Subject:  PACIFIC MUTUAL LIFE INSURANCE CO. v. HASLIP, Syllabus



 
    NOTE: Where it is feasible, a syllabus (headnote) will be released, as
is being done in connection with this case, at the time the opinion is
issued.  The syllabus constitutes no part of the opinion of the Court but
has been prepared by the Reporter of Decisions for the convenience of the
reader.  See United States v. Detroit Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES


Syllabus



PACIFIC MUTUAL LIFE INSURANCE CO. v.
HASLIP et al.


certiorari to the supreme court of alabama

No. 89-1279.  Argued October 3, 1990 -- Decided March 4, 1991

After respondents' health insurance lapsed when one Ruffin, an agent for
petitioner insurance company and another, unaffiliated insurance company,
misappropriated premiums issued by respondents' employer for payment to the
other insurer, respondents filed an action for damages in state court,
claiming fraud by Ruffin and seeking to hold petitioner liable on a
respondeat superior theory.  Following the trial court's charge instructing
the jury that it could award punitive damages if, inter alia, it determined
there was liability for fraud, the jury, among other things, returned a
verdict for respondent Haslip of over $1 million against petitioner and
Ruffin, which sum included a punitive damages award that was more than 4
times the amount of compensatory damages Haslip claimed.  The Supreme Court
of Alabama affirmed, specifically upholding the punitive damages award.

Held: The punitive damages award in this case did not violate the Due
Process Clause of the Fourteenth Amendment.  Pp. 5-20.

    (a) Holding petitioner responsible for Ruffin's acts did not violate
substantive due process.  The jury's finding that Ruffin was acting within
the scope of his apparent authority as an agent of petitioner when he
defrauded respondents was not disturbed by the State Supreme Court and is
amply supported by the record.  Moreover, Alabama's longstanding common-law
rule that an insurer is liable for both compensatory and punitive damages
for the intentional fraud of its agent effected within the scope of his
employment rationally advances the State's interest in minimizing fraud,
since that rule creates a strong financial incentive for vigilance by
insurers.  Thus, imposing liability on petitioner under the respondeat
superior doctrine is not fundamentally unfair.  Pp. 9-12.

    (b) Since every state and federal court considering the question has
ruled that the common-law method for assessing punitive damages does not in
itself violate due process, it cannot be said that that method is so
inherently unfair as to be per se unconstitutional.  The method was well
established before the Fourteenth Amendment was enacted, and nothing in the
Amendment's text or history indicates an intention to overturn it.  Pp.
12-15.

    (c) Nevertheless, unlimited jury or judicial discretion in the fixing
of punitive damages may invite extreme results that are unacceptable under
the Due Process Clause.  Although a mathmatical bright line cannot be drawn
between the constitutionally acceptable and the constitutionally
unacceptable that would fit every case, general concerns of reasonableness
and adequate guidance from the court when the case is tried to a jury
properly enter into the constitutional calculus.  P. 15.

    (d) The punitive damages assessed against petitioner, although large in
comparison to the compensatory damages claimed by Haslip, did not violate
due process, since the award did not lack objective criteria and was
subject to the full panoply of procedural protections.  First, the trial
court's instructions placed reasonable constraints on the exercise of the
jury's discretion by expressly describing punitive damages' purposes of
retribution and deterrence, by requiring the jury to consider the character
and degree of the particular wrong, and by explaining that the imposition
of punitive damages was not compulsory.  Second, the trial court conducted
a post-verdict hearing that conformed with Hammond v. City of Gadsden, 493
So. 2d 1374 (Ala.), which sets forth standards that ensure meaningful and
adequate review of punitive awards.  Third, petitioner received the benefit
of appropriate review by the State Supreme Court, which applied the Hammond
standards, approved the verdict thereunder, and brought to bear all
relevant factors recited in Green Oil Co. v. Hornsby, 539 So. 2d 218
(Ala.), for ensuring that punitive damages are reasonable.  Pp. 15-20.

553 So. 2d 537, affirmed.

Blackmun, J., delivered the opinion of the Court, in which Rehnquist, C.
J., and White, Marshall, and Stevens, JJ., joined.  Scalia, J., and
Kennedy, J., filed opinions concurring in the judgment.  O'Connor, J.,
filed a dissenting opinion.  Souter, J., took no part in the consideration
or decision of the case.

------------------------------------------------------------------------------




Subject: ', 89-1279 -- OPINION



PACIFIC MUTUAL LIFE INSURANCE CO. v. HASLIP

NOTICE: This opinion is subject to formal revision before publication in
the preliminary print of the United States Reports.  Readers are requested
to notify the Reporter of Decisions, Supreme Court of the United States,
Washington, D. C. 20543, of any typographical or other formal errors, in
order that corrections may be made before the preliminary print goes to
press.
SUPREME COURT OF THE UNITED STATES


No. 89-1279



PACIFIC MUTUAL LIFE INSURANCE COMPANY, PETITIONER v. CLEOPATRA HASLIP et
al.

on writ of certiorari to the supreme court of alabama

[March 4, 1991]



    Justice Blackmun delivered the opinion of the Court.
    This case is yet another that presents a challenge to a punitive
damages award.

I
    In 1981, Lemmie L. Ruffin, Jr., was an Alabama-licensed agent for
petitioner Pacific Mutual Life Insurance Company.  He also was a licensed
agent for Union Fidelity Life Insurance Company.  Pacific Mutual and Union
are distinct and nonaffiliated entities.  Union wrote group health
insurance for municipalities.  Pacific Mutual did not.
    Respondents Cleopatra Haslip, Cynthia Craig, Alma M. Calhoun, and Eddie
Hargrove were employees of Roosevelt City, an Alabama municipality.
Ruffin, presenting himself as an agent of Pacific Mutual, solicited the
city for both health and life insurance for its employees.  The city was
interested.  Ruffin gave the city a single proposal for both coverages.
The city approved and, in August 1981, Ruffin prepared separate
applications for the city and its employees for group health with Union and
for individual life policies with Pacific Mutual.  This packaging of health
insurance with life insurance, although from different and unrelated
insurers, was not unusual.  Indeed, it tended to boost life insurance sales
by minimizing the loss of customers who wished to have both health and life
protection.  The initial premium payments were taken by Ruffin and
submitted to the insurers with the applications.  Thus far, nothing is
claimed to have been out of line.  Respondents were among those with the
health coverage.
    An arrangement was made for Union to send its billings for health
premiums to Ruffin at Pacific Mutual's Birmingham office.  Premium payments
were to be effected through payroll deductions.  The city clerk each month
issued a check for those premiums.  The check was sent to Ruffin or picked
up by him.  He, however, did not remit to Union the premium payments
received from the city; instead, he misappropriated most of them.  In late
1981, when Union did not receive payment, it sent notices of lapsed health
coverage to respondents in care of Ruffin and Patrick Lupia, Pacific
Mutual's agent-incharge of its Birmingham office.  Those notices were not
forwarded to respondents.  Although there is some evidence to the contrary,
see Reply Brief for Petitioner B1-B4, the trial court found, App. to Pet.
for Cert. A2, that respondents did not know that their health policies had
been canceled.

II
    Respondent Haslip was hospitalized on January 23, 1982.  She incurred
hospital and physician's charges.  Because the hospital could not confirm
health coverage, it required Haslip, upon her discharge, to make a payment
upon her bill.  Her physician, when he was not paid, placed her account
with a collection agency.  The agency obtained a judgment against Haslip
and her credit was adversely affected.
    In May 1982, respondents filed this suit, naming as de fendants Pacific
Mutual (but not Union) and Ruffin, individually and as a proprietorship, in
the Circuit Court for Jef ferson County, Ala.  It was alleged that Ruffin
collected premiums but failed to remit them to the insurers so that
respondents' respective health insurance policies lapsed without their
knowledge.  Damages for fraud were claimed.  The case against Pacific
Mutual was submitted to the jury under a theory of respondeat superior.
    Following the trial court's charge on liability, the jury was
instructed that if it determined there was liability for fraud, it could
award punitive damages.  That part of the instructions is set forth in the
margin. {1}  Pacific Mutual made no objection on the ground of lack of
specificity in the instructions and it did not propose a more
particularized charge.  No evidence was introduced as to Pacific Mutual's
financial worth.  The jury returned general verdicts for respondents
against Pacific Mutual and Ruffin in the following amounts:

|Haslip:$1,040,000  {2}||Calhoun:15,290|
|Craig:12,400||Hargrove:10,288|

Judgments were entered accordingly.
    On Pacific Mutual's appeal, the Supreme Court of Alabama, by a divided
vote, affirmed.  553 So. 2d 537 (1989).  In addition to issues not now
before us, the court ruled that, while punitive damages are not recoverable
in Alabama for misrepresentation made innocently or by mistake, they are
recoverable for deceit or willful fraud, and that on the evidence in this
case a jury could not have concluded that Ruffin's misrepresentations were
made either innocently or mistakenly.  Id., at 540.  The majority then
specifically upheld the punitive damages award.  Id., at 543.
    One Justice concurred in the result without opinion. {3}  Ibid.  Two
Justices dissented in part on the ground that the award of punitive damages
violated Pacific Mutual's due process rights under the Fourteenth
Amendment.  Id., at 544-545.
    Pacific Mutual, but not Ruffin, then brought the case here.  It
challenged punitive damages in Alabama as the product of unbridled jury
discretion and as violative of its due process rights.  We stayed
enforcement of the Haslip judgment, App. to Pet. for Cert. E2, and then
granted certiorari, --- U. S. --- (1990), to review the punitive damages
procedures and award in the light of the long-enduring debate about their
propriety. {4}

III
    This Court and individual Justices thereof on a number of occasions in
recent years have expressed doubts about the constitutionality of certain
punitive damages awards.
    In Browning-Ferris Industries of Vermont, Inc. v. Kelco Disposal, Inc.,
--- U. S. --- (1989), all nine participating Members of the Court noted
concern.  In that case, punitive damages awarded on a state-law claim were
challenged under the Eighth and Fourteenth Amendments and on federal
common-law grounds.  The majority held that the Excessive Fines Clause of
the Eighth Amendment did not apply to a punitive damages award in a civil
case between private parties; that the claim of excessiveness under the Due
Process Clause of the Fourteenth Amendment had not been raised in either
the District Court or the Court of Appeals and therefore was not to be
considered here; and that federal common law did not provide a basis for
disturbing the jury's punitive damages award.  The Court said:

"The parties agree that due process imposes some limits on jury awards of
punitive damages, and it is not disputed that a jury award may not be
upheld if it was the product of bias or passion, or if it was reached in
proceedings lacking the basic elements of fundamental fairness.  But
petitioners make no claim that the proceedings themselves were unfair, or
that the jury was biased or blinded by emotion or prejudice.  Instead, they
seek further due process protections, addressed directly to the size of the
damages award.  There is some authority in our opinions for the view that
the Due Process Clause places outer limits on the size of a civil damages
award made pursuant to a statutory scheme . . . but we have never addressed
the precise question presented here: whether due process acts as a check on
undue jury discretion to award punitive damages in the absence of any
express statutory limit . . . .  That inquiry must await another day."  ---
U. S., at --- (slip op. 18).


Justice Brennan, joined by Justice Marshall, wrote separately:

    "I join the Court's opinion on the understanding that it leaves the
door open for a holding that the Due Process Clause constrains the
imposition of punitive damages in civil cases brought by private parties.

    . . . . .



    "Without statutory (or at least common-law) standards for the
determination of how large an award of punitive damages is appropriate in a
given case, juries are left largely to themselves in making this important,
and potentially devastating, decision.

    . . . . .



    "Since the Court correctly concludes that BrowningFerris' challenge
based on the Due Process Clause is not properly before us, however, I leave
fuller discussion of these matters for another day."  Id., at --- (slip op.
1-2).


Justice O'Connor, joined by Justice Stevens, concurring in part and
dissenting in part, observed:

    "Awards of punitive damages are skyrocketing.

    . . . . .



"I do . . . agree with the Court that no due process claims -- either
procedural or substantive -- are properly presented in this case, and that
the award of punitive damages here should not be overturned as a matter of
federal common law. . . .  Moreover, I share Justice Brennan's view, ante,
at 1-2, that nothing in the Court's opinion forecloses a due process
challenge to awards of punitive damages or the method by which they are
imposed . . . ."  Id., at --- (slip op. 1-2).


    In Bankers Life & Casualty Co. v. Crenshaw, 486 U. S. 71 (1988), a
challenge to a punitive damages award was made.  The Court, however,
refused to reach claims that the award violated the Due Process Clause and
other provisions of the Federal Constitution since those claims had not
been raised and passed upon in state court.  Id., at 76-80.  Justice
O'Connor, joined by Justice Scalia, concurring in part and concurring in
the judgment, said:

    "Appellant has touched on a due process issue that I think is worthy of
the Court's attention in an appropriate case.  Mississippi law gives juries
discretion to award any amount of punitive damages in any tort case in
which a defendant acts with a certain mental state.  In my view, because of
the punitive character of such awards, there is reason to think that this
may violate the Due Process Clause.

    . . . . .



    "This due process question, serious as it is, should not be decided
today . . . .  I concur in the Court's judgment on this question and would
leave for another day the consideration of these issues."  Id., at 87-89.


    In Aetna Life Ins. Co. v. Lavoie, 475 U. S. 813 (1986), another case
that came here from the Supreme Court of Alabama, the appellant argued that
the imposition of punitive damages was impermissible under the Eighth
Amendment and violated the Due Process Clause of the Fourteenth Amendment.
The Court stated: "These arguments raise important issues which, in an
appropriate setting, must be resolved; however, our disposition of the
recusal-for-bias issue makes it unnecessary to reach them."  Id., at
828-829.
    See also Newport v. Fact Concerts, Inc., 453 U. S. 247, 270-271 (1981)
("The impact of such a windfall recovery is likely to be both unpredictable
and, at times, substantial . . . ."); Electrical Workers v. Foust, 442 U.
S. 42, 50-51 (1979); Gertz v. Robert Welch, Inc., 418 U. S. 323, 350 (1974)
("In most jurisdictions jury discretion over the amounts awarded is limited
only by the gentle rule that they not be excessive.  Consequently, juries
assess punitive damages in wholly unpredictable amounts bearing no
necessary relation to the actual harm caused."); Rosenbloom v. Metromedia,
Inc., 403 U. S. 29, 82-84 (1971) (Marshall, J., joined by Stewart, J.,
dissenting); Missouri Pacific R. Co. v. Tucker, 230 U. S. 340, 351 (1913).
Southwestern Telegraph & Telephone Co. v. Danaher, 238 U. S. 482, 491
(1915); St. Louis, I. M. & S. R. Co. v. Williams, 251 U. S. 63, 67 (1919).
    The constitutional status of punitive damages, therefore, is not an
issue that is new to this Court or unanticipated by it.  Challenges have
been raised before; for stated reasons, they have been rejected or
deferred.  For example, in Browning-Ferris, supra, we rejected the claim
that punitive damages awarded in a civil case could violate the Eighth
Amendment and refused to consider the tardily raised due process argument.
But the Fourteenth Amendment due process challenge is here once again.

