The NAM and the International Association of Defense Counsel filed an amicus brief 9/28/10 urging the Supreme Court to review an Oklahoma state court decision that imposed a $53 million punitive damage award on top of an award of $750,000 in a breach of contract dispute. The punitive damages portion is far greater than the Court has found acceptable in other rulings that compare the ratio of the punitive damages to the actual damages in the case, along with other factors, such as the reprehensibility of the conduct at issue. The lower court added pre-judgment interest (at a special 12% compounded rate over a period from 1973 through 1985) to the actual contract damages, thus making the final punitive damages ratio (4 to 1) smaller and easier to affirm on appeal than a ratio based on the actual contract damages award (70 to 1).
Our brief urged the Supreme Court to review how courts are adding extra amounts to actual damages to inflate compensatory damages, and consequently punitive damages derived from them. Different state courts categorize different types of damages as “compensatory,” leading to wide variations and unpredictability. This unconstitutionally skews the punitive damages ratio, depending on the state rather than the extent of the injury to the plaintiff. We urged the Court to adopt a rule that encourages settlements by giving all sides consistent case valuation parameters, thus conserving judicial resources while preserving legislative flexibility. Examples of controversial claims that are sometimes counted as compensatory damages include emotional distress with a partially punitive aspect, lost profits and attorneys’ fees. State legislatures can cause further mischief by enacting language changes, such as removing the word “penalty” from an interest statute, that lead to excessive punitive damage awards. Uncertainty in this area leads to substantial problems when manufactures and their insurers cannot reasonably estimate exposure limits. We urged the Court to provide guidance that focuses on the actual harm inflicted on a plaintiff when calculating any punitive damages that might also be awarded.
Unfortunately, the Court declined to hear the appeal on 12/13/2010.