Friend of the U.S. Chamber of Commerce

Judge Sonia Sotomayor's nomination to the U.S. Supreme Court may herald an era of greater tolerance toward large punitive damage awards.

The retiring justice Sotomayor would replace, David Souter, was a consistent, and often decisive, vote against large judgments. He wrote the court's 5-3 opinion in 2008 cutting $2 billion from the award against Irving, Texas-based Exxon Mobil Corp. for the 1989 Valdez oil spill.

Sotomayor's views on damages, by contrast, are largely a mystery, with her few rulings on the topic offering limited insight into how she would rule as a justice. As with other business issues, she has eschewed sweeping legal theories, instead taking a case-by-case approach.

"Souter was a critical fifth vote in a bunch of punitive damages cases," said Roy Englert, a Washington appellate lawyer who has represented the U.S. Chamber of Commerce before the Supreme Court. "Without the assurance that she will be as ready to rein in punitive damages as he was, there is a significant worry."

Limiting punitive damages has been a top legal priority for the Chamber of Commerce and companies including Dearborn, Michigan-based Ford Motor Co. and Richmond, Virginia-based Altria Group Inc. They won Supreme Court victories in 1996 and 2003, only to see the court move in the other direction when in March it left intact an $80 million award won by a smoker's widow who sued Altria.

The issue poses a special challenge for businesses because two justices typically on the conservative side of the court -- Antonin Scalia and Clarence Thomas -- say the Constitution?s guarantee of due process doesn?t impose any limits on awards.

Motorola Case

Sotomayor has twice rejected attacks on punitive damage awards as unconstitutional. She was part of a three-judge appeals court panel that in 2007 upheld a $1 billion award to mobile-phone maker Motorola Inc., based in Schaumburg, Illinois, in a corporate fraud suit against Turkey's Uzan family.

As a federal trial judge in 1999, Sotomayor upheld a $1.25 million punitive award to the victim of on-the-job sex discrimination and retaliation. Pointing to indications that the employer, a unit of Swedish bank Svenska Handelsbanken AB, might have discriminated against other women as well, Sotomayor said the award "is adequately related to the reprehensibility of the conduct at issue."

"Modest" Awards

Both those cases involved awards that Evan Tager, a critic of punitive damages at Mayer Brown LLP in Washington, called "relatively modest," given the size of the compensatory awards in the cases. The Supreme Court has said the ratio of punitive damages to compensatory damages is a factor in determining whether an award is excessive.

Sotomayor has in several instances voted to limit potential damages in cases not involving the constitutional excessiveness question. She dissented in 2000 when the 2nd Circuit allowed damage claims by victims of the 1996 crash of TWA flight 800 off the Long Island shore. The case turned on a federal law that limits damage claims for fatalities occurring in international waters.

In 1999, Sotomayor refused to award punitive damages to a woman with a learning disability who sued after New York bar examiners rejected her request for extra time to take the exam. Sotomayor awarded $12,500 in compensatory damages.

Not Like Ginsburg

"Her willingness to cut that one off at least gives us some reason to think she's not some full-throated supporter of large punitive damage awards," along the lines of Justice Ruth Bader Ginsburg, Tager said.

Tager says Sotomayor may bear the most similarity to Justice John Paul Stevens, who voted to uphold the $2.5 billion Valdez award while backing curbs on other awards.

Sotomayor's experience as a trial judge -- something all her prospective colleagues on the Supreme Court lack -- may make her reluctant to overturn awards, says Robert S. Peck, who represented a woman suing Altria's Philip Morris USA unit in a punitive damages case during the court's current term.

"I'm heartened by the fact that she was a trial court judge, which means that she's going to have a due respect for the work that jurors do," said Peck, a lawyer with the Center for Constitutional Litigation in Washington.

Indeed, in a 1996 article of the Suffolk University Law Review in Boston, based on an earlier speech, Sotomayor criticized lawmakers who "introduced bills that place arbitrary limits on jury verdicts in personal injury cases."

"To do this is inconsistent with the premise of the jury system," she wrote. "The focus must be shifted back to monitoring frivolous claims, uncovering pervasive misrepresentation in court and educating the public that no system of justice is perfect."

That passage may mean that she doesn't like limits on punitive damages, said Englert, of Robbins Russell Englert Orseck Untereiner & Sauber LLP. "There is ground for worry there."