Continental Trend Resources, Inc. v. OXY USA Inc.

101 F.3d 634, 1996 WL 680337
CourtCourt of Appeals for the Tenth Circuit
DecidedNovember 26, 1996
DocketNos. 92-6350, 92-6384
StatusPublished
Cited by69 cases

This text of 101 F.3d 634 (Continental Trend Resources, Inc. v. OXY USA Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Continental Trend Resources, Inc. v. OXY USA Inc., 101 F.3d 634, 1996 WL 680337 (10th Cir. 1996).

Opinions

OPINION ON REMAND

LOGAN, Circuit Judge.

I

This matter is before us on remand from the United States Supreme Court. In our original opinion, Continental Trend Resources, Inc. v. OXY USA Inc., 44 F.3d 1465 (10th Cir.1995), we upheld a compensatory damages award of $269,000 and a punitive damages award of $30,000,000 — based on tort claims for interference with contracts and prospective business advantage — rejecting various contentions of error made by defendant OXY USA Inc. The Supreme Court vacated our judgment, OXY USA Inc. v. Continental Trend Resources, Inc., — U.S. -, 116 S.Ct. 1843, 134 L.Ed.2d 945 (1996), and remanded for further consideration in light of its recent decision in BMW of North America, Inc. v. Gore, — U.S. -, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996).

[636]*636BMW, at the Supreme Court level, involved only whether the punitive damages award at issue there imposed a grossly excessive punishment in violation of the Due Process Clause of the Fourteenth Amendment. We therefore consider the only issue before us on remand to be whether the $30 million punitive damages award in the instant case is grossly excessive in violation of the federal constitution.1

In BMW, the Supreme Court held that a $2 million punitive damages award based on BMW’s fraud in failing to disclose to a purchaser that his new car had been repainted, was “grossly excessive” and thus unconstitutional. Id. at - - -, 116 S.Ct. at 1602-04. The BMW opinion expressly set out “to illuminate ‘the character of the standard that will identify constitutionally excessive awards’ of punitive damages.” Id. at -, 116 S.Ct. at 1595 (quoting Honda Motor Co. v. Oberg, 512 U.S. 415, -, 114 S.Ct. 2331, 2335, 129 L.Ed.2d 336 (1994)). The Court began by pointing out that because a punitive damages award must be based on the state’s legitimate interest in “punishing unlawful conduct and deterring its repetition,” a reviewing court must analyze the punitive award in terms of conduct occurring within the state. Id. at - - -, 116 S.Ct. at 1595-97. Any economic penalties the state inflicts “must be supported by the State’s interest in protecting its own consumers and its own economy.” Id. at -, 116 S.Ct. at 1597. The BMW Court listed as additional requirements that a person receive fail- notice “not only of the conduct that will subject him to punishment but also of the severity of the penalty that a State may impose.” Id. at -, 116 S.Ct. at 1598. The Court then provided three “guideposts” for determining whether a defendant had adequate notice of the size of the sanction that a state might impose for a defendant’s misconduct. Id. at - - -, 116 S.Ct. at 1598-99.

The first and “[pjerhaps the most important” guidepost is “the degree of reprehensibility of the defendant’s conduct.” Id. at -, 116 S.Ct. at 1599 (footnote omitted). “The second and perhaps most commonly cited indicium of an unreasonable or excessive punitive damages award is its ratio to the actual harm inflicted on the plaintiff.” Id. at -, 116 S.Ct. at 1601. The third guidepost is a comparison of the punitive damages award with “the civil or criminal penalties that could be imposed for comparable misconduct.” Id. at -, 116 S.Ct. at 1603.

In concluding the punitive damages award was grossly excessive, the Court stated that

[t]he fact that BMW is a large corporation rather than an impecunious individual does not diminish its entitlement to fair notice of the demands that the several States impose on the conduct of its business. Indeed, its status as an active participant in the national economy implicates the federal interest in preventing individual States from imposing undue burdens on interstate commerce.

Id. at -, 116 S.Ct. at 1604. The Court then remanded to the Alabama Supreme Court for it to determine whether there should be a new trial or an independent determination by that court of the amount necessary to vindicate Alabama’s economic interests.

BMW is the first case in modern times in which the Supreme Court has found a punitive damages award to be so excessive that it violates the substantive component of the Due Process Clause. See id. at - n. 41, 116 S.Ct. at 1604 n. 41. In reaching its conclusion the Court clarified in several respects the legal standards to be applied. We now review the Supreme Court’s opinion and reanalyze the award in the instant case under these standards.

