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Exxon Shipping Co. V. Baker: Sailing Into The Confluence Of Common Law And Constitutional Standards For Punitive Damages

July 15, 2008

This is one of a series of articles originally published in Mealey’s Litigation Report: Insurance Bad Faith, Vol. 22, #6, page 26 (July 15, 2008). © 2008

[Editor’s Note: John V. Garaffa is a senior associate with the law firm of Butler Weihmuller Katz Craig LLP with offices in Tampa, Tallahassee, Miami, Mobile, and Charlotte. He devotes his practice to the litigation of property coverage issues. This commentary, other than the quoted material, are the author’s opinions; not his law firm’s, and not Mealey’s Publications’. Copyright © 2008 by author. Responses are welcome.]

On June 25, 2008, the United States Supreme Court issued its much anticipated opinion in Exxon Shipping Co. v. Baker.[1] The Supreme Court reduced the punitive damage award from $2.5 billion dollars to $507 million dollars, an amount approximately equal to the jury’s award of compensatory damages. While the decision certainly warmed the hearts of Exxon’s previously discomfitted stockholders, the Court’s opinion provides only limited encouragement to defendants involved in the current punitive damage lottery. In fairness, the Court’s grant of certiorari made it clear that the Court did not intend its opinion to be viewed as the latest “guidepost” for those seeking the outer edge of permissible punitive damage awards under the Due Process Clause. Despite its limitations, the Court’s discussion of the issues may shed some much needed light along that path.[2]

The facts of the underlying dispute are by now well known. In 1989, the supertanker Exxon Valdez grounded on a reef off Alaska, spilling millions of gallons of crude oil into Prince William Sound. The accident occurred after the tanker’s captain, Joseph Hazelwood — who had a history of alcohol abuse and whose blood still had a high alcohol level 11 hours after the spill-inexplicably exited the bridge, leaving a tricky course correction to unlicensed subordinates.

Exxon spent some $2.1 billion in cleanup efforts, pleaded guilty to criminal violations occasioning fines, settled a civil action by the United States and Alaska for at least $900 million, and paid another $303 million in voluntary payments to private parties. Other civil cases were consolidated into this one, brought against Exxon, Captain Hazelwood, and others to recover economic losses suffered by respondents who depend on Prince William Sound for their livelihoods.[3] The trial was separated into three phases:[4]

Phase I   The jury found Exxon and Hazelwood reckless (and thus potentially liable for punitive damages) under instructions providing that a corporation is responsible for the reckless acts of employees acting in a managerial capacity in the scope of their employment.
Phase II   The jury awarded $287 million in compensatory damages to some of the plaintiffs; others had settled their compensatory claims for $22.6 million.
Phase III   The jury awarded $5,000 in punitive damages against Hazelwood and $5 billion against Exxon.

The original punitive damages award of $5 billion was approved by the trial court. The award was appealed and, after Ninth Circuit’s remand,[5] the district court reduced the award to $4 billion. This award was also appealed and, proving the adage that one should be careful what you ask for, after the Ninth Circuit’s second remand, the trial court increased the award to $4.5 billion.[6]

In May, 2007, after its third review of punitive damages imposed in the litigation,[7] the Ninth Circuit simply ordered a remittitur of $2 billion, resulting in punitive damages of $2.5 billion.[8] The Ninth Circuit based its decision on the Due Process limits outlined by the Supreme Court in State Farm Mut. Auto. Ins. Co. v. Campbell.[9] According to the Ninth Circuit, the ratio of punitive damages to actual economic harm resulting from the spill, reflected in the district court’s award of $4.5 billion, exceeded “by a material factor” a ratio that would be appropriate under controlling Supreme Court analysis. In the course of appeals in the lower courts, the punitive damages went from $5 billion to $4 billion to $4.5 billion to $2 billion. Due Process considerations aside, it doesn’t take an Ivy League law degree to appreciate the unpredictability of punitive damages in our American civil “justice” system.

