• Ohio Supreme Court Limits Damages
  • December 21, 2009 | Author: Samuel G. Casolari
  • Law Firm: Marshall, Dennehey, Warner, Coleman & Goggin - Akron Office
  • In Arbino v. Johnson & Johnson, 116 Ohio St. 3d 468, 2007-Ohio-6948, the Ohio Supreme Court upheld the constitutionality of Ohio's most recent tort reform legislation. In Arbino, the Court held that the cap on non-economic damages and punitive damages did not violate the right to a jury trial, and other constitutional rights. As such, both of these caps, which became effective on April 7, 2005, are now part of the Ohio legal terrain and became important issues for the evaluation of claims and suits pending in the state and federal courts of Ohio.

    These caps are the most recent in a series of attempts over the past 30 years to impose legislatively-mandated tort reform. The past attempts failed to pass constitutional scrutiny for a variety of reasons relating to due process, equal protection, the right to a jury trial, and other constitutional concerns. In each case, the Ohio Supreme Court held that the legislative enactments were unconstitutional, despite the General Assembly's findings that the reform of the current justice system and tort law were important policy concerns in Ohio.

    In Arbino, the Court turned its attention to the two most recent caps on damages. The first cap considered the issue of non-economic damages. R.C. 2315. 18 provides that in certain tort actions, the court (in a bench trial) will enter findings of fact, or the jury (in a jury trial) will return a general verdict accompanied by answers to written interrogatories. In each case, either the findings of fact or the written interrogatories will specify the economic and non-economic damages separately. Afterward, the court must enter judgment for the plaintiff on the economic damages. With regard to the non-economic damages, the court must limit recovery to the greater of (1) $250,000 or (2) three times the economic damages up to a maximum of $350,000 or $500,000 per occurrence. These caps do not apply if the plaintiff suffered:

    • Permanent or substantial physical deformity;
    • Loss of use of a limb;
    • Loss of a bodily organ system; or
    • Permanent physical functional injury.

    In each instance, the limitation on damages are enforced after the deliberations of either the court or the jury.

    Of significance, the Court held that this limitation did not violate the right to a jury trial. This is so because the jury's fact-finding function was not limited. The Court held that:

    So long as the fact finding process is not intruded upon and the resulting findings of fact are not ignored or replaced by another body's findings, awards may not be altered as a matter of law. There is no dispute that the right to a trial by jury does not extend to determinations of question of law...Thus, without violating the constitution, a Court may apply the law to the facts determined by the jury (Emphasis added).

    The Court reasoned that the statute simply requires the trial court to apply limits as a matter of law after the jury completes its fact finding process. The jury is neither limited nor are its findings altered. Rather, the trial court simply enforces the applicable limits, much in the same way a court may issue orders of additur or remittitur, or impose treble damages in some cases.

    The Court also held that these limits did not prevent an injured person from seeking redress before a court because, even though certain damages are limited, the right to seek damages in some form is not altogether extinguished.

    In addition, the Court held that the limitations on non-economic compensatory damages was rationally and substantially related to the general welfare of the public. The Court noted the General Assembly's concern that the civil litigation system was seriously impacted by rising litigation costs and the inherent subjective uncertainty in assessing non-economic damages. The Court noted that:

    The implicit, logical conclusion is that the uncertain and subjective system of evaluating non-economic damages was contributing to the deleterious economic effects of the tort system.

    As with the fact that R.C. 2315.18 did not foreclose a remedy, the Court also noted that the statute was neither arbitrary nor unreasonable in that it left open limitless non-economic damages for catastrophic injuries.

    For similar reasons, the Court upheld the statute on both equal protection and separation of powers challenges in that R.C. 2315.18 was rationally related to a legitimate government function which did not legislatively usurp the role of the judiciary.

    The Court also considered the limitations on punitive damages found in R.C. 2315.21. The statute limits punitive damages in certain tort actions to a maximum of two times the total amount of compensatory damages awarded to a plaintiff against each defendant. The limitations do not apply if the defendant committed a felony in causing the injury and the defendant was convicted of or pleaded guilty to the felony.

    If the punitive damages limitations apply, the damages may be further limited if the defendant is a small employer or an individual. In that case, the punitive damages may not exceed:

    The lesser of two times the amount of the compensatory damages awarded to the plaintiff from the defendant on ten percent of the employer's or individual's net worth when the tort was committed, up to a maximum of $350,000.

    The Court, in upholding the punitive damages limits, noted that precedent, "...conclusively establishes that regulation of punitive damages is discretionary and that states may regulate and limit them as a matter of law without violating the right to a trial by jury."

    As with the limitation of non-economic compensatory damages, the Court found that the limits on punitive damages were really and substantially related to the General Assembly's interest in assuring the predictability of punitive awards and its interest in limiting the awards, both in terms of amount and to whom the limitation is especially applicable. The limits were neither arbitrary nor unreasonable and did not legislatively usurp the judicial power and authority to determine damages.

    Ohio now has constitutionally approved limits on punitive and non-economic compensatory damages. Surely, the courts will visit issues such as what is a "permanent" or "catastrophic" injury, or what constitutes a "bodily organ system." One would expect challenges to the limitation on punitive damages to the net worth of a small employer or person at the time of the tort. These are issues which will become litigated and can one day affect case evaluation.

    Claims professionals and defense lawyers will have to consider how to bring an item of injury into the proscribed limitations. For instance, are purely emotional or psychological injuries permanent or catastrophic? What is a bodily organ system? What will constitute loss of use? Each of these areas will involve litigation and even motion practice. However, it will become incumbent on defense counsel to assert the defenses of the damage limitation whenever and wherever possible and to conduct discovery in a manner so as to fall within the new statutory limits.