OCTOBER TERM, 1992
Syllabus
TXO PRODUCTION CORP.
v. ALLIANCE RESOURCES CORP. ET
AL.
CERTIORARI TO THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
No. 92-479. Argued March 31, 1993-Decided June 25,1993
In a common-law slander of title action in West Virginia state
court, respondents obtained a judgment against petitioner TXO
Production Corp. for $19,000 in actual damages and $10 million in
punitive damages. Accepting respondents' version of disputed issues
of fact, the record shows,
inter alia, that TXO knew that
respondent Alliance Resources Corp. had good title to the oil and
gas development rights at issue; that TXO acted in bad faith by
advancing a claim on those rights on the basis of a worthless
quitclaim deed in an effort to renegotiate its royalty arrangement
with Alliance; that the anticipated gross revenues from oil and gas
development-and therefore the amount of royalties that TXO sought
to renegotiate-were substantial; that TXO was a large, wealthy
company; and that TXO had engaged in similar nefarious activities
in other parts of the country. In affirming, the State Supreme
Court of Appeals, among other things, rejected TXO's contention
that the punitive damages award violated the Due Process Clause of
the Fourteenth Amendment as interpreted in
Pacific Mut. Life
Ins. Co. v.
Has lip, 499 U. S. 1.
Held: The judgment is affirmed.
187 W. Va. 457,419 S. E. 2d 870, affirmed.
JUSTICE STEVENS, joined by THE CHIEF JUSTICE and JUSTICE
BLACKMUN, concluded in Parts II and III that the punitive damages
award did not violate the substantive component of the Due Process
Clause. Pp. 453-462.
(a) With respect to the question whether a particular punitive
award is so "grossly excessive" as to violate the Due Process
Clause,
WatersPierce Oil Co. v.
Texas (No.1),
212 U. S. 86, 111,
this Court need not, and indeed cannot, draw a mathematical bright
line between the constitutionally acceptable and the
constitutionally unacceptable that would fit every case. It can be
said, however, that a general concern of reasonableness properly
enters into the constitutional calculus. See
Has lip, 499 U.
S., at 18. Although the parties' desire to formulate a "test" is
understandable, neither respondents' proposed rational-basis
standard nor TXO's proposed heightened-scrutiny standard is
satisfactory. Pp. 453-458.
444
Syllabus
(b) The punitive award in this case was not so "grossly
excessive" as to violate due process. The dramatic disparity
between the actual damages and the punitive award is not
controlling in a case of this character. On the record, the jury
may reasonably have determined that TXO set out on a malicious and
fraudulent course to win back, either in whole or in part, the
lucrative stream of royalties that it had ceded to Alliance. The
punitive award is certainly large, but in light of the millions of
dollars potentially at stake, TXO's bad faith, the fact that TXO's
scheme was part of a larger pattern of fraud, trickery, and deceit,
and TXO's wealth, the award cannot be said to be beyond the power
of the State to allow. pp. 459-462.
JUSTICE STEVENS, joined by THE CHIEF JUSTICE, JUSTICE BLACKMUN,
and JUSTICE KENNEDY, concluded in Part IV that TXO's procedural due
process arguments-that the jury was not adequately instructed, that
the punitive damages award was not adequately reviewed by the trial
or the appellate court, and that TXO had no advance notice that the
jury might be allowed to return such a large award or to rely on
potential harm as a basis for the award-must be rejected. The first
argument need not be addressed as it was not presented or passed on
below, and the remaining arguments are meritless. Pp. 462-466.
JUSTICE KENNEDY concluded that the plurality's "reasonableness"
formulation is unsatisfactory, since it does not provide a standard
by which to compare the punishment to the malefaction that gave
rise to it. A more manageable constitutional inquiry focuses not on
the amount of money a jury awards in a particular case but on its
reasons for doing so. When a punitive damages award reflects bias,
passion, or prejudice by the jury, rather than a rational concern
for deterrence and retribution, the Constitution has been violated,
no matter what the absolute or relative size of the award. The
record in this case, when viewed as a whole, demonstrates that it
was rational for the jury to place great weight on the evidence of
TXO's deliberate and wrongful conduct, and makes it probable that
the verdict was motivated by a legitimate concern for punishment
and deterrence. Pp. 466-469.
JUSTICE SCALIA, joined by JUSTICE THOMAS, concluded that,
although "procedural due process" requires judicial review of
punitive damages awards for reasonableness, there is no federal
constitutional right to a substantively correct "reasonableness"
determination. If the Due Process Clause of the Fourteenth
Amendment were the secret repository for such an unenumerated
right, it would surely also contain the substantive right not to be
subjected to excessive fines, which would render the Eighth
Amendment's Excessive Fines Clause superfluous. The Constitution
gives federal courts no business in this area, except to assure
that due process (i.
e., traditional procedure) has been
observed.
445
Since the jury in this case was instructed on the purposes of
punitive damages under West Virginia law, and its award was
reviewed for reasonableness by the trial court and the State
Supreme Court of Appeals, petitioner's due process claims must
fail. Pp.470-472.
STEVENS, J., announced the judgment of the Court and delivered
an opinion, in which REHNQUIST, C. J., and BLACKMUN, J., joined,
and in which KENNEDY, J., joined as to Parts I and IV. KENNEDY, J.,
filed an opinion concurring in part and concurring in the judgment,
post, p. 466. SCALIA, J., filed an opinion concurring in the
judgment, in which THOMAS, J., joined,
post, p. 470.
O'CONNOR, J., filed a dissenting opinion, in which WHITE, J.,
joined, and in which SOUTER, J., joined as to Parts II-B-2, II-C,
III, and IV,
post, p. 472.
Carter G.
Phillips argued the cause for
petitioner. With him on the briefs were
Rex E. Lee and
Richard L. Horstman.
Laurence H. Tribe argued the cause for respondents.
With him on the brief were Kenneth
J. Chesebro, Wade T.
Watson, Michael H. Gottesman, and G. David Brumfield.
*
*Briefs of
amici curiae urging reversal were filed for
the American Automobile Manufacturers Association et al. by
Victor E. Schwartz; for the American Council of Life
Insurance et al. by
Erwin N. Griswold, Richard E. Barnsback,
Phillip E. Stano, Theresa L. Sorota, and
Patrick
J. McNally; for the American Tort Reform Association
et al. by
Andrew L. Frey, Charles Rothfeld, and
Fred
J. Hiestand; for Arthur Andersen & Co. et al. by
Leonard P. Novello, Jon N. Ekdahl, Harris J.
Amhowitz, Howard J. Krongard, Carl D. Liggio,
and
Eldon Olson; for the Business Council of Alabama by
Forrest S.
Latta; for the Center for Claims
Resolution by
John D. Aldock and
Frederick C.
Schafrick; for Continental Casualty Co. by
Rodney L.
Eshelman, Donald T. Ramsey, and
David M. Rice; for the
Equal Employment Advisory Council by
Robert E. Williams and
Douglas S.
McDowell; for Owens-Illinois, Inc., et al.
by
Walter Dellinger; for the Product Liability Advisory
Council, Inc., by
Malcolm E. Wheeler; for the Securities
Industries Association, Inc., by
Paul Windels III and
William J. Fitzpatrick; and for the Washington
Legal Foundation by
Carolyn B. Kuhl, Daniel J.
Popeo, and
Paul D. Kamenar.
Briefs of
amici curiae urging affirmance were filed for
the Alabama Trial Lawyers Association by
Bruce J.
McKee; for the Association of Trial Lawyers of America by
Jeffrey Robert White and
Roxanne Barton Conlin; for
the Center for Auto Safety by
Clarence M. Ditlow III and
Albert M. Pearson III; for the Consumers Union of United
States et al. by
An-
446
Opinion of STEVENS, J.
JUSTICE STEVENS announced the judgment of the Court and
delivered an opinion, in which THE CHIEF JUSTICE and JUSTICE
BLACKMUN join, and in which JUSTICE KENNEDY joins as to Parts I and
IV.
In a common-law action for slander of title, respondents
obtained a judgment against petitioner for $19,000 in actual
damages and $10 million in punitive damages. The question we
granted certiorari to decide is whether that punitive damages award
violates the Due Process Clause of the Fourteenth Amendment, either
because its amount is excessive or because it is the product of an
unfair procedure.
drew F.
Popper; for the National Association of
Securities and Commercial Law Attorneys by
Paul F.
Bennett, David B. Gold, Kevin P. Roddy, and
William
S.
Lerach; for Public Citizen by
Leslie A. Brueckner
and
David C.
Vladeck; for Trial Lawyers for Public
Justice by
Brent Rosenthal and
Arthur H. Bryant; for
University Scholars and Law Professors by
Michael Rustad;
and for the West Virginia Trial Lawyers Association by
Mark M.
Hager.
Briefs of amici curiae were filed for the Attorney General of
Alabama et al. by the Attorneys General, pro se, for their
respective States as follows: Darrell V. McGraw, Jr., of West
Virginia, Winston Bryant of Arkansas, James H. Evans of Alabama,
Grant Woods of Arizona, Richard Blumenthal of Connecticut, Charles
M. Oberly III of Delaware, Robert A. Butterworth of Florida, Robert
A. Marks of Hawaii, Larry EchoHawk of Idaho, Bonnie
J.
Campbell of Iowa, Robert T. Stephan of Kansas, Chris Gorman of
Kentucky, Hubert H. Humphrey III of Minnesota, Mike Moore of
Mississippi, Jeremiah W Nixon of Missouri, Joseph P. Mazurek of
Montana, Tom Udall of New Mexico, Robert Abrams of New York,
Michael F. Easley of North Carolina, Heidi Heitkamp of North
Dakota, Lee Fisher of Ohio, Susan Brimer Loving of Oklahoma,
Theodore R. Kulongoski of Oregon, Ernest D. Preate, Jr., of
Pennsylvania, T. Travis Medlock of South Carolina, Dan Morales of
Texas, and Christine Q Gregoire of Washington; for CBS, Inc., et
al. by P. Cameron DeVore, Marshall
J. Nelson, and Douglas P.
Jacobs; for the Church of Scientology of California by Eric M.
Lieberman, Terry Gross, and Michael Lee Hertzberg; and for Phillips
Petroleum Co. et al. by Theodore B. Olson, Larry L. Simms, and
Theodore
J. Boutrous, Jr.
447
I
On August 23, 1985, TXO Production Corp. (TXO) commenced this
litigation by filing a complaint in the Circuit Court of McDowell
County, West Virginia, for a declaratory judgment removing a cloud
on title to an interest in oil and gas development rights.
Respondents, including Alliance Resources Corp. (Alliance), filed a
counterclaim for slander of title that went to trial before a jury
in June 1990. The jury verdict in respondents' favor, which has
been affirmed by the Supreme Court of Appeals of West Virginia,
makes it appropriate to accept respondents' version of disputed
issues of fact.
In 1984, geologists employed by TXO concluded that the recovery
of oil and gas under the surface of a 1,002.74acre tract of land
known as the "Blevins Tract" would be extremely profitable. They
strongly recommended that TXO-a large company that was engaged in
oil and gas production in 25 States-obtain the rights to develop
the oil and gas resources on the Blevins Tract.
Those rights were then controlled by Alliance.1 Prodded by its
geologists, TXO approached Alliance with what Alliance considered
to be a "'phenomenal offer.'" 187 W. Va. 457, 462, 419 S. E. 2d
870, 875 (1992). TXO would pay Alliance $20 per acre in cash, pay
22 percent of the oil and gas revenues in royalties, and pay all of
the development costs. On April 2, 1985, Alliance accepted TXO's
offer, agreeing to assign its interest in the Tract to TXO. With
respect to title to the property, Alliance agreed to return the
consider-
1 Alliance was the assignee of a leasehold interest that
respondents George King and Grover C. Goode, doing business as
Georgia Fuels, had obtained from respondent Tug Fork Land Company.
Georgia Fuels reserved an overriding royalty interest in the
lease.
448
Opinion of STEVENS, J.
ation paid to it if TXO's attorney determined that "title had
failed." 2
Shortly after the agreement was signed, TXO's attorneys
discovered a 1958 deed conveying certain mineral rights in the
Tract from respondent Tug Fork Land Company, a predecessor in
interest of Alliance, to a coal operator named Leo J. Signaigo,
Jr., who had later conveyed those rights to the Hawley Coal Mines
Company, which had, in turn, reconveyed them to the Virginia Crews
Coal Company (Virginia Crews). Interviews with Signaigo, and with
representatives of Hawley and Virginia Crews, established that the
parties all understood that only the right to mine coal had been
involved in those transactions; none of them claimed any interest
in oil or gas development rights. Moreover, the text of the 1958
deed made it "perfectly clear" that the grantor had reserved "all
the oil and gas underlying" the Blevins Tract.3
TXO first advised Alliance of the "distinct possibility or
probability" that its "leasehold title fails" in July 1985.4 In the
meantime, despite its knowledge that any claim that the 1958 deed
created a cloud on title to the oil and gas develop-
2 The agreement provided, in pertinent part:
"Assignor [Alliance] hereby warrants title to the extent that in
the event of conducting title examination of the assigned acreage,
Assignee's examining attorney determines that title has failed to
all or any part of the assigned acreage, Assignor will reimburse to
Assignee the consideration paid to it for any such lands to which
title is determined to have failed." See 187 W. Va., at 463, n. 1,
419 S. E. 2d, at 876, n. 1.
3 The West Virginia Supreme Court of Appeals "unequivocally
[found] that the deed was unambiguous,"
id., at 464, 419 S.
E. 2d, at 877, stating that "[a]lthough the deed does not
demonstrate the most artful drafting, it does
clearly reserve
all of the oil and gas under the Blevins Tract to Tug Fork Land
Company," id., at 463-464, 419 S. E. 2d, at 876-877 (emphasis
in original). The entire deed is reprinted as Appendix A to the
opinion of the State Supreme Court of Appeals. See
id., at
467-471,419
4 See Plaintiff's Exhibit No.4, reprinted in App. to Reply Brief
for Petitioner 1a.
