October 22nd, 2009

Target Lawsuit Over Counterfeiting Claim Settles After $3.1M Verdict

Last year I wrote about Rita Cantrell, who was falsely accused by Target of using a counterfeit $100 bill. The bill was authentic, but lacking some of the modern anti-counterfeiting devices simply because it was an older series.

The resulting suit led to a $100,00 compensatory damage verdict with $3,000,000 in punitive damages for the defamation. Some tort “reformers” smelled an opportunity and a small kerfuffle was set off in the legal blogosphere (see: Target Hit for $3M in Defamation Punitives (And Tort “Reformer” Sees Opportunity).

The suit, Cantrell v. Target, has now settled. While this is good for the parties involved, it’s not so good for the opinionators who were wondering what the Court of Appeals would do with the verdict and the 1:30 compensatory:punitive damage ratio. A Magistrate Judge had previously refused to toss out or modify the damage award, leading to the appeal. (And the Supreme Court had let stand a 1:100 ratio earlier this year.)

According to this paper, the 4th U.S. Circuit Court of Appeals dismissed the appeal “upon such terms as have been agreed to by the parties.” The parties didn’t disclose the terms.

(h/t Stegmaier)

The case was discussed previously here:

Links to this post:

October 23 roundup
Is it against the law to report police movements on Twitter? [Valetk, Law.com; Volokh]; “Attorney Charged With Posting Ad Seeking ‘Secretary With Benefits’” [Legal Profession Blog via Bruce Carton, Legal Blog Watch]; Maker of Monster
posted by Walter Olson @ October 23, 2009 8:43 AM


March 31st, 2009

Supreme Court Lets Stand 100-1 Punitive Damage Ratio in Smoker’s Case

And so it ends. Not just the matter of Williams v. Philip Morris that had been up to the Supreme Court on three different occasions. But going down the tubes with Philip Morris was the spurious argument advanced by defendants that the Supreme Court was going to artificially limit punitive damages to a 10:1 or 3:1 ratio when compared with compensatory damages. The compensatory damages here were $821,000 and the punitive damages were $79.5M.

When I wrote about this case a year ago (Philip Morris $79.5M Punitive Award Reinstated By Oregon High Court), I said:

A $79.5M punitive damage award against Philip Morris in a smoker’s case has twice been tossed out by the U.S. Supreme Court and sent back to Oregon for reconsideration. Now, for the third time, the Oregon Supreme Court has upheld the blockbuster award in Philip Morris v. Williams. The news story is here. The decision is here. And as I explain below, if it should go back up to the Supreme Court a third time, Philip Morris will likely lose if the court addresses the size of the award.

The reason I believe the almost 100-1 ratio will stand is set forth in this analysis I did in February 2007 in the wake of the last remand by the Supremes back to Oregon:
Philip Morris Punitive Damages Decision — Why It Was Good For Plaintiffs

Defendants had long argued that, based on conflicting commentary out of the high court, that large punitive damage awards would not withstand judicial scrutiny.

Now, as a result of the dismissal of the appeal, defendants are stuck arguing that the failure by the high court to decide this third appeal will simply mean it is without precedential value.

But every judge in the land that confronts the issue will know that the court let this punitive damage award of almost 100:1 stand, and will no doubt be guided accordingly.

This is a big loss for big business, as the courts will not be protective of those that hide or obscure the dangers of their products, to the detriment of others.

Here is the case history:

  • Jury verdict for $821,000 in compensatory damages and $79.5M in punitive damages;
  • Punitive damages reduced by trial court to $32M;
  • Punitive damage award reinstated by Oregon Court of Appeals;
  • Affirmed by Oregon Supreme Court;
  • Remanded by U.S. Supreme Court to decide punitive damages issue in light of its new ruling (2003) in State Farm v Campbell;
  • Affirmed again by Oregon Court of Appeals;
  • Affirmed again by Oregon Supreme Court;
  • Remanded by the U.S. Supreme Court due to an issue regarding jury instructions;
  • Affirmed for the third time by the Oregon Supreme Court;
  • Cert granted by Supreme Court
  • Case Dismissed by Supreme Court (today) without an opinion


  • Tobacco punitive verdict stands (SCOTUSblog)

    The marathon, however, apparently is not over yet. Philip Morris, at an earlier stage in the case, reserved the right to challenge a state law that requires that 60 percent of a punitive verdict goes to the state of Oregon. The company’s argument against that is that Oregon has achieved all of the proceeds it is entitled to have under the global settlement of a group of states’ lawsuit against the industry.


