West Coast Hotel Co. v. Parrish, 300 U.S. 379 (1937)

Case Name: West Coast Hotel Co. v. Parrish
Citation: 300 U.S. 379 (1937)

 

Issue: Whether the Washington minimum wage law violates the Due Process Clause of the 14th Amendment.

 

Facts: Minimum wage law created by the state of Washington. Elsie Parrish was a chambermaid and sued to recover the difference between her wages and the state minimum wage ($14.50 per week of 48 hours). The hotel alleged that the minimum wage regulation is a deprivation of freedom of contract.

 

Holding: The minimum wage law was upheld and found to be within the state’s legislative power.

 

Reasoning: The Court believed that this subject should receive “fresh consideration” from previous decisions. The Constitution does not speak of “freedom of contract” but it does speak of “liberty and prohibits the deprivation of liberty without due process of law.”
The state is able to protect the public interest and “what can be closer to the public interest than the health of women and their protection from unscrupulous and overreaching employers?” The requirement of a minimum wage is an admissible means to the end of protecting women. The Court also discussed the “evils” of current employment conditions of women in sweatshops and how they have unequal bargaining power so freedom of contract is really a misnomer.

 

Another policy reason: The exploitation of workers also casts a direct burden upon the community for their support. Taxpayers are called to pay additional wages to the workers in order for them to meet the bare cost of living. Shouldn’t the manufacturer pay for these costs directly because they are receiving the benefit of selling goods in the marketplace?
The Court overruled Adkins stating that it “was a departure from the true application of the principles governing the regulation by the state of the relation of employer and employed.”

United States v. Carolene Products Co., 304 U.S. 144 (1938)

Case Name: United States v. Carolene Products Co.
Citation: 304 U.S. 144 (1938)

Issue: Whether the Federal “Filled Milk Act” infringes the Fifth Amendment.

Facts: The “Filled Milk Act” prohibits the shipment in interstate commerce of skimmed milk mixed with any fat or oil (other than milk fat) in order to resemble milk. Carolene Product Co. was indicted for violating the act for shipping “Milnut.” The indictment stated that Milnut “is an adulterated article of food, injurious to the public health.”

Holding: The prohibition of Carolene’s product in interstate commerce does not infringe the Fifth Amendment.

Reasoning: The Court ruled similarly twenty years ago in Hebe Co. v. Shaw in regards to a similar state law. Also, evidence, showing such products are a danger to the public health, sustains the statute.
“Legislation that affects ordinary commercial transaction is not to be pronounced unconstitutional unless…it does not rest on some rational basis within the knowledge and experience of the legislators.”

Williamson v. Lee Optical of Oklahoma, Inc., 348 U.S. 483 (1955)

Case Name: Williamson v. Lee Optical of Oklahoma, Inc.
Citation: 348 U.S. 483 (1955)

Facts: An Oklahoma law made it unlawful for any person who is not a licensed optometrist or ophthalmologist to fit lenses for someone or replace lenses unless they received a written prescription from an Oklahoma licensed optometrist or ophthalmologist. The goal of this law was to forbid opticians from fitting or duplicating lenses without a prescription.

 

Procedural Posture: The District Court held the Oklahoma law unconstitutional under the Due Process Clause of the 14th Amendment. The District Court did concede that the state has police power to regulate the examination of the eyes but did not agree that a state could require a prescription just “to take old lenses and place them in new frames and then fit the completed spectacles to the face of the eyeglass wearer.” It held that this requirement was not “reasonably and rationally related to the health and welfare of the people.”

 

Holding: The law was upheld. “The day is gone when this Court uses the Due Process Clause of the 14th Amendment to strike down state laws.”

 

Reasoning: This law may be a needless requirement; however, it is for the legislature, not the courts, to balance the advantages and disadvantages of these requirements. “The law need not be in every respect logically consistent with its aims to be constitutional. It is enough that there is an evil at hand for correction,” and [that the legislation was a] rational way to correct it.”
Quoting Chief Justice Waite in Munn v. State of Illinois, “For protection against abuses by legislature the people must resort to the polls, not to the courts.”

BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996)

Case Name: BMW of North America, Inc. v. Gore

Citation: 517 U.S. 559 (1996)

Issue: Whether a $2 million punitive damages award to the purchaser of one car exceeds the constitutional limit created by the Due Process Clause of the 14th Amendment which prohibits a State from imposing a “grossly excessive” punishment on a tortfeasor.

 

Facts: Gore purchased a BMW sports sedan for forty thousand dollars from an authorized BMW dealer in Alabama. Nine months later, he found his car had been repainted by BMW and sued for suppression of a material fact and asked for $500,000 in compensatory and punitive damages.
BMW acknowledged that it had a nationwide policy that if a car was damaged in the course of manufacturing and the cost of repairing the damage exceeded 3 percent of the car’s retail price, the car would be sold as used. If the repair cost did not exceed 3 percent of the suggested retail price, it would be sold as new without advising the dealer that any repairs had been made. The cost of repainting Gore’s car was only 1.5 percent of the retail price.
Gore asserted that the repainted car was worth less than a car which had not been refinished. He showed $4,000 of actual damages. For punitive damages, Gore introduced evidence of BMW selling 983 refinished cars since 1983 (only 14 were sold within Alabama) without disclosing that the cars had been repainted.

 

Procedural Posture: The jury returned a verdict for $4,000 in compensatory damages and $4 million in punitive damages. The Alabama Supreme Court rejected BMW’s claim that this exceeded the constitutionally permissible amount but did find the jury miscalculated the damages and held that “a constitutionally reasonable punitive damages award in this case is $2 million.”

