valuable contribution to this often confusing and misunderstood area of law.  We cover restitution, unjust enrichment, quantum meruit and quasi-contract and other related causes of action in our Damages class and I look forward to mining this article for a better understanding myself.  As a bonus, Dittfurth includes "recent statements by the courts of forty-nine states and the District of Columbia that describe the elements of unjust enrichment" in those jurisdictions.

Craig Estlinbaum

May 10, 2013 in Law Review Articles, Remedies | Permalink | Comments (0)

Wednesday, April 24, 2013

Connecticut: Recovering Attorney's Fees in Multiple Contract Deal Gone Wrong

Often complex business deals are built upon multiple contract which taken together lead to a single business transaction.  When and to what extent may a prevailing party in an American Rule jurisdiction collect attorney's fees from the breaching party when that single business transaction goes wrong and some but not all contracts contributing to the transaction include a provision for recovering attorney's fees?  The Supreme Court of Connectucut, in a case of first impression, tackled that very question Tuesday in Total Recycling Services of Conn., Inc. v. Connecticut Oil Recycling Services, LLC., No. 18823, 2013 WL 1500840 (Conn. April 23, 2013).

Total Recycling originates from the sale of an oil recycling business expressed by the parties in three contracts - an equipment contract, a goodwill contract and a noncompete contract.  The goodwill and noncompete contracts included a provision entitling the defendant to attorney's fees if the plaintiff breached the agreement -- the equipment contract did not.

Disputes arose between the parties with the plaintiff and defendant filing claims and counterclaims against one another.  The plaintiff prevailed on its unjust enrichment claim only while the defendant prevailed on claims that plaintiff breached the contracts, though damages were assessed only as to the equipment contract. The trial court denied defendant's claim for attorney's fees because the contract upon which defendant recovered damages did not include an attorneys fees recovery provision, a reasoning later rejected by the intermediate appellate court. 

On remand, the trial court denied the attorney's fees claim because the defendant failed to apportion attorneys fees among the three contracts.  The intermediate appellate court affirmed the denial on those grounds.  The Supreme Court certified this question:  "Did the Appellate Court improperly affirm the judgment of the trial court denying the defendant's motion for contractual attorney's fees?"  The Supreme Court answered this question affirmatively and remanded for further proceedings.

The Supreme Court held, "when certain claims provide for a party's recovery of contractual attorney's fees but others do not, a party is nevertheless entitled to a full recovery of reasonable attorney's fees if an apportionment is impractical because the claims arise from a common factual nucleus and are intertwined."  The court concluded that defendant should not be required to apportion attorney's fees between the goodwill and noncompete contract claim, for which attorney's fees were recoverable, and the equipment contract, for which attorney's fees were not recoverable, because the claims involved the same transaction, the same parties, the same conduct and the same time frame.  Under these circumstances, the court concluded apportioning attorneys fees among and between the contracts was not practicable.

Craig Estlinbaum

April 24, 2013 in Civil Law, Contract Issues, Remedies, State Law | Permalink | Comments (0)

Monday, March 18, 2013

Virginia Conference on Reparations

From Alfred Brophy, The Faculty Lounge:

This Friday the University of Virginia's Carter Woodson Institute is hosting a symposium on the question, "Does Reparations Have a Future?"  I suppose the short answer is that people are continuing to use reparations talk as a way of organizing their thoughts and actions around racial justice -- even as the case for reparations has been largely defeated in the courts and in legislatures.

Full post.

Craig Estlinbaum

March 18, 2013 in Conferences, Faculty, Law Schools, Remedies | Permalink | Comments (0)

Wednesday, January 16, 2013

Tort Law: Pets and Sentimental Value

The Supreme Court of Texas heard oral arguments on January 10 to answer whether or not a pet owner can recover for the sentimental value of a dog lost due to another's negligence. 

The case is Carla Strickland v. Kathryn and Jeremy Medlen (Case No. 12-0047).  The case came to the Texas high court following an intermediate appeallate court's opinion reversing a trial court's order dismissing the claim against Strickland with prejudice.  According to a David Yates report in the Southeast Texas Record, the allegations in the case are that an animal shelter took possession of the Medlen's dog after it escaped the Medlen's yard.  Jeremy Medlen went to pick up the animal, but did not have enough money to cover the fees.  Medlen alleges he was told he could come back with the money and a "hold for owner" tag would be put on the dog.  Strickland, it is alleged, neglegently put the dog on the list of animals to be euthanized, and it was, and when Medlen returned for the dog, he learned what had happened.

