States win, juries lose in recent court term.

In a quartet of decisions this past term, the U.S. Supreme Court has sketched out a perspective on civil justice that is respectful of federalism and the preeminent role of the states in protecting citizen health and safety but hostile to the jury.

The one clear victory for consumers involved faulty medical devices. A majority of U.S. courts of appeal and several state supreme courts had found lawsuits brought by injured consumers against medical device manufacturers preempted by the 1976 Medical Device Amendments (MDA)(1) to the federal Food, Drug, and Cosmetic Act.(2)

In Medtronic, Inc. v. Lohr, the Supreme Court overturned these cases and ruled that most state products liability causes of action survive the MDA's preemption provision.(3) The Court unanimously held that negligent design claims could go forth. But it split, 5-4, with only a plurality rationale, in also allowing claims for negligent manufacture and faulty labeling.

The opinion by Justice John Paul Stevens held that Congress may only preempt an area of traditional state authority, such as health and safety, by enunciating a clear and manifest purpose to do so. Because the MDA was enacted as a consumer protection measure, upholding Medtronic's blanket preemption claim, the Court said, would have had "the perverse effect of granting complete immunity from design defect liability to an entire industry that, in the judgment of Congress, needed more stringent regulation in order 'to provide for the safety and effectiveness of medical devices intended for human use.'"(4)

Significantly, the plurality focused on the statute's preemptive language, barring state requirements "different from or in addition to" the federal requirement. Thus, common law liability actions that parallel or enforce the federal requirements were not preempted. Most important, the Court beat a retreat from the broad reading that most courts had accorded another Stevens preemption opinion, Cipollone v. Liggett Group, Inc.(5) In that case, the Court found that the Public Health Cigarette Smoking Act of 1969(6) preempted common law tort claims, even though the act had not expressed such a clear purpose.

The departure from the general understanding of Cipollone was surprising. In another of the Court's decisions earlier this term, BMW of North America, Inc. v. Gore, Stevens wrote the majority opinion.(7) It included a seemingly gratuitous footnote that equated damage awards with the kind of "requirements" that burden interstate commerce. This declaration appeared to signal that the result in Lohr would be unfavorable to plaintiffs.

Implausible Argument

Instead, Stevens found Medtronic's argument that "any common-law cause of action is a 'requirement,'" which his Gore footnote seemed to support, to be "not only unpersuasive" but "implausible." This apparent inconsistency may be explained by the vagaries of justices insisting on certain language to join an opinion. The champion of the Medtronic view has been Justice Sandra Day O'Connor, who supported the manufacturer on this point in her partial dissent and who may have requested the Gore footnote.

The Lohr Court was faced with only the federalism question and only in the context of a threat to health and safety. Lora Lohr's case involving a failed pacemaker never made it to a jury, so no accusations of jury overreaching were before the Court.

Several other cases, though, presented issues involving the role of the jury in the context of purely economic injury. In these instances, neither concepts of federalism nor the Seventh Amendment were sufficient to overcome public policy arguments, normally the weakest of constitutional assertions, to protect juror authority. In two separate cases, one pertaining to punitive damages and one involving compensatory awards, the Court found room for judicial review of jury verdicts, depriving the Seventh Amendment of much of its meaning.

Excessive Punitive Damages?

In Gore, a sharply divided Court found $2 million in punitive damages to be "grossly excessive," violating the Fourteenth Amendment's Due Process Clause, when BMW's fraudulent representations only effected a $4,000 loss in value to the consumer. Critical to the Court's decision was its belief that the conduct being punished was illicit only in Alabama. Therefore, the Court reasoned, the conduct was subject to a ceiling that would vindicate that state's interests without attempting to affect the interests of consumers in states where BMW's conduct supposedly met statutory requirements.

The Court drew a distinction between the "purely economic" harm at issue here and "indifference to or reckless disregard for the health and safety of others."(8) Justice Stephen Breyer's concurring opinion characterized misconduct resulting in purely economic harm as the lowest level of misrepresentation conceivable.(9) Greater punishment, the Court strongly suggested, would be merited when the tortious conduct threatened bodily well-being rather than simply one's pocketbook.

The Court set up three guidelines to be evaluated on a case-by-case basis to determine whether the Constitution was offended by a punitive award. These factors include the degree of reprehensibility of the misconduct, the disparity between the harm or potential harm suffered by the plaintiff and the punitive award, and the difference between the award and comparable penalties available in similar instances.

The Court's guidelines suggest that much of its concern can be cured by more precise jury instructions that reflect these factors. More crucially, the Court has opened the door to the introduction of evidence of similar corporate misconduct, even acts outside the state where a case is tried, and a litany of the awards and fines that have not, so far, set the corporate defendant on the path toward righteousness. Surely,a proper punitive damage award will surmount the sum of those awards.

Judges or Jury?