December 3rd, 2008

Punitive Damages Again Before Supreme Court (Philip Morris v. Williams, Round 3)

It’s rare for any case to go the Supreme Court, but one case going three times? Philip Morris v. Williams was heard again today. And in a remarkable suggestion from the Chief Judge during oral argument, the court may consider deviating from the technical issue before it today and decide once and for all the issue of whether or not bright line limits on punitive damages can be read into the Constitution, and if so, by how much.

This is the nutshell history for this smoker’s case that challenges the limits of punitive damages:

  • Jury verdict for $821,000 in compensatory damages and $79.5M in punitive damages;
  • Punitive damages reduced by trial court to $32M;
  • Punitive damage award reinstated by Oregon Court of Appeals;
  • Affirmed by Oregon Supreme Court;
  • Remanded by U.S. Supreme Court to decide punitive damages issue in light of its new punitive damages ruling in State Farm v Campbell, which gave confusing guidance on the degree to which the Due Process Clause of the Fourteenth Amendment is violated by a large award;
  • After considering State Farm v. Campbell, the Oregon Court of Appeals and then Oregon Supreme Court both affirm again;
  • Philip Morris appealed and the US Supreme Court once again remanded the case to Oregon, this time based on the jury instructions;
  • Affirmed for the third time by the Oregon Supreme Court; and
  • Argued in the U.S. Supreme Court today for the third time, with Philip Morris trying to claim that the Oregon courts were defying the Supremes by not knocking the award down.

Now here is the interesting part: During oral argument today about the esoteric issue of the federal courts interceding on state law issues involving jury charges, Chief Justice Roberts reportedly suggested that the court finally decide the penultimate issue of whether the Constitution permits a nearly 100 to 1 ratio of punitive to compensatory damages. (Pages 51-53 of this transcript, via How Appealing)

This is odd for two reasons. First, Roberts suggested that the court decide an issue it doesn’t really have to decide, since the issue before it was jury instructions. But more importantly, if the court were to decide whether a 100:1 punitive to compensatory ratio is constitutionally permissible, there are already five votes in favor of upholding the principle of a 100:1 ratio.

Here’s why the court will uphold the award it if decides that issue: The prior punitive damage case of State Farm v. Campbell was decided by a 6-3 majority. But two members of that majority are gone (Rehnquist and O’Connor) and two others from that majority have indicated in this case, either in dissent (Stevens) or oral argument (Breyer) that they have no problem with the concept of a 100:1 ratio if the facts deem it appropriate. Therefore, there are already five votes in favor of upholding a 100:1 ratio in principle. (See, Philip Morris Punitive Damages Decision — Why It Was Good For Plaintiffs.) And that is without Roberts and Alito having tipped their hands as to which way they will vote.

See also:

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Blawg Review #189
For my first three Blawg Reviews, I’ve let Dante lead me through Hell, Purgatory, and Heaven. Inconsiderately enough, however, Il Maestro never completed a fourth cantica for his Divine Comedy, leaving me stuck for a theme this time
posted by Colin Samuels @ December 08, 2008 3:00 AM


November 2nd, 2008

Target Hit for $3M in Defamation Punitives (And Tort "Reformer" Sees Opportunity)

This is two stories in one. First, a Target store down in South Carolina falsely accused a woman of using a counterfeit $100 bill. She sued Target and won $100K in compensatory damages and Target was hit by the jury with $3M in punitive damages. Then Ted Frank at Overlawyered decided this would be a good fit for that site, but the facts he used didn’t seem to fit the story. If you want to see how some lawsuits get turned into urban legends, this might be a good example to follow.