449
ment rights would have been "frivolous," 5 TXO made two attempts
to lend substance to such a claim. First, after unsuccessfully
trying to convince Virginia Crews that it had an interest in the
oil and gas, TXO paid the company $6,000 for a quitclaim deed
conveying whatever interest it might have to TXO. TXO recorded the
deed without advising Alliance.6 Second, TXO unsuccessfully
attempted to induce Mr. Signaigo to execute a false affidavit
indicating that the 1958 deed might have included oil and gas
rights.
On July 12, after having recorded the quitclaim deed, TXO wrote
to Alliance asserting that there was a title objection and implying
that TXO might well have acquired the oil and gas rights from
Virginia Crews. It then arranged a meeting in August and attempted
to renegotiate the royalty arrangement. When the negotiations were
unsuccessful, TXO commenced this litigation. According to the West
Virginia Supreme Court of Appeals, TXO "knowingly and intentionally
brought a frivolous declaratory judgment action" when its "real
intent" was "to reduce the royalty payments under a 1,002.74 acre
oil and gas lease," and thereby "increas[e] its interest in the oil
and gas rights." 7
TXO's declaratory judgment action was decided on the basis of
the parties' written submissions. The court granted
5 In the words of the West Virginia Supreme Court of Appeals:
"In this case, TXO Production Corporation, a subsidiary of USX,
knowingly and intentionally brought a frivolous declaratory
judgment action against the appellees to clear a purported cloud on
title." 187 W. Va., at 462, 419
6 According to an internal TXO memorandum, TXO viewed the
quitclaim deed as offering "a chance of the court conferring TXO
with 100% interest in the O[il] & G[as] estate as opposed to
having a 78% net lease if the court rules in favor of Tug Fork's
title." Plaintiff's Exhibit No.8 (TXO Production Corp. Inter-Office
Memorandum (May 30, 1985)). The West Virginia Supreme Court of
Appeals referred to TXO's acquisition and recording of the
quitclaim deed as nothing less than "an attempt to steal
[Alliance's] land." 187 W. Va., at 468, 419 S. E. 2d, at 881.
7Id., at 462, 464, 419 S. E. 2d, at 875,877.
450
Opinion of STEVENS, J.
respondents' motion to prohibit TXO from introducing expert and
extrinsic evidence concerning the meaning of the 1958 deed to
Signaigo because the deed itself was unambiguous. On the basis of
the written record, the court found that TXO had asserted a claim
to title to the oil and gas under the Blevins Tract by virtue of
the quitclaim deed from Virginia Crews, App. 15, but that the deed
was a "nullity." 8
The counterclaim for slander of title was subsequently tried to
a jury. In addition to the evidence that TXO knew that Alliance had
good title to the oil and gas and that TXO had acted in bad faith
when it advanced a claim on the basis of the worthless quitclaim
deed in an effort to renegotiate its royalty arrangement, Alliance
introduced evidence showing that TXO was a large company in its own
right and a wholly owned subsidiary of an even larger company; 9
that the anticipated gross revenues from oil and gas
development-and therefore the amount of royalties that TXO sought
to renegotiate-were substantial; 10 and that TXO had
8"The Court further finds, as a matter of law, that TXO
Production Corp. obtained no interest or title to the oil and gas
underlying the 1,002.74 acres in question from Virginia Crews Coal
Company by reason of the quit claim deed in question. The quit
claim deed of Virginia Crews Coal Company conveyed no title to TXO
Production Corp. because Virginia Crews Coal Company obtained no
title to the oil and gas from Hawley Coal Mining Corporation and
said quit claim deed is, therefore, a nullity." App. 18.
9Because TXO had refused to disclose any financial records in
response to Alliance's discovery requests, Alliance employed an
expert witness who analyzed public financial statements of TXO's
parent, USX Corporation; he estimated that the TXO division of USX
had a net worth of between "$2.2 billion and $2.5 billion." 187 W.
Va., at 477, 419 S. E. 2d, at 890. Although TXO objected to the
evidence as including assets of affiliates, it did not offer any
rebuttal testimony on that issue.
Ibid.
10 Respondents introduced expert testimony demonstrating that
the Blevins Tract could support between 15 and 25 wells. Tr. 98-99.
A TXO executive confirmed that TXO intended, when it acquired the
rights to develop the Blevins Tract, to develop multiple wells.
Id., at 673. Respondents also introduced an internal TXO
memorandum, dated April 29, 1985, which showed that benchmark wells
located near the Blevins Tract had reserves of 500,000 Mcf, and
that the prevailing market rate was $3.00
451
engaged in similar nefarious activities in its business dealings
in other parts of the country. 187 W. Va., at 468-470, 419 S. E.
2d, at 881-883.
The jury's verdict of $19,000 in actual damages was based on
Alliance's cost of defending the declaratory judgment action. It is
fair to infer that the punitive damages award of $10 million was
based on other evidence.
In support of motions for judgment notwithstanding the verdict
and for remittitur, TXO argued that the punitive damages award
violated the Due Process Clause. Counsel contended that under the
"general punitive damage instruction given in this case, the jury
was left to their own devices without any yardstick as to what was
a reasonable punitive damage award. And for that reason, a
vagueness, lack of guideline and the lack of any requirement of a
reasonable relationship between the actual injury and the punitive
damage award, in essence, would cause the Court or should cause the
Court to set it aside on Constitutional grounds." 11 In response,
counsel for Alliance argued that the constitutional objection had
been waived, that the misconduct was particularly egregious,12 and
that the award was not excessive.
Mcf. Trial testimony demonstrated that TXO was optimistic that
the Blevins Tract would be quite profitable. See Tr. 672-673
(testimony of TXO official that the Blevins Tract was a good
prospect, that it presented a "reasonably good opportunity," and
that it offered the potential for the development of numerous
wells).
Putting these figures together, respondents contend that TXO
anticipated revenues of as high as $1.5 million for each well
developed on the Tract. Brief for Respondents 3. Further
extrapolating, respondents contend that "the value of the total
income stream that TXO would expect from the Blevins Tract was
somewhere between $22.5 million (with 15 wells) and $37.5 million
(with 25 wells)."
Id., at 4.
11 App. to Pet. for Cert. 64a.
12 In response to TXO's attempt to distinguish cases involving
roughly comparable awards on the ground that they involved
"egregious" conduct, the trial judge had interjected: "What could
be more egregious than the vice president of a company saying,
well, testifying and saying that he knew all along that this
property belonged to Tug Fork?"
Id., at 66a.
452
Opinion of STEVENS, J.
The trial court denied the motions without opinion and TXO
appealedP
On appeal, TXO assigned three primary errors: (1) that no cause
of action for slander of title existed in West Virginia or had been
established by the evidence; (2) that the West Virginia Rules of
Evidence were violated by the admission of testimony of lawyers
involved in litigation against TXO in other States to show TXO's
wrongful intent; and (3) that the award of punitive damages
violated the Due Process Clause as interpreted in our opinion in
Pacific Mut. Life Ins. Co. v.
Haslip, 499 U. S. 1 (1991), and in
the West Virginia Supreme Court of Appeals' recent decision in
Garnes v.
Fleming Landfill, Inc., 186 W. Va. 656, 413
S. E. 2d 897 (1991). The State Supreme Court of Appeals
affirmed.
The court first disposed of the state-law issues.14 It
introduced its discussion of the federal issue by describing the
kinds of defendants against whom punitive damages had been awarded
after our decision in
Has lip. 15 Turning to the
13Id., at 71a-72a.
14 "Slander of title," the court noted, "long has been
recognized as a common law cause of action." 187 W. Va., at 465,
419 S. E. 2d, at 878. The court found that respondents had
demonstrated all the elements of the tort: that TXO, by recording
the frivolous quitclaim deed, had published a false statement
derogatory to respondents' title, had done so with "malice," and
had caused special damages, here the attorney's fees, as a result
of its attack on respondents' interest in the oil and gas
development rights. See
id., at 466-468, 419 S. E. 2d, at
879-881.
15 "We have examined all of the punitive damages opinions issued
since
Haslip was decided in an attempt to find some pattern
in what courts find reasonable. Generally, the cases fall into
three categories: (1) really stupid defendants; (2) really mean
defendants; and, (3) really stupid defendants who could have caused
a great deal of harm by their actions but who actually caused
minimal harm."
Id., at 474-475, 419 S. E. 2d, at 887-888. In
a concurring opinion two justices criticized that categorization
and stated that West Virginia's traditional rule summarizing the
type of conduct that would give rise to punitive damages was better
stated in the following syllabus:
" 'In actions of tort, where gross fraud, malice, oppression, or
wanton, willful, or reckless conduct or criminal indifference to
civil obligations affect-
453
facts of this case, the court stated that the application of its
"reasonable relationship" test required it to consider these three
factors:
"(1) the potential harm that TXO's actions could have caused;
(2) the maliciousness of TXO's actions; and (3) the penalty
necessary to discourage TXO from undertaking such endeavors in the
future." 187 W. Va., at 476,419 S. E. 2d, at 889.
It held that each of those factors supported the award in this
case, stating:
"The type of fraudulent action intentionally
undertaken by TXO in this case could potentially cause millions of
dollars in damages to other victims. As for the reprehensibility of
TXO's conduct, we can say no more than we have already said, and we
believe the jury's verdict says more than we could say in an
opinion twice this length. Just as important, an award of this
magnitude is necessary to discourage TXO from continuing its
pattern and practice of fraud, trickery and deceit." Ibid.
(emphasis in original).
We granted certiorari, 506 U. S. 997 (1992), and now affirm.
II
TXO first argues that a $10 million punitive damages award-an
award 526 times greater than the actual damages awarded by the
jury-is so excessive that it must be deemed an arbitrary
deprivation of property without due process of law.
TXO correctly points out that several of our opinions have
stated that the Due Process Clause of the Fourteenth
ing the rights of others appear, or where legislative enactment
authorizes, it, the jury may assess exemplary, punitive, or
vindictive damages ... .'''
Id., at 484, 419 S. E. 2d, at
895.
454
Opinion of STEVENS, J.
Amendment imposes substantive limits "beyond which penalties may
not go."
Seaboard Air Line R. Co. v.
Seegers, 207 U.
S. 73, 78 (1907). See also
St. Louis, 1.
M. & S.
R. Co. v.
Williams, 251 U. S. 63, 66-67
(1919);
Standard Oil Co. of Ind. v.
Missouri,
224 U. S. 270,
286 (1912).16 Moreover, in
Southwestern Telegraph &
Telephone Co. v.
Danaher, 238 U. S. 482 (1915), the
Court actually set aside a penalty imposed on a telephone company
on the ground that it was so "plainly arbitrary and oppressive" as
to violate the Due Process Clause.
Id., at
491.17 In
an earlier case the Court had stated that it would not review state
action fixing the penalties for unlawful conduct unless "the fines
imposed are so grossly excessive as to amount to a deprivation of
property without due process of law."
Waters-Pierce Oil Co.
v.
Texas (No.1), 212 U. S. 86, 111
(1909).
16 In each of those cases, the Court actually found no
constitutional violation. Thus, in the
Seaboard Air Line R.
Co. case, the Court concluded:
"We know there are limits beyond which penalties may not go-even
in cases where classification is legitimate-but we are not prepared
to hold that the amount of penalty imposed is so great or the
length of time within which the adjustment and payment are to be
made is so short that the act imposing the penalty and fixing the
time is beyond the power of the State." 207 U. S., at 78-79.
17 In doing so, however, the Court emphasized the fact that the
company was punished for conduct that had been undertaken in
complete good faith. It noted:
"There was no intentional wrongdoing; no departure from any
prescribed or known standard of action, and no reckless conduct.
Some regulation establishing a mode of inducing prompt payment of
the monthly rentals was necessary. It is not as if the company had
been free to act or not as it chose. It was engaged in a public
service which could not be neglected. The protection of its own
revenues and justice to its paying patrons required that something
be done. It acted by adopting the regulation and then impartially
enforcing it. There was no mode of judicially testing the
regulation's reasonableness in advance of acting under it, and, as
we have seen, it had the support of repeated adjudications in other
jurisdictions. In these circumstances to inflict upon the company
penalties aggregating $6,300 was so plainly arbitrary and
oppressive as to be nothing short of a taking of its property
without due process oflaw." 238 U. S., at 490-491.
455
While respondents "unabashedly" denigrate those cases as
"Lochner-era precedents," 18 they overlook the fact that the
Justices who had dissented in the
Lochner case itself joined
those opinions.19 More importantly, respondents do not dispute the
proposition that the Fourteenth Amendment imposes a substantive
limit on the amount of a punitive damages award. Brief for
Respondents 17. They contend, however, that the standard of review
should be the same standard of rational-basis scrutiny that is
appropriate for reviewing state economic legislation.
TXO, on the other hand, argues that punitive damages awards
should be scrutinized more strictly than legislative penalties
because they are typically assessed without any legislative
guidance expressing the considered judgment of the elected
representatives of the community.20 TXO urges that we apply a form
of heightened scrutiny, the first step of which is to apply certain
"objective" criteria to determine whether a punitive award
presumptively violates those notions of "fundamental fairness"
inherent in the concept of due process of law. Relying heavily on
the plurality opinion in
Schad v.
Arizona, 501 U. S. 624 (1991),
petitioner argues that" 'history and widely shared practice [are]
concrete indicators of what fundamental fairness and rationality
require,'" Brief for Petitioner 15-16 (quoting
Schad, 501 U.
S., at 640 (plurality opinion), and that therefore we should
examine, as "objective" criteria of fairness, (1) awards of
punitive
18 See Brief for Respondents 17-18.
19 Justices Holmes, Harlan, White, and Day dissented in
Lochner v.
New York,
198 U. S. 45 (1905). See
id., at 65, 75. In all of the cases relied on by TXO, there
were only two solitary dissents. Ironically, one of the two was
that of Justice Peckham, the author of the majority opinion in
Lochner. See
Seaboard Air Line R. Co. v.
Seegers, 207 U.
