mpreme Court of tfje tHniteb J£>tate£
SEP 10 20H No. 14-106 IN THE
mpreme Court of tfje tHniteb J£>tate£ John E. Stevenson and Jane E. Stevenson,
Petitioners, v.
First American Title Insurance Company, Respondent.
on petition for a writ of certiorari
to the Supreme Court of Wisconsin
REPLY TO BRIEF IN OPPOSITION
David H. Weber T. Wickham Schmidt
Conway, Olejniczak & Jerry, S.C. 231 South Adams Street
Green Bay, WI 54301 (920) 437-0476 Kenneth Chesebro
Counsel of Record 1600 Massachusetts Ave., No. 801
Cambridge, MA 02138 [email protected]
(617)661-4423 Attorneys for Petitioners
September 10, 2014 BATEMAN & SLADE, INC.
BOSTON, MASSACHUSETTS
TABLE OF CONTENTS
Table ofAuthorities
I.
^
The Wisconsin Supreme Court's Ruling Is Wrong and Irreconcilable With Decisions
ofThis Court Stretching Back Decades A.
l
This Court's 1994 Endorsement in Oberg of the Rational-Factfinder Test Stands Unaffected by the Post-1994
Decisions Cited by First American
l
B. The Wisconsin Supreme Court Did Not Apply the Rational-Factfinder Standard . 7 C.
The Rational-Factfinder Standard Was Invoked Below; There Was No Waiver .. 10
II. The Conflict in the Lower Courts Is
in Need ofResolution by This Court Conclusion
H -,2
11
TABLE OF AUTHORITIES
Cases:
Page:
Abney v. United States, 431 U.S. 651 (1977) BMWof North America, Inc. v. Gore, 517 U.S. 559 (1996)
6 4-5, 9-10
Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424 (2001)
passim
Flora v. United States, 357 U.S. 63 (1958)
2
Goeke v. Branch, 514 U.S. 115 (1995) Hawks v. Hamill, 288 U.S. 52 (1933)
6 2
Honda Motor Co., Ltd. v. Oberg,
512 U.S. 415 (1994) Jackson v. Virginia, 433 U.S. 307 (1979)
passim passim
Jacque v. Steenberg Homes, Inc., 563 N.W.2d 154 (Wis. 1997) Johnson v. Hugo's Skateway, 974 F.2d 1408
(4th Cir. 1992)
3
6
Jones v. St. Paul Cos., 495 F.3d 888
(8th Cir. 2007) Kappos v. Hyatt, 132 S. Ct. 1690 (2012) Lindsey u. Normet, 405 U.S. 56 (1972) McCoy v. Massachusetts Institute of Technology, 950 F.2d 13 (1st Cir. 1991) McDaniel v. Brown, 558 U.S. 120 (2010) McKane v. Durston, 153 U.S. 684 (1894)
.3 2-3 5 3 8 5
Oberg v. Honda Motor Co., Ltd., 888 P.2d 8 (Or. 1995), cert, denied, 517 U.S. 1219 (1996) .... 3 State Farm Mutual Auto. Ins. Co. v.
Campbell, 538 U.S. 408 (2003) Tolan v. Cotton, 134 S. Ct. 1861 (2014) TXO Production Corp. v. Alliance Resources
Corp., 509 U.S. 443 (1993)
4, 10 8
2
United States v. Augustine, 712 F.3d 1290
(9th Cir. 2013)
3
Williams u. Philip Morris Inc., 127 P.3d 1165
(Or. 2006), reu'd, 549 U.S. 346 (2007)
3
ni
Cases (continued): Page: Williams v. Philip Morris Incorporated, 176 P.3d 1255 (Or. 2008), cert, dismissed as
improvidently granted, 556 U.S. 178 (2009) ... 4 CONSTITUTION:
U.S. CONST., amend. VII
6.7
U.S. CONST., amend. XIV, §1
[[[][ 'passim
ARTICLE:
Daniel J. Meltzer, Harmless Error
and Constitutional Remedies,
61 U. Chi. L. Rev. 1 (1994)
6
Case Materials-.
Brief for the Petitioner in No. 99-2035
(Dec. 4, 2000), 2000 WL 1793080
6
Petition in No. 94-1890 (May 17, 1995), 1995 WL 17048413
3
Petition in No. 05-1256 (Mar. 30, 2006),
2006 WL 849860
.'
Petition in No. 07-1216 (Mar. 24, 2008)
2008 WL 795148
'
Reply Brief for the Petitioner in No. 99-2035 (Feb. 15, 2001), 2001 WL 137340
3
4 6
REPLY TO BRIEF IN OPPOSITION
I.
The Wisconsin Supreme Court's Ruling Is Wrong and Irreconcilable With Decisions
of This Court Stretching Back Decades Pet. 20-27 summarized this Court's decisions establishing that when a htigation outcome is attacked as unsupportable on the record, due process requires
only that a court satisfy itself that the jury's result is rational, viewing the evidence in the Ught most favorable to the verdict. Pet. 27-29 demonstrated that the decision below is irreconcilable with this rule
because it carried out de novo review of the jury's award (not merely of the trial court's decision). First American responds, first, that the Wisconsin Supreme Court did engage in de novo review but was
justified in doing so, because subsequent to Oberg this Court departed from the rational-factfinder standard in
the punitive damages context. Opp. 7-10. It next argues that the court below did not engage in de novo review; actually, it applied the rational-factfinder standard, so
the Stevensons have no ground for complaint. Opp. 1113.And it argues that the Stevensons waived any issue regarding the standard of review by failing to object below. Opp. 7, 9. We address each point in turn. A. This Court's 1994 Endorsement in
Oberg of the Rational-Factfinder Test
Stands Unaffected by the Post-1994 Decisions Cited by First American
First American does not dispute that in every other context in which a htigation outcome is attacked as unsupportable on the record, this Court has held that
the appropriate substantive standard forreviewingthe
jury verdict is the rational-factfinder standard of Jackson v. Virginia, 433 U.S. 307, 318-19 (1979). Pet. 20-23. Thissatisfies due process even whendeprivation of life is at stake. Pet. 23. First American does not
contend greater protection attaches when deprivation of property is at stake.