More after the jump:

Continue reading

January 16, 2013 in Interesting Cases, Remedies, State Law, Texas Law | Permalink | Comments (0)

Friday, August 31, 2012

Supreme Court of Texas Applies Value-to-the-Taker Rule in Condemnation Case

When a condemning authority exercises its eminent domain power, the Federal and (usually) State Constitutinos require that authority pay fair market value to the property owner for the property taken at the time of taking.  Fair market value is determined by the property's highest and best use of the property, and the property's current use is the presumed highest and best use.  Courts may not include in the fair market value, however the value to the condemning authority, also known as special value to owner, or value-to-the-taker.  The compensation should reflect what the landowner lost, not what the condemnor gained.  Boston Chamber of Commerce v. City of Boston, 217 U.S. 189 (1910).  This value-to-the-taker rule serves to keep an owner from receiving a windfall based on the property's special or unique value to the condemnor.

The Avinger family in Enbridge Pipelines (East Texas) L.P. v. Avinger Timber, LLC,  ___ S.W.3d ___ (No. 10-0950, August 31, 2012) (6-3 decision) owned vacant land in a gas producing area uniquely situation for a gas production plant.  In 1973, the Avinger family leased a 23-acre property to Tonkawa Gas Processing Co., a private concern, for construction of a gas plant.  There were several lease renewals on agreed terms until 2007, when the parties could n on longer agree on renewal terms.  Tonkawa then merged with Enbridge Pipelines, an entity with condemning authority.  Enbridge petitioned to condemn Avinger's interest in the property (all improvements belongs to the gas company); the commissioners awarded Avinger $45,580 at the commissioner's hearing.  Avinger appealed.

At trial Enbridge submitted an appraisal with a value for the Avinger tract being $47,940 on a highest and best use of rural residential construction.  Avinger's expert valued Avinger's interest to be $20,955,000 using a highest and best use as industrial property - gas processing plant.

Avinger's expert included in his valuation that savings to Enbridge by being able to condemn the property.  Because the lease provided that Enbridge could remove the plant from the land and restore the land to its original condition, Avinger's only interest in the property was the vacant land.  However, the expert included Enbridge's cost savings by not having to tear down and relocate the plant; a cost Enbridge saved by condemning the property.  The Court held that because the appraisal includes value-to-the-taker as part of the value of the comdenmee's value, the appraisal should have been excluded.

The Supreme Court also affirmed the appeallate court's decision to affirm the trial court's exclusion of Enbridge's appraiser.  That appraiser established the highest and best use despite the presumtion that the law presumes the property's use for the last almost 40 years would be the highest and best use.  The Court noted the property was uniquely situated for operating a gas plant due to pipelines and roads accessing and crossing the property. 

With both appraisals found wanting, the Court remanded the case back for a new trial, possibly with different appraisers, or at least new appraisal methodologies.  As a general rule, when two appraisals come in with a difference of 43,600%, the red flags should be flying high for any court. 

The dissent reportED that the majority errED by referenceing Avinger's expert report because that report was never admitted into evidence.  The dissent claims the testimony from the appraiser was adequate to affirm the lower court's decisions.  The dissent makes a good point regarding the state of the evidence, perhaps, but their view did not carry the day with the nine justices that mattered.

Craig Estlinbaum

August 31, 2012 in Constitutional Law, Interesting Cases, Remedies, Texas Law | Permalink | Comments (2)

Friday, August 24, 2012

California Abolishes the Release Rule

The common law release rule provides that a plaintiff’s settlement with, and release from liability of, one joint tortfeasor also releases from liability all other joint tortfeasors.

The California Supreme Court repudiated the common law release rule yesterday in Lueng v. Verdugo Hills Hospital, No. S192768 (Cal. August 23, 2012).  The unanamous court wrote:

The rationale for the common law release rule was “that there could be only one compensation for a joint wrong and since each joint tortfeasor was responsible for the whole damage, payment by any one of them satisfied plaintiff’s claim against all.”  That rationale assumes that the amount paid in settlement to a plaintiff in return for releasing one joint tortfeasor from liability always provides full compensation for all of the plaintiff’s injuries, and that therefore anything recovered by the plaintiff beyond that amount necessarily constitutes a double or excess recovery.  The assumption, however, is unjustified.  For a variety of reasons — such as the settling defendant’s limited resources or relatively minor role in causing the plaintiff’s injury — a plaintiff may be willing to release one tortfeasor for an amount far less than the total necessary to fully compensate the plaintiff for all injuries incurred.  As Dean Prosser observed in his criticism of the common law release rule:  “There is a genuine distinction between a satisfaction and a release.”

