Judicial Notebook

In February, the U.S. Supreme Court heard oral arguments in Cooper Industries, Inc. v. Leatherman Tool Group, Inc. (No. 99­2035), on the issue of what standard of review appellate courts should apply when reviewing trial court rulings on the constitutionality of punitive damage awards. The case raises interesting empirical questions for psychologists.

The Court has considered the constitutionality of punitive-damage awards in a growing line of cases. In Honda Motor Co. v. Oberg (512 U.S. 415), the Court held that due process considerations require judicial review of the magnitude of punitive damage awards. In BMW of North America, Inc. v. Gore (517 U.S. 559), the Court attempted to define the contours of this review. In BMW, the Court, for the first time, found that a punitive damage award was constitutionally excessive. In doing so, the Court identified three "guideposts" for the review of punitive-damages: 1. The reprehensibility of the conduct; 2. The disparity between the harm or the potential harm suffered and the punitive award; and 3. The difference between the punitive damage award and penalties in comparable cases.

Standard of review

Federal appeals courts have been divided over the proper standard for reviewing punitive damage awards. Cooper Industries, Inc. v. Leatherman Tool Group, Inc., asks the Court to resolve this split. In the 1980s, Leatherman marketed a multifunction hand tool called the Pocket Survival Tool (PST). In the mid-1990s, Cooper developed a similar tool, the Toolzall, which differed only slightly in appearance from the PST. Before the Toolzall was in production, Cooper created a mock-up of the tool for promotional use by modifying a Leatherman PST (i.e., removing the Leatherman identification and substituting fasteners unique to the Toolzall). This prototype was then displayed in advertisements, packaging and other promotional materials for the Toolzall.

A jury found Cooper liable for unfair competition, passing off the modified PST as a product made by Cooper, and false advertising, and awarded Leatherman $50,000 in compensatory damages and $4.5 million in punitive damages. The district court denied Cooper's post-trial motion to reduce the amount of punitive damages. The Ninth Circuit, in an unpublished opinion, affirmed, holding that the district court had not abused its discretion.

On appeal to the Court, Cooper contended that the appellate court should have conducted a de novo review of the case (giving no deference to the district court's ruling) rather than asking whether the district court abused its discretion in refusing to reduce the punitive-damage award.

Research questions for psychologists

The legal question presented in Cooper raises a number of empirical issues. For example, much concern over punitive damages is driven by perceptions of runaway juries and the damages they award. However, existing empirical research demonstrates that although there are variations across geographical area and type of case, punitive damages are seldom awarded, are rarely extreme in size and are infrequently collected in the amounts awarded by juries.

Other questions include:

  • How might differences between trial and appellate court processes--witnesses, oral argument, briefing--shape the decisions of trial and appellate judges?

  • In what ways do legal factors--reprehensible conduct--and extra-legal factors--attitudes about plaintiffs, corporations or foreign defendants--impact punitive damage decision-making?

  • To what extent do these decisions reflect decision-makers' sense of outrage or a deterrence rationale?

  • How do the media influence how punitive damage decisions are made and perceived?

  • How do the processes involved in an initial determination of punitive damages differ from the processes involved in a review of that determination?

  • Specifically, how do "one-shot" jury decisions compare with "repeat-player" decisions by judges, particularly appellate judges?

  • How might a body of written opinions defining the contours of the constitutionality of punitive-damage awards influence judicial decision-making?

In the past decade, psychologists have begun to examine the processes underlying jury decisions about punitive damages; a few of these studies are cited in briefs to the Court. Researchers have paid less attention to punitive damage decision-making by judges. Thus, assumptions regarding the relative decision-making advantages of judges and juries or of trial and appellate judges are often articulated without empirical grounding.

Further Reading

"Judicial notebook" is written by the Courtwatch Committee of APA's Div 9. (Society for the Psychological Study of Social Issues). This column seeks to encourage involvement by psychologists in judicial decision-making.