2009 International Law Update, Volume 15, Number 2 (February)

2009 International Law Update, Volume 15, Number 2 (February)

Legal Analyses published by Mike Meier, Attorney at Law. Copyright 2017 Mike Meier. www.internationallawinfo.com. 

ALIEN TORT CLAIMS ACT

In case of naturalized American Citizen, formerly high ranking military official during Salvadoran military dictatorship who injured Plaintiffs, charged with crimes under Alien Tort Claims Act and Torture Victims Protection Act, Sixth Circuit holds that circumstances in El Salvador gave court discretion to equitably toll ten‑year statute of limitations and that, as resident American citizen, El Salvadoran Amnesty law did not shelter Defendant from civil liability under U.S. law

On December 10, 2003, several victimized Salvadoran citizens (Plaintiffs) filed suit against Nicholas Carranza (Defendant), a naturalized American citizen since 1991, in federal court. The complaint charged Defendant with acts of torture, extrajudicial killing, and crimes against humanity in violation of the Alien Tort Claims Act (ATCA) and the Torture Victims Protection Act (TVPA).

A jury found Defendant liable and awarded $500,000 in compensatory damages and $1 million in punitives to all but one of the Plaintiffs. Defendant appealed to the U.S. Court of Appeals for the Sixth Circuit. He contended (1) that the district court erred in equitably tolling the U.S. statute of limitations and (2) that the Salvadoran Amnesty Law passed in March 1993 barred the Plaintiffs’ claim. The Sixth Circuit affirms.

The TVPA is subject to a ten year statute of limitations. Although the ATCA does not specify a statute of limitations, the Sixth Circuit and several other Courts have applied the TVPA’s statute of limitations to the ATCA. The TVPA “calls for consideration of all equitable tolling principles in calculating this [statute of limitations] period with a view towards giving justice to plaintiff’s rights.” S. REP. NO. 102‑249, at 10 (1991).

Equitable tolling applies to TVPA and ATCA claims where extraordinary circumstances justify its application. The Court held that “When the situation in a given country precludes the administration of justice, fairness may require equitable tolling. In such limited circumstances, where plaintiffs legitimately fear reprisals against themselves or family members from the regime in power, justice may require tolling.” [Slip Op. 6] The Court cites a long list of cases to support this principle.

Defendant disputes that the former situation in El Salvador justifies equitable tolling. Reviewing the lower court’s decision for abuse of discretion, the Court found enough evidence in the record showing Plaintiffs’ fear of reprisal to justify tolling the statute until March 1994. It found that the violence associated with the civil war continued after its formal end in 1992.

As his alternative point, Defendant argues that Salvadoran Amnesty Law (SAL) should have barred the claims since it provides for amnesty for those who took part in political or common crimes during the civil war before 1992. The Circuit Court disagrees. It holds that the SAL was not extraterritorial in application.

“International comity is ‘the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or other persons who are under the protection of its laws.’ Hilton v. Guyot, 159 U.S. 113, 164 (1895). In order for an issue of comity to arise, there must be an actual conflict between the foreign law and the law of the forum. Hartford Fire Ins. Co. v. Cal., 509 U.S. 764, 798 (1993). There is no conflict for comity purposes ‘where a person subject to regulation by two states can comply with the laws of both.’ Id. at 799 (quoting RESTATEMENT (THIRD) FOREIGN RELATIONS LAW § 403 cmt. e (1987)).”

“There is no conflict between domestic and foreign law because the [SAL] cannot be interpreted to apply extraterritorially. A statute must not be interpreted as having extraterritorial effect without a clear indication that it was intended to apply outside the country enacting it. BMW Stores, Inc. v. Peugeot Motors of Am., Inc., 860 F.2d 212, 215 n.1 (6th Cir. 1988). There is nothing in the [SAL] to suggest that it should apply or was intended to apply outside of El Salvador.”

