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Supreme Court lowers burden for punitive damages

Walsh

“This court will not insert the phrase ‘intent to cause injury’ into the statute. To do so here would alter the focus of the statute and jettison the legislative intent.”

Hon. Ann Walsh Bradley
Wisconsin Supreme Court

In two cases decided March 18, the Wisconsin Supreme Court set forth standards for when punitive damages may be awarded pursuant to sec. 895.85(3)

The court held that a person acts in an intentional disregard of the rights of the plaintiff, and damages can be awarded, if the person acts with a purpose to disregard the plaintiff’s rights, or is aware that his or her acts are substantially certain to result in the plaintiff’s rights being disregarded.

In the first case, the court upheld an award of punitive damages arising from a drunk driving accident, and in the second, the punitive damages awarded to ironworkers killed during the collapse of the crane during construction of Miller Park in Milwaukee, reversing the decision, and lowering the standard set forth, by the court of appeals in Wischer v. Mitsubishi Heavy Industries America, Inc., 2003 WI App 202, 267 Wis.2d 638, 673 N.W2d 303.

Strenke v. Hogner

In the first case, LeRoy Strenke was traveling northbound near Cumberland, Wisconsin. Levi Hogner was traveling southbound on the same road. As Strenke approached an intersection, Hogner’s vehicle turned left into the path of Strenke’s car, injuring him.

Hogner’s blood alcohol content was .269%, the result of drinking 16 to 18 beers over a five-hour period, and the incident led to his fifth drunk driving conviction.

Strenke sued Hogner for negligence, seeking compensatory and punitive damages. Liability was stipulated, and the trial on punitive and compensatory damages was bifurcated. The jury awarded $2,000 in compensatory damages, and $225,000 in punitive damages, $200,000 more than Strenke requested in closing arguments.

Hogner appealed, and the court of appeals certified the case to the Supreme Court. The court accepted the case, and affirmed in a decision by Justice Ann Walsh Bradley. Justice Jon P. Wilcox wrote a concurring opinion, and Justice David Prosser did not participate because of his substantial role in enacting the statute when he was in the state legislature.

However, the court was equally divided on whether the punitive damages were excessive, and remanded the case to the court of appeals to decide the issue.

What the court held

Case: Strenke v. Hogner, No. 03-2527; Wischer v. Mitsubishi Heavy Industries America, Inc., Nos. 01-0724, 01-1031 & 01-2486.

Issues: What proof is required for a plaintiff to recover punitive damages under the phrase "in an intentional disregard of the rights of the plaintiff" as provided in sec. 895.85(3)?

Holding: A person acts in an intentional disregard of the rights of the plaintiff if the person acts with a purpose to disregard the plaintiff’s rights, or is aware that his or her acts are substantially certain to result in the plaintiff’s rights being disregarded.

Counsel: For Patricia Wischer, Marjorie DeGrave and Ramona Dulde-Starr there were briefs by Robert L. Habush, Daniel A. Rottier, Mark S. Young, Virginia M. Antoine and Habush Habush & Rottier, S.C., Milwaukee, and David P. Lowe and Jacquart & Lowe, S.C., Milwaukee, and oral argument by Robert L. Habush. For Mitsubishi Heavy Industries America, Inc., there were briefs by Ralph A. Weber, Amelia L. McCarthy and Gass Weber Mullins, LLC, Milwaukee; John W. Bell, Kevin G. Owens and Johnson & Bell, Ltd., Chicago, IL; and Colleen D. Ball and Appellate Counsel, S.C., Wauwatosa, and oral argument by Ralph A. Weber. For The Travelers Indemnity Company of Illinois, there were briefs by Brady C. Williamson, Katherine Stadler, Jennifer L. Peterson and LaFollette Godfrey & Kahn, Madison, and oral argument by Brady C. Williamson. For Federal Insurance Company, Inc., there was a brief by John A. Busch, Christopher C. Mohrman, Timothy M. Hansen, and Michael Best & Friedrich, LLP, Milwaukee and Edward B. Ruff III, Michael Clarke and Pretzel & Stouffer, Chartered, Chicago, IL, and oral argument by John A. Busch. For Tokio Marine & Fire Insurance Company, there was a brief by Jeffrey S. Fertl and Hinshaw & Culberton LLP, Milwaukee.

Wischer v. Mitsubishi

In the second case, three ironworkers were killed during construction of Miller Park, when the crane collapsed in heavy winds. Their widows sued Mitsubishi Heavy Industries America, Inc. (MHIA), and others involved in the construction. At the conclusion of the trial, the jury found that MHIA acted "in an intentional disregard of the rights of the plaintiffs" and awarded punitive damages of $94 million.