Craig Estlinbaum 

August 24, 2012 in Recent Developments, Remedies, State Law | Permalink | Comments (0)

Wednesday, August 1, 2012

Missouri Supreme Court: Med Mal Recovery Cap is Unconstitutional

On Tuesday, the Missouri Supreme Court that legislative caps on the amount an injured plaintiff may recover for non-economic damages in a medical malpractice case violate the state's constitutional right to trial by jury.  Watts v. Lester E. Cox Medical Centers, No. SC91867 (Mo. July 31, 2012).  The court decided the case 4-3.

The Missouri legislature previously passed a law limiting the recovery for non-economic damages in a medical malpractice case to $350,000.  Deborah Watts brought suit against her physician on behalf of her child, Naython Kayne Watts, for brain injuries sustained by the child during pre-natal care and delivery.  A Missouri jury awarded Watts $1.45 million in non-economic damages, however, following the recovery cap law, the trial court reduced the recovery to $350,000. 

The Missouri Supreme Court employed a textual and historical analysis to overturn the recovery limitation law.  Missouri's state consitution, adopted in 1820, guarantees that "the right of trial by jury as heretofore enjoyed shall remain involate..."  The court read the guarantee to mean that if Missouri common law entitled a plaintiff to a jury trial on non-economic damage in a medical negligence action prior to the state consitution being enacted, then Watts had that same right guaranteed in the present.

The court found that Blackstone identified medical negligence as one of "five types of private wrongs" that could be redressed in court, and that English common law allowed plaintiffs so injured to recover non-economic damages.  Further, the court found that Missouri law pre-statehood provided for a jury trial in "all cases of the value of one hundred dollars ... if either of the parties require it."  Because the right to jury trial on non-economic damages in a medical malpractice existed at common law prior to 1820, the court concluded, Watts enjoys a constitutionally guaranteed right to trial by jury on her claim for non-economic damages.

The court's decision overturned Adams by and Through Adams v. Children's Mercy Hospital, 832 S.W.2d 898, 907 (Mo. 1992) which had previously upheld the recovery cap against a similar state constitutional challenge.  The disagreement between Adams and Watts is on whether or not the Missouri right to trial by jury is satisfied by the mere trial before the jury.  Inasmuch as the law allows the jury to hear the evidence and assess damages, Adams concluded, the constitutional guarantee is satisfied even though the recovery cap essentially renders the jury's decision without meaning beyond the cap amount.  The Watts court rejected this interpretation: 

Adams fundamentally misconstrues the nature of the right to trial by jury. While [the Missouri Constitution] sets the constitutional role of the jury, it does so by guaranteeing an individual right to a trial by jury. The application of [the recover cap law] may permit the jury to perform its constitutional role, but it deprives the individual of his or her right to the damages awarded by the jury. The constitutional significance of the jury’s role in determining damages is reflected in the analytical basis for determining whether the right to trial by jury attaches -- if the action is a civil action for damages, then the right to a jury trial attaches and must “remain inviolate.”  Because the constitutional right to a civil jury trial is contingent upon there being an action for damages, statutory limits on those damages directly curtail the individual right to one of the most significant constitutional roles performed by the jury -- the determination of damages. The argument that section 538.210 does not interfere with the right to trial by jury because the jury had a practically meaningless opportunity to assess damages simply “pays lip service to the form of the jury but robs it of its function.”

Citations omitted. 

States continue to return mixed verdicts on state constitutional challenges to recovery cap legislation, typically on textual, historical or structural grounds.

Craig Estlinbaum

August 1, 2012 in Civil Law, Constitutional Law, Interesting Cases, Litigation, Remedies, State Law | Permalink | Comments (0)

Thursday, December 1, 2011

Bey, Announcing Remedies

Professor Sam Bray recently posted on SSRN his forthcoming paper in Cornell Law Review on Remedies. The abstract provides:

It is a familiar ideal that the remedy should fit the wrong – this wrong, by this wrongdoer, against this victim. Modern legal systems ordinarily pursue this kind of fit, at least in civil cases, by tailoring the remedy case by case. There is an alternative, though, which is for a legal system to announce in advance exactly what the remedy will be for all violations of a legal rule. This Article analyzes this alternative, and it offers a theory for when remedies should be announced.

