Supreme
Court lowers burden
for punitive damages
By
David Ziemer
Wisconsin Law Journal
March
23, 2005
 |
| “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 Proof
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
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.
Click
here for Case Analysis.
David
Ziemer can be reached by email.