In its May 2007 opinion, the Ninth Circuit advised that reprehensibility was the most important guidepost according to the Supreme Court’s opinion in Campbell. In assessing the reprehensibility of Exxon’s misconduct, the Court found that there were several mitigating facts. These included the prompt action taken by Exxon both to clean up the oil and to compensate the plaintiffs for economic losses. According to the Ninth Circuit, these actions by Exxon, mollified, “at least to some material degree,” the reprehensibility in economic terms of Exxon’s original misconduct. The Court found that the substantial costs that Exxon had already borne in clean up and loss of cargo lessen the need for deterrence in the future.

Having achieved a fifty percent reduction in the punitive damage award, Exxon filed a petition for writ of certiorari, seeking to eliminate the punitive damage award in its entirety. Exxon’s petition cited three issues:

I.   The Court Should Grant Certiorari to Resolve the Conflict in the Circuits on Whether Maritime Law Permits Vicarious Punitive Damages
II.   The Court Should Grant Certiorari to Resolve the Conflict in the Circuits on Whether Maritime Law Permits Judge-Made Remedies When Congress Has Not Authorized Them in Applicable Statutes
III.   The Court Should Grant Certiorari to Remedy Confusion in the Lower Courts and Make Clear the Permissible Size of Punitive Damage Awards under Maritime Law and under the Due Process Clause[10]

While the Ninth Circuit had based its reduction of punitive damages on the Supreme Court’s decision in Campbell,[11] the Supreme Court excised the Due Process issue by limiting the grant to “Questions 1, 2, and 3(1) presented by the petition.”[12] At first blush, the grant appears to limit the potential audience for the Court’s opinion to those involved in maritime disputes. The Supreme Court was equally divided on the issue of whether Maritime law permits vicarious punitive damages, so the decision of the Ninth Circuit on that issue was left undisturbed.[13] The Court quickly dismissed Exxon’s argument that the Clean Water Act[14] (CWA), foreclosed the award of punitive damages in maritime spill cases. On that issue, the Court found that Exxon’s apparent argument that the CWA preempts punitive damages for economic loss, but not compensatory damages to be untenable.[15]

The central issue in the case, the issue resulting in the Court’s reversal of the punitive damage award, was whether the punitive damages awarded against Exxon in this case were excessive as a matter of maritime common law. Despite that limitation, the Court’s discussion of the role of courts in limiting punitive damages at common law, and its references to its decisions under the Due Process Clause, provide some guidance on where the Court may go when Due Process once again forms the basis for its decision.

The Court set the stage for it common law review by noting that early common law cases[16] offered three basic rationales for punitive damages awards. The first rational for such “exemplary” damages, was punishment for extraordinary wrongdoing.[17] In other cases, the cases emphasized the extraordinary nature of the damages award itself as a way to prevent such offences in the future by making the “punishment” of the defendant an example to others.[18] A third historical justification, was the need “to compensate for intangible injuries as compensation for such injuries was not otherwise available under the narrow conception of compensatory damages prevalent at the time.[19] Putting aside the last rationale, the Court advises that the consensus in modern courts is that punitive damages are imposed to exact retribution and to deter harmful conduct.[20] This consensus, the Court states, informs the doctrine in most modern American jurisdictions, where juries are customarily instructed on twin goals of punitive awards.

Having identified the basis for modern punitive damages as punishment and its aim of deterrence, the Court finds that there are necessarily degrees of relative blameworthiness. According to the Court, reckless conduct may merely be unheedful of the risk of harming others, rather reflecting an intentional, malicious, or callous indifference towards such risks. The Court differentiates between the situations where the defendant knows, or has reason to know the facts create a high degree of risk of harm to others and deliberately proceeds to act, or to fail to act, in conscious disregard or indifference to that risk and those where the defendant has knowledge, or reason to know, of the risk to others, but does not realize or appreciate the high degree of risk involved, although a reasonable man in his position would do so.

