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Does
the Due Process Clause of the Fourteenth Amendment to the Federal Constitution,
as interpreted by State Farm v. Campbell, preclude a bifurcated trial
plan in a consolidated action consisting of personal injury claims of approximately
1,000 individual smokers, wherein Phase I of the trial would decide certain elements
of liability and a punitive damages multiplier and Phase II of the trial would
decide for each plaintiff compensatory damages and punitive damages based upon
the punitive damages multiplier determined in Phase I?
For the reasons that follow, we answer the certified question in the negative.
On January 11, 2000, the circuit court entered a “Case Management Order/Trial Plan” (See footnote 1) that ordered the consolidation of all pending personal injury tobacco cases in a single consolidated trial, with the trial issues to be bifurcated as follows:
(a)
Phase I - General liability issues common to all defendants including, if appropriate,
defective product theory; negligence
theory;
warranty theory; and any other theories supported by pretrial development.
Also to be tried in Phase I will be entitlement to punitive damages[.]
(b)
Phase II - Individual claims of the plaintiffs whose cases have been consolidated.
Either separate individual juries, judge or judges will independently address
issues unique to each plaintiff's compensatory damages and any other individual
issues in reasonably sized trial groups or on an individual basis.
The defendant
tobacco companies ultimately moved to revise this trial plan by removing the
issue of the entitlement to and, if appropriate, the amount of punitive damages
from the jury's consideration in Phase I of the trial based on the U.S. Supreme
Court case of State Farm v. Campbell, 538 U.S. 408, 123 S.Ct. 1513, 155
L.Ed.2d 585 (2003). By order
of June 16, 2004, the circuit court vacated and set aside the January 11, 2000,
trial plan order. The circuit court found that Campbell stands for the
principle that the conduct of a party against whom punitive damages are sought
must have a direct nexus to a specific person who claims to have been damaged
by that conduct. The circuit court further found that “[t]he emphasis
upon a subjective analysis of the defendant's conduct vis-a-vis a specific
plaintiff requires that the defendant's conduct be tailored to each plaintiff[,]” and
concluded that this could not be accomplished under the existing trial plan
order. The circuit court certified the question set forth above to this Court
in a September 24, 2004, order and answered the question in the affirmative.
The
[insureds] have identified scant evidence of repeated misconduct of the sort
that injured them. Nor does our review of the Utah courts' decisions convince
us that State Farm was only punished for its actions toward the [insureds]. Although
evidence of other acts need not be identical to have relevance in the calculation
of punitive damages, the Utah court erred here because evidence pertaining to
claims that had nothing to do with a third-party lawsuit was introduced at length.
Other evidence concerning reprehensibility was even more tangential. For example,
the Utah Supreme Court criticized State Farm's
investigation into the personal life of one of its employees and, in a broader
approach, the manner in which State Farm's policies corrupted its employees.
The [insureds'] attempt to justify the courts' reliance upon this unrelated
testimony on the theory that each dollar of profit made by underpaying a third-
party claimant is the same as a dollar made by underpaying a first-party one.
For the reasons already stated, this argument is unconvincing. The reprehensibility
guidepost does not permit courts to expand the scope of the case so that a
defendant may be punished for any malfeasance, which in this case extended
for a 20-year period. In this case, because the [insureds] have shown no conduct
by State Farm similar to that which harmed them, the conduct that harmed them
is the only conduct relevant to the reprehensibility analysis.