First the suit, which comes via Turley, citing a local news story:

Rita Cantrell of Greer went to two Target stores in the Greenville area in Feb. 2006, and both times employees accused her of using a counterfeit bill. Cantrell tried to buy items at the store and pay with an older series $100 bill.

[A Target] store employee sent out an e-mail to dozens of other retailers and law enforcement agencies warning them that Cantrell was a shoplifter who tried to spend bogus cash. The e-mail also included Cantrell’s picture.

According to Target’s own brief in their failed motion for summary judgment, Ms. Cantrell visited a Target store (just one store, not two as in the news story above) where a counterfeit was suspected. They declined to take the money when offered and asked her if she had another form of payment. She shook her head no, took the goods out of her basket, and walked out of the store. Then came the accusatory email.

The problems were that the bill was legit, and the email also went to her place of employment. And Target didn’t identify the money as a “possible” counterfeit. No sirree. The email said “The lady pictured attempted to use a counterfeit 100 dollar bill today.” So the accusation was unambiguous. (See Order denying judgment.)

The Secret Service was called in, verified the money as real, and Target was sued for the embarrassment and humiliation that Ms. Cantrell suffered, with the jury ordering 100K in compensatory damages and $3M in punitives.

From the original article came this response: Target spokeswoman Bethany Zucco said Friday the company will challenge the ruling.

“We are extremely disappointed by the magnitude of the compensatory and punitive damages awarded by the jury in this case,” Zucco said in a statement. “We sincerely regret any inconvenience incurred by the plaintiff.

Scott Greenfield wrote about this case the other day ($3M to the Target of Target) and remarked about this pathetic response:

Any inconvenience? You sent out a mass email, with her picture, telling the world that she’s a thief and forger, and you’re sorry for the inconvenience? There’s an “apology” that demands some serious puni’s alone.

And now comes the urban legend part. Ted Frank, a well known tort “reformer” at Overlawyered jumps into the action (Cantrell v. Target: $200 medical bill = $3.1M verdict). Except some of the facts in his post look a little different from the Target brief and the judge’s opinion.

1. As noted above, Target clearly identified the money as counterfeit, writing in the email, “The lady pictured attempted to use a counterfeit 100 dollar bill today.” But not according to Frank. In his version of the story, the central accusation is watered down to this:

Target employees were foolish in being unable to recognize the old currency, and mistakenly identified it as a possible counterfeit.

Now that, my friends, is just flat out wrong. They did not use any qualifying language about this being a “possible” counterfeit. That’s why there was a lawsuit and a jury verdict. Because the language was not qualified the way Frank wrote it. Hopefully Frank will fix this before his new version of the story becomes an urban legend.

2. Next up: When the incident happened, Ms. Cantrell “shook her head no and walked out of the store” in response to Target’s query of whether or not she had any other way to pay for the merchandise — as described in Target’s own brief to the court. But Frank says she “fled.” That’s right. Instead of an angry or anguished person simply walking away without the goods they came for after indicating they had no other funds to pay with, he claims she “fled” the scene. Now that’s just wrong (defamatory?).

Hopefully Frank will fix this too before his new version of the story becomes an urban legend. (I’m not being snarky, by the way. We all make errors and he has fixed his in the past.)

3. Next up, the Frank headline refers to a $200 bill and says that is no reason for a big award. Apparently, mental anguish and humiliation are not compensable under Frank’s view. We know this because he calls her experience merely an “inconvenience'” though there is no evidence in Frank’s piece to suggest he actually heard any of the testimony of what she went through. And when I challenged him in the comments to his post, he responded by writing that “the plaintiff suffered no actual injury.” Obviously the people who actually heard the evidence feel otherwise. When people who haven’t heard the evidence make such comments about those who have, it would be appropriate to immediately question the objectivity of that critic and question how their political leanings have affected their view of the facts.

If is fine, of course, for Frank to have a strong opinion and political leanings and write about them — only a fool would question his rights to criticize — but that should not lead to changing the facts of a case.