Nor does First American disputethat the same due
process protection afforded criminal defendants under Jackson is allHonda andits amid in Honda Motor Co.,
Ltd. v. Oberg, 512 U.S. 415 (1994), sought. Pet. 24 & n.10. Oberg, citing Jackson, echoed the approach to rationaUty review sketched a year earlier in the TXO concurrence of Justice Kennedy (who also cited Jackson). Pet. 25-26. Oberg stated that a defendant's
right not to be "subjected to punitive damages of arbitrary amounts" requires judicial review to ensure there is"evidence providing at leasta rational basis for
the particular deprivation of property imposed by the State to deter future wrongdoing." 512 U.S. at 429. This statement was quoted at Pet. 25. First American ignores it.
Of course, Oberg's embrace of the rationalfactfinder standard might be regarded as dictum,
especially because it left undecided, 512 U.S. at 432 n.10, whether Jackson, or some variant, specified the precise minimum constitutionally required standard of review. Opp. 10. But given that the rational-factfinder standard was briefed and discussed at oral argument,
Pet. 24 n.10, and given that Oberg's analysis built on Justice Kennedy's earlier analysis, to the degree that this discussion in Oberg is dictum it must be regarded as "carefully considered dictum," Flora v. United States, 357 U.S. 63, 68 (1958), that isworthy ofrespect,
e.g., Hawks v. Hamill, 288 U.S. 52, 58-59 (1933) (Cardozo, J.) —not "the kind of ill-considered dicta" this Court is inclined to ignore. Kappos v. Hyatt, 132
S. Ct. 1690, 1699 (2012). "[Considered Supreme Court dictum is special," United States v. Augustine, 712 F.3d 1290, 1295 (9th Cir. 2013), and lower courts may not simply ignore it. E.g., Jones v. St. Paul Com
panies, 495 F.3d 888, 893 (8th Cir. 2007); McCoy v. Massachusetts Institute of Technology, 950 F.2d 13, 19 (1st Cir. 1991).
Oberg's status as carefully considered dictum worthy of respect is corroborated by the final outcome
in Oberg. On remand the Oregon Supreme Court, applying the rational-factfinder standard, affirmed the $4 million punitive damages award, finding it "within the range that a rational juror would be entitled to
award in the light of the record as a whole" (judged under the relevant legal factors). Oberg v. HondaMotor
Co., Ltd., 888 P.2d 8, 12 (Or. 1995), cert, denied, 517 U.S. 1219(1996). In its unsuccessfulsecond petition for certiorari, Honda did not challenge the propriety ofthe rational-factfinder standard; it challenged only the result reached under that standard. Petition in No. 941890 (May 17, 1995), 1995 WL 17048413. Nor was Oregon's use of a rational-factfinder
standard forreviewing jury-awarded punitive damages challenged in a later case from Oregon in which this Court twice granted review. In attacking the $79.5 million punitive damages award upheld using the rational-factfinder standard in Williams v. Philip Morris Inc., 127 P.3d 1165, 1176-82 (Or. 2006), rev'd, 549U.S. 346 (2007), Philip Morris never chaUengedthe standard (only the outcome under the standard) — not in its first cert, petition, which resulted in a reversal on
another ground,1 and not in its second cert, petition following reinstatement of the award on remand,
1Petition in No. 05-1256 (Mar. 30, 2006), 2006 WL849860.
Williams v. Philip Morris Inc., 176 P.3d 1255, 1264
(Or. 2008), as to which certiorari was ultimately dismissed as improvidently granted. 556 U.S. 178 (2009).2 The rational-factfinder standard is now firmly
established in Oregon, Pet. 32, this Court having left it undisturbed, consistent with its own decision in Oberg embracing the rational-factfinder standard in the punitive damages context.
Brushing aside the analysis in Oberg, First American argues that Oberg has been superseded by later decisions of this Court. It asserts that neither
Jackson nor Oberg can be controlling because they
predate BMW ofNorth America, Inc. v. Gore, 517 U.S. 559 (1996), and State Farm Mutual Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003). Opp. 9-10. But as explained at Pet. 26-27 (ignored by First American), both
decisions
reinforced
the
rationality-review
approach of Oberg. Justice Breyer's Gore concurrence,
speaking for three Justices (each necessary for a majority) emphasizedthat rational-factfinderanalysis must focus on the record facts, not on conceivable facts. 517 U.S. at 593-94. Campbell invalidated a punitive
damages award under due process only after finding, based on the record evidence, that it was "irrational" and "arbitrary." 538 U.S. at 429. First American also contends that Obergs embrace of the rational-factfinder standard was superseded by
Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424 (2001). Under Leatherman, it insists, "the de novo standard of review that the Wisconsin court
applied is correct." Opp. 7. Hereit contends, as it must, that Leatherman is a due process holding and not
2Petition in No. 07-1216 (Mar. 24, 2008), 2008 WL 795148.
simply an exercise ofthis Court's supervisory authority over the lower federal courts — that it "interprets the Due Process Clause and applies in state court just as it " Opp. 8. First American's applies in federal court discussion of Leatherman is flawed in four respects. First, the Court in Leatherman indicated it was not
revisiting the "substantive standard for determining the jury award's conformity with due process in the first instance" (addressed in Obergand Gore), but was only resolving "the question of the proper standard for reviewing the District Court's due process determina tion
" 532 U.S. at 431 n.4.
