Injury Award Ruling Setback for Business : Justices Decide Excessive Fines Ban Doesn’t Apply
In a blow to businesses facing skyrocketing jury awards, the Supreme Court today declined to curtail settlements in personal injury lawsuits, ruling that the Constitution’s ban on excessive fines places no limit on how much money can be won in such cases.
By a 7-2 vote, the justices refused to extend the prohibition against excessive fines to civil as well as criminal cases.
But the justices left open the possibility that the Constitution’s due-process requirements could put a lid on punitive damage awards. That issue was not raised properly in the case decided today.
Produced Intense Interest
Today’s case produced intense interest in the business community and among lawyers and consumer groups who have been battling for years over the legitimacy of multimillion-dollar awards in a range of lawsuits.
The court upheld a $6-million award a jury ordered a Houston waste-collection company to pay a Vermont competitor.
Justice Harry A. Blackmun wrote for the court that the Constitution’s Eighth Amendment, which bans cruel and unusual punishment and excessive fines, has always been interpreted to restrain governmental power in punishing criminals.
“Awards of punitive damages do not implicate these concerns,” he said. “We therefore hold, on the basis of the history and purpose of the Eighth Amendment, that its excessive fines clause does not apply to awards of punitive damages in cases between private parties.”
But Blackmun hinted that the court might view the Constitution’s due-process protections more liberally.
“There is some authority in our opinions for the view that the due-process clause places outer limits on the size of a civil damages award,” he said.
‘Await Another Day’
“We have never addressed the precise question . . . whether due process acts as a check on undue jury discretion to award punitive damages in the absence of any express statutory limit,” Blackmun continued. “That inquiry must await another day.”
Blackmun was joined by Chief Justice William H. Rehnquist and Justices William J. Brennan, Byron R. White, Thurgood Marshall, Antonin Scalia and Anthony M. Kennedy.
Justices Sandra Day O’Connor and John Paul Stevens dissented. They said punitive damages may violate the Constitution’s ban on excessive fines.
Business leaders and others argue that skyrocketing damage judgments are catastrophic for American competitiveness and development of new products, particularly new forms of medical treatment.
Consumer activists and trial lawyers say punitive damages are a powerful deterrent to corporate greed that poses a threat to public safety.
In another ruling today, the court made it easier to use a federal anti-racketeering law in civil lawsuits against businesses accused of fraud. The court unanimously ruled that the law applies to more than what is traditionally described as organized crime.