S. 73, 79 (1907); 198 u. S., at 52. The comparison requires two
caveats. Justice Harlan died in the fall of 1911, and therefore
only participated in the
Seaboard Air Line and
Waters-Pierce cases. Also, Justice Day did not participate
in the
Standard Oil case.
20 Brief for Petitioner 13-14.
456
Opinion of STEVENS, J.
damages upheld against other defendants in the same
jurisdiction, (2) awards upheld for similar conduct in other
jurisdictions, (3) legislative penalty decisions with respect to
similar conduct, and (4) the relationship of prior punitive awards
to the associated compensatory awards, Brief for Petitioner 16.21
Under petitioner's proposed framework, when this inquiry
demonstrates that an award "exceeds the bounds of contemporary and
historical practice by
orders of magnitude," id., at 21
(emphasis in original), that award must be struck down as arbitrary
and excessive unless there is a "compelling and particularized
justification" for an award of such size.22
The parties' desire to formulate a "test" for determining
whether a particular punitive award is "grossly excessive" is
understandable. Nonetheless, we find neither formulation
satisfactory. Under respondents' rational-basis standard,
apparently
any award that would serve the legitimate state
interest in deterring or punishing wrongful conduct, no matter how
large, would be acceptable. On the other hand, we reject the
premise underlying TXO's invocation of heightened scrutiny. The
review of a jury's award for arbitrariness and the review of
legislation surely are significantly different. Still, it is not
correct to assume that the safeguards in the legislative process
have no counterpart in the judicial process. The members of the
jury were determined to be impartial before they were allowed to
sit, their assessment of damages was the product of collective
deliberation based
21 As counsel for petitioner noted at oral argument, these
objective criteria in part track the analysis of Justice Powell's
opinion for the Court in
Solem v.
Helm, 463 U. S. 277, 290-292
(1983). See Tr. of Oral Arg. 26.
22 Applying this "test," TXO concludes (not surprisingly) that
the award in this case exceeds prior awards given both within the
State of West Virginia and in other jurisdictions in allegedly
comparable circumstances, and cannot be defended as rationally
related to a state interest in either retribution or deterrence.
The punitive award in this case, petitioner contends, is thus
supported only by West Virginia's patently illegitimate interest in
redistributing wealth away from a large, out-of-state
corporation.
457
on evidence and the arguments of adversaries, their award was
reviewed and upheld by the trial judge who also heard the
testimony, and it was affirmed by a unanimous decision of the State
Supreme Court of Appeals. Assuming that fair procedures were
followed, a judgment that is a product of that process is entitled
to a strong presumption of validity. Indeed, there are persuasive
reasons for suggesting that the presumption should be irrebuttable,
see
Haslip, 499 U. S., at 24-40 (SCALIA, J., concurring in
judgment), or virtually so,
id., at 40-42 (KENNEDY, J.,
concurring in judgment).
Nor are we persuaded that reliance on petitioner's "objective"
criteria is the proper course to follow. We have, of course, relied
on history and "widely shared practice" as a guide to determining
whether a particular state practice so departs from an accepted
norm as to be presumptively violative of due process, see
Schad, 501 U. S., at 637-643 (plurality opinion), and
whether a term of imprisonment under certain circumstances is cruel
and unusual punishment, see So
lem v.
Helm, 463 U. S. 277, 290-292
(1983). We question, however, the utility of such a comparative
approach
as a test for assessing whether a particular
punitive award is presumptively unconstitutional.
It is a relatively straightforward task to draw
intrajurisdictional and interjurisdictional comparisons on such
matters as the definition of first-degree murder
(Schad) or
the penalty imposed on nonviolent repeat offenders
(Solem).
The same cannot be said of the task of drawing such comparisons
with regard to punitive damages awards by juries. Such awards are
the product of numerous, and sometimes intangible, factors; a jury
imposing a punitive damages award must make a qualitative
assessment based on a host of facts and circumstances unique to the
particular case before it. Because no two cases are truly
identical, meaningful comparisons of such awards are difficult to
make. Cf.
Haslip, supra, at 41-42 (KENNEDY, J., concurring
in judgment). Such analysis might be useful in considering whether
a state practice
458
Opinion of STEVENS, J.
of permitting juries to rely on a particular factor, such as the
defendant's out-of-state status, would violate due process.23 As an
analytical approach to assessing a particular award, however, we
are skeptical. Thus, while we do not rule out the possibility that
the fact that an award is significantly larger than those in
apparently similar circumstances might, in a given case, be one of
many relevant considerations, we are not prepared to enshrine
petitioner's comparative approach in a "test" for assessing the
constitutionality of punitive damages awards.
In the end, then, in determining whether a particular award is
so "grossly excessive" as to violate the Due Process Clause of the
Fourteenth Amendment,
Waters-Pierce Oil Co., 212 U.
S., at 111, we return to what we said two Terms ago in
Haslip: "We need not, and indeed we cannot, draw a
mathematical bright line between the constitutionally acceptable
and the constitutionally unacceptable that would fit every case. We
can say, however, that [a] general concer[n] of reasonableness ...
properly enter[s] into the constitutional calculus." 499 U. S., at
18. And, to echo
Haslip once again, it is with this concern
for reasonableness in mind that we turn to petitioner's argument
that the punitive award in this case was so "grossly excessive" as
to violate the substantive component of the Due Process
Clause.24
23 Of course, such a state policy would likely be subject to
challenge on other grounds as well.
24JUSTICE SCALIA'S assertion notwithstanding, see
post,
at 471, we do not suggest that a defendant has a substantive due
process right to a correct determination of the "reasonableness" of
a punitive damages award. As JUSTICE O'CONNOR points out, state law
generally imposes a requirement that punitive damages be
"reasonable." See
post, at 475479. A violation of a state
law "reasonableness" requirement would not, however, necessarily
establish that the award is so "grossly excessive" as to violate
the Federal Constitution. Furthermore, the fact that our cases have
recognized for almost a century that the Due Process Clause of the
Fourteenth Amendment imposes an outer limit on such an award does
not,
459
III
In support of its submission that this award is "grossly
excessive," TXO places its primary emphasis on the fact that it is
over 526 times as large as the actual damages award. TXO correctly
notes that state courts have long held that "exemplary damages
allowed should bear some proportion to the real damage sustained."
25 Moreover, in our recent decision in
Has lip, supra, in
which we upheld a punitive damages award of four times the amount
of compensatory damages, we noted that that award "may be close to
the line" of constitutional permissibility.
Id., at 23.
Following that decision, the West Virginia Supreme Court of Appeals
had also observed that as "a matter of fundamental fairness,
punitive damages should bear a reasonable relationship to
compensatory damages."
Garnes v.
Fleming Landfill, Inc.,
186 W. Va., at 668, 413 S. E. 2d, at 909.
That relationship, however, was only one of several factors that
the state court mentioned in its
Garnes opinion. Earlier in
its opinion it gave this example:
"For instance, a man wildly fires a gun into a crowd. By sheer
chance, no one is injured and the only damage is to a $10 pair of
glasses. A jury reasonably could find only $10 in compensatory
damages, but thousands of dollars in punitive damages to teach a
duty of care. We
of course, make that Clause "the secret repository of all sorts
of other, unenumerated, substantive rights,"
post, at 470
(SCALIA, J., concurring in judgment). Indeed, it is ironic that
JUSTICE SCALIA acknowledges that the Due Process Clause of the
Fourteenth Amendment incorporates substantive guarantees of the
Bill of Rights while relying on the enumeration of one of those
rights (the Excessive Fines Clause of the Eighth Amendment) as
evidence that such a right has no counterpart in the Due Process
Clause.
Post, at 470-471.
25Grant v. McDonogh, 7 La. Ann. 447, 448 (1852); Hunter v.
Kansas City R. Co., 213 Mo. App. 233, 245, 248 S. W. 998, 1002
(1923); Mobile
& Montgomery R. Co. v. Ashcraft, 48 Ala.
15, 33 (1872); P.
J. Willis & Bro. v. McNeill, 57 Tex.
465,480 (1882).
460
Opinion of STEVENS, J.
would allow a jury to impose substantial punitive damages in
order to discourage future bad acts." Id., at 661, 413 S. E.
2d, at 902 (citing C. Morris, Punitive Damages in Tort Cases, 44
Harv. L. Rev. 1173, 1181 (1931)).
When the court identified the several factors that should be
mentioned in instructions to the jury, the first one that it
mentioned reflected that example. It said:
"Punitive damages should bear a reasonable relationship to the
harm that is likely to occur from the defendant's conduct as
well as to the harm that actually has occurred. If the defendant's
actions caused or would likely cause in a similar situation
only slight harm, the damages should be relatively small. If the
harm is grievous, the damages should be much greater." 186 W. Va.,
at 668, 413 S. E. 2d, at 909 (emphasis added).
Taking account of the potential harm that might result from the
defendant's conduct in calculating punitive damages was consistent
with the views we expressed in
Has lip, supra. In that case
we endorsed the standards that the Alabama Supreme Court had
previously announced, one of which was "whether there is a
reasonable relationship between the punitive damages award and
the harm likely to result from the defendant's conduct as
well as the harm that actually has occurred,"
id., at 21
(emphasis added).
Thus, both State Supreme Courts and this Court have eschewed an
approach that concentrates entirely on the relationship between
actual and punitive damages. It is appropriate to consider the
magnitude of the
potential harm that the defendant's conduct
would have caused to its intended victim if the wrongful plan had
succeeded, as well as the possible harm to other victims that might
have resulted if similar future behavior were not deterred. In this
case the State Supreme Court of Appeals concluded that TXO's
pattern of behavior "could potentially cause millions of dol-
461
lars in damages to other victims." 26 Moreover, respondents
argue that the record evidence would support a finding that
Alliance's 22 percent share of the projected revenues from the full
development of the oil and gas rights amounted to between $5
million and $8.3 million, depending on how many wells were
developed.27 Even if these figures are exaggerated-as TXO
persuasively argues, see Reply Brief for Petitioner 9-12-the jury
could well have believed that TXO was seeking a multimillion dollar
reduction in its potential royalty obligation. In fact, in making
their closing arguments to the jury, counsel for respondents
stressed, in addition to TXO's vast wealth, the tremendous
financial gains that TXO hoped to achieve through its "elaborate
scheme." Counsel for Alliance argued:
"They wouldn't have gone to this elaborate scheme-No, they
wouldn't now, because they thought this was a huge, gonna be a huge
money-making lease. Gonna puts lots of wells on it. That's why it
was worth the scheme. And the punishment should fit it, and fit the
wealth." App. to Brief for Petitioner 23a.
Echoing the same theme, counsel for respondent Tug Fork Land
Company argued:
"You have to go on what TXO thought when they were going into
this well. They thought it was going to be a better well than it
was. But, see, it got caught up in this litigation and now, I
submit to you, they are saying that it is not as good a well as it
was. And that's a fact that is in some contention here. But
regardless of how good it was, when they went in and did their
operation back in May, June, July and August of 1985, they had
projected that this would be a 20 year well and would produce a lot
of money." Tr. 748-749.
26187 W. Va., at 476, 419 S. E. 2d, at 889. 27 See n. 10,
supra.
462
Opinion of STEVENS, J.
While petitioner stresses the shocking disparity between the
punitive award and the compensatory award, that shock dissipates
when one considers the potential loss to respondents, in terms of
reduced or eliminated royalties payments, had petitioner succeeded
in its illicit scheme. Thus, even if the actual value of the
"potential harm" to respondents is not between $5 million and $8.3
million, but is closer to $4 million, or $2 million, or even $1
million, the disparity between the punitive award and the potential
harm does not, in our view, "jar one's constitutional
sensibilities."
Has lip, 499 U. S., at 18.
In sum, we do not consider the dramatic disparity between the
actual damages and the punitive award controlling in a case of this
character. On this record, the jury may reasonably have determined
that petitioner set out on a malicious and fraudulent course to win
back, either in whole or in part, the lucrative stream of royalties
that it had ceded to Alliance. The punitive damages award in this
case is certainly large, but in light of the amount of money
potentially at stake, the bad faith of petitioner, the fact that
the scheme employed in this case was part of a larger pattern of
fraud, trickery and deceit, and petitioner's wealth,28 we are not
persuaded that the award was so "grossly excessive" as to be beyond
the power of the State to allow.
IV
TXO also argues that the punitive damages award is the result of
a fundamentally unfair procedure because the jury
28TXO also contends that the admission of evidence of its
alleged wrongdoing in other parts of the country, as well as the
evidence of its impressive net worth, led the jury to base its
award on impermissible passion and prejudice. Brief for Petitioner
22-23. Under well-settled law, however, factors such as these are
typically considered in assessing punitive damages. Indeed, the
Alabama factors we approved in
Haslip included both. See
Pacific Mut. Life Ins. Co. v.
Haslip, 499 U. S. 1,21-22 (1991)
("(b) ... the existence and frequency of similar past conduct; ...
(d) the 'financial position' of the defendant").
463
was not adequately instructed, because its award was not
adequately reviewed by the trial or the appellate court, and
because TXO had no advance notice that the jury might be allowed to
return such a large award or to rely on potential harm as a basis
for its calculation. We decline to address the first argument as it
was not argued or passed on below. We find the remaining arguments
meritless.
The instruction to the jury on punitive damages differed from
that found adequate in
Haslip, see 499 U. S., at 6, n. 1, in
two significant respects. It authorized the jury to take account of
"the wealth of the perpetrator" in recognition of the fact that
effective deterrence of wrongful conduct "may require a larger fine
upon one of large means than it would upon one of ordinary means
under the same or similar circumstances." 29 It also stated that
one of the purposes of punitive damages is "to provide additional
compensation for
29The instruction on punitive damages, to which TXO objected,
read as follows:
"In addition to actual or compensatory damages, the law permits
the jury, under certain circumstances, to make an award of punitive
damages, in order to punish the wrongdoer for his misconduct, to
serve as an example or warning to others not to engage in such
conduct and to provide additional compensation for the conduct to
which the injured parties have been subjected.
