Practical Tips on Trying Punitive Damages to the Jury
April 19, 1999
INTRODUCTION
Punitive damages are recoverable in 46 of the 50 states. In two of the four states which prohibit punitive damages, compensatory awards may have a punitive element. (Michigan and New Hampshire.) Thus, an attorney practicing anywhere in the U.S., except for Nebraska, Louisiana, and Washington, must be prepared to present evidence the issue of punitive damages. In light of large amount of the awards recently imposed by juries, the since of testimony relating to these damages can not be underestimated.
Applicable Standard of Conduct
The first step an attorney must undertake in structuring his or her punitive damage case is to determine the standard of liability for imposing punitive damages. In the 46 states which allow punitive damages, there are four generally recognized categories of conduct:
Proof of malice (14 states);
Conduct exceeding gross negligence but not constituting malice (22 states);
Gross negligence (8 states);
Various statutory requirements (2 states, e,g., Louisiana and Massachusetts).
The most stringent standard adopted by 14 states is the malice standard. Under that standard; an injured party must show that the alleged wrongdoer intended to harm the injured party. A slightly less difficult standard adapted in 22 states, requires proof that the perpetrator acted with willful indifference or wanton or reckless conduct. This standard does not require the plaintiff to offer, evidence. regarding the defendant's state of mind. Only eight jurisdictions adopt a gross negligence standard which requires the plaintiff to show that the defendant was unusually careless in his disregard for the possible injurious consequences which could result from this conduct. In the two states which set the standard by statute, various acts are punished by a legislatively set standard.
Voir Dire
If you are reading this article, I assume all motions to strike punitives or bifurcate punitive damages have faded. Thus, you need to "face up" to the fact that you will be trying this issue to the jury and begin to prepare for it in your jury questionnaire and in voir dire. Attached hereto is a jury questionnaire which I prepared that addresses punitive damages. For the sake of space, I have selected the questions which pertain to punitive damages and have only attached those.
Of course, before addressing the jury in voir dire, you have already researched the standard for punitives in your jurisdiction. In your discovery you have gleaned which documents plaintiff will use against your client to prove punitives and you have selected your documents which you will use to defeat punitives. You should be prepared to use these documents in your opening statement. Know your case themes and be prepared to address them both in voir dire and in opening statement.
In terms of voir dire, tell the jury the reason plaintiff is introducing documents Y, Y, and Z is to arouse their passion and prejudice against Company X because plaintiff wants you to punish company X and award him punitive damages. You need to tell the jury that not only did company X not do it and you will prove it but also that the law imposes a higher standard of proof before you can impose punishment. You need to talk about the clear and convincing standard and how that is very difficult to meet (making it sound close to beyond a reasonable doubt), contrasting it with the regular standard of proof. You need a personal commitment from each juror that they will hold the plaintiff to meeting each of these different burdens of proof and that they will keep these burdens of proof separate. It is essential to get a commitment that they will hold plaintiff to its burden of praying liability and will not permit the punitive damage evidence to be bootstrapped into liability thereby lessening plaintiffs burden of proof. The plaintiff will not like it when you spell it out this specifically to the jurors because it works. I have only had defense verdicts and, therefore, never been hit for punitives. I've tried many cases with punitive damage claims, as that appears to be standard faire these days. You cannot go into trial without knowing your evidence and knowing what the plaintiff will argue in closing argument about your documents and have your rebuttal and good documents prepared. You need to know and do this before you talk to the first juror on voir dire.
In terms of the questionnaire, you need to talk to the jurors in voir dire who, on the questionnaire; indicated an easy predilection for imposing punitives and get them to talk about specific examples where they would and would not impose punitive damages. You may get a bad panel, so you need to ferret out those jurors who are definite strikes based on the questionnaire answers and not spend time talking to those. To those you may not like but have to live with because of the luck of the draw, then you will have to talk to them, get examples out of them, and try and set some parameters - boundaries - so you know how to distinguish your evidence from the situation where juror X will automatically vote for punitives and align your evidence with situations where juror X will not vote for punitives. If this sounds like conditioning the jury, you are exactly right. (Of course., if you are a plaintiff’s lawyer reading this article, the reverse, of what is said applies to you).
Opening Statement and Closing Argument
Unfortunately, I believe cases are won or lost on jury selection and the state of the evidence unless you pick a really dumb jury. As a trial lawyer, you should be presenting the evidence so a juror with a 5th grade education can understand it. If this is true, you do not need to argue to persuade them, the strength of the evidence alone should suffice. Opening statement actually should show the jurors how to view the evidence that you will be presenting for your side of the case. You should be giving them tinted sunglasses and explaining the reasons for the tint. They need to know who the witnesses are, what they will say and why their testimony should be believed. You need to tell them everything in plain, simple language.
