Hamlin v. Hampton Lumber Mills Inc.

• Decision Date: 06 January 2011
• Docket Number: (CC 040302235; CA A130213; SC S056700).
• Parties: Ken HAMLIN, Petitioner on Review,v.HAMPTON LUMBER MILLS, INC., an Oregon corporation, dba Willamina Lumber Company, Respondent on Review.
• Court: Oregon Supreme Court

349 Or. 526

246 P.3d 1121

31 IER Cases 1646

Ken HAMLIN, Petitioner on Review,

v.HAMPTON LUMBER MILLS, INC., an Oregon corporation, dba Willamina Lumber Company, Respondent on Review.

(CC 040302235; CA A130213; SC S056700).

Supreme Court of Oregon.

Argued and Submitted Sept. 18, 2009.Decided Jan. 6, 2011.

On review from the Court of Appeals.^*Craig A. Crispin, Crispin Employment Lawyers, Portland, argued the cause and filed the brief for petitioner on review.Brenda K. Baumgart, Barran Liebman LLP, Portland, argued the cause and filed the brief for respondent of review. With her on the brief was Edwin A. Harnden.Phil Goldsmith, Portland, filed the briefs for amicus curiae Oregon Trial Lawyers Association.Before DE MUNIZ, Chief Justice, DURHAM, BALMER, KISTLER, WALTERS, and LINDER, Justices, and GILLETTE, Justice pro tempore. ^**

WALTERS, J.

In this case, plaintiff was injured while working at defendant's mill. When plaintiff was released to return to work, defendant refused to reinstate him as required by ORS 659A.043, falsely asserting that he was a “safety risk.” A jury awarded plaintiff lost wages of $6,000 and punitive damages of $175,000. On appeal, the Court of Appeals held that the punitive damages award was “grossly excessive” under the Due Process Clause of the United States Constitution and reduced the award to a sum four times the amount of the compensatory damages. Hamlin v. Hampton Lumber Mills, Inc., 222 Or.App. 230, 238, 193 P.3d 46 (2008), on recons., 227 Or.App. 165, 205 P.3d 70 (2009). Having allowed plaintiff's petition for review, we now reverse the decision of the Court of Appeals and reinstate the punitive damages award.

In accordance with the jury's verdict, we state the facts in the light most favorable to plaintiff. See Jensen v. Medley, 336 Or. 222, 226, 82 P.3d 149 (2003) (“We state the facts in the light most favorable to plaintiff, because [plaintiff] was the prevailing party before the jury.”). Defendant operated a lumber mill and employed approximately 380 employees. Defendant employed plaintiff as a temporary employee through Express Personnel Services (Express). When plaintiff came to work at defendant's mill, defendant did not instruct plaintiff how to “lock out” its machinery to safely clear jams and avoid injury, nor did it issue plaintiff the locks necessary to do so. Instead, plaintiff was instructed to watch the other employees and to do what they did. On the night that plaintiff was injured, defendant directed plaintiff to stand at a specified location, which later was determined to be unsafe. Plaintiff did as instructed, and when a board became wedged between a conveyor belt and a bin, plaintiff was unable to “lock out” the machinery and safely clear the jam. One of defendant's employees told plaintiff to grab the board, and when he attempted to do so, the machinery caught his glove and mangled his thumb.

Plaintiff was hospitalized and unable to work for four months. During that time, defendant twice told plaintiff that his job was secure. Defendant did not suggest to plaintiff or anyone else that plaintiff was a “safety risk” or that he had been at fault in causing his injury. Defendant prepared a written report describing the incident in which plaintiff had been injured. That report did not suggest that plaintiff was responsible for his own injury or that he constituted a “safety risk.”

While he was unable to work, plaintiff filed a claim for workers' compensation benefits, which was granted, and a safety complaint with Oregon Occupational Safety and Health Administration (OSHA), which was dismissed. When plaintiff's physicians released him to resume work, plaintiff contacted Express and sought reinstatement at defendant's mill.

Express contacted the Oregon Bureau of Labor and Industries (BOLI) to inquire whether a temporary employee in plaintiff's position had reinstatement rights. Express learned that defendant generally was required to reinstate temporary employees, such as plaintiff, under ORS 659A.043,¹ and communicated that information to defendant. Defendant deliberately decided not to reinstate plaintiff and falsely asserted that he was a “safety risk.”

