SHORES, Justice.
The opinion released November 17, 1995, is withdrawn and the following is substituted therefor. The Court wishes to express its appreciation to counsel for the parties and to counsel for amici curiae for the excellent briefs filed in support of the applications for rehearing. The Court has been aided and persuaded by the excellent and well-reasoned arguments advanced by both the parties and the amici curiae.
Daisey L. Johnson sued Life Insurance Company of Georgia ("Life of Georgia"), alleging that it had engaged in intentional and reckless fraud and fraudulent suppression by selling her a Medicare supplement insurance policy that was worthless to her because she was eligible for Medicaid. The jury returned a verdict in favor of Ms. Johnson, assessing compensatory damages at $250,000 and punitive damages at $15 million. Life of Georgia moved for a new trial or for a remittitur of damages. The trial judge held a hearing pursuant to Hammond v. City of Gadsden, 493 So.2d 1374 (Ala. 1986), and Green Oil Co. v. Hornsby 539 So.2d 218 (Ala. 1989). Following the hearing, the trial judge reduced the punitive damages award to $12.5 million, pursuant to Ala. Code 1975, § 6-11-21, and this remittitur was accepted by the plaintiff. Life of Georgia appeals.
Ms. Johnson, a resident of Grove Hill, Alabama, is an 84-year-old woman who went through the third grade in school and who spent her life as a domestic worker. Because Ms. Johnson had dealt with Life of Georgia for over 25 years, paying premiums on nine different policies, she trusted its agents. Sometime before January 8, 1990, a Life of Georgia agent, Barbara Holt, came to Ms. Johnson's home to collect the monthly premiums on her existing policies. Ms. Holt recommended that Ms. Johnson purchase a Medicare supplement policy. The next week Ms. Holt returned and again discussed the Medicare supplement policy with Ms. Johnson, who agreed to purchase the policy. Ms. Johnson testified that Ms. Holt told her that the Medicare supplement policy would protect her. She testified: "If I got in the hospital, you wouldn't have to worry about your doctor bill, you could stay in there because they would pay your doctor bill, and I got it." Ms. Holt filled out the application for Ms. Johnson.
At first, Barbara Holt testified that she asked Ms. Johnson for her Social Security card; later, she testified that she asked Ms. Johnson for her Medicaid card and that she asked the questions on the application, one of which was whether Ms. Johnson was on Medicaid. At trial, Ms. Johnson disputed Ms. Holt's testimony that she was asked whether she was on Medicaid. Ms. Johnson showed the jury how she gave her cards to Ms. Holt, by pulling a vinyl holder out of her purse. She testified that she always kept her cards in this vinyl holder, which contained her Medicaid, Medicare, and Social Security cards.
Despite the fact that Ms. Holt knew that it was illegal and against company policy to sell a Medicare supplement policy to Ms. Johnson, because she was on Medicaid, Ms. Holt completed the application and collected the premiums on the policy. Initially the premiums were $71 per month; by 1992, they had risen to $103 — almost one-third of Ms. Johnson's fixed income. Over almost a three-year period from 1990 through 1992, Ms. Johnson paid a total of $3,132 in premiums on this policy.
Life of Georgia first argues that it was entitled to a directed verdict or to a judgment notwithstanding the verdict, with respect to the award of punitive damages because, it argues, the plaintiff failed to prove by clear and convincing evidence that the company "consciously or deliberately engaged in oppression, fraud, wantonness, or malice" as is required by § 6-11-20, Ala. Code 1975, for the award of punitive damages. The statute provides:
"§ 6-11-20. Punitive damages not to be awarded other than where clear and convincing evidence proven; definitions.
"(a) Punitive damages may not be awarded in any civil action, except civil actions for wrongful death pursuant to Sections 6-5-391 and 6-5-410, other than in a tort action where it is proven by clear and convincing evidence that the defendant consciously or deliberately engaged in oppression, fraud, wantonness, or malice with regard to the plaintiff. Nothing contained in this article is to be construed as creating any claim for punitive damages which is not now present under the law of the State of Alabama.
"(b) As used in this article, the following definitions shall apply:
"(1) Fraud. An intentional misrepresentation, deceit, or concealment of a material fact the concealing party had a duty to disclose, which was gross, oppressive, or malicious and committed with the intention on the part of the defendant of thereby depriving a person or entity of property or legal rights or otherwise causing injury.
"(2) Malice. The intentional doing of a wrongful act without just cause or excuse, either:
"a. With an intent to injure the person or property of another person or entity, or
"b. Under such circumstances that the law will imply an evil intent.
"(3) Wantonness. Conduct which is carried on with a reckless or conscious disregard of the rights or safety of others.
"(4) Clear and convincing evidence. Evidence that, when weighed against evidence in opposition, will produce in the mind of the trier of fact a firm conviction as to each essential element of the claim and a high probability as to the correctness of the conclusion. Proof by clear and convincing evidence requires a level of proof greater than a preponderance of the evidence or the substantial weight of the evidence, but less than beyond a reasonable doubt.
". . . ."
The standard of review applicable to a directed verdict or to a denial of a motion for a directed verdict is whether the nonmoving party presented substantial evidence in support of his or her position. If not, then a directed verdict is proper. Bailey v. Avera, 560 So.2d 1038, 1039 (Ala. 1990). A verdict is properly directed only where there is a complete absence of proof on a material issue or where there are no disputed questions of fact for the jury to determine. Woodruff v. Johnson, 560 So.2d 1040, 1041 (Ala. 1990); K.S. v. Carr, 618 So.2d 707, 713 (Ala. 1993). Life of Georgia argues strenuously that the evidence was not sufficient to meet this clear and convincing standard; however, it admits that the evidence was in sharp conflict.
The trial judge denied Life of Georgia's motion for a directed verdict because he was satisfied that the plaintiff had presented a jury question with regard to the issue of punitive damages. He stated in his Hammond order:
"Clear and convincing evidence was presented at trial that Life of Georgia was aware of the fraudulent sale of these Medicare supplement policies. . . . Plaintiff further produced clear and convincing evidence through the testimony of three live pattern witnesses that Life of Georgia's conduct in selling these policies to elderly, uneducated, single black women was not an isolated event and had not ceased and these people were paying a very substantial portion of their fixed income for useless policies. Evidence was presented at trial that Life of Georgia was aware of the unfitness of its agent in selling this specialized type policy. Eric Peek testified that he trained Barbara Holt for Life of Georgia yet gave her no training relative to the Medicare Supplement policies because he himself did not receive training to enable him to understand and properly sell these policies. Evidence was presented at trial that Life of Georgia began marketing the Medicare supplement policies in 1986 and that continuing through the date of the verdict in June of 1994, Life of Georgia had done nothing to ferret out and correct the problem. In fact, Life of Georgia's corporate officers testified during the Plaintiff's presentation of her case that Life of Georgia had done nothing to try to prevent the sale of Medicare supplement policies to unqualified persons, even though in 1992 Life of Georgia had been faced with trial in Mobile County and experienced an adverse verdict. . . ."
The trial judge then instructed the jury that, pursuant to § 6-1-20, it must be satisfied by "clear and convincing evidence" of the plaintiff's allegations before it could return a punitive damages award. In the Hammond order, the trial judge recited the proof presented by the plaintiff as to her dealings with agent Barbara Holt in regard to the Medicare supplement policy:
"Plaintiff proved that Life of Georgia's agent, Barbara Holt, misrepresented to her that she needed health insurance under a Medicare supplement policy in order to pay her hospital and medical bills should she become sick. There was ample and substantial evidence that Plaintiff showed Barbara Holt her Medicaid card and that Barbara Holt knew or should have known that Plaintiff did not qualify for the insurance since she was a Medicaid recipient. Plaintiff proved that Barbara Holt was not properly trained to be aware of circumstances where elderly persons living on low fixed income such as Daisey Johnson have coverage under both Medicare and Medicaid. This lack of awareness permeated Life of Georgia's entire corporate structure as the vice president in charge of marketing and training, Robert Hayes, gave uncontradicted testimony that he too would 'assume' that if someone was on Medicare they did not have Medicaid. Plaintiff proved that over 116,000 Alabamians have both Medicare and Medicaid. This lack of training and awareness fostered both intentional and reckless misconduct on behalf of its agents, including Barbara Holt. Plaintiff discovered, after hearing about a similar situation involving Mattie Foster and Life of Georgia, that she had been sold a Medicare supplement policy she did not need and was useless to her. Plaintiff's proof that Life of Georgia was aware of the situation where unqualified elderly people living on fixed income were sold this Medicare supplement policy yet did nothing to prevent or detect such wrongful conduct distinguishes this case from 'renegade agent' cases. Life of Georgia played an active role in allowing Barbara Holt to sell the policy in question and continue to collect the premiums."
When the evidence meets the "sufficiency" test, jury verdicts are presumed correct, and this presumption is strengthened by the trial court's denial of a motion for new trial. Therefore, a judgment based upon a jury verdict and sustained by the denial of a post-judgment motion for a new trial will not be reversed on the ground that it is against the weight of the evidence, unless it is plainly and palpably wrong. Alpine Bay Resorts, Inc. v. Wyatt, 539 So.2d 160, 162 (Ala. 1988); Ashbee v. Brock, 510 So.2d 214 (Ala. 1987); Jawad v. Granade, 497 So.2d 471 (Ala. 1986). Having carefully studied the lengthy record, we conclude that there was substantial evidence before the jury to support the plaintiff's claim.
Life of Georgia next contends that the trial court erred in admitting what it calls "highly improper, prejudicial and inflammatory evidence" with respect to the plaintiff's claim that Life of Georgia was negligent and wanton in its training of its agents. The company contends that the only reason the plaintiff pursued the negligent and wanton training claim was to introduce evidence that would prejudice and bias the jury against the company. This argument disregards the Alabama statute on vicarious liability, § 6-11-27, Ala. Code 1975, and the strong proof required under this statute. The common law rule of vicarious liability is modified by § 6-11-27; this Code section requires a higher degree of proof of culpability on the part of the principal before punitive damages can be imposed against the principal for the conduct of its agent. Northwestern Mut. Life Ins. Co. v. Sheridan, 630 So.2d 384, 390 (Ala. 1993). This Court noted this modification in Sheridan and commented: "Thus, as a logical matter, if plaintiffs can meet the statutory requirement for vicarious liability, they will, in many cases, also have established the elements of their claims for wantonness in the hiring and supervision of the agent." Id. The plaintiff's evidence relating to her claim that Life of Georgia negligently and wantonly trained its agents was directly related to her fraud claim. Because the plaintiff was required to prove a higher degree of culpability on the part of Life of Georgia to bind it for the acts of its agent, the trial court did not err in admitting this evidence. Id.
Next, Life of Georgia argues that it is entitled to a remittitur of the $250,000 compensatory award, on the grounds that the award grossly exceeds the plaintiff's "mental anguish" damages and her $3,132 out-of-pocket loss. Life of Georgia contends that the only evidence presented by the plaintiff concerning her mental state, upon learning that the insurance policy she had paid on for almost three years was worthless, was "that it made her angry" and that it "worried" her. The record reflects that this is not an accurate picture of her testimony. Ms. Johnson testified that after she learned that she had been paying the premiums on a worthless insurance policy, she could not sleep and her meal schedule was disrupted. Her testimony that she ran two insurance agents off her property, telling them "to leave — leave out of my yard and don't come back" is evidence from which the jury could conclude that Ms. Johnson was distressed to learn that she had been paying for a worthless policy and that she had suffered mental anguish as a result. The jury listened to her evidence and concluded that she had suffered emotionally as a result of the company's conduct. "[T]here [is no] yardstick to measure the amount of recompense which should be awarded for . . . mental suffering." Birmingham Electric Co. v. Thompson, 251 Ala. 465, 466, 37 So.2d 633, 634 (1948).
