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Court Upholds Two Tort-Reform Statutes

2006-1212. Arbino v. Johnson & Johnson, Slip Opinion No. 2007- Ohio -6948.
On Order from the United States District Court for the Northern District of Ohio, Western Division, Certifying Questions of State Law, No. 3:06 CV 40010. Certified questions answered. See opinion.
Moyer, C.J., and Lundberg Stratton, O'Connor, and Lanzinger, JJ., concur.
Cupp, J., concurs separately.
O'Donnell, J., dissents in part.
Pfeifer, J., dissents.
Opinion: http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2007/2007-Ohio-6948.pdf

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(Dec. 27, 2007) The Supreme Court of Ohio held today that two recent “tort reform” measures enacted by the General Assembly do not violate the constitutional rights of plaintiffs in personal injury lawsuits.

In a 5-2 decision authored by Chief Justice Thomas J. Moyer, the Court ruled that legislation capping the amount of noneconomic damages that may be awarded to personal injury plaintiffs and placing limits on the amount of punitive damages that may be awarded in Ohio tort actions does not violate the constitutional rights of injured parties to trial by jury, to a remedy at law for their injuries, or to due process and equal protection of the laws. The Court also held that the challenged statutes do not violate provisions of the Ohio Constitution that guarantee open courts and the separation of powers between the legislative and judicial branches of government.

The case involved multiple constitutional challenges to S.B. 80, legislation enacted by the General Assembly in 2004 which took effect in April 2005. One of the challenged provisions, R.C. 2315.18, limits the amount of “noneconomic” damages (damages for intangible injuries such as pain and suffering, loss of consortium, disfigurement, mental anguish, etc.) that may be awarded to a plaintiff in a personal injury suit to the greater of $250,000 or three times the amount of “economic damages” awarded to the same plaintiff based on the same injuries, up to an absolute maximum of $350,000. The bill makes an exception to those limits for plaintiffs who suffer permanent disability or the loss of a limb or bodily organ system. Another challenged provision in the bill, R.C. 2315.21, prohibits Ohio courts from awarding a plaintiff punitive damages that exceed two times the amount of his or her compensatory damages from the same defendant.

In this case, an Ohio woman, Melisa Arbino, filed a product liability lawsuit against the Johnson & Johnson Pharmaceutical Co. in federal district court to recover damages for a series of blood clots and other continuing medical problems Arbino suffered in 2005 after using a hormonal birth control product known as the Ortho Evra Birth Control Patch. During pretrial proceedings in federal district court, Arbino filed a motion for summary judgment asking the court to declare that provisions of S.B. 80 imposing caps on the potential amounts of noneconomic and punitive damages she could recover from Johnson & Johnson were unconstitutional and therefore unenforceable. While that motion was pending, Arbino's case was consolidated with those of dozens of other plaintiffs asserting claims against Johnson & Johnson based on medical problems allegedly caused by the Evra birth control patch.

The U.S. District Court for the Northern District of Ohio postponed its consideration of Arbino's summary judgment motion and submitted four “certified questions of state law” to the Supreme Court of Ohio. The Justices agreed to answer three of the certified questions, which asked whether specific Revised Code sections adopted or amended as part of S.B. 80 are unconstitutional because they violate plaintiffs' constitutional rights.

In today's decision, the Supreme Court upheld two of the three challenged statutes. The Court declined to rule on the third, dealing with the admissibility of evidence about a plaintiff's recovery from “collateral sources,” on the ground that Arbino did not have legal standing to challenge that provision.

Writing for the majority, Chief Justice Moyer observed that over the past three decades the legislature has repeatedly passed bills attempting to rein in what it perceived to be arbitrary and unpredictable damage awards in personal injury lawsuits because it believed such awards were a threat to the state's economic health. In each prior instance, he noted, the legislature's enactments were ultimately overturned by the Supreme Court based on findings that certain provisions in those bills violated constitutional rights of injured parties. Noting that Arbino cited those prior cases as precedent, the Chief Justice wrote, “Arbino argues that the portions of S.B. 80 at issue here are functionally identical to the statutes this court held to be unconstitutional in those (earlier) cases. She alleges that the principle of stare decisis (to stand by prior rulings) therefore requires us to declare the statutes here unconstitutional as well. We disagree.”

Quoting from the Court's 1989 ruling in Rocky River v. State Employment Relations Bd., Moyer wrote: “While stare decisis applies to the rulings rendered in regard to specific statutes, it is limited to circumstances ‘where the facts of a subsequent case are substantially the same as a former case.' We will not apply stare decisis to strike down legislation enacted by the General Assembly merely because it is similar to previous enactments that we have deemed unconstitutional. To be covered by the blanket of stare decisis , the legislation must be phrased in language that is substantially the same as that which we have previously invalidated. A careful review of the statutes at issue here reveals that they are more than a rehashing of unconstitutional statutes. In its continued pursuit of reform, the General Assembly has made progress in tailoring its legislation to address the constitutional defects identified by the various majorities of this court. The statutes before us here are sufficiently different from the previous enactments so as to avoid the blanket application of stare decisis and to warrant a fresh review of their individual merits.”

