Davis, J., concurring:
In this proceeding the majority opinion has granted State Farm a new trial, reversed the circuit court's summary judgment ruling on an issue in favor of Mr. Jackson, and affirmed the circuit court's denial of summary judgment to State Farm. I concur in the resolution of each of these issues. I have chosen to write separately to address two issues which I believe to be useful to the resolution of this case.
1. Factual background
of Campbell. Campbell was a first-party bad faith action against
an insurer that was filed in Utah. The plaintiff had previously been sued
as a result of an automobile accident. The verdict exceeded his liability
policy coverage. The insurer refused to pay the excess judgment. The plaintiff
thereafter instituted a bad faith claim against his insurer. During the
course of the Campbell trial, the plaintiff sought to prove that
the insurer had a nationwide policy of engaging in bad faith conduct. To
prove this contention, the plaintiff was allowed to introduce evidence
of all types of lawful out- of-state conduct that was committed
by the insurer. The jury eventually returned a verdict in favor of the
plaintiff. The plaintiff was awarded $1 million in compensatory damages
and $145 million in punitive damages. After the Utah supreme court affirmed
the judgment, the United States Supreme Court granted certiorari. One of
the issues addressed by the Supreme Court involved the use of an insurer's
lawful out-of-state conduct.
2. Guidelines for using evidence of an insurer's out-of-state conduct. Justice Kennedy, writing for the majority in Campbell, (See footnote 2) indicated that as a general rule, a plaintiff cannot introduce evidence of lawful or unlawful out-of-state conduct by a defendant, for the sole purpose of punishing the defendant. The court stated:
A State cannot punish a defendant for conduct that may have been lawful where it occurred. Nor, as a general rule, does a State have a legitimate concern in imposing punitive damages to punish a defendant for unlawful acts committed outside of the State's jurisdiction.
Campbell, 538 U.S. at 421, 123 S.Ct. at 1522, 155 L. Ed. 2d at 603 (citations omitted).
Later, however, in the Campbell opinion, the Court carved out an exception to the general rule regarding the introduction of evidence of lawful out-of-state conduct by a defendant. (See footnote 3) The opinion held:
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.
A jury must be instructed, furthermore, that it may not use evidence of out-of-state
conduct to punish a defendant for action that was lawful in the jurisdiction
where it occurred.
. . .
A defendant should be punished for the conduct that harmed the plaintiff, not for being an unsavory individual or business. Due process does not permit courts, in the calculation of punitive damages, to adjudicate the merits of other parties' hypothetical claims against a defendant under the guise of the reprehensibility analysis.... Punishment on these bases creates the possibility of multiple punitive damages awards for the same conduct; for in the usual case nonparties are not bound by the judgment some other plaintiff obtains.
Campbell, 538 U.S. at 422-423, 123 S. Ct. at 1522-1523, 155 L. Ed. 2d at 604 (citations omitted). In essence, Justice Kennedy concluded that there was no nexus between the lawful out-of-state conduct of the insurer and the conduct complained of by the plaintiff. Campbell, 538 U.S. at 424, 123 S. Ct. at 1524, 155 L. Ed. 2d at 605. (See footnote 4)
Before the Utah court, the plaintiffs were permitted to introduce evidence pertaining to State Farm's performance, planning and review or PP&R policy. The PP&R policy pertained to State Farm's business practices for over twenty years in numerous states. In fact, these practices bore no relation to a third-party automobile insurance claim, the type of claim underlying the Campbell's complaint against the company. In determining, that the evidence was inadmissible, the Campbell court held:
The Campbells have identified
scant evidence of repeated misconduct of the sort that injured them. Nor
does our review of the Utah court's decisions convince us that State Farm was only punished
for its actions toward the Campbells. Although evidence of other acts need
not be identical to have relevance in the calculation of punitive damages,
the Utah court erred here because evidence pertaining to claims that had
nothing to do with a third-party lawsuit was introduced at length. Other
evidence concerning reprehensibility was even more tangential. For example,
the Utah Supreme Court criticized State Farm's investigation into the personal
life of one of its employees and, in a broader approach, the manner in which
State Farm's policies corrected its employees.
538 U.S. 408 at 423-424, 123 S. Ct. at 1523, 155 L. Ed. 2d at 605.
In concluding the Court held:
In this case, because the Campbells
have shown no conduct by State Farm similar to that which harmed them, the conduct
that harmed them is the only conduct relevant to the reprehensibility analysis.
538 U.S. 408 at 424,123 S. Ct. at 1524, 155 L. Ed. 2d at 605.
In summary, the ruling
in Campbell on the use of a defendant's lawful out-of- state is binding
on the courts of West Virginia. Campbell based its ruling on the
requirements of the Due Process Clause of the Fourteenth Amendment. (See
footnote 5) Insofar as Campbell's ruling is constitutionally
based, I believe the majority opinion should have addressed this matter.
As I previously indicated, in Campbell the jury awarded the plaintiff one- million dollars in compensatory damages and one hundred forty five million dollars in punitive damages. In its appeal to the United States Supreme Court, the insurer argued that the amount of punitive damages violated due process. The Supreme Court agreed with the insurer. In doing so, the opinion indicated the following:
again to impose a bright-line ratio which a punitive damages award cannot exceed.
Our jurisprudence and the principles it has now established demonstrate, however,
that, in practice, few awards exceeding a single-digit ratio between punitive
and compensatory damages, to a significant degree, will satisfy due process. .
. . While these ratios are not binding, they are instructive. They demonstrate
what should be obvious: Single-digit multipliers are more likely to comport with
due process, while still achieving the State's goals of deterrence and retribution,
than awards with [greater] ratios. . . .
Campbell 538 U.S. at 425, 123 S.Ct. at 1524, 155 L. Ed. 2d at 605-606 (citations and internal quotation marks omitted).
Campbell reversed the
punitive damages award and remanded the case to the Utah supreme court for reconsideration
of the award. On remand, the Utah supreme court reduced the punitive damages
award and held that the insurer's conduct warranted punitive damages of
$9,018,780.75, nine times the compensatory and special damages for emotional
distress[.] Campbell v. State Farm Mut. Auto. Ins. Co., 2004 WL
869188 (Utah Apr. 23, 2004). See Bardis v. Oates, 119 Cal. App.
4th 1, (2004), 14 Cal. Rptr.3d 89, 92 (2004) ([I]n light
of recent due process constraints laid down by the United States Supreme Court
in State Farm Mutual Insurance v. Campbell, we shall modify the punitive
damages award from $7 million to $1.5 million, and affirm the judgment as modified.). But
see Reatta Resources, Inc. v. Kraft, 2004 WL 423144, at *2 (Tex.App.-Dallas
Mar. 9, 2004) (Reatta has not shown error apparent on the face of the record
merely by pointing to a 33 to 1 ratio of punitive damages to compensatory damages.
Therefore, we are unable to conclude from the ratio alone that the punitive damage
award is excessive.).
In view of the foregoing, I concur.