The trial judge also reviewed the evidence presented by the plaintiff concerning her claim for mental anguish. He concluded: "Ample evidence was presented at trial which supports the total compensatory damages award of $250,000 against Life of Georgia." This Court has said that the trial judge has much discretion in determining whether to grant a new trial and whether to require a remittitur of damages for mental anguish. Crown Life Ins. Co. v. Smith, 657 So.2d 821 (Ala. 1994); Fields v. Parker, 361 So.2d 356 (Ala. 1978). We find no abuse of discretion on his part in denying the motion for a new trial and in refusing to remit the award for compensatory damages, based upon the evidence before him. Pitt v. Century II, Inc., 631 So.2d 235, 239 (Ala. 1993).
Finally, we come to the question of the imposition of punitive damages. Life of Georgia, a tortfeasor that has been found by this jury to be guilty of conduct for which the law permits the imposition of punitive damages, argues that its rights have been unconstitutionally impinged upon by the imposition of such damages. Over the years the constitutional arguments advanced in efforts to eliminate or to cap punitive damages awards have taken different forms. It has been argued that the "excessive fines" provisions of the State and Federal Constitutions forbid the imposition of punitive damages. Kumar v. Lewis, 561 So.2d 1082 (Ala. 1990); Industrial Chemical Fiberglass Corp. v. Chandler, 547 So.2d 812 (Ala. 1988); Alabama Power Co v. Turner, 575 So.2d 551 (Ala. 1991), cert. denied, 500 U.S. 953, 111 S.Ct. 2260, 114 L.Ed.2d 713 (1991). As it relates to the Eighth Amendment, this argument was rejected by the United States Supreme Court in Browning-Ferris Industries of Vermont Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 109 S.Ct. 2909, 106 L.Ed.2d 219 (1989), and this argument now has largely been abandoned. See Ingraham v. Wright, 430 U.S. 651, 97 S.Ct. 1401, 51 L.Ed.2d 711 (1977). More recently, the due process provisions of the Fourteenth Amendment have been the basis of constitutional challenges where, as in this case, the defendant argues that the award of punitive damages is grossly excessive and fundamentally unfair and therefore contravenes Alabama law and the Due Process Clause of the Fourteenth Amendment. See Intercontinental Life Ins. Co. v. Lindblom, 571 So.2d 1092 (Ala. 1990) vacated. It is also frequently argued that, under Alabama law, juries are provided too few standards for determining a verdict appropriate both to punish the defendant, whose conduct inflicted harm upon the victim, and to deter others from engaging in similar conduct, without completely destroying the defendant financially. Aetna Life Ins. Co. v. Lavoie, 475 U.S. 813, 106 S.Ct. 1580, 89 L.Ed.2d 823 (1986).
These arguments have been carefully considered by this Court. The standards set forth in Hammond v. City of Gadsden, 493 So.2d 1374 (Ala. 1986), and Green Oil Co. v. Hornsby, 539 So.2d 218 (Ala. 1989), were adopted partly in response to these concerns. These cases require the trial court, after the jury returns a verdict that the defendant claims to be excessive, to consider all relevant factors bearing on the issue of excessiveness when viewed from the perspective of the defendant. The factors set out in Hammond and Green Oil are not intended to be all-inclusive. Trial judges are encouraged to consider any evidence that has any relevance to the question of the fairness and justness of the jury verdict.
In this case, a jury found that Life of Georgia had defrauded an elderly Alabama citizen, and there was evidence that she was not the only Alabama victim of such fraud. The evidence established, and a jury has found, that the conduct of Life of Georgia justifies requiring it to pay a substantial sum of money as punitive damages. The trial judge has considered evidence offered in a post-verdict hearing pursuant to Hammond and Green Oil. After that hearing, the trial judge ordered a remittitur and explained his order, remitting the $15 million punitive damages award to $12.5 million, as follows:
"This Court is mindful that this verdict is large. Yet this Court finds that a punitive damages award of $12,500,000 bears a reasonable relationship to the harm that is likely to occur from Life of Georgia's conduct as well as to the harm that actually has occurred. The harm which was committed is even more egregious because Life of Georgia refuses to admit or concede any wrongdoing whatsoever and merely [attributes] the sale of this policy [to] a 'miscommunication.' Life of Georgia has profited from such 'miscommunications.'
"This Court finds that the economic impact of the verdict on Defendant Life of Georgia is slight. In 1993, the company had assets exceeding $2.3 billion. Investment income alone totaled $173 million for 1993 and the company has over $1.1 billion in reserve. The company has testified that it has sufficient resources to pay the judgment if it should be affirmed. The financial position of Life of Georgia does not support any reduction in this verdict.
"The Court finds that the verdict should be high in order to encourage a plaintiff such as this, and her attorneys, to pursue this type of case. The Court is of the opinion that there are many people situated such as Plaintiff who are unable due to sickness, age, infirmity or whatever to pursue
such a case. The Court has considered whether the cost of this litigation favors remittitur and is of the opinion that this factor does not weigh in favor of reducing this verdict.
"The Court has compared this verdict to other verdicts affirmed by the Alabama Supreme Court, including
Northwestern Mutual Life Insurance Co. v. Sheridan, [
630 So.2d 384 (Ala. 1993)]. The Court is mindful that the $15 million punitive award is $2,500,000.00 larger than that amount affirmed in
Sheridan, which is the largest punitive damages award in a fraud case ever affirmed by our Supreme Court. The Court has compared the facts of the
Sheridan case, as set forth in the Supreme Court's opinion, and the facts of this case. The Court is clearly convinced that the wrongful conduct in this case is much worse. The class of plaintiffs Life of Georgia preyed upon were from a group of citizens that need the most protection: elderly, uneducated, and low income. Life of Georgia knew that these types of individuals were easily persuaded, and used sales techniques such as 'fear' to sell these policies. The Court further compared this verdict to other verdicts similar in nature. Nevertheless, although this Court is of the opinion that the facts in this case are much worse than those in the
Sheridan case, the Court is of the opinion that the punitive award in this case should be reduced by $2.5 million so as to not exceed the largest punitive award affirmed by our Supreme Court.
