Man v. Raymark Industries, 87-14524

• Citation: 728 F. Supp. 1461
• Decision Date: 21 November 1989
• Docket Number: 87-14470.,No. 87-14524,87-14524
• Parties: Ah You MAN, Harry N. Sato, Plaintiffs, v. RAYMARK INDUSTRIES, et al., Defendants.
• Court: United States District Courts. 9th Circuit. United States District Court (Hawaii)

728 F. Supp. 1461

Ah You MAN, Harry N. Sato, Plaintiffs, v. RAYMARK INDUSTRIES, et al., Defendants.

Nos. 87-14524, 87-14470.

United States District Court, D. Hawaii.

November 21, 1989.

COPYRIGHT MATERIAL OMITTED

George W. Playdon, Theodore Y. Uyeno, Robert B. Frija, Honolulu, Hawaii, for plaintiffs.

Sterns & Ingram, Honolulu, Hawaii, for defendants.

ORDER RE: PUNITIVE DAMAGES

CONTI, District Judge.

The plaintiffs in these cases seek compensatory and punitive damages for injuries allegedly caused by exposure to defendants' asbestos-containing insulation products. The matter is now before the court on defendant Celotex Corporation and defendant Carey Canada, Inc.'s motion for summary judgment as to plaintiffs' punitive damage claims.

Defendants assert two theories in support of their motion: (1) Punitive damages are violative of the Due Process clause of the Constitution and therefore may not be allowed as a matter of law; and (2) Punitive damages may not be assessed against a so-called "successor" corporation, such as Celotex, if those damages arise from the conduct of a "predecessor" corporation, as Celotex asserts is the case here.

I. CONSTITUTIONALITY OF PUNITIVE DAMAGES

Defendants argue that punitive damages violate the Due Process clause in two ways: First they claim juries are free to impose punitive damage awards without meaningful standards; second, multiple punitive damage awards in the mass tort context are "arbitrary" and unfair. Although arguments for abolishing punitive damages in the mass tort context have been rejected in almost every jurisdiction in which they have been raised,¹ defendants assert the court should look at these arguments anew in light of dictum found in a recent Supreme Court opinion, Browning Ferris Industries v. Kelco Disposal Inc., ___ U.S. ___, 109 S.Ct. 2909, 106 L.Ed.2d 219 (1989).

1. The Browning-Ferris Opinion

Browning Ferris was a case of unfair competition. The jury returned a verdict of $51,146 in compensatory damages and $6 million in punitive damages. The defendants, characterizing the punitive damages as excessive, sought to have the award declared unconstitutional as violative of the Excessive Fines Clause of the Eighth Amendment and the Due Process Clause of the Fourteenth Amendment. The Court however held that the Excessive Fines Clause did not apply to civil cases and could not be used to upset the verdict. The court then refused to consider defendants' due process argument on the grounds that defendants were raising it for the first time, stating:

We have never addressed the precise question presented here: whether due process acts as a check on undue jury discretion to award punitive damages in the absence of any express statutory limit.... That inquiry must await another day.

Id. 109 S.Ct. at 2921.

Justice Brennan, with whom Justice Marshall concurred, agreed with the majority, that the question of due process was not properly before the court, but also gave indications that he believed that the court possessed the power to review such an award on due process grounds. According to Brennan, the common law set no specific range for the imposition of punitive damages but instead left it to the jury's discretion. Brennan then noted that "even where a statute sets a range of possible civil damages that may be awarded to a private litigant, the Due Process Clause forbids damages awards that are `grossly excessive" citation omitted or `so severe and oppressive as to be wholly disproportionate to the offense and obviously unreasonable.'" Id. at 2293. Brennan concluded that punitive damages awards which were not based upon a strict legislative scheme, but were instead left to a jury's discretion, should require at least the same, if not a higher level of scrutiny for excessiveness. Id.

Nothing in the Browning-Ferris opinion thus gives any indication that punitive damages are always invalid. In fact the Court implicitly indicated that the opposite is true as its concern was that courts, when dealing with damages already awarded under the common law, must carefully scrutinize the awards for excessiveness. In sum, this court does not find that the Supreme Court has given any indication that punitive damages are unconstitutional as a matter of law and this court will not extract such a doctrine from defendants' inaccurate interpretation of Court dicta.²

2. Meaningful Standards Exist for Imposing Punitive Damages

Despite a lack of precedent, defendants claim that "unlimited discretion" is given to Hawaii juries in imposing punitive damages and that such discretion is unconstitutional. This court disagrees as to defendants' interpretation of both Hawaii and federal law.

