               IN THE SUPREME COURT OF IOWA
                               No. 18–0809

                         Filed February 28, 2020


TOBY THORNTON,

      Appellee,

vs.

AMERICAN INTERSTATE INSURANCE COMPANY,

      Appellant.


      Appeal from the Iowa District Court for Pottawattamie County,

James S. Heckerman, Judge.



      Defendant appeals from the district court judgment entered on a

jury verdict awarding plaintiff compensatory and punitive damages in his

action for first-party bad faith in connection with a workers’ compensation

claim. REVERSED AND REMANDED WITH INSTRUCTIONS.



      Stephen H. Locher, Mark McCormick, and Matthew D. Callanan of
Belin McCormick, P.C., Des Moines, for appellant.



      Tiernan T. Siems and Karen M. Keeler (until withdrawal) of Erickson

Sederstrom, P.C., Omaha, Nebraska, for appellee.
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APPEL, Justice.

      This case involves an appeal by a workers’ compensation insurance

carrier on retrial of a lawsuit where a severely injured plaintiff,

indisputably injured at work, claimed that the insurance carrier acted in

bad faith to delay the receipt of benefits to which the injured worker was

entitled. The jury returned a verdict in favor of the plaintiff for $382,000

in compensatory damages and $6,750,000 in punitive damages.                    The

insurer appealed.

      On appeal, the insurer claims there was insufficient evidence to

support the amount of compensatory damages awarded by the jury. The

insurance   company     asserts   we       should    remit    the   $382,000    in

compensatory damages to a total of no more than $57,145.

      In addition, the insurance company challenges the jury’s award of

$6,750,000 in punitive damages as violating due process under the Due

Process Clauses of both the Iowa and the United States Constitutions.

Indeed, the insurance company claims that under applicable caselaw, the

jury’s award of punitive damages should be remitted to a roughly 1:1 ratio

with the compensatory damages.

      For   the   reasons   expressed       below,    we     conclude   that   the

compensatory award must be reduced to $58,452.42. On the question of

punitive damages, we conclude that under the Federal Due Process

Clause, the maximum amount of punitive damages that may be awarded

under the facts and circumstances of this case is $500,000. For reasons

expressed below, the case is remanded to the district court to enter

judgment for the plaintiff in the amount of $558,452.42.

      I. Procedural and Factual Background.

      A. The Accident and Its Aftermath.             On June 25, 2009, Toby

Thornton was driving a truck for Clayton County Recycling in northeast
                                       3

Iowa. Thornton v. Am. Interstate Ins. (Thornton I), 897 N.W.2d 445, 452

(Iowa 2017).   Thornton lost control of the rig when the load he was

transporting shifted.    Id.   His truck rolled over, crushing the cab with

Thornton inside.   Id.   As a result of the accident, Thornton sustained

serious injuries resulting in paralysis below the chest, no use of his left

hand, and only limited use of his right hand. Id. There was no dispute

that the injury incurred in the course of his employment.           Clayton

Recycling’s workers’ compensation insurer was American Interstate

Insurance Company. Id.

      B. Workers’ Compensation Benefits and Proceedings. Shortly

after the accident, American Interstate began providing workers’

compensation benefits to Thornton. Id. Thornton initially hired counsel

who engaged in correspondence with American Interstate regarding wage

information for Thornton for a year prior to the accident. Id. No formal

proceedings arose from these communications.          Ultimately, however,

Thornton, through new counsel, sought the intervention of the Iowa

Workers’ Compensation Commissioner on three occasions in order to

enforce what he saw as his rights to benefits under Iowa law. Id. at 454–

57.

      First, Thornton obtained a ruling from a deputy commissioner on

May 23, 2013, that he was permanently and totally disabled (PTD) as a

result of the work-related accident. Id. at 455. Second, Thornton obtained

a grant of partial commutation of his workers’ compensation benefits from

a deputy commissioner by petition on May 16, 2014. Id. at 456. Finally,

on October 21, Thornton filed a petition for alternate medical care with the

commissioner related to Thornton’s need for a new wheelchair. Id. at 457.

With respect to the wheelchair, American Interstate conceded that a

replacement wheelchair was “reasonable and necessary,” leading the
                                      4

deputy commissioner to order American Interstate to provide a new

wheelchair on November 4, with the observation that both parties were in

agreement on the matter. Id.

      C. First Bad-Faith Action. On December 26, 2013, Thornton filed

a bad-faith action against American Interstate. Id. at 457. The parties

filed cross-motions for summary judgment. Id. The district court granted

Thornton’s motion for summary judgment in part and denied American

Interstate’s motion. Id. at 458. The district ruled, as a matter of law, that

American Interstate acted in bad faith with respect to its challenge to

Thornton’s claim for PTD benefits and for partial commutation.       Id. The

question of any bad faith prior to March 11, 2013, and the issue of

damages was left to the jury. Id.

      In this first trial of the bad-faith claim, the jury found that American

Interstate acted in bad faith as of September 1, 2009, correlating with the

alleged refusal of American Interstate to provide wage information and

intracompany recognition of PTD.       Id. at 459.   The jury awarded the

following damages:

            Past pain and suffering:         $125,000

            Loss of use of money:            $14,000

            Lost home equity:                $27,000

            Consequential damages:           $118,000

            TOTAL                            $284,000

Id. at 460. In addition, the jury awarded punitive damages of $25 million.

Id. The district court denied American Interstate’s posttrial motions for

judgment notwithstanding the verdict, remittitur, and new trial. Id.

      D. Appeal of First Bad-Faith Action.              American Interstate

appealed denial of their posttrial motions, and Thornton cross-appealed

denial of attorney fees related to the bad-faith claim.     Id. at 451.   On
                                      5

appeal, we held that the district court had properly found, as a matter of

law, that American Interstate knew or should have known it lacked any

reasonable basis to dispute Thornton’s PTD status. Id. at 466.

      At the same time, we found the district court erred in concluding

that American Interstate committed bad faith by offering to settle the

matter on a closed-file basis. Id. We also held that American Interstate

was entitled to a motion for directed verdict and that the district court

erred in instructing the jury on Thornton’s claim that it improperly resisted

his claim for partial commutation.        Id. at 470.   We concluded that

“American Interstate was not in bad faith for resisting commutation

because Thornton’s petition for commutation was fairly debatable on its

facts.” Id. (emphasis omitted).

      On a third issue, we held there was sufficient evidence for a

reasonable jury to conclude that the delay in replacing Thornton’s

wheelchair caused him to suffer from bursitis and cellulitis which led to a

hospitalization. Id. at 473. We did not address any questions related to

liability of American Interstate with respect to the wheelchair question.

      With respect to damages, however, we declined to address a number

of issues.   Specifically, we declined to address the sufficiency of the

evidence to support instructions on the loss of the use of money and home

equity. Id. at 474. We also had no occasion to address the question of

punitive damages, as the case was remanded for a new trial.

      On the question of whether Thornton’s attorney fees for the bad-

faith action may be recovered from American Interstate, we concluded that

the district court correctly refused to instruct the jury that these fees were

allowable damages and denied Thornton’s posttrial motion for fees. Id. at

474–75.
                                      6

      E. Overview of Second Trial of Bad-Faith Claim. As a result of

the ruling of this court in the first bad-faith proceeding, four legal

parameters were established for the second trial. First, as a matter of law,

American Interstate, beginning at least as soon as March 11, 2013,

engaged in bad faith on the PTD question. Id. at 466. Second, also as a

matter of law, American Interstate did not engage in bad faith related to

the issue of partial commutation. Id. Third, with respect to causation, a

triable issue was generated on the question of mind and body damages

arising from the alleged bad-faith delay in the provision of a new

wheelchair to Thornton. Id. at 476. Fourth, attorney fees related to the

bad-faith claims of Thornton were not recoverable from American

Interstate. Id. at 475–76.

      The matter was retried in a five-day trial in February 2018. The

evidence was similar, but not identical, to that in the first bad-faith trial.

The jury returned a verdict in favor of Thornton. The jury determined that

the bad faith of American Interstate began on October 25, 2012. The jury

the provided for compensatory damages as follows:

            Past mental pain and suffering:        $40,000

            Past pain and suffering:               $40,000

            Loss of use of money:                  $150,000

            Loss of full mind and body – past      $100,000

            Consequential damages:                 $52,000

            TOTAL                                  $382,000

The jury also found by a preponderance of clear, convincing, and

satisfactory evidence the conduct of American Interstate constituted willful

and wanton disregard for the rights or safety of another. Further, the jury

determined the conduct of American Interstate was specifically directed
                                        7

toward Thornton. The jury awarded punitive damages in the amount of

$6.75 million.

        II. Standard of Review.

        A motion for judgment notwithstanding the verdict should be

granted if there is not substantial evidence to support the elements of the

plaintiff’s claim. Doe v. Cent. Iowa Health Sys., 766 N.W.2d 787, 790 (Iowa

2009). A motion for new trial should be granted pursuant to Iowa Rule of

Civil Procedure 1.1004(6), (8), and (9) if the “verdict, report or decision is

not sustained by sufficient evidence, or is contrary to law” or in the event

of “[e]rror[] of law occurring in the proceedings, or mistake[] of fact by the

court,” or “[o]n any ground stated in rule 1.1003, the motion specifying the

defect or cause giving rise thereto.”

        Where damages are not supported by the evidence, the court may

“order a remittitur as a condition to avoiding a new trial.” Jasper v. H.

Nizam, Inc., 764 N.W.2d 751, 777 (Iowa 2009). When ordering remittitur,

the court “award should be reduced ‘to the maximum amount proved’

under the record.” Id. (quoting In re Knickerbocker, 827 F.2d 281, 289 n.6

(8th Cir. 1987)). There is authority, however, for the proposition that the

court    may   enter   judgment   in    a   lower   amount   in   appropriate

circumstances. Midland Mut. Life Ins. v. Mercy Clinics, Inc., 579 N.W.2d

823, 835 (Iowa 1998).

        Challenges to the amount of punitive damages under the Due

Process Clause of the United States Constitution are reviewed de novo.

Cooper Indus., Inc. v. Leatherman Tool Grp., Inc., 532 U.S. 424, 436, 121

S. Ct. 1678, 1685–86 (2001) (“[C]ourts of appeals should apply a de novo

standard of review when passing on district courts’ determinations of the

constitutionality of punitive damages awards.”); see also Simon v.

San Paolo U.S. Holding Co., 113 P.3d 63, 70 (Cal. 2005) (“In deciding
                                    8

whether an award of punitive damages is constitutionally excessive under

State Farm [Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408,

123 S. Ct. 1513 (2003),] and its predecessors, we are to review the award

de novo, making an independent assessment of the reprehensibility of the

defendant’s conduct, the relationship between the award and the harm

done to the plaintiff, and the relationship between the award and civil

penalties authorized for comparable conduct.”).

     III. Alleged Bad Faith Arising from Delay in Provision of
Wheelchair.

      A. Introduction. In the appeal of the first bad-faith trial, we held

there was sufficient evidence to support causation of substantial damages

arising from the delay of several months in providing Thornton a

replacement wheelchair.     Thornton I, 897 N.W.2d at 473–74.        As a

consequence, American Interstate does not challenge the causation of the

alleged pain and suffering and loss of body and mind in this appeal and

on cross-appeal. According to Thornton, damages for pain and suffering

and loss of mind and body arise from injuries suffered by Thornton due to

American Interstate’s bad-faith acts and omissions related to the delay in

providing Thornton with his replacement wheelchair.
      At the second bad-faith trial, however, the parties aggressively

litigated the question of whether American Interstate was liable for bad

faith in connection with the alleged delay in providing the wheelchair. In

this appeal, American Interstate asserts that in the second bad-faith trial

there was no substantial evidence in the record to support the jury’s

finding that the company engaged in bad faith in connection with

replacement wheelchair.

      On the other hand, Thornton claims the evidence clearly establishes

that American Interstate showed disregard for the rights of Thornton by
                                      9

failing to see that he received a replacement wheelchair in a timely

manner. Thornton claims that he was injured because of the delay. He

further claims that evidence of his injuries arising from the delay supports

the $180,000 in damages for pain and suffering and loss of mind and body

awarded by the jury.

       In reviewing a jury verdict for sufficiency of the evidence, we review

the evidence in the light most favorable to sustaining the jury’s verdict.

Revere Transducers, Inc. v. Deere & Co., 595 N.W.2d 751, 763 (Iowa 1999).

       B. Overview of Evidence at Trial Related to Alleged Bad-Faith

Delay in Replacing Wheelchair.

       1. Process for ordering a wheelchair.       Ever since his hospital

discharge in October 2009, Thornton has required the use of a wheelchair.

A wheelchair lasts for about five years.     On July 1, 2014, Dr. Rogge,

Thornton’s regular physician, prescribed a new wheelchair for Thornton.

A progress note generated by Dr. Rogge on August 4 stated that the

prescription had been written and that progress note was in American

Interstate’s files.

       In order to obtain a wheelchair, more than a prescription is needed.

A wheelchair for a disabled person is not an off-the-shelf item, but rather,

is custom built. Thornton is a large person who needed to be measured

so that the wheelchair was right-sized. In addition, specific needs also

must be addressed in wheelchair construction in a process referred to as

a mobility evaluation. Once the mobility evaluation is complete, a durable

medical equipment order, or DME order, is prepared with specific

equipment and pricing for approval. A prescription thus does not directly

lead to a new wheelchair but instead sets in motion a process that leads

to delivery of custom equipment.
                                       10

       2. July 1 prescription.     While the prescription was written by

Dr. Rogge on July 1, there is no documentary evidence in the trial record

of any further action taken in the month of July by Dr. Rogge, Thornton,

or American Interstate in connection with fulfilling the prescription.

Dr. Rogge testified, however, with respect to the prescription,

       [A] lot of times my nurse takes care of this stuff for me, but I
       believe we sent it to St. Luke’s, or something like that, in
       Cedar Rapids, because I think he was actually getting fit for
       the new chair or something because he was going to go down
       and have an appointment.

             They were actually going to fit him. It sounded great.

Dr. Rogge’s testimony was supported by Jami Rodgers, who succeeded

Luann Miller as the American Interstate’s claims manager of the Thornton

file. According to Rodgers, Dr. Rogge’s prescription needed to be sent to

St. Luke’s rehab where he would then be fitted for the wheelchair.

       Thornton at one point stated he sent the prescription to his brother

Tim or to his attorneys. He testified that he usually faxed prescriptions to

Tim, who then in turn delivered them to Thornton’s attorneys. He is not

sure when he sent the prescription. When pressed, however, Thornton

testified,

       I know I said I sent it [the prescription] to you guys [his
       attorneys] but I don’t recall – I don’t – I don’t know if I sent it
       to Timmy or where I sent it. I really don’t recall it. I know I
       said that I did but I don’t remember.

Further, his brother Tim remembers a conversation in which the doctor

prescribed the wheelchair but did not recall receiving documents about a

wheelchair and did not hear anything about the issue from Toby until

months later after he still had not received his wheelchair. There is no

correspondence in the record between Thornton’s counsel and American

Interstate’s counsel over a wheelchair until September 29. At that time,
                                    11

as will be seen below, there was no mention of previous correspondence

related to a prescription, but only a request that an order be “expedited.”

      The record further reflects that on October 20, rehabilitation

specialist Kevin Moser contacted Tracy Butler, an employee at Call One, a

vendor who procures such equipment on behalf of American Interstate’s

insureds, asking for the status of the wheelchair. Butler responded by

noting that she was waiting for the items to be put into the system to

generate a “PO,” an apparent reference to a purchase order. She stated

they were having issues finding the parts necessary for Thornton’s

wheelchair.

      A progress note dated August 4 generated by Dr. Rogge states, “We

will continue to do paperwork waiting for him to receive his new

wheelchair.”   The progress note does not describe the nature of the

paperwork that Dr. Rogge would “continue to do.”

      3. September 17 mobility evaluation. On September 17, six weeks

after Dr. Rogge wrote the original prescription, Thornton received a

mobility evaluation at St. Luke’s Hospital. There is nothing in the record

to suggest why the mobility evaluation did not occur until September 17.

      The September 17 mobility evaluation states that Thornton was

“referred to the Mobility-Seating Clinic” but does not expressly state by

whom. The mobility evaluation states that Thornton has had repairs to

his chair over the years, the front riggings and frame are “still bent,” the

back is worn out, the motor is making noises, and the integrity of the chair

is “very questionable.” The current chair is described as “no longer safe or

functional.”

      The mobility evaluation proceeded to evaluate Thornton’s needs and

recommended eleven types of powered mobility-assistive equipment. The

evaluation then has several pages of single-spaced justification for the
                                     12

recommended equipment.          On September 19, Dr. Rogge signed the

mobility evaluation stating, “I have reviewed the above evaluation and

concur with the prescribed equipment.”

      4. September 19 DME order. On September 19, a DME order was

generated.   The DME order has a description of twenty-three items

required for Thornton’s new wheelchair and an itemized cost for each item.

On September 22, 2014, Dr. Rogge signed the DME order which declared,

“I authorize the items/services shown above & certify that the information

provided herein is accurate.”

      5. American   Interstate    action   in   response   to   September   29

correspondence with Thornton’s counsel. On September 29, Thornton’s

attorney received an email from Moser. The Moser email states that he

attached information about a power wheelchair. Thornton’s attorney then

sent an email to American Interstate’s counsel, stating,

      I imagine this has already been sent to Jami Rodgers but if
      you could please expedite, I’m sure the mobility folks would
      appreciate it. Also, considering that Toby is severely overdue
      with a replacement chair, we need to streamline this process.

American Interstate’s counsel forwarded the email to American Interstate’s

claims manager assigned to Thornton, Rodgers. She in turn submitted

the information to One Call. American Interstate, however, does not advise

Thornton’s attorney of the action it had taken.

      On October 10, One Call sent an email to Rodgers asking for

“authorization” for the wheelchair. She provided the authorization on the

same day.

      6. Thornton’s hospitalization on October 12.         Thornton saw his

doctor about bursitis/cellulitis on his arms on October 12. His arms had

swollen up to twice the normal size. Thornton was hospitalized for several

days in extreme pain as a result of the problem.            He was given IV
                                    13

antibiotics to address the infection. Thornton testified the new wheelchair

has wider armrests and is more padded; the old wheelchair had thin

armrests and he would hit his arms a lot going through doorways.

      7. October 21 filing of alternate medical care proceeding and related

correspondence.   On October 20, Thornton’s attorney sent a letter to

American Interstate’s counsel stating that the delay in getting the

wheelchair was unacceptable. On October 21, Thornton filed a petition for

alternate medical care in which he alleged that American Interstate

refused to authorize the wheelchair.     As established above, American

Interstate admitted liability for the work injury and admitted causal

connection of the need for a wheelchair to the covered injury.

      Two days later, on October 23, Thornton’s counsel sent a letter to

American Interstate’s counsel stating, “[I]t’s unfortunate that it requires

litigation to get Toby even the most basic of needs associated with this

claim.” American Interstate’s attorney forwarded the October 23 letter to

American Interstate, characterizing the letter as “more drivel” from

Thornton’s counsel.     On October 23, American Interstate’s counsel

contacted Thornton’s counsel and advised that One Call stated the

wheelchair was in the process of being ordered and would take

approximately three weeks for the chair to be shipped.

      8. November 4 hearing on alternate medical care.           The deputy

commissioner set a telephonic hearing on the petition for alternate medical

care for November 4. Prior to the hearing, an American Interstate file

manager asked counsel to “slap [Thornton’s counsel] around at the

hearing.” At the hearing, however, American Interstate conceded that the

replacement wheelchair was reasonable and necessary. Thornton I, 897

N.W.2d at 457. The deputy commissioner thus noted that there was not

“truly a justiciable controversy pending.”     The deputy commissioner
                                    14

entered a consent order that the wheelchair be provided as consistent and

acceptable to both parties. Id.

      C. Discussion.    There can be no question there was substantial

evidence in the record to show that Thornton was in need of a wheelchair

on July 1, 2014, and this fact was reflected in progress notes in Thornton’s

case file maintained by American Interstate.      There is no substantial

evidence in the record to show, however, that the prescription was sent to

American Interstate by Thornton, Thornton’s counsel, or any healthcare

provider.   What evidence there is in the record indicates that the

prescription was sent to St. Luke’s, where the mobility evaluation would

eventually be conducted. It is difficult to see how American Interstate was

required to take any action when it simply received a progress note that

Dr. Rogge had prescribed a new wheelchair and the prescription was

forwarded to St. Luke’s for further action.

      It is undisputed that in order to obtain a replacement wheelchair, a

mobility examination must be first conducted. There was no evidence in

the record explaining why Thornton’s mobility examination was not

conducted until September 17, more than ten weeks after the original

prescription was made.     More specifically, there is no evidence in the

record to suggest that American Interstate did anything to hinder or delay

Thornton’s mobility evaluation.

      After the mobility evaluation was completed, a DME order was

prepared on September 19 and signed by Dr. Rogge on September 22. The

few days between the mobility order and the development of the DME

order, and between the date of the DME order and Dr. Rogge’s

authorizations, are not extraordinary and seem typical of an ordinary

course of business. In any event, there was no evidence that American

Interstate had anything to do with these brief delays.
                                    15

      American Interstate was not aware of any issue regarding the delay

in the replacement of Thornton’s wheelchair until Thornton’s counsel sent

an email to American Interstate’s counsel on September 29. That same

day, Rodgers contacted One Call, its vendor who procures such

equipment, about the wheelchair issue.          Unfortunately, American

Interstate did not advise Thornton’s counsel about the action that had

been taken. On October 10, One Call asked for authorization for the

wheelchair replacement and Rodgers provided such authorization that

same day. Again, American Interstate did not notify Thornton’s counsel of

the action taken.

      Unfortunately, before the wheelchair was available, Thornton

developed bursitis/cellulitis and was hospitalized with a severe infection

for several days; yet there was no substantial evidence that this event was

a result of a denial of benefits, or unreasonable delay, caused by American

Interstate.

      Under the circumstances, we do not think Thornton has established

a bad-faith claim against American Interstate on the wheelchair issue. An

insurer is liable for bad faith only when the evidence shows “(1) that the

insurer had no reasonable basis for denying benefits under the policy,”

and “(2) the insurer knew, or had reason to know, that its denial was

without basis.” Thornton I, 897 N.W.2d at 461–62 (quoting McIlravy v. N.

River Ins., 653 N.W.2d 323, 329 (Iowa 2002)). A denial may occur when

an insurer “unreasonably . . . delays delivery of necessary medical

equipment.” Id. at 465. Here, however, there is no substantial evidence

that American Interstate knowingly or recklessly disregarded its obligation

to provide the equipment in a timely manner. See Dolan v. Aid Ins., 431

N.W.2d 790, 794 (Iowa 1988) (en banc) (outlining and applying the two-

pronged bad-faith standard); see also Quinones v. UnitedHealth Grp. Inc.,
                                    16

250 F. Supp. 3d 692, 704–05 (D. Haw. 2017) (finding no bad faith where

insurance company had nothing to approve), aff’d, 782 F. App’x 646, 647

(9th Cir. 2019). Delays caused by the insured cannot be attributed to the

insurer.

       Thornton bolsters his claim by noting that American Interstate’s

counsel referred to Thornton’s counsel’s October 23 correspondence

claiming American Interstate refused to authorize the replacement

wheelchair as “more drivel.” Such colorful characterizations by counsel

do not assist American Interstate in its defense of a bad-faith claim. It is

clear, however, that the statement related to the claim made by Thornton’s

counsel that it was necessary for him to file the petition for alternate

medical care when, in fact, American Interstate had authorized the

replacement wheelchair for Thornton ten days earlier. Indeed, American

Interstate, through timely notification to Thornton’s counsel of its action,

might have been able to avoid the petition altogether.

       For the above reasons, we conclude that Thornton failed to produce

substantial evidence to support his bad-faith claim based on delay in the

receipt of the replacement wheelchair. As a result, there was no legal basis

for awarding $100,000 in damages for loss of mind and body and $80,000

in damages for physical and mental pain and suffering that Thornton

claimed he suffered as a result of American Interstate’s alleged bad faith.

       IV. Compensatory Damages Arising from Bad-Faith Denial of
PTD.

       A. Introduction.     With respect to the replacement wheelchair

issue, the prior appeal addressed the question of causation of damages

but did not address the underlying question of American Interstate’s

liability.   In contrast, with respect to Thornton’s claim that American

Interstate acted in bad faith by denying Thornton’s PTD claim, the prior
                                       17

appeal resolved the issue of liability in favor of Thornton but did not

address the issue of damages.

         At the second bad-faith trial, Thornton claimed several categories of

damages arising from American Interstate’s bad faith in connection with

the PTD issue.        First, he claimed the delay in obtaining a PTD

determination in turn imposed an equal delay on obtaining a partial

commutation of his workers’ compensation benefits. As a result, Thornton

claimed he lost the use of money for a period of time in excess of a year.

On this theory, Thornton claimed, and the jury appears to have awarded,

$114,000.

         Second, Thornton claimed that if he had received his partial

commutation in a timely fashion, he would have not lost the opportunity

to buy a one-story ranch house in Monona that Thornton had obtained

preapproval to purchase from a local bank. On this theory, Thornton

claimed $45,000 in damages, but it appears the jury awarded him a

somewhat lesser sum of $36,000 in damages.

         Finally, Thornton claimed he was entitled to recover attorney fees in

excess of $52,000 that were incurred allegedly because of the bad-faith

actions of American Interstate.      The jury awarded him $52,000 on this

claim.

         The jury in the second bad-faith case established one guidepost that

was different than that imposed by the jury in the first bad-faith case.

While the first bad-faith case returned a special verdict stating that the

bad faith of American Interstate commenced on September 1, 2009, the

jury in the second bad-faith case determined that the bad faith of

American Interstate occurred at the significantly later date of October 25,

2012.
                                    18

      In evaluating whether there was substantial evidence to support the

damages awarded by the jury, we must affirm the verdict to the greatest

extent allowed by law. Clarey v. K-Prods., Inc., 514 N.W.2d 900, 903 (Iowa

1994).

      B. Loss of Use of Money. Thornton asserts that if he had received

his partial commutation in a timely fashion, namely, about a year earlier

than he actually received it, Thornton would have invested the more than

$750,000 in the Standard & Poors (S&P) 500 rather than the much more

conservative “Dentist Fund” managed by AMP Wealth Management.           He

claims that if the lump-sum had been paid earlier and before he incurred

expenses such as attorney fees, he could have taken greater risks with his

lump-sum payment.

      Thornton’s brother, an accountant who served as a financial advisor

to Thornton, concurred with the idea that if the lump-sum had been paid

earlier, Thornton “would have been able to be a bit little [sic] more risky

with his investment.” Thornton’s expert Jerome Sherman calculated that

had he received the lump-sum payment more than a year earlier and

invested the funds in the S&P 500, he would have accumulated an

additional $114,000. Sherman refused to say, however, whether he would

recommend such a strategy for someone in Thornton’s position but only

performed the calculation of damages assuming Thornton elected to invest

the entire sum of his partial commutation in an S&P Index Fund.

      American Interstate rejects the argument. American Interstate first

argues that in order to obtain a partial commutation, Thornton

represented to the deputy commissioner that the funds would be

conservatively invested in a conservative AMP Wealth Management Fund,

referred to by the parties as the Dentist Fund. In order to obtain partial

commutation, Thornton had the burden of showing the “reasonableness
                                     19

of [his] plans for using the lump sum proceeds.” Dameron v. Neumann

Bros., Inc., 339 N.W.2d 160, 164 (Iowa 1983). In approving the partial

commutation, the deputy noted that

      there is minimal risk that claimant’s funds will be significantly
      depleted through his stated investment plan. He has
      demonstrated a conservative investment approach and is not
      likely to lose a significant portion of the commuted funds in
      the conservative approach he testified he intends to pursue.

American Interstate argues that without such a representation, the deputy

commissioner would not have approved the partial commutation.

      As a result, American Interstate argues that Thornton is judicially

or collaterally estopped from suggesting that had funds been paid more

timely, he would have taken more risks in his investment. See Winnebago

Indus., Inc. v. Haverly, 727 N.W.2d 567, 573–75 (Iowa 2006) (enumerating

the rationale underlying the doctrine of judicial estoppel); United Fire &

Cas. Co. v. Shelly Funeral Home, Inc., 642 N.W.2d 648, 654–55 (Iowa 2002)

(outlining the rationale underlying the doctrine of collateral estoppel). In

any event, American Interstate argues that there is no evidence that

Thornton in fact would have invested his funds in the riskier S&P 500 had

he received his lump-sum partial commutation a year earlier. See Renze
Hybrids, Inc. v. Shell Oil Co., 418 N.W.2d 634, 638–39 (Iowa 1988) (finding

theoretical deprivation of interest earned in investment as too speculative

to uphold).

      On this issue, we agree with American Interstate. The record simply

does not offer substantial support for Thornton’s claim that he would have

invested his lump-sum partial commutation in the riskier S&P 500 had

the delay in payment not occurred.

      We reach this conclusion based on the evidence at trial.            The

purpose of a lump-sum payment as part of a partial commutation in this
                                       20

case was to give the claimant the means to make an investment large

enough to support an income stream at least equivalent to the income

benefits to which he or she would be entitled to under workers’

compensation.     Because maintaining the income stream is of great

importance to Thornton, one would ordinarily expect Thornton to invest

the funds conservatively in income-producing investments and not riskier

equity funds.    The deputy commissioner in this case understandably

expressly relied upon Thornton’s conservative investment strategy in

deciding to award partial commutation in this case.

        The record shows that Thornton and his support group endorsed

the notion that lump-sum funds should be conservatively invested. His

brother Tim testified that the S&P 500 was not an appropriate investment

vehicle and that the plan was always to invest in the Dentist Fund.

Thornton’s investment advisor stated that he would have recommended

the same fund even if he got the money immediately after the accident.

And, when he received his partial commutation, he in fact invested the

entire amount in the Dentist Fund.

        Of course, we can never reconstruct counterfactual scenarios with

complete assurance.      But the suggestion that Thornton would have

invested his lump-sum in the S&P 500 has no support in the evidence.

Nobody, neither Thornton, his brother Tim, his financial consultant, nor

his trial expert, testified that it would have been a good idea to make such

a risky investment. Indeed, Thornton himself admitted at trial that he

could not take the risk of a stock market crash. It is doubtful that the

deputy commissioner would approve a partial commutation with such a

plan.     Although it might be theoretically conceivable, the notion that

Thornton     would   have   invested    his   lump-sum   payment    in   the

comparatively risky S&P 500 is far too speculative to support damages in
                                           21

this case. See Olson v. Nieman’s, Ltd., 579 N.W.2d 299, 309 (Iowa 1998)

(“Damages are denied where the evidence is speculative and uncertain

whether damages have been sustained.”); Patterson v. Patterson, 189

N.W.2d 601, 605 (Iowa 1971). 1

       For the above reasons, we conclude, as a matter of law, that

Thornton is not entitled to damages on his lost-use theory.

       C. Lost Real Estate Opportunity. At trial, Thornton asserted that

he planned to purchase a ranch house in Monona and would have closed

on the transaction had American Interstate not resisted a finding of PTD,

which had the effect of delaying his partial commutation by approximately

a year.    He asserted that by the time he received his belated partial

commutation, the house he wanted to buy had been sold. When he finally

did receive the lump-sum payment, Thornton argued that he was no longer

in a financial position to purchase a home.

       Thornton claimed that if he had closed on the purchase of the ranch,

he would have made mortgage payments in the amount of $739 per month

instead of rental payments of $750–$800 per month.                     If he had made

mortgage payments instead of rental payments, Thornton argued he would

be accumulating equity in the home rather than simply throwing away his

money in rent. As a measure of his damages, Thornton asserted that the

jury should award him the cumulative value of his rental payments over

the past five years, or $45,000.




       1Thornton  sought damages for lost use of money on the theory that if the partial
commutation would have occurred earlier, he would have invested some or all of the
funds in either the S & P Index Fund or a managed fund earning an 8% annual return.
American Interstate’s expert calculated damages using the Dentist Fund but concluded
that damages for any delay resulting from American Interstate’s bad faith, after credit for
weekly payments made during the delay period, would be “approximately zero or
negative.”
                                     22

      American Interstate counters that although the real estate

transaction considered by Thornton was not consummated, he failed to

show how he was damaged by the lost opportunity. American Interstate

notes that Thornton’s expert made no effort to quantify the amount of

home equity that might have accumulated in a putative mortgage had the

transaction on the ranch house been closed. Further, most of a mortgage

payment would not have gone to equity but instead would have included

interest, taxes, and homeowner insurance. In addition, as a homeowner,

Thornton would have incurred repair, maintenance, and upkeep costs that

he was not responsible for as a renter.      In short, American Interstate

argues that the evidence does not establish how Thornton has been

harmed by the failure to close the real estate transaction.

      We agree with American Interstate. Monthly rental payments do not

represent accumulating home equity.         Only a small portion of any

mortgage payment, especially in the initial years of a mortgage, is allocated

to principal.   Margaret C. Jasper, Home Mortgage Law Primer § 2:31,

Westlaw (database updated Oct. 2012).           Although this number is

ordinarily ascertainable, Thornton elected to present no evidence as to

what the principal accumulation would have been in the first years of the

putative mortgage.

      In addition, while Thornton would have been making payments

toward principal on the loan supporting the mortgage, he would have

incurred increased costs of ownership including maintenance and repair

costs, utility costs, snow removal, et cetera, which would offset any earned

equity.   Further, while the principal due on the house may have been

reduced somewhat through mortgage payments, the market price of the

house may also have fallen over time, thus undercutting any financial

advantage he may have obtained through homeownership.
                                    23

      Of course, there are intangible benefits of homeownership, but in

this bad-faith case we need to focus on compensable damages. Those who

buy (and sell) homes know that they are not necessarily better-off

financially because of homeownership, either in the short or long run. It

is quite plausible that Thornton is economically better-off continuing to

rent his current small apartment than if he owned a larger home with an

ordinary thirty-year mortgage.

      It might have been possible for Thornton to concretely show

damages arising from the lost opportunity to buy the ranch home. Any

such figure, of course, would likely have been much smaller than the

$45,000 claimed by Thornton.     Given the record in this case, we conclude

there is no substantial evidence to show that Thornton was economically

harmed by the collapse of the transaction involving the purchase of a

home, which he claimed was caused by the bad-faith conduct of American

Interstate. See Pavone v. Kirke, 801 N.W.2d 477, 495 (Iowa 2011) (“[S]ome

speculation on the amount of damages sustained is acceptable; however,

overly speculative damages cannot be recovered.”); Data Documents, Inc.

v. Pottawattamie County, 604 N.W.2d 611, 616 (Iowa 2000) (“As a general

rule, the party seeking damages bears the burden of proving them; if the

record is uncertain and speculative as to whether a party has sustained

damages, the factfinder must deny recovery.”); Jamison v. Knosby, 423

N.W.2d 2, 6 (Iowa 1988) (“Under general damage principles, overly

speculative damages cannot be recovered.”); Robinson v. Perpetual Servs.

Corp., 412 N.W.2d 562, 567 (Iowa 1987) (holding amount of damages need

not be established with precision, but there must be a reasonable basis in

the record from which the amount of damages may be inferred).

      D. Consequential Damages: Attorney Fees. Thornton claims that

as a result of American Interstate’s bad-faith conduct, he was forced to
                                      24

incur attorney fees. The jury awarded him a total of $52,000. Thornton

notes that Jury Instruction No. 29 defined consequential damages as

“[a]ttorney fees and all other damages incurred which were necessary in

recovering the workers’ compensation benefits to which Plaintiff was

entitled.” The evidence shows, according to Thornton, that he incurred a

total of $52,301.46 in attorney fees related to his workers’ compensation

claim from 2009 to 2018.       He further states that the jury “also heard

evidence regarding damages Thornton incurred throughout his workers’

compensation claim.”

      Thornton impliedly recognized that under Thornton I, he is not

entitled to attorney fees litigating the bad-faith claim itself. Thornton I, 897

N.W.2d at 474–75. He thus urges us to “amend the jury verdict to reflect

a date of bad faith commencing on September 1, 2009.” According to

Thornton, American Interstate in 2009 knew it had a duty to provide wage

information to Thornton yet failed to do so without a reasonable basis. By

so amending the jury verdict, attorney fees incurred early on in this

workers’ compensation case could be included in the recovery.

      American Interstate disagrees. American Interstate emphasizes that

Thornton is not entitled to attorney fees prior to October 25, 2012, the date

when the jury found that American Interstate’s bad faith commenced.

Further, Thornton is not entitled to attorney fees for litigation in his bad-

faith claims under Thornton I.

      At the outset, we reject the notion that the jury instructions

permitted the jury to award attorney fees for any part of Thornton’s

workers’ compensation representation. Instruction No. 29 does generally

state that Thornton is entitled to attorney fees necessarily incurred in

obtaining the benefits to which Thornton “was entitled.” In context, and

with other instructions, it is clear that the entitlement referred to was
                                           25

benefits resisted by American Interstate due to its bad-faith conduct. For

example, Instruction No. 1 states that the jury is to consider whether the

company “acted in bad faith” and “determine whether plaintiff . . . was

damaged by defendant’s [bad-faith] actions.                      Instruction No. 18

emphasized that “to recover for bad faith,” the jury must determine that

the denial of the plaintiff’s claim “was a proximate cause of damage to the

plaintiff.” Instruction No. 18 further states that if the plaintiff “failed to

prove any of the[] propositions, the plaintiff is not entitled to damages.”

Instruction No. 18 thus plainly links damages to the bad-faith actions of

American Interstate.

       In examining Thornton’s fee claim, we begin by eliminating the claim

for fees prior to October 15, 2012. 2 This eliminates $24,185.38 from the

fee claim.      On the other end of the time spectrum, we eliminate fees

claimed for events after the end of the PTD litigation of $9,663.66. If we

subtract out these fees, the amount that is left is $18,452.42.

       Finally, American Interstate indicates there is $1,407.42 in

unspecified fees accrued in the period between February 2012 and

January 2018.          Other than this generalized description, American

Interstate does not identify the “unspecified fees” it claims should not be
reimbursed.       We require more of a challenge attacking an award of

attorney fees.

       “We review a challenge to a district court’s grant of attorney fees for

an abuse of discretion.” NevadaCare, Inc. v. Dep’t of Human Servs., 783

N.W.2d 459, 469 (Iowa 2010). This court will only reverse the trial court’s


       2While  the jury found that the bad faith of American Interstate commenced on
October 25, 2012, Thornton invites this court to “amend the jury verdict” to reflect a date
of bad faith commencing on September 1, 2009, thereby providing a basis for an award
of attorney fees incurred prior to October 24, 2012. We decline to so amend the jury’s
verdict.
                                     26

ruling when the ruling is clearly unreasonable or untenable. Gabelmann

v. NFO, Inc., 606 N.W.2d 339, 342 (Iowa 2000). Therefore, there is no basis

for reduction of consequential damages in that amount. We conclude the

record supports consequential damages for attorney fees in the amount of

$18,452.42.

      E. Uncontested Award of Damages for Mental Pain and

Suffering Damages.      The jury awarded $40,000 for mental pain and

suffering damages.    Such damages are permitted in bad-faith actions.

Niblo v. Parr Mfg., Inc., 445 N.W.2d 351, 354–55 (Iowa 1989) (en banc).

Thornton argues that American Interstate does not contest this aspect of

the jury award, a proposition that American Interstate does not dispute in

its reply brief.   We therefore do not disturb the jury’s award of these

damages.

      F. Total Compensatory Damages.             Viewed in the light most

favorable to the verdict, the evidence in this case supports an award of

$18,452.42 in attorney fees and $40,000 for mental pain and suffering.

The cumulative total of compensable damages supported by the evidence

is $58,452.42.

      Under Iowa Rule of Civil Procedure 1.1010(2), an appellate court

may impose a term or condition, forcing parties to choose between “a

reduced, modified or increased judgment amount or proceeding to a new

trial.” This court may set aside a verdict failing to secure justice for the

parties, not on the basis of verdict amount, but because a jury ignores

uncontroverted evidence resulting in injustice. See Moore v. Bailey, 163

N.W.2d 435, 437 (Iowa 1968); Henrich v. Oppedal, 248 Iowa 509, 511, 81

N.W.2d 429, 430 (1957). This court has also found that if a verdict award

is inappropriate merely due to lack of sufficient evidence, remittitur may

be ordered in the interest of justice as a condition for avoiding a new trial.
                                       27

See WSH Props., L.L.C. v. Daniels, 761 N.W.2d 45, 49–50 (Iowa 2008);

Schmitt v. Jenkins Truck Lines, Inc., 170 N.W.2d 632, 659 (Iowa 1969).

        Here, however, we have determined, as a matter of law, no damages

may be awarded for lost use of money and lost real estate opportunity.

Where no damages may be awarded as a matter of law, there is no basis

for conditional remittitur with a right to a new trial. A new trial would be

pointless on the issue as the only permissible award on these theories is

zero.

        That leaves us with the question of attorney fees as compensatory

damages. With respect to our reduction of the award of attorney fees, there

is also no basis for conditional remittitur. As a matter of law, Thornton

was not entitled to attorney fees for litigating his bad-faith claim. No jury

award of any amount of attorneys’ fees would be sustainable on the bad-

faith claim. In addition, Thornton was not entitled to attorney fees that

were incurred outside the dates the jury found American Interstate began

to engage in bad faith and the determination of the workers’ compensation

commissioner on the partial commutation issue. In short, the amount of

attorney fees awardable during this timeframe was a liquidated amount.3

See Westchester Fire Ins. v. Hanley, 284 F.2d 409, 418 (6th Cir. 1960);
Christian v. Smith, 759 N.W.2d 447, 463 (Neb. 2008); see also Charles Alan

Wright et al., Federal Practice and Procedure § 2815 & n.2, at 208 (2012 &

Supp. 2019).      To the extent any challenge was launched on the

reasonability of those claims, we have rejected them. Thus, under our

disposition, Thornton has received the entire amount of attorney fees

claimed during the qualifying time period.



        3No   party challenges the jury’s factual finding regarding when American
Interstate’s bad-faith claim commenced.
                                   28

      Under these narrow circumstances, we conclude that a conditional

remittitur is not required.   Instead, we conclude that on remand the

district court should enter judgment on behalf of the plaintiff in the sum

of $58,452.42 in consequential damages.

      V. Punitive Damages.

      A. Introduction. The question of propriety and amount of punitive

damages has been a significant issue in Anglo-American law. In order to

understand the full context of the punitive damages issue in this case, it

is helpful to view the issue within its larger context. As Justice Holmes

said some years ago, “In order to know what [the law] is, we must know

what it has been, and what it tends to become.” Oliver Wendell Holmes,

Jr., The Common Law 1 (1881).

      B. Ancient, Common Law, and Early State Law Approaches to

Punitive Damages. Punitive damages have ancient lineage. They were

part of the Babylonian Code, the Hindu Code of Manu, the Bible, and

Roman law. Michael Rustad & Thomas Koenig, The Historical Continuity

of Punitive Damages Awards: Reforming the Tort Reformers, 42 Am. U. L.

Rev. 1269, 1285 (1993) [hereinafter Rustad & Koenig, Historical Awards].

The Roman law of punitive damages was designed to constrain wealthy

elites who would strike persons unlawfully on the face for sport and then

direct a servant to pay ordinary compensation to the victim. Id. at 1285–

86.

      The English courts employed punitive damages to punish and deter

misuse of wealth and power. The famous search and seizure case of Wilkes

v. Wood, where the court awarded substantial exemplary damages, was

well known and highly praised in the American colonies. Wilkes v. Wood,

(1763) 98 Eng. Rep. 489 (KB). Not surprisingly, the doctrine of punitive
                                           29

damages, though controversial, was transplanted in American soil. See

Rustad & Koenig, Historical Awards, 42 Am. U. L. Rev. at 1290–1304.

       C. Evolving United States Supreme Court Framework for

Evaluation of Punitive Damages for “Gross Excessiveness.”

       1. Supreme Court forays into due process limitations on punitive

damages. The Supreme Court for decades had imposed no constitutional

limits on punitive damages. But there were hints in recent years of a more

aggressive approach.         In Browning-Ferris Industries of Vermont, Inc. v.

Kelco Disposal, Inc., 492 U.S. 257, 109 S. Ct. 2909 (1989), the Supreme

Court rejected the application of the Excessive Fines Clause of the Eighth

Amendment, or limitations of federal common law to punitive damages.

Id. at 259–60, 109 S. Ct. at 2912. The Kelco Court noted, however, that a

due process challenge for excessiveness had not been raised in the lower

courts and was not considered. Id. at 276–77, 109 S. Ct. at 2921. At the

same time, the Kelco Court noted that there is “some authority in our

opinions for the view that the Due Process Clause places outer limits on

the size of a civil damages award made pursuant to a statutory scheme.”

Id. at 276, 109 S. Ct. at 2921. 4

       In Pacific Mutual Life Insurance Co. v. Haslip, 499 U.S. 1, 111 S. Ct.
1032 (1991), the Supreme Court considered a case where an insurance

agent diverted premiums for his own use, thereby causing plaintiffs’ health

insurance, unbeknownst to them, to be cancelled. Id. at 4–5, 111 S. Ct.

at 1036.      The jury found the defendants liable for fraud and imposed


       4See   also Bankers Life & Cas. Co. v. Crenshaw, 486 U.S. 71, 87–89, 108 S. Ct.
1645, 1655–56 (1988) (O’Connor, J., concurring in part and concurring in the judgment)
(characterizing due process issue regarding punitive damages as serious but not raised
in the case); Aetna Life Ins. v. Lavoie, 475 U.S. 813, 828–29, 106 S. Ct. 1580, 1589 (1986)
(characterizing due process and excessive fines challenges to imposition of punitive
damages as “important issues” that must be resolved but not necessary to do so in the
case before the Court).
                                     30

punitive and compensatory damages. Id. at 6–7, 111 S. Ct. at 1036. The

jury returned a general verdict on damages, but the Haslip Court assumed,

based upon Haslip’s argument to the jury, that Haslip received punitive

damages of not less than $840,000 and compensatory damages of

$200,000. Id. at 7 n.2, 111 S. Ct. at 1036 n.2.

       Justice Blackmun’s opinion opened with a respectful review of

common law punitive damages tradition. Id. at 15–18, 111 S. Ct. at 1041–

43. Quoting the well-known, movie-inspiring modern case of Silkwood v.

Kerr-Magee and citing the historically celebrated, revered, and politically

powerful case of Wilkes v. Wood, the Haslip Court noted that “[p]unitive

damages have long been a part of traditional state tort law.” Id. at 15, 111

S. Ct. at 1041–42 (quoting Silkwood, 464 U.S. 238, 255, 104 S. Ct. 615,

625 (1984)). The Haslip Court focused on the traditional common law

approach allowing the amount of the award to be determined by a jury

“instructed to consider the gravity of the wrong and the need to deter

similar wrongful conduct.”    Id. at 15, 111 S. Ct. at 1042.      The jury’s

determination, according to the Haslip Court, was then reviewed by the

trial and appellate courts to ensure reasonability. Id. The Court noted

that   the   common    law   application   of   punitive   damages   is   not

unconstitutional per se and that the United States Supreme Court has on

many occasions endorsed the practice. Id. at 16–17, 111 S. Ct. at 1042–

43; see, e.g., Standard Oil Co. of Ind. v. Missouri, 224 U.S. 270, 285, 32 S.

Ct. 406, 411 (1912) (“Nor, from a Federal standpoint, is there any invalidity

in the judgment because there was no statute fixing a maximum penalty,

no rule for measuring damages, and no hearing . . . .”); Barry v. Edmunds,

116 U.S. 550, 565, 6 S. Ct. 501, 509 (1886) (“For nothing is better settled

than that, in such cases as the present, and other actions for torts where

no precise rule of law fixes the recoverable damages, it is the peculiar
                                    31

function of the jury to determine the amount by their verdict.”); Mo. Pac.

Ry. v. Humes, 115 U.S. 512, 521, 6 S. Ct. 110, 113 (1885) (“The discretion

of the jury in such cases in not controlled by any very definite rules; yet

the wisdom of allowing such additional damages to be given is attested by

the long continuance of the practice.”). Further, the Haslip Court noted

that every state and federal court that had considered the matter

concluded that the common law method for assessing punitive damages

does not in itself violate due process. Haslip, 499 U.S. at 17–18, 111 S.

Ct. at 1043.

      Focusing on the process that led to the award of punitive damages,

the Haslip Court reasoned that the jury instructions in the case

appropriately instructed the jury to use punitive damages to punish and

deter the defendant and not use them to compensate the plaintiff for

injury. Id. at 19, 111 S. Ct. at 1044. The Haslip Court also approved of

Alabama’s postverdict review process, which “ensures that punitive

damages awards are not grossly out of proportion to the severity of the

offense and ha[s] some understandable relationship to compensatory

damages.” Id. at 22, 111 S. Ct. at 1045. The Court cautioned that vesting

either a judge or jury with unlimited discretion in setting punitive damages

award could cause “extreme results that jar one’s constitutional

sensibilities.” Id. at 18, 111 S. Ct. at 1043. At the same time, however,

the Court declared that it was not interested in slicing and dicing punitive

judgment awards into those comporting with constitutional requirements

and which do not. Id. The focus of the Court was on procedural due

process, not substantive due process.

      Justice Kennedy concurred.      He agreed with the Court that the

historical approach should govern the outcome in the case. Id. at 40, 111

S. Ct. at 1055 (Kennedy, J., concurring). He reasoned that because a jury
                                     32

only considers one case and the instructions on punitive damages are

necessarily general, “nonuniformity cannot be equated with constitutional

infirmity.” Id. at 41, 111 S. Ct. at 1055. Yet, Justice Kennedy noted that

“[a] verdict returned by a biased or prejudiced jury no doubt violates due

process, and the extreme amount of an award compared to the actual

damage inflicted can be some evidence of bias or prejudice in an

appropriate case.” Id.

      The comparatively cautious approach to traditional due process

doctrine on punitive damages embraced by the Haslip Court drew crossfire

from Justices Scalia and O’Connor.        Justice Scalia concurred in the

judgment but repeated his view that the Due Process Clause is not

implicated by a jury’s exercise of discretion in the award of punitive

damages. Id. at 24–40, 111 S. Ct. at 1046–54 (Scalia, J., concurring).

Justice O’Connor filed a dissent.         She wrote that the traditional

instructions for punitive damages were “so fraught with uncertainty that

they defy rational implementation.”       Id. at 43, 111 S. Ct. at 1056

(O’Connor, J., dissenting). Her void-for-vagueness approach applied both

to instructions related to determining whether to impose punitive damages

and the determination of the amount of punitive damages. Id. at 44–52,

111 S. Ct. at 1057–61.       She also directly challenged Justice Scalia’s

historic approach to due process espoused in his concurrence; rather,

Justice O’Connor emphasized that due process was not a fixed notion. Id.

at 60, 111 S. Ct. at 1065.

      She quoted with approval Williams v. Illinois, 399 U.S. 235, 90 S. Ct.

2018 (1970), where the court noted that

      neither the antiquity of a practice nor the fact of steadfast
      legislative and judicial adherence to it through the centuries
      insulates it from constitutional attack . . . .

            ....
                                    33
            . . . [N]ew cases expose old infirmities which apathy or
      absence of challenge has permitted to stand.          But the
      constitutional imperatives . . . must have priority over the
      comfortable convenience of the status quo.

Haslip, 499 U.S. at 61, 111 S. Ct. 1065 (alteration in original) (quoting

Williams, 399 U.S. at 239, 245, 90 S. Ct. at 2012, 2024). Among other

things, Justice O’Connor noted the substantive growth of the tort of bad
faith in what otherwise would have been considered actionable only as

breach of contract and the growth in product liability and mass tort

litigation. Id. at 62, 111 S. Ct. at 1066. According to Justice O’Connor,

the explosion in the frequency and size of awards exposed the flaws in the

common law system. Id.

      Two years later, the United States Supreme Court considered the

constitutionality of a punitive damages award in TXO Production Corp. v.

Alliance Resources Corp., 509 U.S. 443, 113 S. Ct. 2711 (1993). In TXO,

the respondent claimed an oil and gas enterprise slandered title to certain

lands where substantial oil reserves were believed to be present. Id. at

446–48, 113 S. Ct. at 2714–15. The jury awarded the plaintiff $19,000 in

compensatory damages and $10 million in punitive damages. Id. at 446,

113 S. Ct. at 2714. A fractured Court affirmed the judgment.

      Justice Stevens announced the plurality opinion, which was joined

by Chief Justice Burger and Justice Blackmun, and was joined in part by

Justice Kennedy. Id. Justice Stevens began his opinion by noting that

the punitive damages award was 526 times the actual damages awarded

by the jury. Id. at 453, 113 S. Ct. at 2718. Justice Stevens, however,

rejected any “test” for excessiveness. Id. at 456–57, 113 S. Ct. at 2719–

20. In particular, Justice Stevens eschewed an approach that relied solely

on the ratio of actual damages to punitive damages. Id. Because of the

potential harm if the defendant’s scheme had succeeded, Justice Stevens
                                     34

noted that the disparity between the punitive award and the potential

harm does not “jar one’s constitutional sensibilities.” Id. at 462, 113 S.

Ct. at 2722 (quoting Haslip, 499 U.S. at 18, 111 S. Ct. at 1043 (majority

opinion)). Justice Stevens noted that

      [t]he punitive damages award in this case is certainly large,
      but in light of the amount of money potentially at stake, the
      bad faith of petitioner, the fact that the scheme employed in
      this case was part of a larger pattern of fraud, trickery and
      deceit, and petitioner’s wealth, we are not persuaded that the
      award was so “grossly excessive” as to be beyond the power of
      the State to allow.

Id. at 462, 113 S. Ct. at 2722–23.

      Justice Stevens further found that the attack on the jury

instruction, which emphasized the wealth of the defendant, was not

preserved for review and rejected the notion that the procedure followed

was unconstitutionally vague. Id. at 463–65, 113 S. Ct. at 2723–24.

      Justice Kennedy concurred in part and concurred in the judgment.

Id. at 466, 113 S. Ct. at 2724 (Kennedy, J., concurring in part and

concurring in the judgment). Justice Kennedy rejected the various tests

posed by the parties but also believed that the plurality’s general focus on

“reasonableness” was a significant improvement. Id. On the other hand,

Justice Kennedy emphasized that a more manageable constitutional

inquiry does not focus on the amount of money a jury awards but on its

reason(s) for doing so. Id. at 467, 113 S. Ct. at 2725. According to Justice

Kennedy,   “The   Constitution    identifies   no   particular   multiple   of

compensatory damages as an acceptable limit for punitive awards; it does

not concern itself with dollar amounts, ratios, or the quirks of juries in

specific jurisdictions.” Id. While Justice Kennedy noted that the size of

the award may be one indication it resulted from bias or prejudice, “that

is not the sole, or even necessarily the most important, sign.” Id. Justice
                                    35

Kennedy stated that other objective indicia, as well as direct evidence, are

helpful in determining “whether a jury stripped a party of its property in

an arbitrary way and not in accordance with the standards of rationality

and fairness the Constitution requires.” Id.

      Justice Kennedy then proceeded to consider the merits of the attack

on the punitive damage award.      Characterizing the case as “close and

difficult,” Justice Kennedy determined that the award should be upheld.

Id. at 468, 113 S. Ct. at 2725.     Echoing the Supreme Court of West

Virginia, Justice Kennedy noted that the evidence demonstrated

intentional misconduct by officers of the defendant “through a ‘pattern and

practice of fraud, trickery and deceit’ and employed ‘unsavory and

malicious practices.’ ” Id. at 469, 113 S. Ct. at 2726 (quoting TXO Prod.

Corp. v. Alliance Res. Corp., 419 S.E.2d 870, 880, 890 (W. Va. 1992)).

Further, Justice Kennedy found that the record showed “a pattern and

practice [by petitioner] to defraud and coerce those in positions of unequal

bargaining power.” Id. Under the circumstances, Justice Kennedy found

it probable “that the jury’s verdict was motivated by legitimate concern for

punishing and deterring [the petitioner], rather than by bias, passion, and

prejudice.” Id.

      Justice Scalia, joined by Justice Thomas, concurred in the

judgment. Id. at 470, 113 S. Ct. at 2726 (Scalia, J., concurring in the

judgment).   Justice Scalia reprised his view that “traditional American

practice governing punitive damages requires no more” than instructions

on the purposes of punitive damages and a review for reasonableness. Id.

While Justice Scalia did not join the plurality opinion, he declared it

valuable because the great majority of due process challenges could be

disposed of simply with the observation “this is no worse than TXO.” Id.

at 472, 113 S. Ct. at 2727.
                                        36

      Justice O’Connor, joined by Justice White and joined in part by

Justice Souter, dissented. Id. at 472, 113 S. Ct. at 2728 (O’Connor, J.,

dissenting). Justice O’Connor rejected the approach of the plurality as

providing “no course at all.” Id. at 480, 113 S. Ct. at 2731. Instead, she

argued that the Court should adopt a regime of objective factors such as

“the relationship between the punitive damages award and compensatory

damages, awards of punitive damages upheld against other defendants in

the same jurisdiction, awards upheld for similar torts in other

jurisdictions,    and   legislatively   designated    penalties   for   similar

misconduct”      Id. at 481, 113 S. Ct. at 2732.     Applying such objective

factors to the facts of the case, Justice O’Connor concluded that the

punitive damage award in the case was so excessive as to violate due

process. Id. at 495, 113 S. Ct. at 2739.

      A few years later, the Supreme Court decided Honda Motor Co. v.

Oberg, 512 U.S. 415, 114 S. Ct. 2331 (1994).           In Oberg, the plaintiff

claimed that Honda’s three-wheeled all-terrain vehicles were inherently

unreasonably and defectively designed and that such flaws caused him

severe and permanent injuries. Id. at 418, 114 S. Ct. at 2334. A jury

awarded him $919,390.39 in compensatory damages, which were reduced

to $735,512.31 because the plaintiff was found to be twenty percent at

fault. Id. The jury further awarded the plaintiff $5 million in punitive

damages. Id. The defendant challenged the punitive damage verdict for

excessiveness and because, under the Oregon Constitution, courts lacked

the power to correct an excessive jury verdict. Id.

      In an opinion written by Justice Stevens, the Oberg Court

considered the validity of a provision of the Oregon Constitution

prohibiting judicial review of a punitive damages verdict unless the court

“can affirmatively say there is no evidence to support the verdict.” Id.
                                    37

(quoting Or. Const. art. 7, § 3). The Court held that the limitation on

judicial review of the verdict of a jury violated procedural due process

rights guaranteed by the Fourteenth Amendment. Id. at 432, 114 S. Ct.

at 2341.

      The Oberg Court noted that recent U.S. Supreme Court cases

recognized a substantive limit on the size of punitive damages awards. Id.

at 420, 114 S. Ct. at 2335. Further, the Oberg Court emphasized that

judicial review of jury verdicts awarding punitive damages was well

established at English common law and in American common law cases.

Id. at 421–24, 114 S. Ct. at 2335–37. According to the Oberg majority, the

common law practice, the procedures of the states, the strong presumption

of judicial review, and “elementary considerations of justice” all support

the conclusion that the determination of the amount of punitive damages

cannot be subject to the unreviewable discretion of the jury. Id. at 434–

35, 114 S. Ct. at 2342.

      Justice Scalia concurred. Id. at 435, 114 S. Ct. at 2342 (Scalia, J.,

concurring). He agreed with the Court based on his view that the unusual

Oregon constitutional provision eliminated the traditional procedure for

enforcing state prescribed limits on punitive damages. Id. at 436, 114

S. Ct. at 2342–43.

      Justice Ginsburg, joined by Chief Justice Rehnquist, dissented. Id.

at 436, 114 S. Ct. at 2343 (Ginsburg, J., dissenting). She reasoned that

Oregon law guides and limits the exercise of jury discretion by reversing

verdicts with punitive damages if the trial was infected with reversible

error, the jury was improperly instructed on punitive damages, or there

was no evidence to support the verdict. Id.

      2. High water mark of substantive due process review of punitive

damages: Gore and Campbell. Although application of the standard was
                                    38

quite generous, TXO unmistakably stood for the proposition that there

were, in fact, substantive due process limitations on the size of punitive

damages awards. In two seminal cases where large punitive damages were

awarded by juries in cases involving solely economic harms, the United

States Supreme Court held that the Due Process Clause of the United

States Constitution imposed limits on the amount of punitive damages

that a jury could award. See Campbell, 538 U.S. 408, 123 S. Ct. 1513;

BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 575, 116 S. Ct. 1589, 1598–99

(1996).

      In Gore, an automobile dealer failed to disclose that a vehicle had

been repainted after being damaged prior to delivery. 517 U.S. at 563, 116

S. Ct. at 1593.     An Alabama jury awarded the plaintiff $4000 in

compensatory damages and $4 million in punitive damages. Id. at 565,

116 S. Ct. at 1593–94. The Alabama Supreme Court reduced the punitive

damages to $2 million, thus awarding punitive damages 550 times the

amount of compensatory damages. Id. at 567, 116 S. Ct. at 1595.

      Meanwhile, in Campbell, an insured brought an action against an

insurer for bad-faith failure to settle a claim. 538 U.S. at 414, 123 S. Ct.

at 1518. A jury awarded compensatory damages of $2.6 million, which

the trial court reduced to $1 million, and punitive damages of $145 million,

thus establishing a ratio of punitive damages to compensatory damages of

145:1. Id. at 415, 123 S. Ct. at 1519. In both cases, a majority of the

court found the punitive damages award “grossly excessive” under

substantive due process analysis, vacated the judgments, and remanded

the cases to the state courts. Id. at 417, 429, 123 S. Ct. at 1520, 1526;

Gore, 517 U.S. at 574–75, 116 S. Ct. at 1598.

      In an opinion by Justice Stevens, the Gore Court built on language

in TXO indicating that grossly excessive punitive damages awards violate
                                     39

due process. Yet, the Gore Court emphasized that “States necessarily have

considerable flexibility in determining the level of punitive damages that

they will allow in different classes of cases.” 517 U.S. at 568, 116 S. Ct.

at 1595. Justice Stevens wrote that courts considering whether punitive

damages were grossly excessive should consider as guideposts the degree

of reprehensibility, the disparity between actual or potential harm, and the

relationship, if any, between punitive damages and civil penalties. Id. at

574–75, 116 S. Ct. at 1598–99.

      The Gore Court noted that reprehensibility was “[p]erhaps the most

important indicium of the reasonableness of a punitive damages award.”

Id. at 575, 116 S. Ct. at 1599. By way of example, the majority emphasized

that the “trickery and deceit” in TXO were more reprehensible than

negligence. Id. at 576, 116 S. Ct. at 1599. And, in this case, unlike Haslip

and TXO, “no deliberate false statements, acts of affirmative misconduct,

or concealment of evidence of improper motive” were present. Id. at 579,

116 S. Ct. at 1601.

      On the question of ratio of punitive damages to compensatory

damages, the Gore Court was careful to emphasize that a mathematical

formula could not be applied to all cases. Id. at 582, 116 S. Ct. at 1602.

Nonetheless, the Gore Court noted that “[a] general concer[n] of

reasonableness . . . properly enter[s] into the constitutional calculus.” Id.

at 583, 116 S. Ct. at 1602 (alterations in original) (quoting TXO, 509 U.S.

at 458, 113 S. Ct. at 2720 (plurality opinion)).

      On the third criterion of sanctions for comparable conduct, the Gore

Court observed that the $2 million in punitive damages far exceeded

permissible fines for the same conduct in Alabama. Id. at 583–84, 116 S.

Ct. at 1603. The Gore Court stated that the punitive sanctions in this case
                                     40

were not necessary to deter misconduct as less drastic remedies could

meet that goal. Id. at 584–85, 116 S. Ct. at 1603–04.

      Justice Breyer, joined by Justices O’Connor and Souter, concurred.

Id. at 586, 116 S. Ct. at 1604 (Breyer, J., concurring). According to Justice

Breyer, a jury verdict on punitive damages that was properly instructed

was entitled to a strong presumption of validity. Id. at 586–87, 116 S. Ct.

at 1604. In explaining how the presumption was overcome, Justice Breyer

concluded that the Alabama legal standards were insufficiently precise to

provide fair notice. Id. at 588, 116 S. Ct. at 1605. Second, Justice Breyer

noted the severe disproportionality between the award and the legitimate

punitive damages objectives. Id. at 596, 116 S. Ct. at 1609. For Justice

Breyer, these two reasons, together, were sufficient to overcome the

presumption of constitutionality behind a punitive damages award. Id. at

597, 116 S. Ct. at 1609.

      Justice Scalia, joined by Justice Thomas dissented. Id. at 598, 116

S. Ct. at 1610 (Scalia, J., dissenting). He again stated his position that

the Court’s constitutional jurisprudence was an unjustified incursion into

the province of state government. Id. Further, Justice Scalia stated that

the Court’s doctrine is not only mistaken but also insusceptible of

principled application. Id. at 599, 116 S. Ct. at 1610. As a result, Justice

Scalia wrote he did not feel bound by the doctrine of stare decisis. Id.

      Justice Ginsburg, joined by Chief Justice Rehnquist, also dissented.

Id. at 607, 116 S. Ct. at 1614 (Ginsburg, J., dissenting). Justice Ginsburg,

like Justice Scalia, believed the Court unnecessarily and “unwisely

venture[d] into territory traditional within the States’ domain.” Id. She

noted that property interests were traditionally within the state’s domain

and that although the Alabama Supreme Court could have shown its work
                                     41

more visibly, its judgment was entitled to respect. Id. at 611, 116 S. Ct.

at 1616.

      After the Supreme Court announced its decision in Gore, the case

was remanded to the Supreme Court of Alabama for further proceedings.

The Alabama Supreme Court declined to follow the Supreme Court’s

suggestion that punitive damages in the case over four times the

compensatory damages might be excessive and instead awarded on

remand punitive damages at a ratio of 12.5:1. BMW of N. Am., Inc. v. Gore,

701 So. 2d 507, 515 (Ala. 1997). The defendant did not seek further review

of the judgment by the Supreme Court. See N. William Hines, Marching to

a Different Drummer: Are Lower Courts Faithfully Implementing the Evolving

Due Process Guideposts to Catch and Correct Excessive Punitive Damages

Awards?, 62 Cath. U. L. Rev. 371, 374 (2012).

      In Campbell, the Supreme Court elaborated on the framework

developed in Gore in an opinion by Justice Kennedy. Here, the Supreme

Court considered an insurance bad-faith claim where the plaintiff received

a jury award of $2.6 million in compensatory damages and $145 million

in punitive damages. Campbell, 538 U.S. at 415, 123 S. Ct. at 1519. The

Utah courts reduced the compensatory damages to $1 million in

compensatory damages. Id.

      The    Campbell     Court    repeated     Gore’s   declaration    that

reprehensibility is “the most important indicium of the reasonableness of

a punitive damage award.” Id. at 419, 123 S. Ct. at 1521 (quoting Gore,

517 U.S. at 575, 116 S. Ct. at 1599 (majority opinion)). In its analysis, the

Campbell Court identified five relevant factors: (1) whether “the harm

caused was physical as opposed to economic”; (2) whether “the tortious

conduct evinced an indifference to or a reckless disregard of the health or

safety of others”; (3) whether “the target of the conduct had financial
                                      42

vulnerability”; (4) whether “the conduct involved repeated actions or was

an isolated incident”; and (5) whether the conduct “was the result of

intentional malice, trickery, or deceit, or mere accident.” Id. at 419, 123

S. Ct. at 1521.    We can infer from the Campbell Court that while the

presence of multiple reprehensibility factors helps uphold a punitive

damage award, one dominant factor can be sufficient to sustain an award.

Id. (“The existence of any one of these factors weighing in favor of a plaintiff

may not be sufficient to sustain a punitive damages award; and the

absence of all of them renders an award suspect.”) Further, the absence

of all factors is not necessarily disqualifying but renders any punitive

damages award suspect. Id.

      Applying these factors, the Campbell Court noted that State Farm’s

handling of the underlying claim “merits no praise.” Id. State Farm altered

company records, disregarded the overwhelming likelihood of liability, and

disregarded the near certainty that, if taken to trial, the judgment would

be in excess of policy limits. Id. Further, State Farm at first assured the

Campbells their assets would be safe from any verdict and then advised

them to sell the house. Id. Based on its review of the record, the Campbell

Court concluded that the jury punished State Farm for conduct dissimilar

to that suffered by the plaintiff. Id. at 419–20, 123 S. Ct. at 1521. As

pointed out by the Campbell Court, an individual or business cannot be

punished for being unsavory. Id. at 423, 123 S. Ct. at 1523. The Campbell

Court finally noted that there was no evidence that State Farm engaged in

repeated conduct similar to that which the plaintiffs received. Id.

      Regarding the second Gore factor, the Campbell Court stated that

“few awards exceeding a single-digit ratio between punitive and

compensatory damages, to a significant degree, will satisfy due process.”

Id. at 425, 123 S. Ct. at 1524. Similarly, the majority in Campbell noted
                                     43

that “[s]ingle-digit multipliers are more likely to comport with due process,

while still achieving the State’s goal of deterrence and retribution, than

awards with ratios in [the] range of 500 to 1.” Id. Yet, as in Gore, the

Campbell Court refused to establish “rigid benchmarks.” Id. In addition,

the majority in Campbell repeated the theme of earlier cases, reaffirming

the broad power of states to set their own punitive punishments, as long

as they fit within broader constitutional bounds. Id. at 421, 123 S. Ct. at

1522. Finally, the Campbell Court recognized that “ratios greater than

those we have previously upheld may comport with due process where ‘a

particularly egregious act has resulted in only a small amount of economic

damages.’ ” Id. at 425, 123 S. Ct. at 1524 (quoting Gore, 517 U.S. at 582,

116 S. Ct. at 1602).

      On the third Gore guidepost, the Campbell Court noted that the

availability of criminal sanctions could be a factor in considering the

amount of punitive damages. Id. at 428, 116 S. Ct. at 1526. But punitive

damages, according to the majority in Campbell, were not a substitute for

criminal processes that have more trial protections and higher standards

of proof. Id.

      Justices Scalia, Thomas, and Ginsburg all filed dissenting opinions,

repeating their established and emphatic views that the United States

Supreme Court should stay out of state court judgments regarding

punitive damages, provided the juries receive adequate instruction and the

judgments are subject to judicial review under state law standards. Id. at

429, 116 S. Ct. at 1526 (Scalia, J., dissenting); id. at 429–30, 116 S. Ct.

at 1526 (Thomas, J., dissenting); id. at 430–39, 116 S. Ct. at 1527–31

(Ginsburg, J., dissenting).

      On remand, the Utah Supreme Court reduced the punitive damages

award to $9 million, an award which had a 9 to 1 ratio to compensatory
                                     44

damages. Campbell v. State Farm Mut. Auto. Ins., 98 P.3d 409, 413 (Utah

2004).   State Farm sought certiorari again, which the Supreme Court

denied. State Farm Mut. Auto Ins. v. Campbell, 543 U.S. 874 (2004) (mem.).

Thus, on the two major state court cases in which the Supreme Court

engaged in substantive due process cases, punitive damages at a ratio of

12.5 to 1 and 9 to 1 were the ultimate results of the state court litigation.

      3. Return to procedural due process: Philip Morris USA v. Williams.

In 2007, the United States Supreme Court reentered the punitive damages

arena in Philip Morris USA v. Williams (Williams II), 549 U.S. 346, 127 S. Ct.

1057 (2007). In Williams v. Philip Morris Inc., the Oregon Court of Appeals

considered a case in which a plaintiff widow and an estate brought an

action of negligence and deceit against Philip Morris in connection with

the death of Jesse Williams, a heavy cigarette smoker. 48 P.3d 824, 828

(Or. Ct. App.), adhered to on reconsideration, 51 P.3d 670, 673 (Or. Ct.

App. 2002). The Oregon appellate court upheld the jury’s verdict in favor

of the plaintiff and its award of $821,000 in compensatory damages and

$79.5 million in punitive damages. Id. at 843.

      At first, the United States Supreme Court simply remanded to the

Oregon state courts in light of Campbell. See Philip Morris USA Inc. v.

Williams (Williams I), 540 U.S. 801, 124 S. Ct. 56 (2003) (mem.).         On

remand, the Oregon Supreme Court upheld the verdict and the Supreme

Court granted certiorari in the case for the second time. Williams v. Philip

Morris Inc., 127 P.3d 1165, 1182 (Or. 2006), vacated sub nom. Williams II,

549 U.S. 346, 127 S. Ct. 1057, and adhered to on reconsideration, 176

P.3d 1255, 1264 (Or. 2008).

      On the second appeal, Philip Morris argued that the Oregon trial

court erred in failing to instruct the jury that it could not punish the

company for injury to persons not before the court, a procedural due
                                     45

process argument. Williams II, 549 U.S. at 350–51, 127 S. Ct. at 1061. In

addition, Philip Morris claimed that the punitive damages verdict of

$79.5 million was “grossly excessive,” a substantive due process

challenge. Id. at 351–52, 127 S. Ct. at 1061–62. In an opinion by Justice

Breyer, the Supreme Court considered only the first procedural due

process question regarding jury instructions raised by Philip Morris. Id.

at 352, 127 S. Ct. at 1062.

        The Williams II Court reasoned that harm to others may not be used

to punish a defendant with punitive damages, noting that a defendant may

not be able to show in a trial that the nonparty knew that smoking was

dangerous or did not rely on statements from the manufacturer. Id. at

353–54, 127 S. Ct. at 1063.      Further, questions regarding nonparties

remain speculative, including how many are there, how they were injured,

how the injury occurred, and more. Id. at 354, 127 S. Ct. at 1063. The

Williams II Court emphasized, however, that harm to others could be used

as a factor in determining the reprehensibility of conduct. Id. at 355, 127

S. Ct. at 1063–64. As can be seen, the argument in the majority opinion

in Williams II was based on procedural due process and not the

substantive due process theory that the punitive damages were grossly

excessive. Id. at 357–58, 127 S. Ct. at 1065.

        Justice Stevens dissented. Id. at 358, 127 S. Ct. at 1065 (Stevens,

J., dissenting). He believed the Oregon Supreme Court correctly applied

the law and saw no reason why harm to others could not be taken into

consideration in assessing punitive damages. Id. at 358, 127 S. Ct. at

1066.     Justice Thomas also dissented, expressing his view that the

Constitution does not constrain the size of punitive damage verdicts. Id.

at 361, 127 S. Ct. at 1067 (Thomas, J., dissenting).
                                    46

      Justice Ginsburg, joined by Justices Scalia and Thomas, filed a third

dissent. Id. at 362, 127 S. Ct. at 1068 (Ginsburg, J., dissenting). She

noted that the majority would allow the use of harm to others to support

reprehensibility analysis and that the Oregon Supreme Court did not rule

otherwise. Id. She further noted that the issue decided by the majority

was not preserved in the Oregon state courts. Id. at 362–63, 127 S. Ct. at

1068. Justice Ginsburg stated she would affirm the verdict of the Oregon

Supreme Court in light of the abundant evidence of “the potential harm

[Philip Morris’] conduct could have caused. Id. at 363–74, 127 S. Ct. at

1068–69.

      On remand, the Oregon Supreme Court’s ruling was surprising. The

Oregon Supreme Court held that although the trial court erred in rejecting

Philip Morris’s proposed instruction for the reasons outlined by the United

States Supreme Court in Williams II, there were other errors in the

proposed instruction that, under Oregon law, supported the rejection of

the instruction by the trial court. Williams, 176 P.3d at 1257. The Oregon

Supreme Court reinstated the verdict against Philip Morris, including the

$79.5 million punitive damages award. Id. at 1263–64.

      Philip Morris again sought certiorari from the United States

Supreme Court on two issues: (1) whether the Oregon Supreme Court

could avoid the holding in Williams II by raising an independent state

ground on remand for the first time in litigation, a state law procedural

bar that is neither firmly established nor regularly followed; and (2)

whether a punitive damage award that is ninety-seven times the

compensatory damages could be upheld. Petition for Writ of Certiorari at

i, Philip Morris USA v. Williams, 553 U.S. 1093 (2008) (No. 07-1216), 2008

WL 795148.
                                     47

      Interestingly, the Supreme Court granted certiorari on the first

question but not the second; then, after oral argument, the Supreme Court

dismissed the case on the ground that certiorari was improvidently

granted. Philip Morris USA Inc. v. Williams, 556 U.S. 178, 129 S. Ct. 1436

(2009) (mem.) (per curiam); see generally Catherine M. Sharkey, Federal

Incursions and State Defiance: Punitive Damages in the Wake of Philip

Morris v. Williams, 46 Willamette L. Rev. 449 (2010).

      4. Summary     of   evolving   Supreme   Court precedent.     As   is

demonstrated above, the United States Supreme Court opinions on

punitive damages present a tapestry of different colors. Traditionally, the

Supreme Court has shown great deference to state court processes and

has not been inclined to intervene. As the Supreme Court edged toward

procedural due process review, it acknowledges the importance of the

federalism concerns. Even when the Supreme Court crossed the Rubicon

and applied substantive due process review of the amount of punitive

damages verdicts, the Court continued to repeatedly employ language of

respect for state court processes.

      The emphasis on state court processes accomplished two purposes.

First, respectful language regarding state court proceedings tended to

make the Supreme Court’s doctrine less revolutionary. Second, it may

have been designed to attract maximum support on a highly divided court.

In any event, as can be seen in the remands discussed above to Alabama,

Utah, and Oregon, the respect for state court processes tended to take the

edge off dicta in Gore and Campbell that might otherwise be read as

establishing strong presumptions in favor of punitive damages awards

with relatively low ratios of punitive to compensatory damages.

      The Supreme Court has also sent mixed messages on punitive

damages. TXO permitted a 526 to 1 punitive damages to compensatory
                                          48

damages ratio to stand in a case involving solely economic damages. TXO

has been cited neutrally, if not favorably, in subsequent Supreme Court

cases. So in addition to the mitigating effects of federalism, the Supreme

Court has explicitly embraced at least one dramatic outlier to its approach

in Gore/Campbell.

       Further, the above narrative demonstrates that the Gore/Campbell

approach remains highly controversial among members of the Supreme

Court.    This may be in part because of Justice O’Connor’s very direct

appeal to living constitutionalism in support of Gore/Campbell, and

Justice Scalia’s equally passionate appeal to constitutional history. Given

the changing makeup of the court, there may be some question as to the

continued viability of Gore/Campbell.            It is quite conceivable that the

Supreme Court will choose to avoid review of punitive damages under

substantive due process, as it did in the Williams cluster of cases to avoid

yet another go around on the issue. The ultimate effect is that state courts

may have considerable breathing room given the multiple strands of

language in the existing caselaw.

       D. Iowa Supreme Court Precedent Involving Due Process

Limitations on Punitive Damages. We have had many cases dealing

with the excessiveness of common law punitive damages. 5 In an early


        5We have found only two cases that deal with the constitutionality of a punitive

damages award under due process. In Wolf v. Wolf, 690 N.W.2d 887 (Iowa 2005), we
rejected a due process challenge on an award of $25,000 in a child custody dispute where
the plaintiff waived all damages except $1. Id. at 895–96. In Spaur v. Owens-Corning
Fiberglas Corp., 510 N.W.2d 854 (Iowa 1994), an asbestos manufacturer challenged an
award of punitive damages on the ground that there were multiple punitive damage
awards in multiple actions across the country. Id. at 865. We rejected that claim. Id. at
866. Finally, in Ezzone v. Riccardi, 525 N.W.2d 388 (Iowa 1994), we concluded that the
due process decisions of the United States Supreme Court required appellate review of
the amount of punitive damages. Id. at 398–99. We have not had occasion to consider
an independent due process constitutional claim under article I, section 9 of the Iowa
Constitution.
                                         49

case, Saunders v. Mullen, 66 Iowa 728, 24 N.W. 529 (1885), we held that

where actual damages sustained by one whose restaurant was unlawfully

closed by an illegal levy of attachment could not have exceeded $50, an

award of exemplary damages of $650 was excessive. Id. at 729, 24 N.W.

at 529–30.     While the Saunders court recognized that the amount of

punitive damages was in the discretion of the jury, it stated that such

discretion was not unlimited. Id. at 729, 24 N.W. 529. The Saunders court

stated that an appellate court should not interfere “unless the conclusion

is irresistible that the amount allowed is so great as to evince prejudice on

the part of the jury.” Id. at 729, 24 N.W. 529–30; 6 see McCarthy v. J.P.

Cullen & Son Corp., 199 N.W.2d 362, 368–70 (Iowa 1972) (holding a

judgment of punitive damages turns “more or less” on acts peculiar to each

case, “rests largely in discretion of the jury,” and must be reasonably

related to actual damages, but rejecting a numeric formula).

       Later Iowa cases make clear, however, that Saunders did not

establish some kind of mathematical limit to punitive damages.                   For

example, in Ryan v. Arneson, 422 N.W.2d 491 (Iowa 1988), the court

considered a white-hot controversy involving allegations that a party

wrongfully attached logs that were cut down on disputed property. Id. at
492. The trial court awarded the injured party $120 in actual damages

and $18,600 in punitive damages. Id. at 493. A question on appeal was

whether the punitive damages award was so excessive as to demonstrate

prejudice and passion of the jury. Id. at 495.

       The Ryan court upheld the punitive damages award that was 155

times the compensatory damages. Id. at 497. The Ryan court declared


       6The  Saunders case was cited by the United States Supreme Court in Gore, 517
U.S. at 580 n.32, 116 S. Ct. at 1601 n.32, and in the dissent in TXO, 509 U.S. at 478
n.3, 113 S. Ct. at 2731 n.3 (O’Connor, J., dissenting).
                                     50

that the primary focus in a review of a punitive damage award was the

relationship between the award and the wrongful conduct of an offending

party. Id. at 496. The Ryan court noted that “[a]n inflexible mathematical

ratio which focuses on the plaintiff’s injuries rather than the wrongful acts

of the defendant fails to accomplish the policy objectives and punishment

and deterrence.”   Id.   The Ryan court emphasized that in determining

whether punitive damages are so excessive that they demonstrate passion

and prejudice on the part of the jury, “we will consider whether the

punitive damage award is reasonably related to the malicious conduct of

the defendant which resulted in actual injury or damage to the plaintiff.”

Id.

      Up until 1994, we declined to order remittitur in cases involving

claims of excessive punitive damages.        See Spaur v. Owens-Corning

Fiberglas Corp., 510 N.W.2d 854, 869–70 (Iowa 1994).           In Ezzone v.

Riccardi, 525 N.W.2d 388 (Iowa 1994), however, we recognized that the

United States Supreme Court in Oberg decided it was a denial of due

process for a state to allow punitive damages without according appellate

review of the appropriateness of the amount. Id. at 399. Although no

constitutional issue was presented in Ezzone, the court determined that it

would follow the approach required in Oberg. The Ezzone court declared

that punitive damage awards will be tested

      with a view of the extent and nature of the outrageous
      conduct, the amount necessary for future deterrence, and
      with deference to the relationship between the punitive award
      and plaintiff’s injury, as reflected in any award for
      compensatory damages. In addition to these traditional
      factors, we shall consider all circumstances surrounding the
      conduct and relationship between the parties.

Id.
                                     51

      Applying these principles, the Ezzone court ordered a substantial

remittitur of punitive damages awarded in a case involving verdicts against

defendants on interference with contract, conversion, and breach of

confidential relations. The jury awarded compensatory damages totaling

$650,000 per plaintiff and the punitive damages totaling $1,260,572. Id.

at 392–93. The court ultimately entered a smaller award after the parties

agreed some of the jury-awarded compensatory damages were duplicative.

Id. The Ezzone court, however, although it found substantial evidence to

support the verdict, did not think much of the plaintiffs’ case. Id. at 391

(noting the jury subscribed to plaintiffs’ factual contentions, which clearly

would have been rejected by many fact finders). Based on its review of the

record, the Ezzone court entered remittitur reducing the punitive damages

to $118,500. Id. at 399.

      After Ezzone, we considered the validity of a $15 million punitive

damage award in a slander case where the plaintiff suffered only $4000 in

actual damages.    Wilson v. IBP, 558 N.W.2d 132, 136 (Iowa 1996) (en

banc). The record in Wilson showed that employees of IBP engaged in a

malicious course of conduct regarding injured workers, sought to

manipulate and repeatedly interfered with their medical treatment, and

manipulated work records that may have resulted in falsification of OSHA

records. Id. at 148. We also considered the wealth of the defendant as a

factor. Id. Citing Gore, Haslip, Spaur, Ryan, and Ezzone, we held that the

$15 million in punitive damages assessed against IBP was excessive. Id.

We concluded, however, that an award of $2 million was supported by the

record. Id. The ratio of punitive damages to actual damages in Wilson was

500 to 1.

      Finally, in Wolf v. Wolf, we considered a $25,000 punitive damages

award in a child custody dispute where the plaintiff waived all
                                    52

compensatory damages except $1.       690 N.W.2d 887, 895 (Iowa 2005).

Engaging in a Gore/Campbell-type analysis, we concluded that the

punitive damages in that case were not excessive. We concluded that the

conduct of the defendant involved intentional malice, trickery, and deceit;

that the actual harm to the plaintiff exceeded the $1 awarded by the court;

and that the Iowa legislature had provided for a jail term of up to thirty

days for violation of the court decree. Id. at 895–96.

      Although there are a considerable number of cases, Iowa caselaw on

punitive damages is not highly developed and is often quite conclusory. In

an application of federal law after Gore was decided, we upheld a very large

award of punitive damages in Wilson. In the case before us, although

Thornton cites article I, section 9 of the Iowa Constitution, his argument

is based on the evolving federal caselaw. As a result, on the state due

process claim, we accept, for purposes of this case, the federal framework,

reserving the right to apply that framework in a more stringent fashion

than the federal caselaw. See, e.g., State v. Tyler, 830 N.W.2d 288, 291

(Iowa 2013).

      E. Positions of Parties.

      1. Thornton. Thornton maintains that the $6.75 million in punitive

damages in a case involving $284,000 in compensatory damages fully

comports with due process. He opens his argument by citing two more

recent Iowa Supreme Court cases: Wilson, 558 N.W.2d at 148, and Gibson

v. ITT Hartford Insurance, 621 N.W.2d 388, 398–99 (Iowa 2001) (en banc).

He claims that these two cases demonstrate that a ratio of 17 to 1 in this

case does not offend due process under the Iowa Constitution.

      Thornton next turns to the question of whether the award of punitive

damages offends the Due Process Clause of the United States Constitution.

He notes that in Campbell, the United States Supreme Court emphasized
                                     53

that it declined to impose a bright-line ratio that a punitive damage award

cannot exceed. 538 U.S. at 424, 123 S. Ct. at 1524. Further, Thornton

argues that the facts of this case are more egregious than those in

Campbell. Thornton asserts he was a financially vulnerable quadriplegic

who was the victim of targeted bad faith for more than half a decade by

American Interstate.

      Thornton proceeds to apply the five-factor reprehensibility test

identified in Campbell. See id. at 419, 123 S. Ct. at 1521. He asserts that

the harm to him was both physical and economic. He claims the refusal

to provide wage information, the threats to delay payment, and testimony

from American Interstate’s claims manager that she would provide a

wheelchair when “ordered” to do so demonstrated indifference to

Thornton’s health and safety.      Thornton further argued that he was

financially vulnerable during the period of time when American Interstate’s

bad faith occurred, as he was living on workers’ compensation benefits

and social security disability payments. According to Thornton, American

Interstate engaged in repeated misconduct by denial of several petitions

related to workers’ compensation benefits, threats to delay the process,

and difficulties getting his needs met. Finally, Thornton claims that the

bad-faith actions of American Interstate were intentional, further noting

that American Interstate still asserts that it did nothing wrong in this case.

      On the question of disparity between actual or potential harm,

Thornton argued that if American Interstate’s bad faith had continued, the

potential harm to Thornton and other injured workers would be far greater

than actually incurred. Thornton then turns to multiplier analysis, noting

that the United States Supreme Court upheld an award of $10 million in

punitive damages in a case involving $19,000 in compensatory damages,

or a ratio of 526 to 1. See TXO, 509 U.S. at 453, 113 S. Ct. at 2718
                                      54

(plurality opinion).   Thornton cites several other post-Campbell cases

where courts have awarded punitive damages using double digit

multipliers. See Mathias v. Accor Econ. Lodging, Inc., 347 F.3d 672, 674

(7th Cir. 2003); Nickerson v. Stonebridge Life Ins., 209 Cal. Rptr. 3d 690,

695 (Ct. App. 2016); Bullock v. Philip Morris USA, Inc., 131 Cal. Rptr. 3d

382, 386 (Ct. App. 2011); Phelps v. Louisville Water Co., 103 S.W.3d 46,

49 (Ky. 2003); Seltzer v. Morton, 154 P.3d 561, 614 (Mont. 2007); Hamlin

v. Hampton Lumber Mills, Inc., 246 P.3d 1121, 1123 (Or. 2011).

      Finally, Thornton addresses the issue of civil versus criminal

penalties. Thornton argues that civil penalties are not available for the

bad-faith claims raised in this case, and thus the third factor is not

applicable. In any event, under the Iowa case of Wilson, Thornton argues

that the criteria for evaluating punitive damages does not include a

comparison between civil penalties and the punitive damages awarded in

the case. See Wilson, 558 N.W.2d at 142.

      2. American Interstate.   At the outset, American Interstate relies

heavily on language in Campbell.      American Interstate cites Campbell,

which notes, “[I]n practice, few awards exceeding a single-digit ratio

between punitive and compensatory damages, to a significant degree, will

satisfy due process.”    538 U.S. at 425, 123 S. Ct. at 1524 (majority

opinion). The Campbell Court further noted that “an award of more than

four times the amount of compensatory damages might be close to the line

of constitutional impropriety.” Id.

      American Interstate canvasses insurance bad-faith cases. It asserts

that it could find no insurance bad-faith case involving “substantial

compensatory damages” where the court upheld a ratio of punitive

damages at or near 18 to 1.      American Interstate did, however, cite a

number of insurance bad-faith cases where punitive damages were
                                       55

remitted to a ratio of 4 to 1. See Buhmeyer v. Case New Holland, Inc., 446

F. Supp. 2d 1035, 1047–50 (S.D. Iowa 2006); Arellano v. Priameria Life

Ins., 332 P.3d 597, 605–06 (Ariz. Ct. App. 2014); Amerigraphics, Inc. v.

Mercury Cas. Co., 107 Cal. Rptr. 3d 307, 330 (Ct. App. 2010), overruled on

other grounds by Nickerson v. Stonebridge Life Ins., 371 P.3d 242, 250 n.2

(Cal. 2016); Hall v. Farmers All. Mut. Ins., 179 P.3d 276, 286 (Idaho 2008);

Goddard v. Farmers Ins. Co. of Or., 179 P.3d 645, 667–71 (Or. 2008) (en

banc).

         On the issue of reprehensibility, American Interstate claims that the

company made its decisions because it was confused by the unwillingness

of plaintiffs’ counsel to engage in meaningful settlement negotiations and

was concerned that Thornton was not being offered what American

Interstate believed were greater benefits than could be obtained through

litigation. American Interstate also claims it was motivated to make sure

Thornton was informed about vocational rehabilitation opportunities that

were     communicated      to   counsel     and   that   the    deputy     workers’

compensation commissioner was aware of benefits that were provided to

Thornton.

         While American Interstate recognizes that its motivations were not

legally justified under the bad-faith standard, they do not demonstrate

reprehensible     conduct.      Thornton      continued    to    receive    income

replacement and medical benefits and, as a result, was not financially

vulnerable. Its conduct, according to American Interstate, was a one-off

incident, not repeated misconduct, and did not show intentional malice or

trickery.

         Turning to the ratio between compensatory and punitive damages,

American Interstate begins its analysis by characterizing the $382,000 in
                                    56

compensatory damages as “substantial” and therefore supporting a lesser

ratio of punitive damages. See Campbell, 538 U.S. at 425, 123 S. Ct. 1513.

       American Interstate then turns to bad-faith caselaw to support its

position. For example, American Interstate notes that in Goddard, the

court found the conduct of the insurance company as bad as any economic

wrongdoing it could conceive, yet the court also reduced the ratio to 4 to

1. See Goddard, 179 P.3d at 670–71. Further, American Interstate cites

Buhmeyer, where the federal court reduced a punitive damage award to 4

to 1 in a workers’ compensation case in which the court found the

defendant’s conduct fell somewhere in the middle of the reprehensibility

analysis.   See Buhmeyer, 446 F. Supp. 2d at 1050.        While American

Interstate recognizes that some cases involve greater punitive damage

ratios, they tend to be cases with smaller compensatory damage awards.

See Kennedy v. Supreme Forrest Prods., Inc., 295 F. Supp. 3d 113, 116 (D.

Conn. 2017); Saint Joseph Healthcare, Inc. v. Thomas, 487 S.W.3d 864,

869 (Ky. 2016).

       Finally, American Interstate notes that the level of civil penalties

available for the misconduct in this case is zero. Under Iowa Code section

86.13 (2013), there is no penalty that could be awarded because American

Interstate paid full benefits to Thornton throughout the workers’

compensation litigation.

       F. De Novo Review of American Interstate’s Bad-Faith Denial of

PTD.

       1. Introduction. The United States Supreme Court has called for a

searching de novo inquiry in punitive damage cases under the Federal Due

Process Clause. As a result, it is necessary to canvass the record in this

case in detail.
                                     57

      2. Thornton’s injuries. The evidence at the second bad-faith trial

showed that Thornton suffered a catastrophic injury as a result of the

accident. It was undisputed that Thornton was paralyzed from the chest

down and that he had no use of one hand and limited use of the other. He

remained hospitalized for approximately four months after the accident.

      Upon release from the hospital, Thornton was wheelchair bound.

He required three hours of home health assistance each morning to

prepare for the day. He would occasionally require assistance at other

times of the day, which he obtained through calling either a family member

or his home healthcare aide if she was available. If he had a problem and

no one was available, he had to wait, something that occurred about fifteen

times a year.    Ultimately, he successfully learned to drive a specially

equipped van which allowed him to travel some distance. By March 23,

2011, Thornton’s physician, Dr. Rogge, advised American Interstate that

Thornton had reached maximum medical improvement.

      3. American Interstate’s treatment of file as PTD.            American

Interstate concluded early on that Thornton was permanently and totally

disabled. As early as July 7, 2009, Luann Miller, a claims manager for

American Interstate initially assigned the file, stated that the file would be

“a perm, total with lifetime exposure.” She believed the injury was severe

enough “to easily classify it as perm total.”

      American Interstate established reserves reflecting that Thornton

was PTD. When American Interstate hired a lawyer, Cory Abbas, to assist

them on the file, American Interstate told the lawyer that the company

accepted permanent total exposure on the file. After review of the file, the

lawyer advised the company on June 25, 2012, that “there currently do

not seem to be many facts present that could be helpful in supporting a

finding of less than permanent total disability.” And again, prior to the
                                     58

hearing before the workers’ compensation commissioner, American

Interstate’s lawyer on March 11, 2013, told the client that “as originally

evaluated, there is really no possible situation where claimant is not going

to be found to be permanently and totally disabled in this matter.” When

asked at trial whether there was anyone at American Interstate who

thought that Thornton would improve so much that he would actually not

be permanently and totally disabled, Henry Lestage, Senior Vice President

of Claims, replied, “No.” Thornton, however, was never directly told that

American Interstate considered his injuries to result in PTD.

      4. Collapse of settlement discussions. In February 2012, Thornton,

prior to engaging counsel, engaged in discussions with American

Interstate about potential settlement.       Thornton developed potential

budgets and American Interstate flew in a financial consultant to present

illustrations of potential structured settlement approaches. Thornton was

told by the financial consultant that “this is probably the best deal you’re

going to get” and “if I was you, I’d probably take it.” Thornton did not fully

understand the proposals, however, and was unwilling to commit without

consulting others.

      Thornton ultimately hired attorney Tiernan Siems to assist him in

workers’ compensation matters.       On May 24, 2012, Thornton filed a

petition with the workers’ compensation commissioner seeking a

declaration that he was PTD. American Interstate denied that Thornton

was PTD.    As a result of scheduling issues, a planned mediation did not

occur until October 25, 2012, the date the jury identified as marking the

beginning of American Interstate’s bad faith. Prior to the mediation, Abbas

sent an email to Siems regarding mediation dates. In the email, he stated,

“Probably the most important reason for your client to consider a closed

file settlement vs. partial commutation is the fact that he would be getting
                                     59

a lump-sum payment much sooner rather than later.” Abbas noted “it

could well be 2-3 years before a final award is entered (considering

potential appeals to the Commissioner, and potentially much longer

appeals to the Courts).” Abbas stated that the most compelling reason to

reach a settlement is that “your client will get a lump sum potentially by

the end of the year rather than 2-3 years down the road.”

      At the October 25 mediation, American Interstate made an offer that

included payment to Thornton of a substantial lump-sum and the

establishment of what American Interstate regarded as well-funded

healthcare accounts to fund Thornton’s ongoing medical needs. American

Interstate, however, insisted on a closed file in which American Interstate’s

risk on the file for all workers’ compensation benefits, including medical

benefits, would be shifted to Thornton. Thornton, through his attorney

Siems, insisted on an open file in which American Interstate would

continue to provide medical benefits for life. Siems also demanded a lump

sum of $1,160,000, an amount that American Interstate viewed as

$400,000 in excess of any lump sum that would be available under

workers’ compensation.

      At the mediation, Abbas urged settlement because it was preferable

to contested litigation, which would take time to resolve. While statements

or characterizations of counsel Siems at trial regarding those statements

were not evidence, there is no question that the downside to Thornton of

litigation delay was introduced into the discussion at the mediation

conference by Abbas.

      5. Resistance to PTD after collapse of settlement. After the failure of

mediation, American Interstate decided to challenge whether Thornton

was, in fact, PTD notwithstanding its knowledge of the facts, its internal
                                    60

correspondence indicating the file was PTD, and its high level of reserves

on the claim.

      American Interstate took a number of steps to implement its new

strategy.   American Interstate requested and obtained an independent

medical examination of Thornton. American Interstate deposed Thornton

in the PTD proceeding, attempting to extract concessions on potential

employability (“[S]ome day I would like to get a job. It’s boring sitting

around.”). American Interstate also hired an expert, Phil Davis, to suggest

that Thornton should explore potential vocational rehabilitation.       But

there were a number of problems.

      First, American Interstate had shown no interest in vocational

rehabilitation in the two-and-a-half years prior to the failed mediation.

American Interstate as insurer would have a strong incentive to explore

vocational training if it offered any prospect of success.    As stated by

Luann Miller, the claims manager responsible for the Thornton file, if the

case for PTD was close, she would have started investigating the

possibility.   Yet, prior to the collapse of the settlement discussion on

October 25, 2012, American Interstate showed no interest in vocational

programs.

      Second, after October 25, no effort was made to do a real vocational

evaluation of Thornton. Such an evaluation would include, among other

things, a review of Thornton’s age, education, work experience, nature of

injuries, and a study of the labor market near Thornton’s home in Monona,

Iowa. American Interstate simply did not arrange for a serious vocational

evaluation but instead developed a very limited approach, suggesting

through its vocational rehabilitation expert, Phil Davis, that some services

theoretically might be available for Thornton to consider.
                                     61

         Third, while Davis testified that although there were specialized

vocational programs that Thornton could perhaps explore, he did not

declare that Thornton was not PTD. Indeed, Davis stated he “would have

trouble” with the use of his report to suggest that Thornton was not PTD.

Davis emphasized that he was simply pointing out possible avenues that

Thornton might pursue, nothing more. Echoing the testimony of Luann

Miller, vocational expert Ronald Schmidt testified at the bad-faith trial that

the question of whether Thornton qualified as PTD was “not even a close

call.”    According to Schmidt, there was “no doubt in [his] mind” that

Thornton could not obtain suitable employment in Monona, Iowa.

         Fourth, there was no clear release from Thornton’s physician to

engage in vocational rehabilitation. Prior to the PTD hearing before the

deputy commissioner, when Abbas asked Thornton’s physician, Dr. Rogge,

about the possibility of him participating in vocational rehabilitation,

Rogge responded, “no.”

         On March 11, 2013, Abbas sent an email to American Interstate

stating that “as originally evaluated,” “there is really no possible situation

where claimant is not going to be permanently and totally disabled in this

matter.” The Abbas email resulted in a conference call involving higher

management of American Interstate, including a Senior Vice President of

Claims Henry Lestage. Abbas and Rodgers took the position that Thornton

was PTD. Notwithstanding the Abbas recommendation and the view of the

claims manager, Lestage made the decision to proceed with a scheduled

workers’ compensation hearing.        Although at the first trial Lestage

defended his decision, at the second trial he admitted that he made a

mistake. According to Lestage, American Interstate was trying to resolve

the case through settlement but he “was just shocked that that we could

not even get a discussion about how to do that.” Lestage admitted he “got
                                     62

bullheaded” as a result and claimed he realized that “it would probably

just have been easier and in Toby’s better interest just to write the check.”

      6. PTD proceedings before the deputy commissioner. A hearing was

held before a deputy commissioner on March 28, 2013. At the hearing,

Thornton was the only witness. The parties submitted various exhibits to

the deputy commissioner.

      The deputy commissioner entered an order May 23, 2013. In the

order, the commissioner noted that “there is no real dispute as to how

seriously Thornton was injured; only whether he retains some residual

earning capacity.” The deputy commissioner was unpersuaded that Phil

Davis’ report was critical of Thornton for not contacting various services

agencies, noting that Davis did not meet or speak with Thornton and did

not specify what “retraining” and “competitive employment” meant.

      The deputy commissioner explored the legal parameters of PTD,

noting that permanent and total disability does not mean a state of

absolute helplessness, but “wholly disables the employee from performing

work that the employee’s experience, training, education, intelligence, and

physical capacities would otherwise permit the employee to perform.” IBP,

Inc. v. Burress, 779 N.W.2d 210, 221 (Iowa 2010).               The deputy

commissioner noted that the pertinent question was whether “there [are]

jobs in the community that the employee can do for which the employee

can realistically compete[.]” Second Injury Fund of Iowa v. Shank, 516

N.W.2d 808, 815 (Iowa 1994). The deputy commissioner noted that the

question was “whether the person is capable of performing a sufficient

quantity and quality of work [such] that an employer in a well-established

branch of the labor market would employ the person on a continuing basis

and pay the person sufficient wages to permit the person to be self-

supporting.”    Tobin-Nichols v. Stacyville Cmty. Nursing Home, Iowa
                                     63

Workers’ Comp. Comm’n No. 1222209, 2003 WL 22927701, at *1 (Dec. 9,

2003). The deputy commissioner noted,

      [T]here is no showing of work he could actually perform in
      sufficient quality and quantity as to enable him to be self-
      supporting through his own wages. Defendants impliedly
      concede this point by virtue of their demonstrated disinterest
      in offering rehabilitation services.

Applying the legal principles to the facts presented at the hearing, the

deputy commissioner declared, “[T]he decision in this case is clear and

obvious: Toby Thornton is now subject to permanent total industrial

disability . . . and entitled to benefits on that basis.”   After the deputy

industrial commissioner’s ruling, Thornton filed a petition for partial

commutation of his workers’ compensation benefits on May 28, 2013.

      American Interstate noted the deputy’s statement regarding

demonstrated disinterest in offering rehabilitation services. It decided to

attempt to repair the negative commentary by filing a motion for

reconsideration on June 3, 2013, pointing to recent correspondence from

American Interstate suggesting that Thornton could participate in various

vocational programs.

      The deputy commissioner entered a ruling on June 24. The deputy
commissioner modified the prior order by deleting references to

defendant’s failure to provide vocational rehabilitation services, but this

did not affect the award. The deputy commissioner declined to stay or

dismiss the commutation proceedings pending any potential appeal.

Ultimately, American Interstate declined to appeal and the decision of the

deputy industrial commissioner became final.

      7. Partial commutation proceedings before the deputy commissioner.

Thornton proceeded to pursue his partial commutation petition.          The

deputy commissioner entered a favorable ruling on partial commutation
                                       64

on May 16, 2014. Among other things, the deputy noted that it would be

hard to imagine a clearer scenario where partial commutation should be

granted. The deputy commissioner noted that Thornton and his brother

Timothy sought the assistance of a reasonable investment group to assist

in the management of the claimants funds. Further, the deputy noted,

         I find that there is minimal risk that claimant’s funds will be
         significantly depleted through his stated investment plan. He
         has demonstrated a conservative investment approach and is
         not likely to lose a significant portion of the commuted funds
         in the conservative approach he testified he intends to pursue.

         At all relevant times, American Interstate was aware that in cases

like Thornton’s, it would be in the claimant’s best interest to obtain a

partial commutation of his workers’ compensation benefits. Luann Miller

testified that she always thought that partial commutation was in

Thornton’s best interest. The advantage of a partial commutation is that

it allows the claimant to invest a lump sum in income-bearing securities,

thus supporting an income stream that incrementally increases over time

to meet rising costs. Without a partial commutation, the claimant receives

a fixed weekly payment that, over time, will decrease in value as inflation

rises.     American Interstate knew that in order to obtain a partial
commutation, an injured worker must first obtain a ruling that, as a result

of workplace injuries, the claimant is PTD.

         American Interstate was also aware that Thornton operated on a

relatively tight budget after the accident, with several bills to be paid. His

budget was modest and reasonable, but without a whole lot of room after

payment of expenses.

         Thus, by delaying the determination that Thornton was PTD,

American Interstate delayed Thornton’s receipt of a partial commutation.

The length of the delay was approximately one-and-a-half years.
                                          65

       G. Application of Due Process Principles. At the outset, candor

requires us to observe that the caselaw of punitive damages in the post-

Gore/Campbell world is rich and varied. 7           The cases uniformly adopt the

framework established in these cases, but there are wide variations in the

outcomes. Although the Supreme Court has provided guidelines for us to

apply, we think the Supreme Court expects us to exercise our best

independent judgment based on the specific facts of this case.

       In engaging in our de novo review of the constitutionality of punitive

damages awards, we do not seek to substitute our best judgment for that

of the jury; rather, we seek to uphold the jury’s punitive damage verdict to

the greatest extent possible. See Cooper Indus., Inc., 532 U.S. at 443, 121

S. Ct. at 1689; Simon, 113 P.3d at 69–71.

       1. Reprehensibility.       We first begin our analysis with the most

important factor, namely, the reprehensibility of American Interstate’s

conduct.     At the outset, this is not a case where the conduct of the

defendant may be characterized as “extraordinarily reprehensible,” such

as that involved in cases like Williams II. In Williams II, the defendant

engaged in “a prolonged pattern of egregious and deceitful conduct that

posed an extreme threat to the health and safety of a significant segment

of the population of the state.” Goddard, 179 P.3d at 645, (describing the

conduct in Williams II).

       Yet, there are features in this file that are quite troubling. It was

clear early on that Toby Thornton suffered an injury that rendered him

        7Although a state constitutional claim is made under article I, section 9 of the

Iowa Constitution, American Interstate does not suggest a framework different from Gore/
Campbell should be applied under the Iowa Constitution. Under the circumstances, we
apply the prevailing federal standards to both claims, reserving the right to apply the
standard more stringently under the Iowa Constitution. Tyler, 830 N.W.2d at 291–92;
State v. Ochoa, 792 N.W.2d 260, 267 (Iowa 2010). Here, considering the relief that has
been provided under federal constitutional analysis, we decline to provide further relief
under the Iowa Constitution given the posture of the case.
                                    66

permanently and totally disabled under Iowa’s workers’ compensation

laws. No one, including the employees of American Interstate, ever really

seemed to think otherwise.

      At first, American Interstate provided appropriate benefits and

assistance to Toby Thornton. His case manager, Luann Miller, was quite

proactive and effective in assisting Thornton with housing, transportation,

and medical issues. Thornton is a likeable, indeed remarkable, person

and got along well with most people, including Miller.

      Matters deteriorated, however, with a failed mediation and the

collapse of settlement discussions.      In particular, American Interstate

became frustrated with the fact that an approach to settlement when

Thornton was uncounseled foundered and settlement efforts were further

complicated when Thornton hired lawyer Siems to represent him.

American   Interstate   concluded   Siems     was   making    unreasonable

settlement demands and seeking a recovery in excess of what would be

afforded under Iowa’s workers’ compensation laws.            After a failed

mediation session, American Interstate continued to express a desire to

settle the matter on terms American Interstate considered generous, but

the company did not receive the response it desired from Siems.

      As a result, American Interstate decided to play tough. If Thornton

was going to be unreasonable in settlement, American Interstate would be

unreasonable in litigation. Although American Interstate’s lawyer advised

that there was no substantial basis to contest that Thornton was

permanently and totally disabled, a position adopted consistently

internally by American Interstate soon after Thornton’s injury, American

Interstate now decided to be obstinate—or in the words of its claims vice

president, “bullheaded.”
                                    67

      The chosen weapon was a defense in the PTD proceeding that

Thornton, in fact, could benefit from vocational rehabilitation and could

find competitive employment that would prevent a finding of PTD. In the

four years that had elapsed since the accident, American Interstate

showed zero interest in vocational rehabilitation for Thornton. Now, as a

chest-pounding     tactical   response   to   attorney   Siems’   perceived

intransigence, American Interstate cranked up a poorly developed and

unsubstantiated defense to a PTD determination; namely, that, voila,

Thornton could in fact be sufficiently rehabilitated and find competitive

employment in Monona, Iowa.

      American Interstate thus let the competitive game it sought to play

trump its fundamental and basic obligations to Toby Thornton. Attorney

Siems was not injured by this course of conduct. In its competitive zeal to

not be pushed around by an aggressive plaintiff’s attorney, American

Interstate acted in a fashion that sought to take advantage of Thornton’s

financial position, which, at least in the medium to long term, would be

precarious without a partial commutation, and his vulnerability as a

disabled person.

      With that background, we turn to application of the five factors

suggested in Campbell and Gore that can assist the court in determining

the degree of reprehensibility.

      The first factor is whether the harm was physical, as compared to

economic. We have concluded that the bad-faith claim against American

Interstate related to the wheelchair lacks merit, and as a result, the

remaining direct harm is not physical in nature. That is not the end of the

matter, however, as in both Gore and Campbell, state courts eventually

awarded substantial punitive damages cases in cases involving only

economic harm. While this case does not involve the kind of personal
                                      68

injury that was present in other cases, such as Williams II, bad-faith denial

of workers’ compensation rights shows indifference to plaintiffs’ mental

health and peace of mind. Century Sur. Co. v. Polisso, 43 Cal. Rptr. 3d

468, 499 (Ct. App. 2006). The bad faith of American Interstate must have

caused substantial mental distress to an individual forced to fight his

insurance company on a worthless and manufactured issue.

      The second factor is whether the tortious conduct showed an

indifference to or reckless disregard of the health or safety of others. The

actions of American Interstate show they did not consider the impact their

actions   would   have   on     Thornton’s    mental   state    as   a   workers’

compensation      beneficiary    seeking     to   navigate     Iowa’s    workers’

compensation system.       See Buhmeyer, 446 F. Supp. 2d at 1048–49;

Century Sur. Co., 43 Cal. Rptr. 3d at 499.

      The third factor is whether the plaintiff was financially vulnerable.

We think this factor cuts in favor of the plaintiff. As American Interstate

points out, it continued to pay workers’ compensation benefits throughout

the course of litigation. As a result, at all times relevant, Thornton received

a biweekly income in workers’ compensation payments plus social security

disability payments. In addition, all his medical bills were being paid by

American Interstate.

      Yet, in cases involving long-term PTD, the value of income benefits

which are paid on a fixed schedule slowly erodes over time because there

is no inflation adjustment to the payments.            As a result, while the

replacement income may seem satisfactory today, over time a worker’s

financial position is increasingly precarious. American Interstate’s denial

of PTD, and the resulting delay in the partial-commutation process, clearly

put some marginal financial pressure on Thornton. Buhmeyer, 446 F.

Supp. 2d at 1049.
                                     69

      The fourth factor is whether conduct involved an isolated incident

or a repeat misconduct.     Here, the conduct does not appear to have

involved persons other than Thornton.            American Interstate, however,

engaged in repeated acts against Thornton in its campaign to delay a PTD

determination   and   consequently       delay    a   partial   commutation   of

Thornton’s PTD benefits. The conduct of American Interstate, however, is

not similar to the extensive pattern and practice of deceit found in TXO or

Gore. See Gore, 517 U.S. at 563, 116 S. Ct. at 1593; TXO, 509 U.S. at 462,

113 S. Ct. at 2722.

      The fifth factor is whether the conduct involved intentional malice,

trickery, or deceit, or mere accident.     This case does not involve simple

negligence on the part of an insurance company. American Interstate put

on a bad-faith defense in retaliation for Thornton’s refusal to settle the

matter on terms preferred by the company. It attempted to convince the

deputy commissioner that the existence of vocational rehabilitation

programs, and the failure of Thornton to access them, somehow

contradicted the repeatedly accepted view within American Interstate that

Thornton was PTD. This factor cuts against American Interstate.

      We conclude based on our review of the facts that the conduct of

American Interstate can be characterized as reprehensible. It plainly does

not approach the character of that presented in the most egregious cases,

but on the PTD bad-faith issue, the conduct of American Interstate is

simply, plainly, and completely unacceptable and worthy of censure in the

form of a substantial punitive damages award.

      2. Actual harm to potential harm.               Turning to the second

Gore/Campbell factor, we note the tendency of some courts to race to ratios

in their analysis of the validity of the amount of punitive damages in a

given case. But reprehensibility is clearly the most important factor, and
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the ratio of punitive damages to compensatory damages, as is apparent in

cases like TXO, is not a be-all and end-all. See TXO, 509 U.S. at 462, 113

S. Ct. at 2722. Yet, it provides a general measure that can assist the court

in ensuring a degree of uniformity in punitive damages cases and in right-

sizing the punitive damages in a particular case.

      In this case, the jury awarded punitive damages at a ratio of nearly

18 to 1. We have concluded, however, that the actual damages in this case

must be reduced from $382,000 to $58,452.42. As a result, if we were to

maintain the ratio of 18 to 1 that the jury determined was appropriate in

this case, the amount of punitive damages would be reduced to a little over

a million dollars.

      We recognize that the primary factor in determining punitive

damages is reprehensibility. And, a ratio of 18 to 1 does appear in the

cases and is not necessarily out of bounds, particularly when there are

aggravating features as in TXO, Wilson, Ryan, and Williams II. But there

was no evidence in this case, for instance, of a companywide pattern and

practice of bad-faith conduct or widespread personal injuries caused by

deceit. Further, there is no compelling reason to believe that the damages

do not generally reflect the actual harm caused in this case as in Wolf.

690 N.W.2d at 895–96. Under these circumstances, the relatively high 18

to 1 ratio raises the judicial eyebrow and suggests a problem of

proportionality that is at the heart of due process analysis.

      3. Comparison     to    civil   and   criminal   penalties.   The   third

Gore/Campbell factor has less importance here in punitive damages

analysis. The relative lack of utility of the third guidepost has been noted

by the commentators.         See N. William Hines, Marching to a Different

Drummer: Are Lower Courts Faithfully Implementing the Evolving Due

Process Guideposts to Catch and Correct Excessive Punitive Damages
                                      71

Awards?, 62 Cath. U. L. Rev. 371, 394 (2013). There are no applicable

civil or criminal penalties to compare the conduct of American Interstate

against. Iowa Code section 86.13 imposes a penalty for denial of certain

workers’ compensation payments, but this section does not apply to the

kind of misconduct imposed in this case. At a minimum, it can be said

that there is nothing in the third Gore/Campbell factor that supports a

ratio of punitive damages to actual damages that falls outside the single

digits.

          4. Application of Gore/Campbell factors. While we strive to uphold

the jury’s verdict to the extent possible on the punitive damages issue, we

think a double-digit punitive damages award as sought by the plaintiff in

this case pushes beyond the upward limit established by the due process

punitive damages cases of the United States Supreme Court. Yet, the

conduct here is reprehensible: delaying a determination of PTD and the

resulting delay in granting partial commutation for a severely injured

individual, based only on a frantic last minute scramble to establish a fact

contrary to repeated actions and statements of the insurer and its

representative to try to get their way.

          In considering the Gore/Campbell factors, we conclude the highest

punitive damage award that could be maintained based on the record in

this case and this court’s rulings in this appeal is $500,000. The conduct

in this case is worthy of censure and demands a measure of punishment

and deterrence. But after two trips to the Iowa Supreme Court and three

years of litigation, a $500,000 punitive damage award is as far as we are

willing to go based upon the one-time event in this case in order to

vindicate the state’s legitimate objectives of punishment and deterrence.

          Because our review of challenges to punitive damages under the

Federal Due Process Clause is de novo, there is no basis for remittitur. In
                                          72

re Lorazepam & Clorazepate Antitrust Litig., 261 F. Supp. 3d 14, 18 (D.D.C.

2017); Ross v. Kansas City Power & Light Co., 293 F.3d 1041, 1049 (8th

Cir. 2002); Simon, 113 P.3d at 69–71. As a result, on remand, the district

court should enter judgment in favor of the plaintiff in the amount of

$500,000.

       VI. Conclusion.

       We conclude that Thornton failed to offer substantial evidence to

support his claim that American Interstate engaged in bad faith in

connection with the alleged delay in providing a replacement wheelchair

to him. As a result, American Interstate was entitled to judgment on the

bad-faith claim based on the delay in acquisition of the replacement

wheelchair.

       With respect to the PTD bad-faith claim, we find that the evidence

supports actual damages of no more than $58,452.42. Further, we find

that the maximum amount of punitive damages that may be awarded is

$500,000. For the reasons expressed in this opinion, remittitur is not

necessary. The district court on remand should enter judgment in the

amount of $58,452.42 in compensatory damages and $500,000 in

punitive damages. 8

       REVERSED AND REMANDED WITH INSTRUCTIONS.

       All justices concur except Christensen, C.J., and Oxley, J., who take

no part.




       8In light of our disposition, it is unnecessary to address the question of whether
attorney Siems should be disqualified as attorney for Thornton in any subsequent retrial.