Second, other Leathermanpassages, quoted at Pet. 28, indicate the Court was exercising its supervisory authority, thus avoiding serious federalism concerns. Pet. 28 n.12. First American has no answer to these
passages. It merely observes that "petitioners cite no decision of any state court that reads Leatherman in so cramped a fashion." Opp. 8. But the meaning of this Court's decisions depends on how the Justices of this
Court read them, not on how lower court judges read them. That some (perhaps many) state courts erron eously view Leatherman as a due process decision, e.g., Pet. 30-31, is a reason to grant, not deny, certiorari. Third, to construe Leatherman as holding that punitive damages defendants have a due process right to a de novo standard of review on appeal would transform Leatherman into an epic precedent. This
Court has never held that any litigant, civilor criminal, has a due process right to any appeal, much less to an appeal under a de novo review standard. E.g., McKane v. Durston, 153 U.S. 684, 687 (1894) (appeals, even in criminal cases, "however grave the offense," are not "a
necessary element of due process" and he "wholly within the discretion of the state"); Lindsey v. Normet, 405 U.S. 56, 77 (1972) (States obliged to "provide
appellate review" in neither criminal nor civil cases); Abney v. United States, 431 U.S. 651, 656 (1977) ("it is well settled that there is no constitutional right to an
appeal"); Goeke v. Branch, 514 U.S. 115, 120 (1995) (per curiam) ("due process does not require a State to provide appellate process at all"). Fourth, even if there were a right to appeal a
punitive damages award, due process could scarcely require de novo review. As Judge Luttig explained in an opinion overlooked by First American, a review standard short of de novo (e.g., for abuse of discretion)
would surely satisfy due process. Johnson v. Hugo's Skateway, 974 F.2d 1408, 1428-32 (4th Cir. 1992) (en banc) (Luttig, J., concurring in part and dissenting in part).Accordingly, in Leatherman itself, the defendant did not contend that the Ninth Circuit's use of an abuse-of-discretion review standard was itself a
violation of due process. It merely argued that the de novo standard employed by other circuits is the customary onefor reviewing constitutional issues, and the one best suited to the development of a coherent
body of law governing limits on punitive damages awards,4 arguments this Court accepted. 532 U.S. at 431, 436, 440.
Finally, First Americansuggests that the Seventh Amendment analysis in Leatherman somehow under mines Oberg's rational-factfinder standard. Opp. 9-10.
3But see Daniel J. Meltzer, Harmless Error and Constitutional
Remedies, 61 U. Chi. L. Rev. 1, 2-3 & n.10, 6-9 (1994) (summariz
ing revisionist argument for a constitutional right to appeal in criminal cases).
4 Brief for the Petitioner in No. 99-2035 (Dec. 4, 2000),
2000 WL 1793080; Reply Brief for the Petitioner in No. 99-2035 (Feb. 15, 2001), 2001 WL 137340.
But here, Leatherman merely holds that theuse ofa de novo review standard by federal appeUate courts is permitted by the Seventh Amendment (at least where
punitive damages are awarded based on moral outrage,
rather than based ona claim more rooted in matters of historical orpredictive fact, e.g., a determination ofthe level ofpunitive damages needed for effective deter rence). 443 U.S. at 437-40. Thathas nothing to do with
what state appellate courts are required to do by due
process. Whether a particular review standard is permitted under the Seventh Amendment, ratified in
1791 to address fears that federal appellate judges
might overreach andperpetuate abuses suffered under British rule, has no logical connection to what review standard state judges must use under the Due Process
Clause of the Fourteenth Amendment ratified in 1868 to redress the arbitrary treatment by some States of persons within their jurisdiction.
In sum, Oberg embraced the rational-factfinder standard in the punitive damages context, and this
Court's later decisions, while further explicating the legal factors relevant in deciding whether a punitive damages award is irrationally excessive on the record evidence, have leftin place this general framework for
due process review ofpunitive damages verdicts. B.
The Wisconsin Supreme Court Did Not Apply the Rational-Factfinder Standard
Curiously, having just argued that "the de novo
standard of review that the Wisconsin court applied is correct," Opp. 7, so the Stevensons must lose on the
merits, First American then argues the opposite: that the court did not apply a de novo review standard —
that it actually applied a rational-factfinder standard,
viewing the evidence in the light most favorable to the
plaintiff, so the Stevensons have no ground for complaint. Opp. 11 (citing Pet. App. 14a n.17), 13 (citing Pet. App. 12a). Here First American relies on snippets from the two key passages of the opinion,
which read in full make clear the court found itself
bound by Leatherman to jettison its past rehance on the rational-factfinder test when reviewingthe amount
ofpunitive damages awarded by a jury. Under "Standard of Review," Pet. App. lla-12a,
the court noted that before Leatherman, the substan tivestandard for reviewing jury verdicts wascontrolled
by Jacque v. Steenberg Homes, Inc., 563 N.W.2d 154 (Wis. 1997). Jacque held: "When we review the record to determine whether a punitive damage award is excessive, the evidence must be viewed in the Ught most favorable to the plaintiff." Id. at 163. This, of
course, is the Jackson rational-factfinder standard, which requires "viewing the evidence in the light most favorable to the" verdict winner. Jackson, 443 U.S. at
319. E.g., McDaniel v. Brown, 558 U.S. 120, 133-34
(2010) (per curiam) (criminal case); Tolan v. Cotton,
134S. Ct. 1861, 1866 (2014) (summary judgment). The court then held that the de novo review standard announced in Leatherman displaced, in part, the rule articulated in Jacque. Under Leatherman, the court now defersonly to a jury's liability determination
regarding punitive damages. A jury's "decision to award punitive damages is accorded deference. The sizeofthe award, however, is subject to de novo review to ensure it accords with the constitutional limits of
due process." Pet. App. 12a (emphasis added). First American distorts the meaning of this passage by
