Two Bites on a Red AppleThe U.S. Postal Service advertises that “shipping isn’t complicated.”  Taking a page from the Postal Service’s book, the Supreme Court of Louisiana on Tuesday said much the same thing about res judicata.  In a concise unanimous decision, the court reversed an award of punitive damages against Exxon on res judicata grounds.  The court held that a defendant may not be required to relitigate whether its conduct warrants punitive damages after a jury found in its favor on that very question in an earlier case involving the same plaintiff.

The relevant cases involved exposure to hazardous material at pipeyards in Louisiana.  In the first case, a group of plaintiffs sued Exxon and others for damages  associated with their increased risk of cancer from the exposure.  The jury awarded compensatory damages for that injury but declined to award punitive damages, finding that Exxon had not engaged in wanton or reckless conduct in storing, handling, or transporting the hazardous material.

One plaintiff later developed cancer and brought a second action against Exxon.  The suit involved the same exposure to hazardous material at issue in the first action.  Exxon sought partial summary judgment with respect to punitive damages, arguing that the first jury’s verdict barred the claim.  The trial court denied the motion, and the jury ultimately awarded $10 million in punitive damages against Exxon.

Although it reduced the award for other reasons, the intermediate appellate court agreed with the district court that res judicata did not bar the claim for punitive damages.  It concluded that “exceptional circumstances” justified relitigation of the plaintiff’s entitlement to punitive damages because of the “complexity of and convoluted circumstances involved in the instant case.”  Although it is not entirely clear from the court’s opinion what the court was referring to, it seems to have had in mind Exxon’s statements during the first trial that the plaintiffs could file another suit if they later developed cancer.

The Louisiana Supreme Court reversed.  It emphasized that courts should not refuse to apply res judicata when the doctrine’s requirements are satisfied, except in truly exceptional cases.  In the Court’s view, this case was not exceptional.  Although the plaintiff had reserved the right to sue again if he developed cancer, that “did not change the fact that he fully prosecuted his exemplary damages claim to the [first] jury and the [first] jury . . .  then made a finding that Exxon had not engaged in wanton and reckless conduct” warranting punishment.

The court’s decision is eminently sensible.  Although the plaintiff’s development of a new injury presented new questions related to compensatory damages, it did not do so with respect to punitive damages.  The second jury punished Exxon for exactly the same conduct that the first jury found did not warrant punitive damages under an identical standard.  That should not have happened.

The court’s application of preclusion principles in this case was straightforward.  Whether preclusion should apply in other punitive damages scenarios presents some more complex issues that will be the subject of a forthcoming post.