A divided court of appeals reversed the award, holding that punitive damages can only be awarded when the defendant intends to cause injury to the plaintiff or knows that his conduct is practically certain to cause the accident or injury to the plaintiff.

The Supreme Court reversed, in a decision by Chief Justice Shirley S. Abrahamson, holding that the evidence was sufficient to submit the punitive damages question to the jury. Justices N. Patrick Crooks and Patience D. Roggensack wrote concurring opinions, and Justice Wilcox dissented. Justice Prosser again did not participate.

The court remanded this case to the court of appeals also, to decide unresolved issues.

Burden of Proo
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The court used the Strenke case to review the standard required for an award of punitive damages.

Section 895.85 provides: "The plaintiff may receive punitive damages if evidence is submitted showing that the defendant acted maliciously toward the plaintiff or in an intentional disregard of the rights of the plaintiff."

Prior to enactment of the statute, common law provided for punitive damages if the defendant acted "either maliciously or in wanton, willful and in reckless disregard of the plaintiff’s rights." The court noted that the major difference is replacement of the common law language, "wanton, willful and reckless," with the term, "intentional."

Rejecting the court of appeals’ interpretation in Wischer, the court wrote, "If the legislature had intended to specify an ‘intent to injure’ requirement, it could have easily done so. Indeed, there was another statute enacted in the same legislative session in which Wis. Stat. sec. 895.85(3) was enacted that demonstrates this point.

Wisconsin Stat. sec. 895.525(4m) was created by 1995 Wis. Act 447 and allows liability of contact sports participants only ‘if the participant who caused the injury acted recklessly or with intent to cause injury.’ There is no comparable language in Wis. Stat. sec. 895.85(3). The words ‘intent to cause injury’ appear nowhere in the text. Rather, the object of the intent as set forth in the text is the ‘disregard of the rights of the plaintiff.’ This court will not insert the phrase ‘intent to cause injury’ into the statute. To do so here would alter the focus of the statute and jettison the legislative intent."

Turning to legislative history, the court acknowledged that the undisputed intent of the legislature was to make it harder to recover punitive damages.

Asking, "how much harder did the legislature make it?" the court answered, "there is no indication that the legislature intended to alter the focus of punitive damages from the nature of the wrongdoer’s conduct to the likelihood of an injury and requiring a certain probability of injury. Such a dramatic change would have to be clearly expressed in the language of the statute. As there is no clear, unambiguous, and peremptory language in Wis. Stat. sec. 895.85(3), this court cannot impute such intent (cites omitted)."

The court added, "Admittedly, part of the problem with interpreting the legislature’s change stems from the fact that the words, ‘intentional’ and ‘disregard’ do not easily combine. Still, we are not persuaded by the interpretation of the Wischer court, which inserted words into the statute. Accordingly, we overrule that decision here. We instead conclude that the legislature intended to require an increased level of consciousness and deliberateness at which the defendant must disregard the plaintiff’s rights in order to be subject to punitive damages."

Lacking a definition of "intentional" in the statutes, the court looked to other sources, and concluded, "a result or consequence is intentional if the person acts with a purpose to cause the result or consequence or is aware that the result or consequence is substantially certain to occur from the person’s conduct. The result or consequence here is the disregard of rights. Applying this definition to Wis. Stat. Sec. 895.85(3), we conclude that the statute’s requirement that the defendant act ‘in an intentional disregard of the rights of the plaintiff’ necessitates that the defendant act with a purpose to disregard the plaintiff’s rights or be aware that his or her conduct is substantially certain to result in the plaintiff’s rights being disregarded."

The court explained that, under this "heightened standard," some cases that previously supported punitive damages under common law no longer will, and that circuit courts must serve as "gatekeepers" before sending a question on punitive damages to the jury.

The court added that punitive damages are not recoverable for mere negligence, and that not every drunk driving case will give rise to punitive damages, but, "Only when the conduct is so aggravated that it meets the elevated standard of an ‘intentional disregard of rights’ should a circuit court send the issue to a jury."

After concluding that a defendant’s conduct need not have been directed at the specific plaintiff seeking punitive damages, and rejecting the holding in Boomsma v. Star Transport, Inc., 202 F.Supp.2d 869 (E.D.Wis.2002), to the contrary, the court turned to the facts in the case at bar, and upheld the submission of the punitive damage question to the jury.

The court noted that the court of appeals has previously upheld punitive damages in a drunk driving case, Lievrouw v. Roth, 157 Wis.2d 332, 345-346, 459 N.W.2d 850 (Ct.App.1990), under the common law standard, observing, "Drunk driving is a terrible scourge," and "Intentionally driving while alcohol-impaired is the type of outrageous conduct that punitive damages should punish and can deter."

While the court acknowledged that sec. 895.83(3) heightened the standard of conduct for punitive damages, the court found Hogner was aware his conduct was substantially certain to cause a disregard of Strenke’s rights, citing several factors.