The Court advises that willful or malicious action, taken with a purpose to injure and action taken or omitted in order to increase the profits of the defendant represent an enhanced degree of punishable culpability.[21] In addition, when wrongdoing is hard to detect, heavier punitive awards have been found to be justifiable regardless of culpability as the defendant stands a greater chance of getting away with his or her behavior.[22]

The Court then noted that, in most American jurisdictions the amount of the punitive award is generally determined by a jury in the first instance, and that “determination is then reviewed by trial and appellate courts to ensure that it is reasonable.”[23] While the Court candidly admits that American punitive damages have been the target of criticism,[24] the court found that jury discretion to award punitive damages has not mass-produced runaway awards. According to the Court, the median ratio of punitive to compensatory awards has remained less than 1:1.[25] The Court also found that there has not been a marked increase in the percentage of cases with punitive awards over the past several decades.[26] In comparison, the Court found that this “restraint” by the majority of juries suggests that, in many instances, a high ratio of punitive to compensatory damages is substantially greater than necessary to satisfy the modern rational for punitive damages; punishment and deterrence.

Echoing the its Due Process analysis on the limits on punitive damages, the Court states that the real problem is the unpredictability of punitive awards. According to the Majority, in their review of jury awards courts of law are concerned with fairness and consistency. Looking again to published studies, the Court found that the spread between high and low individual awards was not acceptable. It noted that the median ratio of punitive to compensatory awards was just 0.62:1, but the studies show awards had a mean ratio of 2.90:1 and a standard deviation of 13.81. The court found 14% of punitive awards in 2001 were greater than four times the compensatory damages, and 18% of punitive damages the 1990s were more than triple the compensatory damages.[27] As the Court noted, these figures demonstrate that the spread of punitive damage awards is great, and the awards at the outer edge subject defendants to punitive damages that dwarf the corresponding compensatory damages.

The Court acknowledged that the range of variation in punitive damage awards might be acceptable or even desirable if they resulted from judges’ and juries’ refining their judgments to reach a generally accepted optimal level of penalty and deterrence in cases involving a wide range of circumstances, while producing fairly consistent results in cases with similar facts.[28] However, the Court found that the evidence indicates that punitive damage verdicts suffer from wide disparity because of the inherent uncertainty of the trial process.[29] In other words, jury discretion and judicial confusion has translated into utter unpredictability in punitive damage awards.

In addressing the issue of punitive damages in the context of judicial review of awards under common law, the Court stated that the unpredictability of high punitive awards is in tension with the function of the awards as punitive. According to the Court, a penalty should be reasonably predictable in its severity, so that even a culpable defendant can look ahead with some ability to know what the stakes are in choosing one course of action or another. Others, will know that they have a fair probability of suffering the same penalty if they cause similar damage.[30] The Court found that an eccentrically high punitive verdict carries the implication of unfairness in a “system whose commonly held notion of law rests on a sense of fairness in dealing with one another.”[31]

The Court then reviewed jury instructions as a way to reduce the unpredictability of punitive damage awards and found them wanting. According to the Court, such instructions can go just so far in promoting systemic consistency when awards are not tied to specifically proven items of damage, such as the cost of medical treatment. In rejecting instructions the Court citing to its own experience with attempts to produce consistency in criminal sentencing. That experience, the Court said, “leaves us doubtful that anything but a quantified approach will work.”[32] According to the Court, as long as there are no punitive-damages guidelines, (corresponding to the federal and state sentencing guidelines,) it is inevitable that the specific amount of punitive damages awarded whether by a judge or by a jury will be arbitrary.[33]

The Court noted that the “potential relevance” of ratio between compensatory and punitive damages is indisputable, being a central feature in their due process analysis.[34] A system of punitive damages that uses a ratio or maximum multiple would introduce the necessary predictability and avoid the impact of inflation on fixed statutory caps on punitive damages. It would allow the trial court and jury to assess the value of the actual loss at today’s costs and fix any punitive damage award to a predictable ratio of the actual compensatory damages.[35] The Court rejected the suggestion that the imposition of fixed ratios for punitive damages was a task for the legislature, rather than the courts. In response to such a challenge, the Court stated that it was acting in the position of a common law court of last review, faced with a perceived defect in a common law remedy. It noted:

Traditionally, courts have accepted primary responsibility for reviewing punitive damages and thus for their evolution, and if, in the absence of legislation, judicially derived standards leave the door open to outlier punitive-damages awards, it is hard to see how the judiciary can wash its hands of a problem it created, simply by calling quantified standards legislative. [36]

