Seventh Circuit Adopts New Standard For Reviewing Non-Economic Damage Awards
July, 2008
by Edward M. Kay and Melinda S. Kollross and Don R. Sampen
The United States Court of Appeals for the Seventh Circuit holds that in determining whether a non-economic damages award is excessive, the trial court on post-trial motion and the Court of Appeals on review should apply a comparison analysis. Arpin v. United States, 521 F.3d 769 (7th Cir. 2008). Although the Illinois Supreme Court “does not require or even encourage such comparisons,” that is of no moment here as consideration of comparison evidence “is a matter of procedure rather than of substance.” Arpin is binding on all federal courts in Illinois, Wisconsin and Indiana.
Facts
Plaintiff sued for the wrongful death of her 54 year-old husband as the result of malpractice while being treated at a hospital operated jointly by the Air Force and St. Louis University. The district court in a bench trial held in plaintiff's favor, finding both a second-year resident and the resident's supervising physician guilty of malpractice. The court awarded plaintiff $500,000 for medical care and lost wages, $750,000 for pain and suffering by her husband, and $7 million for loss of consortium for her and her four adult children. Defendants appealed both liability and damages.Analysis
On appeal, the Seventh Circuit affirmed the district court’s liability finding and the award of damages other than for loss of consortium. The Seventh Circuit vacated the $7 million loss of consortium award ($4 million for Mrs. Arpin and $750,000 to each child) which it called “plucked out of the air.” Federal Rule ofCivil Procedure 52(a) requires a federal judge acting as the trier of fact to explain the grounds of his/her decision. In the damages context, this means the court “must indicate the reasoning process that connects the evidence to the conclusion.” Here, the district court merely stated:
It is difficult to put a value on something that is priceless. Mrs. Arpin is far more dependent on her husband than are her children. Her children have suffered the loss of a father that is great and the devastation to this family is immeasurable.
That is insufficient under Rule 52(a).
The Seventh Circuit then declared that the district court “should have considered awards in similar cases, both in Illinois and elsewhere.” Although the Illinois Supreme Court does not require or even encourage such comparisons, such is a matter of procedure rather than substance and thus state law does not control. As Judge Posner explained:
But whether or not to permit comparison evidence in determining the amount of damages to award in a particular case is a matter of procedure rather than of substance, as it has no inherent tendency…either to increase or decrease the average damages award; the tendency is merely to reduce variance.The Seventh Circuit also suggested that courts might be able to derive guidance for calculating loss of consortium damages from the approach taken by the U.S. Supreme Court in recent years with respect to the constitutionality of punitive damages. The Supreme Court “has ruled that such damages are presumptively limited to a single-digits multiple of the compensatory damages, and perhaps to no more than four times those damages.” State Farm Mut. Autombile Ins. Co. v. Campbell, 538 U.S. 408, 123 S. Ct. 1513 (2003). Thus, the Seventh Circuit offered the following potential analysis for loss of consortium awards:
The first step in taking a ratio approach to calculating damages for loss of consortium would be to examine the average ratio in wrongful-death cases in which the award of such damages was upheld on appeal. The next step would be to consider any special factors that might warrant a departure from the average in the case at hand. Suppose the average ratio is 1:5-that in the average case, the damages awarded for loss of consortium are 20% of the damages awarded to compensate for the other losses resulting from the victim’s death. The amount might then be adjusted upward or downward on the basis of the number of the decedent’s children, whether they were minors or adults, and the closeness of the relationship between the decedent and his spouse and children.The court suspected that such an analysis would likely lead to the conclusion that the $7 million consortium award in this case was excessive. While not prescribing this ratio approach, the Seventh Circuit noted that following it would enable the district court to satisfy the requirements of Rule 52(a). The court accordingly vacated the $7 million loss of consortium award and remanded with directions for the district court to conduct further proceedings consistent with its opinion.
Learning Point
Arpin mandates consideration of comparison evidence in reviewing loss of consortium damages awards (at least in bench trials) and suggests that the Campbell ratio approach to evaluating punitive damage awards may also be applied to consortium damage awards. This new standard will govern in federal courts in Illinois, Indiana and Wisconsin and may be viewed as persuasive authority elsewhere. The decision will not only be useful in litigation, but also for settlement purposes – to make plaintiffs more receptive to reasonable settlement offers since loss of consortium awards will now be subject to greater scrutiny.Back to CM Report of Recent Decisions (2008v2) 2008 Volume 2 Table of Contents
