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Ruling 6-3 in an important First Amendment case, the Supreme Court said April 7 that states may outlaw acts of cross burning that are intended to intimidate or threaten others. The Court recited the long history of cross burning as a virulent “symbol of hate” in its lengthy and fractured ruling on a Virginia law that bars cross burning on public or private property. Five of the nine justices wrote separately in the case, which was argued last Dec. 11. “When a cross burning is used to intimidate, few if any messages are more powerful,” wrote Justice Sandra Day O’Connor for a majority in Virginia v. Black, No. 01-1167. But by a separate 7-2 vote, the Court also said that cross burning could be a form of expression protected by the First Amendment if it is intended to convey a political message, rather than to threaten people who observe it. As a result, this seven-justice majority struck down the Virginia law at issue, because it contained a provision allowing jurors to presume that anyone who burns a cross intended to intimidate. Since the litigation began, Virginia changed its law to require proof of intent, which would appear to satisfy the majority’s objections to the old law. Justice Antonin Scalia, writing separately, saw no constitutional reason to strike down the presumption provision of the law, and Justice Clarence Thomas, the Court’s only African-American member, dissented altogether, arguing that the Virginia law was entirely constitutional and the First Amendment was not even a factor in evaluating the statute. “This statute prohibits only conduct, not expression,” wrote Thomas. “Just as one cannot burn down someone’s house to make a political point and then seek refuge in the First Amendment, those who hate cannot terrorize and intimidate to make their point.” But because Thomas saw no constitutional bar to Virginia’s law, he can be counted with the majority that said states have the right to pass such a law. Thomas added that even if the First Amendment is implicated, the presumption of intent to intimidate included in the Virginia law “presents no constitutional problems.” The ruling appears to be a retreat from the 11-year-old precedent R.A.V. v. City of St. Paul, in which the Court struck down a similar cross-burning statute as impermissible discrimination based on the content of the speech. First Amendment advocates expressed concern that last week’s ruling could lead overzealous legislators to use the intimidation rationale to outlaw other forms of controversial speech, from swastikas to flag burning. While some voiced hope that the Court was creating an isolated “category of one,” inhabited only by cross burning, others fear the Court was opening a significant and potentially unlimited breach in First Amendment protection. A current case pending before the Court, American Coalition of Life Activists v. Planned Parenthood of the Columbia/Willamette, No. 02-563, involves the so-called Nuremberg Files anti-abortion Web site that lists names and addresses of abortion providers. That site has been challenged as an impermissible threat that should not be protected by the First Amendment. “While a majority did invite states to target the display of certain evocative symbols such as burning crosses if — and only if — intent to intimidate is adequately proved, the Court clearly invalidated Virginia’s backdoor procedure,” says Robert O’Neil, director of the Thomas Jefferson Center for the Protection of Free Expression in Charlottesville, Va., which filed a brief against the Virginia cross-burning law. Virginia Attorney General Jerry Kilgore comments, “A burning cross is a symbol like no other. It doesn’t just say, ‘We don’t like you.’ The message is, ‘We are going to do you harm.’ “ Kent Scheidegger, legal director of the Criminal Justice Legal Foundation, calls the ruling “a victory for race relations in America. . . . In our history, burning a cross on someone’s front yard is a threat which is not protected by the First Amendment.” American Civil Liberties Union lawyer Art Spitzer thought the case was widely misreported as a blow to the First Amendment. “I bet 95 percent of the country now thinks cross burning can be banned, whereas the holding was that cross burning is protected by the First Amendment, unless it’s a true threat.” The Court fashioned its ruling by treating the case of Barry Black differently than it did the case of Richard Elliott and Jonathan O’Mara. Black was arrested under the Virginia law in 1998 after burning a cross on an open field in connection with a Ku Klux Klan rally. Elliott and O’Mara, by contrast, were arrested in a separate incident in which they burned a cross on the lawn of Elliott’s African-American neighbor. The Virginia Supreme Court struck down the law as it applied to all three defendants, finding that it was “analytically