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American Civil Litigation and Dispute Resolution

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1 American Civil Litigation and Dispute Resolution
University of Insubria, Como, Italy Jeffrey W. Stempel William S. Boyd School of Law University of Nevada, Las Vegas

2 The U.S. Court System Overview of a Lawsuit Jurisdiction and Venue
Segment 1 The U.S. Court System Overview of a Lawsuit Jurisdiction and Venue

3 Three Branches of Government
The Courts (state and federal) The Legislature (state and federal—Congress) The Executive (The President and Administrative Agencies; in states – the Governors and Administrative Agencies)


5 The United States’ Federal Court of Appeals

6 Amy E. Sloan, Basic Legal Research: Tools and Strategies 7 (4th ed

7 Amy E. Sloan, Basic Legal Research: Tools and Strategies 7 (4th ed

8 Amy E. Sloan, Basic Legal Research: Tools and Strategies 201 (4th ed

9 Lexis-Nexis Congressional Universe, How Does a Bill Become Law?

10 The Sources of U.S. Law Common Law System
Federal and state Case Precedent But Many State and National Statutes Common law vs. Code law? Statutes vs. Codification Substantive Law Affects rights and duties Procedure Governs manner of enforcing rights/duties

11 American Federalism and Its Impact on Civil Litigation
State law dominates in spite of growth of federal (national) government during 20th Century State courts have “general” jurisdiction Federal courts have “limited” jurisdiction Need Specific Authority to sue in federal court Federal Courts must have “subject matter” jurisdiction over the topic of the dispute All courts must have “personal” jurisdiction over the parties to the lawsuit Usual focus is on the defendant; Plaintiff has consented to personal jurisdiction by filing suit in the forum state

12 American Federalism and Its Impact on Civil Litigation -- II
Concurrent Jurisdiction Independence of the federal and state judicial systems “Federalism” or “state’s rights” has created some cases where federal courts “abstain” from deciding a case (even when they have the power) to let state courts have first chance at the matter

13 American Federalism and its Impact on Civil Litigation -- III
Unless lawsuit involves federal law, state law governs Where disputes involve different states or persons from different states, there may be need for trial court to conduct “choice of law” analysis to decide which state law applies Image: Four Corners National Monument /

14 Factors for Choosing Applicable State Law Include:
Citizenship of Parties; Residency of Plaintiff and Defendant Location of accident, contract, or events Location of evidence, information, documents Place where injury or impact is felt Relative interest of state governments Whether law of one state is “better,” clearer, or more developed than others

15 American Federalism and Its Impact on Civil Litigation -- IV
Even though state law controls in cases in federal court because of diversity jurisdiction Federal procedure rules apply Federal Rules of Civil Procedure (1938) as a code of procedure Federal Rules of Evidence and Appellate Procedure as well States have procedure similar to federal system but with significant state-to-state difference

16 Importance of Procedure
Due Process – Constitutional Guarantee – “Fairness” “Opportunity to Be Heard” Jury Trials Role of Judge (determines applicable law) Role of Jury (finds facts and applies law) Motions to Dismiss; Summary Judgment Requirements for Complaints and other pleadings Governs the amount of information (“discovery”) that must be exchanged

17 The Path of a Lawsuit

18 The Path of a Lawsuit Don’t Forget the Preliminaries
Client Engagement, Interview, Retainer Investigation Legal Research Attorney or plaintiff may be punished for bringing unfounded claim Fed. R. Civ. P. 11 (must do some research to have a basis to think a claim is valid) Forum Selection/Forum Shopping

19 The Path of a Lawsuit -- II
Complaint Service of the Complaint (a/k/a service of process) Defendant Response(s) Answer Motion to Dismiss (Fed. R. Civ. P. 12) Counterclaim (Compulsory or Permissive) Cross-claim

20 The Path of a Lawsuit -- III
If Motion to Dismiss is not granted, case proceeds Mandatory Disclosure Exchange of Basic Facts with other parties Discovery Efforts to ferret-out facts from opponents or others Extensive set of Civil Procedure Rules on Discovery (more detail later)

21 The Path of a Lawsuit -- IV
Discovery Generally Broad Scope But Subject to Privilege Privileges exist when social need to foster relationship and confidentiality outweigh social need for the information Privileges developed according to common law Unless a specific statute on point