"If you find from a preponderance of the evidence that TXO
Production Corp. is guilty of wanton, wilful, malicious or reckless
conduct which shows an indifference to the right of others, then
you may make an award of punitive damages in this case.
"In assessing punitive damages, if any, you should take into
consideration all of the circumstances surrounding the particular
occurrence, including the nature of the wrongdoing, the extent of
the harm inflicted, the intent of the party committing the act, the
wealth of the perpetrator, as well as any mitigating circumstances
which may operate to reduce the amount of the damages. The object
of such punishment is to deter TXO Production Corp. and others from
committing like offenses in the future. Therefore the law
recognizes that to in fact deter such conduct may require a larger
fine upon one of large means than it would upon one of ordinary
means under the same or similar circumstances." App. 34-35.
TXO did not propose a different instruction.
464
Opinion of STEVENS, J.
the conduct to which the injured parties have been subjected."
See n. 29,
supra.
We agree with TXO that the emphasis on the wealth of the
wrongdoer increased the risk that the award may have been
influenced by prejudice against large corporations, a risk that is
of special concern when the defendant is a nonresident. We also do
not understand the reference in the instruction to "additional
compensation." We note, however, that in
Haslip we referred
to the "financial position" of the defendant as one factor that
could be taken into account in assessing punitive damages, see n.
28,
supra. We also note that TXO did not squarely argue in
the West Virginia Supreme Court of Appeals that these aspects of
the jury instruction violated the Due Process Clause, see Brief for
Appellant in No. 20281 (W. Va. Sup. Ct.), pp. 44-48,30 possibly
because many States permit the jury to take account of the
defendant's wealth.31 Because TXO's constitutional attack on the
jury instructions was not properly presented to the highest court
of the State,
Bankers Life &
Casualty Co. v.
Crenshaw, 486
U. S. 71, 77-80 (1988), we do not pass on it.
The only basis for criticizing the trial judge's review of the
punitive damages award is that he did not articulate his reasons
for upholding it. He did, however, give counsel an adequate hearing
on TXO's postverdict motions, and during one colloquy indicated his
agreement with the jury's appraisal of
30 In fact, in its brief before that court, petitioner stated
that "[i]t is clear under West Virginia law that the financial
standing
of the defendant is an element to be taken into
consideration in determining the proper measure of punitive or
exemplary damages." Brief for Appellant in No. 20281 (w. Va. Sup.
Ct.), p. 37 (emphasis in original). There is no hint in that brief
that petitioner thought that this state rule violated due
process.
31 See,
e. g., Wagner v.
McDaniels, 9 Ohio St. 3d
184, 186-187, 459 N. E. 2d 561, 564 (1984);
Gamble v.
Stevenson, 305 S. C. 104, 111, n. 3, 406 S. E. 2d 350, 354,
n. 3 (1991);
Lunsford v.
Morris, 746 S. W. 2d 471,
473 (Tex. 1988);
Viking Ins. Co. v.
Jester, 310 S. C.
317, 332, 836 S. W. 2d 371, 379 (Ark. 1992).
465
the egregious character of the conduct of TXO's executives. See
n. 12,
supra. While it is always helpful for trial judges to
explain the basis for their rulings as thoroughly as is consistent
with the efficient dispatch of their duties, we certainly are not
prepared to characterize the trial judge's failure to articulate
the basis for his denial of the motions for judgment
notwithstanding the verdict and for remittitur as a constitutional
violation.
Petitioner's criticism of the West Virginia Supreme Court of
Appeals' opinion is based largely on the court's colorful reference
to classes of "really mean" and "really stupid" defendants. That
those terms played little, if any, part in its actual evaluation of
the propriety of the damages award is evident from the reasoning in
its thorough opinion, succinctly summarized in passages we have
already quoted. Moreover, two members of the court who wrote
separately to disassociate themselves from the "really mean" and
"really stupid" terminology shared the views of the rest of the
members of the court on the merits. See 187 W. Va., at 484, 419 S.
E., at 895 (McHugh, C. J., concurring). The opinion was unanimous
and gave careful attention to the relevant precedents, including
our decision in
Haslip and their own prior decision in
Garnes.
Finally, we find no merit in TXO's argument that the procedure
followed in this case "was unconstitutionally vague" because
petitioner had no notice of the possibility that the award of
punitive damages might be divorced from an award of compensatory
damages. In
Wells v.
Smith, 171 W. Va. 97, 105, 297
S. E. 2d 872, 880 (1982), the West Virginia Supreme Court of
Appeals held that a defendant could be liable for punitive damages
even if the jury did not award the plaintiff
any
compensatory damages.32 In any event, the notice com-
32 In
Garnes v.
Fleming Landfill, Inc., 186 W. Va.
656, 413 S. E. 2d 897 (1991), which was decided well after the
underlying conduct in this case occurred, the West Virginia Supreme
Court of Appeals overturned that aspect of
Wells, holding
instead that the jury must award
some amount of compen-
466
Opinion of KENNEDY, J.
ponent of the Due Process Clause is satisfied if prior law
fairly indicated that a punitive damages award might be imposed in
response to egregiously tortious conduct.
Has lip, 499 U.
S., at 24, n. 12. Prior law, in West Virginia and elsewhere,
unquestionably did so.
The judgment of the West Virginia Supreme Court of Appeals is
affirmed.
It is so ordered.
JUSTICE KENNEDY, concurring in part and concurring in the
judgment.
I concur in the plurality's statement of the case and in Part IV
of the plurality opinion, in which the plurality holds that the
judicial procedures that were followed in awarding punitive damages
against TXO fulfilled the constitutional requirement of due process
of law. I am not in full agreement, however, with the plurality's
discussion of the substantive requirements of the Due Process
Clause in Parts II and III, in which it concentrates on whether the
punitive damages award was "'grossly excessive.'''
Ante, at
458, 462. I agree that the approaches proposed by the parties to
this case are unsatisfactory, see
ante, at 456-458, but I do
not believe that the plurality's replacement, a general focus on
the "'reasonableness'" of the award,
ante, at 458, quoting
Pacific Mut. Life Ins. Co. v.
Haslip, 499 U. S. 1, 18 (1991), is
a significant improvement. To ask whether a particular award of
punitive damages is grossly excessive begs the question: excessive
in relation to what? The answer excessive in relation to the
conduct of the tortfeasor may be correct, but it is unhelpful, for
we are still bereft of any standard by which to compare the
punishment to the malefaction that gave rise to it. A reviewing
court employing this formulation comes close to relying upon
nothing more than its own subjective reaction to a particular
punitive
satory damages before it can award punitive damages. See 186 W.
Va., at 667, 413 S. E. 2d, at 908.
467
damages award in deciding whether the award violates the
Constitution. This type of review, far from imposing meaningful,
law-like restraints on jury excess, could become as fickle as the
process it is designed to superintend. Furthermore, it might give
the illusion of judicial certainty where none in fact exists, and,
in so doing, discourage legislative intervention that might prevent
unjust punitive awards.
As I have suggested before, see
id., at 41 (opinion
concurring in judgment), a more manageable constitutional inquiry
focuses not on the amount of money a jury awards in a particular
case but on its reasons for doing so. The Constitution identifies
no particular multiple of compensatory damages as an acceptable
limit for punitive awards; it does not concern itself with dollar
amounts, ratios, or the quirks of juries in specific jurisdictions.
Rather, its fundamental guarantee is that the individual citizen
may rest secure against arbitrary or irrational deprivations of
property. When a punitive damages award reflects bias, passion, or
prejudice on the part of the jury, rather than a rational concern
for deterrence and retribution, the Constitution has been violated,
no matter what the absolute or relative size of the award. JUSTICE
O'CONNOR is correct in observing that in implementing this
principle, courts have often looked to the size of the award as one
indication that it resulted from bias, passion, or prejudice, see
post, at 476-478, but that is not the sole, or even
necessarily the most important, sign. Other objective indicia of
the type discussed by the plurality, see
ante, at 455-457,
as well as direct evidence from the trial record, are also helpful
in ascertaining whether a jury stripped a party of its property in
an arbitrary way and not in accordance with the standards of
rationality and fairness the Constitution requires.
The plurality suggests that the jury in this case acted in
conformance with these standards of rationality in large part on
the basis of what it perceives to be the rational relation
468
Opinion of KENNEDY, J.
between the size of the award and the degree of harm threatened
by TXO's conduct. See
ante, at 460-462. I do not agree that
this provides a constitutionally adequate foundation for concluding
that the punitive damages verdict against TXO was rational. It is a
commonplace that a jury verdict must be reviewed in relation to the
record before it. See,
e. g., Jackson v.
Virginia,
443 U. S. 307
(1979). Unlike a legislature, whose judgments may be predicated on
educated guesses and need not necessarily be grounded in facts
adduced in a hearing, see,
e. g., Heller v.
Doe,
ante, at 320;
FCC v.
Beach Communications, Inc.,
508 U. S. 307,
315 (1993);
Vance v.
Bradley, 440 U. S. 93, 111 (1979),
a jury is bound to consider only the evidence presented to it in
arriving at a judgment. JUSTICE O'CONNOR demonstrates that the
record in this case does not contain evidence, argument, or
instructions regarding the potential harm from TXO's conduct and so
would not have permitted a reasonable jury to render its verdict on
this basis. See
post, at 484-489. We must therefore look for
other explanations of the jury verdict to decide whether it may
stand.
On its facts, this case is close and difficult; JUSTICE O'CONNOR
makes a plausible argument, based on the record and the trial
court's instructions, that the size of the punitive award is
explained by the jury's raw, redistributionist impulses stemming
from antipathy to a wealthy, outof-state, corporate defendant. See
post, at 492-494. There is, however, another explanation for
the jury verdict, one supported by the record and relied upon by
the state courts, that persuades me that I cannot say with
sufficient confidence that the award was unjustified or improper on
this record: TXO acted with malice. This was not a case of
negligence, strict liability, or
respondeat superior. TXO
was found to have committed, through its senior officers, the
intentional tort of slander of title. The evidence at trial
demonstrated that it acted, in the West Virginia Supreme
469
Court of Appeals' words, through a "pattern and practice of
fraud, trickery and deceit" and employed "unsavory and malicious
practices" in the course of its business dealings with respondent.
187 W. Va. 457, 477, 467, 419 S. E. 2d 870, 890, 880 (1992). "[T]he
record shows that this was not an isolated incident on TXO's part-a
mere excess of zeal by poorly supervised, low level employees-but
rather part of a pattern and practice by TXO to defraud and coerce
those in positions of unequal bargaining power."
Id., at
468, 419
Although in many respects this case represents an odd
application of an already unusual tort, it was rational for the
jury to place great weight on the evidence of TXO's deliberate,
wrongful conduct in determining that a substantial award was
required in order to serve the goals of punishment and deterrence.
I confess to feeling a certain degree of disquiet in affirming this
award, but the record, when viewed as a whole, makes it probable
that the jury's verdict was motivated by a legitimate concern for
punishing and deterring TXO, rather than by bias, passion, or
prejudice. There was ample evidence of willful and malicious
conduct by TXO in this case; the jury heard evidence concerning
several prior lawsuits filed against TXO accusing it of similar
misdeeds; and respondents' attorneys informed the jury of TXO's
vast financial resources and argued that TXO would suffer only as a
result of a large judgment. Compared with this evidence and
argumentation, which dominates the record of the trial, the subtler
and more isolated appeals based on TXO's out-of-state status on
which JUSTICE O'CONNOR focuses were of lesser importance. A case
involving vicarious liability, negligence, or strict liability
might present different issues. But given the record here, I am
satisfied that the jury's punitive damages award did not amount to
an unfair, arbitrary, or irrational seizure of TXO's property.
470
SCALIA, J., concurring in judgment
JUSTICE SCALIA, with whom JUSTICE THOMAS joins, concurring in
the judgment.
The jury in this case was instructed on the purposes of punitive
damages under West Virginia law, and its award was reviewed for
reasonableness by the trial court and the West Virginia Supreme
Court of Appeals. Traditional American practice governing the
imposition of punitive damages requires no more. See
Pacific
Mut. Life Ins. Co. v.
Haslip, 499 U. S. 1, 15 (1991);
id., at 26-27 (SCALIA, J., concurring in judgment). It
follows, in my view, that petitioner's claims under the Due Process
Clause of the Fourteenth Amendment must fail. See
id., at
31. I therefore have no difficulty joining the Court's
judgment.
I do not, however, join the plurality opinion, since it makes
explicit what was implicit in
Haslip: the existence of a
socalled "substantive due process" right that punitive damages be
reasonable, see
ante, at 458.* I am willing to accept the
proposition that the Due Process Clause of the Fourteenth
Amendment, despite its textual limitation to procedure,
incorporates certain substantive guarantees specified in the Bill
of Rights; but I do not accept the proposition that it is the
secret repository of all sorts of other, unenumerated, substantive
rights-however fashionable that proposition may have been (even as
to economic rights of the sort involved here) at the time of the
Lochner-era cases the plural-
*JUSTICE STEVENS asserts that there is a difference between the
constitutional standard that he today proposes, which he describes
as "grossly excessive" (a term used in one of the
Lochner-era cases he relies upon,
Waters-Pierce Oil
Co. v.
Texas (No.1), 212 U. S. 86, 111 (1909)),
and the standard of "reasonableness" that state courts have
traditionally applied.
Ante, at 458-459, n. 24. I doubt
whether there is a difference between the two. As JUSTICE O'CONNOR
points out, see
post, at 476-478, state courts often used
terms like "grossly excessive" to describe the sort of award that
could not stand. But if there
is a difference, then one must
wonder-since it is not based upon any common-law traditionwhere the
standard of
"grossly-excessive-that-means-something-evenworse-than-unreasonable"
comes from.
471
ity relies upon, see
ante, at 453-454. It is particularly
difficult to imagine that "due process" contains the substantive
right not to be subjected to excessive punitive damages, since if
it contains
that it would surely also contain the
substantive right not to be subjected to excessive fines, which
would make the Excessive Fines Clause of the Eighth Amendment
superfluous in light of the Due Process Clause of the Fifth
Amendment.