indistinguishable” from the statute invalidated in R.A.V. But Justice O’Connor found the law objectionable mainly in the case of Black, the Klan leader. Applying the law’s presumption to him, O’Connor suggested, deprived him of the ability to make a defense that he was “engaged in core political speech.” She added, “The prima facie evidence provision in this case ignores all of the contextual factors that are necessary to decide whether a particular cross burning is intended to intimidate. The First Amendment does not permit such a shortcut.” As for Elliott and O’Mara, O’Connor said the presumption was never invoked. O’Mara pleaded guilty, and a jury found Elliott guilty without being instructed by the judge on the presumption aspect of the law. In her interpretation of the presumption, O’Connor was joined by Chief Justice William Rehnquist and Justices John Paul Stevens and Stephen Breyer. In the section of the ruling in which she said states may prohibit cross burning with the intent to intimidate, she was joined by Justices Stevens, Breyer, and Scalia. Justices David Souter, Anthony Kennedy, and Ruth Bader Ginsburg said the entire law was unconstitutional under the R.A.V. precedent. For that reason, they can be counted along with O’Connor, Rehnquist, Stevens, and Breyer as striking down the presumption provision. “Even when the symbolic act is meant to terrify, a burning cross may carry a further, ideological message of white Protestant supremacy,” wrote Souter. Jurisdictions that have anti-cross-burning laws similar to Virginia’s former statute include California, Connecticut, Delaware, Florida, Georgia, Idaho, Montana, North Carolina, South Carolina, South Dakota, Vermont, Washington, and the District of Columbia. DAMAGE CONTROL The Supreme Court on April 7 handed a major victory to corporate defendants, imposing new limits on punitive damages awards in civil litigation. By a 6-3 vote in State Farm Mutual Automobile Insurance Co. v. Campbell, No. 01-1289, the high court overturned a $145 million verdict against an insurer, saying it was out of whack with the $1 million in compensatory damages awarded in the case. Writing for the majority, Justice Anthony Kennedy said that the ratio of punitive damages to compensatory damages almost never should exceed single digits — a maximum of 9-to-1, in other words — and that in many cases, punitive damages should not exceed compensatory damages at all. “Single-digit multipliers are more likely to comport with due process, while still achieving the state’s goals of deterrence and retribution, than awards with ratios in the range of 500 to 1 or, in this case, of 145 to 1,” wrote Kennedy. After a decade-long series of rulings on the issue of giant punitive damages awards, the ruling marks the Supreme Court’s most explicit statement yet about how big is too big. In addition, the Court ruled that neither a defendant’s wealth nor its out-of-state conduct could be a factor in calculating punitive damages. “A defendant should be punished for the conduct that harmed the plaintiff, not for being an unsavory individual or business,” wrote Kennedy. Kennedy also wrote, “The wealth of a defendant cannot justify an otherwise unconstitutional punitive damage award.” The ruling offered the corporate defense bar a near treasure-trove of helpful language in fighting the large liability awards that have fueled an increasingly powerful tort-reform movement. “The Supreme Court recognized some time ago that punitive damages had run wild in this country,” says Victor Schwartz, general counsel of the American Tort Reform Association. “Now, it has provided a decision that will curb this fundamental violation of due process that has been imposed on many unpopular defendants over the past decade.” The Court has dealt with punitive damages issues seven times over the last 10 years, generally imposing ever-tightening limits, but always leaving enough gray areas for both sides to exploit and for judges to argue over. “This case really does answer a lot of the open questions from previous cases,” especially the 1996 ruling in BMW of North America v. Gore, says Evan Tager, a D.C. partner at Mayer, Brown, Rowe & Maw who helped write a brief in the case on behalf of the U.S. Chamber of Commerce. “The Court has basically rendered impotent the issue of wealth as a way to jack up awards.” Tager says that the State Farm ruling may also spell the virtual end of punitive damages awards that are 10 times more or above the amount of compensatories. “Double-digits are now reserved for O.J. Simpson, boiler-room scams, and dumping hazardous materials in the middle of the night,” says Tager. Some plaintiffs lawyers on the other side of the issue downplay the ruling. “I’m not sure the ruling is terribly relevant” to the vast majority of civil cases in which punitive damages are nonexistent or small, says Robert Peck