omitting thesecond sentence. Opp. 13. Plainly the first sentence requires continued deference on liability (with the evidence viewed in the Ught most favorable to the
plaintiff) and the second sentence prohibits deference
on the size of the award (so the evidence is not viewed in the light most favorable to the plaintiff). Footnote 17 made the overruling ofprecedent even more explicit. In the first sentence, the court recited past punitive damages holdings requiring that the evidence be viewed in the light most favorable to the verdict. In the second sentence, it stated that in appellate review of "the amount of the jury's award" the evidence may no longer be viewed in this manner,
as under Leatherman such deference is no longer permitted. Pet. App. 14a n.17. (Again, only the jury's "decision to award punitive damages is accorded deference." Pet. App. 12a (emphasis added).) As First American does not dispute, prior to the decision below it was settled Wisconsin law that the evidence must be
viewed in the light most favorable to the verdict both
on liability and on the amount of punitive damages. Pet. 17 n.6.5
5After first contending that the court below properly engaged in de novo review, without deference to the jury, Opp. 7, and then contending that the court below actually engaged in rationalfactfinder review, with the record viewed in the light most favorable to the verdict, Opp. 11, 13, First American does a final reverse. At Opp. 12 it concedes that in reviewing the amount of punitive damages awarded by the jury, the majority ignored evidence supporting the rationality of the jury's verdict, which had been briefed by the Stevensons and which was emphasized by the dissenters: evidence that the punitive damages award is less than
three times the profit First American likely expected to reap through false representations to the homeowners it had insured.
Pet. 9-11, 18. First American defends that omission by arguing that expected profit from wrongdoing is "not relevant to . . . the Gore guideposts . . . ." Opp. 12. But the Gore guideposts have never been held exclusive. Courts in many States consult other
legal factors in reviewing punitive damages for excessiveness, in line with Dean Griswold's proposal in his Oberg amicus brief that "a non-exclusive list of factors" should be developed to guide
10
C. The Rational-Factfinder Standard Was Invoked Below; There Was No Waiver
First American argues that review should be
denied because the Stevensons supposedly did not object to the jury verdict being reviewed de novo, thus waiving any issue. Opp. 7, 9. But before the decision
below, de novo review of the evidence in a punitive
damages case did not exist in Wisconsin. Previously a jury's liability finding and its determination of the amount of punitive damages were both reviewed with
the evidence viewed in the light most favorable to the plaintiff. Accordingly, in their briefs First American
and the Stevensons agreed that on both issues, the court was required to view the evidence in the Ught most favorable to the plaintiff. Pet. 17 n.6. First American's waiver argument hinges on a reference in the Stevensons' brief to de novo review of
purely legal matters, Opp. 7, ignoring three statements
immediately thereafter on the deference owed the jury, Resp. Wis. Sup. Ct. Br. 21-22, including this: "[T]he appropriate standard of review . . . requires the evidence be viewed in the Ught most favorable to the
verdict." Id. at 22. As to the Stevensons not citing Jackson or Oberg specificaUy, Opp. 9, it was enough that First American conceded in its opening brief that the court was required to view the evidence in the Ught most favorable to the plaintiff (the Jackson standard),
rationality review of punitive damages. Pet. 24 n.10. First
American also ignores Justice Breyer's Gore concurrence noting the value of incorporating the profit factor into excessiveness analysis where relevant, Pet. 26, and two decisions after Gore
referencing the profit factor as part of the review of the record evidence. Leatherman, 532 U.S. at 442; Campbell, 538 U.S. at 428.
11
and that the Stevensons agreed, citing Wisconsin precedent consistent with Jackson. Pet. 17n.6. II. The Conflict in the Lower Courts Is
in Need of Resolution by This Court
Resolving the proper reading of Leatherman is worthy of certiorari. First American does not dispute that courts in at least six other States require appellate judges to review jury-awarded punitive damages under a de novo standard, rather than under the more deferential rational-factfinder standard. Pet. 30-31. It
identifies the federal courts ofappeals as alsofoUowing this approach, Opp. 14-15 & n.5, thereby boosting the importance of resolving the proper reading of. Leatherman. If the reading of Leatherman relied on by First American and these courts strikes this Court as
incorrect, this case is certworthy even if this view of Leatherman is uniformly held among the lower courts. But in fact, in conflict with the court below and
other courts which hold themselves bound by Leatherman to conduct de novo review of jury verdicts (without viewing the evidence in the Ught most favorable to the verdict), appeUate courts in at least four States adhere to the rational-factfinder standard
forreviewingjury verdicts awarding punitive damages, Pet. 31-33, although some engage in de novo review of trialcourt rulings on excessiveness.Opp. 15-17. Plainly this case might come out differently if it were heard on appeal in Oregon (at minimum the evidence of the
likely profit First American expected from its wrong doing would have been discussed). Thus, the Stevensons have a concrete stake in the question presented similar to that held by the defendant in Leatherman, which obtained a remand for further
proceedings after convincing this Court to adopt its proposed standard of review. 532 U.S. at 441-43.
12
|.
Conclusion
The petition for a writ of certiorari should be granted.
j \
Respectfully submitted.
j
j j
David H. Weber
(
T. Wickham Schmidt
f
Conway, Olejniczak&Jerry, S.C.
(
231 South Adams Street
f
Green Bay, WI 54301 (920) 437-0476
j
j
i
Kenneth Chesebro Counsel ofRecord
1600 Massachusetts Ave., No. 801
|
Cambridge, MA 02138
\
(617)661-4423
j
[email protected]
[
Attorneys for Petitioners September 10, 2014
j
j"
mpreme Court of tfje tHniteb J£>tate£ John E. Stevenson and Jane E. Stevenson,
Petitioners, v.
