SUPREME COURT ALLOWS DE NOVO REVIEW OF PUNITIVE DAMAGES

In Cooper v. Leatherman, the U.S. Supreme Court ruled that courts of appeal have de novo review of punitive damage awards. Justice Stevens, writing for the 8-1 majority, said that the Seventh Amendment does not apply to punitive damages, because they are not a "fact" determined by the jury. Overruling Supreme Court precedents stretching back over 150 years, Justice Stevens stated that punitive damages have "evolved" since the early days, when they provided compensation for intangible harms, to the point where now they are "more purely punitive (and therefore less factual)."

Also contrary to precedent, the court ruled that punitive damages are, however, subject to the 8th Amendment prohibition against Excessive Fines, because their purpose is primarily punishment. The Court recognized broad legislative discretion in the area of punitive damages.

Leatherman had won a $4.5 million punitive verdict in a state law claim based on Cooper's appropriation of a doctored photo of Leatherman's tool for use in Cooper's marketing of a similar tool. The trial judge upheld the verdict and the 9th Circuit affirmed, finding no abuse of discretion. The Supreme Court reversed, holding that the court of appeals should have applied de novo review of the punitive damage award.

Justice Ginsburg dissented, arguing that de novo review violates the Seventh Amendment. Justices Thomas and Scalia concurred with the majority. Both reaffirmed their position that the constitution does not limit punitive awards, but noted that, if it did, de novo is the appropriate standard of review.

De novo review could cut both ways. If the trial judge rules that the jury's punitive award is constitutionally excessive, the court of appeals is not obliged to accord deference to the trial judge's determination. The appellate court -- at least in the federal system -- can review the jury's verdict based on its own view of the record and reinstate the award. Nothing in the decision would prevent an appellate court from increasing punitive damages

Source: ATLA