22 The Path of a Lawsuit -- V
After adequate opportunity for discovery . . . Parties may make “dispositive” motion that would determine the case Summary judgment is the primary and usual motion after discovery is completed If Summary judgment is denied, case moves forward Pretrial conferences, witness lists, documents lists, settlement conferences

23 The Path of a Lawsuit -- VI
If no settlement, case proceeds to trial Jury Selection Opening Statement(s) Plaintiff’s “case-in-chief” Direct examination of witnesses Introduction of documents Introduction of “real” evidence (e.g., gun, jewelry) Cross-examination by opposing parties

24 The Path of a Lawsuit -- VII
Expert Witnesses Plaintiff rests Then comes Defendant’s motion for “judgment as a matter of law” If denied, Defendant must present its case-in-chief Defendant presents witnesses and documents Defense rests

25 The Path of a Lawsuit -- VIII
Motion for Judgment as a Matter of Law at the conclusion of all evidence Usually made by both plaintiff and defendant If denied, case to be submitted to the jury Closing Arguments Jury instructions Jury Deliberation Verdict

26 The Path of a Lawsuit -- IX
After verdict, loser may attack verdict Motion for judgment as a matter of law (again) Grounds for JAML (and Summary Judgment) Movant argues that material facts not in dispute and law applied to those facts favors movant even if jury rendered verdict to opponent.

27 The Path of a Lawsuit -- X
Motion for a New Trial (as alternative to JAML) Will not reverse the adverse verdict but will give movant another chance with new jury Granted where Verdict against the weight of the evidence Verdict too high or too low Erroneous jury instructions Trial misconduct by lawyers, jurors Really bad evidence rulings by judge

28 The Path of a Lawsuit -- XI
If no grant of new trial or JAML, loser must appeal within 30 days “Briefs” by counsel argue the issue Then “oral argument” before panel of 3 judges, sometimes entire court Usually months until a decision During that time, parties often negotiate, settle claim But appeals succeed only 40 percent of the time; the trial verdict winner has the advantage

29 Appellate Review Did lower court err in law?
May not revisit the facts unless the lower court is the fact finder and the fact finding is clearly erroneous Will not usually overturn the jury’s fact finding but may find that the judge’s jury instructions were erroneous - case may be tried again

30 Standards of Review for Appellate Courts
Questions of law -- look at the issue “de novo” Questions of fact -- overturn a court’s finding of facts only if “clearly erroneous” Appellate courts do not take testimony – fact finders had opportunity to see the witnesses testify – more qualified to decide the facts

31 The Path of a Lawsuit -- XII
After trial or when appeals process has run its course, winning party may recover some costs of litigation In USA, loser and winner each pay their own attorney fees (the “American Rule”). In Britain, the winning party is often awarded attorney fees (the “English Rule”) Some exceptions to the American Rule in the USA by statute, contractual agreement, or as a punishment for bad faith by a party or counsel

32 The Path of a Lawsuit -- XIII
After “judgment” is final and entered, the loser (or its insurance company) typically pays But if no voluntary payment, the winner is a “judgment creditor” who may use “creditor’s remedies” to satisfy the judgment. Examples: Garnish loser’s wages to pay claim Take funds from loser’s bank account, etc. Place lien on loser real estate; if sold, judgment paid from sale proceeds; foreclosure a possibility

33 The Rare Possibility of Supreme Court Review
After appeals process exhausted, losing party may petition for review (grant of a “writ of certiorari”) by the U.S. Supreme Court Only about one (1) percent of petitions for review granted Supreme Court will not take case just because it suspects error by lower courts Case must present constitutional issue or involve important area of national law where lower courts are divided

34 Judicial Power and Subject Matter Jurisdiction
U.S. Constitution (1787) (and various amendments since) Article I – Legislative (establishes Congress – House and Senate) Article II – Executive (the Presidency, etc.) Article III – Judicial (Supreme Court and basic grant of federal judicial power for federal questions and related things, “diversity” jurisdiction)

35 Federal Question Subject Matter Jurisdiction
Established in Article III of the Constitution Codified in 28 U.S.C. § 1331 States that federal courts have subject matter jurisdiction that “arises” under federal law (statute, treaty) No federal question jurisdiction unless federal law is involved in the claim A defense based on federal law does not create federal subject matter jurisdiction