Plaintiff then filed this action against defendant, asserting (among other claims) ² a claim for failure to reinstate under ORS 659A.043 and a claim for retaliation for filing charges with OSHA under ORS 654.062(5).³ Plaintiff sought $10,968 in economic damages, $100,000 in noneconomic damages, and $969,000 in punitive damages. A jury rendered a verdict for plaintiff on his failure to reinstate claim and awarded him lost wages of $6,000.⁴ The court rendered a verdict for plaintiff on his OSHA retaliation claim and awarded him lost wages of $10,000. ⁵

The court instructed the jury that, to award punitive damages, it must find by clear and convincing evidence that defendant's conduct amounted to “a particularly aggravated, deliberate disregard of the rights of others.” The court permitted the jury to consider various factors in determining the amount of punitive damages to award, including “the sum of money that would be required to discourage the defendant and others from engaging in such conduct in the future; and the income and assets of the defendant.” The jury awarded punitive damages of $175,000.

Defendant filed a motion for judgment notwithstanding the verdict or for a new trial, contending that the trial court was required to reduce the punitive damages award to comport with the Due Process Clause of the Fourteenth Amendment to the United States Constitution. Specifically, defendant asserted that the punitive damages award in this case failed to meet the constitutionality “guideposts” prescribed by the United States Supreme Court in BMW of North America, Inc. v. Gore, 517 U.S. 559, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996), and other cases. Defendant argued (among other things) that the ratio between the compensatory and punitive damages was close to 30:1 and greatly in excess of the single-digit ratio demanded by due process. In opposing defendant's motion, plaintiff argued that the Supreme Court expressly had declined to impose a strict ratio and that the sum awarded by the jury was appropriate to meet the state's interest in deterring and punishing illegal conduct. The trial court agreed with plaintiff, concluded that the punitive damages award “was not unconstitutionally excessive,” and entered judgment against defendant for the full amount of damages awarded by the jury.⁶

Defendant appealed to the Court of Appeals, renewing its assertion that the punitive damages award in this case was so “grossly excessive” that it violated due process. The Court of Appeals agreed. It reasoned that, measured by the guideposts articulated in Gore and other United States Supreme Court cases and reviewed and refined by this court in Goddard v. Farmers Ins. Co., 344 Or. 232, 179 P.3d 645 (2008), the punitive damages verdict was unconstitutionally large. Hamlin, 222 Or.App. at 238, 193 P.3d 46. The Court of Appeals decided that defendant's actions were only moderately reprehensible and had produced only economic harm, id. at 239–41, 193 P.3d 46, that the nearly 30:1 ratio between punitive and compensatory damages was well outside the asserted 4:1 limit for such cases, id. at 241–44, 193 P.3d 46, and that the third guidepost, which examines comparable civil and criminal sanctions, was unhelpful either way. Id. at 246–47, 193 P.3d 46. The court therefore concluded that the constitutional limit on the punitive damages award was four times the amount of the compensatory damages award ( i.e., four times $6,000 plus prejudgment interest). Id. at 250, 193 P.3d 46.

On review, plaintiff argues that the Court of Appeals erred in applying the ratio guidepost too strictly. Plaintiff contends that when, as in this case, a compensatory damages award is small, a punitive damages award that is more than a single-digit multiplier of the compensatory damages award is constitutionally permissible. Plaintiff also asserts that, because defendant's conduct violated a statute, and particularly a statute prohibiting discrimination against a worker, its conduct is more than moderately reprehensible.

Before we consider the merits of plaintiff's arguments, we first review the decisions of the United States Supreme Court that discuss the limitations that the Due Process Clause of the Fourteenth Amendment imposes on awards of punitive damages. The Court has held that that clause prohibits “grossly excessive” punitive damages awards. State Farm Mut. Automobile Ins. Co. v. Campbell, 538 U.S. 408, 416, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003); Gore, 517 U.S. at 568, 116 S.Ct. 1589. “Grossly excessive” punitive damages awards are awards that serve no legitimate state purpose and constitute an arbitrary deprivation of property. Campbell, 538 U.S. at 417, 123 S.Ct. 1513.

The Supreme Court has instructed courts that, to arrive at a conclusion about whether a punitive damages award is “grossly excessive,” they are to consider three “guideposts.” See id. at 418, 123 S.Ct. 1513 (summarizing guideposts); Gore, 517 U.S. at 574–75, 116 S.Ct. 1589 (noting guideposts). The first guidepost is the degree to which defendant's conduct is reprehensible. Campbell, 538 U.S. at 418, 123 S.Ct. 1513; Gore, 517 U.S. at 575, 116 S.Ct. 1589. The second guidepost examines the disparity between the punitive and compensatory damages awards, usually in the form of a ratio. See Campbell, 538 U.S. at 424–25, 123 S.Ct. 1513; Gore, 517 U.S. at 580, 116 S.Ct. 1589 (both so explaining). The third guidepost compares the punitive damages award to legislatively prescribed civil and criminal penalties for comparable misconduct. Campbell, 538 U.S. at 428, 123 S.Ct. 1513; Gore, 517 U.S. at 583, 116 S.Ct. 1589.

The second guidepost is the only quantitative guidepost that the Supreme Court has announced. The Court has suggested that, “in practice, few awards exceeding a...