Returning to the facts of the case, the Court held that it was a case of reckless action, “profitless to the tortfeasor, resulting in substantial recovery for substantial injury.” According to the Court, in a well-functioning system, we should expect that awards at the median or lower range of ratios. Such awards would roughly express jurors’ sense of reasonable penalties in cases without intentional or malicious conduct. Cases with behavior driven primarily by desire for gain, and with modest economic harm or odds of detection would open the door to higher awards. On these assumptions, the Court found that a median ratio of punitive to compensatory damages of about 0.65:1 probably marks the line near which cases like this one largely should be grouped. The Court held that a 1:1 ratio, above the Court’s supposed median common law award of punitive damages, was a fair upper limit in maritime cases such as Exxon. According to the Court, this result was dictated by the need to protect against the possibility of awards that are unpredictable and unnecessary under the stated rationales of deterrence or measured retribution.

The question posed by Exxon is whether the Court’s lengthy discussion of the unpredictability of punitive damages and the Court’s concern over negative impact of that unpredictability indicate that the Court will provided further guidance in cases that reach it on Due Process grounds. It seems likely that it will.

In BMW of North America, Inc. v. Gore, the Supreme Court held a defendant’s punishment must be reasonable and proportionate to the amount of harm to the plaintiff and to the general damages actually recovered.[37] Consistent with the Exxon Court’s discussion of the pernicious influence of arbitrariness in common law punitive damage awards, the Court’s earlier decisions note that the use of predictable ratios is intended to serve as an objective measure of punitive damage awards. While the Court has previously stated that Due Process does not dictate a simple mathematical formula,[38] the U.S. Supreme Court was clear that there are identifiable limits to punitive damages. As the Court in Campbell held:

Nonetheless, because there are no rigid benchmarks that a punitive damages award may not surpass, ratios greater than those we have previously upheld may comport with due process where “a particularly egregious act has resulted in only a small amount of economic damages.” Ibid.; see also, ibid. (positing that a higher ratio might be necessary where “the injury is hard to detect or the monetary value of noneconomic harm might have been difficult to determine”). The converse is also true, however. When compensatory damages are substantial, then a lesser ratio, perhaps only equal to compensatory damages, can reach the outermost limit of the due process guarantee.[39]

In Exxon, the jury awarded a punitive damage award of a half-billion dollars a ratio to compensatory damages of 9.74—to—1. The trial court nonetheless approved the jury’s award, opining that, as the average award per class member would be only $15,704, the punitive damage award “per claimant” was not “substantial.” A fair reading of Campbell should have dictated the amount that the Supreme Court ultimately found reached the limits of a permissible award under common law. There thus seems little doubt what the Supreme Court’s decision would have been had it made its determination on Due Process Grounds.

For those who would argue that the Court’s common law and Due Process standards cannot be read together, the Court’s discussion of the difference is instructive. According to the Court, “Today’s enquiry differs from due process review because the case arises under federal maritime jurisdiction, and we are reviewing a jury award for conformity with maritime law, rather than the outer limit allowed by due process; we are examining the verdict in the exercise of federal maritime common law authority, which precedes and should obviate any application of the constitutional standard.”[40] The Court noted that the earlier due process cases, all involved awards subject in the first instance to state law and, as a result, the only matter of federal law within the Court’s appellate authority was the constitutional due process issue.

Later in the decision, the Majority noted that its earlier responses to “outlier punitive damages awards” had been confined by claims at the constitutional level and that, those cases announced due process standards that every award must pass.[41] Though Exxon was to be decided on the basis of common law restrictions on punitive damages, the Court took the opportunity to reiterate its guidance in Campbell:

Although “we have consistently rejected the notion that the constitutional line is marked by a simple mathematical formula,”id., at 582, we have determined that “few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process,”State Farm, 538 U.S., at 425;”[w]hen compensatory damages are substantial, then a lesser ratio, perhaps only equal to compensatory damages, can reach the outermost limit of the due process guarantee,” ibid.