To say (as I do) that "procedural due process" requires judicial
review of punitive damages awards for reasonableness is not to say
that there is a federal constitutional right to a substantively
correct "reasonableness" determinationwhich is, in my view, what
the plurality tries to assure today. Procedural due process also
requires, I am certain, judicial review of the sufficiency of the
evidence to sustain a civil jury verdict, and judicial review of
the reasonableness of jury-awarded compensatory damages (including
damages for pain and suffering); but no one would claim (or at
least no one has yet claimed) that a substantively correct
determination of sufficiency of evidence and reasonableness of
compensatory damages is a federal constitutional right. So too, I
think, with punitive damages:
Judicial assessment of their
reasonableness is a federal right, but a
correct assessment
of their reasonableness is not.
Today's reprise of
Has lip, despite the widely divergent
opinions it has produced, has not been a waste. The procedures
approved here,
ante, at 463-466 (plurality opinion), are far
less detailed and restrictive than those upheld in
Haslip,
supra, at 19-23, suggesting that if the Court ever does invent
new procedural requirements, they will not deviate significantly
from the traditional ones that ought to govern. And the disposition
of the "substantive due process" claim demonstrates that the
Court's" 'constitutional sensibilities'" are far more resistant to
" 'jar[ring],'"
ante, at 462 (plurality opinion) (quoting
Haslip, supra, at 18), than one might have imagined after
Haslip. There the Court said a 4-to-l ratio
472
between punitive damages and actual damages "may be close to the
line" of "constitutional impropriety,"
Haslip, supra, at
23-24; today we decide that a
10-to-1 ratio between punitive
damages and
the potential harm of petitioner's conduct
passes muster-calculating that potential harm, very generously, to
be more than
50 times the $19,000 in actual damages that
respondents suffered, see
ante, at 460-462 (plurality
opinion).
The plurality's decision is valuable, then, in that the great
majority of due process challenges to punitive damages awards can
henceforth be disposed of simply with the observation that "this is
no worse than
TXO." I would go further, to shut the door the
plurality leaves slightly ajar. As I said in
Has lip, the
Constitution gives federal courts no business in this area, except
to assure that due process (i.
e., traditional procedure)
has been observed. 499 U. S., at 27-28 (opinion concurring in
judgment). State legislatures and courts have ample authority to
eliminate any perceived "unfairness" in the common-law punitive
damages regime, and have frequently exercised that authority in
recent years. See
id., at 39; Brief for Attorney General of
Alabama et al. as
Amici Curiae 14-17 (collecting state
statutes and cases); Brief for National Association of Securities
and Commercial Law Attorneys as
Amicus Curiae 16-30 (same).
The plurality's continued assertion that federal judges have
some, almost-never-usable, power to impose a standard of
"reasonable punitive damages" through the clumsy medium of the Due
Process Clause serves only to spawn wasteful litigation, and to
reduce the incentives for the proper institutions of our society to
undertake that task.
JUSTICE O'CONNOR, with whom JUSTICE WHITE joins, and with whom
JUSTICE SOUTER joins as to Parts II-B-2, II-C, III, and IV,
dissenting.
In
Pacific Mut. Life Ins. Co. v.
Has lip, 499 U. S. 1 (1991), this
Court held out the promise that punitive damages
473
awards would receive sufficient constitutional scrutiny to
restore fairness in what is rapidly becoming an arbitrary and
oppressive system. Today the Court's judgment renders
Haslip's promise a false one. The procedures that converted
this commercial dispute into a $10 million punitive verdict were
wholly inadequate. Rather than producing a judgment founded on
verifiable criteria, they produced a monstrous award-526 times
actual damages and over 20 times greater than any punitive award in
West Virginia history. Worse, the State Supreme Court of Appeals
rejected petitioner's challenge with only cursory analysis,
observing that petitioner, rather than being "really stupid," had
been "really mean." 187 W. Va. 457, 474-475, 419 S. E. 2d 870,
887-889 (1992). The court similarly refused to consider the
possibility of remittitur because petitioner "and its agents and
servants failed to conduct themselves as gentlemen."
Id., at
462, 419 S. E. 2d, at 875. In my view, due process does not
tolerate such cavalier standards when so much is at stake. Because
I believe that neither this award's size nor the procedures that
produced it are consistent with the principles this Court
articulated in
Haslip, I respectfully dissent.
I
Our system of justice entrusts jurors-ordinary citizens who need
not have any training in the law-with profoundly important
determinations. Jurors decide not only civil matters, where the
financial consequences may be great, but also criminal cases, where
the liberty or perhaps life of the defendant hangs in the balance.
Our abiding faith in the jury system is founded on longstanding
tradition reflected in constitutional text, see U. S. Const., Art.
III, § 2, Amdts. 6, 7, and is supported by sound considerations of
justice and democratic theory. The jury system long has been a
guarantor of fairness, a bulwark against tyranny, and a source of
civic values. See 3 W. Blackstone, Commentaries *379-*381;
Haslip, supra, at 40 (KENNEDY, J., concurring in
judgment);
474
w. Olson, The Litigation Explosion 175 (1991); Hyman &
Tarrant, Aspects of American Trial Jury History, in The Jury System
in America 23, 27-28 (R. Simon ed. 1975).
But jurors are not infallible guardians of the public good.
They are ordinary citizens whose decisions can be shaped by
influences impermissible in our system of justice. In fact, they
are more susceptible to such influences than judges. See H. Kalven
& H. Zeisel, The American Jury 497-498 (1966) ("The judge very
often perceives the stimulus that moves the jury, but does not
yield to it .... The perennial amateur, layman jury cannot be so
quickly domesticated to official role and tradition; it remains
accessible to stimuli which the judge will exclude").
Arbitrariness, caprice, passion, bias, and even malice can replace
reasoned judgment and law as the basis for jury decisionmaking.
Modern judicial systems therefore incorporate safeguards against
such influences. Rules of evidence limit what the parties may
present to the jury. Careful instructions direct the jury's
deliberations. Trial judges diligently supervise proceedings,
watchful for potential sources of error. And courts of appeals
stand ready to overturn judgments when efforts to ensure fairness
have failed.
In the usual case, this elaborate but necessary judicial
machinery functions well, ensuring that our jury system is an
engine of liberty and justice rather than a source of oppression
and arbitrary imposition. As JUSTICE KENNEDY has explained,
"[e]lements of whim and caprice do not predominate when the jury
reaches a consensus based upon arguments of counsel, the
presentation of evidence, and instructions from the trial judge,
subject to review by the trial and appellate courts."
Has
lip, 499 U. S., at 40 (opinion concurring in judgment). But the
risk of prejudice, bias, and caprice remains a real one in every
case nonetheless.
This is especially true in the area of punitive damages, where
juries sometimes receive only vague and amorphous guidance. Jurors
may be told that punitive damages are im-
475
posed to punish and deter, but rarely are they instructed on how
to effectuate those goals or whether any limiting principles exist.
See,
e. g., id., at 39. Although this Court has not
held such instructions constitutionally inadequate, it cannot be
denied that the lack of clear guidance heightens the risk that
arbitrariness, passion, or bias will replace dispassionate
deliberation as the basis for the jury's verdict. See
id.,
at 43, 63 (O'CONNOR, J., dissenting);
id., at 41 (KENNEDY,
J., concurring in judgment) ("[T]he generality of the instructions
may contribute to a certain lack of predictability");
Browning-Ferris Industries of Vt., Inc. v.
Kelco
Disposal, Inc., 492 U. S. 257, 281 (1989)
(Brennan, J., concurring) (Such "skeletal" guidance is "scarcely
better than no guidance at all," creating a need for more careful
review);
Smith v.
Wade, 461 U. S. 30, 88 (1983)
(REHNQUIST, J., dissenting) (elastic standards applicable to
punitive awards "giv[e] free reign to the biases and prejudices of
juries"). As one commentator has explained:
"Like everyone else in the court system, juries need and deserve
objective rules for decision. Deprived of any fixed landmarks and
guideposts, any of us can be distracted, played on, and befuddled
to the point where our best guess is far from reliable." Olson,
supra, at 175.
It is therefore no surprise that, time and again, this Court and
its Members have expressed concern about punitive damages awards"
'run wild,'" inexplicable on any basis but caprice or passion.
Has lip, supra, at 9-12, 18 (discussing cases); see also
Gertz v.
Robert Welch, Inc., 418 U. S. 323, 350 (1974)
("[J]uries assess punitive damages in wholly unpredictable amounts
bearing no necessary relation to the actual harm caused").
Influences such as caprice, passion, bias, and prejudice are
antithetical to the rule of law. If there is a fixture of due
process, it is that a verdict based on such influences cannot
476
O'CONNOR, J., dissenting
stand. See
Haslip, supra, at 41 (KENNEDY, J., concurring
in judgment) ("A verdict returned by a biased or prejudiced jury no
doubt violates due process"). Of course, determining whether a
verdict resulted from improper influences is no easy matter. By
tradition and necessity, the circumstances in which jurors may
impeach their own verdict are quite limited. See
Tanner v.
United States, 483 U. S. 107, 117-121,
127 (1987); 11 C. Wright & A. Miller, Federal Practice and
Procedure § 2810, pp. 71-72 (1973); 2 W. Tidd, Practice of Courts
of King's Bench and Common Pleas *908-*909. But fundamental
fairness requires that impermissible influences such as bias and
prejudice be discovered nonetheless, by inference if not by direct
proof. As a result, courts at common law in England traditionally
would strike any award that appeared so grossly disproportionate as
to evidence caprice, passion, or bias.1 This practice long has been
followed
1 See
Hewlett v.
Cruchley, 5 Taunt. 277, 281, 128
Eng. Rep. 696, 698
(C. P. 1813) (Mansfield, C. J.) ("[I]t is
now well acknowledged in all the Courts of
Westminsterhall
[that] if the damages are clearly too large, the Courts will send
the inquiry to another jury");
Duberly v.
Gunning, 4
Durn. & E. 651,657 (K. B. 1792) (Buller, J.) ("New trials have
been granted from the year 1655" on "the grounds ... of excessive
damages");
Chambers v.
Caulfield, 6 East. 244,
256, 102 Eng. Rep. 1280, 1285 (K. B. 1805) (Lord Ellenborough, C.
J.) ("[I]f it appeared to us from the amount of the damages given
as compared with the facts of the case laid before the jury, that
the jury must have acted under the influence either of undue
motives, or some gross error or misconception on the subject, we
should have thought it our duty to submit the question to the
consideration of a second jury");
Leith v.
Pope, 2
Bl. W. 1327, 1328,96 Eng. Rep. 777,778 (K. B. 1782) (award will be
reversed only where "so flagrantly excessive as to afford an
internal evidence of the prejudice and partiality of the jury");
Fabrigas v.
Mostyn, 2 Bl. W. 928, 96 Eng. Rep. 549
(K. B. 1774) ("Some [awards] may be so monstrous and excessive, as
to be in themselves an evidence of passion or partiality in the
jury");
Gilbert v.
Burtenshaw, 1 Cowp. 230, 231, 98
Eng. Rep. 1059, 1060 (K. B. 1774) (Court may grant new trial only
where damages are so "flagrantly outrageous and extravagant" as to
constitute "internal evidence of intemperance in the minds of the
jury"); 2 Tidd, Practice of Courts of King's Bench and Common
Pleas, at *909 (A new trial may be had "for excessive damages" but
"the damages ought not to be weighed
477
in this Nation as welI.2 Indeed, the New Hampshire Supreme Court
emphasized its importance over a century ago, observing that a
court's duty to interfere with a disproportionate jury verdict "is
absolutely necessary to the safe administration of justice, and
ought, in all proper cases, to be asserted and exercised."
Belknap v.
Boston &
Maine R. Co., 49 N. H.
358, 372 (1870). Accord,
Gough v.
Farr, 1 Y. & J.
477, 479-480, 148 Eng. Rep. 759, 760 (Ex. 1827) (Vaughan, B.) ("It
is essential to the due administration of justice, that the Courts
should exercise a salutary control over Juries" by requiring
retrial where the amount of the verdict indicates that the jury
"acted improperly, or upon a gross misconception of the facts");
id., at 478-479, 148 Eng. Rep., at 759-760
in a nice balance, but must be such as appear at first blush to
be outrageous, and indicate passion or partiality in the
jury").
2 G. Field, Law of Damages 685-686 (1876) ("[W]hen the verdict
of the jury is so flagrantly excessive that the mind at once
perceives that the verdict is unjust, it should be set aside");
id., at 684 (Court may set award aside "where it is
apparent, from the amount of the verdict or otherwise, that the
jury were influenced by passion, prejudice, corruption, or an
evident mistake of the law or the facts"); 1 J. Sutherland, Law of
Damages 810 (1882) (Where "the amount is so great or so small as to
indicate" that "it is the result of a perverted judgment, and not
that of [the jury's] cool and impartial deliberation," the court,
"in its discretion, will interpose and set it aside");
Travis v.
Barger, 24 Barb. 614, 629 (N. Y. 1857)
(Damages award will be set aside where "so flagrantly outrageous
and extravagant" as to evince "intemperance, passion, partiality or
corruption");
Pleasants v.
Heard, 15 Ark. 403, 406
(1855) (verdict to be set aside if the "amount of damages, upon all
the facts of the case, ... shocks our sense of justice");
Worster v.
Proprietors of Canal Bridge, 33 Mass. 541,
547-548 (1835) (Court may interfere where damages are "manifestly
exorbitant");
Belknap v.
Boston &
Maine R.
Co., 49 N. H. 358, 372 (1870) (Where damages are so excessive
that one familiar with case would conclude that the "jury ... acted
under the influence of a perverted judgment, it is the duty of the
court in the exercise of a sound discretion to grant a new trial").
Accord,
Pacific Mut. Life Ins. Co. v.
Haslip,
499 U. S. 1, 41
(1991) (KENNEDY, J., concurring in judgment) ("[T]he extreme amount
of an award compared to the actual damage inflicted can be some
evidence of bias or prejudice in an appropriate case").