IV
    Two preliminary and overlapping due process arguments raised by Pacific
Mutual deserve attention before we reach the principal issue in
controversy.  Did Ruffin act within the scope of his apparent authority as
an agent of Pacific Mutual?  If so, may Pacific Mutual be held responsible
for Ruffin's fraud on a theory of respondeat superior?
    Pacific Mutual was held responsible for the acts of Ruffin.  The
insurer mounts a challenge to this result on substantive due process
grounds, arguing that it was not shown that either it or its Birmingham
manager was aware that Ruffin was collecting premiums contrary to his
contract; that Pacific Mutual had no notice of the actions complained of
prior to the filing of the complaint in this litigation; that it did not au
thorize or ratify Ruffin's conduct; that his contract with the company
forbade his collecting any premium other than the initial one submitted
with an application; and that Pacific Mutual was held liable and punished
for unauthorized actions of its agent for acts performed on behalf of
another company.  Thus, it is said, when punitive damages were imposed on
Pacific Mutual, the focus for determining the amount of those damages
shifted from Ruffin, where it belonged, to Pacific Mutual, and obviously
and unfairly contributed to the amount of the punitive damages and their
disproportionality.  Ruffin was acting not to benefit Pacific Mutual but
for his own benefit, and to hold Pacific Mutual liable is "beyond the point
of fundamental fairness," Brief for Petitioner 29, embodied in due process,
id., at 32.  It is said that the burden of the liability comes to rest on
Pacific Mutual's other policy holders.     The jury found that Ruffin was
acting as an employee of Pacific Mutual when he defrauded respondents.  The
Su preme Court of Alabama did not disturb that finding.  There is no
occasion for us to question it, for it is amply supported by the record.
Ruffin had actual authority to sell Pacific Mutual life insurance to
respondents.  The insurer derived economic benefit from those life
insurance sales.  Ruffin's defalcations related to the life premiums as
well as to the health premiums.  Thus, Pacific Mutual cannot plausibly
claim that Ruffin was acting wholly as an agent of Union when he defrauded
respondents.
    The details of Ruffin's representation admit of no other conclusion.
He gave respondents a single proposal -- not multiple ones -- for both life
and health insurance.  He used Pacific Mutual letterhead which he was
authorized to use on Pacific Mutual business.  There was, however, no
indication that Union was a nonaffiliated company.  The trial court found
that Ruffin "spoke only of Pacific Mutual and indicated that Union Fidelity
was a subsidiary of Pacific Mutual."  App. to Pet. for Cert. A2.  Pacific
Mutual encouraged the packaging of life and health insurance.  Ruffin
worked exclusively out of a Pacific Mutual branch office.  Each month he
presented to the city clerk a single invoice on Pacific Mutual letterhead
for both life and health premiums.
    Before the frauds in this case were effectuated, Pacific Mutual had
received notice that its agent Ruffin was engaged in a pattern of fraud
identical to those perpetrated against respondents.  There were complaints
to the Birmingham office about the absence of coverage purchased through
Ruffin.  The Birmingham manager was also advised of Ruffin's receipt of
non-initial premiums made payable to him, a practice in violation of
company policy.
    Alabama's common-law rule is that a corporation is liable for both
compensatory and punitive damages for fraud of its employee effected within
the scope of his employment.  We cannot say that this does not rationally
advance the State's interest in minimizing fraud.  Alabama long has applied
this rule in the insurance context, for it has determined that an insurer
is more likely to prevent an agent's fraud if given sufficient financial
incentive to do so.  See British General Ins. Co. v. Simpson Sales Co., 93
So. 2d 763, 768 (Ala. 1957).
    Imposing exemplary damages on the corporation when its agent commits
intentional fraud creates a strong incentive for vigilance by those in a
position "to guard substantially against the evil to be prevented."  Louis
Pizitz Dry Goods Co. v. Yeldell, 274 U. S. 112, 116 (1927).  If an insurer
were liable for such damages only upon proof that it was at fault
independently, it would have an incentive to minimize oversight of its
agents.  Imposing liability without independent fault deters fraud more
than a less stringent rule.  It therefore rationally advances the State's
goal.  We cannot say this is a violation of Fourteenth Amendment due
process.  See American Society of Mechanical Engineers, Inc. v. Hydro level
Corp., 454 U. S. 556 (1982); Pizitz, 274 U. S., at 115.  These and other
cases in a broad range of civil and criminal contexts make clear that
imposing such liability is not fundamentally unfair and does not in itself
violate the Due Process Clause.  See Shevlin-Carpenter Co. v. Minnesota,
218 U. S. 57 (1910); United States v. Balint, 258 U. S. 250, 252 (1922);
United States v. Park, 421 U. S. 658, 670 (1975).
    We therefore readily conclude that Ruffin was acting as an employee of
Pacific Mutual when he defrauded respondents, and that imposing liability
upon Pacific Mutual for Ruffin's fraud under the doctrine of respondeat
superior does not, on the facts here, violate Pacific Mutual's due process
rights.

V
    "Punitive damages have long been a part of traditional state tort law."
Silkwood v. Kerr-McGee Corp., 464 U. S. 238, 255 (1984).  Blackstone
appears to have noted their use.  3 W. Blackstone, Commentaries *137-138.
See also Wilkes v. Wood, 98 Eng. Rep. 489 (C. P. 1763) (The Lord Chief
Justice validating exemplary damages as compensation, punishment, and
deterrence).  Among the first reported American cases are Genay v. Norris,
1 S. C. L. (1 Bay) 6 (1784), and Coryell v. Colbaugh, 1 N. J. L. 77 (1791).
{5}
    Under the traditional common-law approach, the amount of the punitive
award is initially determined by a jury instructed to consider the gravity
of the wrong and the need to deter similar wrongful conduct.  The jury's
determination is then reviewed by trial and appellate courts to ensure that
it is reasonable.
    This Court more than once has approved the common-law method for
assessing punitive awards.  In Day v. Wood worth, 13 How. 363 (1852), a
case decided before the adoption of the Fourteenth Amendment, Justice
Grier, writing for a unanimous Court, observed:

    "It is a well-established principle of the common law, that in actions
of trespass and all actions on the case for torts, a jury may inflict what
are called exemplary, punitive, or vindictive damages upon a defendant,
having in view the enormity of his offence rather than the measure of
compensation to the plaintiff.  We are aware that the propriety of this
doctrine has been questioned by some writers; but if repeated judicial
decisions for more than a century are to be received as the best exposition
of what the law is, the question will not admit of argument.  By the common
as well as by statute law, men are often punished for aggravated misconduct
or lawless acts, by means of a civil action, and the damages, inflicted by
way of penalty or punishment, given to the party injured.

    . . . . .



    ". . . . This has been always left to the discretion of the jury, as
the degree of punishment to be thus inflicted must depend on the peculiar
circumstances of each case."  Id., at 371.


    In Missouri Pacific R. Co. v. Humes, 115 U. S. 512 (1885), the Court
stated: "The discretion of the jury in such cases is not controlled by any
very definite rules; yet the wisdom of allowing such additional damages to
be given is attested by the long continuance of the practice."  Id., at
521.  See also Barry v. Edmunds, 116 U. S. 550, 565 (1886) ("For nothing is
better settled than that, in such cases as the present, and other actions
for torts where no precise rule of law fixes the recoverable damages, it is
the peculiar function of the jury to determine the amount by their
verdict."); Minneapolis & St. Louis R. Co. v. Beckwith, 129 U. S. 26, 36
(1889) ("The imposition of punitive or exemplary damages in such cases
cannot be opposed as in conflict with the prohibition against the
deprivation of property without due process of law.  It is only one mode of
imposing a penalty for the violation of duty, and its propriety and
legality have been recognized . . . by repeated judicial decisions for more
than a century.  Its authorization by the law in question . . . cannot
therefore be justly assailed as infringing upon the Fourteenth Amendment of
the Constitution of the United States."); Standard Oil Co. v. Missouri, 224
U. S. 270, 285 (1912) ("Nor, from a Federal standpoint, is there any
invalidity in the judgment because there was no statute fixing a maximum
penalty, no rule for measuring damages, and no hearing."); Louis Pizitz Dry
Goods Co. v. Yeldell, 274 U. S. 112 (1927) (although the issue was raised
in the briefs, the Court did not discuss the claim); Memphis Community
School Dist. v. Stachura, 477 U. S. 299, 306, n. 9 (1986).  Recently, in
Smith v. Wade, 461 U. S. 30 (1983), this Court affirmed the assessment of
punitive damages pursuant to 42 U. S. C. MDRV 1983, where the trial court
used the common-law method for determining the amount of the award. {6}
    So far as we have been able to determine, every state and federal court
that has considered the question has ruled that the common-law method for
assessing punitive damages does not in itself violate due process.  But see
New Orleans, J. & G. N. R. Co. v. Hurst, 36 Miss. 660 (1859).  In view of
this consistent history, we cannot say that the common-law method for
assessing punitive damages is so inherently unfair as to deny due process
and be per se unconstitutional.  " `If a thing has been practised for two
hundred years by common consent, it will need a strong case for the
Fourteenth Amendment to affect it.' "  Sun Oil Co. v. Wortman, 486 U. S.
717, 730 (1988), quoting Jackman v. Rosenbaum Co., 260 U. S. 22, 31 (1922).
As the Court in Day v. Woodworth made clear, the common-law method for
assessing punitive damages was well established before the Fourteenth
Amendment was enacted.  Nothing in that Amendment's text or history
indicates an intention on the part of its drafters to overturn the
prevailing method.  See Burnham v. Superior Court of Calif., Marin Cty.,
--- U. S. --- (1990); Snyder v. Massachusetts, 291 U. S. 97, 111 (1934)
("The Fourteenth Amendment has not displaced the procedure of the ages.").
{7}
    This, however, is not the end of the matter.  It would be just as
inappropriate to say that, because punitive damages have been recognized
for so long, their imposition is never unconstitutional.  See Williams v.
Illinois, 399 U. S. 235, 239 (1970) ("[N]either the antiquity of a practice
nor the fact of steadfast legislative and judicial adherence to it through
the centuries insulates it from constitutional attack . . . .").  We note
once again our concern about punitive damages that "run wild."  Having said
that, we conclude that our task today is to determine whether the Due
Process Clause renders the punitive damages award in this case
constitutionally unacceptable.

