Ohio Supreme Court Upholds Tort Reform, Reducing Risk to Businesses of Inflated Damage Awards

On December 27, 2007, in Arbino v. Johnson & Johnson, Slip. Op. No. 2007-Ohio-6948, a 5-2 decision authored by Chief Justice Moyer, the Ohio Supreme Court upheld as constitutional the statutory limitations on the amount of non-economic and punitive damages that may be awarded to plaintiffs in Ohio tort actions.  This opinion constitutes a landmark decision in improving the litigation climate for Ohio’s businesses and employers by reducing the risk of inflated damage awards by juries.

In Arbino, a Cincinnati-area woman, Melisa Arbino, filed a product liability lawsuit against the New Jersey-based company, Johnson & Johnson, in federal district court to recover damages for a series of blood clots and other medical problems Arbino suffered in 2005 after using a hormonal birth control patch known as the Ortho Erva Birth Control Patch.  Before her case went to trial, Arbino’s attorneys filed a motion for partial summary judgment, seeking a ruling on the constitutionality of several provisions of S.B. 80, the tort reform legislation enacted by the General Assembly in 2004, which became effective April 7, 2005.  In lieu of deciding the motion, Judge Katz of the U.S. District Court for the Northern District of Ohio entered a certification order asking the Ohio Supreme Court to decide the constitutionality of the provisions at issue.  The Ohio Supreme Court agreed to review three of the certified questions.

In its decision, the Supreme Court upheld two of the three challenged statutes.  One of the challenged statutes the Court upheld, R.C. § 2315.18, caps the amount of non-economic damages (i.e., damages for intangible injuries such as pain and suffering, loss of consortium, mental anguish and other injuries that are difficult to quantify) that may be awarded to a plaintiff in a tort action to the greater of $250,000 or three times the amount of economic damages (i.e., lost wages, medical costs and other easier-to-measure out-of-pocket damages), up to an absolute maximum of $350,000 for each plaintiff or $500,000 for each occurrence that is the basis for the claim.  Importantly, these limits on non-economic damages do not apply to catastrophic cases, such as those involving permanent disability, paralysis or the loss of a limb or bodily organ system.  The second challenged provision upheld by the Court, R.C. § 2315.21, caps the amount of punitive damages to no more than two times the total amount of plaintiff’s compensatory damages.  Moreover, for small employers (500 or fewer employees for manufacturing companies, and 100 or fewer employees for all others) and individuals, punitive damages are capped at the lesser of two times the total compensatory damages, or 10 percent of the small employer’s or individual’s net worth measured at the time the tort was committed, up to a maximum of $350,000.  The Court declined to rule on the third challenged provision, R.C. § 2315.20, dealing with the admissibility of evidence about a plaintiff’s recovery from “collateral sources,” on the ground that Arbino did not have legal standing to challenge the provision.   

Writing for the majority, Chief Justice Moyer observed that over the past three decades, the Court has repeatedly rejected caps on awards in tort actions, finding aspects of various bills adopted by the legislature to be unconstitutional.  However, Chief Justice Moyer also acknowledged that the General Assembly, in approving S.B. 80, had not simply rehashed former unconstitutional statutes but had instead made progress in tailoring the new statutes to address those constitutional defects previously identified by the Court, thus warranting “a fresh review of their individual merits.” 

Reviewing R.C. 2315.18, which caps non-economic damages, Chief Justice Moyer observed that in enacting the statute as part of S.B. 80, the legislature remedied constitutional flaws found in earlier tort reform bills by exempting from the caps those plaintiffs suffering catastrophic injuries, while still providing “meaningful” remedies for persons with less serious injuries.  Similarly, he noted that R.C. 2315.21, the portion of the bill limiting punitive damages, was drafted to avoid a constitutional flaw identified by the Court in a previous bill by leaving the determination of punitive damages in the hands of jurors, rather than transferring that power to trial judges. 

Chief Justice Moyer acknowledged that tort reform has been and remains “a contentious [issue] across the nation,” but emphasized that the General Assembly, and not the Court, “is charged with making the difficult policy decisions on such issues and codifying them into law.”  Chief Justice Moyer stressed that the Court’s responsibility is not “to second-guess such legislative choices,” but rather to “simply determine whether they comply with the Constitution.”  The Court’s review, he said, “causes us to conclude that the General Assembly has responded to our previous decisions and has created constitutionally permissible limitations.”  In closing, Chief Justice Moyer expressed that the Court’s decision “affirms the General Assembly’s efforts over the last several decades to enact meaningful tort reforms” and also “places Ohio firmly with the growing number of states that have found such reforms to be constitutional.” *

* As of the date of the Arbino opinion, courts in at least 19 other states have upheld limits on non-economic damages:  Alaska, California, Colorado, Florida, Idaho, Indiana, Kansas, Maine, Maryland, Missouri, Montana, Nebraska, New Mexico, Oregon, South Carolina, Texas, Utah, Virginia and West Virginia.  Moreover, courts in at least 10 other states have upheld limits on punitive damages:  Alaska, Florida, Georgia, Indiana, Iowa, Kansas, Missouri, Montana, North Carolina and Oregon.  In contrast, among those states finding such attempts at reform unconstitutional are Illinois, New Hampshire, North Dakota, South Dakota and Wisconsin. ______________________________________________________________________________

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