Opinion Information Sheet

			

Clausen v. Icicle Seafoods, Inc., No. 85200-6
Dissent by J.M. Johnson, J.

                                     No. 85200-6

       J.M. JOHNSON, J. (dissenting) -- This is a case governed by federal 

maritime law.  Today, the majority ignores instruction from the United States 

Supreme Court -- the final arbiter of federal maritime law -- as articulated in

Exxon Shipping Co. v. Baker, 554 U.S. 471, 128 S. Ct. 2605, 171 L. Ed. 2d 

570 (2008).  In Exxon, the Supreme Court  held that in maritime cases, 

punitive damage awards cannot be excessive in relation to the actual harm 

caused.  Id. at 503 (holding the appropriate ratio of punitive to compensatory 

damages in that case was 1:1). Following this decision, I would hold the $1.3 

million punitive damage award in this case must be reduced as it is excessive 

and bears no relation to the compensatory award of $37,420.

       Exxon was a class action brought by commercial fishermen, Native 

Alaskans, and landowners harmed by the Exxon Valdez oil spill.  Id. at 476.  

The spill resulted when the Valdez's intoxicated captain, Joseph Hazelwood, 

Clausen v. Icicle Seafoods, Inc., No. 85200-6

left the ship's bridge at the time his presence was needed to perform a critical 

turn.  Id. at 477-78.  Hazelwood also put the ship on autopilot, causing it to 

speed up and rendering the turn more difficult.  Id.  at 478.  The ship 

grounded, ripping the hull and spilling 11 million gallons of crude oil into the 

Prince Edward Sound.  Id.  The evidence indicated Exxon knew Hazelwood 

was a relapsed alcoholic but nevertheless placed him in charge of a 900-foot 

oil tanker in a region that was notoriously difficult to navigate.          Id. at 477.  

The jury assessed $507.5 million in compensatory damages and $5 billion in 

punitive damages against Exxon.  Id. at 480-81.  The Ninth Circuit Court of 

Appeals remitted the punitive award to $2.5 billion on due process grounds.  

Id. at 481.

       The United States Supreme Court reviewed the punitive damage award 

for conformity with federal maritime law.  Id.  at  489-90.  It  expressed 

concern over the unpredictability of punitive damage awards.  Id.  at 499. 

Unpredictable awards fail to promote one of the essential goals of punitive 

damages: deterrence.  Id.         at 502 ("[A] penalty should be reasonably 

predictable in its severity, so that even Justice Holmes's 'bad man' can look 

ahead with some ability to know what the stakes are in choosing one course 

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of action or another.").  The Exxon Court was particularly troubled by 

"outlier" punitive damage awards "that dwarf the corresponding 

compensatories," much like the punitive damage award in this case.  Id. at 

500.

       To solve the problem of runaway punitive damage awards, the Exxon

Court  concluded that        punitive damages should be "pegg[ed] . . . to 

compensatory damages using a ratio . . . ."  Id. at 506.  The Court analyzed 

ratios ranging from 3:1 to 1:1.  Id. at 507-13.  The Court considered a 3:1 

ratio inappropriate in Exxon, even though it reflected the statutory cap in a 

majority of states, because the 3:1 ratio is often applied to the "most 

egregious conduct."  Id. at 510-11 ("[A] legislative judgment that 3:1 is a 

reasonable limit overall is not a judgment that 3:1 is a reasonable limit in this 

particular type of case.").  The Court next calculated the median ratio of 

punitive to  compensatory damages actually awarded in a cross section of 

cases.  They arrived at a ratio close to 1:1, which was deemed to reflect 

"what juries and judges have considered reasonable across many hundreds of 

punitive awards."      Id. at 512.    Based on "the need to protect against the 

possibility (and the disruptive cost to the legal system) of awards that are 

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unpredictable and unnecessary," the Exxon Court held a 1:1 ratio was the 

"fair upper limit" in that case.  Id. at 513.

       The majority avoids Exxon by claiming the case does not establish "a 

general rule limiting the jury's role in determining appropriate damages."  

Majority at 19.  But, the Exxon decision has been interpreted by other courts 

and scholars as limiting punitive damage awards in maritime cases, with the 

potential for even broader application.  See, e.g., Duckworth v. United States, 

418 F. App'x 2, 3 (D.C. Cir. 2011) (unpublished) ("In [Exxon], the Supreme 

Court addressed 'punitive damages in maritime law' . . . and held that a jury's

award of punitive damages may not exceed the amount of compensatory 

damages in a federal maritime case." (quoting Exxon 554 U.S. at 489-90));

Hayduk v. City of Johnstown, 580 F. Supp. 2d 429, 484 n.46 (W.D. Pa. 

2008) ("Although Exxon is a maritime law case, it is clear that the Supreme 

Court intends that its holding have a much broader application."); Joni Hersch

& W. Kip Viscusi, Punitive Damages by Numbers: Exxon Shipping Co. v. 

