Oregon Case Law Update: $500,000 Non-Economic Damages Cap; the Slippery Slope Just Got Slippier

Oregon Case Law Update: $500,000 Non-Economic Damages Cap; the Slippery Slope Just Got Slippier
From the desk of Jeff Eberhard and Matt Ukishima: A few months ago, the Oregon Court of Appeals issued a decision in Vasquez v. Double Press Mfg., Inc., 288 Or App (2017), holding that applying the $500,000 noneconomic damages cap to plaintiff’s $4,860,000 noneconomic damages award would render the plaintiff with a remedy that was not substantial, and as a result, violates the remedy clause of Article I, section 10 of the Oregon Constitution. [See our prior Case Update on Vasquez here].  In this case, the Oregon Court of Appeals considers whether the noneconomic damages cap violates the remedy clause if applied to the husband’s $2,343,750 noneconomic damages award and to the wife’s $759,375 noneconomic damages award.  Read on for a discussion on the court’s analysis and the future of the statutory cap on noneconomic damages.
Claims Pointer: In this case arising out of a plaintiff who was rendered paraplegic after a job site accident, the Oregon Court of Appeals purports to rely on Vasquez, holding that application of the $500,000 noneconomic damages cap to the husband’s $2,343,750 noneconomic damages award leaves the husband with a remedy that is not substantial.  The court also holds that applying the noneconomic damages cap to the wife’s $759,375 noneconomic damages award leaves the wife with a remedy that is not substantial, despite the fact that the wife stood to recover more than 65 percent of her noneconomic damages award. We expect this opinion to be reviewed by the Oregon Supreme Court and the 2019 session of the Oregon legislature.
Rains v. Stayton Builders Mart, Inc. 289 Or App 672 (2018)
Plaintiff Kevin Rains (“Kevin”) was rendered paraplegic after a defective board of wood broke at his job site, causing him to fall almost 16 feet.  He brought a products liability suit against the retailer and manufacturer of the defective board (“defendants”). Kevin’s wife Mitzi Rains (“Mitzi”), brought a loss of consortium claim against defendants.  At trial, the jury found that Kevin suffered $5,237,700 and $3,125,000 in noneconomic damages, and that Mitzi was entitled to $1,012,500 in noneconomic damages.  The jury also found that Kevin was 25 percent at fault.  The manufacturer asked the court to apply the $500,000 statutory cap in ORS 31.710(1) to both awards.  The court declined to limit the noneconomic damages to $500,000, and instead, after allocating for Kevin’s comparative fault, entered a judgment award of $6,272,025 in damages to Kevin and $759,375 to Mitzi.  Defendants appealed the trial court’s decision.
On appeal, Kevin and Mitzi argued that the $500,000 noneconomic damages cap in ORS 31.710(1) violated the remedy clause in Article I, section 10 “because it would leave them without a substantial remedy.”  In determining whether the cap was unconstitutional, the court first looked to the Oregon Supreme Court’s decision in Horton v OHSU [See our prior Case Updates on Horton v. OHSU here: part 1 and part 2].  Horton identified three different categories of legislation to be considered when determining the legislature’s limits under the remedy clause:

“(1) legislation that did not alter the common-law duty but denies or limits the remedy a person injured as a result of that breach of duty may recover; (2) legislation that sought to adjust a person’s rights and remedies as part of a larger statutory scheme that extends benefits to some while limiting benefits to others (a quid pro quo); (3) legislation that modified common-law duties or eliminated a common-law cause of action when the premises underlying those duties and causes of action have changed.”

Relying on its prior decision in Vasquez, the court concluded that ORS 31.710(1) falls into the first category of cases, as it limits, but does not deny, the remedy that an injured person could recover.  The court dismissed finding ORS 31.710(1) facially unconstitutional, and explained that it would consider whether the statutory remedy of $500,000 is “substantial,” “on a case-by-case basis, because a capped remedy could provide complete relief for many claimants.”
In analyzing whether ORS 31.710(1) provided a “substantial” remedy, the court noted that when the legislature does not limit the duty a defendant owes, but limits the size or nature of the remedy, the legislative remedy is not required to restore all the damages, but “a remedy that is only a paltry fraction of the damages that the plaintiff sustained will unlikely be sufficient.”  (emphasis added).  The court explained that in order to determine if the remedy is substantial, it would consider the extent to which the legislature had departed from the common-law and measure it against the legislature’s reason for the departure. (emphasis added).
To determine the legislature’s reason for enacting the cap, the court again looked to Vasquez, which explained that the reason for the cap was to “put a lid on litigation costs, which in turn would help control rising insurance premium costs for Oregonians.”  The court considered the extent of the departure, finding that the legislature “departed fairly dramatically” from the common law model by enacting ORS 31.710(1).  Before the statute, the plaintiffs would have been subject to no limitation on recovery, thereby being able to recover their entire award.  In contrast, plaintiffs were now subject to a cap that had been enacted in 1987, which “has not since been revisited,” and provides no adjustment for inflation, or “severity of injuries sustained by a plaintiff.”  The cap would leave Kevin with $500,000 of his $2,343,750 noneconomic damages award, representing a $1,843,750 reduction.  In a rather conclusive manner, the court stated, “[f]or the same reasons elucidated in Vasquez, application of ORS 31.710(1) to Kevin’s damages award violates the remedy clause in Article I, section 10.”
The court then turned to Mitzi’s award. Applying the noneconomic damages cap would reduce her award from $759,375 to $500,000, a $259,375 reduction.  Defendants argued that Mitzi was left with a substantial remedy because even with the cap she would recover “more than 65 percent” of her award.  The court rejected this argument, and explained that the only cases where the court had determined that certain percentages of recovery were substantial, involved considerations not present in the current case, such as historical limitations on recovery in statutory wrongful death claims, or quid pro quo legislation.  With no similar considerations at play, the court said that it could “not see a principled reason to conclude that reducing Mitzi’s noneconomic damages award by $259,375 in the circumstances of this case leaves her with a ‘substantial’ remedy.”
Although Rains explicitly rejected holding that ORS 31.710(1) is facially invalid, following the court’s holding the court’s failure to apply the noneconomic damages cap to the wife’s $759,375 loss of consortium claim, it is difficult to predict circumstances in which the court will find the application of the cap to a case involving personal injury to be constitutional.
We do not agree with the court’s analysis in Rains and find it troubling that while the opinion was 19 pages in length, only one paragraph was devoted to analyzing whether application of ORS 31.710(1) to the wife’s award violates the remedy clause.  Also, both Vasquez and Horton provided that legislation which falls into the first category is unlikely to be constitutional if it leaves plaintiff with “only a paltry fraction” of the sustained damages.  Merriam-Webster defines paltry as “trivial” or “measly.”  The Rains court provided no explanation on how applying the $500,000 noneconomic damages cap to the wife’s $759,375 award would leave her with a “paltry fraction” of her sustained damages.
We expect that Rains and Vasquez will be appealed to the Oregon Supreme Court.  It could take up to a few years before the Oregon Supreme Court issues its opinion.  In the meantime, a statutory amendment is possible, because both Rains and Vasquez hinted at the fact that their analysis could change if there were a statutory amendment; either increasing the $500,000 noneconomic damages cap, adjusting the cap for inflation, or adjusting the cap for severity of plaintiff’s injuries.  The next full session of the Oregon legislature beings January 2019.
View full opinion at http://www.publications.ojd.state.or.us/docs/A145916A.pdf
Case updates are intended to inform our clients and others about legal matters of current interest. They are not intended as legal advice. Readers should not act upon the information contained in this article without seeking professional counsel.
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