Adding to the list of sad things that happened in 2020, my long-time friend and mentor Andy Frey retired from Mayer Brown at the end of the year. Although Andy will remain available to consult on punitive damages and other matters as needed, I will greatly miss our regular collaboration in the effort to make the law of punitive damages fairer and more rational.
Andy joined Mayer Brown in 1986 after a lengthy stint in the Solicitor General’s office, where he served as Deputy Solicitor General with responsibility for the criminal docket for 13 years. During his time in the SG’s office, Andy helped steer the Supreme Court to fundamentally revise its constitutional criminal-procedure jurisprudence in several critical respects. In addition, he developed an appreciation and knowledge of the purposes of criminal sentencing that later informed his approach to punitive damages.
Andy’s earliest foray into the world of punitive damages came in 1988 when he was retained by Browning-Ferris, a waste management company, to seek Supreme Court review of what was then a large punitive damages award of $6 million. At the time, the bar assumed that the Eighth Amendment’s Excessive Fines Clause was the most logical source of a constitutional limit on the amount of a punitive damages award.
Andy’s petition for certiorari asked the Supreme Court to decide whether the bar was right—i.e., whether the Excessive Fines Clause applies to civil jury awards of punitive damages—although Andy also included a fallback argument that the Due Process Clause imposes its own limits on the amount of punitive damages. The Court granted the petition, and Andy argued the case in April 1989.
The majority held that the Excessive Fines Clause is limited to exactions initiated by a governmental entity and therefore does not apply in cases between private parties. Critically, however, although the Court held that the due process argument had not been preserved in the lower courts, it recognized the possibility that the Due Process Clause might impose a limit on punitive damages.
Meanwhile, state juries were continuing to pump out punitive damages awards in increasingly large amounts. Alabama became especially well known for such awards (and for the pliability of its courts in upholding them), though other states also had some outlier awards.
With Andy at the helm, our firm began receiving a rapidly increasing number of requests to represent clients that had suffered large punitive awards. We were handling post-trial motions, appeals, and amicus briefs in courts around the country, where we developed and refined arguments for why the Due Process Clause imposes limits on punitive damages awards and how courts should go about ascertaining those limits.
In 1993, we were retained by Honda to seek Supreme Court review of a procedural issue—namely, whether the Due Process Clause requires state courts to review punitive awards for excessiveness. Oregon—alone among the states—had a constitutional provision that barred such review, meaning that once a jury had imposed a punitive award, no matter how large and disproportionate, there was nothing that a defendant could do about it (unless it could overturn the underlying liability findings).
The Supreme Court granted our petition for certiorari, Andy argued the case in April 1994, and in June the Court held that Oregon was required by the Due Process Clause to provide some post-verdict review of the amount of punitive damages imposed by a jury. By this point, although it was now evident that a majority of the Supreme Court agreed that the Due Process Clause also places a substantive limit on the amount of punitive damages, the Court had not yet deemed any particular award to breach that limit—having declined to do so in both Pacific Mutual Life Insurance Co. v. Haslip and TXO Production Corp. v. Alliance Resources Corp.
That all changed with BMW of North America, Inc. v. Gore.
As readers may recall, the case involved a doctor’s claim that BMW defrauded him by refinishing several surfaces of a car that had been blemished by acid rain and then selling it to him as new without disclosing the refinishing. Dr. Gore, who purchased the car from the dealer, never noticed anything about the paint until he brought the car to a detailer who advised him that the presence of a tape line under the hood meant that the car had likely been refinished.
Dr. Gore sued BMW in Alabama state court. A jury awarded him $4,000 in compensatory damages (ten percent of the car’s purchase price), plus $4 million in punitive damages, representing a punishment of $4,000 for each of the approximately 1,000 cars that BMW had refinished and then sold to customers nationwide without disclosure. The trial court denied BMW’s post-trial motions.
