United States: Why Courts Should Not Defer To Phantom Factual Findings When Reviewing Punitive Damages Awards For Excessiveness

Last Updated: December 23 2014
Article by Evan M. Tager and Andrew L. Frey

Everyone who follows punitive damages law knows that the Supreme Court has identified three guideposts for determining whether a punitive award is excessive under the Due Process Clause: (i) the degree of reprehensibility of the defendant's conduct; (ii) the ratio of the punitive damages to the compensatory damages and/or the harm to the plaintiff that was likely to result from the defendant's conduct; and (iii) the disparity between the punitive damages and the legislatively established penalties for comparable conduct.  The first guidepost in particular requires an assessment predicated on the facts of the case, which the parties will likely have disputed.  How should courts go about resolving those disputes?

Many practitioners and courts assume that in conducting excessiveness review, courts should take the evidence in the light most favorable to the plaintiff, just as they do when determining whether the evidence is sufficient to support a liability finding.  Unless the jury has made specific factual findings, however, that assumption is wrong, except to the extent that the facts in question were necessary to the jury's finding of punitive liability.  The reason is that whereas a finding of liability necessarily constitutes a factual finding that each indispensable element of the cause of action has been established, the jury's function in setting the amount of punitive damages does nottypically involve determining whether any particular fact has been proven.

Once the punishment-setting stage is reached, the jury generally is not instructed that it must find particular facts.  Instead, the jury essentially is asked to make an impressionistic judgment about the amount of punishment to exact.  The resulting verdict is the legal equivalent of an ink blot, subject to any number of possible interpretations.

Because it is not possible to tell what facts (if any) the jury found in setting an amount of punitive damages or what relative weight it gave to any facts that may have been found, application of a sufficiency-of-the-evidence standard results in deference being given to what in all probability are phantom factual determinations.  It is simply not true that a large punitive verdict necessarily entails a finding of high reprehensibility.  A headline-making award might be (and all too often is) based largely or entirely on the defendant's finances; or it might be based on some other unknown or undisclosed consideration.

The California Supreme Court is the leading exponent of the view that reviewing courts should not defer to "findings" that the jury neither expressly nor implicitly made.  It explained in its seminal decision in Simon v. San Paolo U.S. Holding Co., 113 P.3d 63 (Cal. 2005), that when the jury has not made an express finding of fact, giving the plaintiff the benefit of all permissible inferences merely because the jury awarded a substantial amount of punitive damages would allow the punitive award to "indirectly justify itself."  Accordingly, it held that "[w]hile we defer to express jury findings supported by the evidence, in the absence of an express finding on the question we must independently decide" the existence of particular disputed facts bearing on the amount of punitive damages.

A decision by the Second Circuit exemplifies the countervailing position.  In Payne v. Jones, 711 F.3d 85 (2d Cir. 2013), the court expressed grave concerns about the administration of punitive damages and carved out an aggressive role for reviewing courts.  Yet it nonetheless stated—without analysis or citation—that "[o]n a motion to set aside or reduce a jury verdict for excessiveness, trial courts and appellate courts alike are required to view all evidence in the light most favorable to sustaining the verdict, and neither court is free to substitute its own fact findings or credibility determinations for those of the jury."

The facts of Payne illustrate why the court was mistaken in assuming that sufficiency-of-the-evidence review applies.  The case involved a claim of police brutality.  One highly disputed fact was whether the defendant was a recidivist.  A witness for the plaintiff testified that the defendant had used excessive force against him a few years earlier, but two police officers testified that the complainant had resisted arrest and that the defendant used no more force than was necessary to subdue him.

The jury didn't need to resolve this factual dispute in order to find either that the defendant had used excessive force against the plaintiff or that the standard for punitive damages had been satisfied.  But the Second Circuit accepted that the defendant was a recidivist merely because the jury awarded $300,000 in punitive damages.  As the California Supreme Court would put it, that allows the award "indirectly to justify itself."  And it is also apt to produce false-positive determinations of high reprehensibility, thereby undermining the effectiveness of the guideposts as constraints on excessive awards.

Consider, for example, the following hypothetical based on Payne.  Suppose that the plaintiff's wife (i.e., an inherently biased witness) testified that the defendant police officer beat her up at a particular time on a particular day in the middle of St. Patrick's Cathedral and that ten bishops testified that they were there that day at that time and that nothing of the sort took place.  This is the kind of credibility dispute that the Second Circuit would say must be resolved in favor of the plaintiff, even though no court reviewing the evidence independently would accept the wife's biased testimony over the unbiased testimony of the ten bishops.

Absent Supreme Court review, this issue is not likely to go away soon.  In the mean time, defendants will need to be vigilant not to acquiesce in the Second Circuit's mistaken assumption when litigating in courts in which the issue remains open.  And in the Second Circuit, defendants will need to consider whether to seek explicit factual findings on various issues that might bear on the guideposts on the theory that they would be no worse off if the jury finds against them than if there are no express factual findings at all—although often these are matters of degree not subject to "yes" or "no" answers and therefore not readily amenable to special verdicts.

Tags: reprehensibility

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2014. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions