Free Reply to Response to Motion - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Case No. 01-cv-02199-MSK-MEH MICHAEL E. CLAWSON and JARED L. DILLON, Plaintiffs, v. MOUNTAIN COAL COMPANY, L.L.C., ARCH WESTERN RESOURCES, L.L.C., and ARCH COAL, INC., Defendants.

PLAINTIFFS' REPLY RE: MOTION FOR ASSESSMENT AND AWARD OF PUNITIVE DAMAGES BY THE COURT OR FOR ADDITUR

The plaintiffs, Michael E. Clawson and Jared L. Dillon, through their undersigned counsel, Killian, Guthro & Jensen, P.C., hereby submit their Reply Re: Motion for Assessment and Award of Punitive Damages by the Court or for Additur, and in support thereof, state as follows: I. Defendants' Misread The Holding Of Cooper Industries And Have Misapplied It To The Issue At Bar The United States Supreme Court held in Cooper that the determination of an amount of punitive damages was not a finding of fact. Cooper Indus. v. Leatherman Tool Group, 532 U.S. 424, 432, 437 & FN 11 (2001). This determination was necessary to its holding that the standard or review of a trial court's decision as to the constitutionality of punitive damages is de novo. See Id. at 436. The holding that the amount of punitive damages is not a finding of fact affects the analysis of every aspect of the issue of punitive damages now before the court. Because

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defendants have failed to properly recognize this aspect of the Cooper holding, their analysis of the punitive damages issue is faulty. Defendants are correct that the issue on which the Supreme Court granted certiorari was a narrow one. The court had to resolve the issue of the proper standard of review for punitive damages. Id. at 426. However, the court's holding extends to all decisions necessary to the ultimate resolution of the issues before it. As explained below, it was necessary for the court to determine that the amount of punitive damages was not a finding of fact in order for the court to determine the proper standard of review. Further, even if the statements made by the Supreme Court that punitive damages are not findings of fact were mere dicta, that dicta should be followed by this court unless there is subsequent contrary authority. The Tenth Circuit stated, "this court considers itself bound by Supreme Court dicta almost as firmly as by the Court's outright holdings, particularly when the dicta is recent and not enfeebled by later statements." Gaylor v. United States, 74 F.3d 214, 217 (10th Cir. 1996). Defendants have presented no authority from the Tenth Circuit or Supreme Court subsequent to Cooper which contradicts the statements made by the Supreme Court in Cooper. The Supreme Court in reaching its conclusion in Cooper had to determine that the decision on the amount of punitive damages was not a finding of fact for purposes of the Seventh Amendment to the United States Constitution.1 The Supreme Court determined in a prior case that the decision of a trial court on whether to remit or award a new trial due to excessive actual damages had to be reviewed for an abuse of discretion in order for such review to be consistent with the Seventh Amendment. Gasperini v. Center for Humanities, 518 U.S. 415, 419, 434-38

The Seventh Amendment provides: "In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved; and no fact tried by a jury shall be otherwise re-examined in any court of the United States than according to the rules of the common law."

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(1996); Cooper, 532 U.S. at 444-45 (Ginsburg Dissent). If the jury's decision on an amount of punitive damages is a finding of fact under the Seventh Amendment, the court would have to overturn Gasperini in order to allow de novo review of a trial court's decision to remit or order a new trial on such an award. The Supreme Court did not overturn Gasperini. Instead, it distinguished the case by holding that the amount of punitive damages was not a finding of fact. Cooper, 532 U.S. at 432, 437 & FN 11. "A jury's assessment of the extent of a plaintiff's injury is essentially a factual determination, whereas its imposition of punitive damages is an expression of its moral condemnation." Id. at 432. Because the amount of punitive damages is not a finding of fact it does not fall within the Seventh Amendment, and does not implicate Seventh Amendment concerns. Id. at 437. Therefore, allowing de novo review of a trial court's decision regarding the amount of punitive damages is not contradictory to the Gasperini decision. Id. at 437. The Supreme Court's determination that the amount of punitive damages is not a finding of fact is important for two reasons related to this case. First, the role of the jury in the federal court system is to make findings of fact. Dimick v. Schiedt, 293 U.S. 474, 485 (1935). It is highly questionable whether the jury has the authority to make a binding decision on an issue that is not a finding of fact. Lisa Litwiller, Has the Supreme Court Sounded the Death Knell for Jury Assessed Punitive Damages?, 36 U.S.F. L. Rev. 411, 411, 470, 471 (Winter 2002). It therefore seems apparent that the jury's decision on the amount of punitive damages is not binding on the court. Second, the sole basis for the prohibition on additur in the federal courts is the Seventh Amendment. See generally Dimick v. Schiedt, 293 U.S. 474 (1935). If the Seventh Amendment does not apply to the amount of punitive damages, then the prohibition on additur