First American Title Insurance Company, Respondent.
on petition for a writ of certiorari
to the Supreme Court of Wisconsin
REPLY TO BRIEF IN OPPOSITION
David H. Weber T. Wickham Schmidt
Conway, Olejniczak & Jerry, S.C. 231 South Adams Street
Green Bay, WI 54301 (920) 437-0476 Kenneth Chesebro
Counsel of Record 1600 Massachusetts Ave., No. 801
Cambridge, MA 02138 [email protected]
(617)661-4423 Attorneys for Petitioners
September 10, 2014 BATEMAN & SLADE, INC.
BOSTON, MASSACHUSETTS
TABLE OF CONTENTS
Table ofAuthorities
I.
^
The Wisconsin Supreme Court's Ruling Is Wrong and Irreconcilable With Decisions
ofThis Court Stretching Back Decades A.
l
This Court's 1994 Endorsement in Oberg of the Rational-Factfinder Test Stands Unaffected by the Post-1994
Decisions Cited by First American
l
B. The Wisconsin Supreme Court Did Not Apply the Rational-Factfinder Standard . 7 C.
The Rational-Factfinder Standard Was Invoked Below; There Was No Waiver .. 10
II. The Conflict in the Lower Courts Is
in Need ofResolution by This Court Conclusion
H -,2
11
TABLE OF AUTHORITIES
Cases:
Page:
Abney v. United States, 431 U.S. 651 (1977) BMWof North America, Inc. v. Gore, 517 U.S. 559 (1996)
6 4-5, 9-10
Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424 (2001)
passim
Flora v. United States, 357 U.S. 63 (1958)
2
Goeke v. Branch, 514 U.S. 115 (1995) Hawks v. Hamill, 288 U.S. 52 (1933)
6 2
Honda Motor Co., Ltd. v. Oberg,
512 U.S. 415 (1994) Jackson v. Virginia, 433 U.S. 307 (1979)
passim passim
Jacque v. Steenberg Homes, Inc., 563 N.W.2d 154 (Wis. 1997) Johnson v. Hugo's Skateway, 974 F.2d 1408
(4th Cir. 1992)
3
6
Jones v. St. Paul Cos., 495 F.3d 888
(8th Cir. 2007) Kappos v. Hyatt, 132 S. Ct. 1690 (2012) Lindsey u. Normet, 405 U.S. 56 (1972) McCoy v. Massachusetts Institute of Technology, 950 F.2d 13 (1st Cir. 1991) McDaniel v. Brown, 558 U.S. 120 (2010) McKane v. Durston, 153 U.S. 684 (1894)
.3 2-3 5 3 8 5
Oberg v. Honda Motor Co., Ltd., 888 P.2d 8 (Or. 1995), cert, denied, 517 U.S. 1219 (1996) .... 3 State Farm Mutual Auto. Ins. Co. v.
Campbell, 538 U.S. 408 (2003) Tolan v. Cotton, 134 S. Ct. 1861 (2014) TXO Production Corp. v. Alliance Resources
Corp., 509 U.S. 443 (1993)
4, 10 8
2
United States v. Augustine, 712 F.3d 1290
(9th Cir. 2013)
3
Williams u. Philip Morris Inc., 127 P.3d 1165
(Or. 2006), reu'd, 549 U.S. 346 (2007)
3
ni
Cases (continued): Page: Williams v. Philip Morris Incorporated, 176 P.3d 1255 (Or. 2008), cert, dismissed as
improvidently granted, 556 U.S. 178 (2009) ... 4 CONSTITUTION:
U.S. CONST., amend. VII
6.7
U.S. CONST., amend. XIV, §1
[[[][ 'passim
ARTICLE:
Daniel J. Meltzer, Harmless Error
and Constitutional Remedies,
61 U. Chi. L. Rev. 1 (1994)
6
Case Materials-.
Brief for the Petitioner in No. 99-2035
(Dec. 4, 2000), 2000 WL 1793080
6
Petition in No. 94-1890 (May 17, 1995), 1995 WL 17048413
3
Petition in No. 05-1256 (Mar. 30, 2006),
2006 WL 849860
.'
Petition in No. 07-1216 (Mar. 24, 2008)
2008 WL 795148
'
Reply Brief for the Petitioner in No. 99-2035 (Feb. 15, 2001), 2001 WL 137340
3
4 6
REPLY TO BRIEF IN OPPOSITION
I.
The Wisconsin Supreme Court's Ruling Is Wrong and Irreconcilable With Decisions
of This Court Stretching Back Decades Pet. 20-27 summarized this Court's decisions establishing that when a htigation outcome is attacked as unsupportable on the record, due process requires
only that a court satisfy itself that the jury's result is rational, viewing the evidence in the Ught most favorable to the verdict. Pet. 27-29 demonstrated that the decision below is irreconcilable with this rule
because it carried out de novo review of the jury's award (not merely of the trial court's decision). First American responds, first, that the Wisconsin Supreme Court did engage in de novo review but was
justified in doing so, because subsequent to Oberg this Court departed from the rational-factfinder standard in
the punitive damages context. Opp. 7-10. It next argues that the court below did not engage in de novo review; actually, it applied the rational-factfinder standard, so
the Stevensons have no ground for complaint. Opp. 1113.And it argues that the Stevensons waived any issue regarding the standard of review by failing to object below. Opp. 7, 9. We address each point in turn. A. This Court's 1994 Endorsement in
Oberg of the Rational-Factfinder Test
Stands Unaffected by the Post-1994 Decisions Cited by First American
First American does not dispute that in every other context in which a htigation outcome is attacked as unsupportable on the record, this Court has held that
the appropriate substantive standard forreviewingthe
jury verdict is the rational-factfinder standard of Jackson v. Virginia, 433 U.S. 307, 318-19 (1979). Pet. 20-23. Thissatisfies due process even whendeprivation of life is at stake. Pet. 23. First American does not
contend greater protection attaches when deprivation of property is at stake.