For those looking for guidance in Baker for future Due Process challenges, it is important to note that Baker involved what the Court characterized as reckless action, “profitless to the tortfeasor, resulting in substantial recovery for substantial injury.”[42] As a recent case demonstrates, where the defendant’s actions are “particularly reprehensible” the ratio between punitive and compensatory damages could be more than 1 to 1 under the Court’s Due Process analysis. Days after its decision in Baker, the Supreme Court refused to grant a petition for certiorari in Action Marine, Inc. v. Continental Carbon, Inc.[43] In Action Marine, the 11th Circuit Court of Appeals let stand a judgment against a producer of carbon black in a suit brought by those claiming injury as the result of the manufacturer’s operations. The award had a 5.4 ratio of punitive to compensatory damages.

According to the 11th Circuit, the evidence demonstrated the potential health hazards associated with inhalation or ingestion of carbon black, including a finding, documented in the manufacturer’s safety data sheet, that the substance was a possible cause of cancer in humans. The court found the manufacturer’s approach to dealing with the public and adjacent property owners was less than honest. The court also found the evidence established a pattern of intentional misconduct leading to repeated damage to properties. The court found that actions by the manufacturer were exceedingly “reprehensible,” and thus punitive damages award of $17.5 million against manufacturer was not unconstitutionally excessive under the Fourteenth Amendment, notwithstanding compensatory damage award of $3.2 million.


The U.S. Supreme Court’s decision in Exxon makes two things clear. First, both the common law and the Due Process Clause limit the amount of punitive damages that can be awarded. Second, that the Supreme Court believes the standards to be applied in cases arising under the common law and the Due Process Clause are the same. Punitive damages must bear a reasonable relationship to compensatory damages. In cases where the award is “substantial”, the permissible ratio of punitive damages to compensatory damages is likely to be 1 to 1. Rejecting the trial court’s measure of “substantial,” we now know the ratio is measured from the perspective of the defendant, that is the ratio between the compensatory damages and the entire punitive damage award, not the probable award per class member.

Perhaps more intriguing is the Court’s discussion of the ratio of the median award of 0.65 to1 between punitive and compensatory damages. The Court suggested strongly that awards outside the median are suspect and that the 1 to 1 ratio reached the outer limit in Exxon under the Court’s common law analysis. In Campbell, the Court opined that an 1 to 1 ratio might reach the outer limit for awards under its Due Process analysis and that few awards in excess of single digit ratios would pass constitutional muster. While that seemed to focus litigants and courts on ratios between 1 and 9 to 1, the Court’s discussion in Exxon suggests that the proper measure in cases of reckless conduct may be between the “median award” of 0.65 to 1 with an outer limit, barring intentional harm or small compensatory awards, on 1 to 1.

Litigants and lower courts will have to see if the Supreme Court repeats its review of average awards in the next case that arises under the Due Process Clause. Until then, what we know is that the Supreme Court views the current system of punitive damages as “broken” and has resolved to address that condition using whatever basis for jurisdiction that is available to it.[44]

[1]Exxon Shipping Co. v. Baker, — S.Ct. —-, 2008 WL 2511219 (U.S.)

[2]. For further discussion of the need for clearer rulings on the permissible limits of punitive damages, see: The Continuing Need for De Novo Review of Punitive Damage Awards — Liggett Group, Inc. v. Engle, by John V. Garaffa, Mealey’s Litigation Report: Insurance Bad Faith, Vol. 18, #5, p. 29 (July 7, 2004) and Williams v. Philip Morris Inc. II – The Fog of Legal Rationale by John V. Garaffa, Mealey’s Litigation Report: Insurance Bad Faith, Vol. 21, #4, p. 32 (June 19, 2007).

[3]. In re Exxon Valdez, 472 F.3d 600 (C.A.9 Alaska 2006). The Court noted that it and the jury were precluded from punishing Exxon for “befouling the beautiful region where the oil was spilled,” because that punishment had already been imposed in separate litigation that had settled. Baker v. Hazelwood (In re the Exxon Valdez), 270 F.3d 1215 at 1242. (9th Cir.2001). In that opinion the Court explained the plaintiffs’ punitive damages case was saved from preemption and res judicata because the award “vindicates only private economic and quasi-economic interests, not the public interest in punishing harm to the environment.” See also Sea Hawk Seafoods, Inc. v. Exxon Corp., No. 03—35166 (9th Cir. Aug. 18, 2003).