“Moreover, compliance with both domestic law and the [SAL] is possible. Plaintiffs may be barred from filing suit in El Salvador, but they are not barred from filing suit in the United States. Likewise, if Defendant were living in El Salvador, he would likely be immune from suit. However, he is a citizen and resident of the United States and is therefore subject to civil liability for his violations of the ATCA and TVPA. In addition, the Republic of El Salvador, as amicus, argues that this case would be rejected if it were brought in El Salvador – further demonstrating that Salvadoran courts can apply the [SAL] domestically without undermining the jurisdiction of United States courts.” (Slip op. 4)

Citation: Chavez v. Carranza, 559 F.3d 486 (6th Cir. 2009).

ARBITRATION

Despite already pending litigation between United States and Australian religious organizations in Australian court, Sixth Circuit finds that international comity does not stand in way of U.S. federal suit to compel arbitration under arbitration convention to which both U.S. and Australia are parties

“Answers in Genesis” of Kentucky (Plaintiff) is a Kentucky non‑profit corporation. “Creation Ministries International” (Defendant) (which previously was the “Foundation”) is an Australian non‑profit organization. Its goal was to promote creationism and apologetics throughout Australia. In 1987, one of Defendant’s leaders, Ken Ham, moved to the U.S. and set up what would become Plaintiff. The two organizations worked together for years in the area of teaching creationism. Plaintiff grew faster than Defendant, however, which led to tensions between Ham and Carl Wieland, the leader of Defendant.

One of the disputes centered on the control over “Foundation,” Defendant’s predecessor. In October 2005, the boards of directors of both Plaintiff and the Foundation met in Kentucky to resolve their disputes over the Foundation, as well as the content of the Foundation’s publication “Creation Magazine” and the parties’ joint website.

The result of the meeting was a Memorandum of Agreement (MOA), which transferred inter se certain copyrights and licenses. The MOA included an arbitration clause, requiring the parties to submit their disputes to “Christian arbitration.” Wieland objected to the MOA and tensions increased.

In May 2007, the U.S. Defendant filed a lawsuit against the present Plaintiff in a Queensland, Australia trial court. The following March, Plaintiff sued in a Kentucky federal court to compel arbitration under the Federal Arbitration Act (FAA), 9 U.S.C. § 206. Plaintiff also asked the court to enjoin Defendant from continuing the Australian lawsuit.

After hearing the parties, the district court ordered them to arbitrate the dispute. Defendant appeals, claiming that the court should either have dismissed Plaintiff’s lawsuit based on the contract’s forum selection clause, or should have abstained since Defendant had filed its Australian lawsuit first.

On Defendant’s appeal, the U.S. Court of Appeals for the Sixth Circuit affirms. It rules (1) that the district court had properly ordered the parties to arbitrate, and (2) did not abuse its discretion in declining to issue an anti‑suit injunction.

Defendant first argues that the district court erred when it failed to abstain on the basis of international comity. “Whether to abstain in regard to a motion to compel arbitration because of international comity concerns is an issue of first impression in this circuit. Case law is available from other circuits in the area of abstention based upon international comity in general. ‘One approach has taken the criteria enunciated in [Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976)] Colorado River and applied them to the international context’ while another approach has developed a similar test with more of a focus on the ‘special concerns’ injected by international comity. ...”

“Defendant suggests adopting the approach of the Eleventh Circuit in [Turner Entm’t Co. v. Degeto Film GmbH, 25 F.3d 1512 (11th Cir. 1994)], which combined the two complementary lines of cases to develop a multi‑factor balancing test: weighing international comity, concerns about ‘fairness to litigants,’ and the ‘efficient use of scarce judicial resources.’”

“By contrast, Colorado River instructed courts to consider several factors in determining whether to abstain in favor of a parallel proceeding in the courts of another sovereign. The ‘most important’ factor courts are to consider is whether there exists a ‘clear federal policy evinc[ing] . . . the avoidance of piecemeal adjudication.’ supra at 819. Additional factors include how far the parallel proceeding has advanced in the other sovereign’s courts, the number of defendants and complexity of the proceeding, the convenience of the parties, and whether a sovereign government is participating in the suit. Id. at 820.”

“For the purposes of this appeal, it is not necessary that we decide whether abstention is ever appropriate when one party seeks to compel arbitration with regard to an agreement in which the other party is international in origin. We conclude that even assuming that abstention might be appropriate in such a circumstance, Defendant has not met its burden in proving that abstention is required.”

“We base our conclusion upon weighing the factors found in the Colorado River test. We believe the factors found in Colorado River are the most applicable to the case at bar because those factors and their relative weight match most closely the public‑policy concerns the Supreme Court has identified as vital in the area of arbitration. Colorado River instructs that the ‘most important’ factor a court must consider is whether there is a ‘clear federal policy evinc[ing] . . . the avoidance of piecemeal adjudication’ found within the statutory scheme at issue. Id. at 819. In the case of the Federal Arbitration Act, there most clearly is not such a policy. [...]”

“International law, as incorporated by congressional action, supports our conclusion that abstention is inappropriate in this case. A similar concern for enforcing private agreements led to the adoption of the international treaty under which Plaintiff seeks to vindicate its right to arbitrate. Plaintiff filed this action under § 206 of the FAA. 9 U.S.C. § 206. Section 206 provides that district courts may compel arbitration upon motion of a party to an agreement covered by the 1958 Convention on the Recognition and Enforcement of [Foreign] Arbitral Awards [21 U.S.T. 2517; T.I.A.S. 6997; 330 U.N.T.S. 3; in force for U.S. Dec. 29, 1970] (‘Convention’). ... Chapter Two of the FAA incorporates the provisions of the Convention into American domestic law. See 9 U.S.C. §§ 201‑208. Both Australia and the United States are signatories to the Convention, and thus its terms govern the resolution of this dispute. ... Article II of the Convention, as incorporated by the FAA, establishes the requirements necessary for an arbitration agreement to come within the Convention’s terms. The agreement must be in writing, concern a ‘legal relationship . . . which is considered as commercial,’ and either at least one party to the contract must not be an American citizen or the commercial relationship must have a ‘reasonable relation with one or more foreign states.’ 9 U.S.C. § 202. Cf. Convention, Article II.”

“The MOA and Deed of Copyright License, which concern the transfer of multiples pieces of intellectual property and corporate stock, are in writing and clearly concern a commercial topic. Furthermore, it is undisputed that Plaintiff is an American corporation and [that] Defendant is Australian in citizenship. All of the Convention’s requirements are therefore met. Consequently, ‘when one of the parties’ to the arbitration agreement requests a court refer the dispute to arbitration, that court ‘shall’ do so. Convention art. II(3). Cf. 9 U.S.C. § 208.”

“As other courts construing the Convention’s language have observed, ‘there is nothing discretionary about Article II(3) of the Convention.’ Tennessee Imports, Inc. v. Filippi, 745 F. Supp. 1314, 1322 (M. D. Tenn. 1990) ... The language of the treaty and its statutory incorporation provide for no exceptions. When any party seeks arbitration, if the agreement falls within the Convention, we must compel the arbitration unless the agreement is ‘null and void, inoperative, or incapable of being performed.’ Convention, art. II(3). Defendant makes no such argument before us.”

“Further, it is difficult to see how comity concerns could come into play where both Australia and the United States, as signatories to the Convention, apply the same law. Defendant did not seek to compel arbitration in its action. Plaintiff instead filed the first action seeking to compel arbitration. To assume that the district court’s order infringes on comity concerns is to assume that Australian courts would not follow their obligation under the Convention, as Defendant’s argument must rest upon an assumption that an Australian court would be less likely to order arbitration. Such an argument both demeans the foreign tribunal and hardly advances the comity interests that Defendant claims to seek to vindicate. Cf. Gau Shan Co. v. Bankers Trust Co., 956 F.2d 1349, 1355 (6th Cir. 1992) (noting that federal courts should not seek to convey a message that they have ‘little confidence in the foreign court’s ability to adjudicate a given dispute fairly’).”

“Finally, we note that the other factors delineated in Colorado River do not clearly weigh in Defendant’s favor. The Australian proceeding is only in its initial stages, and the Australian courts have yet to consider Plaintiff’s jurisdictional and venue defenses. Because one group of witnesses is in Australia and another separate group is in Kentucky, either forum will be inconvenient for half of the parties such that this factor is a draw.”