36 Tests for Federal Question Jurisdiction
Does federal law “create” the cause of action? Or Does federal law comprise an “essential” ingredient of the cause of action? Because federal courts are courts of “limited” jurisdiction that should not supplant state courts, federal question jurisdiction is construed narrowly

37 Federal “Diversity” Subject Matter Jurisdiction
Established in Article III Codified in 28 U.S.C. § 1332 Federal courts have subject matter jurisdiction when all plaintiffs and all defendants are citizens of different states (the rule of “complete” diversity) If the matter in controversy exceeds $75,000 in value

38 Diversity Jurisdiction (con’t)
Citizenship means “domicile” Domicile means one’s home People are born with a domicile Can change it by relocating with intent to change domicile (summer camp and university not enough – if you plan to return home after)

39 Diversity Jurisdiction (con’t)
Dual Domicile/Citizenship of Corporation Place of incorporation (e.g., Delaware) (corporations are charted in a particular state in the U.S. – no national chartering system) And Principal Place of Business Almost Always Means Company Headquarters Clarified in Hertz v. Friend (2010)

40 Another Federalism Wrinkle: Removal
After a lawsuit is filed in state court, the defendant may be able to “remove” it to the nearest federal court if It could have been brought in federal court On the basis of either federal question or subject matter jurisdiction Must act within 30 days All defendants must join in multi-defendant case If a diversity case, only a defendant who is not a resident of the forum state can remove

41 Personal Jurisdiction
Subject Matter Jurisdiction is judicial power over the subject matter of the lawsuit (e.g., violation of federal law; plaintiff and defendant from different states) Personal jurisdiction is judicial power over the parties – particularly the defendant Exercise of personal jurisdiction must satisfy “Due Process”

42 Due Process Guaranteed against the federal government by Fifth Amendment to Constitution Guaranteed against state governments by the Fourteenth Amendment Defined as Reasonable and fair notice of the claim Opportunity to be fairly heard Before a neutral adjudicator In a fair forum

43 Personal Jurisdiction and Due Process
Court exercise of personal jurisdiction in an unfair forum violates due process Forum considered unfair if defendant lacks sufficient contact Where the claim is connected to forum-related activity of the defendant, there must be sufficient “minimum contacts” so that court jurisdiction does not offend sense of fairness and justice

44 Personal Jurisdiction and Due Process
Where the claim does not relate to defendant’s activity in the forum state, there may still be “general” personal jurisdiction over the defendant because it has pervasive presence in the state Test is whether defendant’s presence is “continuous” and “systematic”

45 Venue “Venue” means the place of trial within the jurisdiction/state
Basic rule codified at 28 U.S. § 1391 Venue generally proper Where all defendants reside Where a “substantial part of the events giving rise to the claim” occurred Some differences and complexities not addressed in this class

46 Venue -- II If venue is improper where lawsuit first filed, defendant may move for dismissal (28 U.S.C. § 1406) Or court may transfer case to a place of proper venue Or defendant may seek change of venue to more convenient venue (28 U.S.C. § 1404)

47 Venue -- III Preferable venue determined by Location of parties
Location of real evidence Access to/Convenience of Witnesses Documents and other proof Burden on court relative to its connection to case (e.g., fairness of imposing a New York-centered trial on California jurors)

48 Segment 2 The Erie Doctrine

49 A Review of American Federalism
State law is the “baseline” governing law Although it can often be supplanted by applicable federal law under the “Supremacy Clause” of the Constitution If there is a sufficient link to interstate commerce or something else that conveys federal power In the absence of federal law, state law is the default

50 Still More on Federalism
The concept is captured in the Rules of Decision Act, 28 U.S.C. § 1652 The laws of the states should be the “rule of decision” unless the case is governed by federal law Despite this ethos in America, there was established in the 1800s the practice of applying “federal common law” to disputes between citizens of different states in cases that were in federal court because of diversity jurisdiction

51 A Little More Federalism
This practice of using federal common law was established in Swift v. Tyson (1842) The thought behind it was the application of federal common law in commercial matters would be efficient – but it proved not to make much difference And it led to the divergent results and unequal outcomes alluded to in Erie v. Tompkins