II

First, the punitive damages award must relate to conduct occurring within the state — here, Oklahoma. A state may not [637]*637sanction a tortfeasor “with the intent of changing the tortfeasor’s lawful conduct in other States.” — U.S. at -, 116 S.Ct. at 1697. Thus, any penalty must be supported by Oklahoma’s “interest in protecting its own consumers and its own economy.” Id. Of course, unlike in BMW, OXY’s conduct in the ease before us would be tortious in any state. The BMW Court goes on to state that it “need not consider whether one State may properly attempt to change a tortfeasor’s unlawful conduct in another State.” Id. at - n. 20, 116 S.Ct. at 1598 n. 20. Despite this comment we read the opinion to prohibit reliance upon inhibiting unlawful conduct in other states. The Court states that evidence of out-of-state transactions is not irrelevant; “such evidence is relevant to the determination of the degree of reprehensibility of the defendant’s conduct.” Id. at - n. 21, 116 S.Ct. at 1598 n. 21.

In the instant case only acts of OXY within Oklahoma were introduced to support plaintiffs’ tort claims. There were references to the effect that OXY had approximately 6,000 contracts like that at issue in this case. There is no indication in the record whether any of the 6,000 contracts were in states other than Oklahoma. OXY had only about 500 contracts at Rodman, however, and. plaintiffs had 140 wells connected to the Rodman gas gathering system. The total number of contracts, some of which might have been in other states, could have influenced the amount of the punitive award, as the jury instruction did not limit the jury’s consideration to Oklahoma activities.2 OXY objected to certain aspects of the instruction, see II Appellant’s App. 426-37, but not to its failure to limit the jury to consideration of ■ OXY’s presence in Oklahoma.

The evidence here focused on OXY’s Oklahoma activities, particularly in connection with the Rodman plant. With hindsight provided by the BMW opinion it might have been desirable to instruct the jury to restrict its consideration to Oklahoma’s “interest in protecting its own [citizens] and its own economy.” — U.S. at -, 116 S.Ct. at 1597. [638]*638But we do not think the evidence here required such an instruction.

III

Second, a defendant must receive “fair notice ... of the conduct that will subject him to punishment.” — U.S. at -, 116 S.Ct. at 1598. BMW did not discuss this requirement except in the context of the severity of the penalty the defendant might expect.

In the instant case we have no difficulty with this requirement.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Lompe v. Sunridge Partners, LLC
818 F.3d 1041 (Tenth Circuit, 2016)
Leon v. Fedex Ground Package System, Inc.
313 F.R.D. 615 (D. New Mexico, 2016)
Peshlakai v. Ruiz
39 F. Supp. 3d 1264 (D. New Mexico, 2014)
Jones v. Wells Fargo Home Mortgage, Inc.
489 B.R. 645 (E.D. Louisiana, 2013)
Jones v. United Parcel Service, Inc.
674 F.3d 1187 (Tenth Circuit, 2012)
Guidance Endodontics, LLC v. Dentsply International, Inc.
791 F. Supp. 2d 1026 (D. New Mexico, 2011)
Blount v. Stroud
395 Ill. App. 3d 8 (Appellate Court of Illinois, 2009)
Blood v. Qwest Services Corp.
224 P.3d 301 (Colorado Court of Appeals, 2009)
Distad v. United States (In Re Distad)
392 B.R. 482 (D. Utah, 2008)
In Re Boyce
317 B.R. 165 (D. Utah, 2004)
Mosing v. Domas
830 So. 2d 967 (Supreme Court of Louisiana, 2002)
Campbell v. State Farm Mutual Automobile Insurance Co.
2001 UT 89 (Utah Supreme Court, 2001)
Jeffries v. Wal-Mart Stores, Inc.
15 F. App'x 252 (Sixth Circuit, 2001)
In Re New Orleans Train Car Leakage Fire Litigation
795 So. 2d 364 (Louisiana Court of Appeal, 2001)
Bielicki v. Terminix International Co.
225 F.3d 1159 (Tenth Circuit, 2000)
Harris v. Soley
2000 ME 150 (Supreme Judicial Court of Maine, 2000)
Smith v. Ingersoll-Rand, Co.
214 F.3d 1235 (Tenth Circuit, 2000)

Cite This Page — Counsel Stack

Bluebook (online)
101 F.3d 634, 1996 WL 680337, Counsel Stack Legal Research, https://law.counselstack.com/opinion/continental-trend-resources-inc-v-oxy-usa-inc-ca10-1996.