"Next, the president of Life of Georgia testified that Life of Georgia ceased doing business in Alabama and would never return. He also testified that if any policyholder of Life of Georgia had been sold a Medicare supplement policy who had received Medicaid benefits, that person's premiums would be immediately refunded. He further stated that Life of Georgia had undertaken a program in Alabama to determine whether there were any policyholders situated such as Daisey Johnson. However, the Court is aware that following the testimony of Life of Georgia's president, a witness testified by deposition for Plaintiff that her 91-year-old father was on Medicaid, had been sold a Medicare supplement policy, and that she had demanded Life of Georgia to return his premiums. Ms. Pernell, the daughter of the person sold the Medicare supplement policy, was informed by Life of Georgia that they would not refund the premiums. This testimony contradicts that of the president and concerns the Court as to the quality of Life of Georgia's assertion that it would refund premiums once an unqualified policyholder came forward.
"It is the conclusion of this Court that the verdict was not based upon bias, passion, prejudice, corruption, or other improper motive, but instead was the product of the jury's careful and studious consideration of the evidence and applicable law. This conclusion is based in part on this Court's observing . . . all of the parties to the trial, the respective attorneys, and the jury and its reaction to all of the others. The jury was justified in awarding these damages to punish Life of Georgia and to prevent similar wrongs in the future. The imposition of these damages in this case creates a strong incentive for vigilance on the part of all insurance companies doing business in this state. The jury arrived at an amount that it considered necessary to vindicate the public interest by eliminating the reprehensible conduct of this defendant and in punishing it appropriately. This verdict is not so large that it goes beyond an amount necessary to accomplish these goals. This verdict will have little, if any, impact upon Life of Georgia and other insurance companies unless it is substantial. . . ."
The trial judge's order demonstrates that he focused on the conduct of Life of Georgia to determine whether the punishment was excessive in relationship to that conduct. The trial judge also considered the public policy upon which punitive damages are based: to eradicate intentional conduct by the particular defendant before the court and to deter others from similar conduct. The trial court remitted the award to an amount that it determined, from an examination of the facts specific to the defendant, was not excessive; the court determined that the reduced award is not so large as to destroy the defendant, but is large enough to serve the public policy of punishment and deterrence.
Alabama citizens who become the victims of fraud have little recourse other than through litigation. The record in this case is replete with expert testimony to the effect that the State Insurance Department has little power to regulate agents, and we judicially know that litigation is often the only weapon defrauded citizens have. Punitive damages have historically been part of the remedy for such victims, and to get that remedy they must prove that the defendant intentionally inflicted the injury for which punishment is sought. As Jonathan Massey, writing recently in Trial magazine, explained, punitive damages have been used "to help equalize the playing field between the powerful and the powerless — whether between king and subject, railroad and passenger, or corporation and consumer." "Why Tradition Supports Punitive Damages: and How the Defense Bar Misreads History," Trial, September 1995 p. 19. Massey continues:
"Punitive damages awards in consumer fraud and products liability cases are within the historical tradition of tort law for an even more fundamental reason: Punitive damages have traditionally been used as a populist weapon to help level the playing field between powerless plaintiffs and powerful defendants. As the U.S. Supreme Court observed in an 1886 case,
" 'The dignity and value of the right assailed, and the
power and authority of the source from which the assault proceeds, are elements to be considered in the computation of damages, if they are to be not only compensation for the direct loss inflicted, but a remedy and prevention for the greater wrong and injury involved in the apprehension of its repetition. [
Barry v. Edmunds, 116 U.S. 550, 566,
6 S.Ct. 501, 510,
29 L.Ed. 729 (emphasis added)].'
"In common law England, punitive damages were often employed against the crown and the aristocracy. In 19th-century America, they were frequently used against railroads and robber barons. As the Pennsylvania Supreme Court observed in 1886, 'The liability of railway and other corporations to exemplary damages for gross negligence is well settled.' [
Lake Shore Michigan S. Ry. v. Rosenzweig, 113 Pa. 519, 544, 6 A. 545 (1886)].
"The modern-day heir of this populist legacy is the consumer plaintiff suing a large corporate defendant. Using punitive damages to redress the imbalance in the relationship between consumer and corporation is squarely within their historical tradition."
Id. at pp. 24-27.
Attorneys who represent victims of fraud, such as the fraud practiced upon this plaintiff, usually bear all of the expense of the litigation and carry all of the risk of failure. They are reimbursed only if the victim recovers from the wrongdoer. The lawyer takes a significant risk in such cases. According to Business Week magazine, plaintiffs today are losing a greater proportion of cases that go to trial than in past years; in 1988 plaintiffs won 63% of the cases that went to trial, but in 1992 plaintiffs won only 54%. This Business Week statistic is supported by a United States Justice Department Survey of the country's 75 most populous counties, which concluded that in 1992 only 2% of the 762,000 civil cases disposed of in those counties were decided by juries, and that plaintiffs won in only 52% of those cases.
"Corporate America's fear of juries may be overblown," Business Week, November 8, 1993.
"Civil Jury Cases and Verdicts in Large Counties" is a joint project of the Bureau of Justice Statistics and the National Center for State Courts.
Richard C. Reuben, "Plaintiffs Rarely Win Punitives, Study Says," A.B.A. Journal, p. 26, October 1995.
American Bar Association statistics show that personal injury claims represent only 9% of the civil caseload in this country. Since 1986, personal injury cases have remained essentially flat on the scale, while domestic relations matters have increased by 43%.
Statistics according to the State Court Caseload Statistics Annual Report 1992, published February 1994. The report is a joint project of the Conference of State Court Administrators, the State Justice Institute, and the National Center for State Courts Court Statistics Project.
There are also many cases that are concluded by the entry of a summary judgment for the defendant. Cases decided by summary judgments formed the largest category of civil cases decided by this Court in 1994, 47.6%. Eighty-three percent of those cases were affirmed by this Court, either in whole or in part. In those cases in which the plaintiff's lawyer works on a contingency fee basis, the lawyer loses the amount she or he has expended in filing the action and in preparing for trial.