In Hawaii punitive damages may be awarded only in cases where the wrong-doer has acted wantonly, oppressively, or with such malice as implies spirit of mischief or criminal indifference to civil obligations, or where there has been such willful misconduct or entire want of care as would raise presumption of conscious indifference to consequences. Quedding v. Arisumi Brothers, Inc., 66 Hawaii 335, 240, 661 P.2d 706, 710 (1983); Kang v. Harrington, 59 Hawaii 652, 660-661, 587 P.2d 285, 293 (1978). The proper measure of damages is based upon the degree of malice, oppression or gross negligence which forms the basis for the award and the amount of money required to punish the defendant, considering his financial condition. Kang, 59 Hawaii at 652, 587 P.2d 285; Howell v. Associated Hotels, Ltd., 40 Hawaii 492, 501 (1954). Moreover claims for punitive damages must be proven by "clear and convincing evidence." Masaki v. General Motors Corporation, 780 P.2d 566, 575 (September 20, 1989).

Defendants state that these requirements are inadequate because a punitive damage claim is criminal or penal in nature, therefore the requirements and safeguards granted in criminal cases, such as the prohibition against double jeopardy and the necessity of proof beyond a reasonable doubt must apply. However since a punitive damage claim does not serve the purpose of determining whether the criminal law has been violated, does not carry the consequence of possible incarceration or the stigma inherent in a determination of a criminal violation, and is not a claim backed by the resources of the State, it is not "criminal" or "penal" in nature. See Hansen v. Johns Manville Products Corp., 734 F.2d 1036, 1042 (5th Cir.1984), cert. denied 470 U.S. 1051, 105 S.Ct. 1749, 84 L.Ed.2d 814 (1985).³ Therefore comparisons with criminal law are irrelevant.

In fact the adequacy of Hawaii law is made abundantly clear by comparison to the Supreme Court's own formulations of the punitive damage standard as it relates to both federal causes of action and constitutional rights. In Smith v. Wade, 461 U.S. 30, 103 S.Ct. 1625, 75 L.Ed.2d 632 (1983), a § 1983 defendant challenged the propriety of a punitive damage award grounded on a "recklessness or callous indifference" standard as being too vague to fairly achieve the goal of deterrence. The Supreme Court rejected the defendant's arguments noting that the "recklessness" standard was adopted for the very reason that it satisfied the need for clarity and fairness in the awarding of punitive damages. Id. at 49, 103 S.Ct. at 1636. Similarly, in Gertz v. Robert Welch, Inc., 418 U.S. 323, 349, 94 S.Ct. 2997, 3011, 41 L.Ed.2d 789 (1974) the Court stated that punitive damages may not be assessed in a defamation suit unless there is a showing of knowledge of falsity or reckless disregard for the truth. See Leonen v. Johns-Manville, Corp., 717 F.Supp. 272, 280 (D.N.J. 1989).

This court finds that the standard established by Hawaii law is sufficient to apprise potential defendants and juries of both the nature of the conduct which may expose one to punitive damage liability as well as what level of award is appropriate under the circumstances. Moreover due process is further guaranteed as, if a jury does award such damages, the court may, pursuant to a proper motion, examine the award. Thus there is no constitutional violation in the application of Hawaii law in imposing punitive damage liability. See Vollert v. Summa Corp., 389 F.Supp. 1348, 1350 (D.Hawaii 1975).

3. Punitive Damages are Appropriate in the Mass Tort Context

Defendants also argue that multiple awards of punitive damages, in the mass tort context, violate the fundamental fairness concerns of the Due Process Clause as defendants are being destructively subjected to multiple awards for what they describe as a "single course of conduct." As defendants state that punitive damages have already been assessed against it, defendants assert that no purpose is served by additional punitive damage awards. This court however disagrees with defendants' analysis of the facts, the law, and applicable public policy.⁴

To begin defendants describe their acts as a "single course of conduct", as if they are being subjected to multiple liability for a single incident. That is not the case. Defendants in the asbestos litigation are not being repeatedly punished for a single act, rather punitive awards stem from an alleged series of corporate actions and decisions over decades involving repeated willful failure to warn, despite concrete knowledge of product dangers. At any juncture of time defendants allegedly had the opportunity to have saved lives by changing their behavior. See Plaintiff's Memorandum of Opposition at pp. 20-30.

And as one court has stated:

"Since a product seller owes a separate duty to each individual who is a ... user of such a product to refrain from `outrageous conduct' and, if the defendant exhibits `outrageous conduct' towards a particular individual through deficiencies in that product which causes injury to that plaintiff, then its course of conduct cannot be described as `the same act' because it is separate and distinct to each individual plaintiff."

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