[4]. Facts from the Syllabus of the Supreme Court’s June 25, 2008 Opinion. As noted in footnote *, the syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U.S. 321, 337, (U.S. 1902). (headnote is not the work of the court, nor does it state its decision. . . .  It is simply the work of the reporter, gives his understanding of the decision, and is prepared for the convenience of the profession in the examination of the reports.

[5]. In re the Exxon Valdez, 236 F. Supp. 2d 1043, 1068 (D. Alaska 2002).

[6]. In re the Exxon Valdez, 296 F. Supp. 2d 1071, 1110 (D. Alaska 2004).

[7]. In re Exxon Valdez, 490 F.3d 1066 (C.A. 9 Alaska 2007).

[8]. The Ninth Circuit upheld the Phase I jury instruction on corporate liability.

[9]. State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, (U.S. 2003). For a detailed discussion of the Campbell decision, see, The Campbell Cap, by John J. and William R. Lewis, Mealey’s Litigation Report – Insurance Bad Faith, Volume. 17, Number 2 (May 21, 2003).

[10]. Brief for Petitioners, On Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit.

[11]. Campbell, supra, 538 U.S. 408, (U.S. 2003).

[12]Exxon Shipping Co. v. Baker, 128 S. Ct. 492 (Mem) (U.S. 2007).

[13]. According to the Court, the respondents argued that the maritime rule should conform to modern land-based common law, where a majority of States allow punitive damages for the conduct of any employee, and most others follow the Restatement, imposing liability for managerial agents. As the Court was equally divided on this question, no order revesing the lower court can be made. Durant v. Essex Co., 7 Wall. 107, 112, 19 L.Ed. 154 (1869). The majority noted that “it should go without saying that the disposition here is not precedential on the derivative liability question.” Citing Neil v. Biggers, 409 U.S. 188, 192, 93 S.Ct. 375, 34 L.Ed.2d 401 (1972); Ohio ex rel. Eaton v. Price, 364 U.S. 263, 264, 80 S.Ct. 1463, 4 L. Ed. 2d 1708 (1960) (opinion of Brennan, J.).

[14]. 86 Stat. 816, 33 U.S.C. § 1251 et seq. (2000 Ed. and Supp. V).

[15]. The Court noted “nothing in the statutory text points to fragmenting the recovery scheme this way, and we have rejected similar attempts to sever remedies from their causes of action.  See Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 255—256, 104 S. Ct. 615, 78 L. Ed. 2d 443 (1984). All in all, we see no clear indication of congressional intent to occupy the entire field of pollution remedies, see, e.g., United States v. Texas, 507 U.S. 529, 534, 113 S. Ct. 1631, 123 L. Ed. 2d 245 (1993) (“In order to abrogate a common-law principle, the statute must speak directly to the question addressed by the common law” (internal quotation marks omitted)); nor for that matter do we perceive that punitive damages for private harms will have any frustrating effect on the CWA remedial scheme, which would point to preemption. Baker, supra —- S.Ct. —-, 2008 WL 2511219 (U.S.).

[16]. The Court notes that awarding damages beyond amounts required to compensate the plaintiff was not a wholly novel idea before the early common law cases it cites. The Court advises that legal codes from ancient times through the Middle Ages having called for multiple damages for certain especially harmful acts. See, e.g., Code of Hammurabi § 8 ®. Harper Ed. 1904) (tenfold penalty for stealing the goat of a freed man); Statute of Gloucester, 1278, 6 Edw. I, ch. 5, 1 Stat. at Large 66 (treble damages for waste).

[17]Wilkes v. Wood, Lofft 1, 18, 98 Eng. Rep. 489, 498 (1763) (Lord Chief Justice Pratt).

[18]Tullidge v. Wade, 3 Wils. 18, 19, 95 Eng. Rep. 909 (K.B. 1769) (Lord Chief Justice Wilmot); Coryell v. Colbaugh, 1 N.J.L. 77 (1791).

[19]Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 437—438, n.11, 121 S. Ct. 1678, 149 L. Ed. 2d 674 (2001) (citing, inter alia, Note, Exemplary Damages in the Law of Torts, 70 Harv. L. Rev. 517 (1957).

