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Ohio Supreme Court Upholds Tort Reform Statute
Anne Marie Sferra
Bricker & Eckler LLP
December 2007
Full text of the Court's decision
On December 27, 2007, in a 5-2 decision, the Ohio Supreme Court upheld the statutory limitations on noneconomic and punitive damages enacted in S.B. 80, effective April 7, 2005, in Arbino v. Johnson & Johnson, Slip. Op. No. 2007-Ohio-6948. The issue of the constitutionality of the caps on damages came before the Court on certified questions from the United States District Court for the Northern District of Ohio in a product liability action involving a birth control patch. The 75-page opinion, which includes the majority opinion authored by Chief Justice Moyer, a concurring opinion by Justice Cupp, and two separate dissenting opinions by Justices O'Donnell and Pfeifer, is briefly summarized below.
Plaintiff argued that under Ohio Supreme Court precedent (including Morris v. Savoy, (1991),
61 Ohio St.3d 684, Sorrell v. Thevenir (1994), 69 Ohio St.3d 415, Zoppo v. Homestead Ins. Co. (1994),
71 Ohio St.3d 552, and State ex rel. Ohio Academy of Trial Lawyers v. Sheward (1999),
86 Ohio St.3d 451) the caps were unconstitutional on a variety of grounds, including that
they violated the right to trial by jury, the right to a remedy and open court,
and the right to equal protection of the laws. The Ohio Supreme Court rejected Plaintiff's arguments, and found that the statutory limitations on noneconomic damages (R.C. 2315.18) and punitive damages "are facially constitutional." Arbino at 7.
The Court made clear that even though it had previously found some tort reform
measures unconstitutional, it had not dismissed "all tort reform as an unconstitutional concept." Arbino at 23.
The Court recognized that the General Assembly had not simply rehashed former unconstitutional statutes,
but had instead tailored the new statutes to address constitutional defects previously identified by the Court.
Arbino at 24. Therefore, the new statutes "warrant a fresh review of their individual merits." Id.
Before reviewing the individual statutes at issue, the Court noted that the constitutional
challenges before it were to the statutes on their face - and not as applied to a particular set of facts. To show that a statute is facially unconstitutional, a plaintiff must meet the strict standard of demonstrating that there is no set of circumstances under which the statute would be valid.
With respect to the limitation on noneconomic damages, the Court found:
Right to Trial by Jury: The right to a trial by jury is not violated because, among other reasons, this right is not absolute and limitations may be applied to it. The right to a trial by jury applies to the fact-finding process, but there is no dispute that this right "does not extend to the determination of questions of law." Arbino at 37. Thus, a court may apply the law as set forth by the General Assembly to a jury's determination of damages without violating the right to a trial by jury.
Right to a Remedy/Open Courts: The right to a remedy and open courts requires "an opportunity granted at a meaningful time and in a meaningful manner" and "prohibit[s] statutes that effectively prevent individuals from pursuing relief for their injuries." Arbino at 44. The Court held that "[a]lthough R.C. 2315.18 limits certain types of noneconomic damages, those limits do not wholly deny persons a remedy for their injuries." Arbino at 47. The remedies that are available under the statute, including full recovery of economic damages, are meaningful.
Due Course of Law/Due Process: When reviewing a statute on due process grounds,
a rational basis test is applied unless the statute restricts the exercise of fundamental rights.
Because the Court had already concluded that R.C. 2315.18 does not violate the right to a trial by
jury or the right to a remedy/open courts, the rational basis test was applied as no fundamental right was implicated.
Under this test, a statute will be upheld if: (1) it bears a real and substantial relation to the public health,
safety, morals or general welfare of the public and (2) it is not unreasonable or arbitrary. Arbino at 49.
With respect to the first prong of this test, the Court contrasted the S.B. 80 record before the
General Assembly with records in other cases in which the Court criticized the lack of evidence demonstrating a
rational connection between the tort reform measures and the public good to be achieved, and
concluded that "there is a clear connection drawn between limiting uncertain and potentially
tainted noneconomic damage awards and the economic problems demonstrated in the evidence." Arbino at 56.
Plaintiff attacked the evidence before the General Assembly as "specious" and "threadbare" and requested
the Court to evaluate it and reach its own conclusion. The Court rejected this approach and
deferred to the legislature, stating that "[s]uch an intensive examination is beyond the scope of our review."
Arbino at 58
In connection with the second prong of the rational basis test, the Court found that the
General Assembly alleviated the concern the Court raised in Morris v. Savoy - that the
damage caps were unreasonable "because they imposed the cost of the intended benefit to the
public upon those most severely injured" - "by allowing for limitless noneconomic damages for
those suffering catastrophic injuries." Arbino at 58-59.