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does not apply either. Thus, Cooper removes the underlying basis for the prohibition of additur in regard to punitive damages. II. The Court Has The Final Decision On The Amount Of Punitive Damages While Cooper does not directly address the issue of whether judges or juries have the final say on punitive damages, the logic of the decision leads only to the conclusion that judges have the final say. It is important not to look just at the Supreme Court's holding, but also the logic used by the court. See Carter v. Sedgwick County, 929 F.2d 1501, 1503-04 (10th Cir. 1991) (acknowledging that the Supreme Court expressly did not decide the issue before the Tenth Circuit, but the Supreme Court's logic lead to but one conclusion on the issue). It is important to note that the Supreme Court analogized the determination of the amount of punitive damages to decisions that a trial court judge makes in deciding that de novo review was appropriate. Cooper, 532 U.S. at 434-36; see also 438 fn 1 (Ginsburg Dissent). The jury's role is to make findings of fact. If the issue before the jury is not a finding of fact, its effect is limited to advising the judge. If the jury's verdict is advisory, the court can substitute its own judgment for the decision of the jury. Smith v. Northwest Fin. Acceptance, 129 F.3d 1408, 1416 FN 6 (10th Cir. 1997). Defendants assert that the Supreme Court's citation to authorities stating that the determination of the amount of punitive damages is for the jury means that the Supreme Court intended to leave the question to the jury. However, the Supreme Court was actually limiting the effect of these cases in its discussion. The court stated that these cases "do not, however, indicate that the amount of punitive damages imposed by the jury is itself a "fact" within the meaning of the Seventh Amendment Reexamination Clause." Cooper, 532 U.S. at 437 fn 11. The court then went further, explaining that the purposes of punitive damages had changed since those decisions, made in 1852 and 1886, and that they had little value to the current issue. Id. 4

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Defendants also fault plaintiffs for not citing any cases applying Cooper in the manner plaintiffs are requesting. However, defendants do not cite any cases to the contrary. It appears that the only case touching on the issue is the Jones v. Rent-A-Center decision. 281 F.Supp. 2d 1277 (D. Kan 2003). It therefore appears that this is an issue of first impression, and plaintiff can hardly be blamed for the lack of authority on the issue. Some court, somewhere, has to be the first to decide an issue, and for this issue the court is the Federal District Court for the District of Colorado. Defendants argue that because allowing a jury trial on punitive damages is implicit in the remedial scheme of Title VII, the jury's decision on the amount of punitive damages must be binding. However, there is no indication that Congress intended anything other than a Constitutional jury making findings of fact as allowed by the Seventh Amendment. Nothing indicates that Congress intended to expand the jury's power beyond making findings of fact. The jury still decides if the Title VII defendant acted willfully. If a special verdict form or interrogatories are used the jury can make findings on issues such as the size of the company and its assets and whether its conduct was reprehensible. Cooper, 532 U.S. at 440 fn12 and 449 fn 2 (Ginsburg Dissent). Plaintiffs' motion also pointed out that there are sound reasons for the jury to provide and advisory verdict on punitive damages. Such a verdict is an expression of moral condemnation, and the jury is the conscience of the community. Determining that the jury's decision on the amount of punitive damages is advisory does not undermine Congresses purpose in allowing jury trials under Title VII. Lastly, defendants assert that plaintiffs have waived their ability to have the court determine punitive damages by treating the jury's verdict as advisory. Defendants cite no authority for this proposition. Neither plaintiffs, nor defendants, nor the court expressly 5

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addressed the issue. Plaintiffs should not be held to have agreed to a trial by jury an issue that is properly decided by the judge unless there is a clear and express waiver or a clear and express agreement. Neither exists here. At most, the final pre-trial order reflects plaintiffs' agreement that the jury will decide the availability of punitive damages, which is proper. Inherent in the logic and holding of Cooper is that the final decision on the amount of punitive damages is a question for the court, not the jury. Therefore, the court should treat the jury's decision on punitive damages as advisory. The award of zero dollars was inadequate and against the weight of the evidence, and therefore the court should impose an award of punitive damages. III. For Punitive Damages Only, Cooper Removes The Prohibition On Additur Defendants argue this issue as if plaintiffs were asserting that Cooper resulted in a blanket repeal of the prohibition on additur. This is not the case. Cooper only applied to punitive damages, and it only affects additur in regard to punitive damages cases. All of the cases cited by defendants recognize that the prohibition on additur arises out of the Seventh Amendment.2 If the Seventh Amendment does not apply to the amount of punitive damages, then additur in regard to punitive damages is not prohibited. The existence of additur in state courts is a perfect example of this. The Seventh Amendment does not apply in state courts. Gasperini, 518 U.S. at 418. Therefore, the states may authorize the use of additur, depending upon state law. Lyon Dev. Co. v. Business Men's Assurance Co. of Am., 76 F.3d 1118, 1125 (10th Cir. 1996); Waldorf v. Shuta, 916 F.Supp. 423, 432 (D. N.J. 1996). The Supreme Court in Cooper removed the underlying reason for the prohibition on additur in regard to punitive damages by holding that the amount of punitive damages is not a
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Sanjuan v. IBP, Inc., 160 F.3d 1291, 1301 (10th Cir. 1998) does not state this directly. However, it only cites Dimick and Lyon Dev. which themselves held that additur was prohibited because of the Seventh Amednment.

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finding of fact within the Seventh Amendment. However, the prohibition on additur in regard to actual damages remains in place. This is because the Supreme Court distinguished punitive damages from actual damages. The Supreme Court held that the amount of actual damages is a finding of fact within the Seventh Amendment, but that the amount of punitive damages is not such a finding. Cooper, 532 U.S. at 432, 437. For this reason, none of the cases cited by defendants for the proposition that additur remains prohibited after Cooper is relevant. All of these cases involved an attempt to obtain additur for actual damages. None of them involved an attempt to obtain additur for punitive damages. This issue of additur to punitive damages after Cooper also appears to be an issue of first impression. However, the holding and logic of Cooper leads to the conclusion that additur in regard to punitive damages is now allowed in federal court. IV. The Amount Of Zero Dollars In Punitive Damages Was Grossly Inadequate, And An Award Of $200,000 Would Be Appropriate If the court determines that it has the final say on punitive damages under Cooper, it may treat the jury's verdict as advisory. In that event, the court can substitute its own judgment for that of the jury. However, if the court finds that it is limited to additur, this is an appropriate case because the amount is so inadequate as to shock the judicial conscience. Plaintiffs' assert that $200,000, adjusted to the damages cap of 42 USC § 1981a(b)(3), is an appropriate amount. However, the court may determine that a lesser or greater amount is appropriate in the exercise of its fact finding function or discretion. To start, defendants misinterpret the holding of the district court decision in Sanjuan. The district court in Sanjuan determined that punitive damages were not automatically available upon a finding of liability and award of actual damages. Sanjuan v. IBP, Inc., 941 F.Supp. 1000,

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1007 (D. Kan. 1996). The court did not address whether punitive damages are automatically awardable on a finding of willfulness. It appears that the jury in Sanjuan did not find willfulness, and thus the court had no reason to discuss the issue. In any event, plaintiffs are not asserting that punitive damages must always be awarded on a finding of willfulness. Plaintiffs are asserting that in this case, on the evidence presented to the jury, the award of zero dollars in punitive damages after a finding of willfulness is so inadequate as to shock the conscience. Plaintiffs cited the various reasons why zero dollars was inadequate in the Motion for Assessment and Award of Punitive Damages By the Court or Additur, and will not repeat them all here. However, plaintiff will address specific issues raised by the defendants. While the purpose of punitive damages is to punish the defendant and deter the defendant and others, the prerequisite to awarding punitive damages is a finding of willfulness. Once a finding of willfulness has been made, it is the determination of the amount of punitive damages that serves to effectuate the purpose of such damages. While defendants cite their own alleged change in policy as evidence they no longer need to be deterred, they ignore the punishment aspects of the case. They also ignore the purpose of deterring other from engaging in similar acts, as explained in jury instruction 23. Further, it is not undisputed that defendants' policy changed in practice. There was evidence at trial that defendants had non-discrimination policies on paper that were not enforced in practice. This allows the inference that the change in policy was merely on paper, and not put into effect in practice. Defendants also argue that plaintiffs' motion discusses the wrong standard of reprehensibility for punitive damages. It should be noted that jury instruction 23 actual urges the jury to consider the degree of willfulness involved, and defendants did not dispute this as the 8