538 U.S. at 423-24, 123 S.Ct. at 1523-24 (citations omitted).
After
carefully considering the parties' arguments and the Supreme Court's decision
in Campbell, this Court finds that Campbell, which did not involve
mass tort litigation, does not per se preclude the circuit court's original trial
plan. We emphasize that the question before this Court is a narrow one. Accordingly,
our answer is strictly limited to this narrow question. Our response is limited
to the issue of whether State Farm v. Campbell precludes a bifurcated
trial plan like the one below. Further, we do not address whether there may be
other legal reasons to question the circuit court's bifurcated trial plan. Nor
do we, or indeed can we, address in the abstract the specific evidence that may
be presented on the issue of reprehensibility. Our conclusion in this case simply
is, first, we find nothing in Campbell that mandates a reexamination of
our existing system of mass tort litigation. Second, we find nothing in Campbell that
per se precludes a bifurcated trial plan
in which a punitive damages multiplier is established prior to the determination
of individual compensatory damages. Beyond this, we leave more specific issues
for another day. As this Court stated in State ex rel. Mobil Corp. v. Gaughan, 211
W.Va. 106, 563 S.E.2d 419 (2002),
we
cannot substantively address Mobil's concerns regarding the potential use of
a matrix, or a punitive damage multiplier, because the trial court has not yet
definitively ruled upon the use of either of these mechanisms. Accordingly, any consideration
of these issues at this time would be clearly premature. The trial court's announcement
to postpone for the time being, any decision regarding the potential use of a
matrix underscores the precipitous nature of ruling on this issue at this juncture.
Matters such as a matrix and the use of a punitive damage multiplier, given the
unresolved nature of the use of such mechanisms, can be better addressed by this
Court upon appeals taken from final orders.
Gaughan, 211 W.Va. at 216, 563 S.E.2d at 426. Similarly, in the instant
case, any issue beyond that set forth in the certified question is one that
this Court will only consider on appeal with the benefit of a fully developed
record and a final order. To reiterate, it is clear to this Court that Campbell does
not eliminate mass tort litigation as provided for in our Trial Court Rule
26. Further, it is significant to us that bifurcated trial plans structured
like the one at issue are common in West Virginia as well as other jurisdictions.
In sum, absent a clear indication to the contrary, we believe that Campbell does
not preclude the bifurcated trial plan at issue.
The circuit
court found in its order setting aside its original trial plan, and the defendants
agree, that “the conduct of a party against whom punitive damages are sought
must have a direct nexus to a specific person who claims to have been damaged
by that conduct.” Further, “[t]he emphasis upon a subjective analysis
of the defendant's conduct vis- a-vis a specific plaintiff requires that the
defendant's conduct be tailored to each plaintiff. That cannot be accomplished
under the existing Case Management Order.” We reject the circuit court's
application of Campbell.
Campbell stands
for the principle, among others, that “[a] defendant's dissimilar 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.” 538
U.S. at 422-23, 123 S.Ct. at 1523. Notably, the facts in Campbell were
quite extreme. As noted above, the plaintiffs in Campbell brought what
the Supreme Court characterized as a third-party bad faith claim against their
insurer. In order to show the reprehensibility of the insurer's conduct, the
plaintiffs were permitted to introduce evidence of insurer misconduct that had
nothing to do with the type of misconduct that injured them. “For example,
the Utah Supreme Court [in upholding the verdict in Campbell] criticized
State Farm's investigation into the personal life of one of its employees and,
in a broader approach, the manner in which State Farm's policies corrupted its
employees.” Campbell, 538 U.S. at 424, 123 S.Ct. at 1523.
In application
of this principle to the instant case, it is the role of the circuit court to
ensure that the plaintiffs' evidence is relevant, reasonably related to the acts
upon which liability is premised, and supports their claim for punitive damages.
Therefore, we find nothing in the circuit court's original trial plan that prevents
the admission of evidence that is proper under Campbell.
Another
concern raised by the defendants is that the circuit court's original trial plan
would not ensure that punitive damages are proportionate to the injury caused
to individual plaintiffs. Again, we disagree. As noted above, the circuit court's
original trial plan anticipates that the defendants' general liability and a
punitive damages multiplier would be determined in the first trial phase. In
the second phase, compensatory damages would be determined for each individual
plaintiff after individual evidence is presented. Finally, the punitive damages
multiplier determined in the first phase would be applied to each plaintiff's
compensatory damages award in order to reach the proper amount of punitive damages
for each plaintiff.
Concerning
the proper ratio of punitive damages to compensatory damages, the Court in Campbell opined,
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.