Announcing has important social benefits. First, there is greater equality, because what a successful litigant recovers is not affected by her race, gender, or other characteristics. Second, announcing produces greater compliance with legal rules, because it assures the public that remedies are not being unfairly manipulated. Third, announcing reduces the “costs of telling.” When remedies are decided case by case, a plaintiff’s recovery depends on how successfully she tells her story. This telling has personal costs, such as impaired hedonic adaptation, that are avoided when remedies are announced.

In achieving these benefits, announcing does not operate as a unitary phenomenon. Sometimes it performs a cost-saving function, sometimes a communication function, and sometimes a precommitment function. Distinguishing between these functions is critical to proper use of announcing. Other important considerations include the interplay of rights and remedies, the need for future-proofing, and the way announcing one remedy can affect the entire system of remedies.

This paper looks very interesting and can be downloaded here.

Mitchell H. Rubinstein

December 1, 2011 in Remedies | Permalink | Comments (0)

Friday, February 5, 2010

Illinois Supreme Court Strike Med-Mal Damages Caps

The Illinois Supreme Court yesterday ruled that an Illinois statute capping damages in medical malpractice lawsuits violates the state constitution's separation of powers clause.  The court's opinion, including concurrences and dissents, is here.

Craig Estlinbaum

February 5, 2010 in Remedies, State Law | Permalink | Comments (0)

Tuesday, June 2, 2009

Eisenberg, et al. on The Decision to Award Punitive Damages

Theodore Eisenberg (Cornell Law), Michael Heise (Cornell Law), Nicole L. Waters (National Center for State Courts) and Martin T. Wells (Cornell University and Weill Medical Center) have posted "The Decision to Award Punitive Damages: An Empirical Study" on the Social Science Research Network.  Here is the abstract:

Empirical studies have consistently shown that punitive damages are rarely awarded, with rates of about three to five percent of plaintiff trial wins. Using the 2005 data from the Bureau of Justice Statistics Civil Justice Survey, this article shows that knowing in which cases plaintiffs sought punitive damages transforms the picture of punitive damages. Not accounting for whether punitive damages were sought obscures the meaningful punitive damages rate, the rate of awards in cases in which they were sought, by a factor of nearly 10, and obfuscates a more explicable pattern of awards than has been reported. Punitive damages were surprisingly infrequently sought, with requests found in about 10% of tried cases that plaintiffs won. Punitive damages were awarded in about 30% these trials. Awards were most frequent in cases of intentional tort, with a punitive award rate of over 60%. Greater harm corresponded to a greater probability of an award: the size of the compensatory award was significantly associated with whether punitive damages were awarded, with a rate of approximately 60% for cases with compensatory awards of $1 million or more. Regression models correctly classify about 70% or more of the punitive award request outcomes, Judge-jury differences in the rate of awards exist, with judges awarding punitive damages at a higher rate in personal injury cases and juries awarding them at a higher rate in nonpersonal injury cases. These puzzling adjudicator differences may be a consequence of the routing of different cases to judges and juries.

Craig Estlinbaum

June 2, 2009 in Remedies | Permalink | Comments (0) | TrackBack (0)

Friday, February 6, 2009

Colby on punitive damages (Yale Law Journal)

The Yale Law Journal has published Thomas B. Colby (George Washington), "Clearing the Smoke from Philip Morris v. Williams: The Past, Present, and Future of Punitive Damages" in its December 2008 issue.

Professor Colby concurs with the Williams holding prohibiting a court from assessing punitive damages to punish a defendant for harm caused to third parties, but does so on grounds different and distinct from those offered by the Supreme Court.  Colby addresses the distinction between punishment for public wrongs, which he argues requires due process safeguards, with punishment for private wrongs done to individual plaintiffs, a distinction Colby says the Supreme Court has avoided in its punitive damages jurisprudence.  Colby argues that "punitive damages are constitutional if they fulfill their historical role of punishing the defendant for the private wrong committed upon the individual plaintiff," but cannot pass constitutional muster, "as punishment for the public wrong visited on society."  His concluding section, which invokes law and economics' optimal deterrence theory and includes a well-developed discussion about the different deterrence goals in the civil and crimimal system, is especially worth the read. 

Readers interested in this subject may want to visit this earlier post pointing to two other recent articles on punitive damages appearing in the most recent Cornell Law Review and William & Mary Law Review, respectively.

Craig Estlinbaum

February 6, 2009 in Law Review Articles, Litigation, Remedies | Permalink | Comments (0) | TrackBack (0)

Thursday, February 5, 2009

Markel, Seiner on punitive damages

Two good law review articles on punitive damages have been released this month.  The Cornell Law Review has published "Retributive Damages: A Theory of Punitive Damages as Intermediate Sanction" by  Dan Markel (Florida State).  Here is the abstract:

Not long ago, Professor Cass Sunstein and his co-authors lamented that our legal culture lacks “a full normative account of the relationship between retributive goals and punitive damages.” This Article offers that full normative account—through a theory of “retributive damages” as  intermediate civil sanctions. Under the retributive damages framework, when people defy certain legal obligations, the state may either seek to punish them through traditional criminal law or make available the sanction of retributive damages, which would be credited against any further criminal sanctions imposed by the state for the same misconduct. Accompanied by an intermediate level of procedural safeguards, retributive damages statutes would empower private parties to act on behalf of the state to seek the imposition of what is in effect a civil fine determined largely by the reprehensibility of the defendant’s misconduct. The base amount of the fine would assess a percentage of the defendant’s wealth (or net value for entities) that increases with the reprehensibility of the defendant’s misconduct, an assessment informed by guidelines and commentary provided by the state. The total retributive damages award should also include gain-stripping amounts, if any, in excess of compensatory damages, as well as lawyers’ fees and a modest and fixed award for the plaintiff for bringing the matter to the public’s attention. These payments (to the state, the plaintiff, and the lawyers) together constitute a sensible way to structure the aspect of extra-compensatory damages designed to advance the public’s interest in retributive justice.

After offering some background on punitive damages and how retributive justice differs from other rationales for punitive damages (such as optimal deterrence or victim vindication), the Article describes the structure of retributive damages and clarifies the comparative advantages of  retributive damages vis-`a-vis other remedies and mechanisms. Finally, the Article defends the retributive damages framework against possible constitutional objections. Importantly, the account here not only answers Sunstein’s challenge, but also promises to make sense of the Supreme Court’s recent and somewhat puzzling holding in Philip Morris USA v. Williams, i.e., that juries may not calculate punitive damages by considering the amount of harm caused to nonparties to the litigation.

Markel also has forthcoming "How Should Punitive Damages Work?" in the University of Pennsylvania Law Review and these two articles make an important contribution to the punitive damages debate.

The William & Mary Law Review has published "The Failure of Punitive Damages in Employment Discrimination Cases:  A Call for Change" by Joseph A. Senier (South Carolina) in its most recent issue.  This article addresses the Title VII's punitive damages framework and recommends a 3-part test for awarding liquidated (versus exemplary) damages in employment discrimination cases.  From the article:

[T]he three-part test for determining liquidated damages in Title VII claims of intentional discrimination would proceed as follows:

1. The plaintiff would have the burden of persuasion of demonstrating intentional discrimination to the trier of fact.

2. If intentional discrimination is proven, the trier of fact and district court judge would determine the appropriate amount of relief under the statute. The question of punitive damages would not be at issue.

3. The defendant would have an opportunity to establish an affirmative good faith defense to the trier of fact. If the defense is successful, no liquidated damages would be awarded. If the defense is unsuccessful, the district court would award liquidated damages in the amount equal to actual damages in the case.

These articles are recommended for anyone interested in recent scholarship about punitive damages.

Craig Estlinbaum

February 5, 2009 in Law Review Articles, Litigation, Remedies, Title VII | Permalink | Comments (0) | TrackBack (0)

Thursday, February 7, 2008

NY Court of Appeals Rejects 6 month limitation on AIDS Phobia Lawsuits

Imagine, your a medical professional and are negligent stuck with a contaminated needle from a patient dying from AIDS. Your afraid that your going to come down with this dreaded disease. Query: How long a period of time are you entitled to recover for pain and suffering?

In Ornstein v. NYC Health and Hospitals Corporation, __N.Y.3d__(2008), the Court of Appeals reversed a 6 month cap for such pain and suffering that had been imposed on by the lower courts. The Court unanimously ruled that the 6 month time limit "appears to be unprecedented in our common law tort jurisprudence" and is unfair to the victims of possible negligent exposure to AIDS who sometimes suffer for far longer than six months from "AIDS-phobia," the fear of having been exposed to the disease.

