Legislative Developments

Should divided panels of federal appellate courts really be deciding state-law issues of first impression? That’s what happened last month in Lindenberg v. Jackson National Life Insurance Co. In Lindenberg, two Sixth Circuit judges—over a lengthy dissent by the third member of the panel—resolved two state-law issues in a manner that expands the availability of punitive damages under Tennessee law.
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In an effort to address the problem of excessive, multiple punishment, the Florida Legislature enacted a statute that “punitive damages may not be awarded against a defendant in a civil action if that defendant establishes, before trial, that punitive damages have previously been awarded against that defendant in any state or federal court in any action alleging harm from the same act or single course of conduct for which the claimant seeks compensatory damages.” The statute contains an escape hatch that allows for additional awards of punitive damages “if the court determines by clear and convincing evidence that the amount of prior punitive damages awarded was insufficient to punish that defendant’s behavior.”
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In 2015, West Virginia enacted a statute that caps punitive damages at the greater of $500,000 or four times the compensatory damages. We blogged about the statute here, explaining that the West Virginia legislature was seeking to reform the state’s image as a “judicial hellhole” that is hostile to defendants.
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Seal_of_the_Supreme_Court_of_TexasAn issue that seems to be arising with increasing frequency is whether the defendant must plead applicability of a cap on punitive damages in its answer. We have already explained why the argument that the cap is an affirmative defense that must be pleaded is specious.

The Texas Supreme Court agreed with that position

1024px-Surgical_Instruments_01About a month ago, we reported on a Delaware trial court decision reducing a $75 million punitive award to $7.5 million in a transvaginal mesh case. Last week, in what we believe to be the first appellate decision in one of these cases, the Fourth Circuit upheld a verdict of $250,000 in compensatory damages and $1.75 million in punitive damages.

The decision in Cisson v. C.R. Bard, Inc. implicates a number of issues that may arise with some frequency in punitive damages cases.
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West Virginia Flag as the territory Map on the Black BackgroundWest Virginia long has been at or near the top of the Chamber of Commerce’s and American Tort Reform Association’s lists of judicial hellholes. Last month, the State took a big step toward changing its image, enacting a series of laws that aim to eliminate “jackpot justice.”

Most pertinent to readers of this blog, the Legislature passed and the Governor signed a punitive damages statute that comprehensively reshapes the manner in which this remedy is administered in West Virginia.


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Books-IRS_187115In mid-January, Senator Patrick Leahy (Dem. Vt.) proposed—again—legislation that would prevent businesses from deducting from taxable income any punitive damages they have paid during the relevant tax year.

Although it would seem that this legislation has little chance of being enacted in the current Republican-controlled Congress, out of an abundance of caution we think it is worth reciting the reasons why this proposal is a bad idea.


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Beverage bottle openedLast week, in Lewellen v. Franklin, the Missouri Supreme Court sharply restricted the reach of the State’s punitive damages cap statute, which limits punitive damages to the greater of $500,000 or five times the compensatory damages.  The court reasoned that applying the statute to common-law causes of action that existed prior to 1820, when Missouri adopted its Constitution, violates the plaintiff’s right to trial by jury.
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Line Graph_000004905228_LargeAs readers undoubtedly are aware, concerns about upward spiraling punitive awards have prompted many state legislatures to enact caps on punitive damages.  The plaintiff bar’s first line of attack on such statutes has been to challenge them under various provisions of state constitutions.

When that tactic has failed—as it has in most states—a second option in some plaintiffs’ playbook has been to assert in individual cases that the defendant forfeited the right to receive the benefit of the cap by not pleading it as an affirmative defense.  For example, the plaintiff has invoked this argument in the Montana Supreme Court case about which Andy Frey and Rory Schneider blogged a couple of months ago.


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The threat of large punitive damages awards is particularly acute for businesses, large and small.  Like many of its counterparts in other states, the Montana legislature sought to relieve businesses of the unpredictability and hydraulic pressure to settle created by the risk of uncabined punitive awards by imposing a cap on such awards: the lesser of $10 million or 3% of a defendant’s net worth.

615px-Flag_of_Montana.svgThough similar restrictions have generally, but not always, withstood state constitutional challenge, a Montana state trial court judge struck down the cap as unconstitutional a little over three months ago.  The defendant, with support from the Montana Attorney General as intervenor and two Montana business organizations as amici, has urged the Montana Supreme Court to reverse the lower court and uphold the constitutionality of the cap.  (For copies of their briefs, click here and search for case DA 14-0113). 
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