Friday, April 06, 2007

USSC limits state punitive damage awards

The U.S. Supreme Court recently held that "a large state-court punitive damages award" that is based in part on the desire to punish the defendant for harm to non-parties (i.e., people not before the court), is an unconstitutional taking under the Due Process Clause. Click on link above or see Philip Morris USA v. Williams, 2007 WL 505781 (2007). This decision builds upon the Court's 2003 decision in State Farm Mut. Auto. Ins. Co. v. Cambell, 538 U.S. 408 (2003).

Williams noted several rationales for its decision. First, a defendant threatened with punishment for harm to non-parties is unable to defend itself by pointing out factors such as the non-parties' culpability, knowledge, and other relevant factors. Second, a jury would be likely to make a standardless punitive damages determination because it would have to speculate on issues such as how many victims exist, how seriously were they injured, and what the circumstances of injury were. This speculation would violate fundamental due process concerns -- risk of arbitrariness, uncertainty, and lack of notice. Williams noted that BMW left open the question of "harm to others" as a basis for a punitive damages award -- a door that was closed in Williams.

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