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Busting myths about punitives in products cases; don't let the defense misuse State Farm v. Campbell. Instead, learn to use it to your client's advantage to - believe it or not - prove the defendant's conduct deserves punishment.

Article Excerpt
The Supreme Court's decision in State Farm Mutual Automobile Insurance Co. v. Campbell has created a firestorm of controversy. (1) Defense counsel relentlessly argue propositions from Campbell that do not exist in the language of the case. More disturbing, some trial courts and even appellate courts "buy in" to the myths created by the defense arguments. But when examined objectively, Campbell actually does little more than reiterate the standards established in prior cases, especially BMW of North America, Inc. v. Gore (2) and Pacific Mutual Life Insurance Co. v. Haslip. (3)

As the district court handling the Exxon Valdez case noted:

[Campbell] adds no new, freestanding factor to the constitutional analysis of punitive damages.... It is the court's view that [Campbell], while bringing the [Gore] guideposts into sharper focus, does not change the analysis. In fact, there are aspects of the due process evaluation of punitive damages awards which have not changed at all as a result of [Campbell]. (4)

In court, reveal these myths for what they are--furtive attempts by defendants to expand the effect of Campbell beyond what the Supreme Court actually held. And don't overlook the benefits to be drawn from Campbell in products liability cases.

Defendants have developed four myths about Campbell that they use to defeat punitive damages claims.

Myth 1--Out-of-state conduct, even similar out-of-state conduct, cannot be considered. This myth directly conflicts with express statements in Campbell. The Court made clear that two types of out-of-state conduct cannot be considered in assessing the constitutionality of a punitive damages award: out-of-state conduct, even unlawful out-of-state conduct, that has no nexus to the conduct at issue; and out-of-state conduct that is lawful where it occurs.

On the other hand, "lawful out-of-state conduct may be probative when it demonstrates the deliberateness and culpability of the defendant's action in the state where it is tortious, but that conduct must have a nexus to the specific harm suffered by the plaintiff. " (5)

Thus, in a products liability action, the defendant's out-of-state manufacture of a defective product that injures the plaintiff is admissible. So, too, is evidence of other injuries caused by the same product, even if those injuries occurred in other states. Similarly, the defendant's failure to take corrective action after notice of those injuries is relevant because it demonstrates the recidivist nature of the defendant's conduct. The Campbell Court confirmed that a recidivist can be more severely punished than a first-time offender. (6)

Myth 2--The most important criterion for examining the constitutionality of a punitive damages award is the ratio of compensatory to punitive damages. Defendants, and some courts, focus primarily on the ratio issue in discussing the constitutional appropriateness of a punitive damages award. But the Supreme Court has said--and emphatically--repeated--that "the most important indicium of the reasonableness of a punitive damages award" is the reprehensibility of the defendant's conduct. (7)

Factors for assessing the reprehensibility of the defendant's conduct are

* whether the harm was economic or physical (causing physical harm is more reprehensible than causing economic harm). (8)

* whether the defendant's tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others

* whether the target of the conduct was financially vulnerable

* whether the conduct involved repeated actions or was merely an isolated incident

* whether the harm was the result of intentional malice, trickery, or deceit. (9)

In a products liability case, these factors generally support a finding of extremely reprehensible conduct by defendants--which should be emphasized to the jury. Submit a jury instruction based on these factors and focus on each in your closing argument.

Myth 3--The defendant's wealth cannot be considered in determining the constitutionality of a punitive damages award. All that the Campbell Court said is that the "wealth of a defendant cannot justify an otherwise unconstitutional punitive damages award." (10)

Indeed, in TXO Production Corp. v. Alliance Resources Corp., the Supreme Court specifically approved the jury's consideration of a defendant's wealth as an appropriate factor in determining a punitive damages award, "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.'" (11)

The court in Mathias v. Accor Economy Lodging, Inc., also engaged in a ratio analysis that involved the defendant's wealth as a factor. (12)...

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