Oregon appellate court finds $4.3 million reduction in non-economic damages unconstitutional

By Allen Eraut and Shaun Morgan

In Vasquez v. Double Press Mfg, 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 to the plaintiff.

The plaintiff was severely injured while cleaning hay out of defendant’s bale-cutting machine. The accident left plaintiff a permanent paraplegic. The defendant moved to limit the plaintiff’s non-economic damages 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.” The trial court denied the motion for summary judgment, citing Lakin v. Senco Products, Inc., 329 Or 62, clarified, 329 Or 369 (1999), which held the cap unconstitutional, because it denied an injured plaintiff the right to have a jury determine damages.

At trial, the jury awarded the plaintiff approximately $2 million in economic damages and $8 million in non-economic damages, but also found that the plaintiff was 40 percent at fault. The trial court entered a judgment for the remaining 60 percent, or $1.2 in economic damages and $4.8 million in non-economic damages.

The defendant appealed. In 2016, the court of appeals rejected the defendant’s appeal, citing Lakin. See Vasquez v. Double Press Mfg., 278 Or App 77 (2016). But the following day, the Oregon Supreme Court overruled Lakin in Horton v. OHSU, 359 Or 168 (2016). Since Lakin was no longer good law, the court granted defendant’s motion for reconsideration.

Horton addressed the constitutionality of a different damages cap that 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 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.

The Vasquez court applied the Horton framework. The plaintiff first argued that unlike Horton’s damages cap, which exchanged governmental immunity for a limit on damages, the Vasquez noneconomic damages cap did not involve any such exchange. The defendant argued otherwise, because the legislature passed the damages cap to prevent excessive insurance costs, and all plaintiffs are benefited by access to better and cheaper insurance. The court rejected this argument as too indirect a benefit, explaining that the legislature’s reason for enacting the non-economic damages did not concern the welfare of injured plaintiffs, and that such a reason did not justify dramatic reductions in damages for grievously-injured plaintiffs.

While ORS 31.710(1) did not have the same quid pro quo as the statute in Horton, that alone did not render it unconstitutional. The court 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 particular plaintiff a constitutionally adequate remedy.

The court of appeals next considered whether ORS 31.710(1) was unconstitutional as applied, because it denied the plaintiff a “substantial” remedy. The court concluded that the damages cap was constitutionally inadequate, because it reduced the plaintiff’s damages to ten percent of what had been awarded, without affording 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. On these facts, the lack of a quid pro quo was relevant to determining whether the award provided a substantial remedy to the plaintiff. The court emphasized that the plaintiff’s injuries had been “grievous,” because the defendant’s bale-cutting machine had essentially severed the plaintiff’s spine in half, rendering him a paraplegic. Therefore, the court found a non-economic damages award of $500,000 represented a “paltry fraction” of his non-economic damages.

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