In the opening statement, the plaintiff's attorney should plant the notion that the defendants in the particular case acted or did not act with malice, gross negligence or whichever standard applies in that particular jurisdiction. By pointing to a defendants’ failure to conduct adequate testing of its product, failure to place a warning on its product or disregard of similar accidents, a plaintiffs counsel can begin to persuade a jury in the opening argument that the defendant acted with reckless disregard of the plaintiff’s and the public's safety. Alternatively, for example, in a state adopting the stringent malice standard, defense counsel should emphasize in its opening argument that punitive damages may not be awarded unless the plaintiff introduces evidence of defendants intent to the harm the plaintiff or the public generally. Defense counsel should plant the seeds early that plaintiff can't meet its burden and will try to exaggerate defendants conduct to satisfy this stringent standard.
In closing argument, defense counsel should repeat, "as I told you in voir dire and in opening statement," the plaintiff has not met his burden of proof on liability and is only waving around these documents to incite your passion and anger against my client because he does not have a liability case. I would tell them not to let him do that; remind them, as you promised them you would in voir dire, that you would not let him use these documents to lessen his burden of proving his case. You understood that both passion and sympathy are not to enter your decision on liability; they are to be kept outside the courtroom. You will then argue your documents, your themes and your reasons for no liability and no punitives, as you told them in voir dire and in opening statement. (Of course, if you are a plaintiff’s lawyer, the reverse is applicable.) I hope this is helpful. I will now provide you with some recent case examples and you can judge whether these principles were applied.
In jurisdictions which bifurcate the trial, evidence of the defendants' financial worth may not be introduced until a jury has concluded that punitive damages are appropriate. However, where bifurcation is not an issue, the plaintiff should always argue evidence of the defendants' worth in opening argument.
SPECIFIC CASE EXAMPLES
Types of conduct that plaintiff would argue justify imposition. of punitive damages include concealment, other accidents and subsequent remedial conduct and existence and frequency of similar past conduct.
Concealment
For example, in Kociemba v. G.D. Searle & Co., 707 F. Supp. 1517(D. Minn. 1989), the manufacturer knew that the IUD it sold posed a danger to certain women and failed to warn of that danger. In Airco, Inc. v. Simmons First National Bank, 638 SW 2d 660(Ark. 1982), the plaintiff established one incident which showed that the defendant had prior knowledge of a problem with a product, an artificial breathing machine. Plaintiff presented the employee who designed the product and testified that he had conducted tests tending to show that the product was inherently dangerous, nevertheless, the manufacturer concealed these tests from the public and continued to sell the product.
Plaintiffs' counsel should also offer the following type of evidence regarding concealment: the nature of the harm concealed by the defendant (obviously the more serious the better), the substantial period of time that the defendant concealed this information from the public, how inexpensive it would been for the defendant to conduct more tests or issue warnings to certain classes of people. Defense counsel must be prepared to offer evidence which disputes defendants concealment of information regarding danger to the public. This can be accomplished by lay and expert testimony that the product was adequately tested and is not dangerous or that the defendant was not aware of the danger from the information known to it at the time. For example, defense counsel can rebut plaintiffs evidence that certain test results establish a defendants knowledge of danger by offering testimony that the safety standard and testing evidence should be rejected as inconclusive or unreliable.
In Merrell Dow Pharmaceuticals v. Havner, 907 S.W. 2d 535 (1994), the appellate court reversed a $20.2 million punitive damage judgment, holding that the evidence was too weak to support a conclusion that the company was consciously indifferent to an extreme risk that its product could cause birth defects; the defendant introduced evidence that it voluntarily submitted data after the falsification episodes and the company regularly reviewed medical journals re this drug and its effects.