 

Holding: The punitive damage award was grossly excessive and exceeds the constitutional limit.

 

Reasoning: Gore argued that the large punitive damages award was necessary to induce BMW to change the nationwide policy that it adopted in 1983. However, by attempting to alter BMW’s nationwide policy, Alabama would be infringing on the policy choices of other states. One state cannot impose economic sanctions on violators of its laws with the “intent of changing the tortfeasor’s lawful conduct in other States.”
In addition, the Court gave three guideposts for reviewing punitive damages:
  1. the degree of reprehensibility of the defendant’s misconduct,
  2. the ratio of punitive damages to actual damages (here it is 500 to 1 which does not bear a “reasonable relationship.”), and
  3. the difference between punitive damages awarded by the jury and civil penalties authorized or imposed in comparable cases (here, Alabama’s Legislature authorizes a maximum $2,000 penalty of $2,000 through its Deceptive Trade Practices Act. In Alabama, there were only 14 violations).

 

Scalia’s Dissent (Thomas joined): The Constitution does not make excessive punitive damages any concern of the Court. There is no federal guarantee (even in the 14th Amendment) that a damages award actually be reasonable. “By today’s logic, every dispute as to evidentiary sufficiency in a state civil suit poses a question of constitutional moment, subject to review in this Court. That is a stupefying proposition.

State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408 (2003)

Case Name: State Farm Mutual Automobile Insurance Co. v. Campbell

Citation: 538 U.S. 408 (2003)

Issue: Whether $145 million in punitive damages (in relation to $1 million in compensatory damages) is excessive and in violation of the Due Process Clause of the 14th Amendment.

Facts: $145 million in punitive damages and $1 million in compensatory awarded to Campbell. Campbell was insured by State Farm and after being involved in a tragic accident, and at fault, was found liable for $185,849. Before the trial, State Farm informed Campbell that he would not be personally liable for any of the damages and that there was no need for him to get his own attorney. After the verdict, State Farm told him to “put a for sale sign on [his] property to get things moving.” The Campbells instituted an action against State Farm for bad faith, fraud, and intentional infliction of emotional distress.

 

Procedural Posture: “The jury awarded the Campbells $2.6 million in compensatory damages and $145 million in punitive damages which the trial court reduced to $1 million and $25 million respectively. Both parties appealed. The Utah Supreme Court reinstate the $145 million punitive damages award.”

 

Holding: The punitive damages away was “neither reasonable nor proportionate to the wrong committed, and it was an irrational and arbitrary deprivation of the property of the defendant.” The Court stated that “few awards exceeding a single-digit ration between punitive and compensatory damages, to a significant degree, will satisfy due process.”

 

Reasoning: This Court continues to state that the Due Process Clause of the 14th Amendment prohibits states from imposing grossly excessive punishments on a tortfeasor. It spoke about the “three guideposts” from BMW of North America, Inc. v. Gore. It went on to address each guidepost in detail.
In considering the degree of reprehensibility of the defendant’s conduct, a court should consider whether:
1. The harm cause was physical as opposed to economic;
2. The tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others;
3. The target of the conduct had financial vulnerability;
4. The conduct involved repeated actions or was an isolated incident; and
5. The harm was the result of intentional malice, trickery, or deceit, or mere accident.
The absence of any one of these factors renders any award suspect.
Again, the Utah Supreme Court made clear that State Farm was being condemned for its nationwide policies rather than for the conduct directed toward the Campbells.

 

Judgment: The Court stated that the punitive damages award should be at or near the amount of compensatory damages but the calculation should be done by the Utah courts; under the principles of the Supreme Court.

 

Scalia’s dissent: Reiterated his dissenting opinion from BMW of North America, Inc. v. Gore.

 

Thomas’ dissent: The Constitution does not constrain the size of punitive damages awards.

 

Ginsburg’s dissent: “The law of the particular State must suffice until judges or legislators authorized to do so initiate system-wide change.” Ginsburg goes on to tell the whole story about State Farm’s fraudulent practices and bad faith that the majority left out in its analysis of “reprehensibility.” She ended her dissent that she “would not join the Court’s swift conversion of [the three guideposts] into instructions that begin to resemble marching orders.”

Philip Morris U.S.A. v. Williams, 127 S. Ct. 1057 (2007)

Case Name: Philip Morris U.S.A. v. Williams
Citation:
127 S. Ct. 1057 (2007)

Issue: Whether the Constitution’s Due Process Clause permits a jury to base punitive damages on its desire to punish the defendant for harming individuals not before the court.

 

Facts: Williams’ widow sued Philip Morris, the manufacturer of Malboro for negligence and deceit in causing the death of her husband. At trial, the court did not accept Philip Morris’ instruction that “the jury could not seek to punish Philip Morris for injury to other persons not before the court.” However, it allowed the plaintiff’s attorney to consider all those in the state of Oregon who will die from cigarettes that Philip Morris makes.

 

Procedural Posture: “The jury found that Williams’ death was cause by smoking; that Williams smoked [ ] because he thought it was safe to do so; and that Philip Morris knowingly and falsely led him to believe that this was so.” The jury awarded compensatory damages of $821,000 and $79.5 million in punitive damages. The Oregon Supreme Court upheld the judgment.

 

Holding: A punitive damage award such as this “amounts to a taking of “property” from the defendant without due process.”

 

Reasoning: The Due Process Clause does not allow a State to use a punitive damage award to punish a defendant for injury that it inflicts upon nonparties. Relied on BMW of North America, Inc. v. Gore and State Farm Mutual Automobile Insurance Co. v. Campbell.

 

Judgment: The Supreme Court vacated the Oregon Supreme Court’s judgment and remanded the case for further proceedings.