State ex rel. Young v. Crookham

• Decision Date: 04 November 1980
• Citation: 290 Or. 61,618 P.2d 1268
• Parties: , 11 A.L.R.4th 1251 STATE ex rel. Stephen YOUNG et al., Plaintiffs-Relators, v. Honorable Charles S. CROOKHAM, Defendant. TC 7704-05707 etc.; SC 26305.
• Court: Oregon Supreme Court

Page 1268

618 P.2d 1268

290 Or. 61, 11 A.L.R.4th 1251

STATE ex rel. Stephen YOUNG et al., Plaintiffs-Relators, v. Honorable Charles S. CROOKHAM, Defendant.

TC 7704-05707 etc.; SC 26305.

Supreme Court of Oregon.

Argued and Submitted Jan. 7, 1980.

Decided Nov. 4, 1980.

Don S. Willner and Charles S. Tauman, Portland, argued the cause for plaintiffs-relators. With them on the briefs were Willner, Bennett, Bobbitt & Hartman and Kafoury & Hagen, Portland.

Wayne A. Williamson, Portland, argued the cause for defendant. With him on the brief were Souther, Spaulding, Kinsey, Williamson & Schwabe, Wayne A. Williamson, Ridgway K. Foley, Jr., Henry C. Willener and Elizabeth K. Reeve, Portland.

Before DENECKE, ^* C. J., and HOWELL, LENT, LINDE, PETERSON and TANZER, JJ.

LENT, Justice.

The issue in this case is whether Oregon should adopt the so-called "one bite" or "first comer" theory of punitive damages whereby, in multiple litigation arising from a continuing episode, the award of exemplary damages to one plaintiff would preclude the recovery of punitive damages for all subsequent plaintiffs.

Plaintiffs are 75 persons ¹ who claim to have been exposed to E coli bacteria resulting in severe gastrointestinal illness while visiting Crater Lake Lodge in Crater Lake National Park. Defendant is the presiding judge of the Multnomah County Circuit Court.

Defendant circuit judge made an order disallowing plaintiffs' claims for punitive damages in all subsequent cases after such damages were awarded in the case of Joachim v. Crater Lake Lodge, being Multnomah Clerk's No. 787420. Understanding the unique and controversial nature of his order, defendant encouraged plaintiffs to petition for a writ of mandamus to decide the issue before proceeding to trial in the remaining 75 cases. This court, exercising original jurisdiction, issued an alternative writ to consider what limits, if any, a trial court may impose on potentially cumulative punitive awards evolving from a single, albeit protracted, course of tortious conduct by a single defendant or set of defendants.

FACTS

Summer of 1975 saw a high incidence of severe intestinal illness among employees of Crater Lake Lodge and visitors to the lodge. The epidemic was determined by mid-summer to be the product of raw sewage overflowing into the water supply, and on July 11, 1975, the park and lodge were closed for the season by federal authorities.

Alleging injury as a result of drinking the contaminated water, 76 persons, through common counsel, initiated a class action against Crater Lake Lodge, Inc. and Ralph Peyton, the manager thereof. Defendants below contested the propriety of a class action, and the circuit court refused to certify the class. This court held that order was not appealable as a matter of right. Joachim, et al v. Crater Lake Lodge, Inc., et al, 276 Or. 875, 556 P.2d 1334 (1976). Plaintiffs then filed individual actions and moved to consolidate the cases for trial on the issue of liability. Defendants below opposed consolidation, and the trial court denied the motion. Following denial of the motion to consolidate, the 76 plaintiffs signed an agreement which provided, among other things, that any punitive damages recovered by members of the group would be prorated and divided among all of them. ²

In early November, 1978, the first of the 76 cases went to trial before a jury. Both parties stipulated that the record of that case be made part of the record here. During that trial evidence was presented by plaintiff Janice Joachim of the conduct of defendants below from mid-June to July 11, 1975. Included was evidence of defendant's knowledge of wide-spread illness among employees, less-than-whole-hearted cooperation with health investigators, rousting of nauseated employees from their sick beds to work in the lodge's restaurant and food handling operations, failure to warn patrons and visitors of potential injury and attempts to cover up the seriousness of the problem including tearing down warning signs posted by the park management and removing newspapers containing accounts of the extent and severity of the illness. The evidence received concerned events both prior and subsequent to the date of Ms. Joachim's injury. The jury returned a plaintiff's verdict for compensatory and punitive damages, which judgment has been affirmed by the Court of Appeals in Joachim v. Crater Lake Lodge, 48 Or.App. 379, 617 P.2d 632 (1980), holding that the evidence was sufficient to support a finding of wanton misconduct.

Following resolution of the Joachim case at the trial level, defendant herein entered an Order granting the motion of Crater Lake Lodge and Ralph Peyton for summary judgment on the issue of punitive damages. That order would eliminate any possibility of punitive damage recovery in the remaining 75 cases whose plaintiffs are petitioners in the instant case.