Frank brings up medical costs and their relationship to injuries in order to minimize Ms. Cantrell’s experience, and it is true that sometimes medical costs have a relationship to the seriousness of an injury. But not always. While a high bill usually means a pretty serious injury, a low bill does not necessarily mean a small injury. Psychological injuries are a perfect example of something that can torment an individual but have very low (or non-existent) medical bills. Another example is ongoing back pain that may be almost crippling to an individual but have no viable medical treatment. Looking at medical bills in a defamation action, and pretending it will have some bearing on the injury, is almost bizarre.

There are plenty of frivolous claims around to keep law bloggers busy if they want to write about them. With a nation of 300 million people this will happen. I write about them from time to time, as do others, because there are lessons to be learned in doing so. But there is no evidence this suit falls into that category. So long as one sticks to the actual facts.

Last note: Will the damage awards be sustained on appeal? That’s hard to say, since I didn’t hear the testimony nor have I seen a full record of the trial. But the 30-1 ratio may well be sustainable in general for a personal injury case. My analysis on why this is so is based on decisions and argument from the US Supreme Court here: Philip Morris Punitive Damages Decision — Why It Was Good For Plaintiffs


March 26th, 2008

Punitive Damages: Why America is Different than Europe

In the New York Times, Adam Liptak writes that in Europe punitive damages are not viewed the same way they are here (see: Foreign Courts Wary of U.S. Punitive Damages). The idea of punitive damages “was so offensive to Italian notions of justice that it would not enforce [an] Alabama judgment” in a case Liptak uses to illustrate the point.

In the U.S., of course, punitive damages are a crucial part of our judicial system, where private litigants can punish others for reckless wrongdoing that causes injury. Not so elsewhere, where the idea of punishment and deterrence is strictly a government function. The essence of Liptak’s piece is this:

Most of the rest of the world views the idea of punitive damages with alarm. As the Italian court explained, private lawsuits brought by injured people should have only one goal — compensation for a loss. Allowing separate awards meant to punish the defendant, foreign courts say, is a terrible idea.

Punishments, they say, should be meted out only by the criminal justice system, with its elaborate due process protections and disinterested prosecutors.

Why the difference? I think it’s easy. America was founded from the time of the Revolution on limiting the power of government. The political tension between those that want larger government and those that want smaller is seen to this day, and will likely be seen so long as the republic exists. It is seen every time the issue of taxes is broached, for example, because larger government means more payments to government employees, and the money has to come from somewhere.

While I don’t profess to be a scholar of European governments, I think most would agree that they are significantly more interventionist in the private lives of the people than here. You see that in nations that restrict free speech or grant universal health care, as two examples. Our notions of freedom are not always the same as elsewhere.

Intervention means not only larger government with larger powers. It also means higher taxes to pay for it. So wrongdoing is handled by the government, which the people pay for.

While comparing tax rates is exceptionally difficult because of all the exemptions and complications, not to mention state and local tax issues, I see that the top rate in Italy is 43%. Our top rate is 35%. And Italy isn’t spending bazillions on two wars. A comparison of tax rate changes in the 80s and 90s can be seen in this government report (chart on p. 17). We are clearly at the low end of industrialized nations, despite our significantly higher military expenditures.

So we could, in theory, create criminal penalties to take the place of civil wrongs, and spend much more on criminal prosecutions of those wrongs as they do elsewhere. But we have to pay for that, and money has to come from somewhere if you care about fiscal responsibility.

Or we could let the private sector regulate itself by empowering people to bring the wrongdoers to court themselves, and let the private sector handle the costs. And the public, instead of paying, receives not only the benefits of stopping reckless conduct, but the financial benefits by taxing the punitive damage award.

Now here is the irony in this: Those that want to kill off punitive damages in the U.S. come from the right side of the political spectrum. But in doing so, they are not advocating changes in laws to criminalize civil wrongs and increase taxes to pay for enforcement.

It seems to me that a little ideological consistency is in order, because all I see when arguments pop up for eliminating punitive damages, is hypocrisy.

Your thoughts on the subject are welcome in the comments….