478
(Alexander, L. C. B.) (Where damages are so excessive that "the
Courts are of opinion ... that the Jury have acted under the
influence of undue motives, or of misconception, it is their duty
to interfere");
Travis v.
Barger, 24 Barb. 614, 629
(N. Y. 1857) (reciting Lord Ellenborough's view that, "if it
appeared from the amount of damages given, as compared with the
facts of the case laid before jury, that the jury must have acted
under the influence either of undue motives, or some gross error or
misconception of the subject, the court would have thought it their
duty to submit the question to the consideration of a second
jury");
Flannery v.
Baltimore &
Ohio R.
Co., 15 D. C. 111, 125 (1885) (When the punitive damages award
is disproportionate, "we feel it our duty to interfere").
Judicial intervention in cases of excessive awards also has the
critical function of ensuring that another ancient and fundamental
principle of justice is observed-that the punishment be
proportionate to the offense. As we have observed, the requirement
of proportionality is "deeply rooted and frequently repeated in
common-law jurisprudence."
Solem v.
Helm, 463 U. S. 277, 284-285
(1983). See,
e. g., Le Gras v.
Bailiff of Bishop of
Winchester, Y. B. Mich. 10 Edw. II, pI. 4 (C. P. 1316),
reprinted in 52 Selden Society 3, 5 (1934) (amercement vacated and
bailiff ordered to "take a moderate amercement proper to the
magnitude and manner of that offence"); First Statute of
Westminster, 3 Edw. I, ch. 6 (1275). Because punitive damages are
designed as punishment rather than compensation,
Browning-Ferris, 492 U. S., at 297 (O'CONNOR, J., concurring
in part and dissenting in part) (citing cases), courts historically
have required that punitive damages awards bear a reasonable
relationship to the actual harm imposed.3 This Court similarly has
recognized that
3 Ante, at 459, and n. 25 (plurality opinion)
("[S]tate courts have long held that 'exemplary damages allowed
should bear some proportion to the real damage sustained,'" quoting
Grant v.
McDonogh, 7 La. Ann. 447, 448 (1852), and
citing other cases). See,
e. g., McCarthy v.
Niskern,
22 Minn. 90, 91-92 (1875) (Punitive damages "enormously in excess
of what may
479
the requirement of proportionality is implicit in the notion of
due process. We therefore have held that an award that is "plainly
arbitrary and oppressive,"
Southwestern Telegraph &
Telephone Co. v.
Danaher, 238 U. S. 482, 491
(1915), "grossly excessive,"
Waters-Pierce Oil Co. v.
Texas (No.1), 212 U. S. 86, 111 (1909),
or "so severe and oppressive as to be wholly disproportioned to the
offense and obviously unreasonable,"
St. Louis, 1.
M.
& S.
R. Co. v.
Williams, 251 U. S. 63, 66-67
(1919), offends the Due Process Clause and may not stand.
II
The plurality does not retreat today from our prior statements
regarding excessive punitive damages awards. Nor does it deny that
our prior decisions have a strong basis in historical practice and
the common law. On the contrary, it reaffirms our precedents once
again, properly rebuffing respondents' attempt to denigrate them as
Lochner-era aberra-
justly be regarded as compensation" for the harm incurred must
be set aside "to prevent injustice");
International &
Great Northern R. Co. v.
Telephone &
Telegraph
Co., 69 Tex. 277, 282, 5 S. W. 517, 518 (1887) (Punitive
damages "when allowed should be in proportion to the actual damages
sustained" (internal quotation marks omitted));
Burkett v.
Lanata, 15 La. 337, 339 (1860) (Punitive damages should "be
commensurate to the nature of the offence");
Saunders v.
Mullen, 66 Iowa 728, 729, 24 N. W. 529 (1885) (''When the
actual damages are so small, the amount allowed as exemplary
damages should not be so large");
Flannery v.
Baltimore &
Ohio R. Co., 15 D. C. 111, 125 (1885)
(When punitive damages award "is out of all proportion to the
injuries received, we feel it our duty to interfere"). See also
Leith v.
Pope, supra, at 1328, 96 Eng. Rep., at 778
(Court will interfere where damages are "outrageously
disproportionate, either to the wrong received, or to the situation
and circumstances of either the plaintiff or defendant");
Duberly v.
Gunning, 4 Durn. & E., at 657 (Buller,
J.) (The Court has the power to order a new trial where "the
damages given are enormously disproportionate to the case proved in
evidence");
Townsend v.
Hughes, 2 Mod. *150, *151, 86
Eng. Rep. 994, 995
(C. P. 1677) (Atkins, J.) (court should
"consider whether the [offense] and damages bear any proportion; if
not, then the Court ought to lay their hands upon the
verdict").
480
O'CONNOR, J., dissenting
tions.
Ante, at 455. It is thus common ground that an
award may be so excessive as to violate due process.
Ibid.
We part company, however, on how to determine if this is such an
award.
In Solomonic fashion, the plurality rejects both petitioner's
and respondents' proffered approaches, instead selecting a
seemingly moderate course. See
ante, at 456-458. But the
course the plurality chooses is, in fact, no course at all. The
plurality opinion erects not a single guidepost to help other
courts find their way through this area. Rather, quoting
Haslip's observation that there is no "'mathematical bright
line between the constitutionally acceptable and the
constitutionally unacceptable,'"
ante, at 458 (quoting 499
U. S., at 18), the plurality abandons all pretense of providing
instruction and moves directly into the specifics of this case.
I believe that the plurality errs not only in its result but
also in its approach. Our inability to discern a mathematical
formula does not liberate us altogether from our duty to provide
guidance to courts that, unlike this one, must address jury
verdicts such as this on a regular basis. On the contrary, the
difficulty of the matter imposes upon us a correspondingly greater
obligation to provide the most coherent explanation we can. I agree
with the plurality that we ought not adopt TXO's or respondents'
suggested approach as a rigid formula for determining the
constitutionality of punitive damages verdicts. But it does not
follow that, in the course of deciding this case, we should avoid
offering even a clue as to our own.
TXO's suggestion that this Court should rely on objective
criteria has much to commend it. As an initial matter,
constitutional judgments "'should not be, or appear to be, merely
the subjective views of individual Justices.'''
Rummel v.
Estelle, 445
U. S. 263, 274 (1980) (quoting
Coker v.
Georgia,
433 U. S. 584,
592 (1977) (opinion of WHITE, J.)). Without objective criteria on
which to rely, almost any decision regarding proportionality will
be a matter of personal
481
preference. One judge's excess very well may be another's
moderation. To avoid that element of subjectivity, our
"'judgment[s] should be informed by objective factors to the
maximum possible extent.'" 445 U. S., at 274-275 (quoting same). As
the plurality points out,
ante, at 455-456, TXO directs our
attention to various objective indicators, including the
relationship between the punitive damages award and compensatory
damages, awards of punitive damages upheld against other defendants
in the same jurisdiction, awards upheld for similar torts in other
jurisdictions, and legislatively designated penalties for similar
misconduct. While these factors by no means exhaust the due process
inquiry, they are quite probative. It is to their proper
application that I now turn.
A
In my view, due process at least requires judges to engage in
searching review where the verdict discloses such great
disproportions as to suggest the possibility of bias, caprice, or
passion. As JUSTICE STEVENS observed in a different context, "[o]ne
need not use Justice Stewart's classic definition of obscenity-'I
know it when I see it' -as an ultimate standard for judging" the
constitutionality of a punitive damages verdict "to recognize that
the dramatically irregular" size and nature of an award "may have
sufficient probative force to call for an explanation." Cf.
Karcher v.
Daggett, 462 U. S. 725, 755 (1983)
(concurring opinion) (footnotes omitted).
This $10 million punitive award, returned in a case involving
only $19,000 in compensatory damages, is a dramatically irregular,
if not shocking, verdict by any measure. At the very least it
should raise a suspicious judicial eyebrow. Not only does the
punitive award represent over 500 times actual damages, but it also
exceeds economic harm by over $9.98 million. Thus, it cannot be
accepted as bearing the "understandable relationship to
compensatory damages," 499 U. S., at 22, the Court found sufficient
in
Haslip. Indeed, in
Has-
482
lip the Court observed that an $840,000 punitive award,
representing four times compensatory damages, may have been "close
to the line" of "constitutional impropriety."
Id., at 23-24.
If the quadruple damages, $840,000 award in
Haslip was
"close to the line," absent a convincing explanation, this $10
million award-over 500 times actual damages-surely must cross
it.
A comparison of this award and prior ones in West Virginia
confirms its unusual nature: It is 20 times larger than the highest
punitive damages award
ever upheld in West Virginia history
for any misconduct. See App. to Brief for Petitioner 1a-3a (listing
punitive damages awards affirmed on appeal in West Virginia). That
figure is particularly surprising if one considers the nature of
the offense at issue. This is not a case involving grave physical
injury imposed on a helpless citizen by a callous malefactor.
Rather, it is a business dispute between two companies in the oil
and gas industry. TXO was accused of slandering respondents' title
to a tract of land-that is, impugning their claim of ownership-in
an attempt to win concessions on a pre-existing contract. Although
TXO's conduct was clearly wrongful, calculated, and improper, the
award in this case cannot be upheld as a reasoned retributive
response. Not only is it greatly in excess of the actual harm
caused, but it is 10 times greater than the largest punitive
damages award for the same tort in any jurisdiction,
id., at
5a-8a (listing all recorded punitive damages awards for slander of
title affirmed on appeal), and orders of magnitude larger than
authorized civil and criminal penalties for similar offenses, see
Brief for Petitioner 19, nn. 17-18, and App. to Brief for
Petitioner 9a-21a (collecting statutes). By any "objective
criteria,"
Haslip, 499 U. S., at 23, the award is "grossly
out of proportion to the severity of the offense" and bears no
"understandable relationship to compensatory damages,"
id.,
at 22. It is, at first blush, an "extreme resul[t] that jar[s]
one's constitutional sensibilities."
Id., at 18.
483
That these disproportions might implicate due process concerns
the plurality does not deny. Nonetheless, it refuses to "enshrine
petitioner's comparative approach in a 'test' for assessing the
constitutionality of punitive damages awards."
Ante, at 458.
I agree with the plurality that, although it might be convenient to
establish a multipart test and impose it upon the States, the
principles of federalism counsel against such a course. The States
should be permitted to "experiment with different methods" of
ferreting out impermissible awards "and to adjust these methods
over time."
Has lip, supra, at 64 (O'CONNOR, J.,
dissenting). Nonetheless, I see no reason why this Court or any
other would wish to disregard such probative evidence. For example,
although retribution is a permissible consideration in assessing
punitive damages awards, it is quite difficult to determine whether
a particular award can be attributed to that goal; retribution
resists quantification. Nonetheless, jury awards in similar cases
and the civil and criminal penalties created by the legislature for
like conduct can give us some idea of the limits on retribution.
Thus, a $5,000 punitive damages award on actual damages of $1 may
not seem well proportioned at first blush; but if the legislature
has seen fit to impose a $50,000 penalty for that very same
conduct, the award might be deemed a reasoned retributive
response.
This approach, of course, has its limits. Because no two cases
are alike, not all comparisons will be enlightening. See
ante, at 457-458 (plurality opinion). But recognizing the
limits of an approach does not compel us to discard it entirely. I
do not see what can be gained by blinding ourselves to the few
clear guideposts in an area so painfully bereft of objective
criteria. Indeed, JUSTICE STEVENS joined in proposing precisely
such an approach to punitive damages under the Eighth Amendment in
Browning-Ferris, see 492 U. S., at 301 (O'CONNOR, J., joined
by STEVENS, J., concurring in part and dissenting in part).
Moreover, courts at common law engaged in similar comparisons. See,
e. g., Travis v.
Barger,
484
O'CONNOR, J., dissenting
24 Barb. 614, 629 (N. Y. 1857) (comparing verdicts for similar
torts);
International &
Great Northern R. Co. v.
Telephone &
Telegraph Co., 69 Tex. 277, 282, 5 S.
W. 517, 518 (1887) (comparing ratios). In any event, what the
comparisons demonstrate in this case is what one might have
suspected from the beginning. This award cannot be justified as a
reasoned retributive response, for it is notably out of line with
the punishment previously imposed by juries or established by
statute for similar conduct.
B
That, however, does not end our inquiry. In some cases, the
unusual nature of the award will be explained by the peculiar
considerations placed before the jury. Indeed, the plurality
asserts that such an explanation exists in this case. The award,
the plurality explains, may have been based on the profit TXO
anticipated or the harm TXO would have imposed on respondents had
its scheme been successful.
Ante, at 459-462.
I have no quarrel with the plurality that, in the abstract,
punitive damages may be predicated on the potential but unrealized
harm to the victim, or even on the defendant's anticipated gain.
Linking the punitive award to those factors not only substantially
furthers the State's weighty interests in deterrence and
retribution, but also can be traced well back in the common law.
See,
e. g., Benson v.
Frederick, 3 Burr. 1846, 97
Eng. Rep. 1130 (K. B. 1766) (Wilmot, J.) (damages for ordering the
plaintiff flogged by two drummers not excessive even though
disproportionate to plaintiff's actual suffering, as "it was rather
owing to the lenity of the drummers than of the [defendant] that
the [plaintiff] did not suffer
more"). The plurality's
theory, however, bears little relationship to what actually
happened in this case.
1
The record demonstrates that the potential harm theory is little
more than an after-the-fact rationalization invented by
485
counsel to defend this startling award on appeal. The $5 to $8.3
million estimate of potential loss that respondents proffer today
appears nowhere in the record. No expert or lay witness testified
to the jury about any such figure. No one directed the jury's
attention to the technical documents or scattered testimony on
which respondents now rely. See
ante, at 450-451, n. 10
(plurality opinion). No one told the jury how to pull all those
numbers together to calculate such a figure. In fact, the jury
never was told that it was permitted to do so.