of the Center for Constitutional Litigation, which represents the Association of Trial Lawyers of America. “I think the Court was mostly trying to signal that it has had enough of these cases, so it gave a little more guidance to lower courts,” he adds. Harvard Law School professor Laurence Tribe, who argued against State Farm in the case before the Court, says, “There is no doubt that the six-justice majority has greatly tightened the noose on punitive damages.” But Tribe holds out hope that higher damages will be allowed in egregious cases. “The Court has left open the possibility of higher multiples in cases where, even though the expected profit associated with wrongful behavior may not be high, the defendant deliberately or recklessly endangered human life or limb.” In his majority opinion, Justice Kennedy said that the ruling was an elaboration of BMW v. Gore, in which the Court held that judges should consider the reprehensibility of a defendant’s action, as well as the relation to compensatory damages and to other comparable civil penalties, in determining whether a punitive damages award is excessive. But litigants ever since have been seeking clearer guidance on the meaning of those factors. The ruling delivers that guidance with an unusual degree of specificity. The ruling also represents a strong assertion of power over the usual domain of state courts in the civil trial area. Dissenting Justice Ruth Bader Ginsburg said the benchmarks established in the ruling would have been valid if enacted by state legislators or courts. “In a judicial decree imposed on the states by this Court under the banner of substantive due process, the numerical controls today’s decision installs seem to me boldly out of order,” Ginsburg wrote. Justices Antonin Scalia and Clarence Thomas also wrote separate dissents, arguing that the Constitution cannot be read to impose limits on punitive damages. The case before the Court began in 1981 when Curtis Campbell sued State Farm for refusing to settle a claim stemming from a fatal car accident and for exposing Campbell to damages in excess of his policy coverage. At trial, lawyers for Campbell convinced a jury that State Farm’s action was part of a nationwide effort to reduce claims payments by refusing to settle cases. The Utah Supreme Court upheld jury awards of $1 million in compensatory damages and $145 million in punitives. “This case is neither close nor difficult,” said Kennedy in reviewing the specifics of the award against State Farm. He acknowledged that the insurer’s handling of the claims against Campbell “merits no praise.” But Kennedy wrote that a “more modest punishment for this reprehensible conduct” would have been appropriate. Instead, he said, “this case was used as a platform to expose and punish the perceived deficiencies of State Farm’s operations throughout the country.” The Court said Utah was not entitled to punish State Farm for conduct — lawful or unlawful — outside the state. In one of the few concessions to plaintiffs, Kennedy did say that jurors could hear evidence of out-of-state conduct that “demonstrates the deliberateness and culpability of the defendant’s action . . . but that conduct must have a nexus to the specific harm suffered by the plaintiff.” For example, plaintiffs could use out-of-state evidence to rebut a defendant’s claims that its conduct was accidental, experts said. But that evidence could not be used by the jury in determining the size of a punitives award. Peck of the Center for Constitutional Litigation says this was one of several “outs” he sees in the ruling that could allow for punitive damages greater than 9-to-1. For instance, appellate courts may be willing to exceed the new limits in egregious cases, Peck suggests. Justice Kennedy went on to say that a comparable civil fine in Utah for improper claims handling was $10,000, which makes the $145 million punitive award even more inappropriate. Considering all the factors, Kennedy concluded that, in Campbell’s case, “a punitive damages award at or near the amount of compensatory damages” would have been proper. The ruling may have an immediate effect on a case pending before the high court. In Ford Motor Co. v. Romo, No. 02-1097, Ford is fighting a $290 million verdict resulting from a single rollover accident involving a Ford Bronco. Ford claims the California verdict is the highest personal injury award ever upheld on appeal. “The ruling [in State Farm] supports our position that the verdict in Romo is unconstitutional,” says Ford attorney Theodore Boutrous Jr. of Gibson, Dunn & Crutcher. Boutrous is hoping the high court will still grant review in Romo because of the somewhat different issues raised by product liability cases. “There are powerful reasons for the Court to clear these issues up in this context,” Boutrous says.

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