Litigation is slow and costly and carries no guarantee of success. Victims of fraud bear the burden of proving to the satisfaction of a jury of 12 citizens that they have been victimized by the defendant. It is a heavy burden, and litigation is an inefficient way to stop fraudulent conduct — one lawsuit at a time, brought by one victim at a time — but it provides the only recourse a defrauded citizen of Alabama has.
The question whether setting standards for post-trial review of a jury's verdict is sufficient to provide due process, while allowing the jury discretion to determine punitive damages, has been much discussed. Under our present procedure, the jury, before rendering its verdict, never hears whether the amount it selects as the appropriate amount for punishing the defendant and deterring others from similar conduct is actually an appropriate amount, considering the factors that trial courts and appellate courts must consider in reviewing jury verdicts (i.e., the Hammond and Green Oil factors). In some cases, the plaintiff or defendant may offer evidence that the acts complained of resulted in profit to the defendant in a specific amount. In some cases the evidence might show how much or how little it would have cost the defendant to remedy a defect in a product or to change its method of doing business, but, in most cases, it could be argued that the jury has incomplete information from which to determine with certainty the amount that is appropriate to serve the ends for which punitive damages were intended. Under our present procedure, much evidence relevant to reaching a decision as to an appropriate amount to punish the particular defendant is withheld from the jury. To reach a verdict and to fix an amount of punitive damages, the jury may consider only the character of the defendant's conduct and the degree of wrong as shown by the evidence in the case. These strictures on the evidence that the jury may consider in awarding punitive damages result from concern that evidence of the defendant's wealth or the defendant's lack of wealth and other evidence that is relevant, if not critical, to the issue the jury is asked to decide must be excluded because such evidence could potentially influence the jury to the prejudice of one party or another. We have concluded, after much deliberation, that the need for more guidance for the jury in these cases outweighs the concern that such evidence might prejudice the jury. Juries are presumed to follow the law as instructed by the trial court. There is no reason to assume that the jury would disregard the trial court's instructions on this issue.
Separating the fact-finding process for adjudging liability and compensatory damages from the damages-assessment process in a punitive damages case and, at the same time, improving the reliability of the punitive damages-assessment process is a procedural goal that was recognized by Justice Jones in his special concurrence in Ridout's-Brown Service, Inc. v. Holloway, 397 So.2d 125 (Ala. 1981), as adopted by this Court in Green Oil Co. v. Hornsby, supra. Justice Houston, concurring specially in Charter Hosp. of Mobile, Inc. v. Weinberg, 558 So.2d 909 (Ala. 1990), expressed his opinion that constitutional due process provisions are violated when the jury is "given the unbridled discretion to award no punitive damages or to award an unlimited amount of punitive damages, taking into consideration only the character and the degree of the wrong as shown by the evidence in the case and the necessity of preventing similar wrongs in the future." 558 So.2d at 917. Justice Houston then set out a procedure providing for a bifurcated trial as a way to ensure due process:
"Therefore, I would recommend that the following procedure be applied in all jury cases involving claims for punitive damages and as to which claims a party had a right to trial by jury at common law prior to the adoption of the first Alabama Constitution. . . .
"A jury will determine the issues of liability, the amount of compensatory damages, and whether the defendant's conduct warrants the imposition of punitive damages. In addition to other jury verdict forms, in common law cases involving punitive damages the following jury verdict form should be given to a jury for each party against whom punitive damages are sought:
" 'In accordance with the instructions given to us by the trial court, we find that punitive damages (should) (should not) be assessed against (name of party against whom punitive damages are sought).'
"In the event that the jury determines that punitive damages should be imposed against one or more defendants, the trial will resume; and evidence of the following, which was not admissible in the trial in chief, shall be admissible upon an offer by any party in accordance with the rules of evidence.
"A bifurcated trial is also recommended by the American College of Trial Lawyers, 'Report on Punitive Damages of the Committee on Special Problems in the Administration of Justice' (March 3, 1989), pp. 18-19."
"Evidence of the harm that was likely to occur from the defendant's conduct as well as the harm that actually has occurred is relevant. The jury should be instructed that, if it finds that the actual and likely harm is slight, the punitive damages (subject to the other factors hereinafter set out) should be relatively small. If the actual harm and/or likely harm was grievous, the punitive damages (subject to the other factors hereinafter set out) should be much greater.
"The duration of the defendant's conduct, the degree of the defendant's awareness of any hazard that his conduct has caused or is likely to cause, any concealment or 'cover-up' of that hazard, and the existence and frequency of similar conduct of the defendant are relevant. The jury should be instructed that if it finds that the defendant's offensive conduct was of long duration or was frequently repeated; that the defendant acted with awareness that his conduct was causing or was likely to cause the hazard by which the plaintiff was in fact damaged; or that the defendant concealed or covered up that hazard, then such a finding should increase the amount of punitive damages.
"The profitability of the conduct to the defendant is relevant. The jury should be instructed that the punitive damages should remove all profit from the wrongful conduct and should be in excess of the profit, so that the damages would 'sting.'
"The financial position of the defendant is relevant. The jury should be instructed that the amount of punitive damages should 'sting' the defendant, considering his financial condition.
"All costs of the litigation, including the attorney fees to be paid to the plaintiff's attorney, are relevant; and the jury should be instructed that its award should include all reasonable costs of litigation, so as to encourage injured parties to bring wrongdoers to trial.
"If criminal sanctions have been imposed on the defendant for his conduct, this is relevant; and the jury should be instructed that such criminal sanctions should be taken into account in mitigation of the punitive damages award.
"If there have been other civil actions against the defendant based on the same conduct and if punitive damages have been assessed against the defendant in those civil actions, this is relevant; and the jury should be instructed that it should consider this in mitigation of the punitive damages award.
