United States: Ohio Supreme Court Upholds Constitutionality Of Tort Reform Provisions Capping Awards Of Noneconomic And Punitive Damages

Article by Frederick C. Schafrick , Elizabeth Runyan Geise ,Joanne M. Gray and Kenneth J. Parsigan
http://www.mondaq.com

Efforts to reform state tort law have been the subject of much political controversy over the last three decades as legislatures have attempted to ameliorate the adverse impacts of tort law on the availability of insurance coverage and on their economies. A variety of provisions have been enacted by individual state legislatures and, in a few instances, by Congress on such subjects as medical liability, product liability and joint and several liability.2In those statutes, a number of states have capped damages on noneconomic damages (damages for such items as pain and suffering and emotional distress), at least in cases involving medical liability.2 Many states have also reformed their procedures for awarding punitive damages, including placing limits on the amounts of such punitive awards.3

These efforts at tort reform have, of course, been vigorously opposed by the plaintiffs’ trial bar. Not content with challenging those efforts on the legislative front, plaintiffs’ lawyers have attacked various tort reforms as being unconstitutional on a variety of grounds. To the extent that their attacks have been based on the United States Constitution, those attacks have been uniformly unsuccessful.4 While results have varied from state to state, plaintiffs have had more success attacking state tort reform statutes on the ground that they violate state’s constitution.5

One state where the plaintiffs’ bar had had great success in challenging tort reform measures is Ohio. On no less than five occasions from 1991 to 1999, the Ohio Supreme Court struck down tort reform statutes enacted by the Ohio legislature that in some respect limited jury awards of damages.6 Notwithstanding these setbacks, the Ohio legislature tried again in 2005, enacting S.B. 80, a comprehensive tort reform statute. On December 27, 2007, in Arbino v. Johnson & Johnson,7 the Ohio Supreme Court decided the first set of challenges to this statute.

Two provisions of S.B. 80 were at issue in Arbino.8 The first provision generally limits awards of noneconomic damages to the greater of (a) $250,000 or (b) three times the award of economic damages up to a maximum of $350,000, or $500,000 per single occurrence.9 These limits on noneconomic damages do not apply, however, to cases where the plaintiff suffered certain severe permanent injuries.

The second provision challenged in Arbino limits awards of punitive damages in tort actions to a maximum of twice the total amount of compensatory damages awarded to a plaintiff per defendant, unless the defendant has been convicted of certain felonies.10 In addition, if the limitations on punitive damages do apply, punitive awards against an individual or a “small employer” cannot exceed $350,000. Finally, punitive damages cannot be awarded more than once against the same defendant for the same course of conduct once the maximum amount of punitive damages has been awarded.

Plaintiff in Arbino challenged these two provisions under several provisions of the Ohio constitution: those dealing with the right to a jury trial, right to due process, right to remedy, right to open courts, and right to equal protection. Departing from its prior decisions, the Ohio Supreme Court rejected (by a six-to-two vote) all of these challenges. Interestingly, the court did not overrule its prior decisions. As the court noted, its prior review had “focused on certain unconstitutional facets of the prior tort-reform laws . . .” that it said could be “addressed to create constitutionally valid legislation.” Arbino at ¶ 22. The court then stated that the provisions at issue were “more than a rehashing” of statutes previously declared unconstitutional – that the legislature had “made progress in tailoring its legislation to address the constitutional defects identified” in prior decisions. Id. ¶ 24.

On this basis, the court distinguished the prior decisions striking down earlier tort reform efforts. For instance, the court distinguished its decision invalidating a prior limitation on noneconomic recoveries on the ground that, unlike that law, S.B. 80 allowed “limitless noneconomic damages for those suffering catastrophic injuries.” Id. ¶ 80. The court also relied on the fact that that this limitation, unlike the prior invalidated statute, was supported by economic studies on the impact of the tort system on Ohio’s economy. Id. ¶ 53. Finally, the court distinguished statements in an earlier decision criticizing the bases for tort reform as being “dicta” not necessary to the decision in that case. Id. ¶ 52.

The significance of the Arbino decision is, first, that (as the court stated) it joins “Ohio firmly with the growing number of states that have found [tort] reforms to be constitutional.” Id. ¶ 112. The court cited cases from 19 other states that had upheld particular limitations on the awards of noneconomic damages.11 It also cited decisions from 10 other states upholding limitations on awards of punitive damages.12 The clear trend seems to be for state courts to uphold such limitations.