VI
    One must concede that unlimited jury discretion -- or unlimited
judicial discretion for that matter -- in the fixing of punitive damages
may invite extreme results that jar one's constitutional sensibilities.
See Waters-Pierce Oil Co. v. Texas (No. 1), 212 U. S. 86, 111 (1909). {8}
We need not, and indeed we cannot, draw a mathematical bright line between
the constitutionally acceptable and the constitutionally unacceptable that
would fit every case.  We can say, however, that general concerns of
reasonableness and adequate guidance from the court when the case is tried
to a jury properly enter into the constitutional calculus.  With these
concerns in mind, we review the constitutionality of the punitive damages
awarded in this case.
    We conclude that the punitive damages assessed by the jury against
Pacific Mutual were not violative of the Due Process Clause of the
Fourteenth Amendment.  It is true, of course, that under Alabama law, as
under the law of most States, punitive damages are imposed for purposes of
retribution and deterrence.  Aetna Life Ins. Co. v. Lavoie, 470 So. 2d
1060, 1076 (Ala. 1984).  They have been described as quasi-criminal.  See
Smith v. Wade, 461 U. S. 30, 59 (1983) (Rehnquist, J., dissenting).  But
this in itself does not provide the answer.  We move, then, to the points
of specific attack.
    1. We have carefully reviewed the instructions to the jury.  By these
instructions, see n. 1, supra, the trial court expressly described for the
jury the purpose of punitive damages, namely, "not to compensate the
plaintiff for any injury" but "to punish the defendant" and "for the added
purpose of protecting the public by [deterring] the defendant and others
from doing such wrong in the future."  App. 105-106.  Any evidence of
Pacific Mutual's wealth was excluded from the trial in accord with Alabama
law.  See Southern Life & Health Ins. Co. v. Whitman, 358 So. 2d 1025,
1026-1027 (Ala. 1978).
    To be sure, the instructions gave the jury significant discretion in
its determination of punitive damages.  But that discretion was not
unlimited.  It was confined to deterrence and retribution, the state policy
concerns sought to be advanced.  And if punitive damages were to be
awarded, the jury "must take into consideration the character and the
degree of the wrong as shown by the evidence and necessity of preventing
similar wrong."  App. 106.  The instructions thus enlightened the jury as
to the punitive damages' nature and purpose, identified the damages as
punishment for civil wrongdoing of the kind involved, and explained that
their imposition was not compulsory.
    These instructions, we believe, reasonably accommodated Pacific
Mutual's interest in rational decisionmaking and Alabama's interest in
meaningful individualized assessment of appropriate deterrence and
retribution.  The discretion allowed under Alabama law in determining
punitive damages is no greater than that pursued in many familiar areas of
the law as, for example, deciding "the best interests of the child," or
"reasonable care," or "due diligence," or appropriate compensation for pain
and suffering or mental anguish. {9}  As long as the discretion is
exercised within reasonable constraints, due process is satisfied.  See, e.
g., Schall v. Martin, 467 U. S. 253, 279 (1984); Greenholtz v. Nebraska
Penal Inmates, 442 U. S. 1, 16 (1977).  See also McGautha v. California,
402 U. S. 183, 207 (1971).
    2. Before the trial in this case took place, the Supreme Court of
Alabama had established post-trial procedures for scrutinizing punitive
awards.  In Hammond v. City of Gadsden, 493 So. 2d 1374 (1986), it stated
that trial courts are "to reflect in the record the reasons for interfering
with a jury verdict, or refusing to do so, on grounds of excessiveness of
the damages."  Id., at 1379.  Among the factors deemed "appropriate for the
trial court's consideration" are the "culpability of the defendant's
conduct," the "desirability of discouraging others from similar conduct,"
the "impact upon the parties," and "other factors, such as the impact on
innocent third parties."  Ibid.  The Hammond test ensures meaningful and
adequate review by the trial court whenever a jury has fixed the punitive
damages.
    3. By its review of punitive awards, the Alabama Supreme Court provides
an additional check on the jury's or trial court's discretion.  It first
undertakes a comparative analysis.  See, e. g., Aetna Life Ins. Co. v.
Lavoie, 505 So. 2d 1050, 1053 (1987).  It then applies the detailed
substantive standards it has developed for evaluating punitive awards. {10}
In particular, it makes its review to ensure that the award does "not
exceed an amount that will accomplish society's goals of punishment and
deterrence."  Green Oil Co. v. Hornsby, 539 So. 2d 218, 222 (1989); Wilson
v. Dukona Corp., 547 So. 2d 70, 73 (1989).  This appellate review makes
certain that the punitive damages are reasonable in their amount and
rational in light of their purpose to punish what has occurred and to deter
its repetition.
    Also before its ruling in the present case, the Supreme Court of
Alabama had elaborated and refined the Hammond criteria for determining
whether a punitive award is rea sonably related to the goals of deterrence
and retribution.  Hornsby, 539 So. 2d, at 223-224; Central Alabama, 546 So.
2d, at 376-377.  It was announced that the following could be taken into
consideration in determining whether the award was excessive or inadequate:
(a) whether there is a reasonable relationship between the punitive damages
award and the harm likely to result from the defendant's conduct as well as
the harm that actually has occurred; (b) the degree of reprehensibility of
the defendant's conduct, the duration of that conduct, the defendant's
awareness, any concealment, and the existence and frequency of similar past
conduct; (c) the profitability to the defendant of the wrongful conduct and
the desirability of removing that profit and of having the defendant also
sustain a loss; (d) the "financial position" of the defendant; (e) all the
costs of litigation; (f) the imposition of criminal sanctions on the
defendant for its conduct, these to be taken in mitigation; and (g) the
existence of other civil awards against the defendant for the same conduct,
these also to be taken in mitigation.
    The application of these standards, we conclude, imposes a sufficiently
definite and meaningful constraint on the discretion of Alabama fact
finders in awarding punitive damages.  The Alabama Supreme Court's
post-verdict review ensures that punitive damages awards are not grossly
out of proportion to the severity of the offense and have some
understandable relationship to compensatory damages.  While punitive
damages in Alabama may embrace such factors as the heinousness of the civil
wrong, its effect upon the victim, the likelihood of its recurrence, and
the extent of defendant's wrongful gain, the fact finder must be guided by
more than the defendant's net worth.  Alabama plaintiffs do not enjoy a
windfall because they have the good fortune to have a defendant with a deep
pocket.
    These standards have real effect when applied by the Alabama Supreme
Court to jury awards.  For examples of their application in trial practice,
see Hornsby, 539 So. 2d, at 219, and Williams v. Ralph Collins
Ford-Chrysler, Inc., 551 So. 2d 964, 966 (1989).  And post-verdict review
by the Alabama Supreme Court has resulted in reduction of punitive awards.
See, e. g., Wilson v. Dukona Corp., 547 So. 2d 70, 74 (1989); United
Services Automobile Assn. v. Wade, 544 So. 2d 906, 917 (1989).  The
standards provide for a rational relationship in determining whether a
particular award is greater than reasonably necessary to punish and deter.
They surely are as specific as those adopted legislatively in Ohio Rev.
Code Ann. MDRV 2307.80(B) (Supp. 1989) and in Mont. Code Ann. MDRV 27-1-221
(1989). {11}
    Pacific Mutual thus had the benefit of the full panoply of Alabama's
procedural protections.  The jury was adequately instructed.  The trial
court conducted a post-verdict hearing that conformed with Hammond.  The
trial court specifically found the conduct in question "evidenced
intentional malicious, gross, or oppressive fraud," App. to Pet. for Cert.
A14, and found the amount of the award to be reasonable in light of the
importance of discouraging insurers from similar conduct, id., at A15.
Pacific Mutual also received the benefit of appropriate review by the
Supreme Court of Alabama.  It applied the Hammond standards and approved
the verdict thereunder.  It brought to bear all relevant factors recited in
Hornsby.
    We are aware that the punitive damages award in this case is more than
4 times the amount of compensatory damages, is more than 200 times the
out-of-pocket expenses of respondent Haslip, see n. 2, supra, and, of
course, is much in excess of the fine that could be imposed for insurance
fraud under Ala. Code 15 13A-5-11 and 13A-5-12(a) (1982), and 15 271-12,
27-12-17, and 27-12-23 (1986).  Imprisonment, however, could also be
required of an individual in the criminal context.  While the monetary
comparisons are wide and, indeed, may be close to the line, the award here
did not lack objective criteria.  We conclude, after careful consideration,
that in this case it does not cross the line into the area of
constitutional impropriety. {12}  Accordingly, Pacific Mutual's due process
challenge must be, and is, rejected.
    The judgment of the Supreme Court of Alabama is affirmed.

It is so ordered.


    Justice Souter took no part in the consideration or decision of this
case.

 
 
 
 
 


------------------------------------------------------------------------------
1
    "Now, if you find that fraud was perpetrated then in addition to
compensatory damages you may in your discretion, when I use the word
discretion, I say you don't have to even find fraud, you wouldn't have to,
but you may, the law says you may award an amount of money known as
punitive damages.
    "This amount of money is awarded to the plaintiff but it is not to
compensate the plaintiff for any injury.  It is to punish the defendant.
Punitive means to punish or it is also called exemplary damages, which
means to make an example.  So, if you feel or not feel, but if you are
reasonably satisfied from the evidence that the plaintiff, whatever
plaintiff you are talking about, has had a fraud perpetrated upon them and
as a direct result they were injured and in addition to compensatory
damages you may in your discretion award punitive damages.
    "Now, the purpose of awarding punitive or exemplary damages is to allow
money recovery to the plaintiffs, it does to the plaintiff, by way of
punishment to the defendant and for the added purpose of protecting the
public by detering [sic] the defendant and others from doing such wrong in
the future.  Imposition of punitive damages is entirely discretionary with
the jury, that means you don't have to award it unless this jury feels that
you should do so.

    "Should you award punitive damages, in fixing the amount, you must take
into consideration the character and the degree of the wrong as shown by
the evidence and necessity of preventing similar wrong."  App. 105-106.
2
    Although there is controversy about the matter, it is probable that the
general verdict for respondent Haslip contained a punitive damages
component of not less than $840,000.  In Haslip's counsel's argument to the
jury, compensatory damages of $200,000 (including out-of-pocket
expenditures of less than $4,000) and punitive damages of $3,000,000 were
requested.  Tr. 810-814.  For present purposes, we accept this description
of the verdict.

3
    This Justice, in a later case, appears to have rethought his position
with respect to punitive damages under Alabama law.  See Charter Hospital
of Mobile, Inc. v. Weinberg, 558 So. 2d 909, 913 (1990) (Houston, J.,
concurring specially).  He did not address the question of the
constitutionality of punitive damages in Alabama under the United States
Constitution.  Id., at 914.

4
    Compare, e. g., Fay v. Parker, 53 N. H. 342, 382 (1873) ("The idea is
wrong.  It is a monstrous heresy.  It is an unsightly and an unhealthy
excrescence, deforming the symmetry of the body of the law."), with Luther
v. Shaw, 157 Wisc. 234, 238, 147 N. W. 18, 19-20 (1914) (Timlin, J.,
"Speaking for myself only in this paragraph . . . .  The law giving
exemplary damages is an outgrowth of the English love of liberty regulated
by law.  It tends to elevate the jury as a responsible instrument of
government, discourage private reprisals, restrains the strong,
influential, and unscrupulous, vindicates the right of the weak, and
encourages recourse to and confidence in the courts of law by those wronged
or oppressed by acts or practices not cognizable in or not sufficiently
punished by the criminal law.").
    This debate finds replication in the many amicus briefs filed here.
See, e. g., Brief for Alliance of American Insurers et al. 5 ("The Due
Process Clause imposes substantive limits on the amounts of punitive
damages that civil juries can award.  This conclusion is evident from
history."); Brief for American Institute of Architects et al. 4 ("Punitive
damages are today awarded with a frequency and in amounts that are
startling . . . .  This system of punitive damages -- where punitive awards
are routine and fantastic verdicts receive little attention -- is entirely
a product of the last 20 years."); Brief for Business Roundtable et al. 2
("[A]n award that is not rationally related to the retributive and
deterrent purposes of punitive damages is unconstitutionally excessive.");
Brief for Defense Research Institute 2 ("No society concerned for fairness
and regularity in the administration of justice can afford to tolerate an
essentially lawless regime of punishment."); Brief for Pharmaceutical
Manufacturers Association et al. 4 ("[A]ny award of punitive damages for
lawful conduct approved in advance by the [Food and Drug Administration]
must be deemed arbitrary and excessive."); Brief for Aetna Life Insurance
Company et al. 6 ("[A] State may impose punishment on its citizens only
pursuant to standards established in advance."); Brief for Hospital
Authority of Gwinnett County, Georgia, 2 ("[I]n the absence of a statute .
. . an award of punitive damages . . . violates the defendant's right to
due process . . . unless it is shown by clear and convincing evidence that
the act constituted a crime . . . .  [A]wards of punitive damages in excess
of twice the amount of actual damages (that is, awards in excess of treble
damages) . . . violate . . . due process . . . ."); Brief for Mid-America
Legal Foundation 8 ("[S]ystem as applied today merely introduces a wildcard
into the legal process . . . ."); Brief for As sociation for California
Tort Reform 2 ("Until state legislatures do their job and set maximum
limits for punitive awards and establish meaningful criteria for juries to
use, punitive damages are per se a violation of due process."); Brief for
Association of Trial Lawyers of America 3 ("There is no `explosion'. . . .
[P]unitive damages neither deter innovation nor place American businesses
at a competitive disadvantage . . . .); Brief for National Insurance
Consumer Organization 3 ("Punitive damages have developed as the most
effective means by which the states can protect their citizens against
corporate misconduct."); Brief for Attorney Generals of Alabama et al. 1
("[T]he States -- and not this Court -- should decide how and when punitive
damages may be assessed in civil cases between private litigants.").

5
    For informative historical comment, see Owen, Punitive Damages in
Products Liability Litigation, 74 Mich. L. Rev. 1257, 1262-1264, and nn.
17-23 (1976).

6
    Congress by statute in a number of instances has provided for punitive
damages.  See, e. g., 11 U. S. C. 15 303(i)(2)(B), 362(h), and 363(n); 12
U. S. C. MDRV 3417(a)(3); 15 U. S. C. 15 78u(h)(7)(A)(iii), 298(c),
1116(d)(11), and 1681n(2); 26 U. S. C. MDRV 7431(c)(1)(B)(ii); 33 U. S. C.
MDRV 1514(c).

7
    See M. Peterson, S. Sarma, & M. Shanley, Punitive Damages -- Empirical
Findings (Rand R-3311-1CJ 1987).

8
    See also Owen, The Moral Foundations of Punitive Damages, 40 Ala. L.
Rev. 705, 739 (1989) ("Yet punitive damages are a powerful remedy which
itself may be abused, causing serious damage to public and private
interests and moral values.").

9
    The Alabama Legislature recently enacted a statute that places a
$250,000 limit on punitive damages in most cases.  See 1987 Ala. Acts, No.
87-185, 15 1, 2, and 4.  The legislation, however, became effective only on
June 11, 1987, see MDRV 12, after the cause of action in the present case
arose and the complaint was filed.

10
    See Central Alabama Electric Cooperative v. Tapley, 546 So. 2d 371,
377-378 (Ala. 1989).  This, we feel, distinguishes Alabama's system from
the Vermont and Mississippi schemes about which Justices expressed concern
in Browning-Ferris Industries of Vermont, Inc. v. Kelco Disposal, Inc., ---
U. S. --- (1989), and in Bankers Life & Casualty Co. v. Crenshaw, 486 U. S.
71 (1988).  In those respective schemes, an amount awarded would be set
aside or modified only if it was "manifestly and grossly excessive,"
Pezzano v. Bonneau, 133 Vt. 88, 91, 329 A. 2d 659, 661 (1974), or would be
considered excessive when "it evinces passion, bias and prejudice on the
part of the jury so as to shock the conscience," Bankers Life & Casualty
Co. v. Crenshaw, 483 So. 2d 254, 278 (Miss. 1985).

11
    We have considered the arguments raised by Pacific Mutual and some of
its amici as to the constitutional necessity of imposing a standard of
proof of punitive damages higher than "preponderance of the evidence."
There is much to be said in favor of a State's requiring, as many do, see,
e. g., Ohio Rev. Code Ann. MDRV 2307.80 (1989), a standard of "clear and
convincing evidence" or, even, "beyond a reasonable doubt," see Colo. Rev.
Stat. MDRV 13-25-127(2) (Supp. 1979), as in the criminal context.  We are
not persuaded, however, that the Due Process Clause requires that much.  We
feel that the lesser standard prevailing in Alabama -- "reasonably
satisfied from the evidence" -- when buttressed, as it is, by the
procedural and substantive protections outlined above, is constitutionally
sufficient.

12
    Pacific Mutual also makes what it calls a void-for-vagueness argument
and, in support thereof, cites Giaccio v. Pennsylvania, 382 U. S. 399
(1966).  That case, however, is not helpful.  The Court there struck down a
Pennsylvania statute allowing costs to be awarded against a defendant
acquitted of a misdemeanor.  The statute did not concern jury discretion in
fixing the amount of costs.  Decisions about the appropriate consequences
of violating a law are significantly different from decisions as to whether
a violation has occurred.