Our jurisprudence and the principles it has now established demonstrate, however,
that, in practice, few awards exceeding a single-digit ratio between punitive
and compensatory damages, to a significant degree, will satisfy due process.
In [Pacific Mut. Life Ins. Co. v.] Haslip, [499 U.S. 1, 111 S.Ct.
1032, 113 L.Ed.2d 1 (1991)] in upholding a punitive damages award, we concluded
that an award of more than four times the amount of compensatory damages might
be close to the line of constitutional impropriety. We cited that 4-to-1 ratio
again in [BMW of North America, Inc. v.] Gore [517 U.S. 559,
116 S.Ct. 1589, 134 L.Ed.2d 809 (1996)]. The Court further referenced
a long legislative history, dating back over 700 years and going forward to
today, providing that sanctions of double, treble, or quadruple damages to
deter and punish. While these ratios are not binding, they are instructive.
They demonstrate what should be obvious: Single-digit multipliers are more
likely to comport with due process, while still achieving the State's goal
of deterrence and retribution, than awards with ratios in range of 500 to 1,
or, in this case, 145 to 1.
Campbell, 538 U.S. at 424-425, 123 S.Ct. at 1524 (citations omitted).
The defendants below contend that by determining the punitive damages multiplier
prior to determining individual compensatory damages, there is no way to ensure
the proper ratio between the two. We disagree.
This
Court has recognized the duty of trial courts to review punitive damage awards. See
Bowyer v. Hi-Lad, Inc. 216 W.Va. 634, 49, 609 S.E.2d 895, 910 (2004) (stating
that “[i]f a jury awards punitive damages to a litigant, a circuit court
must carefully review the jury's verdict”); Garnes v. Fleming Landfill,
Inc., 186 W.Va. 656, 413 S.E.2d 897 (1991) (setting forth the factors for
trial courts to consider when reviewing awards of punitive
damages). In cases like the instant one, we are confident that once individual
compensatory and punitive damages awards are determined, the trial court can
review each of the awards to ensure that it comports with the principles articulated
in Campbell and other applicable cases. (See
footnote 3)
Therefore,
we now hold that the United States Supreme Court's decision in State Farm
v. Campbell, 538 U.S. 408, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003), does not
preclude the bifurcation of a trial into two phases wherein certain elements
of liability and a punitive damages multiplier are determined in the first phase
and compensatory damages and punitive damages, based on the punitive damages
multiplier, are determined for each individual plaintiff in the second phase.
Again,
in answering the question certified to us, we have determined merely that the
trial court's original trial plan is not violative of Campbell. Beyond
this, we make no judgment on whether the trial court's original plan is the best
method for trying the instant tobacco litigation. Further, we decline to tell
the circuit court how to proceed. This Court has recognized that,
management
of [mass tort] cases cannot be accomplished without granting the trial courts
assigned to these matters significant flexibility and leeway with regard to their
handling of these cases. A critical component of that required flexibility is
the opportunity for the trial court to continually reassess and evaluate what
is required to advance the needs and rights of the parties within the constraints
of the judicial system. Out of this need to deal with “mass litigation” cases
in non-traditional and often innovative ways, TCR 26.01 was drafted and adopted.
State ex rel. Mobil Corp. v. Gaughan, 211 W.Va. 106, 111, 563 S.E.2d
419, 424 (2002). Thus, absolutely nothing in this opinion should be read to
limit a trial court's significant leeway in fashioning a trial plan appropriate
to the specific circumstances of the mass tort case at issue.
For
the reasons set forth above, we answer the certified question as follows:
Does
the Due Process Clause of the Fourteenth Amendment to the Federal Constitution,
as interpreted by State Farm v. Campbell, preclude a bifurcated trial
plan in a consolidated action consisting of personal injury claims of approximately
1,000 individual smokers, wherein Phase I of the trial would decide certain elements
of liability and a punitive damages multiplier and Phase II of the trial would
decide for each plaintiff compensatory damages and punitive damages based upon
the punitive damages multiplier determined in Phase I?
Answer:
No.
Certified
question answered.