Texas Bar Journal • January 2024

[OPINION]

Appellate Review of Non-Economic Damages: Thoughts in Response

Observations regarding the development of the standard of review.

Written by Ryan P. Pitts and Mark Trachtenberg1

As H. Victor Thomas and Randall O. Sorrels have helpfully laid out in their article, in the continued search for a workable standard of review for non-economic damages, we see a clear example of our common law system at work. Texas courts and advocates have wrestled with difficult issues of proof, fairness, and the role of the common-law courts in it all. We do not write here to disagree with the particulars of caselaw, to suggest a definite standard of review, or to criticize any of the Gregory v. Chohan opinions. We rather offer a few observations regarding the ongoing development of the standard of review.

First, the heart of the disagreement between the justices in Chohan is over the role of courts and scope of review for intangible damages awards. The plurality operates under the presumption that, to be compensable in a legal system, legal damages must be reviewed objectively. Justices John Devine and Jeff Boyd argue that the subjective nature of the harm cannot be separated from the analysis, and so they would afford more deference to the jury.

For a long time now, Texas caselaw has focused on the “inherently subjective”2 nature of intangible losses and less on the objective role of courts in reviewing awards arising from such losses. This focus can be traced back to the earliest Supreme Court of Texas jurisprudence on the subject, in which the court made intangible losses compensable but without offering any explanation as to how they should be adjudicated in a legal system.3 Pain, impairment, and emotional losses are subjective and found by the factfinder; damages awarded through the legal system, however, are objective and fully reviewable by courts. Put simply: feelings are subjectively experienced but legal damages are objectively awarded.

At a fundamental level, the transformation of intangible loss into damages, a weight of one thing into some weight of another thing, presents a question of law—of what society understands as reasonable and will tolerate. A factfinder has no appropriate factual basis on which to determine an exchange rate between money and pain, impairment, and emotional turmoil. For this very reason, plaintiff and defense lawyers have struggled with what to say to a jury about the damages amounts. Plaintiff lawyers have resorted to decision-making heuristics such as anchors, ratios, per diems, comparisons, and the list could go on; defense lawyers have often thrown up their hands and simply argued: “far less than what the plaintiffs’ counsel said.”

When understood at this fundamental level, the aim of review changes. Rather than struggling to accurately value what defies precise valuation, the question becomes how to approximate what the “reasonable” person in Texas could accept or tolerate as legal damages for the noneconomic injuries shown by the evidence at trial. The focus of judicial review changes from the subjective nature of the harm to the range of what a “reasonable” person could objectively award under the evidence.

This question as to the subject of review helps to explain the different opinions of Chohan. The plurality and concurrence diverge on whether review must encompass the subjective nature of the evidence.

The Chohan plurality formulated the test as objective— what can the evidence reasonably support? “[A]ppellate courts have a duty to ensure that the damages awarded for a noneconomic injury are the result of a rational effort, grounded in the evidence, to compensate the plaintiff for the injury.”4 “[T]he results of litigation should always be justifiable based on evidence and reason” to “guard against arbitrary outcomes and to ensure that damages awards are genuinely compensatory.”5 “[S]ome rational basis for the size of the judgment is a minimal requirement on which the law must insist.”6 The plurality framed review as over objectively awarded damages subject to scrutiny for a “rational connection, grounded in the evidence.”7

Justices Devine and Boyd expressed the opposite understanding and reframed the subject of review as inescapably tied to the unquantifiable depth of the losses. Their first sentences read: “The value of a life is inherently unquantifiable. Grief, loss, loneliness, longing, pain, and suffering simply have no market value.”8 “So, the ultimate question is: who decides the value of a man’s worth to his family?”9 Noneconomic damages, they wrote, “are easy to monetize but impossible to objectively quantify.”10 They objected that no “rational connection” can be ascertained between objective damages and subjective injuries.11 They concluded: “fairly and justly compensating tort victims for noneconomic injuries boils down to a policy choice,” which courts have long “entrusted” to “juries.”12

However the full court ultimately settles this disagreement, what’s plain is that the Texas legal system has fully engaged itself in quantifying damages for noneconomic harm. The review of those damages must be principled and produce consistent results. Otherwise, Texas tort law will become more unpredictable. Some plaintiffs will receive vastly more in noneconomic damages than others for similar injuries—turning the judicial system into a lottery. Some defendants will pay vastly more noneconomic damages than others in comparable cases—creating a sense of punishment (without the safeguards applied to true punitive damages). Our system of law based on fairness and equal treatment would struggle to satisfactorily explain these divergent outcomes. And a side effect may be that settlements become harder to fairly evaluate.

*     *     *

Our second observation is that—despite the differing opinions expressed in Chohan—the Texas legal system can, and hopefully will, devise a workable standard for review of non- economic damages. Little is truly new, the past repeats, and previous evolutions of legal standards fill the reporters of U.S. caselaw. The current search of the Supreme Court of Texas to define a “meaningful”13 review of non-economic damages mirrors the U.S. Supreme Court’s development of a workable standard for reviewing the constitutionality of punitive damage awards, which culminated in the early 2000s.

Review of punitive and noneconomic damages poses a similar problem because both defy objective quantification.14 Just as no objective exchange rate exists for transforming pain, impairment, and emotional turmoil into money, there is no objectively discernible exchange rate between the need to deter and punish and money. And, in fact, punitive and noneconomic damages originated together in the common law but became distinct over time.15

In 1989, without reaching the question, the U.S. Supreme Court noted that an award of punitive damages may have constitutional limits.16 Two years later, the court acknowledged constitutional boundaries arising from “general concerns of reasonableness” and “reasonable constraints” on jury discretion.17 It noted “that unlimited jury discretion—or unlimited judicial discretion for that matter—in the fixing of punitive damages may invite extreme results that jar one’s constitutional sensibilities.”18 This vague guidance, however, provided little clarity to lower courts about what constitutional “reasonableness” meant.

Then, in 1993, came TXO Production Corp. v. Alliance Resources Corp.,19 another decision by a fractured court with clear parallels to the Chohan decisions. Both sides called on the Supreme Court to define a “test” for the constitutionality of punitive damages.20 The plurality found that call “understandable” but could not obtain consensus on the test to adopt.21 It relied on the vague “reasonableness” test. Justice Sandra Day O’Connor, joined by Justices Byron White and David Souter, wrote powerfully of the need to lay out “guidepost[s] to help other courts find their way through this area,” including by looking to similar cases and assessing any improper arguments made.22 The “lack of clear guidance heightens the risk that arbitrariness, passion, or bias will replace dispassionate deliberation as the basis for the jury’s verdict.”23 As Justice Anthony Kennedy said in his partial concurrence: “To ask whether a particular award of punitive damages is grossly excessive begs the question: excessive in relation to what?”24 As in Chohan, the court could not agree.

But the Supreme Court soon after settled the disagreements of TXO in the two landmark decisions that still govern the constitutionality of punitive damages today—BMW of North America, Inc. v. Gore (1996)25 and State Farm Mutual Automobile Insurance Co. v. Campbell (2003).26 The compromise was to demand “exacting appellate review”27 and to expressly articulate three “guideposts” for reasonableness review of punitive damages. This standard seems to have largely succeeded; there have been no widespread calls for changes in how appellate courts review punitive damages. The Gore and State Farm standards have become accepted and ingrained.

The lesson is that a workable standard can be developed. And one can easily imagine a similar end to the search for a standard to review noneconomic damages in Texas—exacting appellate review based on factors designed to probe reasonableness, such as:

1.  The nature, duration, and severity of emotional suffering, see Parkway, 901 S.W.2d at 444; cf. Gore, 517 U.S. at 575 (“Perhaps the most important indicium of the reasonableness of a punitive damages award is the degree of reprehensibility of the defendant’s conduct.”);

2.  The ratio of economic to noneconomic losses in appropriate cases, see Chohan, 670 S.W.3d at 559 (plurality op.) (“The usefulness of such ratios will vary depending on the nature of the case.”); cf. Gore, 517 U.S. at 580 (“The second and perhaps most commonly cited indicium of an unreasonable or excessive punitive damages award is its ratio to the actual harm inflicted on the plaintiff.”);

3.  Awards for noneconomic losses in comparable cases, see Chohan, 670 S.W.3d at 561 n.12 (plurality op.) (“We do not foreclose the possibility that comparison to other cases may play some role in a plaintiff ’s effort to establish that a given amount of noneconomic damages is reasonable and just compensation rationally grounded in the evidence.”); cf. State Farm, 538 U.S. at 428 (looking to “civil penalties authorized or imposed in comparable cases”);28 and

4.  Any improper arguments or evidence presented to the jury, see Chohan, 670 S.W.3d at 558 (“This improper argument may have influenced the jury.”); cf. State Farm, 538 U.S. at 418 (“Our concerns are heightened when the decisionmaker is presented . . . with evidence that has little bearing as to the amount of punitive damages.”); TXO, 509 U.S. at 493 (O’Connor, J., dissenting) (“Counsels’ arguments, however, converted that grave risk of prejudice into a near certainty.”).

Time will tell.29 We conclude with a quote from Justice O’Connor written many years ago in TXO about the standard of constitutional review for punitive damages, which speaks to review of non-economic damages, too:

Our inability to discern a mathematical formula does not liberate us altogether from our duty to provide guidance to courts that, unlike this one, must address jury verdicts such as this on a regular basis. On the contrary, the difficulty of the matter imposes upon us a correspondingly greater obligation to provide the most coherent explanation we can.30

1.  The authors did not represent any of the parties in Gregory v. Chohan; they did file an amicus brief with the Supreme Court of Texas on behalf of Allied Aviation Fueling Co. of Houston, Inc. and Reginald Willis, who were defending large awards of noneconomic damages in a case that settled before the opinion in Chohan issued.
2. Parkway Co. v. Woodruff, 901 S.W.2d 434, 442 (Tex. 1995).
3.  See, e.g., Parkway, 901 S.W.2d at 443; see also Moore v. Lillebo, 722 S.W.2d 683, 685–86 (Tex. 1986); see also Sanchez v. Schindler, 651 S.W.2d 249, 250 (Tex. 1983); see also Gulf, C. & S.F. Ry. Co. v. Hayter, 54 S.W. 944, 945 (Tex. 1900); see also Hill v. Kimball, 13 S.W. 59, 59 (Tex. 1890).
4.  Gregory v. Chohan, 670 S.W.3d 546, 550 (Tex. 2023) (plurality op.) (emphasis in original).
5.  Id. at 551 (plurality op.).
6.  Id. (plurality op.) (emphasis added).
7.  Id. (plurality op.).
8.  Id. at 568 (Devine, J., concurring).
9.  Id. (Devine, J., concurring).
10.  Id. at 570 (Devine, J., concurring) (emphasis in original).
11.  Id. (Devine, J., concurring).
12.  Id. at 571–72 (Devine, J., concurring).
13.  Saenz v. Fid. & Guar. Ins. Underwriters, 925 S.W.2d 607, 614 (Tex. 1996).
14.  See TXO Prod. Corp. v. All. Res. Corp., 509 U.S. 443, 456 (1993) (plurality op.) (punitive “awards are the product of numerous, and sometimes intangible, factors”). Indeed, Justices Scalia and Thomas believed the reasoning of the court’s constitutional limits on punitive damages applies equally to compensatory damages (while disagreeing with the entire endeavor). See also BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 606 (Scalia, J., joined by Thomas, J., dissenting).
15.  Exxon Shipping Co. v. Baker, 554 U.S. 471, 492 (2008) (“As the century progressed, and the types of compensatory damages available to plaintiffs broadened, . . . the consequence was that American courts tended to speak of punitive damages as separate and distinct from compensatory damages.” (alterations and quotations omitted)).
16.  Browning-Ferris Indus. of Vt., Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 276 (1989).
17.  Pac. Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 18, 20 (1991).
18.  Id. at 18.
19.  509 U.S. at 443.
20.  Id. at 455–56.
21.  Id. at 456.
22.  Id. at 480 (O’Connor, J., dissenting).
23.  Id. at 475 (O’Connor, J., dissenting).
24.  Id. at 466 (Kennedy, J., concurring in part and concurring in the judgment).
25.  517 U.S. at 574–86.
26.  538 U.S. 408, 426 (2003).
27.  Id. at 418.
28.  Indeed, for noneconomic damages, comparison to similar cases seems like an especially promising guidepost for assessing reasonableness. We have previously written on the subject. See Mark Trachtenberg, Kent Rutter, and Ryan Pitts, The Use of Scattergrams to Challenge Extreme Verdicts, THE TEXAS LAWBOOK (Sept. 20, 2023), https://texaslawbook.net/the-use-of-scattergrams-to-challenge-extreme-verdicts-a-  case-study.; And so have scholars; See Hillel J. Bavli and Reagan Mozer, The Effects of Comparable-Case Guidance on Awards for Pain and Suffering and Punitive Damages: Evidence from a Randomized Controlled Trial, 37 YALE L. & POL’Y REV. 405, 457–58 (2019) (prior award information helps reduce “the unpredictability of awards for pain and suffering and punitive damages”); see also Hillel J. Bavli, The Logic of Comparable-Case Guidance in the Determination of Awards for Pain and Suffering and Punitive Damages, 85 U. CIN. L. REV. 1, 5 (2017) (comparison “improve[s] the accuracy of awards for pain and suffering and punitive damages”); see also David Baldus et. al., Improving Judicial Oversight of Jury Damages Assessments: A Proposal for the Comparative Additur/Remittitur Review of Awards for Nonpecuniary Harms and Punitive Damages, 80 IOWA L. REV. 1109, 1188 (1995).
29.  As the U.S. Supreme Court has noted, the same search for a justiciable standard occurred in the context of federal sentencing—which came to a similar guidepost- based conclusion. See Baker, 554 U.S. at 505.
30.  TXO, 509 U.S. at 480 (O’Connor, J., dissenting).

 

Headshot of Ryan PittsRYAN P. PITTS is an associate of Haynes and Boone in Houston and a member of the firm’s Appellate Practice Group.

Headshot of Mark TrachtetenbergMARK TRACHTENBERG is a partner with Haynes and Boone in Houston and a member of the firm’s Appellate Practice Group.

 

The views expressed in this article are those of the authors and do not necessarily represent the policy, position, or views of, and should not be attributed to, the State Bar of Texas.