Equal Protection: Plaintiff argued that a fundamental right is implicated
on the basis that the damage caps disproportionately affect women, children, minorities, and the elderly, and
people with low incomes. The Court rejected this argument because facially neutral laws that
may have a disproportionate impact do not violate equal protection. Because the statute is facially
neutral and does not implicate a fundamental right, the rational basis test is applicable.
After reviewing the General Assembly's findings set forth in the uncodified law of S.B. 80,
the Court concluded that "R.C. 2315.18 is rationally related to the legitimate state interests of
reforming the state civil justice system to make it fairer and more predictable and thereby improving the
state's economy." Arbino at 69.
The Court noted that the noneconomic damage limitations in R.C. 2315.18 "may not be the
best way to address the perceived problems in the civil justice system" but the Court's role is to
determine whether the statute complies with the Constitution; it is not to second-guess the policy
choices made by the General Assembly. Arbino at 71.
Separation of Powers: The Court found that "[t]he argument that R.C. 2315.18 infringes on the judicial power to decide damages lacks merit" because the General Assembly is not prohibited from regulating the amount of damages available in certain circumstances. Arbino at 74. The Court also rejected Plaintiff's argument that General Assembly exceeded its authority by re-enacting legislation previously found unconstitutional. In this regard, the Court reiterated that R.C. 2315.18 is sufficiently different from the previous damage limitations statute found unconstitutional years ago.
With respect to the limitation on punitive damages, the Court found:
Right to Trial by Jury: As the Court previously explained, "the fact that
a statute limits potential damages as a matter of law does not mean that it violates the
right to a trial by jury." Arbino at 90. Plaintiff reliance on Zappo and Sheward is misplaced.
The Court noted that the punitive damage statute in Zoppo was different because it
required the court to determine the amount of punitive damages in all cases - completely removing
this function from the jury. Under the new punitive damage statute, the trier of fact
determines the amount of punitive damages and "[t]he subsequent application of a statute
to this decision does not abrogate the established function of the jury." Arbino at 92.
Sheward is not controlling because the Sheward Court's statements on this issue were dicta.
The Court stated, however, that even if it were bound by the reasoning in Sheward,, it would be
required to revisit such reasoning in light of United States Supreme Court decisions after
Sheward which "conclusively establish that regulation of punitive damages is discretionary and
that states may regulate them as a matter of law without violating the right to trial by jury." Arbino at 94-95.
Right to a Remedy/Open Courts: The punitive damage limits in R.C. 2315.21 do not deny plaintiffs the right to seek a meaningful remedy, primarily because punitive damages are not compensation for an injury; they are private fines levied separate and apart from any remedy for a plaintiff's injuries.
Due Course of Law/Due Process: The Court applied the rational basis test and found that
R.C. 2315.21 met it. The Court found that the first part of the rational basis test was met for
the similar reasons as those articulated in connection with the noneconomic damage limitations.
Notably, the Court agreed with the Plaintiff that the legislative record "is thin" with respect to
specific evidence or testimony supporting its claim that the unpredictability of punitive damages is harming the
state's economy. Arbino at 102. Nonetheless, the General Assembly's reasoning was
sufficient to show a real and substantial relation to the general welfare of the public.
The Court found that the statute is neither arbitrary nor unreasonable and, thus, the second part of the rational basis test was met. More specifically, the Court stated: "Setting the limitation at double the amount of compensatory damages received by the plaintiff ensures that the defendant may still be punished. Further, the exceptions for small employers and individuals strike a balance between imposing punishment and ensuring that lives and businesses are not destroyed in the process. This careful compromise represents a level of thought and attention to detail not seen in arbitrary or unreasonable statutes." Arbino at 103.
Equal Protection: For the same reasons articulated in connection with the noneconomic damage limitations, the punitive damage limitations do not violate equal protection of the laws.
Separation of Powers: Plaintiff's argument that the General Assembly
simply re-enacted a statute previously found unconstitutional lacks merit because Sheward did not invalidate
the punitive damage caps for violating the right to trial by jury. While the Sheward majority
discussed a potential conflict between the punitive damage caps and the right to trial by jury, it did not
invalidate the statute on that ground. Instead, it struck H.B. 350 in its entirety on the
bases that it violated the separation of powers doctrine and the single-subject rule.
In closing, the majority expressed that its decision "affirms the General Assembly's efforts over the last several decades to enact meaningful tort reforms" and "places Ohio firmly with the growing number of states that have found such reforms to be constitutional." Arbino at 112. The Court also reiterated that the General Assembly -- and not the Court -- is responsible for weighing policy concerns and making policy decisions.
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