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legal standard. It should also be noted that the State Farm case referenced by defendants was a discussion of punitive damages in the common law tort context. State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 412, 416-17 (2003). When the court is looking at the reprehensible nature of conduct within a statutory scheme, the court should look at what type of conduct the statute is seeking to prevent. However, even under State Farm, defendants' conduct was reprehensible. The targets of the conduct had financial vulnerability. Id. at 419. Each plaintiff had a high school education or less. Mining was the best job available to blue-collar workers in the area. Dillon was especially vulnerable, having three children and less than a high school education. Dillon's children made the loss of fringe benefits particularly hard on him. The conduct was not an isolated incident. Id. Both plaintiffs received a verdict in their favor, so defendants' violation was repeated at least once. Further, it was part of a policy risking multiple violation. Defendants conduct was willful and not the result of mere accident. Id. The jury's finding of willfulness is definitive on this issue. Finally, defendants' footnote 3 contend that there is an insufficient basis for the plaintiffs to ask for $200,000, and therefore the court should deny the motion all together. Of course, this ignores the fact that the court can select a different amount if the court believes that the $200,000 is incorrect. It also ignores plaintiffs' extensive discussion of all of the factors which are to be considered in selecting an amount of punitive damages. Further, plaintiffs' request fits well with the Supreme Court's opinion in State Farm and with principles of additur and remittitur. The jury awarded Clawson more than he requested in back pay and in compensatory damages. The jury awarded Dillon somewhat less than he requested in back pay, but more than he requested in compensatory damages. The Supreme Court stated, "When compensatory damages are substantial, then a lesser ratio, perhaps only 9

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equal to compensatory damages, can reach the outermost limit of the due process guarantee." Id. at 425. Here plaintiffs are asking for around half of their actual damages. It is a little more than half for Dillon, who was more economically vulnerable, and a little less than half for Clawson. This is sensible. When a court orders remittitur it should not reduce damages to the lowest amount the jury could award. Likewise, in using additur, the court should not seek to increase the amount to the highest that could be awarded, but to an amount the jury could reasonable award under the circumstances. In this case the amount is $200,000. For all of the above reasons the court should grant the relief requested in plaintiffs motion and award each plaintiff $200,000 in punitive damages. Alternatively the court should order an additur in this amount. RESPECTFULLY SUBMITTED this 21st day of June, 2006.

s/Damon Davis J. Keith Killian Damon Davis Killian, Guthro & Jensen, P.C. 225 North 5th Street Grand Junction, Colorado 81501 Telephone: (970) 241-0707 FAX: (970) 242-8375 E-mail: [email protected] Attorney for Plaintiffs Michael E. Clawson and Jared L. Dillon

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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO CERTIFICATE OF SERVICE (CM/ECF) I hereby certify that on June 21, 2006, I electronically filed the foregoing with the Clerk of Court using the CM/ECF system, which will send notification of such filing to the following e-mail addresses: [email protected] [email protected] and, I hereby certify that I have mailed or served the document or paper to the following non CM/ECF participants in the manner (mail, hand-delivery, etc.) indicated by the non-participant's name: Mr. Michael Clawson 38506 Back River Road Paonia, CO 81428 Mr. Jared Dillon 35404 Back River Road Hotchkiss, CO 81419 Mail

Mail

s/Damon Davis Damon Davis Attorney for Plaintiffs Killian, Guthro & Jensen, P.C. 225 N. 5th Street Grand Junction, CO 81501 Telephone: (970) 241-0707 Fax: (970) 242-8375 [email protected]

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