What’s on Their Minds: The Punitive Damages Cap Meets Joint and Several Liability. Ronald Luri v.Republic Services, Inc. et al.

Read an anlysis of the Court’s summary disposition of this case here.

On April 25 the Supreme Court of Ohio heard oral argument in the case of Ronald Luri v. Republic Services, Inc., et al., The issue in this case is whether Ohio’s punitive damages cap statute, R.C. 2315.21 requires a reviewing court to apply the cap separately to  each defendant’s punitive damages award or whether the cap must be applied after combining all separate awards into one.  

The plaintiff in this case brought a retaliatory discharge suit against three related corporate defendants and two individual defendants, and was awarded a total of $3.5 million in compensatory damages and slightly over $43 million in punitive damages.  The compensatory damage award was joint and several against all defendants.  Each defendant was assessed a separate punitive damages award. The award against each of the corporate defendants was different, and each exceeded 7 million dollars. The trial court applied the cap separately to each of the three corporate defendants, awarding the plaintiff $21 in punitive damages.  The Eighth District Court of Appeals reversed, in a split decision, reducing the punitive damages to a single $7 million award. The plaintiff appealed from this finding.  The Supreme Court also accepted a cross appeal from the defendants on the constitutionality of R.C. 2315.21(B), the mandatory bifurcation statute, and ordered that issue held pending its decision in Havel v. Villa St. Joseph,  which has since been released and did uphold the constitutionality of that mandatory bifurcation provision.

Read the oral argument preview of the Luri case here.

Plaintiff’s counsel argued that R.C. 2315.21 is unambiguous and under the plain language of the statute, the punitive damage cap must be applied separately to each defendant. The jury filled out the proper interrogatories, which both sides approved. The defendants had rejected a single interrogatory for all three defendants together. The statute is consistent with Ohio common law which allows for joint and several liability with compensatory damages awards, but individualizes punitive damages because the awards  serve different purposes.  The former is to make the plaintiff whole, while the latter is to punish and deter. Some states have held that it is against public policy to allow joint and several liability for punitive damages.  She also argued that the only evidence defendants sought to keep out of the trial in its bifurcation motions was wealth evidence, not misconduct evidence.  Misconduct evidence was essential to the liability portion of the trial to prove the underlying unlawful retaliation claim, and wealth is not mentioned in Havel as the kind of evidence that must be excluded.  She also argued waiver and invited error on these points-defendants never objected to the wealth evidence coming in, nor requested any instruction to disregard evidence of wealth.

Defense counsel led with Havel and stuck with it most of the way, arguing that the Court’s decision in Havel is unequivocal—since the defense twice moved for bifurcation in this case, and the trial court denied it, the case must be reversed and remanded for a new trial,  period. Plaintiff’s trial counsel repeatedly interjected the wealth of defendants into the trial, and made punishing them and sending a message a key theme of the trial.  As for the application of the caps, plaintiff tried the case under a single employer theory and should not now be allowed to get separate punitive damages awards from each corporate defendant.

Arghhhhh. Math.

In the most amusing exchange of the day Chief Justice O’Connor allowed as how math wasn’t her strongest subject. ( I have a colleague at the law school who is convinced that lawyers are math phobic.)

Justice O’Donnell asked if Republic (the parent company) paid the entire $3.5 in compensatory damages, what was the maximum amount of punitive damages that could be assessed against Republic (answer: 7 million, reminding the Court that the calculation is based on the jury verdict, not on who pays it.) But if Republic paid the entire amount of compensatory damages, would any other defendant be obligated to pay compensatory damages (answer: no.) But still, was it plaintiff’s position that the plaintiff should be allowed to collect additional punitive damages from other defendants even though he could only collect the total amount of compensatory damages once. (answer: yes).

Chief Justice O’Connor asked defense counsel if it was impermissible to multiplying twice the compensatory damages  against each defendant? (answer:yes). And yet, the jury did individualize the punitive damages against each defendant, which would be seven million dollars times each of the three corporate defendants if plaintiff is correct.

