Given that the proper ratio to consider, of punitive to compensatory damages, is not actual damages, but potential damages, the award in this case is clearly not excessive on that basis. As the court noted, actual damages from a drunk driving accident could easily have been much greater than $2,000, and even been as much as the punitive damage award, in which case the ratio would have been only 1:1.
If we assume that damages could easily be $200,000, then awards in future cases could reach $1 million, without even nearing the suspect double-digit ratio, despite actual damages of only $2,000.
However, one of the court’s application of the five factors set forth in State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 419 (2003), is highly suspect: "whether the target was financially vulnerable."
In a drunk driving context, this is a factor that should always weigh against an award of punitive damages, because a drunk driver has no specific target. As such, he cannot ever be said to have targeted economically vulnerable individuals.
When this case was before the Supreme Court, one of the issues was whether punitive damages can be awarded even though the defendant did not target the particular plaintiff. The court held that damages were proper, notwithstanding the absence of a target. Strenke v. Hogner, 2005 WI 25, 279 Wis.2d 52, 694 N.W.2d 296, 306-307.
Nevertheless, the fact that there was no "target" at all, much less a financially vulnerable one, is a factor that should weigh against punitive damages, not for punitive damages, as the court found.
The court wrote, "While [Hogner’s conduct] did not intentionally target economically vulnerable individuals, given the current realities of insurance and medical coverage, it certainly had a strong likelihood of affecting such individuals."
There are two assumptions implicit in this statement: the drunk driver is underinsured; and the citizenry at large is underinsured.
The statement is particularly troubling, because Hogner had insurance, although the opinion does not state how much.
Where a defendant has no insurance, or is vastly underinsured, he is risking that the damage he causes will not be adequately covered. Arguably, this could be an aggravating factor supporting punitive damages.
But suppose the driver has liability insurance of $1 million, and an umbrella policy, on top of that. Such a driver cannot be considered to be targeting financially vulnerable individuals by his conduct, even if one accepts the court’s underlying assumption that the populace at large is underinsured.
By finding that this factor supports an award of punitive damages against Hogner, even though he had insurance to cover the compensatory damages, the court has taken a factor that should weigh against punitive damages in drunk driving cases in most (or at least some) cases, and turned it into one that will always weigh in favor of damages.
Attention should also be paid to the remittitur issue.
Arguably, the two issues are separate: a punitive damage award could be excessive, and thus should be remitted, even though it does not violate due process.
Were this the law, appellate courts should consider the nonconstitutional issue (remittitur) first, and the constitutional issue (due process) second. Appellate courts generally should not address constitutional issues, if the case can be resolved on statutory grounds. State v. Harris, 2004 WI 64, 272 Wis.2d 80, 680 N.W.2d 737, 745, fn. 6.
Here, however, the court considered the constitutional issue first, and avoided the remittitur issue altogether, by stating, "Hogner’s argument that the trial court erred by not remitting the award only restates his constitutional argument."
In this case, however, the court need not have considered the remittitur issue at all.
When this case was before the Supreme Court, the court wrote, "Although the certification of the court of appeals treats excessiveness and due process as separate inquiries, we view them as intertwined." Strenke, 694 N.W.2d at 299, fn. 4.
The statement could be interpreted two ways: (1) in the case at bar, the two issues are intertwined, but in other cases, they may not be; or (2) whenever a punitive damage award is constitutional, it is per se, not excessive.
The latter interpretation seems to be what the Supreme Court intended, but until the issue is squarely addressed, lower courts and attorneys should not entirely ignore the distinction between the two inquiries.
– David Ziemer
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David Ziemer can be reached by email.