The court wrote, "First, Hogner’s acts of drinking 16 to 18 twelve-ounce containers of beer and then driving while intoxicated were deliberate. As noted by the circuit court, ‘nobody was holding him down and pouring these [drinks] down his throat involuntarily …’ Similarly, there is no evidence in the record that anybody made Hogner get behind the wheel of his car that night.

"Second, Hogner’s act of drinking and driving disregarded Strenke’s right to safety in using the highway with other motorists in sober command of their vehicles.

While Hogner may not have targeted Strenke personally, his intentional disregard of the rights of all motorists on the road necessarily implicated Strenke’s rights. The fact that his blood alcohol content was tested to be .269% confirms this.

"Third, Hogner’s conduct was sufficiently aggravated to warrant punishment by punitive damages. Here, Hogner admitted that he had four prior convictions for driving while intoxicated. He further acknowledged that he consumed 16 to 18 twelve-ounce containers of beer within a five-hour span on the night of the accident."

Accordingly, the court affirmed.

The Concurrence

Justice Wilcox wrote separately, agreeing that punitive damages were properly awarded in this case, but disagreeing with the majority’s analysis of sec. 895.85(3).

Wilcox concluded that the statute requires the defendant intend to harm the plaintiff.

Wilcox concluded, "the majority’s analysis of Wis. Stat. sec. 895.85(3) ignores accepted canons of statutory construction, misconstrues our common law relating to punitive damages, and adopts an interpretation of sec. 895.85(3) that is virtually identical to, if not lower than, the common-law standard for punitive damages. In doing so, the majority turns on its head what the legislature clearly intended as a heightened standard governing the recovery of punitive damages."

Reviewing the common law prior to the statute, Wilcox noted, "We utilized the phrase ‘disregard of rights’ rather than ‘disregard of safety’ when referring to the type of conduct sufficient to give rise to punitive damages generally because punitive damages were not restricted to cases involving physical injury. However, in each case, our analysis focused on the defendant’s awareness of the likelihood of some type of harm, rather than the likelihood of a violation of the plaintiff’s rights in the abstract."

Wilcox concluded, "Therefore, there was no need for the legislature to specify ‘injury’ or ‘harm’ when it enacted sec. 895.85(3), because under the common law, it was understood that ‘disregard of the plaintiff’s rights’ referred to the harm caused by the defendant’s conduct in each particular case."

Wilcox quoted the court of appeals’ decision with approval, arguing that the standard adopted by the majority lowers, rather than raises the standard for punitive damages: "[A]nyone who is negligent could be considered to be intentionally disregarding the rights of someone. Examples are numerous: someone who is drinking a cup of coffee while driving, or eating while driving, or adjusting the radio while driving, or even driving over the speed limit. In each of these examples, an injured plaintiff could argue that the tortfeasor driver intentionally disregarded the rights of the other drivers on the road, and thus justify a punitive damage award."

After asserting that the defendant’s conduct must also be directed at the party seeking punitive damages, Wilcox turned to the facts of the case, and on this point, agreed that punitive damages were properly awarded, even under a standard heightened by sec. 895.85(3).

Miller Park

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Case Analysis

Applying the standard adopted in the Strenke’s case to the Miller Park case, the majority also found punitive damages were properly awarded.

The court concluded, "the jury could have concluded that MHIA was aware that its conduct was substantially certain to result in the plaintiffs’ rights being disregarded. The jury could have reached this conclusion by believing that MHIA’s course of conduct was deliberate in failing to follow the load chart, in failing to adhere to common practices used with other lifts at other sites, and in failing to calculate the maximum safe wind speed for a crane 45 stories high that was lifting, on a windy afternoon, a mass with a large surface area that weighed almost a million pounds."

Justice Crooks wrote separately, concluding that the court should address the constitutionality of the amount of the award.

Justice Roggensack also concurred, but disagreed with the majority’s rationale. Roggensack wrote, "The majority opinion focuses largely on the conduct of Grotlisch and on expert testimony showing that wind-load calculations should have been done, but were not. In doing so, it fails to show that MHIA had the requisite awareness of the wind speed at the time of the lift, which fact is necessary in order to prove the intentional state of mind required by Wis. Stat. sec. 895.85(3)."

Roggensack concluded, "Awareness of the wind speeds at the time of the lift is necessary to establish that conducting the lift under wind conditions then in existence was an intentional disregard of Wischer’s rights, rather than a reckless disregard of those rights."

Wilcox dissented, finding that, under the standard put forth in his concurrence in Strenke, the defendant’s conduct is, at most, a reckless disregard of the plaintiffs’ rights, and thus, no longer sufficient to support an award of punitive damages.

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David Ziemer can be reached by email.

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