Justices Won’t Review Punitive-Damage Cases
The Supreme Court on Monday rejected three appeals raising the issue of whether skyrocketing punitive-damage awards in personal injury lawsuits violate due-process rights.
The decisions came one week after the court suggested that it would be willing to decide such cases.
Without comment, the justices turned away the case of a $17.8-million award won by ventriloquist Paul Winchell over the destruction of all videotapes of his popular children’s television show of the 1960s.
The court refused to hear arguments by Metromedia Inc. that the bulk of the California jury award--$14 million in punitive damages--is unconstitutional.
The court also refused to hear an appeal by Goodyear Tire & Rubber Co., which was ordered to pay $4 million in punitive damages to a Minnesota service station attendant injured by an exploding tire.
And the justices refused to study the issue in an appeal by a salt mining company ordered to pay $10 million in punitive damages to Kansas farmers whose crops were ruined.
In other business-related decisions, the high court:
- Allowed the government to enforce regulations barring sales at below market value in a way foreign companies and U.S. importers claim improperly impedes international trade.
The court rejected a Canadian steel producer’s appeal that was supported by a U.S. export-import association and an international consumers group.
- Agreed to re-examine how far states may go to prohibit advertising by lawyers, in an appeal by an Illinois lawyer censured for saying on his professional letterhead he is a civil trial specialist certified by a private organization.
- Ordered reargument of related cases from Arkansas and Florida on whether a business that successfully challenges a state tax as an undue burden on interstate commerce is entitled to be refunded money it paid before the tax was invalidated.
- Told a federal appeals court to restudy a lawsuit accusing billionaire hotel owner Harry Helmsley and his business partners of fraud in connection with a New York City condominium conversion.
On punitive damages, the high court on June 26 ruled that the awards, no matter how large, do not violate the Constitution’s ban on excessive fines. The court said 7-2 that the ban does not apply to civil lawsuits between private citizens or corporations.
But it left open the possibility that due-process guarantees--the Constitution’s assurance of fair play--may limit juries’ discretion to award enormous sums in civil suits.
The court was being urged in the three cases to impose a broad standard for judges and juries, particularly in states that have not imposed ceilings on damage awards, not to rule on the constitutionality of such limits.
Business leaders have clashed for years with lawyers and consumer groups over the legitimacy of multimillion-dollar awards in a range of lawsuits.
Opponents say the big-money awards are catastrophic for U.S. competitiveness and discourage development of potentially risky products, particularly new forms of medical treatment. They also say juries penalize the wealthy in order to benefit victims.
Consumer activists and trial lawyers say punitive damages are a powerful deterrent to corporate greed that poses a threat to public safety. They say large corporations may view smaller compensatory awards as an acceptable cost of doing business.
The Winchell case stemmed from a 1965 contract calling for him to produce and host the “Winchell-Mahoney Time” television show, which featured Winchell’s dummy, Jerry Mahoney.
Polluted Underground Water
A dispute between Winchell and Metromedia arose in 1969 over future broadcast rights of tapes of 288 shows. Metromedia erased all 288 tapes in 1972. When Winchell learned in 1976 that the tapes had been destroyed, he sued Metromedia for breach of contract.
In the case of the exploding tire, Goodyear was ordered to pay $3.37 million in compensatory damages and $4 million in punitive damages to Dale Hodder.
Hodder, who worked at a service station in Remer, Minn., was 17 at the time of the accident on Dec. 19, 1981. The metal rim of a truck tire manufactured in 1955 exploded while he was mounting the tire on a customer’s logging truck. Goodyear has since discontinued making that type of tire, called a K-rim.
In the Kansas case, General Host Corp. and its subsidiary Cudahy Co. were ordered to pay Rice County farmers $3.06 million for actual damages from 1975 through 1983 plus the $10-million punitive award.
Salt mining operations run by the companies were found to have polluted an underground stream, making the water unusable for irrigation.