Reviewing R.C. 2315.18, which caps noneconomic damages, the Chief Justice observed that in enacting the statute as part of S.B. 80, the legislature remedied constitutional flaws found in earlier tort reform bills by exempting from the caps any plaintiff who has suffered “[p]ermanent and substantial physical deformity, loss of use of a limb, or loss of a bodily organ system,” or “[p]ermanent physical functional injury that permanently prevents the injured person from being able to independently care for self and perform life-sustaining activities.” Similarly, he noted that R.C. 2315.21, the portion of the bill limiting punitive damages, was drafted to avoid a constitutional flaw identified by the Court in a previous bill by leaving the determination of punitive damages in the hands of jurors, rather than transferring that power to trial judges.

In addressing whether the challenged statutes violate a plaintiff's constitutional right to trial by jury by limiting the amount of jury-determined damages a court may actually award to a successful plaintiff, Chief Justice Moyer cited Ohio laws that authorize courts to triple the actual damages awarded by a jury in cases involving violations of the Consumer Sales Practices Act, public utility regulations and the state's corrupt activities statute, among others.

“In each of these statutes, the General Assembly demonstrated a clear policy choice to modify the amount of jury awards. We have never held that the legislative choice to increase a jury award as a matter of law infringes upon the right to a trial by jury; the corresponding decrease as a matter of law cannot logically violate that right,” wrote Chief Justice Moyer. “So it must be with R.C. 2315.18. By limiting noneconomic damages for all but the most serious injuries, the General Assembly made a policy choice that noneconomic damages exceeding set amounts are not in the best interest of the citizens of Ohio . The statute is distinguishable from those allowing courts to substitute their own findings of fact on collateral benefits or requiring repayment plans that ‘further reduce the jury's award of damages already once reduced to present value.' ... Courts must simply apply the limits as a matter of law to the facts found by the jury; they do not alter the findings of facts themselves, thus avoiding constitutional conflicts.”

In rejecting Arbino's arguments that the challenged statutes violated her constitutional rights to due process and equal protection of the laws, Chief Justice Moyer noted that during legislative debate on S.B. 80, the General Assembly cited a number of reports and studies “demonstrating that uncertainty related to the existing civil litigation system and rising costs associated with it were harming the economy. It noted that noneconomic damages are inherently subjective and thus easily tainted by irrelevant considerations. The implicit, logical conclusion is that the uncertain and subjective system of evaluating noneconomic damages was contributing to the deleterious economic effects of the tort system.”

While taking note of Arbino's criticisms of the data and sources relied upon by the legislature, Moyer wrote that in urging the Court to find that the General Assembly did not have a “rational basis” for imposing limits on noneconomic and punitive damages “(Arbino) asks us to evaluate the information relied upon by the General Assembly and come to our own conclusions as to whether R.C. 2315.18 was warranted. Such an intensive reexamination is beyond the scope of our review. Although couched in an equal protection context, we noted in State v. Williams (2000) that ‘we are to grant substantial deference to the predictive judgment of the General Assembly' under a rational-basis review. Further, as the United States Supreme Court has stated, ‘it is not the function of the courts to substitute their evaluation of legislative facts for that of the legislature.' ... Finding that the General Assembly's review of the evidence yielded a statute that bears a real and substantial relation to the general welfare of the public, we need not cross-check its findings to ensure that we would agree with its conclusions.”

The Chief Justice acknowledged that tort reform has been and remains “a contentious issue across the country,” and that some states have affirmed the constitutionality of damage limits similar to those imposed by S.B. 80 while others have found such limits unconstitutional. While the limits set forth in the challenged Ohio statutes “may or may not be the best way to address the perceived problems in the civil justice system,” he wrote: “(T)he General Assembly is charged with making the difficult policy decisions on such issues and codifying them into law. This court is not the forum to second-guess such legislative choices; we must simply determine whether they comply with the Constitution. In that function, we cannot say that the General Assembly's action lacked all rational relation to the legitimate state interest of improving the state's civil justice system and its economy. The limitations were aimed at reducing the uncertainty associated with the existing tort system and the negative consequences resulting from it. The distinctions the legislature drew in refusing to limit certain injuries were rational and based on the conclusion that catastrophic injuries offer more concrete evidence of noneconomic damages and thus calculation of those damages poses a lesser risk of being tainted by improper external considerations. Such reasoning withstands scrutiny under the rational-basis test.”

The majority opinion was joined by Justices Evelyn Lundberg Stratton, Maureen O'Connor and Judith Ann Lanzinger. Justice Robert R. Cupp entered a separate concurring opinion. Justices Paul E. Pfeifer and Terrence O'Donnell entered separate dissents.

