Morgan Lewis Title

The Supreme Court Requires Higher Standard of Review for Constitutional Due Process Challenges to Punitive Damages Awards

June 2001

In Cooper Industries, Inc. v. Leatherman Tool Group, Inc., the United States Supreme Court directed appellate courts to review constitutional challenges to punitive damages awards under the de novo standard. The Court reversed a Ninth Circuit decision applying a less stringent abuse-of-discretion standard to a trial court's decision upholding a punitive damages award.

On its face, Cooper appears to favor defendants who seek the reversal of punitive verdicts on constitutional grounds. The "atmospherics" of the decision, in addition to its holding, are likely to produce a more searching scrutiny of punitive damages awards, particularly when those awards are, as in Cooper, nearly 100 times greater than compensatory damages. As the Supreme Court itself recognized, however, it is quite possible that the appellate standard of review will alter the outcome "in only a relatively small number of cases." Even before Cooper, several federal courts of appeals already were using the de novo standard in reviewing constitutional challenges to punitive damages awards. On the other hand, two major commercial courts of appeals, the Second and the Seventh Circuits, applied the same abuse-of-discretion standard that the Ninth Circuit employed in Cooper, and the standard of review in these jurisdictions will be altered by the Supreme Court's decision.

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