Subject: 89-1279 -- CONCUR, PACIFIC MUTUAL LIFE INSURANCE CO. v. HASLIP

 
SUPREME COURT OF THE UNITED STATES


No. 89-1279



PACIFIC MUTUAL LIFE INSURANCE COMPANY,
PETITIONER v. CLEOPATRA HASLIP et al.


on writ of certiorari to the supreme court of alabama

[March 4, 1991]



    Justice Scalia, concurring in the judgment.
    In Browning-Ferris Industries v. Kelco Disposal, Inc., 492 U. S. 257
(1989), we rejected the argument that the Eighth Amendment limits punitive
damages awards, but left for "another day" the question whether "undue jury
discretion to award punitive damages" violates the Due Process Clause of
the Fourteenth Amendment, id., at 277.  That day has come, the due process
point has been thoroughly briefed and argued, but the Court chooses to
decide only that the jury discretion in the present case was not undue.  It
says that Alabama's particular procedures (at least as applied here) are
not so "unreasonable" as to "cross the line into the area of constitutional
impropriety," ante, at 20.  This jury-like verdict provides no guidance as
to whether any other procedures are sufficiently "reasonable," and thus
perpetuates the uncertainty that our grant of certiorari in this case was
intended to resolve.  Since it has been the traditional practice of
American courts to leave punitive damages (where the evidence satisfies the
legal requirements for imposing them) to the discretion of the jury; and
since in my view a process that accords with such a tradition and does not
violate the Bill of Rights necessarily constitutes "due" process; I would
approve the procedure challenged here without further inquiry into its
"fairness" or "reasonableness."  I therefore concur only in the judgment of
the Court.

I
    As the Court notes, punitive or "exemplary" damages have long been a
part of Anglo-American law.  They have always been controversial.  As
recently as the mid-19th century, treatise writers sparred over whether
they even existed.  One respected commentator, Professor Simon Greenleaf,
argued that no doctrine of authentically "punitive" damages could be found
in the cases; he attempted to explain judgments that ostensibly included
punitive damages as in reality no more than full compensation.  2 S.
Greenleaf, Law of Evidence 235, n. 2 (13th ed. 1876).  This view was not
widely shared.  In his influential treatise on the law of damages, Theodore
Sedgwick stated that "the rule" with respect to the "salutary doctrine" of
exemplary damages is that "where gross fraud, malice, or oppression
appears, the jury are not bound to adhere to the strict line of
compensation, but may, by a severer verdict, at once impose a punishment on
the defendant and hold up an example to the community."  T. Sedgwick,
Measure of Damages 522 (4th ed. 1868).  The doctrine, Sedgwick noted,
"seems settled in England, and in the general jurisprudence of this
country," id., at 35.  See also G. Field, Law of Damages 66 (1876) ("[The]
doctrine [of punitive damages] seems to be sustained by at least a great
preponderance of authorities, both in England and this country"); J.
Sutherland, Law of Damages 721-722, 726-727, n. 1 (1882) ("The doctrine
that [punitive] damages may be allowed for the purpose of example and
punishment, in addition to compensation, in certain cases, is held in
nearly all the states of the Union and in England."  "Since the time of the
controversy between Professor Greenleaf and Mr. Sedg wick (1847) on this
subject, a large majority of the appellate courts in this country have
followed the doctrine advocated by Mr. Sedgwick . . .").  In Day v.
Woodworth, 13 How. 363, 371 (1852), this Court observed:

    "It is a well-established principle of the common law, that in actions
of trespass and all actions on the case for torts, a jury may inflict what
are called exemplary, punitive, or vindictive damages upon a defendant,
having in view the enormity of his offence rather than the measure of
compensation to the plaintiff.  We are aware that the propriety of this
doctrine has been questioned by some writers; but if repeated judicial
decisions for more than a century are to be received as the best exposition
of what the law is, the question will not admit of argument."


Even fierce opponents of the doctrine acknowledged that it was a firmly
established feature of American law.  Justice Foster of the New Hampshire
Supreme Court, in a lengthy decision disallowing punitive damages, called
them "a perversion of language and ideas so ancient and so common as seldom
to attract attention," Fay v. Parker, 53 N. H. 342, 343 (1873).  The
opinion concluded, with more passion than even petitioners in the present
case could muster:

"Undoubtedly this pernicious doctrine has become so fixed in the law . . .
that it may be difficult to get rid of it.  But it is the business of
courts to deal with difficulties; and this heresy should be taken in hand
without favor, firmly and fearlessly. . . .  [N]ot reluctantly should we
apply the knife to this deformity, concerning which every true member of
the sound and healthy body of the law may well exclaim -- `I have no need
of thee.' "  Id., at 397 (internal quotations omitted).


    In 1868, therefore, when the Fourteenth Amendment was adopted, punitive
damages were undoubtedly an established part of the American common law of
torts.  It is just as clear that no particular procedures were deemed
necessary to circumscribe a jury's discretion regarding the award of such
damages, or their amount.  As this Court noted in Barry v. Edmunds, 116 U.
S. 550, 565 (1886), "nothing is better settled than that, in cases such as
the present, and other actions for torts where no precise rule of law fixes
the recoverable damages, it is the peculiar function of the jury to
determine the amount by their verdict."  See also Missouri Pacific R. Co.
v. Humes, 115 U. S. 512, 521 (1885) ("The discretion of the jury in such
cases is not controlled by any very definite rules").  Commentators
confirmed that the imposition of punitive damages was not thought to
require special procedural safeguards, other than -- at most -- some review
by the trial court.  "[I]n cases proper for exemplary damages, it would
seem impracticable to set any bounds to the discretion of the jury, though
in cases where the wrong done, though with malicious intent, is greatly
disproportioned to the amount of the verdict, the court may exercise the
power it always possesses to grant a new trial for excessive damages."
Sedg wick, supra, at 537-538, n. 1.  See also Field, supra, at 65 ("[T]he
amount of damages by way of punishment or example, are necessarily largely
within the discretion of the jury; the only check . . . being the power of
the court to set aside the verdict where it is manifest that the jury were
unduly influenced by passion, prejudice, partiality, or corruption, or
where it clearly evinces a mistake of the law or the facts of the case");
Sutherland, supra, at 742 ("Whether [punitive damages] shall be allowed,
and their amount, are left to the discretion of the jury, but subject to
the power of the court to set aside the verdict if it is so excessive that
the court may infer that the jury have been influenced by passion or
prejudice").
    Although both the majority and the dissenting opinions today concede
that the common-law system for awarding punitive damages is firmly rooted
in our history, both reject the proposition that this is dispositive for
due process purposes.  Ante, at 14-15; post, at 18.  I disagree.  In my
view, it is not for the Members of this Court to decide from time to time
whether a process approved by the legal traditions of our people is "due"
process, nor do I believe such a rootless analysis to be dictated by our
precedents.
II
    Determining whether common-law procedures for awarding punitive damages
can deny "due process of law" requires some inquiry into the meaning of
that majestic phrase.  Its first prominent use appears to have been in an
English statute of 1354: "[N]o man of what estate or condition that he be,
shall be put out of land or tenement, nor taken, nor imprisoned, nor
disinherited, nor put to death, without being brought to answer by due
process of the law."  28 Edw. III, ch. 3.  Although historical evidence
suggests that the word "process" in this provision referred to specific
writs employed in the English courts (a usage retained in the phrase
"service of process"), see Jurow, Untimely Thoughts: A Reconsideration of
the Origins of Due Process of Law, 19 Am. J. Legal Hist. 265, 272-275
(1975), Sir Edward Coke had a different view.  In the second part of his
Institutes, see 2 Institutes 50 (5th ed. 1797), Coke equated the phrase
"due process of the law" in the 1354 statute with the phrase "Law of the
Land" in Chapter 29 of Magna Charta (Chapter 39 of the original Magna
Charta signed by King John at Runnymede in 1215), which provides: "No
Freeman shall be taken, or imprisoned, or be disseised of his Freehold, or
Liberties, or free Customs, or be outlawed, or exiled, or any otherwise
destroyed; nor will we not pass upon him, nor condemn him, but by lawful
Judgment of his Peers, or by the Law of the Land."  9 Hen. III, ch. 29
(1225).  In Coke's view, the phrase "due process of law" referred to the
customary procedures to which freemen were entitled by "the old law of
England," 2 Institutes 50.
    The American colonists were intimately familiar with Coke, see R. Mott,
Due Process of Law 87-90, 107 (1926); A. Howard, The Road from Runnymede:
Magna Carta and Constitutionalism in America 117-125 (1968), and when, in
their Constitutions, they widely adopted Magna Charta's "law of the land"
guarantee, see, e. g., N. C. Const., Art. XII (1776) ("[N]o freeman ought
to be taken, imprisoned, or disseized of his freehold, liberties or
privileges, or outlawed, or exiled, or in any manner destroyed, or deprived
of his life, liberty, or property, but by the law of the land"); Mass.
Const., Art. XII (1780) ("[N]o subject shall be arrested, imprisoned,
despoiled, or deprived of his property, immunities, or privileges, put out
of the protection of the law, exiled or deprived of his life, liberty, or
estate, but by the judgment of his peers, or the law of the land"), they
almost certainly understood it as Coke did.  It was thus as a supposed
affirmation of Magna Charta according to Coke that the First Congress
(without recorded debate on the issue) included in the proposed Fifth
Amendment to the Federal Constitution the provision that "[n]o person shall
be . . . deprived of life, liberty, or property, without due process of
law."  Early commentaries confirm this.  See, e. g., 2 W. Blackstone,
Commentaries 133 nn. 11, 12 (S. Tucker ed. 1803); 2 J. Kent, Commentaries
on American Law 10 (1827); 3 J. Story, Commentaries on the Constitution of
the United States 661 (1833).
    This Court did not engage in any detailed analysis of the Due Process
Clause until Murray's Lessee v. Hoboken Land & Improvement Co., 18 How. 272
(1856).  That case involved the validity of a federal statute authorizing
the issuance of distress warrants, a mechanism by which the Government
collected debts without providing the debtor notice or an opportunity for
hearing.  The Court noted that the words "due process of law" conveyed "the
same meaning as the words `by the law of the land,' in Magna Charta"
(referring to Coke's commentary and early state constitutions), and that
they were "a restraint on the legislature as well as on the executive and
judicial powers of the government," id., at 276.  This brought the Court to
the critical question:

"To what principles, then, are we to resort to ascertain whether this
process enacted by congress, is due process?  To this the answer must be
twofold.  We must examine the constitution itself, to see whether this
process be in conflict with any of its provisions.  If not found to be so,
we must look to those settled usages and modes of proceeding existing in
the common and statute law of England, before the emigration of our
ancestors, and which are shown not to have been unsuited to their civil and
political condition by having been acted on by them after the settlement of
this country."  Id., at 276-277.


Reviewing the history of the distress warrant, the Court concluded that the
procedure could not deny due process of law because "there has been no
period, since the establishment of the English monarchy, when there has not
been, by the law of the land, a summary method for the recovery of debts
due to the crown, and especially those due from the receivers of the
revenues," id., at 277, and these summary procedures had been replicated,
with minor modifications, in the laws of the various American colonies and,
after independence, the States.  Id., at 278-280.
    Subsequent to the decision in Murray's Lessee, of course, the
Fourteenth Amendment was adopted, adding another Due Process Clause to the
Constitution.  The Court soon reaffirmed the teaching of Murray's Lessee
under the new provision:

"A State cannot deprive a person of his property without due process of
law; but this does not necessarily imply that all trials in the State
courts affecting the property of persons must be by jury.  This requirement
of the Constitution is met if the trial is had according to the settled
course of judicial proceedings.  Due process of law is process due
according to the law of the land."  Walker v. Sauvinet, 92 U. S. 90, 92-93
(1876) (emphasis added; citation omitted).


Not until Hurtado v. California, 110 U. S. 516 (1884), however, did the
Court significantly elaborate upon the historical test for due process
advanced in Murray's Lessee.  In that case, a man convicted of murder in
California contended that the State had denied him due process of law by
omitting grand-jury indictment.  Relying upon Murray's Lessee, he argued
that because that procedure was firmly rooted in the Anglo-American
common-law tradition, it was an indispensable element of due process.  The
Court disagreed.

"The real syllabus of [the relevant portion of Murray's Lessee] is, that a
process of law, which is not otherwise forbidden, must be taken to be due
process of law, if it can show the sanction of settled usage both in
England and in this country; but it by no means follows that nothing else
can be due process of law.  The point in the case cited arose in reference
to a summary proceeding, questioned on that account, as not due process of
law.  The answer was: however exceptional it may be, as tested by
definitions and principles of ordinary procedure, nevertheless, this, in
substance, has been immemorially the actual law of the land, and,
therefore, is due process of law.  But to hold that such a characteristic
is essential to due process of law, would be to deny every quality of the
law but its age, and to render it incapable of progress or improvement.  It
would be to stamp upon our jurisprudence the unchangeableness attributed to
the laws of the Medes and Persians."  Id., at 528-529.


    Hurtado, then, clarified the proper role of history in a due process
analysis: if the government chooses to follow a historically approved
procedure, it necessarily provides due process, but if it chooses to depart
from historical practice, it does not necessarily deny due process.  The
remaining business, of course, was to develop a test for determining when a
departure from historical practice denies due process.  Hur tado provided
scant guidance.  It merely suggested that due process could be assessed in
such cases by reference to "those fundamental principles of liberty and
justice which lie at the base of all our civil and political institutions,"
id., at 535 (emphasis added).
    The concept of "fundamental justice" thus entered the due process
lexicon not as a description of what due process entails in general, but as
a description of what it entails when traditional procedures are dispensed
with.  As the Court reiterated in Twining v. New Jersey, 211 U. S. 78
(1908), "consistently with the requirements of due process, no change in
ancient procedure can be made which disregards those fundamental
principles, to be ascertained from time to time by judicial action, which
have relation to process of law and protect the citizen in his private
right, and guard him against the arbitrary action of government."  Id., at
101 (emphasis added).  See also Maxwell v. Dow, 176 U. S. 581, 602-605
(1900) (eight-member jury does not violate due process because it is not "a
denial of fundamental rights"). {1}
    Ownbey v. Morgan, 256 U. S. 94 (1921) provides a classic expression of
the Court's "settled usage" doctrine.  The Delaware statute challenged in
that case provided that a creditor could attach the in-state property of an
out-of-state debtor and recover against it without the debtor's being given
an opportunity to be heard unless he posted a bond.  This procedure could
be traced back to 18th-century London, and had been followed in Delaware
and other States since colonial days.  The Court acknowledged that in
general the due process guarantee "includ[es] the right to be heard where
liberty or property is at stake in judicial proceedings," id., at 111.
But, it said, "[a] procedure customarily employed, long before the
Revolution, in the commercial metropolis of England, and generally adopted
by the States as suited to their circumstances and needs, cannot be deemed
inconsistent with due process of law."  Ibid.

