Oberg v. Honda Motor Co., Ltd.

• Decision Date: 02 February 1995
• Citation: 320 Or. 544,888 P.2d 8
• Parties: , 63 USLW 2544, Prod.Liab.Rep. (CCH) P 14,156 Karl L. OBERG, Respondent on Review, v. HONDA MOTOR CO., LTD.; Honda R & D Co., Ltd.; and American Honda Motor Co., Inc., Petitioners on Review. CC A8709-05897; CA A61587, USSC 93-644; SC S38436.
• Court: Oregon Supreme Court

Page 8

888 P.2d 8

320 Or. 544, 63 USLW 2544, Prod.Liab.Rep.

(CCH) P 14,156

Karl L. OBERG, Respondent on Review, v. HONDA MOTOR CO., LTD.; Honda R & D Co., Ltd.; and American Honda Motor Co., Inc., Petitioners on Review.

CC A8709-05897; CA A61587, USSC 93-644; SC S38436.

Supreme Court of Oregon In Banc.

Argued and Submitted Sept. 12, 1994.

Decided Feb. 2, 1995.

Andrew L. Frey, of Mayer, Brown & Platt, Washington, DC, argued the cause for petitioners on review. With him on the briefs were Jeffrey R. Brooke and Paul G. Cereghini, of Bowman & Brooke, Phoenix, AZ, and Thomas W. Brown and James H. Gidley, of Cosgrave, Vergeer & Kester, Portland.

Kathryn H. Clarke, Portland, and William A. Gaylord, Portland, argued the cause for respondent on review. With them on the briefs was Raymond F. Thomas, Portland.

Thomas W. Sondag, of Lane Powell Spears Lubersky, Portland, filed briefs on behalf of amicus curiae First Interstate Bank of Oregon, N.A. With him on the briefs were James H. Clarke and Jeffrey M. Batchelor.

Maureen Leonard, Portland, filed a brief on behalf of amicus curiae Oregon Trial Lawyers Ass'n.

Mildred J. Carmack, of Schwabe, Williamson & Wyatt, Portland, filed a brief on behalf of amicus curiae Oregon Ass'n of Defense Counsel.

William L. Hallmark, of Hallmark, Keating & Abbott, P.C., Portland, filed briefs on behalf of amicus curiae Senco Products, Inc., an Ohio corp.

Rives Kistler, Asst. Atty. Gen., Salem, filed a brief on behalf of amicus curiae State of Oregon. With him on the brief were Theodore R. Kulongoski, Atty. Gen., and Virginia L. Linder, Sol. Gen., Salem.

GRABER, Justice.

This case is before us on remand from the Supreme Court of the United States. Honda Motor Co., Ltd. v. Oberg, 512 U.S. 415, 114 S.Ct. 2331, 129 L.Ed.2d 336 (1994).

INTRODUCTION

This civil case involves a product liability claim against defendants, who manufactured and sold a three-wheeled all-terrain vehicle (ATV) used by plaintiff. The ATV flipped over backwards while plaintiff was riding it, and plaintiff suffered multiple injuries. A jury returned a verdict in favor of plaintiff, awarding both general and punitive damages. Defendants appealed to the Court of Appeals, which affirmed the judgment. Oberg v. Honda Motor Co., 108 Or.App. 43, 56, 814 P.2d 517 (1991). On review to this court, we also affirmed. 316 Or. 263, 289, 851 P.2d 1084 (1994). The facts are set forth in more detail in those opinions.

As now pertinent, defendants argued in their earlier appearance before this court that, under the Due Process Clause of the Fourteenth Amendment to the Constitution of the United States, ¹ an award of punitive damages must be subject to post-verdict judicial review for excessiveness. 316 Or. at 275, 851 P.2d 1084. They reasoned that, because the Oregon Constitution had been interpreted to preclude post-verdict judicial review of an award of punitive damages, the procedure followed by the Oregon courts did not comport with the requirements of federal procedural due process. This court stated that Article VII (Amended), section 3, of the Oregon Constitution, ² prevents Oregon trial and appellate courts from reviewing awards of punitive damages. ³ Id. at 275-76, 851 P.2d 1084. This court held that, despite that restriction, Oregon's procedure complied with the dictates of federal procedural due process under then-existing Fourteenth Amendment jurisprudence. Id. at 283-89, 851 P.2d 1084.

On certiorari, the Supreme Court of the United States reversed. The Supreme Court held that "Oregon's denial of judicial review of punitive damages awards violates the Due Process Clause of the Fourteenth Amendment." Honda Motor Co., 512 U.S. at ----, 114 S.Ct. at 2341. The Supreme Court went on to state:

"A decision to punish a tortfeasor by means of an exaction of exemplary damages is an exercise of state power that must comply with the Due Process Clause of the Fourteenth Amendment. The common law practice, the procedures applied by every other State, the strong presumption favoring judicial review that we have applied in other areas of the law, and elementary considerations of justice, all support the conclusion that such a decision should not be committed to the unreviewable discretion of a jury." Id. at ----, 114 S.Ct. at 2342.