52 Just a Bit More Federalism
The ramifications of Swift v. Tyson were exacerbated because courts also did not treat state judicial precedent as the “laws” of the states for purposes of the Rules of Decision Act. Consequently, state law displaced federal common law in diversity cases only where there was state legislation – even if state court decisions established state law counter to the federal common law In federal question cases, of course, federal law governs – but even here there are some complexities that we must skip over for this short course

53 Erie v. Tompkins Continues to Be Good Law in the U.S.
But in further application it can become complicated, with more disagreement about the correct application First, some fine-tuning of Erie There still may be times when federal courts will use federal common law When construing aspects of federal law not set forth in statute When dealing with federal officials When dealing with federal property, lands, inter-government disputes (e.g., City of Milwaukee [Wisconsin]) v. State of Illinois case over pollution problem)

54 Erie Made Easy? Although the Erie Doctrine can get horribly messy and contentious at the edges, the premise is relatively simple and reflects the prevailing U.S. view most see as different than the European view Strong preference or presumption for applying state substantive law absent other factors such as “purely” or primarily procedural matter or clearly applicable federal substantive law Example of the latter: Byrd v. Blue Ridge Electric (1958) finds Const. Amendment VII to prevent application of a South Carolina law (at issue in a diversity jurisdiction case) mandating bench trials (trials by judge rather than jury)

55 Erie in Brief Apply state substantive law to proceedings in federal court where only basis for subject matter jurisdiction is diversity of plaintiff and defendant But apply federal procedural law to any case in federal court – so long as the Federal Rule of Civil Procedure at issue really regulates procedure (rather than being a subterfuge for regulating substance) and was properly promulgated.

56 The Discovery and Trial Process
Segment 3 The Discovery and Trial Process

57 Disclosure and Discovery
Prior to 1938, only available in select courts for select cases A dramatic change in the practice of law No more “trial by ambush” or guessing at the other side’s proof Counsel now has the means to become informed about the other side’s facts and evidence “Fishing expeditions” allowed

58 Disclosure and Discovery
Rule 26 is the fulcrum of U.S. federal court discovery Similar rule in almost every state Disclosure rules came in 1993 But they were intended to simply advance production of information everyone had been getting since 1938

59 Disclosure and Discovery
Rule 26 sets forth the scope of discovery Any matter that is “not privileged” which relates to the “claims” or “defenses” of the parties For “good cause” shown, a litigant may have discovery of anything relevant to the “subject matter” of the case Even if material sought is not admissible in evidence, discovery is permitted as long as discovery is “reasonably calculated” to lead to admissible evidence

60 Discovery -- Privilege
Attorney-Client most important But courts also recognize other privileges Clergy (Priest-Penitent) Doctor-Patient Trade Secrets National Security Marital Communications (but not absolute ban on discovery/evidence from spouse). Wife can testify that she saw husband sell drugs but cannot say that husband told her he sold drugs.

61 Attorney-Client Privilege
Elements of the Privilege Attorney-Client Relationship Communication between lawyer and client Made in confidence For the purpose of facilitating legal advice Kept in confidence (e.g., not waived through disclosure) An “absolute” privilege – no exceptions if it is applicable But privilege may be destroyed by conduct such as waiver or fail to apply. Most common example of this is the “crime-fraud” exception – communications are not privileged if lawyer’s services used to effect a crime or fraud

62 Trial Preparation or “Work Product” Privilege (Rule 26(b)(3))
Things prepared by lawyer (and staff, such as paralegals or investigators) “in anticipation of litigation” need not be produced to opponent But the underlying facts are not privileged Example: Lawyer interviews witness; lawyer notes privileged but opponent can interview witness or take deposition of witness A “qualified” privilege rather than an absolute privilege If the opponent can show inability to get “substantial equivalent” of the materials without “undue burden” the materials may be ordered produced But attorney mental impressions still protected. For example, parts of a witness interview reflecting counsel’s thinking may be redacted. If that is impossible, the material may be protected even if there is hardship to the opponent (e.g., witness dies after interview)

63 Discovery Devices Interrogatories (Rule 33)
Document Production Requests (Rule 34) Depositions (Rule 30) Medical Examinations or Inspections (Rule 35) Requests for Admission (Rule 36)