"I believe that, if these factors are considered by a jury in assessing the amount of punitive damages a defendant should pay, this will improve the reliability of the punitive damages assessment process and will fit the punishment to the offensive conduct of the offender. I believe that by doing this in a bifurcated trial the court
could preserve the reliability of the factfinding process for adjudging liability, thereby accomplishing the goal we set in
Green Oil Co. v. Hornsby, supra, when we adopted Justice Jones's special concurrence in
Ridout's-Brown Service, Inc. v. Holloway, [
397 So.2d 125, 127-28 (Ala. 1981)].
558 So.2d at 917-18.
I. Bifurcation
We hold that after the new procedures announced in this case become effective in all cases in which punitive damages are sought, excluding all actions based upon wrongful death, the trial shall be bifurcated in accordance with the procedure set out in Justice Houston's special concurrence in Charter Hospital of Mobile v. Weinberg, supra. The trial court shall charge the jury on the appropriate law, and the jury shall determine liability and the amount of compensatory damages, if any. The jury will also decide, by special verdict, whether the evidence justifies the imposition of punitive damages. In order to get an award of punitive damages, the plaintiff must prove a prima facie case of conduct supporting an award of punitive damages and the jury's decision to award punitive damages must be based upon clear and convincing evidence. If the jury returns the special verdict in the affirmative, the trial shall resume for the second part of the bifurcated trial.
In the second part, all evidence shall be admitted that is relevant to the question of what amount would be appropriate, to accomplish the purposes punitive damages were designed to serve, and it shall be admitted in accordance with § 6-11-23(b), Ala. Code 1975, which provides:
"(b) In all cases wherein a verdict for punitive damages is awarded, the trial court shall, upon motion of any party, either conduct hearings or receive additional evidence, or both, concerning the amount of punitive damages. Any relevant evidence, including but not limited to the economic impact of the verdict on the defendant or the plaintiff, the amount of compensatory damages awarded, whether or not the defendant has been guilty of the same or similar acts in the past, the nature and the extent of any effort the defendant made to remedy the wrong and the opportunity or lack of opportunity the plaintiff gave the defendant to remedy the wrong complained of shall be admissible; however, such information shall not be subject to discovery, unless otherwise discoverable, until after a verdict for punitive damages has been rendered. . . ."
All evidence that has heretofore been admissible at post-verdict Hammond/Green Oil hearings can be introduced under this new procedure, before the jury retires to consider its punitive damages verdict.
The jury is to be guided not only by the factors set forth in Hammond and Green Oil, but also by those factors stated in the statute and in other case law. Davis Carr, writing in the Alabama Lawyer, has offered the following compilation of factors, drawn from both case law and statute, that can be considered:
"From the statute [
§ 6-11-23, Ala. Code 1975 (Supp. 1989)]:
"1. Nature, extent and 'economic impact' of verdict on plaintiff or defendant.
"2. Amount of compensatory damages.
"3. Whether defendant has been guilty of similar acts in the past.
"4. The nature and extent of any effort by defendant to remedy the wrong.
"From Green Oil:
"1. Does the punitive damages award bear a reasonable relationship to the harm likely to occur from the defendant's conduct?
"2. The degree of reprehensibility of defendant's conduct, including:
"(a) the duration of this conduct;
"(b) the degree of defendant's awareness of any hazard which this conduct has caused or is likely to cause;
"(c) any concealment or cover-up of the hazard;
"(d) existence and frequency of similar past conduct.
"3. Punitive damages should remove the profit, if any, from the defendant and should be in excess of the profit so that defendant recognizes a loss.
"4. Defendant's 'financial position.'
"5. Cost of litigation to the plaintiff.
"6. If defendant has received criminal sanctions, that should be taken into account in mitigation.
"7. If there have been other civil actions against the same defendant based on the same conduct, this should be taken into account in mitigation of the punitive damages.
"From Hammond:
"1. Culpability of defendant's conduct.
"2. The desirability of discouraging others.
"3. 'The impact' on the parties.
"4. 'Impact' on innocent third parties.
"From
Holloway [
Ridout's-Brown Service, Inc. v. Holloway, 397 So.2d 125, 127 (Ala. 1981)]:
"The punitive damages award should sting, but ordinarily it should not destroy.
"From
Wilson [v. Dukona Corp., N.V., 547 So.2d 70 at 73 (Ala. 1989)]:
"Defendant's 'right to fair punishment' must be considered above plaintiff's right to recover the fullest amount of punitive damages.
"From
Lavoie [
Aetna Life Ins. Co. v. Lavoie, 505 So.2d 1050 at 1053 (Ala. 1987)]:
" 'A comparative analysis with other awards in similar cases.' "
Davis Carr, "Punitive Damages and Post-Verdict Procedures: Where Are We Now and Where Do We Go From Here?" Ala. Lawyer, Vol. 51, March 1990, pp. 94-95. Mr. Carr's article carried the following note: "As to this listing of factors, the author hereby acknowledges 'limited plagiarism' from a handout by Danner Frazer, Jr., 'How to Handle a Post-Judgment Punitive Damage Hearing — Discovery to End,' presented at the Alabama Defense Lawyers Association fall meeting, 1989."
We agree with the parties and amici curiae that the fact of the existence of liability insurance and the amount thereof cannot be disclosed to the jury. In addition, the discovery of financial information concerning the defendant will be limited to that which is relevant to the issue in the case. How much the defendant profited as a result of the tortious conduct would be relevant, as would, in many cases, how much it would have cost the defendant to avoid the tortious conduct. The net worth of the defendant may or may not be relevant, depending upon the nature of the case. In no event, however, is the defendant to be punished for its size or its success, only for its tortious conduct. This new procedure is intended to allow the jury to decide, based upon all the evidence that is relevant to that inquiry, the award that the specific defendant before the jury should be required to pay as punishment for the specific conduct justifying the punitive award.