[20]. See n.9 where the Court cites Moskovitz v. Mount Sinai Medical Center, 69 Ohio St. 3d 638, 651, 635 N.E.2d 331, 343 (1994) (“The purpose of punitive damages is not to compensate a plaintiff, but to punish and deter certain conduct”); Hamilton Development Co. v. Broad Rock Club, Inc., 248 Va. 40, 45, 445 S.E.2d 140, 143 (1994) (same); Loitz v. Remington Arms Co., 138 Ill. 2d 404, 414, 150 Ill.Dec. 510, 563 N.E.2d 397, 401 (1990) (same); Green Oil Co. v. Hornsby, 539 So. 2d 218, 222 (Ala.1989) (same); Masaki v. General Motors Corp., 71 Haw. 1, 6, 780 P.2d 566, 570 (1989) (same); and its own decisions in Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 432, 121 S.Ct. 1678, 149 L. Ed. 2d 674 (2001) (punitive damages are “intended to punish the defendant and to deter future wrongdoing“); State Farm Mut. Automobile Ins. Co. v. Campbell, 538 U.S. 408, 416, 123 S.Ct. 1513, 155 L. Ed. 2d 585 (2003) (“[P]unitive damages . . . are aimed at deterrence and retribution”) and 4 Restatement § 908, Comment a. Baker, Supra —- S.Ct. —-, 2008 WL 2511219 (U.S.).

[21]. The Court cites as examples Alaska Stat. § 09.17.020(g) (2006) (higher statutory limit applies where conduct was motivated by financial gain and its adverse consequences were known to the defendant); Ark.Code Ann. § 16—55—208(b) (2005) (statutory limit does not apply where the defendant intentionally pursued a course of conduct for the purpose of causing injury or damage).

[22]. Baker, supra, citing BMW of North America, Inc. v. Gore, 517 U.S. 559, 582, 116 S. Ct. 1589, 134 L. Ed. 2d 809 (1996). For a further discussion of the Gore decision, see, Detours: Campbell Stops At The Willow Inn, by John J. and Eric W. Dickey, Mealey’s Litigation Report: Insurance Bad Faith, Vol. 18, #24, p. 27 (April 19, 2005).

[23]. Ibid, citing Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 15, 111 S. Ct. 1032, 113 L. Ed. 2d 1 (1991); see also Honda Motor Co. v. Oberg, 512 U.S. 415, 421—426, 114 S. Ct. 2331, 129 L. Ed. 2d 336 (1994). For a discussion of Haslip, see, Crossing The Line: Punitive Damages And The Supreme Court by John J. , Mealey’s Litigation Report: Insurance Bad Faith, Volume 16, Number 2, (May 15, 2002).

[24]. Ibid, citing The Paths of Civil Litigation, 113 Harv. L.Rev. 1783, 1784—1788 (2000) (surveying criticism). The Court states that the most recent studies tend to undercut much of that criticism, see id., at 1787—1788.A.

[25]. Ibid, The Court cites Juries, Judges, and Punitive Damages 269 (reporting median ratios of 0.62:1 in jury trials and 0.66:1 in bench trials using the Bureau of Justice Statistics data from 1992, 1996, and 2001); Vidmar & Rose, Punitive Damages by Juries in Florida, 38 Harv. J. Legis. 487, 492 (2001) (studying civil cases in Florida state courts between 1989 and 1998 and finding a median ratio of 0.67:1). But see Financial Injury Jury Verdicts 307 (finding a median ratio of 1.4:1 in “financial injury” cases in the late 1980s and early 1990s).

[26]. Ibid, citing Cohen 8 (compiling data from the Nation’s 75 most populous counties, and finding that in jury trials where the plaintiff prevailed, the percentage of cases involving punitive awards was 6.1% in 1992 and 5.6% in 2001).

[27]. Ibid, Ostrom, Rottman, & Goerdt, A Step Above Anecdote: A Profile of the Civil Jury in the 1990s, 79 Judicature 233, 240 (1996).

[28]. Ibid, citing TXO Production Corp. v. Alliance Resources Corp., 509 U.S. 443, 457—458, 113 S. Ct. 2711, 125 L. Ed. 2d 366 (1993) (plurality opinion).