64 Interrogatories Governed by Rule 33
Allows each side to ask questions of the other Presumptive limit of 25 per party More available if showing of good cause or need Must make reasonable effort to answer Important for organizational or entity parties (e.g., corporations, governments). Businesses can not “forget” as easily as a natural person

65 Document Production Requests
Allows for the exchange of written information No limit on production Allows parties to see if their respective contentions are supported in the record Hard for opponent to hide behind what it previously stated Example: “smoking gun” letter or s (e.g., “We know the product is unsafe but it is so profitable we have to keep selling it. A warning would reduce sales.”)

66 Depositions Governed by Federal Rule 30 (for oral depositions)
Rule 31 governs written question depositions, which are far less common Can be videotaped, is always recorded or transcribed Presumptive limit of 10 depositions per side But court can order more for good cause Presumptive limit on length of deposition to one business day of seven (7) hours but can be changed

67 Depositions Counsel examines person (or a person representing an entity such as a corporation or government) under oath Like questioning a witness at trial but different At trial, you call your witnesses and prepare them to give streamlined, relevant, efficient testimony. Although you might call an “adverse” witness to put information into the trial record, this is comparatively rare

68 Medical Exams, Etc Federal Rule 35
Common in bodily injury claims (e.g., auto accident) – Defendant will want someone other than plaintiff’s own doctor to assess the extent of plaintiff’s injury Can also permit inspections of land, taking of water samples, etc.

69 Requests to Admit Federal Rule 36
Party sends requests to admit Receiving party must admit, deny, or explain why it cannot respond Sounds wonderful in practice but not very effective for gaining admissions on contested issue But can be an effective way of avoiding using trial time to prove clearly objectively established facts or non-controversial facts

70 More on Discovery Special Rules for Experts (in Rule 26)
Fear of a party or counsel being ambushed by a slick expert that may be persuasive to layperson jurors but is actually full of hot air The idea is to allow each side to test the bona fides of the other’s expert and to better prepare for trial Report by the expert is required – then usually a deposition

71 Enforcement of Discovery Rights
Federal Rule 37 Where the opposing party is not providing required disclosure or adequate responses to discovery, the requesting party may seek help from the court An order “compelling” the requested discovery If opposing party fails to comply with the order, the court may punish the opposing party If the opposing party’s claim not “substantially justified” (even if not persuasive), the court may award attorney fees to the moving party. Governed by Federal Rule 30

72 Enforcing Discovery Rights
If an order compelling discovery is not obeyed, the court may Levy a fine against the disobeying party May require payment of attorney fees May declare certain facts established for purpose of trial May enter a default judgment against the party May even use incarceration as a punishment for contempt All this is pretty rare. Most American lawyers think courts are not aggressive enough in enforcing discovery rights

73 Class 4 The Right to Jury Trial

74 Jury Trial Historically, an English judicial institution
Although existing in limited or modified form in many societies But for the world at large (including European countries for most lawsuits), the norm is trial before a professionally trained judge The U.S. adopted the jury trial because it inherited the English legal system Despite the American Revolution, the new nation kept much of the English judicial system

75 “Preserving” the Right to Jury Trial
When U.S. was being formed, a big concern was excessive power in the new national government General belief that juries would be a safeguard because jurors are not part of the government like judges Resulted in Amendment VII to the U.S. Constitution

76 The Seventh Amendment “In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, [other] than according to the rules of the common law.” Applies only in federal court States are free to go without juries But nearly all have similar language in state constitutions (but often not as broad or mandatory)

77 Breaking Down the Seventh Amendment
Twenty Dollars? Would be $ today (Tompkins $30,000 verdict would be almost $467,000 today) “Suits at common law” means actions for legal relief as they existed in the U.S. and England at the time the Amendment was enacted (1791) Generally means an action seeking monetary damages rather than “equitable” relief such as an injunction

78 More Seventh Amendment
The jury trial right must be “preserved” – generally taken to mean that jury trials must not be curtailed from what they were but there is no requirement to expand the jury When new rights are created by statute, Congress need not make a jury trial available Jury trial rights, like most Constitutional rights (or most legal rights) can be waived by a party Federal Rule 38 makes it a waiver if the party does not make a prompt demand for a jury trial at the early stage of litigation

