January 4, 2008

Ohio Supreme Court Upholds Constitutionality of Tort Reform Provisions Capping Awards of Noneconomic and Punitive Damages

Efforts to reform state tort law have been the subject of much political controversy over the last three decades as legislatures have attempted to ameliorate the adverse impacts of tort law on the availability of insurance coverage and on their economies. A variety of provisions have been enacted by individual state legislatures and, in a few instances, by Congress on such subjects as medical liability, product liability and joint and several liability.1 In those statutes, a number of states have capped damages on noneconomic damages (damages for such items as pain and suffering and emotional distress), at least in cases involving medical liability.2 Many states have also reformed their procedures for awarding punitive damages, including placing limits on the amounts of such punitive awards.3

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

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

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

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

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

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

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

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

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