    "The due process clause does not impose upon the States a duty to
establish ideal systems for the administration of justice, with every
modern improvement and with provision against every possible hardship that
may befall. . . .
    "However desirable it is that the old forms of pro cedure be improved
with the progress of time, it cannot rightly be said that the Fourteenth
Amendment furnishes a universal and self-executing remedy.  Its function is
negative, not affirmative, and it carries no mandate for particular
measures of reform."  Id., at 110-112.


See also Corn Exchange Bank v. Coler, 280 U. S. 218, 222-223 (1930).
    By the time the Court decided Snyder v. Massachusetts, 291 U. S. 97
(1934), its understanding of due process had shifted in a subtle but
significant way.  That case rejected a criminal defendant's claim that he
had been denied due process by being prevented from accompanying his jury
on a visit to the scene of the crime.  Writing for the Court, Justice
Cardozo assumed that due process required "fundamental justice," id., at
108, or "fairness," see id., at 116, in all cases, and not merely when
evaluating nontraditional procedures.  The opinion's analysis began from
the premise that "Massachusetts is free to regulate the procedure of its
courts in accordance with its own conception of policy and fairness unless
in so doing it offends some principle of justice so rooted in the
traditions and conscience of our people to be ranked as fundamental."  Id.,
at 105 (emphasis added).  Even so, however, only the mode of analysis and
not the content of the Due Process Clause had changed, since in assessing
whether some principle of "fundamental justice" had been violated, the
Court was willing to accord historical practice dispositive weight.
Justice Cardozo noted that the practice of showing evidence to the jury
outside the presence of the defendant could be traced back to 18th-century
England, and had been widely adopted in the States.  "The Fourteenth
Amendment," he wrote, "has not displaced the procedure of the ages."  Id.,
at 111.
    In the ensuing decades, however, the concept of "fundamental fairness"
under the Fourteenth Amendment became increasingly decoupled from the
traditional historical approach.  The principal mechanism for that
development was the incorporation within the Fourteenth Amendment of the
Bill of Rights guarantees.  Although the Court resisted for some time the
idea that "fundamental fairness" necessarily included the protections of
the Bill of Rights, see, e. g., Adamson v. California, 332 U. S. 46, 54-58
(1947); Betts v. Brady, 316 U. S. 455, 462 (1942); Palko v. Connecticut,
302 U. S. 319, 323-325 (1937), it ultimately incorporated virtually all of
them.  See, e. g., Malloy v. Hogan, 378 U. S. 1, 4-6 (1964); Gideon v.
Wainwright, 372 U. S. 335, 341-345 (1963).  Of course, most of the
procedural protections of the federal Bill of Rights simply codified
traditional common law privileges, and had been widely adopted by the
States.  See Robertson v. Baldwin, 165 U. S. 275, 281 (1897) ("The law is
perfectly well settled that the first ten amendments to the Constitution,
commonly known as the Bill of Rights, were not intended to lay down any
novel principles of government, but simply to embody certain guaranties and
immunities which we had inherited from our English ancestors"); T. Cooley,
Constitutional Limitations ch. X (4th ed. 1878).  However, in the days when
they were deemed to apply only to the Federal Government and not to impose
uniformity upon the States, the Court had interpreted several provisions of
the Bill of Rights in a way that departed from their strict common-law
meaning.  Thus, by the mid-20th century there had come to be some
considerable divergence between historical practice followed by the States
and the guarantees of the Bill of Rights.  Gideon, supra, established that
no matter how strong its historical pedigree, a procedure prohibited by the
Sixth Amendment (failure to appoint counsel in certain criminal cases)
violates "fundamental fairness" and must be abandoned by the States.  Id.,
at 342-345.
    To say that unbroken historical usage cannot save a procedure that
violates one of the explicit procedural guarantees of the Bill of Rights
(applicable through the Fourteenth Amendment) is not necessarily to say
that such usage cannot dem onstrate the procedure's compliance with the
more general guarantee of "due process."  In principle, what is important
enough to have been included within the Bill of Rights has good claim to
being an element of "fundamental fairness," whatever history might say; and
as a practical matter, the invalidation of traditional state practices
achievable through the Bill of Rights is at least limited to enumerated
subjects.  But disregard of "the procedure of the ages" for incorporation
purposes has led to its disregard more generally.  There is irony in this,
since some of those who most ardently supported the incorporation doctrine
did so in the belief that it was a means of avoiding, rather than
producing, a subjective due-process jurisprudence.  See, for example, the
dissent of Justice Black, author of Gideon, from the Court's refusal to
replace "fundamental fairness" with the Bill of Rights as the sole test of
due process:

"[T]he `natural law' formula which the Court uses to reach its conclusion
in this case should be abandoned as an incongruous excrescence on our
Constitution.  I believe that formula to be itself a violation of our
Consti tution, in that it subtly conveys to courts, at the expense of
legislatures, ultimate power over public policies in fields where no
specific provision of the Constitution limits legislative power."  Adamson,
supra, at 75 (Black, J., dissenting).


    In any case, our due process opinions in recent decades have
indiscriminately applied balancing analysis to determine "fundamental
fairness," without regard to whether the procedure under challenge was (1)
a traditional one, and if so (2) prohibited by the Bill of Rights.  See, e.
g., Ake v. Oklahoma, 470 U. S. 68, 76-87 (1985); Lassiter v. Department of
Social Services of Durham Cty, N. C., 452 U. S. 18, 24-25 (1981); Mathews
v. Eldridge, 424 U. S. 319, 332-335 (1976).  Even so, however, very few
cases have used the due process clause, without the benefit of an
accompanying Bill of Rights guarantee, to strike down a procedure
concededly approved by traditional and continuing American practice.  Most
notably, in Sniadach v. Family Finance Corp. of Bay View, 395 U. S. 337,
340 (1969), over the strenuous dissent of Justice Black, the Court declared
unconstitutional the garnishment of wages, saying that "[t]he fact that a
procedure would pass muster under a feudal regime does not mean it gives
necessary protection to all property in its modern forms."  And in Shaffer
v. Heitner, 433 U. S. 186 (1977), the Court invalidated general quasi in
rem jurisdiction, saying that " `traditional notions of fair play and
substantial justice' can be as readily offended by the perpetuation of
ancient forms that are no longer justified as by the adoption of new
procedures that are inconsistent with the basic values of our
constitutional heritage," id., at 212.  Such cases, at least in their broad
pronouncements if not with respect to the particular provisions at issue,
{2} were in my view wrongly decided.
    I might, for reasons of stare decisis, adhere to the principle that
these cases announce, except for the fact that our later cases give it
nothing but lip service, and by their holdings reaffirm the view that
traditional practice (unless contrary to the Bill of Rights) is conclusive
of "fundamental fairness."  As I wrote last Term in Burnham v. Superior
Court of Calif., Marin Cty., 495 U. S. ---, --- (1990) (slip op., at
17-19), nothing but the conclusiveness of history can explain why
jurisdiction based upon mere service of process within a State -- either
generally or on the precise facts of that case -- is "fundamentally fair."
Nor to my mind can anything else explain today's decision that a punishment
whose assessment and extent are committed entirely to the discretion of the
jury is "fundamentally fair."  The Court relies upon two inconsequential
factors.  First, the "guidance" to the jury provided by the admonition that
it "take into consideration the character and the degree of the wrong as
shown by the evidence and necessity of preventing similar wrong."  That is
not guidance but platitude.  Second, review of the amount of the verdict by
the trial and appellate courts, which are also governed by no discernible
standard except what they have done in other cases (unless, presumably,
they announce a change).  But it would surely not be considered "fair" (or
in accordance with due process) to follow a similar procedure outside of
this historically approved context -- for example, to dispense with
meaningful guidance concerning compensatory damages, so long as whatever
number the jury picks out of the air can be reduced by the trial judge or
on appeal.  I can conceive of no test relating to "fairness" in the
abstract that would approve this procedure, unless it is whether something
even more unfair could be imagined.  If the imposition of millions of
dollars of liability in this hodge-podge fashion fails to "jar [the
Court's] constitutional sensibilities," ante, at 15, it is hard to say what
would.
    When the rationale of earlier cases (Sniadach and Shaffer) is
contradicted by later holdings -- and particularly when that rationale has
no basis in constitutional text and itself contradicts opinions never
explicitly overruled -- I think it has no valid stare decisis claim upon
me.  Our holdings remain in conflict, no matter which course I take.  I
choose, then, to take the course that accords with the language of the
Constitution and with our interpretation of it through the first half of
this century.  I reject the principle, aptly described and faithfully
followed in Justice O'Connor's dissent, that a traditional procedure of our
society becomes unconstitutional whenever the Members of this Court "lose .
. . confidence" in it, post, at 22.  And like Justice Cardozo in Snyder, I
affirm that no procedure firmly rooted in the practices of our people can
be so "fundamentally unfair" as to deny due process of law.
    Let me be clear about the scope of the principle I am ap plying.  It
does not say that every practice sanctioned by history is constitutional.
It does not call into question, for example, the case of Williams v.
Illinois, 399 U. S. 235 (1970), relied upon by both the majority and the
dissent, where we held unconstitutional the centuries-old practice of
permitting convicted criminals to reduce their prison sentences by paying
fines.  The basis of that invalidation was not denial of due process but
denial to indigent prisoners of equal protection of the laws.  The Equal
Protection Clause and other provisions of the Constitution, unlike the Due
Process Clause, are not an explicit invocation of the "law of the land,"
and might be thought to have some counterhistorical content.  Moreover, the
principle I apply today does not reject our cases holding that procedures
demanded by the Bill of Rights -- which extends against the States only
through the Due Process Clause -- must be provided despite historical
practice to the contrary.  Thus, it does not call into question the
proposition that punitive damages, despite their historical sanction, can
violate the First Amendment.  See, e. g., Gertz v. Robert Welch, Inc., 418
U. S. 323, 349-350 (1974) (First Amendment prohibits awards of punitive
damages in certain defamation suits).

*  *  *
    A harsh or unwise procedure is not necessarily unconsti tutional, Corn
Exchange Bank, 280 U. S., at 223, just as the most sensible of procedures
may well violate the Constitution, see Maryland v. Craig, 497 U. S. ---,
--- (1990) (slip op., at 1-2) (Scalia, J., dissenting).  State legislatures
and courts have the power to restrict or abolish the common-law practice of
punitive damages, and in recent years have increasingly done so.  See, e.
g., Alaska Stat. Ann. MDRV 09.17.020 (Supp. 1990) (punitive damages must be
supported by "clear and convincing evidence"); Fla. Stat. MDRV 768.73(1)(a)
(1989) (in specified classes of cases, punitive damages are limited to
three times the amount of compensatory damages); Va. Code MDRV 8.01-38.1
(Supp. 1990) (punitive damages limited to $350,000).  It is through those
means -- State by State, and, at the federal level, by Congress -- that the
legal procedures affecting our citizens are improved.  Perhaps, when the
operation of that process has purged a historically approved practice from
our national life, the Due Process Clause would permit this Court to
announce that it is no longer in accord with the law of the land.  But
punitive damages assessed under common-law procedures are far from a
fossil, or even an endangered species.  They are (regrettably to many)
vigorously alive.  To effect their elimination may well be wise, but is not
the role of the Due Process Clause.  "Its function is negative, not
affirmative, and it carries no mandate for particular measures of reform."
Ownbey, 256 U. S., at 112.
    We have expended much ink upon the due-process implications of punitive
damages, and the fact-specific nature of the Court's opinion guarantees
that we and other courts will expend much more in the years to come.  Since
jury-assessed punitive damages are a part of our living tradition that
dates back prior to 1868, I would end the suspense and categorically affirm
their validity.

 
 
 
 
 


------------------------------------------------------------------------------
1
    During the late 19th century the Court also advanced the view that laws
departing from substantive common law might violate due process if they
denied "fundamental" rights.  See, e. g., Allgeyer v. Louisiana, 165 U. S.
578, 589 (1897).  The present analysis deals only with the Court's socalled
"procedural" due process jurisprudence.

2
    In Shaffer, Justice Stevens' concurrence noted that Delaware was the
only State that currently exercised quasi in rem jurisdiction in the manner
there at issue, viz., on the basis of ownership of stock in a
statechartered corporation, when both owner and custodian of the stock
resided elsewhere.  See 433 U. S., at 218 (opinion concurring in judgment).
It seems not to have been asserted, moreover, that that manner of exercise
had ever been a common and established American practice.





Subject: 89-1279 -- CONCUR, PACIFIC MUTUAL LIFE INSURANCE CO. v. HASLIP

 
SUPREME COURT OF THE UNITED STATES


No. 89-1279



PACIFIC MUTUAL LIFE INSURANCE COMPANY,
PETITIONER v. CLEOPATRA HASLIP et al.


on writ of certiorari to the supreme court of alabama

[March 4, 1991]



    Justice Kennedy, concurring in the judgment.

