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If plaintiffs’ attorneys own dart boards, it wouldn’t be a stretch to see Sheila Birnbaum’s picture pinned there. As the attorney for State Farm Insurance Co., she set the stage for the U.S. Supreme Court’s monumental decision that further limited punitive damages awards. The April 2003 decision has already cost plaintiffs’ lawyers and their clients billions of dollars. Birnbaum, a partner at New York’s Skadden, Arps, Slate, Meagher & Flom, took over State Farm’s defense after the Utah Supreme Court restored a $145 million punitive damages award, which the trial court had reduced to $25 million, and let stand a compensatory damage award of $1 million. The U.S. Supreme Court’s 6-3 majority opinion, authored by Justice Anthony M. Kennedy, said that “few awards exceeding a single-digit ratio would satisfy due process,” and suggested that a ratio of 1-to-1 and up to 4-to-1 should be more the norm. The case also severely limited the circumstances when out-of-state conduct of a defendant, even if unlawful, could be considered as evidence. State Farm Mut. Auto Ins. Co. v. Campbell, 123 S. Ct. 1513 (2003). Birnbaum, 63, a native of the Bronx, N.Y., came to her firm in 1980 and started its products liability department. She now heads the department, which has more than 70 attorneys, and has an office with a spectacular panoramic view that includes the Statue of Liberty. Birnbaum is a mass tort specialist practicing primarily in the areas of toxic torts and insurance coverage litigation. Judith Kaye, chief judge of New York state, and Birnbaum have often worked together in reform-minded groups. “She has a practical and positive approach,” Kaye said. “She doesn’t see the problems as much as she sees the objectives.” Creative juggling Birnbaum considers State Farm an example of “tort reform” and her most significant case to date. Winning it involved some juggling by the diminutive litigator. “We had to argue within the Gore guideposts,” she said. “If Gore hadn’t been decided so recently, we could have approached it differently.” BMW of North America v. Gore, 517 U.S. 559 (1996). In Gore-the last time the Supreme Court visited the issue of punitive damages-the court declined to recommend a numerical guidepost. In State Farm, “we showed that, although the Utah Supreme Court said they had applied the Gore guidelines, they didn’t follow the letter or the spirit,” Birnbaum said. Kennedy’s opinion often mirrored her briefs. Birnbaum, who’d won a major U.S. Supreme Court case once before, practiced her argument in front of attorneys who had filed amicus briefs or had significant punitive damages cases, and in-house counsel from State Farm. Grateful for a solid majority, her only disappointment was that justices Antonin Scalia and Clarence Thomas thought that punitive damages awards did not warrant substantive due process review. Cases that have reached federal circuit courts since State Farm was decided have allowed multipliers greater than single digits only when compensatory damages were small and the conduct of defendants was egregious. Most often those cases involved violations of plaintiffs’ civil rights or housing and workplace discrimination. “There are substantive due process considerations that every court has to apply . . . .I think they left an opening for the unusual case where the reprehensibility of the conduct is substantial and where the compensatories are not,” Birnbaum said of the court. She said that we are in “a period of time where the courts are interpreting the Supreme Court mandate and if they don’t follow the guideposts, the Supreme Court is likely to speak again.” Birnbaum faults plaintiffs’ counsel for often “overreaching,” claims that are out of proportion to the limited problems a product or an act has caused: “with many claimants who were never affected. If we could just somehow resolve the cases where people have real injuries we’d be making a lot of progress.” Post’s e-mail address is [email protected].

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