Supreme Court permits juries' punitive awards

March 05, 1991|By Lyle Denniston | Lyle Denniston,Washington Bureau of The Sun C. Fraser Smith of The Sun's Annapolis Bureau contributed to this article.

WASHINGTON -- The Supreme Court, lifting a constitutional cloud that has hung for more than 20 years over American juries, upheld yesterday the wide-ranging power of jurors to impose megabuck verdicts against those who cause harm to others.

The 7-1 decision appeared to do away with the only significant constitutional objection to so-called "punitive damages" -- amounts tacked on to regular jury verdicts. In recent years, those assessments have ranged into the tens of millions of dollars.

Doctors and hospitals, manufacturers of consumer goods and drugs, insurance companies and the news media all have been hit by that kind of large judgment, and had joined in a years-long campaign to try to persuade the Supreme Court to wipe out -- or at least strictly curb -- jury power to issue such verdicts.

A clear majority of the current justices had sent signals that they might do just that, and they had seemed to be merely waiting for a proper case in which to do it.

Instead, when the final decision emerged yesterday in an Alabama insurance case, seven of the nine justices strongly endorsed jury discretion to impose heavy damages with very little guidance from trial judges or appeals courts.

[Maryland Deputy Attorney General Dennis M. Sweeney said the ruling was not likely to directly affect cases in the state. "There is really not much of an impact in Maryland in terms of unsettling anything," he said. The state has a $350,000 cap on pain-and-suffering awards in medical malpractice cases, Mr. Sweeney said, but he observed that punitive damages can be employed in a much wider array of cases.]

In the Supreme Court case, the challengers argued that unlimited jury power to impose damages violates the Constitution's guarantee of "due process."

The court's main opinion, written by Justice Harry A. Blackmun and endorsed in full by four other justices, left open a long-shot possibility that some "punitive damages" verdicts might go so far as to be unconstitutional. There was only a hint, however, and the degree of discretion the opinion endorsed for juries was very wide.

Justice Sandra Day O'Connor, the lone dissenter, read at length from her opinion from the bench -- a rare event. With a hoarse voice, the result of a heavy cold, she complained that the ruling would mean that juries can go on imposing "wildly unpredictable and gravely unfair" verdicts, often "on a whim."

The Alabama procedure upheld yesterday, she said, "gives free reign to the biases and prejudices of individual jurors, allowing them to target unpopular defendants and punish selectively."

Justice David H. Souter, the newest member of the court, did not take part in the ruling.

The case tested the constitutionality of a "punitive damages" verdict against an insurance company for $840,000.

"Punitive damages" are not intended to compensate the winner for actual losses or harms but rather are imposed additionally, to make an example of the wrongdoer.

In a deep bow to the authority of jurors to make up their own minds, the Blackmun opinion noted, "It is the peculiar function of the jury to determine the amount [to be awarded] by their verdict."

At the same time, however, the opinion said, "It would be just as inappropriate to say that, because punitive damages have been recognized for so long, their imposition is never unconstitutional." He said that giving jurors "unlimited discretion" about the amounts "may invite extreme results that jar one's constitutional sensibilities."

Mr. Blackmun, though, then said the court would not and could not "draw a mathematical bright line" between damages that would be constitutional and those that would not be, indicating that the constitutional line would have to be drawn on a case-by-case basis.

The case

Yesterday's Supreme Court decision on punitive damages began when Cleopatra Haslip of Roosevelt, Ala., had to pay a $2,500 hospital bill and $1,500 of other expenses out of her own money because the health insurance she thought she had did not exist.

Ms. Haslip and three other employees of the city of Roosevelt had bought insurance from an agent, Lemmie L. Ruffin Jr., who represented Pacific Mutual Life Insurance Co. and another insurer. The employees paid their premiums, but it later turned out that Mr. Ruffin pocketed that money. The insurance was eventually canceled for non-payment, but the workers were not told.

The four city workers sued, and ultimately won $1,077,978 in damages from Pacific Mutual in state court on the theory that it was responsible for Mr. Ruffin's actions. Only Ms. Haslip was awarded "punitive damages," amounting to about $840,000 of the total she won of $1,040,000.

The case was Pacific Mutual vs. Haslip (No. 89-1279).

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