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April 7 will be the first birthday of the U.S. Supreme Court’s single-digit theory — the statement by Justice Anthony M. Kennedy and five other justices that the ratio of punitive damages to compensatory damages almost never should exceed 9-to-1. But no one is sure what the court’s decision in State Farm Automobile Co. v. Campbell, 538 U.S. 408, will look like when it grows up. Late last year, the Georgia Court of Appeals upheld a punitive damages award that was 22 times the compensatory damages award, saying the drunken-driving defendant was so reckless as to justify a punishment beyond the high court’s 9-1 guideline. Last week the Georgia Supreme Court let the ruling stand by denying the defendant’s petition for certiorari. Craig v. Holsey, 264 Ga. App. 344 (2003), cert. denied March 29, 2004. James T. Budd of Mabry & McClelland, the defendant’s appellate lawyer, said he did not know whether his client, whose defense is being paid for by The Windsor Group insurance company, would authorize a last-chance appeal to the U.S. justices. Given that only $200,000 is at stake — as opposed to the $145 million in State Farm — Budd was skeptical about a certiorari petition’s chances. On the other hand, “They might say, ‘Here’s a state that’s not listening,’” to the decision in State Farm or the other precedents, Budd speculated. David N. Krugler, who worked on the plaintiffs’ side of the case, said the appeals court was listening just fine to the U.S. high court. “They say explicitly there is no rule” requiring a 9-1 ratio, argued Krugler, who assisted the plaintiffs’ trial lawyer, Charles A. Mathis Jr. “It’s not a mathematical equation.” In State Farm, Kennedy wrote for a 6-3 majority that “few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process” guarantees in the U.S. Constitution. In the next paragraph, Kennedy added that “there are no rigid benchmarks” for punitive damages awards. REPREHENSIBILITY IS KEY Eight-and-a-half months later, the Georgia Court of Appeals issued its decision in Craig v. Holsey. The case was prompted by an accident in which Rodney Leroy Craig crashed his car into the back of another car, pushing it into oncoming traffic. Passenger Tamika Holsey suffered neck and back injuries, according to court records. The records also show that Craig was on probation for possession of crack cocaine, and he had smoked two marijuana cigarettes and drank six beers and eight ounces of gin before the accident. When Holsey sued, a jury awarded her $8,801 in compensatory damages and $200,000 in punitive damages. Writing for a 6-1 majority, Judge A. Harris Adams rejected Craig’s argument that the punitive damages were unconstitutionally excessive. Citing the State Farm decision, Adams noted that the most important indicator of a punitive damages award’s reasonableness was the degree of reprehensibility of the defendant’s conduct. In this case, Adams wrote, Craig’s behavior was not an isolated incident, caused physical harm and showed a reckless disregard for the safety of others — three of the five criteria courts use to measure reprehensibility. (The other two are whether the victim was financially vulnerable and whether the conduct was the result of intentional malice.) “Holsey could have died as a result of Craig’s driving under the influence,” Adams added. (Craig was prosecuted for causing the accident and was sentenced to 30 months of probation.) Judge Gary B. Andrews was the lone dissenter, citing the single-digit theory in support of his argument. “Moreover,” he added, “the majority seeks to negate the disparity by leaping to the conclusion that Holsey could have died in this accident,” when she suffered only neck and back strain. DUCKING PUNITIVES CASES? Insurance defense lawyer J. Robert Persons of Carter & Ansley, who has criticized the Georgia high court for not clarifying its punitive damages rulings, said the decision “sidesteps much of what is mandated in State Farm v. Campbell.” Persons, who is not involved in Craig v. Holsey, added that the majority decision “will certainly be applauded by the bench and bar since it results in upholding a punitive award against a drunken marijuana smoker recklessly operating a vehicle. “That the Georgia Supreme Court denied certiorari is not surprising either,” Persons added, “since it has passively ducked punitive damages cases over the past decade in the face of numerous United States Supreme Court reversals of state court decisions here and in other jurisdictions ignoring constitutional limitations on such awards.” Michael B. Terry of Bondurant, Mixson & Elmore, which was part of a team that had a $257 million punitive damages award against Time Warner Entertainment Co. upheld, disagreed. “The idea the [Georgia] Supreme Court is avoiding these questions is absurd,” he said. Terry, who also is not involved in Craig v. Holsey, explained that the court issued in 1998 a pro-defendant decision requiring juries awarding more than $250,000 in punitive damages to answer a special question asking whether the defendant intended to cause harm. Terry added that since the State Farm decision, courts around the country have upheld punitive damages awards with ratios far bigger than 9-1. He cited as one example Matthias v. Accor Econ. Lodging, No. 03-1010 (7th Cir. Oct. 21, 2003). That ruling held that State Farm did not establish a bright line rule, and affirmed punitive damages in a ratio of 37.2 to 1.

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