“The issues raised by the parties involve the interpretation of a half‑century‑old Convention whose terms are largely unambiguous, and no sovereign is participating in these proceedings. Cf. Colorado River, 424 U.S. at 820. Consequently, because neither international comity nor the traditional abstention factors applicable to parallel proceedings require abstention, we hold that the district court did not err in declining to abstain in favor of the prior‑filed Australian proceedings.” [Slip op.4‑6]

Citation: Answers in Genesis of Kentucky, Inc. v. Creation Ministries Int’l, Ltd., 556 F.3d 459 (6th Cir. 2009).

INTERNATIONAL ORGANIZATIONS

District of Columbia Circuit finds that there is no immunity for International Finance Corporation in dispute resulting from contract negotiations over sale of investment to third party

The International Finance Corporation (IFC) (Defendant) is an international organization with 178 member states. It primarily invests in private enterprises within developing countries. One of its mandates is to sell its investments to private investors whenever possible. See Article 6, §3(vi) of the Articles of Agreement of the International Finance Corporation [ 7 U.S.T. 2197; T.I.A.S. No. 3620; 264 U.N.T.S. 117; in force July 20, 1956].

Salah Osseiran [Plaintiff] is a Lebanese business man who tried to buy the Defendant’s 11% stake in the Middle East Capital Group (an Isle of Guernsey corporation headquartered in Beirut, Lebanon) (MECG). In early October 2005, Plaintiff e‑mailed Jan van Bilsen, the Defendant’s portfolio manager for the Middle East, offering to purchase the shares.

The parties negotiated by e‑mail and telephone for about two months; van Bilsen sent a proposed sales agreement toward the end of November. Plaintiff responded that the agreement was “generally Ok” but proposed some changes. The Defendant did not sign and a few months later tried to sell the shares to a higher bidder.

Plaintiff sued the Defendant in the District of Columbia federal court. The suit claimed (1) that Defendant had breached their contract, (2) that the Defendant was estopped from selling the shares to a third party and (3) that the Defendant breached the parties’ confidentiality agreement.

The Defendant moved to dismiss based on its immunity under the International Organizations Immunities Act, 22 U.S.C. §§ 288‑288f (IOIA). The District Court found that the Defendant had waived its immunity, but dismissed the breach of contract claim for failure to state a claim. The Defendant filed this interlocutory appeal from the denial of its immunity claim. The U.S. Court of Appeals for the District of Columbia Circuit, however, affirms.

The IOIA grants immunity to designated international organizations, similar to the immunity traditionally accorded to foreign governments. International organizations, however, may expressly waive their immunity for purposes of any proceedings or by the terms of a contract. 22 U.S.C. § 288a(b). Cases on point have found waivers of immunity where the waiver furthers the organization’s financial objectives.

Here, however, the Defendant presented different immunity arguments. It contended that a waiver of immunity from claims of promissory estoppel and breach of confidentiality does not advance its interests because the Plaintiff’s claims are not cognizable under governing law. Thus, the Defendant basically argued that the Plaintiff was probably going to lose on the merits.

The Court notes that, with this approach, immunity does not turn on the validity of the underlying legal action. “Since the validity of Plaintiff’s claims is not a prerequisite to jurisdiction, we need not determine whether the law of Guernsey, the site of [MECG’s] incorporation, controls, as [Defendant] claims.”

“... [I]mmunity from suits based on ‘commercial transactions with the outside world’ can hinder an organization’s ability to operate in the marketplace. Mendaro, 717 F.2d at 618; Atkinson, 156 F.3d at 1338. The thought was that parties may hesitate to do business with an entity insulated from judicial process; promises founded on good faith alone are worth less than obligations enforceable in court. See Atkinson, supra at 1338 ...”

“[Defendant] is in the business of selling its investments to private parties. ICF’s Charter art. 3, § 3(vi). Sales agreements result from negotiations. Plaintiff’s promissory estoppel and confidentiality claims concern [Defendant’s] alleged representations during such negotiations. To follow the Mendaro‑Atkinson theory, waiver of immunity for an action by such a plaintiff, asserting claims arising out of that category of activity, might help attract prospective investors by reinforcing expectations of fair play. Such a ‘corresponding benefit’ would promote [Defendant’s] chartered objective of revolving its investments.”

“As against this potential benefit, [Defendant] identifies no unique countervailing costs like those the court identified in Mendaro, supra at 618 (noting [that] waiver would ‘lay the Bank open to disruptive interference with its employment policies’) ... It follows that the broad language of the waiver in [Defendant’s] charter is controlling and that the corporation does not have immunity from Plaintiff’s claims in counts 2 and 3 of his amended complaint.” [841‑2].

Citation: Osseiran v. Int’l Finance Corp., 552 F.3d 836 (D.C. Cir. 2009).

MARITIME LAW (PUNITIVE DAMAGES)

In nineteen‑year‑old litigation over Exxon’s supertanker oil spill in Alaskan waters, divided U.S. Supreme Court holds, as matter of maritime common law, that inherent inconsistencies in jury determinations of punitive damages justifies limiting same to no more than amount of compensatory damages

On or about March 29, 1989, Petitioner Exxon’s supertanker Valdez grounded on a reef off Alaska, spilling crude oil into Prince William Sound. The tanker was over 900 feet long and Exxon used it to carry crude oil from the end of the Trans‑Alaska Pipeline in Valdez, Alaska, to the lower 48 States. On the night of the spill it was carrying 53,000,000 gallons of crude oil, or over 1,000,000 barrels.

The accident came about soon after Captain Joseph Hazelwood – for some unknown reason – walked off the bridge. This action placed a tricky course correction in the inexperienced hands of unlicensed subordinates. Moreover, Hazelwood had a history of alcohol abuse and his blood still had a high alcohol level eleven hours after the spill. Witnesses testified that, before the Valdez left port on the night of the disaster, Hazelwood had consumed at least five double vodkas in the waterfront bars of Valdez, an intake of about 15 ounces of 80‑proof alcohol, enough that a non‑alcoholic would have passed out. There also was evidence that Exxon officials knew that Hazelwood’s various sessions with AA etc. had failed to succeed in curing his alcohol addiction. Nevertheless, Exxon kept him in command of this super tanker.

After the disaster, Exxon spent some $2.1 billion in cleanup activities. It also (1) pled guilty to criminal violations for which it paid fines, (2) settled a civil action brought by the United States and the state of Alaska for at least $900 million, and (3) voluntarily paid another $303 million to various private parties adversely affected by the spill.

In the resulting civil actions, the Alaska federal court consolidated related actions against Exxon into this one. Plaintiffs brought it against Exxon, Hazelwood, and others to recover economic losses suffered by Respondents (collectively Baker), who depend on the health of Prince William Sound to earn a living. Plaintiffs also demanded punitive damages.

At Phase I of the trial, the jury decided that Exxon and Hazelwood had acted recklessly, thus opening the door for punitive damages claims. The trial court charged the jury that a corporation is responsible for the reckless acts of employees acting in a managerial capacity within the scope of their employment.

In Phase II, the jury came in with $287 million in compensatory damages to some of the Plaintiffs – other Plaintiffs had settled their compensatory claims for $22.6 million. In Phase III, the jury awarded $5,000 in punitives against Captain Hazelwood and $5 billion against Exxon. The Ninth Circuit upheld the Phase I jury instruction on corporate liability and ended up remitting the punitive damages award against Exxon to $2.5 billion.

The U.S. Supreme Court granted certiorari to decide three questions of maritime common law: (1) whether a shipowner may be liable for punitive damages even though it did not acquiesce in the harm‑causing actions; (2) whether federal statutory law has implicitly precluded an award of punitive damages by making no express provision for them; and (3) whether the award of $2.5 billion in this case is greater than maritime law should allow in the circumstances of this case. A majority of the Court vacates the punitive damage judgment and remands for further proceedings. On the statutory point, the Court majority concludes that water pollution penalties under the Clean Water Act (CWA) 33 U.S.C. § 1321, do not preempt punitive‑damages awards in maritime spill cases. Section 1321(b) protects navigable waters ..., adjoining shorelines, ... [and] natural resources, subject to a saving clause reserving obligations ... under any ... law for damages to any ... privately owned property resulting from [an oil] discharge, § 1321(o).

Exxon admits that the CWA does not displace compensatory remedies for the effects of water pollution, even those for economic harms. This, however, puts the company in the untenable posture of claiming that, for economic losses, the CWA somehow preempts punitive damages, but not compensatory damages. Nothing in the statute requires that result, and the Court has spurned similar attempts to sever remedies from their causes of action, see Silkwood v. Kerr‑McGee Corp., 464 U.S. 238, 255‑256. Nowhere in the CWA did Congress clearly express or imply an intent to take over the entire range of water pollution remedies. Moreover, it seems unlikely that awarding punitive damages for private harms would to any degree frustrate the CWA’s specific remedial goals.

The Court, however, does conclude that the punitive damages award against Exxon was exorbitant as a matter of maritime common law. Under the circumstances of this case, this Court’s bottom line is that the federal courts should limit such awards to an amount that duplicates the compensatory damages. The Court then explains its rationale.

It is true that legal codes from ancient times through the Middle Ages did allow multiple damages for certain particularly harmful acts. On the other hand, modern Anglo‑American punitive damages principles are rooted in 18th‑century English law as widely accepted by American courts by the mid‑19th century. See, e.g., Day v. Woodworth, 13 How. 363, 371.

 The majority American rule limits punitive damages to cases involving enormity. Day v. Woodworth, ibid. These are situations where the courts describe a defendant’s conduct in terms such as outrageous, owing to gross negligence, willful, wanton, and reckless indifference for others’ rights, or even more deplorable behavior. The modern consensus is that our law designs punitive damages not only to punish the wrongdoer but also to deter future harmful conduct by a particular defendant or by anybody else so tempted.

State regulation of punitive damages is far from uniform. A few States award them rarely, or not at all, and others approve them only when authorized by statute. Many States have set statutory limits on punitive awards. These may take the form of absolute monetary caps, a maximum ratio of punitive to compensatory damages, or, often, some combination of the two.

“Despite these limitations, punitive damages overall are higher and more frequent in the United States than they are anywhere else. See, e.g., Gotanda, Punitive Damages: A Comparative Analysis, 42 Colum. J. Transnat’l L. 391, 421 (2004); 2 L. Schlueter, Punitive Damages § 22.0 (5th ed. 2005).

“In England and Wales, punitive, or exemplary, damages are available only for oppressive, arbitrary, or unconstitutional action by government servants; injuries designed by the defendant to yield a larger profit than the likely cost of compensatory damages, and conduct for which punitive damages are expressly authorized by statute. Rookes v. Barnard, [1964] 1 All E. R. 367, 410‑411 (H. L.). Even in the circumstances where punitive damages are allowed, they are subject to strict, judicially imposed guidelines.”

“American punitive damages have been the target of audible criticism in recent decades, see, e.g., Note, Developments, The Paths of Civil Litigation, 113 Harv. L. Rev. 1783, 1784‑1788 (2000) (surveying criticism), but the most recent studies tend to undercut much of it, see id., at 1787‑1788. A survey of the literature reveals that discretion to award punitive damages has not mass‑produced runaway awards, and although some studies show the dollar amounts of punitive‑damages awards growing over time, even in real terms, by most accounts the median ratio of punitive to compensatory awards has remained less than 1:1.”

“Nor do the data substantiate a marked increase in the percentage of cases with punitive awards over the past several decades. The figures thus show an overall restraint and suggest that in many instances a high ratio of punitive to compensatory damages is substantially greater than necessary to punish or deter.” [2624].         

“The real problem, it seems, is the stark unpredictability of punitive awards. Courts of law are concerned with fairness as consistency, and evidence that the median ratio of punitive to compensatory awards falls within a reasonable zone, or that punitive awards are infrequent, fails to tell us whether the spread between high and low individual awards is acceptable. The available data suggest it is not. A recent comprehensive study of punitive damages awarded by juries in state civil trials found a median ratio of punitive to compensatory awards of just 0.62:1, but a mean ratio of 2.90:1 and a standard deviation of 13.81. Juries, Judges, and Punitive Damages 269.”

“Even to those of us unsophisticated in statistics, the thrust of these figures is clear: the spread is great, and the outlier cases subject defendants to punitive damages that dwarf the corresponding compensatories. The distribution of awards is narrower, but still remarkable, among punitive damages assessed by judges: the median ratio is 0.66:1, the mean ratio is 1.60:1, and the standard deviation is 4.54. Ibid.”

“Other studies of some of the same data show that fully 14% of punitive awards in 2001 were greater than four times the compensatory damages, ... with 18% of punitives in the 1990s more than trebling the compensatory damages, see Ostrom, Rottman, & Goerdt, A Step Above Anecdote: A Profile of the Civil Jury in the 1990s, 79 Judicature 233, 240 (1996). And a study of ‘financial injury’ cases using a different data set found that 34% of the punitive awards were greater than three times the corresponding compensatory damages. Financial Injury: Jury Verdicts 333.

“Starting with the premise of a punitive‑damages regime, these ranges of variation might be acceptable or even desirable if they resulted from judges’ and juries’ refining their judgments to reach a generally accepted optimal level of penalty and deterrence in cases involving a wide range of circumstances, while producing fairly consistent results in cases with similar facts. Cf. TXO Production Corp. v. Alliance Resources Corp., 509 U.S. 443, 457‑458 (1993) (plurality opinion). But anecdotal evidence suggests that nothing of that sort is going on.” [2625].

“One of our own leading cases on punitive damages, with a $4 million verdict by an Alabama jury, noted that a second Alabama case with strikingly similar facts produced ‘a comparable amount of compensatory damages’ but ‘no punitive damages at all.’ See BMW of North America, Inc. v. Gore, 517 U.S. 559, 565, n. 8 (1996). As the Supreme Court of Alabama candidly explained, ‘the disparity between the two jury verdicts ... [w]as a reflection of the inherent uncertainty of the trial process.’ BMW of North America, Inc. v. Gore, 646 So. 2d 619, 626 (1994)(per curiam).” We are aware of no scholarly work pointing to consistency across punitive awards in cases involving similar claims and circumstances.”

“Today’s enquiry differs from due process review because the case arises under federal maritime jurisdiction, and we are reviewing a jury award for conformity with maritime law, rather than the outer limit allowed by due process; we are examining the verdict in the exercise of federal maritime common law authority, which precedes and should obviate any application of the constitutional standard. Our due process cases, on the contrary, have all involved awards subject in the first instance to state law. ... These, as state‑law cases, could provide no occasion to consider a ‘common‑law standard of excessiveness,’ [Cite] and the only matter of federal law within our appellate authority was the constitutional due process issue.” [2626].

“Our review of punitive damages today, then, considers not their intersection with the Constitution, but the desirability of regulating them as a common law remedy for which responsibility lies with this Court as a source of judge‑made law in the absence of statute. Whatever may be the constitutional significance of the unpredictability of high punitive awards, this feature of happenstance is in tension with the function of the awards as punitive, just because of the implication of unfairness that an eccentrically high punitive verdict carries in a system whose commonly held notion of law rests on a sense of fairness in dealing with one another.”

“Thus, 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 of action or another. See The Path of the Law, 10 Harv. L. Rev. 457, 459 (1897). And when the bad man’s counterparts turn up from time to time, the penalty scheme they face ought to threaten them with a fair probability of suffering in like degree when they wreak like damage. Cf. Koon v. United States, 518 U.S. 81, 113 (1996) (noting the need ‘to reduce unjustified disparities’ in criminal sentencing ‘and so reach toward the evenhandedness and neutrality that are the distinguishing marks of any principled system of justice’). The common sense of justice would surely bar penalties that reasonable people would think excessive for the harm caused in the circumstances. ...” [2627].

“The provision of the CWA respecting daily fines confirms our judgment that anything greater [than compensatory damages] would be excessive here and in cases of this type. Congress set criminal penalties of up to $25,000 per day for negligent violations of pollution restrictions, and up to $50,000 per day for knowing ones. 33 U.S.C. §§ 1319(c)(1), (2). Discretion to double the penalty for knowing action compares to discretion to double the civil liability on conduct going beyond negligence and meriting punitive treatment.”

“And our explanation of the constitutional upper limit confirms that the 1:1 ratio is not too low. In State Farm Mut. Automobile Ins. Co. v. Campbell, 538 U.S. 408, 425, we said that a single‑digit maximum is appropriate in all but the most exceptional of cases, and ‘[w]hen compensatory damages are substantial, then a lesser ratio, perhaps only equal to compensatory damages, can reach the outermost limit of the due process guarantee. State Farm, supra, at 425.” [2634]. The Court, therefore, vacates and remands the case to the lower courts.

Citation: Exxon Shipping Co. v. Baker, 128 S. Ct. 2605, 171 L.Ed.2d 570, 2008 A.M.C. 1521 (U.S.S.C. 2008).

Serbian court convicts four Serbs for war crimes of massacring forty‑eight Kosovo Albanian civilians. On April 23, after a three‑year trial, a Serbian war crimes court on Thursday convicted four former Serbian policemen for massacring 48 Kosovo Albanians at Suva Reka; it sentenced two of them to 20 years in prison. The other two received sentences of 15 or 13 years. The judges said that the dead were the victims of the worst single slaughter of civilians during the 1998‑99 Kosovo war. Among the victims were 14 children, two infants, a pregnant woman and a 100‑year‑old woman. In Serbia, the trial evidenced a powerful change in local public opinion, for many citizens had looked upon Serbs who fought separatist ethnic Albanians in Kosovo as war heroes. But agitation by human rights groups led Belgrade to find out who was to blame for the Suva Reka massacre. More than 100 witnesses testified at the hearings, some of them Kosovo Albanians. Such trials were impossible under the regime of Mr. Milosevic (now deceased) which ended in 2000. Kosovo declared independence last year, something Serbia refuses to recognize. Citation: The Associated Press (online), Belgrade, Serbia, Thursday, April 23, 2009 at 12:45:17 GMT (byline of Dusan Stojanovic, AP writer).

United Nations conference votes to enlarge list of banned organic pollutants already listed in Stockholm Convention. A 160‑nation meeting in Geneva this week has voted to enlarge the coverage of a U. N.‑sponsored treaty, the Stockholm Convention on Persistent Organic Pollutants (2004), or POPs; the expansion seeks to control highly dangerous chemicals beyond the original “dirty dozen.” The international community has been using substantial amounts of the nine additional substances in pesticides, flame retardants and other products. The 2004 Convention aims to protect the environment and human health from these very dangerous chemicals that last a long time in the Earth’s atmosphere, soil or water and ultimately to phase them out. The Convention has so far included a list of 12 chemicals, such as the widely banned pesticides DDT and chlordane. The so‑called POPs pose a risk to humans and to the environment because they often damage reproductive health, can lead to mental health problems, cause cancer or impede normal growth. The chemicals build up in the environment, rise up through the food chain and accumulate in people’s bodies. Among its additions, the meeting decided to ban chlordecone, an agricultural pesticide, hexabromobiphenyl, an industrial flame retardant; and lindane, which many have used in insecticides for soil, wood and animals. The meeting also decided to restrict the use, production and trade of so‑called PFOS, toxic chemicals used in many electronic applications, such as semiconductor chips. It was hardest to get PFOS on the banned list because its commercial use is still widespread. Each year, the trade in PFOS is easily in the billions of dollars. Countries which have internally ratified the Convention also agreed to enact national legislation to implement within its territory the bans and restrictions it imposes. Citation: Associated Press (online), Geneva, Switzerland, Saturday, May 9, 2009 (byline of Eliane Engeler, with contributions by Alexander G. Higgins, AP staff writers).