The adoption of this bifurcated procedure is not a substitute for post-trial procedures for reviewing punitive damages awards. These awards, when challenged as excessive or inadequate, still must be considered through the procedures set out in Green Oil Co. v. Hornsby, supra, and Hammond v. City of Gadsden supra. However, the evidence need not be readmitted in any post-verdict hearing on the question of excessiveness. Only such evidence as was not available for consideration by the jury that bears on the issue of excessiveness will be admitted in a post-verdict hearing on excessiveness. The trial courts must continue to review jury verdicts not only for excessiveness, but also to determine the validity of other challenges to jury verdicts. After this procedure is put in place, it can no longer be said that juries are left with no guidance in determining an appropriate punitive award.
II. Allocation
Much of the criticism surrounding the issue of punitive damages has been based on the perception that punitive damages awards sometimes amount to undeserved windfalls to the prevailing plaintiffs. Chief Justice Rehnquist has suggested that the windfall effect could be avoided by requiring the losing defendant to pay the punitive award "to the State, not to the plaintiff — who by hypothesis is fully compensated." Smith v. Wade, 461 U.S. 30, 59, 103 S.Ct. 1625, 1641, 75 L.Ed.2d 632 (1983) (Rehnquist, C.J., dissenting). Such broad power to shape and effectuate remedies is deeply rooted in the common law system. Eisenberg and Yeazell, The Ordinary and the Extraordinary in Institutional Litigation, 93 Harv.L.Rev. 465 (1980); Chayes, The Role of the Judge in Public Law Litigation, 89 Harv.L.Rev. 1281 (1976).
Some states have passed statutes that allocate punitive damages and require that a portion of each punitive damages award be paid to the state general fund or some special fund that serves a public purpose. Fuller v. Preferred Risk Life Ins. Co., 577 So.2d 878, 887 (Ala. 1991). For example, Illinois and Iowa allocate punitive damages pursuant to statute. Florida and Colorado passed such statutes in 1987; these were both repealed, effective 1995.
Ill.Rev.Stat. Ch. 110, para. 2-1207 (Supp. 1987); now cited as Ill St. Ch. 735 § 5/2-1207.
Iowa Code Ann. § 668A.1(2)(b) (West Supp. 1987).
Fla.Stat.Ann. § 768.73(2) (West Supp. 1987); held constitutional in Gordon v. State, 608 So.2d 800 (Fla. 1992); repealed by Laws 1992, c. 92-85, § 3, effective July 1, 1995.
Colo.Rev.Stat. § 13-21-102(4) (1987); held unconstitutional in Kirk v. Denver Publishing Co., 818 P.2d 262 (Colo. 1991), because a judgment for exemplary damages qualifies as a property interest under Colorado law (there is no right to punitive damages under Alabama law); repealed by Laws 1995, H.B. 95-1090, § 1, effective March 9, 1995.
A special concurrence in Preferred Risk, 577 So.2d at 886, suggested that if a court concludes that the amount of punitive damages awarded is not so large as to deprive the defendant of property in contravention of § 13 of the Alabama Constitution of 1901 and the Due Process Clause of the Fourteenth Amendment to the United States Constitution, then the court, nevertheless, may also determine that it would be in the best interest of justice to require the plaintiff to accept less than all of the amount and to devote a part of the amount to such purposes as the court may determine would best serve the goals for which punitive damages are allowed in the first place: vindication of the public interest and deterrence to the defendant and to others who might commit similar wrongs in the future. This viewpoint was again expressed by three Justices in Smith v. States General Life Ins. Co., 592 So.2d 1021, 1025 (Ala. 1992), and in special concurrences in Principal Financial Group v. Thomas, 585 So.2d 816, 819 (Ala. 1991) (with Shores, Houston, and Steagall, JJ., joining), cert. denied, 502 U.S. 1009, 112 S.Ct. 649, 116 L.Ed.2d 666 (1991); Southern Life Health Ins. Co. v. Turner, 586 So.2d 854, 859 (Ala. 1991); Union Mortgage Co. v. Barlow, 595 So.2d 1335, 1348 (Ala.), cert. denied, 506 U.S. 906, 113 S.Ct. 301, 121 L.Ed.2d 224 (1992); BMW of North America, Inc. v. Gore, 646 So.2d 619, 629 (Ala. 1994).
In a special concurrence in BMW of North America, Inc. v. Gore, supra, a Justice views a procedure that directs a substantial portion of punitive damages awards to the state general fund or some special fund that serves a public purpose as a means of both avoiding the windfall effect and strengthening the jury system:
"In the name of all that is fair, I ask this Court, which has consistently held that plaintiffs have no right to punitive damages, to direct that all or a substantial portion of punitive damages awarded in civil cases, after deducting attorney fees and expenses of litigation, be paid to the state general fund or to some special fund that serves a public purpose or advances the cause of justice. If this is done, then the time-honored and constitutionally mandated right to trial by jury will not be perceived, insofar as punitive damages is concerned, as Alabama's lottery, as it is now perceived by so many."
646 So.2d at 631. We agree, and we now hold that a part of the punitive damages awarded in future cases (excluding cases based on wrongful death) shall be paid into the state general fund. It is appropriate and fair that some part of the civil fine imposed by juries in the form of punitive damages awards should be devoted to the general welfare of all the citizens of Alabama. We believe that this practice will strengthen the public's confidence in our civil justice system because, under this procedure, wrongdoers can be appropriately discouraged from inflicting harm upon others without inappropriately rewarding the victim.
All punitive damages judgments (excluding all damages in actions based upon wrongful death) that are entered as a result of the new bifurcated procedure shall be allocated as follows: After any post-verdict review is concluded by the trial court, and after appellate review, if any, the amount of the judgment as finally determined shall be paid into the trial court. The trial court shall order all reasonable expenses of the litigation, including the plaintiff's attorney fees (as determined in accordance with any agreement between the plaintiff and the plaintiff's attorney), paid. The trial court shall then order the clerk of the court to divide the remaining amount equally between the plaintiff and the State general fund. The fact that the State may ultimately share in some part of a punitive damages award does not mean that the State has a vested interest in a private lawsuit seeking punitive damages. The State shall have no right to intervene or participate in such cases. The parties will continue to have full authority to settle cases without the participation or consent of the State, and court approval is not required. In the case of settlement, the parties need not designate any part of the settlement proceeds as punitive damages and no part of the settlement proceeds shall be paid into the general fund. In summary, the right of the parties to settle any lawsuit is unaffected by this opinion.