Respondents did not even present their $5 to $8.3 million
estimate to defend the verdict before the West Virginia Supreme
Court of Appeals. Nor did that court rely on such an estimate. Its
opinion, which the plurality applauds as "thorough,"
ante,
at 465, nowhere suggests that the jury might have based the award
on the potential harm to respondents or on TXO's anticipated
profit. Rather, its sole reference to potential harm is the
"millions of dollars of damages" that might result if TXO
repeated its misdeeds against
"other victims." 187 W.
Va., at 476, 419 S. E. 2d, at 889 (emphasis added). Virtually any
tort, however, can cause millions of dollars of harm if imposed
against a sufficient number of victims.
Respondents' $5 to $8.3 million estimate appeared for the first
time after this Court granted certiorari, having been produced
exclusively for our consumption. As the plurality notes, there is
every reason to believe that the figure, derived as it is from a
series of extrapolations and economic assumptions never presented
to the jury and yet untested by adversary presentation, is
unrealistic. See
ante, at 461. Consequently, the plurality
refuses to rely on the figure, instead offering a series of its own
estimates. See
ante, at 462. These estimates also are
speculative, however, as the plurality does not indicate how they
were derived or where they are supported in the record. The little
evidence regarding potential harm the record does yield, it turns
out, is
486
O'CONNOR, J., dissenting
SO uncertain and ambiguous that the plurality cannot rely on it,
either; to the extent it demonstrates anything at all, it shows
respondents' estimate to be exaggerated. See Tr. 100, 103-104.
2
But even if we assume that the plurality's estimates of
potential harm are plausible or supported by the evidence, they
are, on this record, entirely irrelevant. The question is not
simply whether
this Court might think the award appropriate
in light of its estimate of potential harm. The question is also
whether
the jury might have relied on such an estimate
rather than some impermissible factor, such as a personal
preference for the primarily local plaintiffs as compared to the
unsympathetic and wealthy out-of-state defendant, as TXO contends.
After all, due process does not simply require that a particular
result be substantively acceptable; it also requires that it be
reached on the basis of permissible considerations. See
Has
lip, 499 U. S., at 41 (KENNEDY, J., concurring in judgment). In
this case, the jury instructions precluded the jury from relying on
the potential harm theory the plurality endorses. As a result, that
theory can neither explain nor justify the otherwise astonishing
verdict the jury returned.
At trial, the jury was instructed to consider numerous factors
when setting the punitive damages award, including "'the nature of
the wrongdoing, the extent of the harm inflicted, the intent of the
party committing the act, the wealth of the perpetrator, as well as
any mitigating circumstances.'"
Ante, at 463, n. 29
(plurality opinion) (quoting App. 34-35). Nowhere do the
instructions mention the alternative measure of potential harm to
respondents upon which the plurality relies today.
Of course, the instructions do mention that the goal of punitive
damages is deterrence. One therefore might hypothesize that a
particularly sophisticated jury would realize that imposing damages
in an amount linked to potential harm or
487
the defendant's expected gain might provide appropriate
deterrence. One might even go so far as to suppose that the jury
would be daring enough to apply that measure, even though the trial
court listed numerous factors, including
actual harm, but
made no mention of
potential harm. But such speculation has
no application in this case, for the jury instructions made it
quite clear that deterrence was linked not to an unmentioned factor
like potential gain but to a factor the trial court
did
mention-TXO's wealth:
"'The object of [punitive damages] is to deter TXO Production
Corp. and others from committing like offenses in the future.
Therefore the law recognizes that to in fact deter such
conduct may require a larger fine upon one of large means than it
would upon one of ordinary means under the same or similar
circumstances.'" Ante, at 463, n. 29 (plurality opinion)
(quoting App. 35) (emphasis added).
A reasonable juror hearing these instructions would not have
felt free to consider the potential harm or expected gain measures
the plurality proposes today.
The two passages the plurality excerpts from closing arguments,
see
ante, at 461, do not support the plurality's theory.
Respondent Tug Fork Land Company's closing argument does mention
that TXO thought the wells would produce "'lot[s] of money.'"
Ibid. (quoting Tr. 748-749). But that remark had nothing to
do with punitive damages. Instead, counsel was addressing the issue
of liability: According to him, TXO's desire to obtain all the
royalties was the motive for its bad faith conduct. See Tr. 746-749
(TXO slandered respondents' title to lower the value of the
property so it could exact concessions or win 100% of royalties by
means of a lawsuit). When counsel
did discuss the
appropriate measure of punitive damages, not once did he mention
the potential harm to respondents. Instead, he relied exclusively
on TXO's vast wealth:
488
"His Honor has instructed you that you may award punitive
damages and I've indicated to you what punitive damages [are].
Now, just consider the wealth of this corporation. [T]he
reason for putting in [expert evidence on TXO's resources] is
that's how a jury considers the amount of punitive damages.
This is a multi-million dollar corporation-even a billion dollars
in assets .... [Think about imposing a punitive award in the range
of a] million, twelve million dollars. Those kinds of numbers are
not out of line when you talk about a corporation that has assets
of something like a billion dollars." Id., at 757-758
(emphases added).
Counsel for respondent Alliance Resources Corp. similarly did
not argue that punitive damages should be linked to potential harm.
He did mention that TXO anticipated a large profit from its
nefarious scheme. See
id., at 779-780;
ante, at 461
(plurality opinion). But counsel once again made no attempt to
quantify TXO's potential gain. Nor did he encourage the jury to
base the punitive damages award on TXO's expected profit. Instead,
counsel argued only
one measure for punitive damages-TXO's
wealth:
"A two billion dollar company. Ha[s] earnings of $225,000,000,
average. Last year made $125,000,000.00 alone. Last year. Now,
what's a good fine for a company like that? A hundred thousand? A
million? You can do that if you think it's fair .... " Tr. 781.
The portion of counsel's argument the plurality relies upon,
ante, at 461, turns out to be a transition between a
discussion of TXO's conduct and a plea for the jury to award
punitive damages based exclusively on TXO's wealth. Immediately
after delivering the portion of the argument the plurality
reproduces-in which counsel told the jury that the punishment
should" 'fit'" the scheme and" 'fit the wealth,'"
ibid.he
asked rhetorically, "Now, how much is the wealth?" Tr. 780. It was
then that he told the jury, in great detail, about
489
TXO's vast resources. At no point, however, did counsel ask
rhetorically, "Now, how much was the potential profit?" At no point
did he answer that question. Nor did he ever suggest that the jury
calculate potential harm or base its punitive damages award
thereon. Instead, like co counsel before him, he relied exclusively
on TXO's wealth. See
id., at 781-782.
I am therefore unpersuaded by the plurality's assertion that
this award may be upheld based on the potential harm to respondents
or TXO's potential gain. That theory was not available to the jury
under the court's instructions. It was not one supported by
evidence on which the jury might have relied. And it is not one
that trial counsel chose to promote. It was instead an
after-the-fact rationalization invented by appellate counsel who
could not otherwise explain this disproportionate award.
C
There is another explanation for the verdict, but it is not one
that permits affirmance. As I read the record in this case, it
seems quite likely that the jury in fact was unduly influenced by
the fact that TXO is a very large, out-of-state corporation.
In
Haslip, this Court considered jury instructions that
differed from those used here in two material respects. First,
unlike the instructions in
Has lip, which did not permit the
jury to consider the defendant's wealth, the instructions in this
case specifically directed the jury to take TXO's wealth into
account. The plurality concedes that introducing TXO's wealth into
the calculus "increased the risk that the award may have been
influenced by prejudice against large corporations, a risk that is
of special concern when the defendant is," as here, "a
nonresident."
Ante, at 464. Second, the instructions
directed the jury to impose punitive damages" 'to provide
additional compensation for the conduct to which the injured
parties have been subjected.'"
Ante, at 463, n. 29
490
O'CONNOR, J., dissenting
(plurality opinion) (quoting App. 34). The latter instruction,
of course, is without legal meaning.
Ante, at 464 (plurality
opinion) (We do "not understand the reference ... to 'additional
compensation' "). Plaintiffs are compensated for injuries they have
suffered; one cannot speak of "additional compensation" unless it
is linked to some additional harm.
To a juror, however, compensation is the money it awards the
plaintiff; "additional compensation," if not linked to a particular
measure of harm, is simply additional money the jury gives to the
plaintiff. As a result, the "additional compensation" instruction,
considered together with the instruction directing the jury's
attention to TXO's massive wealth, encouraged the jury to transfer
some of TXO's impressive wealth to the smaller and more sympathetic
respondents as undifferentiated "additional compensation"-for any
reason, or no reason at all. In fact, the instructions practically
ensured that this would occur. They provided the jury with only two
objective factors on which to rely. See
supra, at 486
(citing jury instructions). The first was actual harm, a relatively
small sum on which the jury obviously did not rely; the second was
TXO's wealth, a factor that obviously impressed the jury a great
deal. Thus, unlike the instructions in
Haslip, these
instructions did not prevent respondents from "enjoy[ing] a
windfall because they have the good fortune to have a defendant
with a deep pocket." 499 U. S., at 22. Instead, they ensured that a
windfall verdict would result by inviting the jury to redistribute
wealth to respondents as undifferentiated "additional
compensation," based solely on TXO's financial position.
That a jury might have such inclinations should come as no
surprise. Courts long have recognized that jurors may view large
corporations with great disfavor. See,
e. g., Illinois Central
R. Co. v.
Welch, 52 Ill. 183, 188 (1869) ("[J]uries may
generally assess an amount of damages against railway corporations
which, in similar cases between individuals, would be considered
unjust in the extreme. It
491
is lamentable that the popular prejudice against these
corporations should be so powerful as to taint the administration
of justice, but we cannot close our eyes to the fact").
Corporations are mere abstractions and, as such, are unlikely to be
viewed with much sympathy. Moreover, they often represent a large
accumulation of productive resources; jurors naturally think little
of taking an otherwise large sum of money out of what appears to be
an enormously larger pool of wealth. Finally, juries may feel
privileged to correct perceived social ills stemming from unequal
wealth distribution by transferring money from "wealthy"
corporations to comparatively needier plaintiffs. Brickman, The
Asbestos Litigation Crisis, 13 Cardozo L. Rev. 1819, 1849, n. 128
(1992); Ellis, Fairness and Efficiency in the Law of Punitive
Damages, 56 S. Cal. L. Rev. 1, 61-62 (1982); Owen, Problems in
Assessing Punitive Damages Against Manufacturers of Defective
Products, 49 U. Chi. L. Rev. 1, 45-46 (1982) (jury assessing
punitive damages against multimillion dollar corporation forced to
think of an award measuring seven, eight, or nine figures); see
also
supra, at 474-475 (juror discretion in awarding
punitive damages not limited); cf.
Smith v.
Covell, 100 Cal. App. 3d 947, 960, 161 Cal. Rptr.
377, 385 (1980) (juror impressed with idea that plaintiffs had
money and "'didn't need anymore' ").
This is not to say that consideration of a defendant's wealth is
unconstitutional. To be sure, there are strong economic arguments
that permitting juries to consider wealth is unwise if not
irrational, see Abraham & Jeffries, Punitive Damages and the
Rule of Law: The Role of Defendant's Wealth, 18 J. Legal Studies
415 (1989), especially where the defendant is a corporation,
id., at 421-422; cf.
Zazu Designs v.
L'Oreal,
S.
A., 979 F.2d
499, 508-509 (CA 7 1992) (Easterbrook, J.). But, "[j]ust as the
Fourteenth Amendment does not enact Herbert Spencer's Social
Statics, see
Lochner v.
New York, 198 U. S. 45, 75 (1905)
(Holmes, J., dissenting)," it does not require us to adopt the
views of the Law and
492
Economics school either. As a historical matter, the wealth of
the perpetrator long has been thought relevant. See
Browning-Ferris, 492 U. S., at 300 (O'CONNOR, J., concurring
in part and dissenting in part) (citing the Magna Carta and
Blackstone's Commentaries). Moreover,
Haslip itself suggests
that the defendant's wealth is a permissible consideration,
ante, at 462, n. 28, 464 (plurality opinion), although it
does so only in the context of
appellate review. See 499 U.
S., at 22.
Nonetheless, courts must have authority to recognize the special
danger of bias that such considerations create. The plurality does
just that today,
ante, at 464, as this Court, other
tribunals, and numerous commentators have before. See,
e.
g., Morris, Punitive Damages in Tort Cases, 44 Harv. L. Rev.
1173, 1191 (1931) ("It is a good guess that rich men do not fare
well before juries, and the more emphasis placed on their riches,
the less well they fare. Such evidence may do more harm than good;
jurymen may be more interested in divesting vested interests than
in attempting to fix penalties which will make for effective
working of the admonitory function"); Abraham & Jeffries,
supra, at 424;
Illinois Central R. Co., supra, at 188
(bias against railroads);
McConnell v.
Hampton, 12
Johns. 234, 236 (N. Y. 1815) (Thompson, C. J.) (jury unduly
influenced by defendant's great wealth); cf.
Newport v.
Fact Concerts, Inc., 453 U. S. 247, 270-271
(1981) ("[E]vidence of a [municipality's wealth, inasmuch as it has
unlimited taxing power], may have a prejudicial impact on the jury,
in effect encouraging it to impose a sizable award. The impact of
such a windfall recovery is likely to be both unpredictable and, at
times, substantial"); see also
Has lip, 499 U. S., at 43
(O'CONNOR, J., dissenting) (jurors, if not properly guided, may
"target unpopular defendants ... and redistribute wealth").
The risk of prejudice was especially grave here. The jury
repeatedly was told of TXO's extraordinary resources, which
respondents estimated at $2 billion. To make matters
493
worse, unlike the jurors or the primary plaintiffs, TXO was not
from West Virginia. It was an interloper, from the large State of
Texas. As the Supreme Court of Appeals of West Virginia has
recognized, the temptation to transfer wealth from out-of-state
corporate defendants to in-state plaintiffs can be quite strong.
See
Garnes v.