    Historical acceptance of legal institutions serves to validate them not
because history provides the most convenient rule of decision but because
we have confidence that a longaccepted legal institution would not have
survived if it rested upon procedures found to be either irrational or
unfair.  For this reason, Justice Scalia's historical approach to questions
of procedural due process has much to commend it.  I cannot say with the
confidence maintained by Justice Scalia, however, that widespread adherence
to a historical practice always forecloses further inquiry when a party
challenges an ancient institution or procedure as violative of due process.
But I agree that the judgment of history should govern the outcome in the
case before us.  Jury determination of punitive damages has such long and
principled recognition as a central part of our system that no further
evidence of its essential fairness or rationality ought to be deemed
necessary.
    Our legal tradition is one of progress from fiat to rationality.  The
evolution of the jury illustrates this principle.  From the 13th or 14th
century onward, the verdict of the jury found gradual acceptance not as a
matter of ipse dixit, the basis for verdicts in trials by ordeal which the
jury came to displace, but instead because the verdict was based upon
rational procedures.  See Plucknett, A Concise History of the Common Law
120-131 (5th ed. 1956).  Elements of whim and caprice do not predominate
when the jury reaches a consensus based upon arguments of counsel, the
presentation of evidence, and instructions from the trial judge, subject to
review by the trial and appellate courts. There is a principled
justification too in the composition of the jury, for its representative
character permits its verdicts to express the sense of the community.
    Some inconsistency of jury results can be expected for at least two
reasons.  First, the jury is empanelled to act as a decisionmaker in a
single case, not as a more permanent body.  As a necessary consequence of
their case-by-case existence, juries may tend to reach disparate outcomes
based on the same instructions.  Second, the generality of the instructions
may contribute to a certain lack of predictability.  The law encompasses
standards phrased at varying levels of generality.  As with other
adjudicators, the jury may be instructed to follow a rule of certain and
specific content in order to yield uniformity at the expense of
considerations of fairness in the particular case; or, as in this case, the
standard can be more abstract and general to give the adjudicator
flexibility in resolving the dispute at hand.
    These features of the jury system for assessing punitive damages
discourage uniform results, but nonuniformity cannot be equated with
constitutional infirmity.  As we have said in the capital sentencing
context:

"It is not surprising that such collective judgments often are difficult to
explain.  But the inherent lack of predictability of jury decisions does
not justify their condemnation.  On the contrary, it is the jury's function
to make the difficult and uniquely human judgments that defy codification
and that `buil[d] discretion, equity, and flexibility into a legal system.'
"  McCleskey v. Kemp, 481 U. S. 279, 311 (1987) (quoting H. Kalven & H.
Zeisel, The American Jury 498 (1966)).


    This is not to say that every award of punitive damages by a jury will
satisfy constitutional norms.  A verdict returned by a biased or prejudiced
jury no doubt violates due process, and the extreme amount of an award
compared to the actual damage inflicted can be some evidence of bias or
prejudice in an appropriate case.  One must recognize the difficulty of
making the showing required to prevail on this theory.  In my view,
however, it provides firmer guidance and rests on sounder jurisprudential
foundations than does the approach espoused by the majority.  While seeming
to approve the common law method for assessing punitive damages, ante, at
14, the majority nevertheless undertakes a detailed examination of that
method as applied in the case before us, ante, at 14-20.  It is difficult
to comprehend on what basis the majority believes the common-law method
might violate due process in a particular case after it has approved that
method as a general matter, and this tension in its analysis now must be
resolved in some later case.
    In my view, the principles mentioned above and the usual protections
given by the laws of the particular State must suffice until judges or
legislators authorized to do so initiate systemwide change.  We do not have
the authority, as do judges in some of the States, to alter the rules of
the common law respecting the proper standard for awarding punitive damages
and the respective roles of the jury and the court in making that
determination.  Were we sitting as state court judges, the size and
recurring unpredictability of punitive damages awards might be a convincing
argument to reconsider those rules or to urge a reexamination by the
legislative authority.  We are confined in this case, however, to
interpreting the Constitution, and from this perspective I agree that we
must reject the arguments advanced by petitioner.   For these reasons I
concur in the judgment of the Court.

------------------------------------------------------------------------------




Subject: 89-1279 -- DISSENT, PACIFIC MUTUAL LIFE INSURANCE CO. v. HASLIP

 
SUPREME COURT OF THE UNITED STATES


No. 89-1279



PACIFIC MUTUAL LIFE INSURANCE COMPANY,
PETITIONER v. CLEOPATRA HASLIP et al.


on writ of certiorari to the supreme court of alabama

[March 4, 1991]



    Justice O'Connor, dissenting.

    Punitive damages are a powerful weapon.  Imposed wisely and with
restraint, they have the potential to advance legitimate state interests.
Imposed indiscriminately, however, they have a devastating potential for
harm.  Regrettably, common-law procedures for awarding punitive damages
fall into the latter category.  States routinely authorize civil juries to
impose punitive damages without providing them any meaningful instructions
on how to do so.  Rarely is a jury told anything more specific than "do
what you think best."  See Browning-Ferris Industries v. Kelco Disposal,
Inc., 492 U. S. ---, --- (1989) (slip op., at 2) (Brennan, J.,
concurring).
    In my view, such instructions are so fraught with uncertainty that they
defy rational implementation.  Instead, they encourage inconsistent and
unpredictable results by inviting juries to rely on private beliefs and
personal predilections.  Juries are permitted to target unpopular
defendants, penalize unorthodox or controversial views, and redistribute
wealth.  Multimillion dollar losses are inflicted on a whim.  While I do
not question the general legitimacy of punitive damages, I see a strong
need to provide juries with standards to constrain their discretion so that
they may exercise their power wisely, not capriciously or maliciously.  The
Constitution requires as much.
    The Court today acknowledges that dangers may lurk, but holds that they
did not materialize in this case.  See ante, at 15-20.  They did
materialize, however.  They always do, because such dangers are
part-and-parcel of common-law punitive damages procedures.  As is typical,
the trial court's instructions in this case provided no meaningful
standards to guide the jury's decision to impose punitive damages or to fix
the amount.  Accordingly, these instructions were void for vagueness.  Even
if the Court disagrees with me on this point, it should still find that
Pacific Mutual was denied procedural due process.  Whether or not the jury
instructions were so vague as to be unconstitutional, they plainly offered
less guidance than is required under the due process test set out in
Mathews v. Eldridge, 424 U. S. 319, 335 (1976).  The most modest of
procedural safeguards would have made the process substantially more
rational without impairing any legitimate governmental interest.  The Court
relies heavily on the State's mechanism for postverdict judicial review,
ante, at 17-20, but this is incapable of curing a grant of standard less
discretion to the jury.  Post hoc review tests only the amount of the
award, not the procedures by which that amount was determined.  Alabama's
common-law scheme is so lacking in fundamental fairness that the propriety
of any specific award is irrelevant.  Any award of punitive damages
rendered under these procedures, no matter how small the amount, is
constitutionally infirm.
    Notwithstanding its recognition of serious due process concerns, the
Court upholds Alabama's punitive damages scheme.  Unfortunately, Alabama's
punitive damages scheme is indistinguishable from the common-law schemes
employed by many States.  The Court's holding will therefore substantially
impede punitive damages reforms.  Because I am concerned that the Court
today sends the wrong signal, I respectfully dissent.
I
    Due process requires that a State provide meaningful standards to guide
the application of its laws.  See Kolender v. Lawson, 461 U. S. 352, 358
(1983).  A state law that lacks such standards is void for vagueness.  The
void-for-vagueness doctrine applies not only to laws that proscribe
conduct, but also to laws that vest standardless discretion in the jury to
fix a penalty.  See United States v. Batchelder, 442 U. S. 114, 123 (1979).
I have no trouble concluding that Alabama's common-law scheme for imposing
punitive damages is void for vagueness.
A
    Alabama's punitive damages scheme requires a jury to make two
decisions: (1) whether or not to impose punitive damages against the
defendant, and (2) if so, in what amount.  On the threshold question of
whether or not to impose punitive damages, the trial court instructed the
jury as follows: "Imposition of punitive damages is entirely discretionary
with the jury, that means you don't have to award it unless this jury feels
that you should do so."  App. 105-106 (emphasis added).
    This instruction is as vague as any I can imagine.  It speaks of
discretion, but suggests no criteria on which to base the exercise of that
discretion.  Instead of reminding the jury that its decision must rest on a
factual or legal predicate, the instruction suggests that the jury may do
whatever it "feels" like.  It thus invites individual jurors to rely upon
emotion, bias, and personal predilections of every sort.  As I read the
instruction, it as much permits a determination based upon the toss of a
coin or the color of the defendant's skin as upon a reasoned analysis of
the offensive conduct.  This is not "discretion in the legal sense of that
term, but . . . mere will.  It is purely arbitrary and acknowledges neither
guidance nor restraint."  Yick Wo v. Hopkins, 118 U. S. 356, 366-367
(1886).
    Giaccio v. Pennsylvania, 382 U. S. 399 (1966), offers a compelling
analogy.  At issue in Giaccio was a statute that left to the discretion of
the jury whether or not to assess costs against an acquitted criminal
defendant.  The statute did not set out any standards to guide the jury's
determination.  Id., at 401.  The Court did not hesitate in striking down
the statute on vagueness grounds.  Id., at 402.  It reasoned that the utter
lack of standards subjected acquitted defendants to "arbitrary and
discriminatory impositions of costs."  Ibid.  Justice Black wrote for the
Court:

"The Act, without imposing a single condition, limitation or contingency on
a jury which has acquitted a defendant simply says the jurors `shall
determine, by their verdict, whether . . . the defendant, shall pay the
costs' . . . .  Certainly one of the basic purposes of the Due Process
Clause has always been to protect a person against having the Government
impose burdens upon him except in accordance with the valid laws of the
land.  Implicit in this constitutional safeguard is the premise that the
law must be one that carries an understandable meaning with legal standards
that courts must enforce.  This state Act as written does not even begin to
meet this constitutional requirement."  Id., at 403.


    Alabama's common-law punitive damages scheme fails for precisely the
same reason.  It permits a jury to decide whether or not to impose punitive
damages "without imposing a single condition, limitation or contingency" on
the jury.  Ibid.  The State offers no principled basis for distinguishing
those tortfeasors who should be liable for punitive damages from those who
should not be liable.  Instead, the State delegates this basic policy
matter to individual juries "for res olution on an ad hoc and subjective
basis, with the attendant dangers of arbitrary and discriminatory
application."  Grayned v. City of Rockford, 408 U. S. 104, 108-109 (1972).
As in Giaccio, this grant of unchanneled, standardless discretion "does not
even begin to meet th[e] constitutional requirement."  Giaccio, 382 U. S.,
at 403.
    The vagueness question is not even close.  This is not a case where a
State has ostensibly provided a standard to guide the jury's discretion.
Alabama, making no pretensions whatsoever, gives civil juries complete,
unfettered, and unchanneled discretion to determine whether or not to
impose punitive damages.  Not only that, the State tells the jury that it
has complete discretion.  This is a textbook example of the
void-for-vagueness doctrine.  Alabama's common-law scheme is
unconstitutionally vague because the State entrusts the jury with "such
broad and unlimited power . . . that the jurors must make determinations of
the crucial issue upon their notions of what the law should be instead of
what it is."  Ibid.
    If anything, this is an easier case than Giaccio.  There, the Court
struck down on vagueness grounds a Pennsylvania law, under which the
monetary penalty that could be assessed by the jury against the defendant
was limited to the costs of prosecution -- in that case, $230.95.  Id., at
400.  Our scrutiny under the vagueness doctrine intensifies, however, in
proportion to the severity of the penalty imposed, see Hoffman Estates v.
The Flipside, Hoffman Estates, Inc., 455 U. S. 489, 498-499 (1982), and
Alabama's punitive damages scheme places no substantive limits on the
amount of a jury's award.  Pacific Mutual was found liable for punitive
damages of $840,000.  Ante, at 3, n. 2.  Even this substantial sum pales by
comparison to others handed down by juries in the State.  See App. to Brief
for Alabama Defense Lawyers Association as Amicus Curiae 1a-19a (listing
Alabama jury verdicts including punitive damages awards as high as $10
million, $25 million, and $50 million).
    It is no defense to vagueness that this case concerns a jury
instruction rather than a statute.  The constitutional prohibition against
vagueness does not disappear simply because the state law at issue
originated in the courts rather than the legislature.  "[I]f anything, our
scrutiny of awards made without the benefit of a legislature's deliberation
and guidance would be less indulgent than our consideration of those that
fall within statutory limits."  Browning-Ferris, 492 U. S., at --- (slip
op., at 1) (Brennan, J., concurring).  See ante, at 17-18.  Moreover, the
instruction in this case was not an aberration.  It tracked virtually
word-for-word Alabama's Pattern Jury Instruction on punitive damages.  See
Alabama Pattern Jury Instructions 11.03 (1974).
    Nor does it matter that punitive damages are imposed by civil juries
rather than criminal courts.  The vagueness doctrine is not limited to
criminal penalties.  See Hoffman Estates, supra; City of Mesquite v.
Aladdin's Castle, Inc., 455 U. S. 283 (1982).  The Court in Giaccio
expressly repudiated this distinction:

"Both liberty and property are specifically protected by the Fourteenth
Amendment against any state deprivation which does not meet the standards
of due process, and this protection is not to be avoided by the simple
label a State chooses to fasten upon its conduct or its statute.  So here
this state Act whether labeled `penal' or not must meet the challenge that
it is unconstitutionally vague."  382 U. S., at 402.