Second, the decision shows that, if legislatures are persistent, tort reforms can be upheld even if earlier efforts have been held unconstitutional. The majority in Arbino stated that “[t]he fact that the General Assembly has repeatedly sought to reform some aspects of the civil tort system for over 30 years demonstrates the continuing prominence of this issue.” Id. ¶ 21. And, as noted above, the Ohio legislature had revised its prior attempts in response to the court’s criticisms. Finally, because the Ohio Supreme Court’s prior rejections of tort reform had been an issue in hotly contested campaigns for the bench, the decision is proof that efforts of the business community to emphasize tort reform in judicial elections can bear fruit.13

While the proponents of tort reform in Ohio and elsewhere can take great satisfaction with the Arbino decision, their battle is not over. Arbino was a facial challenge to S.B. 80, which leaves open the possibility of challenges to S.B. 80 as applied to the facts of a specific case.14 See Arbino at ¶ 26. Moreover, challenges might be made to other provisions in S.B. 80 not at issue in Arbino.15 Finally, tort reform opponents will surely continue their efforts against tort reform on the political and legislative fronts, as well as on the judicial front. These caveats notwithstanding, Arbino is a major victory for proponents of tort reform in Ohio, and may well further such efforts in other states.

Endnotes

1 A compilation of the tort reform efforts of various states and the federal government can be found at the website of the American Tort Reform Association, http://www.atra.org.

2 See, e.g., Alas. Stat. § 9.17.010; Cal. Civ. Code § 333.2 (medical liability only); Fla. Stat. §§ 766.207, 766.209; Idaho Code Ann. § 6-1603; Kan. Stat. Ann. §§ 60-1902, 1903; Mass. Gen. Laws Ann. Ch. 231, § 60-H (medical liability only); Mich. Comp. Laws § 600.1483 (medical liability only); Miss. Code Ann. § 11-1-60.

3 See, e.g., Ala. Code § 6-11-21; Alas. Stat. § 9.17.020; Fla. Stat. 768.73; Ga. Code Ann. § 51.12-5.1; N.J. Stat. Ann. § 2A:15-5.14; Tex. Civ. Prac. & Rem. Code §§ 41.003, .008.

4 Constitutional challenges to federal statutes limiting tort recoveries have been rejected. See, e.g., Duke Power Co. v. Carolina Environ. Study Group, Inc., 438 U.S. 59 (1978) (upholding Price-Anderson Act limiting liability of nuclear power plant operators); Lyon v. Agusta S.P.A., 252 F.3d 1078, 1085-89 (9th Cir. 2001) (upholding General Aviation Revitalization Act establishing 18-year statute of repose on claims against small aircraft manufacturers), cert. denied, 534 U.S. 1079 (2002). Similarly, state tort reform statutes have been upheld against federal constitutional attacks. See, e.g., Eaton v. Jarvis Products Corp., 965 F.2d 922 (10th Cir. 1992) (upholding Colorado statute of repose); Harris v. Black Clawson Co., 961 F.2d 547 (5th Cir. 1992) (upholding Louisiana statute of repose); Alexander v. Beech Aircraft Corp., 952 F.2d 1215 (10th Cir. 1991) (upholding Indiana statute of repose).

5 See, e.g., Best v. Taylor Machine Works, Inc., 689 N.E.2d 1057 (Ill. 1997) (striking down Civil Justice Reforms Amendments in their entirety, including caps on noneconomic and punitive damages); Ferndon v. Wisconsin Patients Comp. Fund, 701 N.W.2d 440 (Wis. 2005) (striking down $250,000 cap on noneconomic damages in medical malpractice claims); Lakin v. Senco Prods., Inc., 987 P.2d 463 (Or. 1999) (striking down $500,000 cap on noneconomic damages in cases arising out of the common law); Hanson v. Williams County, 389 N.W.2d 319 (N.D. 1986) (striking down statute of repose); Berry v. Beech Aircraft Corp., 717 P.2d 670 (Utah 1985) (striking down statute of repose); see generally compilation of cases by issue at the website of the American Tort Reform Association, http://www.atra.org/issues.

6 See Morris v. Savoy, 61 Ohio St.3d 684, 576 N.E.2d 765 (1991) (striking down $200,000 cap on medical malpractice damages); Sorrell v. Thevenir, 69 Ohio St.3d 415, 633 N.E.2d 504 (1994) (striking down statute requiring deduction of certain collateral sources from plaintiff’s award of damages); Galayda v. Lake Hosp. Sys., Inc., 71 Ohio St.3d 421, 644 N.E.2d 298 (1994) (striking down statute requiring medical malpractice awards greater than $200,000 be paid in series of periodic payments); Zoppo v. Homestead Ins. Co., 71 Ohio St.3d 552, 644 N.E.2d 397 (1994) (statute requiring judge, rather than jury, to determine award of punitive damages struck down); State ex rel. Ohio Academy of Trial Lawyers v. Sheward, 86 Ohio St.3d 451, 715 N.E.2d 1062 (1999) (statute enacting numerous reforms, including requiring trier of fact to consider collateral benefits and capping punitive damages, struck down as violating separation of powers and single-subject clause of the Ohio Constitution).

7 Slip Opinion No. 2007-Ohio-6948 (Dec. 27, 2007) (available at http://www.supremecourtofohio.gov).

8 The court declined to consider one challenge, that involving collateral benefits, on the ground that the plaintiff was not injured by it and therefore lacked standing. Arbino at ¶¶ 81-84.