A February 8, 2008 New York Law Journal article about this case is available here.

This is an important case dealing with damages.

Mitchell H. Rubinstein

February 7, 2008 in Remedies | Permalink | Comments (0) | TrackBack (0)

Wednesday, February 6, 2008

Punitive Damages Reduced in Westboro Church Case

On March 3, 2006, Lance Cpl. Matthew Snyder died in a non combat-related vehicle accident in Al Anbar province, Iraq.  At his funeral in Westminster, Maryland a week later, members of the Westboro Baptist Church of Topeka, Kansas protested.  Lance Cpl Snyder's father sued Westboro and other defendants for intentional infliction of emotional distress and invasion of privacy.  A federal jury found for Mr. Snyder and awarded $2.9 million in compensatory damages and $10 million in exemplary damages. Defendants filed various post-trial motions, including a motion to reduce the exemplary damages on Due Process grounds.

Monday, U. S. District Judge Richard D. Bennett (Maryland) affirmed the liability finding and the compensatory damage amount, but reduced by over 70% the punitive damages the jury awarded to Mr. Snyder.  The case is styled Albert Snyder v. Fred W. Phelps, et al, No. RDB-06-1389 (D. Md. Feb. 4, 2008).

In his opinion, Judge Bennett examined the damage award under the excessiveness guideposts established by the U.S. Supreme Court in BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996).  These guideposts are “(1) the degree of reprehensibility of the defendant's misconduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award; and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases.”   

The judge also examined Maryland law, which adopts the Gore standard, and examines six other factors to consider when reviewing punitive damage awards for constitutional excessiveness.  These six factors are, "1) the defendant's ability to pay; 2) the deterrent value of the punitive damages award; 3) punitive damages awarded in comparable cases; 4) other punitive damages awarded against the same defendant; 5) whether the punitive damages were for separate torts arising out of the same incident; and 6) the plaintiff's costs and expenses.  Bowden v. Caldor, Inc., 710 A.2d 267 (Md.1998).

This case has garnered considerable national attention due to its facts.  For our purposes, however, Judge Bennett offers here a useful and well-written example on how to apply the Gore standards to review a punitive damage award for Due Process excessiveness.

Craig Estlinbaum

February 6, 2008 in Interesting Cases, Remedies | Permalink | Comments (0) | TrackBack (0)

Hyman, et al., on Medical Malpractice Damage Caps

David A. Hyman (Illinois), Bernard Black (Texas), Charles Silver (Texas) and William M. Sage (Texas) posted "Estimating the Effect of Damage Caps In Medical Malpractice Cases:  Evidence from Texas" on the Social Science Research Network.  Here is the abstract:

Using claim-level data, we simulate the effect of Texas's 2003 cap on non-economic damages on jury verdicts, post-verdict payouts, and settlements in medical malpractice cases closed during 1988-2004. For pro-plaintiff jury verdicts, the cap affects 47% of verdicts, and reduces mean allowed non-economic damages, mean allowed verdict, and mean payout by 73%, 37%, and 26%, respectively. In total, the non-econ cap reduces adjusted verdicts by $156M, but predicted payouts by only $60M. The impact on payouts is smaller because a substantial portion of the above-cap damage awards were not being paid to begin with. In cases settled without trial, the non-econ cap affects 18% of cases; and reduces predicted mean payout for non-economic damages (predicted mean total payout) by 38% (18%). The non-econ cap has a smaller impact on settled cases than tried cases because settled cases tend to involve smaller payouts.

The impact of the non-econ cap varies across plaintiff categories. Deceased, unemployed, and elderly plaintiffs suffer a larger percentage reduction in payouts than living, employed, and non-elderly plaintiffs, these differences are statistically significant for the first two comparisons.

We also simulate the effects of different caps, and find substantial differences in cap stringency across states. Different caps reduce aggregate payouts in tried cases (all cases) by between 16% and 65% (7% and 42%). Caps on total damages have especially large effects.

The authors take no position on the merits of damage caps, seeking instead to "provide[] an objective basis for estimating the likely effects of specific caps, both and in the aggregate and for particular categories of plaintiff."  As damage caps become more prevalent in the states, empirical studies such as this one will play a key role in determining what caps most effectively balance the victim's right to full recovery for harm done against the need to restrain unreasonably large jury verdicts.

Craig Estlinbaum

February 6, 2008 in Remedies, Texas Law | Permalink | Comments (0) | TrackBack (0)