Nor does First American disputethat the same due
process protection afforded criminal defendants under Jackson is allHonda andits amid in Honda Motor Co.,
Ltd. v. Oberg, 512 U.S. 415 (1994), sought. Pet. 24 & n.10. Oberg, citing Jackson, echoed the approach to rationaUty review sketched a year earlier in the TXO concurrence of Justice Kennedy (who also cited Jackson). Pet. 25-26. Oberg stated that a defendant's
right not to be "subjected to punitive damages of arbitrary amounts" requires judicial review to ensure there is"evidence providing at leasta rational basis for
the particular deprivation of property imposed by the State to deter future wrongdoing." 512 U.S. at 429. This statement was quoted at Pet. 25. First American ignores it.
Of course, Oberg's embrace of the rationalfactfinder standard might be regarded as dictum,
especially because it left undecided, 512 U.S. at 432 n.10, whether Jackson, or some variant, specified the precise minimum constitutionally required standard of review. Opp. 10. But given that the rational-factfinder standard was briefed and discussed at oral argument,
Pet. 24 n.10, and given that Oberg's analysis built on Justice Kennedy's earlier analysis, to the degree that this discussion in Oberg is dictum it must be regarded as "carefully considered dictum," Flora v. United States, 357 U.S. 63, 68 (1958), that isworthy ofrespect,
e.g., Hawks v. Hamill, 288 U.S. 52, 58-59 (1933) (Cardozo, J.) —not "the kind of ill-considered dicta" this Court is inclined to ignore. Kappos v. Hyatt, 132
S. Ct. 1690, 1699 (2012). "[Considered Supreme Court dictum is special," United States v. Augustine, 712 F.3d 1290, 1295 (9th Cir. 2013), and lower courts may not simply ignore it. E.g., Jones v. St. Paul Com
panies, 495 F.3d 888, 893 (8th Cir. 2007); McCoy v. Massachusetts Institute of Technology, 950 F.2d 13, 19 (1st Cir. 1991).
Oberg's status as carefully considered dictum worthy of respect is corroborated by the final outcome
in Oberg. On remand the Oregon Supreme Court, applying the rational-factfinder standard, affirmed the $4 million punitive damages award, finding it "within the range that a rational juror would be entitled to
award in the light of the record as a whole" (judged under the relevant legal factors). Oberg v. HondaMotor
Co., Ltd., 888 P.2d 8, 12 (Or. 1995), cert, denied, 517 U.S. 1219(1996). In its unsuccessfulsecond petition for certiorari, Honda did not challenge the propriety ofthe rational-factfinder standard; it challenged only the result reached under that standard. Petition in No. 941890 (May 17, 1995), 1995 WL 17048413. Nor was Oregon's use of a rational-factfinder
standard forreviewing jury-awarded punitive damages challenged in a later case from Oregon in which this Court twice granted review. In attacking the $79.5 million punitive damages award upheld using the rational-factfinder standard in Williams v. Philip Morris Inc., 127 P.3d 1165, 1176-82 (Or. 2006), rev'd, 549U.S. 346 (2007), Philip Morris never chaUengedthe standard (only the outcome under the standard) — not in its first cert, petition, which resulted in a reversal on
another ground,1 and not in its second cert, petition following reinstatement of the award on remand,
1Petition in No. 05-1256 (Mar. 30, 2006), 2006 WL849860.
Williams v. Philip Morris Inc., 176 P.3d 1255, 1264
(Or. 2008), as to which certiorari was ultimately dismissed as improvidently granted. 556 U.S. 178 (2009).2 The rational-factfinder standard is now firmly
established in Oregon, Pet. 32, this Court having left it undisturbed, consistent with its own decision in Oberg embracing the rational-factfinder standard in the punitive damages context.
Brushing aside the analysis in Oberg, First American argues that Oberg has been superseded by later decisions of this Court. It asserts that neither
Jackson nor Oberg can be controlling because they
predate BMW ofNorth America, Inc. v. Gore, 517 U.S. 559 (1996), and State Farm Mutual Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003). Opp. 9-10. But as explained at Pet. 26-27 (ignored by First American), both
decisions
reinforced
the
rationality-review
approach of Oberg. Justice Breyer's Gore concurrence,
speaking for three Justices (each necessary for a majority) emphasizedthat rational-factfinderanalysis must focus on the record facts, not on conceivable facts. 517 U.S. at 593-94. Campbell invalidated a punitive
damages award under due process only after finding, based on the record evidence, that it was "irrational" and "arbitrary." 538 U.S. at 429. First American also contends that Obergs embrace of the rational-factfinder standard was superseded by
Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424 (2001). Under Leatherman, it insists, "the de novo standard of review that the Wisconsin court
applied is correct." Opp. 7. Hereit contends, as it must, that Leatherman is a due process holding and not
2Petition in No. 07-1216 (Mar. 24, 2008), 2008 WL 795148.
simply an exercise ofthis Court's supervisory authority over the lower federal courts — that it "interprets the Due Process Clause and applies in state court just as it " Opp. 8. First American's applies in federal court discussion of Leatherman is flawed in four respects. First, the Court in Leatherman indicated it was not
revisiting the "substantive standard for determining the jury award's conformity with due process in the first instance" (addressed in Obergand Gore), but was only resolving "the question of the proper standard for reviewing the District Court's due process determina tion
" 532 U.S. at 431 n.4.