    Here, as in Giaccio, the civil/criminal distinction is blurry.  Unlike
compensatory damages, which are purely civil in character, punitive damages
are, by definition, punishment.  They operate as "private fines levied by
civil juries" to advance governmental objectives.  Gertz v. Robert Welch,
Inc., 418 U. S. 323, 350 (1974).  Because Alabama permits juries to inflict
these potentially devastating penalties wholly at random, the State scheme
is void for vagueness.
B
    If an Alabama jury determines that punitive damages are appropriate in
a particular case, it must then fix the amount.  Here, the trial court
instructed the jury: "Should you award punitive damages, in fixing the
amount, you must take into consideration the character and the degree of
the wrong as shown by the evidence and [the] necessity of preventing
similar wrong."  App. 106.
    The Court concludes that this instruction sufficiently limited the
jury's discretion, ante, at 16-17, but I cannot share this conclusion.
Although the instruction ostensibly provided some guidance, this appearance
is deceiving.  As Justice Brennan said of a similar instruction: "Guidance
like this is scarcely better than no guidance at all.  I do not suggest
that the instruction itself was in error; indeed, it appears to have been a
correct statement of [state] law.  The point is, rather, that the
instruction reveals a deeper flaw: the fact that punitive damages are
imposed by juries guided by little more than an admonition to do what they
think is best."  Browning-Ferris, supra, at --- (slip op., at 2)
(concurring opinion).  I agree wholeheartedly.  Vague references to "the
character and the degree of the wrong" and the "necessity of preventing
similar wrong" do not assist a jury in making a reasoned decision; they are
too amorphous.  They restate the overarching principles of punitive damages
awards -- to punish and deter -- without adding meaning to these terms.
For example, the trial court did not suggest what relation, if any, should
exist between the harm caused and the size of the award, nor how to measure
the deterrent effect of a particular award.  It provided no information to
the jury about criminal fines for comparable conduct or the range of
punitive damages awards in similar cases.  Nor did it identify the
limitations dictated by retributive and deterrent principles, or advise the
jury to refrain from awarding more than necessary to meet these objectives.
In short, the trial court's instruction identified the ultimate
destination, but did not tell the jury how to get there.  Due process may
not require a detailed roadmap, but it certainly requires directions of
some sort.
    Giaccio is instructive in this inquiry.  There, the State argued that
even if the cost-assessment statute was impermissibly vague as written,
subsequent state court decisions had adopted meaningful standards for
implementing it.  The jury in Giaccio was thus instructed that it could
assess costs against the defendant if it found that he was guilty of
misconduct that, while not a criminal offense, warranted a penalty.  See
Giaccio, 382 U. S., at 404.  This Court did not accept that this nebulous
instruction cured the statute's vagueness.  "It may possibly be that the
trial court's charge comes nearer to giving a guide to the jury than those
that preceded it, but it still falls short of the kind of legal standard
due process requires."  Ibid.
    The trial court's instruction in this case fares no better.  In fact,
the minimal guidance it offered may well have pushed the jury further away
from reasoned decisionmaking.  Paraphrased slightly, the court's terse
instruction told the jury: "Think about how much you hate what the
defendants did and teach them a lesson."  This is not the sort of
instruction likely to produce a fair, dispassionate verdict.  Like most
common-law punitive damages instructions, this one has "an open-ended,
anything-goes quality that can too easily stoke . . . the vindictive or
sympathetic passions of juries."  P. Huber, Liability: The Legal Revolution
and Its Consequences 118 (1988) (hereinafter Huber).  Our cases attest to
the wildly unpredictable results and glaring unfairness that characterize
common-law punitive damages procedures.  See infra, at 13-14.
    One need not look far to see that these so-called standards provide no
guidance to Alabama juries.  Consider, for example, a recent Alabama case
involving a collision between a train and a tractor-trailer truck, which
resulted in the death of the driver of the tractor.  Notwithstanding that
the tractor pulled onto the tracks right in front of the train, thereby
ignoring a stop sign, three warning signs, and five speed bumps, the
administratrix of decedent's estate asked for $3 million in punitive
damages.  The jury, after receiving instructions no more vague than those
at issue here, awarded her $15 million.  Whitt v. Burlington Northern R.
Co., No. CV-85-311 (Cir. Ct. Ala. Aug. 23, 1988), aff'd conditionally, No.
88-376 (Ala. Sept. 21, 1990) (remitting award to $5 million), stay granted
--- U. S. --- (Dec. 5, 1990) (Kennedy, J., Circuit Justice).
    That Alabama's "standards" in fact provide no guidance whatsoever was
illustrated quite dramatically by Alabama Supreme Court Justice Houston in
his concurring opinion in Charter Hospital of Mobile, Inc. v. Weinberg, 558
So. 2d 909, 916 (Ala. 1990).  He pointed to two cases involving
substantially the same misconduct and jury instructions, but having very
different results: Washington Nat. Ins. Co. v. Strick land, 491 So. 2d 872
(Ala. 1985), and Land & Assocs., Inc. v. Simmons, 562 So. 2d 140 (Ala.
1989).  In both cases, an insurance agent misrepresented to a prospective
insured that coverage would begin as soon as the insured paid the first
premium when, in reality, the agent should have known that coverage was
conditioned upon a medical examination that the insured was unlikely to
pass.  See Strickland, supra, at 873, 877; Simmons, supra, at 142.  In one
case, the jury handed down a punitive damages award of approximately
$21,000 -- 151/2 times the compensatory damages.  See Strickland, supra, at
874.  In the other case, the jury penalized substantially the same conduct
with a punitive damages award of $2,490,000 -- 249 times the compensatory
award.  See Simmons, supra, at 151 (Houston, J., concurring specially).
These vastly disparate results demonstrate that, under Alabama's common-law
scheme, any case-to-case consistency among verdicts is purely fortuitous.
    This is not a case where more precise standards are either impossible
or impractical.  See Kolender, 461 U. S., at 361.  Just the opposite.  The
Alabama Supreme Court has already formulated a list of seven factors that
it considers relevant to the size of a punitive damages award:

    " `(1) Punitive damages should bear a reasonable relationship to the
harm that is likely to occur from the defendant's conduct as well as to the
harm that actually has occurred.  If the actual or likely harm is slight,
the damages should be relatively small.  If grievous, the damages should be
much greater.
    " `(2) The degree of reprehensibility of the defendant's conduct should
be considered.  The duration of this conduct, the degree of the defendant's
awareness of any hazard which his conduct has caused or is likely to cause,
and any concealment or "cover-up" of that hazard, and the existence and
frequency of similar past conduct should all be relevant in determining
this degree of reprehensibility.
    " `(3) If the wrongful conduct was profitable to the defendant, the
punitive damages should remove the profit and should be in excess of the
profit, so that the defendant recognizes a loss.
    " `(4) The financial position of the defendant would be relevant.
    " `(5) All the costs of litigation should be included, so as to
encourage plaintiffs to bring wrongdoers to trial.
    " `(6) If criminal sanctions have been imposed on the defendant for his
conduct, this should be taken into account in mitigation of the punitive
damages award.
    " `(7) If there have been other civil actions against the same
defendant, based on the same conduct, this should be taken into account in
mitigation of the punitive damages award.' "  Green Oil Co. v. Hornsby, 539
So. 2d 218, 223-224 (1989), quoting Aetna Life Ins. Co. v. Lavoie, 505 So.
2d 1050, 1062 (Ala. 1987) (Houston, J., concurring specially).


    In my view, these standards -- the "Green Oil factors" -- could assist
juries to make fair, rational decisions.  Unfortunately, Alabama courts do
not give the Green Oil factors to the jury.  See 539 So. 2d, at 224
(Maddox, J., concurring specially).  Instead, the jury has standardless
discretion to impose punitive damages whenever and in whatever amount it
wants.  The Green Oil factors play a role only after the jury has rendered
its verdict.  The trial court and other reviewing courts may -- but are not
required to -- take these factors into consideration in determining whether
a punitive damages award is excessive.  Id., at 223.
    Obviously, this post hoc application of the Green Oil factors does not
cure the vagueness of the jury instructions.  Cf. Baggett v. Bullitt, 377
U. S. 360, 373 (1964) ("[J]udicial safeguards do not neutralize the vice of
a vague law").  See also Roberts v. United States Jaycees, 468 U. S. 609,
629 (1984).  As respondents candidly admit, judicial review in Alabama is
limited to the amount of the award.  The voidfor-vagueness doctrine, on the
other hand, is concerned with the procedures by which the amount is
determined.  Afterthe-fact review of the amount in no way diminishes the
fact that the State entrusts its juries with standardless discretion.  It
thus does not matter that the amount settled upon by the jury might have
been permissible under a rational system.  Even a wholly irrational process
may, on occasion, stumble upon a fair result.  What is crucial is that the
existing system is not rational.  "[P]rocedural due process rules are
shaped by the risk of error inherent in the truth-finding process as
applied to the generality of cases, not the rare exceptions."  Mathews v.
Eldridge, 424 U. S., at 344.  The state court justice who devised the Green
Oil factors, Justice Houston, has recognized this.  Addressing a vagueness
challenge to the State's punitive damages procedures, he wrote: "We have
attempted to deal with the issue of the reliability of punitive damages
assessments by post-trial review only.  That attempt does not really
address the issue."  Charter Hospital, 558 So. 2d, at 915 (Houston, J.,
concurring specially) (emphasis added; citations omitted).
II
    For the reasons stated above, I would hold that Alabama's common-law
punitive damages scheme is void for vagueness.  But the Court need not
agree with me on this point in order to conclude that Pacific Mutual was
denied procedural due process.  Whether or not the Court agrees that the
jury instructions were so vague as to be unconstitutional, there can be no
doubt but that they offered substantially less guidance than is possible.
Applying the test of procedural due process set out in Mathews v. Eldridge,
supra, more guidance was required.  Modest safeguards would make the
process significantly more rational without impairing any legitimate
governmental interest.
A
    In Mathews v. Eldridge, supra, at 334, we recognized that " ` "[d]ue
process," unlike some legal rules, is not a technical conception with a
fixed content unrelated to time, place and circumstances.  Cafeteria
Workers v. McElroy, 367 U. S. 886, 895 (1961).' "  "[D]ue process is
flexible and calls for such procedural protections as the particular
situation demands."  Morrissey v. Brewer, 408 U. S. 471, 481 (1972).
Accordingly, Mathews described a sliding-scale test for determining whether
a particular set of procedures was constitutionally adequate.  We look at
three factors: (1) the private interest at stake; (2) the risk that
existing procedures will wrongly impair this private interest, and the
likelihood that additional procedural safeguards can effect a cure; and (3)
the governmental interest in avoiding these additional procedures.
Mathews, supra, at 335.
    Applying the Mathews test to Alabama's common-law punitive damages
scheme, it is clear that the state procedures deprive defendants of
property without due process of law.  The private property interest at
stake is enormous.  Without imposing any legislative or common-law limits,
Alabama authorizes juries to levy civil fines ranging from zero to tens of
millions of dollars.  Indeed, a jury would not exceed its discretion under
state law by imposing an award of punitive damages that was deliberately
calculated to bankrupt the defendant.  Unlike compensatory damages, which
are tied to an actual injury, there is no objective standard that limits
the amount of punitive damages.  Consequently, " `the impact of these
windfall recoveries is unpredictable and potentially substantial.' "
Bankers Life & Casualty Co. v. Cren shaw, 486 U. S. 71, 87 (1988) (opinion
concurring in part and concurring in judgment), quoting Electrical Workers
v. Foust, 442 U. S. 42, 50 (1979).
    Compounding the problem, punitive damages are quasicriminal punishment.
Unlike compensatory damages, which serve to allocate an existing loss
between two parties, punitive damages are specifically designed to exact
punishment in excess of actual harm to make clear that the defendant's
misconduct was especially reprehensible.  Hence, there is a stigma attached
to an award of punitive damages that does not accompany a purely
compensatory award.  The punitive character of punitive damages means that
there is more than just money at stake.  This factor militates in favor of
strong procedural safeguards.
    The second Mathews prong focuses on the fairness and reliability of
existing procedures.  This is a question we have spoken to before.  Over
the last 20 years, the Court has repeatedly criticized common-law punitive
damages procedures on the ground that they invite discriminatory and
otherwise illegitimate awards.  E. g., Gertz, 418 U. S., at 350 (common-law
procedures leave juries "free to use their discretion selectively to punish
expressions of unpopular views"); Electrical Workers, supra, at 50-51, and
n. 14 ("[P]unitive damages may be employed to punish unpopular
defendants"); Rosenbloom v. Metromedia, Inc., 403 U. S. 29, 83 (1971)
(Marshall, J., dissenting) ("This discretion allows juries to penalize
heavily the unorthodox and the unpopular and exact little from others");
Smith v. Wade, 461 U. S. 30, 59 (1983) (Rehnquist, J., dissenting)
("[P]unitive damages are frequently based upon the caprice and prejudice of
jurors").  For this reason, the Court has forbidden the award of punitive
damages in certain defamation suits brought by private plaintiffs, Gertz,
supra, at 349-350, and in unfair representation suits brought against labor
unions under the Railway Labor Act, Electrical Workers, supra, at 52.
    Although our cases have not squarely addressed the due process question
before us today, see Browning-Ferris, --- U. S., at ---, we have strongly
hinted at the answer.  See ante, at 5-9.  Justice Brennan and Justice
Marshall joined the Court's opinion in Browning-Ferris, but wrote
separately to express their "understanding that it leaves the door open for
a holding that the Due Process Clause constrains the imposition of punitive
damages in civil cases brought by private parties."  492 U. S., at ---
(slip op., at 1) (Brennan, J., concurring).  In a separate opinion that
Justice Stevens joined, I voiced strong concerns "regarding the vagueness
and procedural due process problems presented by juries given unbridled
discretion to impose punitive damages."  Id., at --- (slip op., at 2)
(opinion concurring in part and dissenting in part).  This echoed my
earlier statement, with which Justice Scalia joined, in Bankers Life,
supra, at 88: "This grant of wholly standardless discretion to determine
the severity of punishment appears inconsistent with due process" (opinion
concurring in part and concurring in judgment).
    As explained above, see supra, at 10-11, Alabama's grant of
standardless discretion to juries is not remedied by post hoc judicial
review.  At best, this mechanism tests whether the award is grossly
excessive.  This is an important substantive due process concern, but our
focus here is on the requirements of procedural due process.  Cf. Santosky
v. Kramer, 455 U. S. 745, 757 (1982) ("Retrospective case-by-case review
cannot preserve fundamental fairness when a class of proceedings is
governed by a constitutionally defective evidentiary standard").
    Even if judicial review of award amounts could potentially mimimize the
evils of standardless discretion, Alabama's review procedure is not up to
the task.  For one thing, Alabama courts cannot review whether a jury
properly applied permissible factors, because juries are not told which
factors are permissible and which are not.  See Wheeler, The Constitutional
Case for Reforming Punitive Damage Procedures, 69 Va. L. Rev. 269, 290
(1983) (hereinafter Wheeler).  Making effective review even more unlikely,
the primary com ponent of Alabama's review mechanism is deference.  The
State Supreme Court insists that a jury's award of punitive damages carries
a "presumption of correctness" that a defendant must overcome before
remittitur is appropriate.  Green Oil, 539 So. 2d, at 222, 224.  Reviewing
courts are thus required to uphold the jury's exercise of unbridled,
unchanneled, standardless discretion unless the amount happened upon by the
jury cannot be reconciled with even the most generous application of the
Green Oil factors.
    That is precisely what happened here.  When Pacific Mutual challenged
the State's procedures governing awards of punitive damages, the trial
court simply deferred to the jury.  The judge noted that he "would in all
likelihood have rendered a lesser amount," App. to Pet. for Cert. A-15, but
that the verdict was not excessive or unfair because "[t]he jury was
composed of male and female, white and black and . . . acted
conscientiously throughout the trial."  Ibid.  Relying on the trial judge's
refusal to disturb the verdict, the State Supreme Court afforded it a
double dose of deference, stating that "jury verdicts are presumed correct,
and that presumption is strengthened when the presiding judge refuses to
grant a new trial."  553 So. 2d 537, 543 (Ala. 1989).
    This strong deference is troubling given that the Alabama Supreme Court
has explicitly acknowledged that its current procedures provide for "
`unguided discretion,' " Green Oil, 539 So. 2d, at 222, and in no way
dictate a rational jury verdict: " `The current system furnishe[s]
virtually no yardstick for measuring the amount of the award over against
the purpose of the award.' "  Ibid., quoting Ridout's-Brown Service, Inc.
v. Holloway, 397 So. 2d 125, 127-128 (Ala. 1981) (Jones, J., concurring
specially).  "[I]t is possible for a jury to hear the evidence in the case,
make findings of fact, correctly apply the law, and still, albeit
unwittingly, assess damages that bear no reasonable relationship to the
accomplishment of [punishment and deterrence] goals."  Ibid.  Thus, the
State Supreme Court recognizes that its common-law procedures produce
irrational results, yet insists on deferring to these results.  Blind
adherence to the product of recognized procedural infirmity is not judicial
review as I understand it.  It is an empty exercise in rationalization that
creates only the appearance of even-handed justice.
    Crucial to Mathews' second prong, the procedural infirmities here are
easily remedied.  The Alabama Supreme Court has already given its approval
to the Green Oil factors.  By giving these factors to juries, the State
would be providing them with some specific standards to guide their
discretion.  This would substantially enhance the fairness and rationality
of the State's punitive damages system.  Other procedural safeguards might
prove equally effective.  For example, state legislatures could establish
fixed monetary limits for awards of punitive damages for particular kinds
of conduct.  So long as the legislatively determined ranges are
sufficiently narrow, they could function as meaningful constraints on jury
discretion while at the same time permitting juries to render
individualized verdicts.
    Another possibility advocated by several commentators, see ante, at 19,
n. 11; Wheeler 300-301, is that States could bifurcate trials into
liability and punitive damages stages.  At the punitive damages stage,
clear and convincing evidence that the defendant acted with the requisite
culpability would be required.  This would serve two goals.  On a practical
level, the clear-and-convincing-evidence requirement would constrain the
jury's discretion, limiting punitive damages to the more egregious cases.
This would also permit closer scrutiny of the evidence by trial judges and
reviewing courts.  See Ellis, Punitive Damages, Due Process, and the Jury,
40 Ala. L. Rev. 975, 995-996 (1989).  On a symbolic level, the higher
evidentiary standard would signal to the jury that it should have a high
level of confidence in its factual findings before imposing punitive
damages.  Id., at 995; Wheeler 297-298.  Any of these rudimentary
modifications would afford more meaningful guidance to juries, thereby
lessening the chance of arbitrary and discriminatory awards, without
impairing the State's legitimate interests in punishment and deterrence.
Given the existence of several equally acceptable methods, concerns of
federalism and judicial restraint counsel that this Court should not
legislate to the States which particular method to adopt.  I would thus
leave it to individual States to decide what method is most consistent with
their objectives.
    The final Mathews factor asks whether the State has a legitimate
interest in preserving standardless jury discretion that is so compelling
as to render even modest procedural reforms unduly burdensome.  The Court
effectively answered this question in Gertz, 418 U. S., at 349, announcing
that "the States have no substantial interest in securing for plaintiffs .
. . gratuitous awards of money damages far in excess of actual injury"
(emphasis added).
    Respondents do not give up easily.  They point out that the State has a
substantial interest in deterring wrongful conduct and draw from this a
peculiar argument.  They contend that, by making jury awards more
predictable, procedural safeguards will tend to diminish the deterrent
effect of punitive damages.  If award amounts are predictable, they argue,
corporations will not avoid wrongdoing; instead, they will merely calculate
the probability of a punitive damages award and factor it in as a cost of
doing business.  Accordingly, to best advance the State's interest in
deterrence, juries must be given unbridled discretion to render awards that
are wildly unpredictable.
    This argument goes too far.  While the State has a legitimate interest
in avoiding rigid strictures so that a jury may tailor its award to
specific facts, the Due Process Clause does not permit a State to classify
arbitrariness as a virtue.  Indeed, the point of due process -- of the law
in general -- is to allow citizens to order their behavior.  A State can
have no legitimate interest in deliberately making the law so arbitrary
that citizens will be unable to avoid punishment based solely upon bias or
whim.  The procedural reforms suggested here in no way intrude on the
jury's ability to exercise reasoned discretion, nor do they preclude
flexible decisionmaking.  Due process requires only that a jury be given a
measurable degree of guidance, not that it be straight jacketed into
performing a particular calculus.
    Similarly, the suggested procedural safeguards do not impair the
State's punishment objectives.  Admittedly, the State has a strong interest
in punishing wrongdoers, but it has no legitimate interest in maintaining
in pristine form a common-law system that imposes disproportionate
punishment and that subjects defendants guilty of similar misconduct to
wholly different punishments.  Due process requires, at some level, that
punishment be commensurate with the wrongful conduct.  See Solem v. Helm,
463 U. S. 277, 284290 (1983); id., at 311, n. 3 (Burger, C. J.,
dissenting).  The State can therefore have no valid objection to procedural
measures that merely ensure that punitive damages awards are based on some
factual or legal predicate, rather than the personal predilections and
whims of individual jurors.
B
    In his concurrence, Justice Scalia offers a very different notion of
what due process requires.  He argues that a practice with a long
historical pedigree is immune to reexamination.  Ante, at 15.  The Court
properly rejects this argument.  Ante, at 14-15.  A static notion of due
process is flatly inconsistent with Mathews, 424 U. S., at 334-335, in
which this Court announced that the requirements of the Due Process Clause
are " `flexible' " and may vary with " `time, place and circumstances.' "
We have repeatedly relied on the Mathews analysis, and our recent cases
leave no doubt as to its continued vitality.  See, e. g., Washington v.
Harper, 494 U. S. ---, --- (1990) (slip op., at 17); Brock v. Roadway
Express, Inc., 481 U. S. 252, 261-262 (1987); Walters v. National Assn. of
Radiation Survivors, 473 U. S. 305, 320-321 (1985); Cleveland Bd. of
Education v. Loudermill, 470 U. S. 532, 542-543 (1985); Ake v. Oklahoma,
470 U. S. 68, 77 (1985); Schall v. Martin, 467 U. S. 253, 274 (1984).
    Due process is not a fixed notion.  Procedural rules, "even ancient
ones, must satisfy contemporary notions of due process."  Burnham v.
Superior Court of Calif., 495 U. S. ---, --- (1990) (slip op., at 2)
(Brennan, J., concurring in judgment).  Although history creates a strong
presumption of continued validity, "the Court has the authority under the
[Fourteenth] Amendment to examine even traditionally accepted procedures
and declare them invalid."  Id., at --- (slip op., at 1) (White, J.,
concurring in part and concurring in judgment), citing Shaffer v. Heitner,
433 U. S. 186 (1977).
    The Court's decision in Williams v. Ilinois, 399 U. S. 235 (1970), is
also instructive.  In Williams, the Court invalidated on equal protection
grounds the time-honored practice of extending prison terms beyond the
statutory maximum when a defendant was unable to pay a fine or court costs.
The Court's language bears repeating:

