AMI 2218A Punitive Damages—Out-of-State Conduct and Harm to Non-parties—Cautionary Instructions

The first bracketed paragraph of this instruction is to be used only when evidence has been admitted of defendant's lawful out-of-state conduct.

The second bracketed paragraph of this instruction is to be given, upon request, when evidence has been admitted or argument introduced that defendant's conduct has caused harm to nonparties.

In some cases evidence of the defendant's out-of-state conduct may be deemed admissible for some purposes (e.g., because relevant to a witness's credibility or to the defendant's state of mind), but of limited permissible applicability as a basis for punitive damages (e.g., as evidence of recidivism). For an example, see Williams v. ConAgra Poultry Co., 378 F.3d 790, 796–98 (8th Cir. 2004). The first bracketed paragraph of this cautionary instruction responds to the constitutional concerns presented by such situations, as articulated in BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996), and State Farm Mutual Automobile Ins. Co. v. Campbell, 538 U.S. 408 (2003), which are discussed generally in the Comment to AMI 2218. Invoking principles of federalism, and the substantive due process requirement of a nexus between defendant's conduct and the specific harm suffered by plaintiff in the determination of the amount of a punitive damages award, the Court in State Farm stated that ““[l]awful out-of-state conduct may be probative when it demonstrates the deliberateness and culpability of the defendant's action in the State where it is tortious, but that conduct must have a nexus to the specific harm suffered by the plaintiff. A jury must be instructed, furthermore, that it may not use evidence of out-of-state conduct to punish a defendant for action that was lawful in the jurisdiction where it occurred. 538 U.S. at 422. See also Gore, 517 U.S. at 572–573 (noting that a state “does not have the power … to punish [a defendant] for conduct that was lawful where it occurred and that had no impact on [the state] or its residents’).” Id.

A related problem involves evidence of in-state conduct causing harm to nonparties. The Court in State Farm, while stopping short of expressly mandating that a cautionary instruction must be administered to the jury, observed that: “A defendant's dissimilar acts, independent from the acts upon which liability was premised, may not serve as the basis for punitive damages.” 538 U.S. at 423. The Court stated that the defendant is to be punished only “for the conduct that harmed the plaintiff, not for being an unsavory individual or business.” Id. Furthermore, inclusion of dissimilar harm to nonparties creates the risk of multiple punitive damages awards against the defendant for the same conduct because in the usual case nonparties are not bound by a judgment obtained by some other plaintiff. Id. (citing Gore, 517 U.S. at 593 (Breyer, J., concurring)). For an Arkansas case concluding that a punitive damages award, which may have been based in part on evidence of out-of-state harm, violated the defendant's due process rights, see FMC Corp., Inc. v. Helton, 360 Ark. 465, 477–78, 202 S.W.3d 490, 499–00 (2005). In Williams, Judge Morris Arnold parsed the due process distinction between harm to nonparties that was insufficiently similar to plaintiff's harm “to be evidence of recidivism under the narrow exception set forth in State Farm,” on the one hand, and evidence “that would fall within the State Farm recidivism exception,” on the other hand. 378 F.3d at 796–98 (8th Cir. 2004). In Boerner v. Brown & Williamson Tobacco Co., which involved evidence of both out-of-state conduct and harm to nonparties, the court rejected the defendant's argument that AMI 2218 failed to satisfy State Farm. 394 F.3d 594, 603–04 (8th Cir. 2005). That conclusion was bolstered, however, by the court's observation that there was no indication that the defendant's out-of-state behavior was lawful elsewhere. Id. Judge Bye's separate opinion objected that the Arkansas Model Jury Instructions did not sufficiently limit the jury's consideration to the harm suffered by the plaintiff. Id. at 606 (Bye, J., concurring).

The second bracketed paragraph of this instruction responds to Philip Morris USA, Inc. v. Williams, 549 U.S. 346, 353 (2007) (“Philip Morris II”), in which the Court explicitly extended State Farm to hold that “the Constitution's Due Process Clause forbids a State to use a punitive damages award to punish a defendant for injury that it inflicts upon nonparties or those whom they directly represent, i.e., injury that it inflicts upon those who are, essentially, strangers to the litigation.” (Note that the Court had previously remanded the $79.5 million punitive damages award in light of State Farm, Philip Morris USA, Inc. v. Williams, 540 U.S. 801 (2003) (“Philip Morris I”); but the Oregon courts reinstated the award. The Oregon court again reinstated the award following remand from the Supreme Court, Williams v. Philip Morris Inc., 344 Or. 45, 176 P.2d 1255 (2008) (adhering to prior Oregon Supreme Court ruling and affirming Oregon Court of Appeals decision on independent state law grounds), and the Supreme Court again granted a writ of certiorari, which it subsequently dismissed as improvidently granted. Philip Morris USA v. Williams, 129 S.Ct. 1436 (2009)). The Court also recognized in Philip Morris II, however, that evidence of actual harm or risk of harm to nonparties could be relevant to show that “the conduct that harmed the plaintiff also posed a substantial risk to the general public, and so was particularly reprehensible.” 549 U.S. at 355. When there is “an unreasonable and unnecessary risk” that juries will confuse the constitutionally permissible purpose for which harm to nonparties may be considered (to determine reprehensibility) with the constitutionally prohibited one (to punish defendant for having caused injury to nonparties)—because such evidence or argument was introduced at trial—the trial court, “upon request, must protect against that risk,” Id. at 357, presumably by giving a cautionary instruction. For an Arkansas case mentioning the distinction between consideration of harm to nonparties as evidence of reprehensibility and as a basis for punishing defendant, see Jim Ray, Inc. v. Williams, 99 Ark. 315, 322, 260 S.W.3d 307, 311 (2007). For a case reversing and remanding after Philip Morris II for a limiting punitive damages instruction concerning harm to nonparties, even though the trial court had given a limiting instruction regarding extraterritorial harm, see White v. Ford Motor Co., 500 F.3d 963, 971–73 (9th Cir. 2007).