Baker, 18 Sup. Ct. Econ. Rev. 259, 259 (2010) ("The U.S. Supreme Court 

decision in Exxon Shipping Co. v. Baker is a landmark that establishes an 

upper bound ratio of punitive damages to compensatory damages of 1:1 for 

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maritime cases, with potential implications for other types of cases as well."); 

Victor E. Schwartz et al., The Supreme Court's Common Law Approach to 

Excessive Punitive Damage Awards: A Guide for the Development of State 

Law, 60 S.C. L. Rev. 881, 882 (2009) ("Will state courts view the [Exxon] 

decision as solely limited to the field of federal maritime law, or will the high 

court's powerful reasoning broadly influence state courts struggling to cabin

in 'outlier' punitive damage verdicts?").  

       Dissenting in part in Exxon, Justice Ginsburg emphasized the weight of 

the  Court's decision.  Wary of its ramifications            beyond the context of 

maritime law, she queried, "[I]s the Court holding only that 1:1 is the 

maritime-law ceiling, or is it also signaling that any ratio higher than 1:1 will 

be held to exceed 'the constitutional outer limit'?"  Exxon, 554 U.S. at 524 

(Ginsburg, J., dissenting in part).  Given Exxon's potential to influence even 

nonmaritime cases, the majority's attempt to restrict the case to its facts is 

unconvincing.

       The holding in Exxon surely controls maritime cases like this one.  The 

majority reasons that the 1:1 ratio applied in Baker is inappropriate under 

these  facts and therefore no  limiting  ratio whatsoever should be applied.  

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Clausen v. Icicle Seafoods, Inc., No. 85200-6

While the facts of this case do not mirror Exxon, the basic rationale of Exxon

still governs.  At its core, Exxon stands for the premise that punitive damage 

awards in maritime cases cannot be excessive when compared with the actual 

harm caused by the defendant.  Id. at 503 ("The common sense of justice . . . 

bar[s] penalties that reasonable people would think excessive for the harm 

caused in the circumstances.").  The degree that a punitive damage award 

may depart from the corresponding compensatory award depends on the facts 

of the case, including the culpability or blameworthiness of the defendant,

whether the wrongdoing was hard to detect, and the size of the compensatory 

award.  Id. at 493-94. In other words, Exxon instructs that punitive awards in 

maritime cases should "pegg[ed] . . . to compensatory damages" in a manner 

suited to the circumstances of the case.  Id. at 506.

       The highest ratio considered potentially applicable in Exxon was 3:1.  

Id. at 510.  This ratio was considered appropriate only for cases "involving 

some of the most egregious conduct."  Id. at 509.  The majority seems to 

acknowledge that a 3:1 ratio was the "upper limit" discussed in Exxon by 

quoting that portion of the decision.  Majority at 19-20 ("'the upper limit is 

not directed to cases like this one . . . the 3:1 ratio . . . applies to awards in

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quite different cases involving . . . malicious behavior and dangerous activity 

carried on for the purpose of increasing a tortfeasor's financial gain'" (second 

and third alterations in original) (quoting Exxon, 554 U.S. at 510)).  The court

nevertheless sustains a punitive to compensatory ratio that vastly exceeds any 

ratio considered palatable by the Exxon Court.  Assuming, as the majority 

does, that Icicle's conduct was more blameworthy than Exxon's, a 3:1 ratio 
should be the "upper limit" here.1  Accordingly, the punitive damage award 

should be reduced to $112,260 -- three times the compensatory award of 

$37,420.

       In a footnote, the majority infers the punitive damage award in this 

case is no more than three times the compensatory award.  Majority at 23 n.5.  

The court reaches this fiction by reasoning that attorney fees should be added 

to the compensatory side of the punitive to compensatory damages ratio. 

Majority at 23.  In the cases cited by the majority for this proposition, the 

1 The majority's conclusion that Icicle's conduct was more reprehensible than Exxon's is 
certainly debatable.  Majority at 19-20.  Exxon's conduct led to harm that was 
exponentially more devastating than Icicle's wrongful withholding of maintenance and 
cure from one individual.  Over 32,000 plaintiffs were involved in the Exxon class action.  
554 U.S. at 479.  The oil spill stripped them of their livelihoods.  Id.  While the jury found 
Exxon reckless, it did not have the opportunity to consider the possibility of any degree of 
fault beyond recklessness.  Id. at 480 n.2.  Given the evidence presented, "[t]he jury could 
reasonably have believed that Exxon knowingly allowed a relapsed alcoholic repeatedly to 
pilot a vessel filled with millions of gallons of oil through waters that provided the 
livelihood for the many plaintiffs."  Id. at 525 (Breyer, J., dissenting in part).
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courts looked to the classification of attorney fees as compensatory under the 

law of the state involved.  See Blount v. Stroud, 395 Ill. App. 3d 8, 27, 915 

N.E.2d 925, 333 Ill. Dec. 854 (2009) ("In Illinois, our supreme court has 

recognized that the amount of attorney fees expended . . . is a relevant 

consideration to factor into the side of the ratio that quantifies the amount 

necessary to make the plaintiff whole." (Citations omitted.)); Action Marine, 

Inc. v. Cont'l Carbon, Inc.,  481 F.3d 1302, 1321 (11th  Cir. 2007) ("In 

Georgia, awards of attorney fees in tort cases involving bad faith are 

compensatory in nature."); Willow Inn, Inc. v. Pub. Serv. Mut. Ins. Co., 399 

F.3d 224, 237 (3d Cir. 2005) (alteration in original) ("'The obvious design of 

the Pennsylvania statute is, first, to place [plaintiffs] in the same economic 

position they would have been in had the insurer performed as promised, by 

awarding attorney's fees as additional damages.'" (quoting Klinger v. State 

Farm Mut. Auto. Ins. Co., 115 F.3d 230, 236 (1997))).  But, the classification 

of attorney fees as compensatory in other jurisdictions is not  controlling

where a case is governed exclusively by federal maritime law. 