In his concurring opinion, which was joined by Justices Stratton, O'Connor and Lanzinger, Justice Cupp agreed with the majority's holdings on each of the constitutional issues raised by Arbino. He wrote separately, however, to clarify his view that, historically, the right to have a jury set the amount of damages in civil cases has not been based on a perceived need to restrict the policy-making prerogatives of the legislative branch over tort lawsuits, but instead has evolved as a means to protect litigants against the favoritism or bias of corrupt judges. “It is long-settled constitutional law that it is within the power of the legislature to alter, revise, modify, or abolish the common law as it may determine necessary or advisable for the common good,” wrote Justice Cupp. “The power to alter or abolish a common-law cause of action necessarily includes the power to modify any associated remedy. It would be illogical that, while the right to trial by jury does not prevent the legislature from altering or abolishing a cause of action, it nevertheless prevents the legislature from defining by statute the remedies available for a cause of action.”

Justice Pfeifer entered an extensive dissent in which he rejected the majority's holdings on each of the constitutional issues raised by Arbino. He suggested that, rather than exercising “judicial restraint” in affirming the legislature's authority to impose caps on civil damages awarded by juries, the majority decision abandons constitutional principles that the Court has defended in many prior decisions, including those rejecting prior tort reform statutes.

“The majority ... states that R.C. 2315.18 is nothing more than a policy choice by the General Assembly. A jury award for noneconomic damages in excess of the limit imposed by R.C. 2315.18 will be reduced automatically by the judge as a matter of law. According to the majority opinion, that reduction does “not alter the findings of facts themselves.” The members of the majority profess to believe that because the findings of fact are ignored, not changed, the requirements of the Constitution have been observed,” wrote Justice Pfeifer. “In Galayda v. Lake Hosp. Sys., Inc . (1994), we stated that the right to trial by jury includes ‘the right to have a jury determine all questions of fact, including the amount of damages to which the plaintiff is entitled.' ... Ignoring factual findings is the equivalent of changing them. Ignoring factual findings is the equivalent of rendering those findings impotent. ... However you characterize it, a statute that authorizes a judge to ignore or change factual findings (made by a jury) deprives litigants ‘of the benefits of Trial by Jury' and must be declared unconstitutional.”

“If a damages cap of $250,000 is constitutional,” Justice Pfeifer wrote, “why can't the General Assembly limit damages for claims they do not favor to $100,000? Or $1,000? Or $10? Under this court's reasoning, there is nothing in the Ohio Constitution to restrain the General Assembly from limiting noneconomic damages to $1. In essence, the power to cap noneconomic damages is the power to eliminate them. But the General Assembly does not have this power; only the people by the amendment process have this power. After today, what meaning is left in a litigant's constitutional right to have a jury determine damages?”

Justice O'Donnell also dissented from the majority's approval of the statutory cap on noneconomic damages and expressed his view that R.C. 2315.18 violates the constitutional right of litigants to have all issues of fact, including the amount of damages, determined by a jury.

Citing the Supreme Court's 1994 decision in Sorrell v. Thevenir, Justice O'Donnell wrote that “the statute requires the trial court to disregard the jury's findings of noneconomic damages in excess of the statutory limit and to enter judgment pursuant to the legislatively imposed maximum dollar amount. Thus, R.C. 2315.18 renders fact-finding with respect to noneconomic damage in excess of the statutory limit a meaningless exercise. In this regard, R.C. 2315.18 operates no differently than the statute that this court held unconstitutional in Sorrell because it authorized trial courts to ‘enter judgments in disregard of the jury's verdict and thus violate the plaintiff's right to have all facts determined by the jury, including damages.'” In addition, Justice O'Donnell pointed out that “while it may be argued that the General Assembly may abolish a common law cause of action in its entirety without violating due process or equal protection, such reasoning does not imply that the legislature may establish by statute the maximum amount a litigant may recover where the Constitution provides that a litigant has the right to have a jury make that determination.”

Moreover, in response to the position taken by Justice Cupp, Justice O'Donnell wrote that “the historical basis for preventing legislative intrusion on a party's right to a jury trial exists in the language of Section 5, Article I of the Ohio Constitution, adopted in 1802: ‘The right of trial by jury shall be inviolate.'” He also cited the Supreme Court's decisions in Work v. State (1853), which traced the history of the right to a trial by jury to the feudal system and stated that the court had a “duty to meet and arrest, at the outset, what we cannot but regard as an infringement of a great constitutional right,” and in Gibbs v. Girard (1913), which emphasized that “The right of a trial by jury, being guaranteed to all our citizens by the constitution of the state, cannot be invaded or violated by either legislative act or judicial order or decree.” Thus, Justice O'Donnell reasoned, the fact that the right to trial by jury arose in response to perceived overreaching by the judiciary “does not suggest that any other branch of government may overreach and interfere with the right to a jury trial,” and he concluded that “R.C. 2315.18, which substitutes the judgment of the General Assembly for that of a jury, violates Section 5, Article I of the Ohio Constitution.”

Janet G. Abaray, 513.852.5600, for Melisa Arbino.

Irene Keyse-Walker, 216.592.5000, for Johnson & Johnson Pharmaceutical Co.

Stephen P. Carney, 614.466.8980, for the State of Ohio.