9 Ohio Rev. Code § 2315.18.

10 Ohio Rev. Code § 2315.21.

11 Id. ¶ 112 n.8 (citing cases from Alaska, California, Colorado, Florida, Idaho, Indiana, Kansas, Maine, Maryland, Missouri, Montana, Nebraska, New Mexico, Oregon, South Carolina, Texas, Utah, Virginia and West Virginia).

12 Id. ¶ 112 n.8 (citing cases from Alaska, Florida, Georgia, Indiana, Iowa, Kansas, Missouri, Montana, North Dakota and Oregon).

13 See, e.g., Limits on Damages for Pain Are Upheld by Ohio Supreme Court: Court Affirms 2004 Law, at http://www.tradingmarkets.com/.site/news/Stock%20News/946073/, (Dec. 28, 2007) (noting that there were four new justices since last tort reform decision); Arbino v. Johnson & Johnson: Ohio Tort Reform Upheld, http://druganddevicelaw.blogspot.com/2007/12/arbino-v-johnson-johnson-ohio-tort.html (Dec. 30, 2007) (referring to “unbelievably ugly judicial elections in Ohio in the early 2000s”). For varying reactions to the Arbino ruling, see, e.g., John Michael Spinelli, Ohio Supremes’ Ruling Good for Bad Bills, Bad for Good Juries, http://www.dailykos.com/storyonly/2007/12/27/175457/88/191/426967 (Dec. 27, 2007); NFIB Applauds Ohio Supreme Court Ruling in Products Liability Case, http://www.nfib.com/object/IO_35697.html (Dec. 27, 2007).

14 A decision rendered by the Oregon Supreme Court on December 28, 2007, shows that, in particular cases, a challenge to limitation on damages can be effective when applied to damages caps with no exceptions. Clark v. Oregon Health Servs. Univ., No. SO53868 (Or. Dec. 28, 2007) (available at http://www.publications.ojd.state.or.us/S053868.htm). An Oregon statute limited the liability of public entities, including a state-owned hospital, for both economic and noneconomic damages to $200,000 and took away the common law right to sue the hospital’s employees for malpractice. Although the statute had been previously upheld on a facial challenge, it was struck down as applied to the claims of a severely injured infant plaintiff who had stipulated economic damages in excess of $12 million and noneconomic damages of $5 million. The Oregon court had previously ruled that common law rights as they existed in 1857 (the date of Oregon’s constitution) could not be modified unless an adequate substitute was provided. The court held that, under the circumstances of the Clarke case, the right to recover $200,000 from the state was an inadequate substitute for the common law right to sue doctors for malpractice with no limit on liability.

15 For instance, S.B. 80 also enacted a 10-year statute of repose for certain product liability actions. Ohio Rev. Code §§ 2125.02(D)(2)(a) and (b), 2305.10(C)(1) and (2).

This publication, which may be considered advertising under the ethical rules of certain jurisdictions, is provided with the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin Procter LLP or its attorneys. Additionally, the foregoing discussion does not constitute tax advice. Any discussion of tax matters contained in this publication is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code or promoting, marketing or recommending to another party any transaction or matter. © 2008 Goodwin Procter LLP. All rights reserved.

Full access to all articles on products liability and mass torts prepared by Goodwin Procter is available at:
http://www.goodwinprocter.com/Publications/FullIndexPublications.aspx

Full access to all articles prepared by Goodwin Procter is available at:
http://www.goodwinprocter.com/publications/findapublication.aspx?mode=all

Goodwin Procter LLP is one of the nation’s leading law firms, with a team of 700 attorneys and offices in Boston, Los Angeles, New York, San Diego, San Francisco and Washington, D.C. The firm combines in-depth legal knowledge with practical business experience to deliver innovative solutions to complex legal problems. We provide litigation, corporate law and real estate services to clients ranging from start-up companies to Fortune 500 multinationals, with a focus on matters involving private equity, technology companies, real estate capital markets, financial services, intellectual property and products liability.

This article, which may be considered advertising under the ethical rules of certain jurisdictions, is provided with the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin Procter LLP or its attorneys. © 2008 Goodwin Procter LLP. All rights reserved.

You may also like

Legislative panel approves medical malpractice bill
Read more
Urgent-care centers: Illinois numbers grow as time-pressed families seek low-cost option to ERs
Read more
Global Center for Medical Innovation launches
Read more

Recent Posts

U.S. District Court Sets Aside Record Noneconomic Damage Award

Curi Holdings, Constellation Complete Merger to Offer Scale the Modern Healthcare Delivery System Requires

Connecticut Supreme Court Narrows Scope of Physicians’ Immunity from Civil Liability During COVID

Popular Posts

PIAA 2017: Current Trends & Future Concerns

2022 Medical Malpractice Insurance Rates: What the data tells us

Global Center for Medical Innovation launches

Start Your Custom Quote Process™

Request a free quote