Joint and Several Liability When it Suits; Individual Allocation When it Doesn’t

Justice Stratton was particularly aggressive with plaintiff’s counsel, suggesting that plaintiff pursued one theory for the compensatory award and got a single verdict,  but  now wants to break out the verdict on punitive damages. She commented that the plaintiff  favors one theory when it suited him, another when it didn’t.  To be consistent, each defendant should only be responsible for one fifth of the compensatory damages, and then have the court multiply each separate award times two for the punitive damages award against each defendant. (answer—that isn’t how joint and several liability works; and compensatory and punitive damages serve different purposes. Compensatory damages at common law are joint and several; punitive damages were not.).

Justice Stratton later asked defense counsel hypothetically if a plaintiff could persuade a jury that defendants committed three separate acts with three separate compensatory damages verdicts, then the statute could be read to award three separate “times two” caps.

Justice Cupp asked how the defendants decide how to divide up the compensatory damages award if they don’t agree on who should pay what?

Understanding the Verdict Forms

Justice Lanzinger asked if the verdict forms allowed the jury to divide the compensatory damage awards among the defendants. (plaintiff’s answer: the court wasn’t asked to do it that way, and to try and argue that now would be invited error). She asked defense counsel the same question, and his answer was that plaintiff wanted it that way because of his single employer theory.

 What Happened at Trial?

Justice Pfeifer asked whether the jury was told of the cap? (answer: no) And did trial counsel fail to seek the proper interrogatories and object when necessary? Specifically, did defense counsel object to the line of questioning interjecting wealth into the case?

 What Message is Being Sent Here?

Justice Pfeifer asked if the jury found the degree of reprehensibility different for each defendant?

Havel: The Elephant in the Room.

Justice O’Donnell asked how the decision in Havel affects this case. (counsel differed dramatically  here. Plaintiff’s counsel tried to distinguish it away.   Defense counsel finds it totally controlling requiring immediate reversal.)

 Just on punitives, asked Justice Pfeifer? (a—no, en toto replied defense counsel). And if we agree with you, does the Court even need to answer the question about the application of the caps? (no)

Justice Pfeifer asked if the record was clear that the defendants had requested bifurcation. (Answer—no question about it)

Justice McGee Brown asked if defense counsel sought leave to appeal after the trial court denied the motions to bifurcate? Must that be appealed immediately?

 Why Not Just Get Rid of Punitive Damages Altogether?

Asked Justice Pfeifer, seemingly to be rascally. Since everyone hates them so much, and since punitive damages are a common law concept, should the Court just get rid of them altogether? (Defense counsel wisely didn’t play this game.  He cautiously noted that there may be times punitive damage awards are warranted, and he wasn’t there to advocate for that one way or the other.  He also questioned whether the Court had the power to do that now that the legislature had adopted the tort reform statutes.)

How it Looks from the Bleachers

The decision in Havel may well kill this case. R.C. 2315.21(B) requires a tort action to be bifurcated upon the motion of any party in a case in which plaintiffs seek both compensatory and punitive damages, and no evidence of punitive damages can be admitted in that first phase. While plaintiff’s counsel tried gamely to argue that misconduct evidence in this case was necessary to establish the underlying tort claim, and that defendants failed to object to the evidence of wealth it now claims should have been excluded, that may be a stretch.  And yet, a few weeks before argument in this case, the defendants filed a motion for summary reversal in this case on the authority of Havel, and requested the cancellation of oral argument. The Court denied the motion, but clearly still could and well may decide the case on this basis, which would be unfortunate, because the issue raised is an interesting one. If the Court does reach the merits, the plaintiff appears to have an uphill struggle (Justice Stratton clearly isn’t buying the plaintiff’s position),  but much depends on the state of the record. If the Court does get past Havel, the easiest way out may be to find that the plaintiff did try this on a single employer theory, which would limit the punitive damage award to $7 million total from the three corporate defendants, but wouldn’t require interpretation of the statute as requested here.

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