Fleming Landfill, Inc., 186 W. Va. 656,
665, 413 S. E. 2d 897, 906 (1991) (Excess jury discretion
"[i]nevitably ... leads to increasing efforts to redistribute
wealth from without the state to within"; cases involving large
awards typically pit local plaintiffs against "out-of-state (often
faceless, publicly held) corporations"). That court speaks from
experience. The three highest punitive damages awards ever affirmed
in West Virginia, including this one, were assessed against
relatively wealthy out-of-state defendants.
Jarvis v.
Modern Woodmen of America, 185 W. Va. 305, 406 S. E. 2d 736
(1991);
Berry v.
Nationwide Mutual Fire Ins. Co., 181
W. Va. 168, 381
Counsels' arguments, however, converted that grave risk of
prejudice into a near certainty. Repeatedly they reminded the jury
that TXO was from another State. Repeatedly they told the jury
about TXO's massive wealth. And repeatedly they told the jury that
it could do anything it thought "fair." The opening line from
rebuttal set the tone. "Ladies and gentleman of the jury," one
attorney began, "this greedy bunch from down in Texas still doesn't
understand this case." Tr. 773. Playing on images of Texans as
overrich gamblers who profit by chance rather than work, he
referred to TXO shortly thereafter as a bunch of "Texas high
rollers, wildcatters."
Id., at 777. Finally, counsel drove
the point home yet one more time, comparing TXO to an obviously
wealthy out-of-town visitor who refuses to put money in the parking
meter to help pay for community service:
"Well, what is fair? ... If someone comes to town and
intentionally doesn't put a quarter in the meter, stays
494
here all day, [in this] town that needs it to pay for the
police force and the fire department, they give [him] a fine.
And at the end of the day [he] may have to pay a dollar. That
person reaches in his billfold at the end of the day and maybe
he's got a hundred bucks in there. He doesn't want to have
to pay that dollar, but he does, because he knows if he doesn't
[he'll have legal problems] .... The town didn't take everything
from the individual, didn't ruin [him], just took one percent of
what that person had in cash. One percent. You can fine TXO one
percent if you want, you can fine them one dollar if you want.
But I submit to you a one percent fine, the same as John Doe on
this street, would be fair. That's twelve and a half million
dollars, based on what they had left over. And their earnings
w[ere] $225,000,000.00 [per year]. I mean, yeah, their cash
flow. Their surplus. So anything between twelve and a half million
and twenty-two million is only one percent-the same as this poor
guy who just tried to cheat a little bit. Now that's a lot of
money. I hope, like I said, you don't analyze this on a lot or a
little, but fair." Id., at 781-782 (emphases added).
Over and over respondents' lawyers reminded the jury that there
were virtually no substantive limits on its discretion. Time and
again they told the jury of TXO's great wealth and that it could
take away any amount it wanted, as long as it seemed "fair."
Id., at 781 ("It isn't really whether the verdict is too
large or too small, too big or too little. It's whether it's
fair");
ibid. ("A two billion dollar company. Have earnings
of $225,000,000.00, average. Last year made $125,000,000.00 alone.
Last year. Now, what's a good fine for a company like that? A
hundred thousand? A million? You can do that if you think it's fair
... "). And each time the argument found solid support in the trial
court's instructions, which not only licensed the jury to afford
respondents
495
any "additional compensation" they believed appropriate, but
also encouraged them to do so based on TXO's wealth alone.
Given the absence of another plausible explanation for this
monumentally large punitive damages award, I believe it likely, if
not inescapable, that the jury was influenced unduly by TXO's
out-of-state status and its large resources. The plurality
acknowledges this possibility, see
ante, at 464, but refuses
to address it. TXO, the plurality contends, failed to press its
objections to the jury instructions in the state court below.
Ibid. I disagree. TXO's brief specifically argued that the
jury instructions did not meet the
"Has lip standards and
[were] not constitutionally permissible." Brief for Appellant in
No. 20281 (W. Va.), p. 48; see
id., at 44-46 (jury
instructions insufficient under
Garnes v.
Fleming
Landfill, Inc., supra, a recent West Virginia Supreme Court of
Appeals decision interpreting
Haslip). The State Supreme
Court of Appeals so understood TXO's challenge. See 187 W. Va., at
473-477,419 S. E. 2d, at 886-890.
Of course, TXO did not make precisely the same arguments it
makes here. But it was not required to. "Once a federal claim is
properly presented, a party can make any argument in support of
that claim; parties are not limited to the precise arguments they
made below."
Yee v.
Escondido, 503 U. S. 519, 534
(1992). There can be little doubt that TXO argued below that the
punitive damages award was excessive; there can be little doubt
that TXO identified the jury instructions as being partially
responsible. TXO ought not be precluded from fully presenting its
arguments here. Because those arguments demonstrate that this award
was based on considerations inconsistent with due process, I would
reverse the judgment below so the matter could be submitted to the
consideration of a second jury.
III
Confronted by a $10 million verdict on damages of $19,000, the
State Supreme Court of Appeals in this case did not en-
496
gage in searching review. Instead it added insult to injury,
applying cavalier standards in the course of a cursory examination
of the case. Because the review afforded TXO was insufficient to
conform with the criteria this Court approved in
Haslip, the
case at least should be remanded for constitutionally adequate
postverdict review.
A
Two Terms ago, this Court in
Haslip upheld Alabama's
punitive damages regime against constitutional challenge. Although
the Court recognized that juries in Alabama receive limited
instructions regarding punitive damages, see 499 U. S., at 6, n. 1,
19-20, it was reassured by the fact that the Alabama courts subject
punitive verdicts to exacting postverdict review at two different
levels. First, Alabama trial courts must indicate on the record
their "'reasons for interfering with a jury verdict, or refusing to
do so, on grounds of excessiveness.'"
Id., at 20 (quoting
Hammond v.
Gadsden, 493 So. 2d 1374, 1379 (1986)).
Second, the Alabama Supreme Court itself provides an additional
"check" by conducting comparative analysis and applying detailed
substantive standards-seven in all-thereby "ensur[ing] that the
award does not exceed an amount that will accomplish society's
goals of punishment and deterrence." 499 U. S., at 21 (internal
quotation marks omitted). Specifically, the Alabama Supreme Court
examines:
"(a) whether there is a reasonable relationship between the
punitive damages award and the harm likely to result from the
defendant's conduct as well as the harm that actually has occurred;
(b) the degree of reprehensibility of the defendant's conduct, the
duration of that conduct, the defendant's awareness, any
concealment, and the existence and frequency of similar past
conduct; (c) the profitability to the defendant of the wrongful
conduct and the desirability of removing that profit and of having
the defendant also sustain a loss; (d) the 'financial
497
position' of the defendant; (e) all the costs of litigation; (f)
the imposition of criminal sanctions on the defendant for its
conduct, these to be taken in mitigation; and (g) the existence of
other civil awards against the defendant for the same conduct,
these also to be taken in mitigation." Id., at 21-22.
In
Has lip, the Court concluded that application of those
standards "imposes a sufficiently definite and meaningful
constraint" on factfinder discretion.
Id., at 22. Because
the standards had a "real effect,"
ibid., the Court upheld
Alabama's regime against constitutional challenge despite the
relatively sparse guidance it afforded juries.
As the plurality admits,
ante, at 463-464, the jury
instructions used here were not dissimilar to those employed in
Has lip. Unlike
Haslip, however, the verdict they
produced was not subjected to post-trial review sufficient to
impose a "meaningful constraint" on factfinder discretion. Indeed,
the post-trial review offered here bears no resemblance to that
approved in
Has lip. In contrast to the trial judge in
Haslip, the trial judge here made no written findings. Nor
did he announce why he believed-or even if he believedthat the
amount of damages bore a reasonable or recognizable relationship to
actual damages or any other relevant measure. Instead, ruling from
the bench, the trial judge summarily denied TXO's motions seeking
reduction or elimination of the punitive damages award.
More important, the Supreme Court of Appeals of West Virginia
did not do much better. At the outset, it refused to consider the
possibility of remittitur because TXO "and its agents and servants
failed to conduct themselves as gentlemen." 187 W. Va., at 462, 419
S. E. 2d, at 875. Proceeding to the question whether the award of
punitive damages should be stricken as excessive, the court
distinguished between two categories of defendants: those who are
"really stupid" and those who are "really mean."
Id., at
474-476, 419 S. E. 2d, at 887-889. If the defendant is "really
stupid,"
498
O'CONNOR, J., dissenting
the court explained, "the outer limit of punitive damages is"
generally about "five to one."
Id., at 476, 419 S. E. 2d, at
889. For the "really mean" defendant, however, "even punitive
damages 500 times greater than compensatory damages are not
per
se unconstitutional."
Ibid. TXO, it seems, was not
really stupid but "really mean." The Supreme Court of Appeals
affirmed the $10 million punitive award even though it was 526
times greater than compensatory damages.
Reference to categories like "really stupid" and "really mean"
are a caricature of the difficult task of determining whether an
award may be upheld consistent with due process. It is simply not
enough to observe that the conduct was malicious and conclude that,
as a result, the sky (or 500 times compensatory damages) is the
limit. But cf.
ante, at 468-469 (KENNEDY, J., concurring in
part and concurring in judgment) (so concluding solely because the
conduct was malicious and the defendant rich). Instead, post-trial
review must be sufficient to "ensur[e] that punitive damages awards
are not grossly out of proportion to the severity of the offense
and have some understandable relationship to" some measure of harm.
Has lip, supra, at 22. Aside from its two-page dissertation
on the difference between "really stupid" and "really mean,"
however, the State Supreme Court of Appeals offered only three
conclusory sentences in a single paragraph to bolster its
conclusion that the damages here were not excessive. See
ante, at 453 (plurality opinion) (citing 187 W. Va., at 476,
419 S. E. 2d, at 889). Because I believe that such cursory review
is inconsistent with this Court's decision in
Haslip, I
cannot join my colleagues in affirming.
B
That the Supreme Court of Appeals would engage in such cursory
review is something of a surprise. In
Garnes v.
Fleming
Landfill, Inc., 186 W. Va. 656, 413 S. E. 2d 897 (1991), that
court demonstrated concern for the due process implications of
punitive awards. Holding that West Virgin-
499
ia's previous punitive damages regime was constitutionally
suspect in light of
Haslip, it required trial courts to
instruct juries on numerous factors relevant to the measure of
punitive damages, see 186 W. Va., at 667-668, 413 S. E. 2d, at
908-909; it mandated that trial courts conduct extensive review and
articulate reasons for their decisions on the record,
id.,
at 668-669, 413 S. E. 2d, at 909-910; and it announced that it
would apply the factors approved in
Haslip in its own
review, 186 W. Va., at 669, 413 S. E. 2d, at 910.
Unfortunately for TXO,
Garnes was decided after TXO's
trial took place. Although the Supreme Court of Appeals recognized
that TXO had not received the benefit of
Garnes' and
Haslip's protections, it refused to remand the case.
Instead, the court indicated that it would be "especially diligent"
in reviewing this award; it went on to recite language from both
Haslip and
Garnes. It is therefore clear that
Haslip still governs punitive damages awards in West
Virginia. As a result, the plurality perhaps declines to reverse
because it believes that the Supreme Court of Appeals' failure to
follow
Haslip here is of little consequence to anyone but
TXO. After all, a decision of this Court requiring more searching
review would alter only the result in this particular case and
perhaps a few like it, without changing the law, even in West
Virginia.
If the plurality is in fact proceeding on such an assumption, I
believe it is mistaken. While this Court has the ultimate power to
interpret the Constitution, we grant review in only a small number
of cases. We therefore rely primarily on state courts to fulfill
the constitutional role as primary guarantors of federal rights.
But the state courts must do more than recite the constitutional
rule. They also must apply it, faithful to its letter and cognizant
of the principles underlying it. Unfortunately, such review is not
always forthcoming.
Amici recite case after case in which
review has been inadequate or absent altogether. See,
e.
g., Brief for Phillips Petroleum Co. et al. as
Amici
Curiae 20-27. The Supreme
500
Court of Appeals of West Virginia, at the same time it
recognized
Haslip as law, itself warned:
"[WJe understand as well as the next court how to ... articulate
the correct legal principle, and then perversely fit into that
principle a set of facts to which the principle obviously does not
apply. [All judges] know how to mouth the correct legal rules with
ironic solemnity while avoiding those rules' logical consequences."
Garnes, supra, at 666, 413 S. E. 2d, at 907 (footnote
omitted).
I fear that the Supreme Court of Appeals followed such a course
in this case. By affirming the judgment nonetheless, today's
decision renders the meaningful appellate review contemplated in
Haslip illusory; courts now may disregard the post-trial
review required by due process at whim or will, so long as they do
not deny its necessity openly or altogether.
IV
As little as 30 years ago, punitive damages awards were "rarely
assessed" and usually "small in amount." Ellis, 56 S. Cal. L. Rev.,
at 2. Recently, however, the frequency and size of such awards have
been skyrocketing. One commentator has observed that "hardly a
month goes by without a multimillion-dollar punitive damages
verdict in a product liability case." Wheeler, A Proposal for
Further Common Law Development of the Use of Punitive Damages in
Modern Product Liability Litigation, 40 Ala. L. Rev. 919 (1989).
And it appears that the upward trajectory continues unabated. See
Volz & Fayz, Punitive Damages and the Due Process Clause: The
Search for Constitutional Standards, 69 U. Det. Mercy L. Rev. 459,
462, n. 17 (1992). The increased frequency and size of punitive
awards, however, has not been matched by a corresponding expansion
of procedural protections or predictability. On the contrary,
although some courts have made genuine efforts at reform, many
courts
501
continue to provide jurors with skeletal guidance that permits
the traditional guarantor of fairness-the jury itself-to be
converted into a source of caprice and bias. This Court's decision
in
Haslip promised that, even if juries occasionally failed
to fulfill their function faithfully, trial and appellate courts
would provide meaningful review sufficient to discern impermissible
influences and guarantee constitutional results. In my view,
today's decision fails to make good on that promise. I therefore
respectfully dissent.
Comments
Be the first to comment
Leave a Comment