Article I, Section 10: To Limit Non-economic Damages or Not to Limit Non-economic Damages...

By: Rick Lee

Oregon’s Supreme Court weighed in once more on the constitutionality of the $500,000 cap on non-economic damages set forth in ORS 31.710 (1) ("the cap"). The cap is unconstitutional as applied to negligence actions – at least those that do not result in death – because it violates Article I, Section 10 of Oregon’s constitution. Busch v. McInnis Waste Sys., 366 Or 628 (2020).

So, the current scorecard is as follows:

Wrongful death case - Constitutional

Case subject to the Tort Claims Act - Constitutional

Negligence action without death and not subject to the Tort Claims Act - Unconstitutional

In Busch, defendant’s garbage truck struck plaintiff in a sidewalk, causing severe injuries. Defendant admitted fault, and the jury awarded economic damages of $3,021,922 and non-economic damages of $10,500,000. The trial court applied the cap and reduced the non-economic damages to $500,000. Plaintiff appealed, contending that the cap violated Article I, Section 10, which provides:

No court shall be secret, but justice shall be administered, openly and without purchase, completely and without delay, and every man shall have remedy by due course of law for injury done him in his person, property, or reputation.

The defendant acknowledged that Article I, Section 10 places a substantive limit on the legislature’s authority to limit damages, but advanced three arguments to support the constitutionality of the cap as applied to the case.

First, the defendant argued that the reduced damages awarded under the cap were substantial and, therefore, an adequate remedy. The court reasoned that the size of the final award after application of the cap is not “determinative in and of itself,” but rather, it is only appropriate as a final check to ensure that the reduced award is constitutionally adequate.

Second, the defendant argued that the resulting award was substantial given the nature and purpose of non-economic damages. The court rejected that argument, finding that Article I, Section 10 did not distinguish between economic and non-economic damages because they both serve the same compensatory purpose.

Third, the defendant argued that the legislature’s reasons for enacting the cap made it constitutional. The court agreed that the correct analysis is to focus on the reasons the legislature had in enacting the cap. In response, the plaintiff argued that the lack of a quid pro quo for limiting the remedy rendered the statute unconstitutional. The court reasoned that the lack of a quid pro quo is not fatal, but that it is a factor to consider in evaluating the constitutionality of the limitation of a remedy. The court determined that the legislature’s reasons for enacting the cap – to reduce insurance costs and to improve insurance availability – were insufficient, particularly in the absence of a quid pro quo. The court concluded that the legislature’s reasons did not address an issue with constitutional underpinnings, and the reasons for enacting the statute were insufficient to overcome the loss of the constitutional right.

What next? It is hard to tell. The court’s historical decisions concerning Article I, Section 10 have been “consistently inconsistent,” to quote from Justice Balmer’s dissent. While Busch generally follows the most recent precedent, Horton v. OHSU, 359 Or 168 (2016), the results can leave many a layperson and lawyer scratching their heads. It may be appropriate for the legislature to completely eliminate a cause of action (which naturally eliminates a remedy). It may be appropriate for a legislature to reduce damages as long as there is a sufficient reason. It helps the reason to be sufficient if there is a quid pro quo for the reduction in damages. The application of the clause is not limited to those causes of action that existed in 1857, the date of Oregon’s constitution, but the constitutionality of any reduction in damages will depend, to an unknown degree, upon how far the cause of action and remedy strays from what the court considered “baseline” – those causes of action that existed at common law in 1857.

Further exploration of the constitutionality of the cap may come relatively soon, because a panel comprised of Judges Roger Wollman, Ferdinand Fernandez, and Richard Paez recently certified a question on behalf of the United States Court of Appeals for the Ninth Circuit to the Oregon Supreme Court asking about the application of the cap in employment cases. Zweizig v. Rote, 962 F3d 484 (9th Cir 2020).

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