By Rob Moritz
Arkansas News Bureau
LITTLE ROCK — Lawyers for an agricultural company ordered to pay a $48 million judgment in a lawsuit over tainted rice asked the state Supreme Court on today to overturn a judge’s ruling that stuck down limits on punitive damages in the state’s tort reform law.
Lawyers for Bayer CropScience argued that 2003 Civil Justice Reform Act law, which caps punitive damage awards in civil cases at $1 million, meets constitutional muster.
Last year, Lonoke County Judge Phillip Whiteaker declared the cap unconstitutional in awarding rice farmers $42 million in punitive damages and about $6 million in compensatory damages in a lawsuit farmers filed claiming their crops were tainted by genetically modified rice produced by Bayer CropScience.
Punitive damages in the case would have been subject to the state cap but Whiteaker ruled after the trial ended that the cap on punitive damages was unconstitutional. He did not explain the ruling.
Attorneys for Randal Schafer and 11 other rice farmers argued today that Whiteaker’s ruling was correct.
The Legislature passed the Civil Justice Reform Act after a jury awarded a $78 million judgment against a Mena nursing home in a resident’s death. The state Supreme Court reduced the award to $26 million in May 2003.
“Compensatory damages, fundamentally are a recovery for injuries. Punitive damages are fundamentally a penalty for conduct. Punitive damages are not a penalty for injuries, they are a penalty for conduct,” Donald Scott of Denver, Colo., attorney for Bayer, told the high court today.
Chief Justice Jim Hannah asked Scott if there was any validity to the argument that “the angst these farmers went through in seeing (the rice) prices drop perhaps was some kind of injury to them as opposed to punishment?”
Scott said the farmers submitted claims for market losses and received compensatory damages.
“If that were an injury it would be a claim for the injury, but punitive damages are the penalty for conduct and stand separate from that,” Scott said. “That is what the Civil Justice Reform Act was aimed at, not recovery for injuries, but what the penalty should be for conduct.”
Scott also told the justices that the tort reform law does not violate the separation of powers doctrine because the Legislature, when enacting the law, did not restrict what judges can do.
“It is a procedure by which this court and the trial courts bring jury awards into compliance with law and evidence, and sometimes it’s exercised because the court perceives the jury has acted on passion and gone beyond the evidence,” he said.
“The policy of punitive damages … I would suggest is within the legislative power, it is substantive, it’s a policy determination as are other penalties in civil and criminal law. They are legislative in nature in setting the policy of the state,” Scott said.
Scott Powell of Birmingham, Ala., attorney for Schafer and the other farmers, argued the state’s tort reform law is unconstitutional.
“This is indeed a property damage case,” Powell said, adding every country that normally buys from the farmers refused because the rice had been contaminated.
“There was no marketable crop and the reason it was not marketable is because it was infected with genetically modified material,” Powell said. “That is supported by the general manager of quality control for Riceland Foods.”
The U.S.A Rice Federation also warned every rice farmer of the problem and to take necessary precautions to clean equipment and land, Powell said.
Attorney Bruce McKee, also from Birmingham, Ala., said the cap limitation is unconstitutional because state statutes prohibit placing limits on the amount to be recovered.
“And very importantly, punitive damages are part of the amount to be recovered,” McKee said, adding there must be some injury to personal property in order for there to be any punitive damages.