The Supreme Court did not address "the more difficult question of what standard of review is constitutionally required." Id. at ---- n. 10, 114 S.Ct. at 2341 n. 10. The Supreme Court left that question to us.

On remand, then, our task is twofold. First, we must identify a standard of post-verdict judicial review of awards of punitive damages that complies with the federal constitution. Then, we must apply that standard to the case before us.

Article VII (Amended), section 3, of the Oregon Constitution, quoted in note 2 ante, prohibits a court from re-examining a fact tried by a jury unless there is no evidence to support the jury's verdict. In Van Lom v. Schneiderman, 187 Or. 89, 116, 210 P.2d 461 (1949), this court held that an assessment of punitive damages is a question of fact committed to the decision of a jury, to which Article VII (Amended), section 3, applies. ⁴ Therefore, a trial or appellate court is prohibited from reviewing an award of punitive damages if there is evidence in the record to support a jury's finding that punitive damages should be awarded. Id. at 110-13, 210 P.2d 461. It is that aspect of the holding in Van Lom, construing Article VII (Amended), section 3, that comes into direct conflict with the decision of the Supreme Court of the United States in this case, concerning the requirements of federal due process. Under the Supremacy Clause, ⁵ we are bound to follow the requirements of federal due process in the face of that conflict.

On remand, we hold that the standard for post-verdict judicial review of an award of punitive damages is as follows: ⁶ A jury's award of punitive damages shall not be disturbed when it is within the range that a rational juror would be entitled to award in the light of the record as a whole; the range that a rational juror would be entitled to award depends, in turn, on the statutory and common law factors that allow an award of punitive damages for the specific kind of claim at issue. We also hold that the award of punitive damages in this case was not excessive, when reviewed under the foregoing standard.

THE STANDARD FOR POST-VERDICT JUDICIAL REVIEW

As discussed above, the Supreme Court of the United States held in Oberg that the Due Process Clause of the Fourteenth Amendment requires post-verdict judicial review of awards of punitive damages. 512 U.S. at ----, 114 S.Ct. at 2341. In reaching its conclusion, the Supreme Court noted that, "[i]n the federal courts and in every State except Oregon, judges review the size of damage awards." Id. at ----, 114 S.Ct. at 2338. The Court then stated that "traditional practice provides a touchstone" for what is required by procedural due process. Id. at ----, 114 S.Ct. at 2339.

The Court's discussion of traditional practice, from the era of George III to "modern practice," describes the proper procedure to be followed when it is asserted that a jury's award of punitive damages is excessive. Id. at ---- - ----, 114 S.Ct. at 2335-38. By contrast, the Court does not spell out what standard of review is required by federal procedural due process. Two passages in Oberg offer some guidance, however. First, the Court, in rejecting plaintiff's argument that Oregon provided adequate post-verdict review of a jury's award of punitive damages (because a trial judge or an appellate court can overturn an award of punitive damages if there is no evidence to support such an award, or if the jury was improperly instructed before it gave the award), stated:

"What we are concerned with is the possibility that a guilty defendant may be unjustly punished; evidence of guilt warranting some punishment is not a substitute for evidence providing at least a rational basis for the particular deprivation of property imposed by the State to deter future wrongdoing." Id. at ----, 114 S.Ct. at 2339 (emphasis added).

Second, in a footnote, the Court stated:

"This case does not pose the more difficult question of what standard of review is constitutionally required. Although courts adopting a more deferential approach use different verbal formulations, there may not be much practical difference between review which focuses on 'passion and prejudice,' 'gross excessiveness,' or whether the verdict was 'against the great weight of the evidence.' All of these may be rough equivalents of the standard this Court articulated in Jackson v. Virginia, 443 U.S. 307, 324, 99 S.Ct. 2781, 2791-2792, 61 L.Ed.2d 560 (1979) (whether 'no rational trier of fact could have' reached the same verdict)." ⁷ Id. 512 U.S. at ---- n. 10, 114 S.Ct. at 2341 n. 10.

In those two brief statements, the Supreme Court suggests that a form of post-verdict judicial review that asks whether "a rational basis" exists for the particular amount of punitive damages assessed, or a form of post-verdict judicial review that asks whether a "rational trier of fact" could assess the same award, would meet the requirements of the Due Process Clause. Both of those standards are related to the evidence in the record; some rational nexus must exist between the award and the evidence in the record.

There is a range of punitive damages that a reasonable jury may assess in a given case, and an assessment of damages that exceeds that range results in a deprivation of property that is a substantive due process violation. ⁸ A court, trial or appellate, reviewing an award of punitive damages thus engages in post-verdict review (a procedural due process safeguard) to ensure that the award is within the permissible range of damages (which is limited by substantive due process concerns).

With the above considerations in mind, we hold that the legal standard to apply to...