"[N]either the antiquity of a practice nor the fact of steadfast
legislative and judicial adherence to it through the centuries insulates it
from constitutional attack . . . .
    "The need to be open to reassessment of ancient practices other than
those explicitly mandated by the Constitution is illustrated by the present
case since the greatly increased use of fines as a criminal sanction has
made nonpayment a major cause of incarceration in this country."  Id., at
239-240.


    Punitive damages are similarly ripe for reevaluation.  In the past,
such awards "merited scant attention" because they were "rarely assessed
and likely to be small in amount."  Ellis, Fairness and Efficiency in the
Law of Punitive Damages, 56 S. Cal. L. Rev. 1, 2 (1982).  When awarded,
they were reserved for the most reprehensible, outrageous, or insulting
acts.  See F. Pollock, Law of Torts (1887); Huber 119.  Even then, they
came at a time when compensatory damages were not available for pain,
humiliation, and other forms of intangible injury.  Punitive damages filled
this gap.  See K. Redden, Punitive Damages MDRV 2.3(A) (1980); Note,
Exemplary Damages in the Law of Torts, 70 Harv. L. Rev. 517, 519-520
(1957).
    Recent years, however, have witnessed an explosion in the frequency and
size of punitive damages awards.  See RAND Institute for Civil Justice, M.
Peterson, S. Sarma, & M. Shanley, Punitive Damages -- Empirical Findings
iii (1987) (hereinafter RAND).  A recent study by the RAND Corporation
found that punitive damages were assessed against one of every ten
defendants who were found liable for compensatory damages in California.
Id., at viii.  The amounts can be staggering.  Within nine months of our
decision in Browning-Ferris, there were no fewer than six punitive damages
awards of more than $20 million.  Crovitz, Absurd Punitive Damages Also
"Mock" Due Process, Wall St. Journal, March 14, 1990, p. A19, col. 3.
Medians as well as averages are skyrocketing, meaning that even routine
awards are growing in size.  RAND vi, ix, 65.  The amounts "seem to be
limited only by the ability of lawyers to string zeros together in drafting
a complaint."  Oki America, Inc. v. Microtech Int'l, Inc., 872 F. 2d. 312,
315 (CA9 1989) (Kozinski, J., concurring).
    Much of this is attributable to changes in the law.  For 200 years,
recovery for breach of contract has been limited to compensatory damages.
In recent years, however, a growing number of States have permitted
recovery of punitive damages where a contract is breached or repudiated in
bad faith.  See, e. g., Seaman's Direct Buying Serv., Inc. v. Standard Oil
Co., 36 Cal. 3d 752, 686 P. 2d 1158 (1984).  Unheard of only 30 years ago,
bad faith contract actions now account for a substantial percentage of all
punitive damages awards.  See RAND iv.  Other significant legal
developments include the advent of product liability and mass tort
litigation.  "As recently as a decade ago, the largest award of punitive
damages affirmed by an appellate court in a products liability case was
$250,000. . . .  Since then, awards more than 30 times as high have been
sustained on appeal."  Browning-Ferris, 492 U. S., at --- (slip op., at 1)
(opinion concurring in part and dissenting in part).  "Today, hardly a
month goes by without a multimillion-dollar punitive damages verdict in a
product liability case."  Wheeler, A Proposal for Further Common Law
Development of the Use of Punitive Damages in Modern Product Liability
Litigation, 40 Ala. L. Rev. 919 (1989).
    As in Williams, the time has come to reassess the constitutionality of
a time-honored practice.  The explosion in the frequency and size of
punitive damages awards has exposed the constitutional defects that inhere
in the common-law system.  That we did not discover these defects earlier
is regrettable, but it does not mean that we can pretend that they do not
exist now.  "[N]ew cases expose old infirmities which apathy or absence of
challenge has permitted to stand.  But the constitutional imperatives . . .
must have priority over the comfortable convenience of the status quo."
Williams, 399 U. S., at 245.  Circumstances today are different than they
were 200 years ago, and nothing in the Fourteenth Amendment requires us to
blind ourselves to this fact.  See Wheeler 277.  Just the opposite is true.
The Due Process Clause demands that we possess some degree of confidence
that the procedures employed to deprive persons of life, liberty, and
property are capable of producing fair and reasonable results.  When we
lose that confidence, a change must be made.
III
    " `The touchstone of due process is protection of the individual
against arbitrary action of government.' "  Daniels v. Williams, 474 U. S.
327, 331 (1986), quoting Dent v. West Virginia, 129 U. S. 114, 123 (1889).
Alabama's common-law scheme for awarding punitive damages provides a jury
with "such skeletal guidance," Browning-Ferris, supra, at --- (slip op., at
2) (Brennan, J., concurring), that it invites -- even requires -- arbitrary
results.  It gives free reign to the biases and prejudices of individual
jurors, allowing them to target unpopular defendants and punish
selectively.  In short, it is the antithesis of due process.  It does not
matter that the system has been around for a long time, or that the result
in this particular case may not seem glaringly unfair.  The common-law
scheme yields unfair and inconsistent results "in so many instances that it
should be held violative of due process in every case."  Burnham, 495 U.
S., at --- (slip op., at 1) (White, J., concurring in part and concurring
in judgment).
    I would require Alabama to adopt some method, either through its
legislature or its courts, to constrain the discretion of juries in
deciding whether or not to impose punitive damages and in fixing the amount
of such awards.  As a number of effective procedural safeguards are
available, we need not dictate to the States the precise manner in which
they must address the problem.  We should permit the States to experiment
with different methods and to adjust these methods over time.
    This conclusion is neither ground-breaking nor remarkable.  It reflects
merely a straightforward application of our Due Process Clause
jurisprudence.  Given our statements in recent cases such as
Browning-Ferris, supra, and Bankers Life, supra, the parties had every
reason to expect that this would be the Court's holding.  Why, then, is it
consigned to a dissent rather than a majority opinion?  It may be that the
Court is reluctant to afford procedural due process to Pacific Mutual
because it perceives that such a ruling would force us to evaluate the
constitutionality of every State's punitive damages scheme.  I am
confident, though, that if we announce what the Constitution requires and
allow the States sufficient flexibility to respond, the constitutional
problems will be resolved in time without any undue burden on the federal
courts.  Indeed, it may have been our hesitation that has inspired a flood
of petitions for certiorari.  For more than 20 years, this Court has
criticized common-law punitive damages procedures, see supra, at 13-14, but
has shied away from its duty to step in, hoping that the problems would go
away.  It is now clear that the problems are getting worse, and that the
time has come to address them squarely.  The Court does address them today.
In my view, however, it offers an incorrect answer.

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