Second, other Leathermanpassages, quoted at Pet. 28, indicate the Court was exercising its supervisory authority, thus avoiding serious federalism concerns. Pet. 28 n.12. First American has no answer to these
passages. It merely observes that "petitioners cite no decision of any state court that reads Leatherman in so cramped a fashion." Opp. 8. But the meaning of this Court's decisions depends on how the Justices of this
Court read them, not on how lower court judges read them. That some (perhaps many) state courts erron eously view Leatherman as a due process decision, e.g., Pet. 30-31, is a reason to grant, not deny, certiorari. Third, to construe Leatherman as holding that punitive damages defendants have a due process right to a de novo standard of review on appeal would transform Leatherman into an epic precedent. This
Court has never held that any litigant, civilor criminal, has a due process right to any appeal, much less to an appeal under a de novo review standard. E.g., McKane v. Durston, 153 U.S. 684, 687 (1894) (appeals, even in criminal cases, "however grave the offense," are not "a
necessary element of due process" and he "wholly within the discretion of the state"); Lindsey v. Normet, 405 U.S. 56, 77 (1972) (States obliged to "provide
appellate review" in neither criminal nor civil cases); Abney v. United States, 431 U.S. 651, 656 (1977) ("it is well settled that there is no constitutional right to an
appeal"); Goeke v. Branch, 514 U.S. 115, 120 (1995) (per curiam) ("due process does not require a State to provide appellate process at all"). Fourth, even if there were a right to appeal a
punitive damages award, due process could scarcely require de novo review. As Judge Luttig explained in an opinion overlooked by First American, a review standard short of de novo (e.g., for abuse of discretion)
would surely satisfy due process. Johnson v. Hugo's Skateway, 974 F.2d 1408, 1428-32 (4th Cir. 1992) (en banc) (Luttig, J., concurring in part and dissenting in part).Accordingly, in Leatherman itself, the defendant did not contend that the Ninth Circuit's use of an abuse-of-discretion review standard was itself a
violation of due process. It merely argued that the de novo standard employed by other circuits is the customary onefor reviewing constitutional issues, and the one best suited to the development of a coherent
body of law governing limits on punitive damages awards,4 arguments this Court accepted. 532 U.S. at 431, 436, 440.
Finally, First Americansuggests that the Seventh Amendment analysis in Leatherman somehow under mines Oberg's rational-factfinder standard. Opp. 9-10.
3But see Daniel J. Meltzer, Harmless Error and Constitutional
Remedies, 61 U. Chi. L. Rev. 1, 2-3 & n.10, 6-9 (1994) (summariz
ing revisionist argument for a constitutional right to appeal in criminal cases).
4 Brief for the Petitioner in No. 99-2035 (Dec. 4, 2000),
2000 WL 1793080; Reply Brief for the Petitioner in No. 99-2035 (Feb. 15, 2001), 2001 WL 137340.
But here, Leatherman merely holds that theuse ofa de novo review standard by federal appeUate courts is permitted by the Seventh Amendment (at least where
punitive damages are awarded based on moral outrage,
rather than based ona claim more rooted in matters of historical orpredictive fact, e.g., a determination ofthe level ofpunitive damages needed for effective deter rence). 443 U.S. at 437-40. Thathas nothing to do with
what state appellate courts are required to do by due
process. Whether a particular review standard is permitted under the Seventh Amendment, ratified in
1791 to address fears that federal appellate judges
might overreach andperpetuate abuses suffered under British rule, has no logical connection to what review standard state judges must use under the Due Process
Clause of the Fourteenth Amendment ratified in 1868 to redress the arbitrary treatment by some States of persons within their jurisdiction.
In sum, Oberg embraced the rational-factfinder standard in the punitive damages context, and this
Court's later decisions, while further explicating the legal factors relevant in deciding whether a punitive damages award is irrationally excessive on the record evidence, have leftin place this general framework for
due process review ofpunitive damages verdicts. B.
The Wisconsin Supreme Court Did Not Apply the Rational-Factfinder Standard
Curiously, having just argued that "the de novo
standard of review that the Wisconsin court applied is correct," Opp. 7, so the Stevensons must lose on the
merits, First American then argues the opposite: that the court did not apply a de novo review standard —
that it actually applied a rational-factfinder standard,
viewing the evidence in the light most favorable to the
plaintiff, so the Stevensons have no ground for complaint. Opp. 11 (citing Pet. App. 14a n.17), 13 (citing Pet. App. 12a). Here First American relies on snippets from the two key passages of the opinion,
which read in full make clear the court found itself
bound by Leatherman to jettison its past rehance on the rational-factfinder test when reviewingthe amount
ofpunitive damages awarded by a jury. Under "Standard of Review," Pet. App. lla-12a,
the court noted that before Leatherman, the substan tivestandard for reviewing jury verdicts wascontrolled
by Jacque v. Steenberg Homes, Inc., 563 N.W.2d 154 (Wis. 1997). Jacque held: "When we review the record to determine whether a punitive damage award is excessive, the evidence must be viewed in the Ught most favorable to the plaintiff." Id. at 163. This, of
course, is the Jackson rational-factfinder standard, which requires "viewing the evidence in the light most favorable to the" verdict winner. Jackson, 443 U.S. at
319. E.g., McDaniel v. Brown, 558 U.S. 120, 133-34
(2010) (per curiam) (criminal case); Tolan v. Cotton,
134S. Ct. 1861, 1866 (2014) (summary judgment). The court then held that the de novo review standard announced in Leatherman displaced, in part, the rule articulated in Jacque. Under Leatherman, the court now defersonly to a jury's liability determination
regarding punitive damages. A jury's "decision to award punitive damages is accorded deference. The sizeofthe award, however, is subject to de novo review to ensure it accords with the constitutional limits of
due process." Pet. App. 12a (emphasis added). First American distorts the meaning of this passage by
omitting thesecond sentence. Opp. 13. Plainly the first sentence requires continued deference on liability (with the evidence viewed in the Ught most favorable to the
plaintiff) and the second sentence prohibits deference
on the size of the award (so the evidence is not viewed in the light most favorable to the plaintiff). Footnote 17 made the overruling ofprecedent even more explicit. In the first sentence, the court recited past punitive damages holdings requiring that the evidence be viewed in the light most favorable to the verdict. In the second sentence, it stated that in appellate review of "the amount of the jury's award" the evidence may no longer be viewed in this manner,
as under Leatherman such deference is no longer permitted. Pet. App. 14a n.17. (Again, only the jury's "decision to award punitive damages is accorded deference." Pet. App. 12a (emphasis added).) As First American does not dispute, prior to the decision below it was settled Wisconsin law that the evidence must be
viewed in the light most favorable to the verdict both
on liability and on the amount of punitive damages. Pet. 17 n.6.5
5After first contending that the court below properly engaged in de novo review, without deference to the jury, Opp. 7, and then contending that the court below actually engaged in rationalfactfinder review, with the record viewed in the light most favorable to the verdict, Opp. 11, 13, First American does a final reverse. At Opp. 12 it concedes that in reviewing the amount of punitive damages awarded by the jury, the majority ignored evidence supporting the rationality of the jury's verdict, which had been briefed by the Stevensons and which was emphasized by the dissenters: evidence that the punitive damages award is less than
three times the profit First American likely expected to reap through false representations to the homeowners it had insured.