79 More Seventh Amendment
The “preservation” language of the Amendment has made courts use a “historical” test for determining whether a jury is required in a particular action. This approach asks whether the claim currently before the court is like the type of claim for which a jury was required in 1791 Conversely, if the claim is not like a “suit at common law” or an “action at law” from that time, the Amendment presumably does not apply

80 More Seventh Amendment
In addition to the “historical” test, courts use a “remedy” test to assess whether a claim is subject to the Seventh Amendment and requires a jury trial The remedy test asks whether the lawsuit is seeking a “legal” remedy (usually payment of money). If so, a jury trial right probably applies – but it can get complicated

81 The Ramifications of the Jury: A Major American Difference
American Exceptionalism perhaps a chronic problem But the jury trial is something hard-wired into the U.S. judicial system Not like foreign policy, which may vary from George W. Bush to Barack Obama, etc. Because Constitution is difficult to amend and jury trial is popular, the Seventh Amendment will probably never change But judicial interpretation may be broad or narrow

82 The State of the Jury England – which inspired the U.S. – now hardly uses the jury in civil matters A major exception is use of the jury in defamation cases (which is probably a disaster, particularly because England does not have a robust First Amendment guaranteeing freedom of speech and of the press) Juries not part of Europe and systems derived from European colonial days (unless England the colonizer) But some interest in juries in Third World or former Iron Curtain countries

83 Impact of the Jury Trial must be condensed into a relatively small window of time Cannot ask jurors to hear evidence, go back to work for weeks, hear more evidence, go back to work, and so on for weeks, months or years By contrast, judge is a full time employee of the judiciary and may hear evidence in bits and pieces Judge also has the benefit of the transcript, notes, law clerk These are usually denied to jurors (e.g., cannot take transcript into jury room)

84 Impact of the Jury Also more concern about whether the jury deliberation process can cause problems Jury tampering a concern (e.g, bribery, threats, informal coercion by society) Jury may be “sequestered” in hotel to prevent unwanted social pressure or worse May even have “secret” jurors to avoid intimidation or worse Even “garden variety” cases poses concern (e.g., judges will not give the jury a case at 16:00 on a Friday – too much temptation to rush to decision to start the weekend)

85 Impact of the Jury But the biggest impact is the way in which the U.S. courts treat the receipt of information at trial In systems without a jury, the rules of admitting information into the record are relatively relaxed. Theory is that professional judges will give apt weight to material and avoid being influenced by inflammatory matters or information that may seem informative to the unskilled but actually is misleading or irrelevant By contrast, in the U.S., an extensive code of evidence has developed (The Federal Rules), much of which is designed to control what information reaches jurors and under what condition

86 Class Actions Punitive Damages Final Examination
Segment 5 Class Actions Punitive Damages Final Examination

87 Class Actions Image: digitalart /

88 Class Actions Controlled by Fed. R. Civil Procedure 23 (and similar state court rules) Sets Minimum qualities necessary for class action 1. Numerosity too many litigants to join individually 2. Commonality of claims of class members 3. Typicality of named plaintiff’s claim and those of class as a whole 4. Adequacy of the named plaintiff and counsel to represent the class

89 Types of Class Actions Declaratory – Establish Status or Rights (Rule 23(b)(1)) (A) When risk of inconsistent judgments affecting class members that would establish “incompatible standards of conduct (B) When individual judgments would affect class members’ interests and “substantially impair or impede” their ability to protect those interests.” Injunctive – Order Defendant(s) to do something or refrain from doing something (Rule 23(b)(2)) Party opposing class has acted or refused to act on grounds that apply generally to the class

90 Types of Class Actions (con’t)
Damages (Rule 23(b)(3)) Requires reasonable notice to class members that they may “opt out” of the class Plaintiffs with potentially large individual claims tend to opt out and sue individually Plaintiffs with small claims tend to remain in the class

91 Tort Class Actions Historically, class action device thought to be rarely appropriate for tort claims Commentary to this effect by Rule 23 drafter in notes to 1966 Amendments to Rule 23, citing article by then-Professor Jack Weinstein, now a federal judge in N.Y. But then came the “mass torts” of the 1970s to the present Agent Orange (1980s)(presided over by Judge Weinstein) Asbestos (first wave in 1980s; second wave in 2000s) Pollution (1970s forward) Drug Product Liability (1970s forward)