[29]. Ibid, BMW of North America, Inc. v. Gore, 646 So. 2d 619, 626 (1994)(per curiam).

[30]. Ibid, citing The Path of the Law,10 Harv. L. Rev. 457, 459 (1897).

[31]. Ibid. See also Punitive Damages And Hip-Hop, by John J. and Eric W. Dickey, Mealey’s Litigation Report: Insurance Bad Faith, Volume 18, Number 9 (September 7, 2004) and Anger And Punishment by John J. and Matthew W. Peaire, Mealey’s Litigation Report: Insurance Bad Faith, Volume 16, Number 18 (January 22, 2003).

[32]. Ibid. See the discussion of ratios in Punitive Damages – the Rationale of Ratios by Diane M. Barnes, Mealey’s Litigation Report: Insurance Bad Faith, Vol. 21, #16, p. 27 (December 18, 2007).

[33]. Ibid. citing Mathias v. Accor Economy Lodging, Inc., 347 F.3d 672, 678 (C.A. 7 2003).

[34]. Ibid, citing State Farm, supra, 538 U.S., at 425 and Gore, supra, 517 U.S., at 580.

[35]. Ibid, citing 2 ALI Enterprise Responsibility for Personal Injury: Reporters’ Study 258 (1991) and ABA, Report of Special Comm. on Punitive Damages, Section of Litigation, Punitive Damages: A Constructive Examination 64—66 (1986) (recommending a presumptive punitive-to-compensatory damages ratio). The Court also noted that Congress has passed analogous legislation from time to time, as for example in providing treble damages in antitrust, racketeering, patent, and trademark actions, see 15 U.S.C. §§ 15, 1117 (2000 ed. and Supp. V); 18 U.S.C. § 1964(c); 35 U.S.C. § 284.

[36]. Ibid., citing Justice Ginsburg’s dissent in Campbell, supra, at 438 (“In a legislative scheme or a state high court’s design to cap punitive damages, the handiwork in setting single-digit and 1—to—1 benchmarks could hardly be questioned”) and 2 ALI Reporters’ Study 257 (recommending adoption of ratio, probably legislatively, although possibly judicially).

[37]BMW of North America, Inc. v. Gore, supra.

[38]. Gore, 517 U.S. at 582, 116 S.Ct. 1589.

[39]State Farm Mut. Auto. Ins. Co. v. Campbell, supra, 538 U.S. at 428.

[40]. Baker, supra.

[41]. Ibid. citing State Farm Mut. Automobile Ins. Co. v. Campbell, supra, and Gore, supra.

[42]. It should be noted that insurance “bad faith” is considered an intentional tort. See a discussion of contractual bad faith and its intentional nature in Reflections – Thirty Years After Gruenberg v. Aetna Ins. Co., by John V. Garaffa, Mealey’s Litigation Report: Insurance Bad Faith, Vol. 17, #8, p. 17 (August 13, 2003), and Willful and Wanton, by John J. , Mealey’s Litigation Report: Insurance Bad Faith, Vol. 19, #6 (July 19, 2005).

[43]Action Marine, Inc. v. Continental Carbon, Inc., 481 F.3d 1302, 20 Fla. L. Weekly Fed. C 429 (11th Cir. Ala. Mar 21, 2007) (Rehearing and Rehearing en Banc Denied) 254 Fed. Appx. 800 (11th Cir. Ala.) Certiorari Denied, Continental Carbon Co. v. Action Marine, Inc., —- S.Ct. —-, 2008 WL 2547367 (U.S. June 27, 2008).

[44]. For additional discussion of the challenges posed by the current review of punitive damage awards, see, Piece Of Mind: The Utah Supreme Court’s Response To Campbell, by John J. and John V. Garaffa, Mealey’s Litigation Report: Insurance Bad Faith, Vol. 18, #18, p. 25 (January 18, 2005), and Sleep Tight, Don’t Let the Bedbugs Bite: Exploring The Increasingly Ephemeral Limits on Punitive Damages by John V. Garaffa, Mealey’s Litigation Report: Insurance Bad Faith, Vol. 19, #14 (November 15, 2005).