Pet. 9-11, 18. First American defends that omission by arguing that expected profit from wrongdoing is "not relevant to . . . the Gore guideposts . . . ." Opp. 12. But the Gore guideposts have never been held exclusive. Courts in many States consult other
legal factors in reviewing punitive damages for excessiveness, in line with Dean Griswold's proposal in his Oberg amicus brief that "a non-exclusive list of factors" should be developed to guide
10
C. The Rational-Factfinder Standard Was Invoked Below; There Was No Waiver
First American argues that review should be
denied because the Stevensons supposedly did not object to the jury verdict being reviewed de novo, thus waiving any issue. Opp. 7, 9. But before the decision
below, de novo review of the evidence in a punitive
damages case did not exist in Wisconsin. Previously a jury's liability finding and its determination of the amount of punitive damages were both reviewed with
the evidence viewed in the light most favorable to the plaintiff. Accordingly, in their briefs First American
and the Stevensons agreed that on both issues, the court was required to view the evidence in the Ught most favorable to the plaintiff. Pet. 17 n.6. First American's waiver argument hinges on a reference in the Stevensons' brief to de novo review of
purely legal matters, Opp. 7, ignoring three statements
immediately thereafter on the deference owed the jury, Resp. Wis. Sup. Ct. Br. 21-22, including this: "[T]he appropriate standard of review . . . requires the evidence be viewed in the Ught most favorable to the
verdict." Id. at 22. As to the Stevensons not citing Jackson or Oberg specificaUy, Opp. 9, it was enough that First American conceded in its opening brief that the court was required to view the evidence in the Ught most favorable to the plaintiff (the Jackson standard),
rationality review of punitive damages. Pet. 24 n.10. First
American also ignores Justice Breyer's Gore concurrence noting the value of incorporating the profit factor into excessiveness analysis where relevant, Pet. 26, and two decisions after Gore
referencing the profit factor as part of the review of the record evidence. Leatherman, 532 U.S. at 442; Campbell, 538 U.S. at 428.
11
and that the Stevensons agreed, citing Wisconsin precedent consistent with Jackson. Pet. 17n.6. II. The Conflict in the Lower Courts Is
in Need of Resolution by This Court
Resolving the proper reading of Leatherman is worthy of certiorari. First American does not dispute that courts in at least six other States require appellate judges to review jury-awarded punitive damages under a de novo standard, rather than under the more deferential rational-factfinder standard. Pet. 30-31. It
identifies the federal courts ofappeals as alsofoUowing this approach, Opp. 14-15 & n.5, thereby boosting the importance of resolving the proper reading of. Leatherman. If the reading of Leatherman relied on by First American and these courts strikes this Court as
incorrect, this case is certworthy even if this view of Leatherman is uniformly held among the lower courts. But in fact, in conflict with the court below and
other courts which hold themselves bound by Leatherman to conduct de novo review of jury verdicts (without viewing the evidence in the Ught most favorable to the verdict), appeUate courts in at least four States adhere to the rational-factfinder standard
forreviewingjury verdicts awarding punitive damages, Pet. 31-33, although some engage in de novo review of trialcourt rulings on excessiveness.Opp. 15-17. Plainly this case might come out differently if it were heard on appeal in Oregon (at minimum the evidence of the
likely profit First American expected from its wrong doing would have been discussed). Thus, the Stevensons have a concrete stake in the question presented similar to that held by the defendant in Leatherman, which obtained a remand for further
proceedings after convincing this Court to adopt its proposed standard of review. 532 U.S. at 441-43.
12
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Conclusion
The petition for a writ of certiorari should be granted.
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Respectfully submitted.
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David H. Weber
(
T. Wickham Schmidt
f
Conway, Olejniczak&Jerry, S.C.
(
231 South Adams Street
f
Green Bay, WI 54301 (920) 437-0476
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j
i
Kenneth Chesebro Counsel ofRecord
1600 Massachusetts Ave., No. 801
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Cambridge, MA 02138
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(617)661-4423
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[email protected]
[
Attorneys for Petitioners September 10, 2014
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