In Gasperini v. Center for Humanities, Inc., the Court gave lip service to the Seventh Amendment and federalism by rejecting the notion that a federal appeals court may substitute its judgment for that of a jury in determining the size of compensatory awards.(l0) The justices sent back a Second Circuit decision that suggested a $100,000 award was more appropriate than the $450,000 determined by a jury in a diversity case.

The case arose in New York when a group making a videotape lost a photographer's 300 slide transparencies. State law permitted appellate review; the Seventh Amendment forbids federal courts from reexamining facts tried by a jury.

The Court split the baby to resolve the dilemma. Federal trial judges rather than appellate judges, it said, retain authority to order a reduction of excessive damage awards or to order a new trial. The only role the Seventh Amendment leaves to the appellate bench is abuse-of-discretion review of the trial judge's determination. Still, the Court, following a Gore-like approach, instructed trial judges to consider whether the jury's verdict "deviates materially" from determinations in substantially similar cases.

The Court's attitude toward juries has cast the Seventh Amendment in the role of Hamlet, making it a constitutional prescription of legendary acclaim that never comes forth to smite its enemies. It was not always this way. The absence of a provision on the civil jury in the Constitution contributed mightily to the movement for a Bill of Rights.

Alexander Hamilton conceded that both friends and foes of the proposed Constitution agreed that, at least, the civil jury is "a valuable safeguard to liberty" and, at most, "the very palladium of free government."(11) The Court has, at least rhetorically, endorsed this view, calling the civil jury "a right so fundamental and sacred to the citizen" that it "should be jealously guarded by the courts."(l2)

Having paid due homage to the amendment, however, the Court has demonstrated great expertise in giving it limited scope. Alone among the guarantees of the Bill of Rights, it is denied incorporation into the Fourteenth Amendment's guarantees and frozen in time to the meaning it had in 1791.

The Court's attitude toward jurors was most apparent this term in a patent case, Markman v. Westview Instruments, Inc.(13) A unanimous Court decided that the meaning of "inventory" in a patent was an issue for the judge and not the jury.

Even though the Court could have declared that issues of construction are questions of law for the judge and not questions of fact for the jury, the Court chose to compare "the relative interpretive skills of judges and juries."(14) The justices determined that "construction of written instruments is one of those things that judges often do and are likely to do better than jurors unburdened by training in exegesis."(15)

Even though expert testimony might be needed to establish the meaning of a patent document, the Court found that jurors lacked the ability to conduct a "sophisticated analysis" of the evidence.(16) The Court also noted that its ruling would better meet the need for uniformity. Of course, if such a functional evaluation of jurors' abilities could trump plain constitutional language, it is difficult to imagine any jury function that could not be commandeered by the judiciary.

The Court's decision, based as it is on finding judges more capable than juries, subtly adopts the unsubstantiated rhetoric of "tort reform" that holds that juries have run amok. This ruling shows that despite substantial empirical evidence to the contrary, business interests have succeeded in effecting a broad doctrinal change in the courts to the detriment of plaintiffs, particularly consumers.(17)

The Court's rulings this term indicate that jury decisions, particularly when they do not involve health and safety issues, will receive considerable judicial scrutiny. Comparability with other verdicts will remain the important touchstone. The Court's decisions will result in substantial ancillary litigation over the size of jury verdicts that, no doubt, will lead to further review by the Supreme Court.

The best way to immunize a jury verdict from further reductions is to demonstrate its consistency with comparable verdicts and to emphasize the state's authority to resolve issues of health and safety--that is, until the Court revisits the issue and starts a new goose chase. The quicksand foundation erected this term may well swallow up the precedents of 1996, making them mere fodder for future controversies.

Notes

(1) Pub. L. No. 94-295,90 Stat. 539 (1976) (codified as amended in scattered sections of 21 U.S.C.).

(2) Ch. 675, 52 Stat. 1040 (1938) (codified as amended at 21 U.S.C. [SECTION]301-93 (1994)).

(3) No. 95-754 (June 26, 1996).

(4) Slip op. at 15 (citation omitted).

(5) 505 U.S. 504 (1992).

(6)Pub. L. No. 91-222, 84 Stat. 87 (1969) (codified as amended at 15 U.S.C. [SUBSECTIONS]1331-41 (1994)).

(7) 116 S. Ct. 1589 (1996).

(8) Slip op. at 16.

(9) Slip op. at 4 (Breyer, J., concurring).

(10) No. 95-719 (June 24,1996).

(11) THE FEDERALIST NO. 83, at 499 (Alexander Hamilton) (Clinton Rossiter ed., 1961).

(12) Jacob v. New York City, 315 U.S. 752, 752-53 (1942).

(13) 116 S. Ct. 1384 (1996).

(14) Id. at 1387.

(15) Id. at 1395.

(16) Id.

(17) See generally James A. Henderson Jr. & Theodore Eisenberg, The Quiet Revolution in Products Liability: An Empirical Study of Legal Change, 37 U.C.L.A. L. REV. 479 (1990).