Alabama Supreme Court clarifies scope of post-judgment discovery in connection with review of punitive damages

In Ex parte Vulcan Materials, [Ms. 1051184] (Ala. April 25, 2008) , the Alabama Supreme Court clarified the allowable scope of post judgment discovery in connection with a review of punitive damages, including the scope of discovery regarding a defendant’s financial position.  The decision also includes interesting concurrences by Justice Murdock and Chief Justice Cobb.  


Vulcan filed a motion for remittitur of a punitive damages award.  The plaintiff served extensive post judgment discovery to Vulcan.  The trial court compelled production of the information, and Vulcan sought mandamus relief.  The Supreme Court, in an opinion authored by Justice Woodall, took this opportunity to clarify the scope of permissible post-judgment discovery.


First. the Court addressed the scope of discovery of a defendant’s financial information.  Vulcan did not assert inability to pay the award as a basis for remittitur, but the plaintiff argued that Vulcan’s financial information was relevant to review the "relationship between the defendant’s financial position and the size of the punitive-damages award" and the profit from the misconduct.  Slip Op., p. 12.  The Court held that discovery into Vulcan’s financial status was not relevant to the punitive damage review this case.


The Court first noted that a plaintiff cannot seek additur of punitive damages or seek a hearing on the adequacy of damages.  Slip Op., p. 13.  Instead, the Hammond/Green Oil factors are considered for the benefit of the defendants, and that, therefore, the defendant can waive reliance on certain factors.  Slip Op., p. 14.  The Court held that because Vulcan conceded that its financial condition did not warrant a reduction, information about Vulcan’s finances was not relevant.  Indeed, Vulcan’s disclaimer required the trial court to weigh the relationship factor against remittitur.  Slip Op., p. 16. 


With regard to the profitability factor, the Court noted that, to be relevant, the profit at issue had to be from the alleged conduct at issue in the suit.  The Court held that "[e]vidence of Vulcan’s general financial status is far too attenuated for useful analysis under the profitability factor."  Slip. Op., p. 17.


The Court addressed sveeral other areas of post-judgment discovery as well.  For example, the Plaintiff sought discovery of Vulcan’s knowledge of "other lawsuits" and "other quarries."  Citing the United States Supreme Court case State Farm v. Campbell, the Court held that discovery should be geographically limited to Alabama because an Alabama court cannot punish for conduct which occurred out of state.  Slip Op., pp. 19-20.  Likewise, the request must be temporally limited to a period of 5 years.  Slip Op., pp. 21-22.  Moroever, the request regarding other litigation must be limited to similar litigation.  Slip. Op.. pp. 24-25.


The minutes of the Board of Directors’ meeting were not discoverable where the minutes made no mention of the plaintiff.  Slip Op. pp. 27-28.  And, discovery of Vulcan’s attorney’s fees would not be discoverable unless Vulcan challenged the reasonableness of the plaintiff’s fees as part of the review of the costs of litigation.  Slip Op.. pp. 34-36.


Finally, the Court denied the petition with regard to the production of Vulcan’s e-mails about the case, but, remanded the issue to the trial court for a review of whether the e-mails were privileged.


Also of note in this case are the concurrences written by Justice Murdock and Chief Justice Cobb.


Justice Murdock concurred because he believed enough financial information had already been produced the the Plaintiff and that the requested information was not needed.  However, he disagreed with the Court’s conclusion that Vulcan’s financial condition was not relevant.  In support of his argument, Justice Murdock raised two main points, but both points appear to be inconsistent with Alabama law.


First, Justice Murdock  wrote "Essential to the trial court’s determination of the proper amount of the punitive damages award is a determination that the presumption in favor of the award made by the jury has been rebutted."  Slip op.,  42.  However, both the trial court’s and Supreme Court’s review of punitive damages is de novo, so there is no presumption of correctness.  Ala. Code 6-11-23(a);  Horton Homes, Inc. v. Brooks, 832 So.2d 44, 57 (Ala. 2001); Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 121 S.Ct. 1678 (2001).


Second, Justice Murdock argues that the financial condition is relevant because it "might support the award, or at least some award greater than that which the trial court otherwise would choose" and that I find no indication in our cases — before today’s decision — that, where the task of the trial court is to decide what amount of punitive damages will be ‘proper,’ the financial condition of the defendant is not admissible both for the purpose of assessing that level of damages might be too much and for the purpose of assessing what reduced level of damages might not be enough."  Slip Op., pp. 43-44.  However, Alabama cases hold that an excessive punitive aard cannnot be upheld simply because a defendant has the authority to pay.  BMW of North America, Inc. v. Gore, 701 So.2d 507, 514 (Ala. 1997);   American Pioneer Life Ins. Co. v. Williamson, 704 So. 2d 1361, 1366 (Ala. 1997).


Chief Justice Cobb had similar concerns.  Chief Justice Cobb wrote that the Hammond/Green Oil factors were designed to benefit the defendant "insofar as the ‘benefit’ in question is the defendant’s right to a fair punishment, . . . and not the defendant’s interest in avoiding punishment." Slip Op., pp. 52-35 (internal citations omitted, emphasis in original).  Chief Justice Cobb stressed that a defendant could not avoid the effect of a Hammond/Green Oil factor simply by disclaiming reliance on it.