THER ACCIDENTS AND PAST CONDUCT
In Pacific Mutual Life Insurance v. Haslip, 499 U.S. 1 (1991), the court allowed plaintiff to introduce evidence of the cross-defendant's unethical treatment of other people, allowing evidence of the existence and frequency of similar past conduct. In Ross v. Black & Decker, 977 F.2d 1178(4th. Cir. 1992), the court permitted evidence regarding prior accidents because it tended to support notice to the defendant as well as evidence of safety standards which tended to establish that the product was unreasonably dangerous. This type of evidence poses the biggest threat to defense counsel in light of the recent Supreme Court rulings on this type of evidence. In a recent landmark U.S. Supreme Court case, TXO Production Corp. v. Alliance Resource Corp., 509 US, 113 S. Ct. 2711 (1993), relying on its earlier ruling in Pacific Mutual Life Insurance v: Haslip, 499 US 1 (1991), permitted plaintiff’s counsel to introduce a broad scope of "other claims and case evidence" in establishing the defendants liability. In TX0, a party intentionally purchased an alleged cloud on title to negotiate a better deal. When that didn't work, the party filed a quiet title action based on the cloud on the title. Alliance received an award of $19,000 in compensatory damages and $10 million in punitive damages, a 500:1 ratio.
In TXO, the court allowed the plaintiff to introduce, "general character" evidence of the cross-defendant's unethical treatment including the defendants: coercing an illiterate client into signing a lease even though they wanted to consult with counsel; failure to pay royalties to another client and backing this failure up with a threat to sue; underpaying royalties by claiming false amounts of royalty, and evidence of numerous other pending lawsuits which had been filed by former clients of the defendants in a real estate action.
The TXO trial court admitted evidence of "other claims" which was devastating to defendants. Defendants need to establish a strategy for narrowing or limiting other claim evidence. Defense counsel should seek to exclude this evidence in a motion in limine. If this is not successful, in opening statement defense counsel should emphasize that plaintiff is seeking to put the defendant on trial for its past act which is punished, not the injury at issue in this case.
In Richards v. Michelin Tire Corp., 21 F.3d 1048 (11th Cir. 1994), where plaintiff sued tire manufacturer after a tire exploded while he was performing mechanic work, the court held punitive damages was inappropriate, based upon evidence that:
- Wantonness requires knowledge that risk of injury is "probable" or "likely"
- 4 out of 15 million products mismatches sold does not satisfy the "likely" or "probable" injury standard.
- Defendant complied with FDA regulations and industry practices
- Defendant provided industry mandated information
- Defendant placed warnings on its product
Similarly, in Vaughn v. Butler, 664 So. 2d 225 (1995), punitive damages were not appropriate because defendant's behavior did not constitute "wanton" conduct; plaintiff sued a home developer for backed-up sewage after septic repair failed. The Court considered the following evidence in making its determination:
- After the problems were identified, the developer attempted to fix the septic system to comply with state regulations.
- Defendant also. sought assistance from more experienced people to cue the problem.
- Nature, combined with mistakes of others, thwarted the remedial measures.
Evidence of a defendant's subsequent improvement to a product, in opening statement, before the other side has an opportunity to request cautionary instructions, can profoundly effect the jury's opinion of the defendant's liability. Defense counsel should seek to preclude this type of evidence by motions in limine or by requesting bifurcation of the trial, thereby keeping this evidence out of the liability phase of the lawsuit.
Other accident evidence can be extremely effective in opening argument as it paints a picture of a vicious or greedy defendant who was aware of potential harm and failed to act. The more similar the past accident(s) are to the accident at issue in the case, the better for the plaintiff, the more dissimilar, the better for the defendant. The frequency of the past accidents establishes the degree of notice to the defendant of the potential harm. The net effect of this approach so early in the case may persuade the jury to associate the defendant with all of these accidents rather than the single salient at issue in the case. Plaintiff’s counsel in its opening statement should argue that even one incident is sufficient to put a defendant on notice of harm, and require warnings and other action. Defense counsel should argue that defendant provided adequate warnings or was not on notice of the harm (sufficient to impose punitive damages) either because the accidents are dissimilar or too uncommon to put them on notice of potential harm. Defendants should, through motions, restrict this evidence and clearly argue it is only relevant in Phase 2, not in the liability phase.
PHASE 2
In closing, most states today permit jurors only to find that defendant acted with malice, willful, wanton, intentional or grossly negligent conduct (depending on your jurisdiction). You will not get into evidence the financial worth of the company until Phase 2. It is only if the jurors find liability AND that you acted with the above intent (they check the box yes). that you will face evidence of net worth, other judgments for the same conduct, other accidents, offsets and insurance. This Phase 2 trial is with the same jury.
Insurance
Although the general rule is that insurance is not admissible to determine the wealth of the defendant, in Wheeler v. Murphy, 192 W. Va. 325 (1994), the Court permitted rebuttal evidence of defendant's insurers, in Phase 2, after defendant offered financial information to the jury regarding financial status. (Message: defendant, beware of offering financial information.) The Court noted that insurance is not admissible for liability purposes it is only admissible in the punitive phase to prove wealth of the defendant.
