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Upon additional reflection, it seems likely that the recent Supreme Court decision concerning the constitutional pitfalls of punitive damages awards, Philip Morris USA v. Williams, 127 S.Ct. 1057 (2007), signals the end of class actions for punitive damages.

Even before Williams, the great bulk of recent precedent had concluded that aggregation of punitive damages was an unconstitutional violation of Due Process, mostly on the strength of State Farm Mutual Auto Insurance Co. v. Campbell, 538 U.S. 408, 416-417 (2003). See In re Simon II, 407 F.3d 125, 139 (2d Cir. 2005); Beck v. Boeing Co., 60 Fed. Appx. 38, 40 (9th Cir. 2003); Allison v. Citgo Petroleum Corp., 151 F.3d 402, 417-18 (5th Cir. 1998); Johnson v. Ford Motor Co., 113 P.3d 82, 94-95 (Cal. 2005) (rejecting “aggregate disgorgement”); Engle v. Liggett Group, Inc., 945 So.2d 1246, 1265 (Fla. 2006); In re Chevron Fire Cases, 2005 WL 1077516, at *14-15 (Cal. App. May 6, 2005) (unpublished); Colindres v. QuitFlex Manufacturing, 235 F.R.D. 347, 378 (S.D. Tex. 2006); O’Neal, v. Wackenhut Services, Inc., 2006 WL 1469348, at *22 (E.D. Tenn. May 25, 2006).

Of the two contrary cases, Dukes v. Wal-Mart, Inc., 474 F.3d 1214, 1239 (9th Cir. 2007), and In Re Tobacco Litigation, 624 S.E.2d 738, 741-42 (W. Va. 2005), the latter was highly preliminary – almost advisory – and will undoubtedly be subject to much additional jousting in the trial court, and the former was decided only a week or so before Williams, and is subject to reconsideration and/or further appeal.

Due Process limits both punitive damages procedures and the amounts of such awards. Williams, 127 S.Ct. at 1062. The Williams court was not concerned with substantive due process and limited itself to procedural aspects. The procedural ruling, however, was a doozy, an unequivocal holding that Due Process prohibits a defendant from being punished for harm to others. Id. at 1065 (“We did not previously hold explicitly that a jury may not punish for the harm caused others. But we do so hold now”).

That’s bad news for class action advocates, because representative litigation necessarily involves harm to others who are not individually present before the court. While Williams wasn’t itself a class action, it made pretty clear that it was discussing litigation where one plaintiff purported to “represent” others:

[T]he Constitution’s Due Process Clause forbids a State to use a punitive damages award to punish a defendant for injury that it inflicts upon nonparties or those whom they directly represent, i.e., injury that it inflicts upon those who are, essentially, strangers to the litigation.

127 S.Ct. at 1063 (emphasis added). Class actions are inherently “represent[ative]” litigation. Their only reason for existence is to adjudicate the claims of persons not formally before the court. If “strangers to the litigation” can’t recover punitives, that pretty well shuts down the logic of class actions in this area.

Further, class actions are often bifurcated (or worse) so that “individual” issues are tried separately. Not so with punitive damages after Williams. The Court held, “the Due Process Clause prohibits a State from punishing an individual without first providing that individual with an opportunity to present every available defense.” Id. (emphasis added). Thus Williams’ conception of Due Process gives defendants the right to “every available defense” before being held liable for punitive damages.

Not only that, but it’s crystal clear that Williams had in mind the sort of individualized defenses that class-action types usually try to hold until “phase II” – and hopefully never if a settlement can be extracted during (or before) a class trial. Williams specifically mentions inherently individualized defenses: that the absent “victim[s]. . .knew that smoking was dangerous or did not rely upon the defendant’s statements.” Id.

In general Williams holds that aggregate punitive awards (including those encompassing “nonparties” who are “directly represent[ed] by parties) are necessarily “standardless” and “speculative” in violation of Due Process:

To permit punishment for injuring a nonparty victim would add a near standardless dimension to the punitive damages equation. How many such victims are there? How seriously were they injured? Under what circumstances did injury occur?. . . The jury will be left to speculate. And the fundamental due process concerns to which our punitive damages cases refer – risks of arbitrariness, uncertainty, and lack of notice – will be magnified.

Id. (citations omitted). While a jury may hear evidence about harm to others it “may not go further. . .and use a punitive damages verdict to punish a defendant directly on account of harms it is alleged to have visited on nonparties”. Id. at 1064. Ask not for what the bell tolls, it tolls for punitive damages being assessed through “representative” litigation such as class actions. This is really good stuff. We’ll keep thinking about it.

A further implication of Williams is what does having “an opportunity to present every available defense,” id. at 1063, mean? A lot of things that were either matters of substantive law, or even evidentiary, are now presumptively constitutionalized (precisely the fear of Scalia, et al.). Even in a purely individual action, did the trial court’s arguable misinterpretation of the scope of a state-law defense, deprive the defendant of its “opportunity”? How about exclusion of evidence of the plaintiff’s assumption of the risk? It’s impossible to state any firm answers, but it’s safe to say that a great variety of otherwise mundane trial rulings now come tinged with a constitutional patina when they occur in a case in which the plaintiff is seeking punitive damages.

From now on, we’ll certainly be viewing anything in the trial of cases involving punitive damages context with an eye towards preserving constitutional objections that might not have previously existed. We recommend that other defense counsel do the same.