       Moreover, the attorney fees awarded in Blount under 42 U.S.C. section 

1988  were  specifically  classified by the court as "'remedial'" rather than 

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punitive in nature.  395 Ill. App. 3d at 28 (quoting  Williams v. City of 

Fairburn, 702 F.2d 973, 976 (11th Cir. 1983)).               Section 1988 does not 

require a showing of a particular type of blameworthiness before attorney fees 

may be recovered.  See 42 U.S.C. § 1988 ("the court, in its discretion, may 

allow the prevailing party . . . a reasonable attorney's fee as part of the 

costs").  

       In contrast, attorney fee awards in maintenance and cure actions are

characterized as punitive because fees are not available unless a showing of 

callous or willful and wanton conduct is made.  See Vaughan v. Atkinson, 369 

U.S. 527, 531, 82 S. Ct. 997, 8 L. Ed. 2d 88 (1962) (assessing an award of 

attorney fees against a shipowner due to "callous" attitude, "recalcitrance," 

and "willful and persistent" failure to pay its maintenance and cure 

obligations).  In a recent maintenance and cure case, Atlantic Sounding Co. v. 

Townsend, the United States Supreme Court described attorney fees in this 

context as punitive in nature:

       [O]ur case law also supports the view that punitive damages 
       awards, in particular, remain available in maintenance and cure 
       actions . . . In Vaughan v. Atkinson, 369 U.S. 527, 82 S. Ct. 
       997, 8 L.Ed.2d 88 (1962), for example, the Court permitted the 
       recovery of attorney's fees for the "callous" and  "willful  and 
       persistent" refusal to pay maintenance and cure

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557 U.S. 404, 129 S. Ct. 2561, 2571, 174 L. Ed. 2d 382 (2009); see also 

Kraljic v. Berman Enters., Inc., 575 F.2d 412, 414 (2d Cir. 1978) ("We 

conclude therefore that the majority in [Vaughn v.] Atkinson . . . was in fact 

awarding counsel fees as punitive damages. . . .  Recovery of such fees is 

therefore based upon the traditional theory of punitive damages.").

       Construing the attorney  fee award in this case as punitive is also 

supported by the majority's interpretation of the award as an "exception to 

the American rule that parties bear their own costs and fees in litigation."  

Majority at 10.  Fees awarded under this exception to the American rule have 

been classified as punitive by the United States Supreme Court.  Hall v. Cole, 

412 U.S. 1, 5, 93 S. Ct. 1943, 36 L. Ed. 2d 702 (1973) ("a federal court may 

award counsel fees to a successful party when his opponent has acted 'in bad 

faith, vexatiously, wantonly, or for oppressive reasons.' . . . [T]he underlying 

rationale of 'fee shifting' is, of course, punitive" (citations omitted) (quoting 6 

James Wm.  Moore,  Moore's  Federal Practice 54.77[2],  at 1709 (2d ed. 

1972)));  see also Shimman v. Int'l Union of Operating Eng'rs,  744 F.2d 

1226, 1232 n.9 (6th Cir. 1984) ("Fees awarded under the bad faith exception 

[to the American rule] are punitive in nature.").  Where an award of attorney 

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fees "includes a certain punitive element," the fee award supports a lower 

punitive to compensatory ratio as  punishment has already been partially 

imposed in the form of attorney fees.  Parrish v. Sollecito, 280 F. Supp. 2d 

145, 164 (S.D.N.Y. 2003).  In such cases, attorney fees are not considered 

part of the compensatory award.  Laymon v. Lobby House, Inc., 613 F. Supp. 

2d 504 (D. Del. 2009).  

       Properly disregarding the attorney fee award, the punitive award of 

$1.3 million is nearly 35 times the compensatory award of $37,420.  This

punitive award is plainly excessive in relation to the actual harm caused by 
the defendant.2  By upholding the award, this court perpetuates a problem the 

Exxon Court intended to remedy: the issue of unpredictable punitive damage 

awards that fail the fundamental goal of deterrence. I would hold the punitive 

damage award must be reduced to conform to federal maritime law as 

articulated in Exxon.  Therefore, I respectfully dissent.

2 The jury found that Icicle's failure to pay maintenance and cure, although willful, caused 
no harm to Clausen beyond the amount of maintenance and cure in arrears.  
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Clausen v. Icicle Seafoods, Inc., No. 85200-6

AUTHOR:
        Justice James M. Johnson

WE CONCUR:
        Gerry L. Alexander, Justice Pro Tem.

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