BMW then retained us to challenge the verdict in the Alabama Supreme Court. We argued there that the punitive award was improper for two reasons. First, because it was meant to punish BMW for harms to owners throughout the country, the punitive award violated the Constitution’s prohibition against extraterritorial regulation. Second, because it was 1,000 times the compensatory damages, was out of all proportion to the gravity of BMW’s conduct, and was orders of magnitude greater than Alabama’s statutory civil penalty for deceptive trade practices, the award was unconstitutionally excessive.
The Alabama Supreme Court agreed with our argument that the jury had engaged in unconstitutional extraterritorial punishment. As a remedy, however, it merely cut the punitive damages in half.
We then filed a petition for certiorari, asking the U.S. Supreme Court to review both the propriety of the remedy for the unconstitutional extraterritorial punishment and whether a $2 million exaction was unconstitutionally excessive. After re-listing the case several times, the Court granted the petition.
In May 1996, a closely divided Court ruled for the first time that a punitive award was unconstitutionally excessive. Embracing our argument that a jury in Alabama was not entitled to punish BMW for the effects of its conduct on residents of other states, the Court first held that the punitive award had to be evaluated solely in terms of Alabama’s interests in retribution and deterrence. It then held that the $2 million exaction was grossly excessive in relation to those interests.
In so doing, the Court set forth the now-famous BMW guideposts: (i) the degree of reprehensibility of the defendant’s conduct; (ii) the ratio of the punitive damages to the harm to the plaintiff; and (iii) the disparity between the punitive damages and the legislatively established penalty for comparable conduct.
The Court’s decision largely tracked the arguments we had made in our briefs—with one exception. We argued not only that it was impermissible for the jury to have punished BMW for conduct that affected non-Alabamians, but also that it was not permissible for the jury to punish BMW for the effects of its conduct even on other Alabamians. The Court did not need to reach that issue because it remanded the case for the state courts to reconsider the amount of punitive damages.
But the punishment against BMW was not unique. Plaintiffs’ lawyers throughout the country were seeking and obtaining punitive awards that were designed to punish defendants for the full effects of the defendants’ conduct rather than just for the harm caused to the plaintiffs themselves.
One such case was Philip Morris USA v. Williams. In that case, the plaintiff alleged that Philip Morris deceived her husband into believing that smoking is safe. After the plaintiff’s lawyer urged the jury to think about how many other people in Oregon were affected in the same way, Philip Morris asked the trial court to instruct the jury that it could not punish Philip Morris for harms caused to other individuals. The court refused to do so, the jury awarded $821,000 in compensatory damages and $79.5 million in punitive damages, and after a couple of trips up and down the Oregon appellate system (which included a remand for further consideration from the U.S. Supreme Court), the Oregon Supreme Court ultimately upheld the full punitive award.
Once again led by Andy, we then filed a petition for certiorari asking the Supreme Court to review both whether a jury permissibly may punish a defendant in an individual case for harms to non-parties and whether the $79.5 million punitive award was unconstitutionally excessive. The Court granted the petition and held once and for all that the Due Process Clause forbids punishing defendants for harms caused to non-parties—the argument that we had first developed in BMW. It then remanded the case without reaching the excessiveness issue.
Philip Morris marked Andy’s fourth oral argument in the Supreme Court on punitive damages. No other practitioner on the defense side has argued more than one punitive damages case.
Together, BMW and Philip Morris have had a pronounced impact on the law of punitive damages and have resulted in countless reductions of excessive punitive awards.
But Andy’s contribution to the development of punitive damages law has not been limited to the cases he argued in the Supreme Court. Over the course of his career, Andy won many punitive damages cases in the lower courts and wrote several influential articles on the topic. Some of his best ideas—for example, the creation of punitive-damages-setting guidelines akin to the criminal sentencing guidelines—remain to be adopted.
But it is no exaggeration to say that the punitive damages landscape has changed dramatically as a result of Andy’s work in this field over the past 30-plus years. It is heartening to know that, despite retiring from Mayer Brown, Andy plans to continue trying to shape the law of punitive damages.