OHIO SUPREME COURT UPHOLDS TORT REFORM

DAMAGE CAPS

By Bradford C. Weber, Esq.

            In a slip opinion decided December 27, 2007, the Ohio Supreme Court upheld legislative caps for non-economic damages and punitive damages. 

            In Arbino v. Johnson & Johnson, 2007-Ohio-6948, 2007 WL 4569719, the Ohio Supreme Court was asked by the United States District Court for the Northern District of Ohio to answer certified questions whether R.C. 2315.18 (Caps on economic damages), R.C. 2315.21 (Caps on punitive damages) and R.C. 2315.20 (Collateral Source Statute) were constitutional. These were statutory provisions passed in Senate Bill 80 that became effective April 7, 2005. In a reversal of its prior trend regarding statutory tort reform, the Supreme Court upheld the caps on punitive and non-economic damages.  The Court declined to address the Collateral Source Statute for lack of standing.

            Ohio Revised Code §2315.18 establishes caps on “non-economic loss” in a “tort action.”  Non-economic loss means non-pecuniary harm resulting from injury or loss to person or property including, but not limited to, pain and suffering, loss of society, consortium, companionship, education, disfigurement, mental anguish, and any other intangible loss.  A tort action means any action for damages to person or property, but does not include, most significantly, actions for wrongful death, medical or dental malpractice or breach of contract.  Non-economic loss is capped at $250,000.00 or an amount equal to three times the economic loss, whichever is greater, to a maximum of $350,000.00 for each plaintiff or a maximum of $500,000.00 for each occurrence that is the basis of the tort action.  However, there is no limit for loss if there is a “permanent and substantial physical deformity, loss of use of limb or loss of bodily organ system or permanent physical functional injury preventing the injured person from being able to independently care for self and perform life sustaining activities.” 

If punitive damages are awarded, they are limited to two times the amount of compensatory damages. There is a further limit for individuals or “small employers” (less than 100 full time employees or, if a manufacturer, less than 500).   If a defendant is an individual or a small employer, punitive damages are limited to the lesser of two times compensatory damages or 10% of the employer’s net worth, up to a maximum of $350,000.00.  Also, there is no prejudgment interest to be calculated on punitive or exemplary damages. 

            Although not before the Court in Arbino, another part of Senate Bill 80 includes the seatbelt defense.  The seatbelt defense is codified at ORC §4513.263, and permits evidence of seatbelt non-use (in accidents occurring after April 7, 2005) to diminish recovery of compensatory damages for non-economic loss that could have been recovered but for a plaintiff’s failure to wear “all of the available elements of a properly adjusted restraining device.”  Traditionally, evidence of seatbelt non-use was not admissible in Ohio, so this is another important change contained in Senate Bill 80.

            This decision is a significant departure from the prior holdings of the Ohio Supreme Court that consistently found most previous attempts at tort reform unconstitutional.  The Court seems to agree with the arguments and rationale of the legislature, that unrestricted jury verdicts in the areas of non-economic damages and punitive damages are injurious to the economy of the State of Ohio.  This decision could potentially be important for individuals and employers who are defendants in actions involving bodily injury and property damage occurring after April 7, 2005.  Please note that these caps are for punitive damages and non-economic damages only, so there is still no limit to the amount of actual, pecuniary damages that a jury can award (e.g. medical bills, wage loss), if a plaintiff meets his or her burden of proof.