92 Punitive Damages Origins Unclear
But Reasonably Well Established in the USA by the mid-1800s (e.g., Seymour v. McCormick) (U.S. Sup. Ct. 1850)(dealing with lower court opinion imposing punitive damages) Permits a Verdict Winner to Recover Additional “Exemplary” or “Punitive” damages in addition to compensatory damages

93 Purposes and Rationale of Punitive Damages
To Punish the Defendant/Tortfeasor for bad conduct beyond mere negligence To Deter the Defendant/Tortfeasor from similar bad conduct in the future To Deter Others from similar bad conduct in the future (Implicitly) to allow victim to be made more “whole” than would otherwise be the case because of special circumstances Sub-silentio Recovery of Counsel Fees/Expense?

94 How Bad Must the Conduct Be?
Controlled by State Law No Federal Law (except for Constitutional Limits) Standard Varies With Each State But all require more than mere negligence A few states permit if conduct is grossly negligent Most require that conduct be intentionally in disregard of victim’s rights. Reckless disregard may be sufficient

95 Policing Punitive Damages
All states require proof of the required bad conduct by “clear and convincing” evidence Beyond the norm of proof by a “preponderance” of the evidence But not as demanding as “beyond a reasonable doubt” standard used in criminal cases Punitive damages jury verdicts given special scrutiny by trial judges Trial court punitive judgments subject to de novo review on appeal Rather than deferential standard of affirming trial court fact finding unless “clearly erroneous”

96 Additional Controls on Punitive Damages
Bifurcation of trial Trial first on liability, compensatory damages before consideration of punitive damages Restricting discovery regarding defendant wealth and certain information regarding defendant conduct until/unless plaintiff prevails on liability generally and obtains a compensatory damage award

97 How Much is Too Much? Historically, punitive damages were assessed according to whether the amount was reasonable in light of The Wrongfulness of the Conduct The Amount of Compensatory Damage Done Common Law outside limit of times compensatory damages The Defendant’s Wealth Rationale was that a modest punitive award would not deter a wealthy defendant What amount of $$$ award deters Bill Gates?

98 The U.S. Supreme Court Enters the Punitive Damages Arena
Until 1980s, Punitive Damages considered issue of state law only U.S. Supreme Court, responding to business defendant concerns, begins to examine whether large punitive damages are: Excessive punishment in violation of Eighth Amendment to Constitution; Violation of defendant’s right to Due Process of law (guaranteed in Fourteenth Amendment)

99 The Court Takes Control (or Meddles) With Punitive Damages
1990s – Court, after flirting with issue during prior decade, decides in several cases that unreasonably large awards violate due process. Crazy Cases Make Bad Law? BWM v. Gore (1996) Dr. Ira Gore, not the former V.P. and Nobel winner Automaker deceit about touched up paint job $4,000 compensatory damages; $4 million punitive damages, reduced to $2 million on appeal Vacated and remanded by U.S. Supreme Court

100 21st Century Supreme Court Cases
Campbell v. State Farm Insurance (2004) $145 million punitive award, $1 million compensatory damages for insurer bad faith Court vacates award because jury was allowed to consider bad insurer acts in other states, with other product lines Court states general rule: where compensatory award significant, 9:1 is maximum punitive damages ratio although “reprehensibility” of defendant conduct most important factor overall On remand, Utah Supreme Court enters $9 million punitive judgment; U.S. Supreme Court declines to review

101 21st Century Supreme Court Cases
Exxon v. Baker (2008) Reduces $ 5 billion punitive judgment in case of $ 500 million compensatory damages to 1:1 ratio in action related to infamous Exxon Valdez oil spill But decided on basis of maritime law (not Constitution) Williams v. Philip Morris (2007) Court initially vacates and remands $79.5 million punitive judgment on $ 821,000 compensatory damages in tobacco liability case Oregon Supreme Court reinstates award in 2008 U.S. Supreme Court grants review in 2008 and then changes its mind, dismisses certiorari as “improvidently granted” in 2009

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