Limited Wealth - Offsets
In addition to emphasizing the defendants limited financial worth, defense counsel should introduce evidence of money received by the plaintiff from collateral sources, as allowed by the court in Palmer v. Ted Stevens Honda, 193 Cal. App. 3d 530 (1987). Defense counsel should educate the jury that punitive damages must bear a reasonable relationship to the plaintiff’s actual compensatory damages. The defendant should tell the jury what plaintiffs actual compensatory damages are, by offering offset evidence that lowers the amount of compensatory damages, to ensure that the punitive damages are tied to actual compensatory damages. One clever plaintiff’s counsel in closing argument urged the jury to take away the 36 million dollar weekly allowance of a 9 billion dollar company. Continental Trend Resources v Oxy USA. Inc., 44 F.3d 1465 (10th Cir. 1995).
Warning
Warning evidence was dispositive in Patton v. The United Corp., 859 F. Supp. (D. Kan 1994). In Patton, a manufacturer of a cultivator product failed to issue post-sale warning following is receipt of information of a number of serious accidents. In Phase 2, the court awarded punitive damages in spite of defendant's attempts to introduce evidence that a warning would not have been effective to prevent the harm on the grounds that the defendant failed to undertake any effort to determine if a warning program would be effective. Thus, evidence of a warning program or an investigation of such a program may be crucial to a defendants potential punitive damage liability and should be emphasized in the defense opening statement.
OTHER CLAIMS/JUDGMENTS
Defendants need to establish a strategy for narrowing or limiting other claim evidence. Defendants have also argued, in mass torts, "prior judgments," and threatened bankruptcy, in Phase 2, to show they have been punished enough for the same conduct (particularly since many of the individuals mating the earlier decisions in the company are no longer alive). In Juzwin v. Amtorg Trading Corp., 705 F. Supp. 1053, 1064 (D. N.J. 1989), modifying 718 F Supp 1233 (1989), the court held that "subjecting defendants to the possibility of multiple awards of punitive damages for the single course of conduct alleged in this action would deprive defendants of the fundamental fairness required by the due process clause. In Haslip, the court stated that previous civil awards against the defendant for the same conduct should be a "mitigating factor."
DUE PROCESS LIMITATIONS
The Supreme Court has made it clear that punitive damages are subject to due process requirements; the Court is concerned that appropriate due process requirements are satisfied. Recently, in Life Insurance Co. of Georgia v. Johnson (1996 WL 202543 4/2/6/96), the Supreme Court of Alabama announced two procedural ranges for trying punitive damage claims - automatic bifurcation and one half of any punitive award will go to the state. With that ruling, Alabama became the tenth state to impose such an award-sharing requirement on a plaintiff who wins punitive damages. In Pulla v. Amoco, 1995 WL 747259 (8th Cir. 12/19/95), the Eighth Circuit threw out a punitive damage award as so excessive it violates "due process," the jury having awarded $2 in actual damages and $500,000 in punitives (a 250,000:1 ratio). For the plaintiff; Pulla underscores the importance in punitive damages cases of showing evidence of complicity of top management.
On review, the court looks at whether the punitive damage award is the result of passion or prejudice or so grossly excessive as to shock the court's conscience. There must be a nexus between compensatory and punitive damages in order to sustain an appeal. Courts are actively reviewing punitive damage awards and fashioning their own procedural limitations on the amount plaintiffs actually receive.
Jury Questionnaire
Have you or anyone in your family or any close friends ever been sued by anyone?
Yes _____ No _____
If yes, what was the result of the suit?
Do you think the size of damages awarded today is too high?
How do you feel about awarding compensation for:
Lost wages
Past and future medical expenses
Pain and suffering
Emotional distress, anxiety
Loss of comfort, companionship and society
If it were appropriate under the law and the evidence presented, how would you feel about awarding no money to plaintiff?
What is your general attitude about people who bring lawsuits?
What is your general attitude about corporations?
Do you think you can decide this case fairly without passion, prejudice or sympathy?
Yes _____ No _____ Explain:
Do you know what punitive damages are?
Yes _____ No _____ Explain:
Do you know they require a higher degree of proof?
Yes _____ No _____ Explain:
Do you have any leanings one way or the other on this issue?
Yes _____ No _____
Do you believe that making a defendant pay money damages for events occurring in the past will change other’s behavior?
Yes _____ No _____ Explain: