Court of Appeals Impact Summary of Rains Decision

By Shaun Morgan and Allen Eraut

 

In Rains v. Stayton Builders Mart, the Oregon Court of Appeals held that Oregon’s $500,000 non-economic damages cap on a personal injury award in a product liability case was unconstitutional as applied, because it denied the plaintiff the substantial remedy he was entitled to under the remedy clause of the Oregon Constitution. The court of appeals also ruled for the first time since the Oregon Supreme Court reinstated the statutory cap in certain personal injury claims in Horton v. OSHU, 359 Or 168 (2016), that spousal loss of consortium claims are also protected by the remedy clause of the Oregon Constitution. The court of appeals also held that the $500,000 cap to the plaintiffs’ loss of consortium claim was unconstitutional as applied.

The plaintiff was paralyzed when a wood board he was standing on at a construction site broke, sending the plaintiff falling almost sixteen feet to the ground. The plaintiff sued the manufacturer of the defective board and the retailer of the board. His wife brought a claim for loss of consortium. The plaintiff alleged claims for strict products liability against the manufacturer-defendant. The case went to trial and the jury found that the defendants were 75 percent at fault, and the plaintiff was 25 percent at fault. The jury awarded the plaintiff $5,237,700 in economic damages and $3,125,000 in noneconomic damages. The jury awarded the plaintiff’s wife $1,012,500 in noneconomic damages for her loss of consortium claim. The trial court reduced the plaintiff’s award to $6,272,025 and his wife’s award to $759,275 after accounting for the plaintiff’s proportion of fault.

The manufacturer-defendant appealed the judgment, arguing that the plaintiff’s non-economic damages should have been reduced to $500,000 under ORS 31.710(1), which provides that in “any civil action seeking damages arising out of bodily injury…the amount awarded for noneconomic damages shall not exceed $500,000.” Under the law at the time, Oregon courts had held that application of the cap violated the right to a jury trial under the Oregon Constitution, and that the legislature could only alter or reduce jury awards in causes of action in which a jury was customary in 1857, the date when the Oregon Constriction was enacted. Accordingly, the Court of Appeals ruled that the cap was not unconstitutional as applied to the plaintiff’s strict product liability claim, because strict liability product claims did not exist in 1857. The court of appeals held that the plaintiff’s wife’s loss of consortium claim did exist in 1857. Therefore, any reduction to the jury-award for her loss of consortium claim would violate her right to a jury trial.

The Oregon Supreme Court accepted review of the Court of Appeals decision. However, before the matter was heard, the Court issued its decision in Horton v. OSHU, 359 Or 168 (2016), in which it altered the legal framework for determining whether the legislature has the authority to place a cap on damages awards. Accordingly, the Oregon Supreme Court remanded Rains to Court of Appeals to analyze the constitutionality of the cap under the framework provided in Horton.

Horton involved the constitutionality of a different damages cap, which limited economic-damages in tort claims brought against government entities. Horton held that the damages cap did not violate the right to a jury trial provided for in article 17 of Oregon’s Constitution, because Article 17 does not prohibit the legislature from limiting or defining the elements of a claim or the damages available for that claim.

Horton also addressed whether the cap violated the remedy clause of Oregon’s Constitution, Or. Const., art I, § 10, which ensures injured persons receive an adequate remedy. The court held that the cap did not violate the remedy clause, because the plaintiff was provided a remedy, albeit less than the jury had awarded.

Horton went on to discuss factors for determining whether a remedy is constitutionally adequate, including whether a substantial remedy remains and whether the statute contains a quid pro quo. The court explained that governmental entities were previously protected from suit under the concept of sovereign immunity. The legislature waived sovereign immunity to allow suits such as the plaintiff’s suit in Horton, but imposed a damages cap. By allowing claims that would previously have been barred, the legislature was justified in limiting what damages a plaintiff could recover.

Following remand of Rains to the Court of Appeals, the court applied the Horton framework to determine the plaintiff’s claim was unconstitutional as applied. The court also cited another recent Court of Appeals decision, Vasquez v. Double Press, 288 Or App 503 (2017), in which the cap was held unconstitutional as applied under the Horton framework. Like Rains, Vasquez involved a plaintiff who had been rendered a paraplegic by his injuries.

In both cases, the court of appeals held there was no quid pro quo, because the injured plaintiffs were not suing a government entity, and they were not receiving any direct benefit from the legislature in exchange for the cap of their right to receive damages for their injuries.

While ORS 31.710(1) did not have the same quid pro quo as the statute in Horton, that alone does not render it unconstitutional. The courts in Vasquez and Rains held that since ORS 31.710(1) did not completely deny a remedy, it was not facially invalid. However, the court explained that the lack of any benefit to the plaintiff in exchange for the limit on his recoverable damages was relevant to determining whether the cap denied this specific plaintiff a constitutionally adequate remedy. The Court of Appeals in Rains concluded that the reduction of the multimillion dollar non-economic damages award was constitutionally inadequate, because it reduced his award to a “paltry” amount, without providing him any other statutory rights or benefits, such as the right to sue to a governmental entity as had been provided to the plaintiff in Horton. Therefore, the court found that the cap was unconstitutional as applied because it denied the plaintiff a substantial remedy under the constitution.

The court of appeals also held that loss of consortium claims are protected by the remedy clause, meaning that capping a spouse’s award may be unconstitutional if application of the cap leaves the spouse without a substantial remedy under the Horton framework. The defendant-manufacturer had argued that the remedy clause only protects a person’s right to a remedy for injury to her person or her property, and that a loss of consortium claims seeks redress for injury to a relational interest, not a personal or property interest. The Court of Appeals held that a loss of consortium claim is a claim that redresses an injury to a person, because it is akin to claim for emotional harm to the spouse who has suffered a loss of society and companionship on account of the physical injury to the spouse.

Lastly, the court of appeals applied the Horton framework to her loss of consortium claim, determining that the reduction of her award by $200,000 was constitutionally inadequate, and explaining that there was “no principled reason to conclude” that reducing her award would leave her with a substantial remedy.

 



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