THE ONE BITE/FIRST COMER THEORY

Punitive damages are allowed in Oregon to punish a willful, wanton or malicious wrongdoer and to deter that wrongdoer and others similarly situated from like conduct in the future. Martin v. Cambas, 134 Or. 257, 293 P. 601 (1930); accord Noe v. Kaiser Foundation Hospitals, 248 Or. 420, 435 P.2d 306 (1967). This court agrees with the reasoning of International Brotherhood of Electrical Workers v. Foust, 442 U.S. 42, 99 S.Ct. 2121, 60 L.Ed.2d 698 (1979) that contrary to early English theory, punitive damages under the modern view are not a substitute for compensatory awards nor an offset against litigation expense. Noe v. Kaiser Foundation Hospitals, supra.

The propriety of the award of punitive damages in the Joachim case is not at issue in this case. The issue before this court is whether, after punitive damages have been awarded in one case, a judge may remove punitive damages from the jury's consideration in all subsequent cases involving the same set of defendants and arising from the same continuing wrongful act.

Considerable concern has surfaced in recent decades over the effect of multiple punitive damages awards on a single defendant faced with mass litigation. Roginsky v. Richardson-Merrell, Inc., 378 F.2d 832 (2d Cir., 1967); Globus v. Law Research Services, 418 F.2d 1276 (2d Cir, 1969); deHaas v. Empire Petroleum Co., 435 F.2d 1223 (10th Cir., 1971); see also, Kreindler, Punitive Damages in Aviation Litigation, 8 Cum.L.Rev. 607 (1978). Chief among the cases voicing concern about the effects of multiple punitive damages awards in mass litigation is Roginsky v. Richardson-Merrell Inc., supra. That case considered the controversy surrounding the drug MER/29 which was distributed by its manufacturer despite studies indicating that the drug could cause cataracts in users.

The MER/29 litigation involved some 1,500 cases across the nation, in many of which punitive damages were sought. Before deciding the case on other grounds, ³ the Roginsky court expressed grave concern at the potential for "overkill" inherent in allowing multiple recoveries of punitive damages for an indefinite class of plaintiffs. Implicit in Roginsky and other sources evidencing concern for defendants faced with the potential of such multiple awards is the proposition that the purpose of punitive damages is deterrence not destruction. See e. g., Maxey v. Freightliner, 450 F.Supp. 955, 961 (N.D.Tex., 1978). With this the court agrees.

The apprehension expressed in the Roginsky dictum must, however, be placed in its proper perspective. First the MER/29 litigation involved an inascertainable number of plaintiffs bringing suit in a multitude of jurisdictions from coast to coast. In the instant case, the statute of limitations has run and the number of plaintiffs is therefore set. All pending cases against Crater Lake Lodge and Mr. Peyton are within a single jurisdiction, thus there is no danger of multifarious legal doctrines adding to the unpredictability of the cases as was true in the MER/29 situation. Second, the reasoning of Roginsky does not stand unchallenged. The California Court of Appeal, in an MER/29 case decided shortly after Roginsky, noted the decision of the Second Circuit and expressly chose to "respectfully disagree." Toole v. Richardson-Merrell, Inc., 251 Cal.App.2d 689, 715, 60 Cal.Rptr. 398, 416 (1967), allowing recovery of punitive damages in MER/29 cases in California. Third, financial interests of the malicious and wanton wrongdoer must be considered in the context of societal concern for the injured and the future protection of society.

Other aspects of the MER/29 analogy are particularly damning to defendant's position in the instant case. Hindsight demonstrates that the apprehension of the Roginsky court was heavily exaggerated. Of the 1,500 cases, in only 3 did juries award punitive damages. The vast majority of cases were settled and the financial destruction feared by the Second Circuit did not come to pass. See generally, Rheingold, The MER/29 Story-An Instance of Successful Mass Disaster Litigation, 56 Cal.L.Rev. Part 1, 116 (1968).

"(I)f this is an example of the most crushing punishment that will befall a manufacturer guilty of flagrant marketing misbehavior-and it is difficult to imagine a more extreme case of such misbehavior than that of Richardson-Merrell in marketing MER/29-then the threat of bankrupting a manufacturer with punitive damages awards in mass disaster litigation appears to be more theoretical than real." Owen, Punitive Damages in Products Liability Litigation, 74 Mich.L.Rev. Part 2, 1258, 1324-1325 (1976).

Finally, Roginsky, despite the court's concern for defendants' plight in a mass litigation context, specifically rejects the one bite/first comer proposal as a solution.

"We know of no principle whereby the first punitive award exhausts all claims for punitive damages and would thus preclude future judgments * * * neither does it seem fair or practicable to limit punitive recoveries to an indeterminate number of first comers." Roginsky...