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The U.S. Supreme Court delivered a blow Monday to Six Flags Over Georgia investors when it vacated a $257 million punitive damages award against Time Warner Entertainment. The Court, which heard the case on certiorari, remanded it to the Georgia Court of Appeals for consideration in light of an earlier Supreme Court decision that requires state appellate courts to scrutinize punitive damages to assure their constitutionality. Time Warner Entertainment v. Six Flags Over Georgia, remanded, No. 00-1875 (Oct. 1, 2001) John J. Dalton, an Atlanta-based Troutman Sanders lawyer who represents Time Warner, says the Court’s action indicates “state appellate courts everywhere now have the additional duty to conduct an independent and searching review of punitive damages awards, especially run-away jury punitive awards as was the case here.” PLAINTIFFS’ ATTORNEY: VERDICT WILL HOLD UP James E. Butler Jr., attorney for the plaintiffs, says he’s confident that the verdict will hold up under additional appellate review. Butler is a partner at Columbus, Ga.-based Butler, Wooten, Scherffius, Fryhofer, Daughtery & Sullivan. In 1998, a Gwinnett County, Ga., jury awarded the investors $257 million in punitive damages and $197 million in compensatory damages after six weeks of trial. The $454 million verdict was four times the state’s previous highest verdict, which also was won by Butler. The Georgia Court of Appeals will apply a de novo standard of review to the Six Flags $257 million punitive damages award in light of Cooper Industries v. Leatherman Tool Group. In that case, decided in May, the Court held that courts of appeals should apply a de novo standard when reviewing district court determinations of the constitutionality of punitive damages awards. “ Cooper, we think, requires the Court of Appeals to make a de novo review and compare the punitive award to see if it fits the conduct,” says Dalton. That comparison, he adds, will determine whether the award is excessive in light of the facts in the case. Time-Warner interprets the Cooper opinion to apply to both federal and state appellate courts, Dalton says. But Butler says Cooper doesn’t apply here. Time-Warner stipulated that the governing standard of review was abuse-of-discretion and elected not to raise the de novo standard at the Georgia Court of Appeals level, Butler says. ABUSE OF DISCRETION STANDARD Under an abuse of discretion standard, an appellate court examines the lower court’s decision to determine if it abused its discretion in awarding punitive damages. Also, Butler says, the Georgia Court of Appeals already conducted an exhaustive review of the facts in this case. The court didn’t call that a de novo review of the case, but it was one, he says. The case was filed in Gwinnett County Superior Court in March 1997. The plaintiffs were investors who claimed that Six Flag’s general partner and manager, Time Warner, had systematically shortchanged the park on capital investment, including delaying installation of the high-tech Batman roller coaster until 1997. Management wanted to keep revenue flat, the plaintiffs claimed, in order to allow Time Warner to renegotiate its management contract on better terms and discourage other park operators from competing for the contract. Time Warner defended its capital expenditures, saying it met and exceeded all terms of the partnership agreement by making more than $28 million in improvements over the six years at issue, although it was only obligated to spend $4.8 million. SUIT FILED IN 1997 Litigation began in March 1997 with the filing of a complaint by Time Warner in Gwinnet County Superior Court. The 122 limited partner-owners filed a counter-complaint on April 21, 1997. Gwinnett Superior Court Judge James W. Oxendine later realigned the parties. The six-week trial began in November 1998 and the next month, a Gwinnett jury awarded the $454 million. On the last day of trial, Time Warner Vice Chairman Ted Turner took the stand in an unsuccessful effort to minimize the punitive award. In April 1999, Oxendine denied Time Warner’s motion for new trial. The Georgia Court of Appeals panel affirmed the verdict in July 2000. The panel found the punitive damages not excessive, noting that the amount was just 1.3 times the compensatory damages award. Time Warner v. Six Flags Over Georgia, 245 Ga. App. 334 (2000). The Georgia Supreme Court unanimously rejected Time Warner’s petition for certiorari on Jan. 18. The U.S. Supreme Court granted certiorari on March 1.

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