III. Judicial Review of Jury Verdicts in General
Under our system of government, with its guarantee of separation of powers between the executive, legislative, and judicial branches of government, it is peculiarly and exclusively the function of the judiciary to determine whether a jury award in a civil case exceeds the amount that the State and Federal Constitutions will allow without violating the due process rights guaranteed to all citizens of this State and this country. Armstrong v. Roger's Outdoor Sports, Inc., 581 So.2d 414, 419, 581 So.2d 414 (Ala. 1991). The separation of powers provision, found in Article III, § 42, of the Alabama Constitution of 1901, provides:
"The powers of the government of the State of Alabama shall be divided into three distinct departments, each of which shall be confided to a separate body of magistracy, to wit: those which are legislative, to one; those which are executive to another, and those which are judicial to another."
Section 43 reads:
"In the government of this state, except in the instances in this Constitution, hereinafter expressly directed or permitted, the legislative department shall never exercise the executive and judicial powers, or either of them; the executive shall never exercise the legislative and judicial powers, or either of them; the judicial shall never exercise the legislative and executive powers, or either of them; to the end that it may be a government of laws and not of men."
In Armstrong v. Roger's Outdoor Sports, we held certain statutes, which attempted to remove all presumption of correctness from a jury verdict and from a trial court's judgment, to be unconstitutional as a violation of the separation of powers provisions of the Alabama Constitution, Article III, §§ 42 and 43. Armstrong, 581 So.2d at 421. In Armstrong v. Roger's Outdoor Sports we quoted with approval Cobb v. Malone, 92 Ala. 630, 9 So. 738 (1891):
In Armstrong, we wrote: "In summary, we hold that § 6-11-23(a), § 6-11-24(a), and the parenthetical phrase in the last sentence of § 6-11-23(b) are unconstitutional. Section 6-11-24(b) and the remaining portion of § 6-11-23(b) are constitutional as construed herein." 581 So.2d at 421.
" 'The power to set aside verdicts has been generally regarded in this country as inherent in courts organized upon the principles of common law, though in some States it is regulated by statute, enumerating the grounds upon which a motion for a new trial may be made. The power is essential to prevent irreparable injustice in
cases where a verdict wholly wrong is the result of inadvertence, forgetfulness, or intentional or capricious disregard of the testimony, or of bias or prejudice, on the part of juries, which sometimes occurs. . . .' "
581 So.2d at 419.
In two other cases, this Court had held that statutes enacted by the legislature violated the right-to-jury-trial provisions of the Alabama Constitution. In Moore v. Mobile Infirmary Ass'n, 592 So.2d 156 (Ala. 1991), this Court held that § 6-5-544(b), Ala. Code 1975, which limited the amount of "noneconomic" damages recoverable in a medical malpractice action, violated the right to trial by jury as guaranteed by Article I, § 11, of the Alabama Constitution 1901. This section provides "[t]hat the right of trial by jury shall remain inviolate." Then, in Henderson v. Alabama Power Co., 627 So.2d 878 (Ala. 1993), this Court held that a limitation on punitive damages, such as that imposed by § 6-11-21, clearly impairs the traditional function of the jury, thus violating the right to trial by jury guaranteed by Article I, § 11. In those cases, we said that, under an analysis of § 11, the pertinent question is not whether the right still exists under the statute, but whether it still remains inviolate. 627 So.2d at 885 (quoting Alford v. State, 170 Ala. 178, 197, 54 So. 213 (1910)). Because the majority was convinced that the statutes violated the right-to-jury-trial provision of the Alabama Constitution, it was not necessary in those cases to decide whether those statutes also violated the separation of powers provisions of the Alabama and United States Constitutions. However, it is arguable that these statutes did violate the separation of powers provisions.
Because, under the separation of powers provisions, it is the inherent and exclusive power of the judiciary to determine whether a jury award in a civil case exceeds the amount that the State and Federal Constitutions will allow without violating due process rights, the trial judge in this case, in a post-verdict Hammond hearing, considered the question whether the jury had followed its instructions on the law, as well as whether the verdict was the result of passion or bias in favor of, or against, either side in the litigation. After so doing, he ordered a remittitur of the $15 million award of punitive damages to $12.5 million.
IV. Appellate Review in this Case
We have independently reviewed the evidence in this case, applying the factors set forth in Green Oil Co. v. Hornsby, 539 So.2d 218, 223-24 (Ala. 1989), cited in Pacific Mutual Life Insurance Co. v. Haslip, 499 U.S. 1, 111 S.Ct. 1032, 113 L.Ed.2d 1 (1991), and quoted in Northwestern Mut. Life Ins. Co. v. Sheridan, 630 So.2d 384 (Ala. 1993), including:
" '(a) whether there is a reasonable relationship between the punitive damages award and the harm likely to result from the defendant's conduct as well as the harm that actually has occurred; (b) the degree of reprehensibility of the defendant's conduct, the duration of that conduct, the defendant's awareness, any concealment, and the existence and frequency of similar past conduct; (c) the profitability to the defendant of the wrongful conduct and the desirability of removing that profit and of having the defendant also sustain a loss; (d) the 'financial position' of the defendant; (e) all the costs of litigation; (f) the imposition of criminal sanctions on the defendant for its conduct, these to be taken in mitigation; and (g) the existence of other civil awards against the defendant for the same conduct, these also to be taken in mitigation.'
Haslip, 499 U.S. at 21-22,
111 S.Ct. at 1045."
Northwestern Mut. Life Ins. Co. v. Sheridan, 630 So.2d at 393.
We conclude, as did the trial judge, that the conduct of this defendant was egregious and reprehensible and resulted in a great financial hardship to some of the most vulnerable members of our society. Life of Georgia fraudulently sold policies to people on Medicaid that were totally worthless to the victims of the fraud. Life of Georgia had no risk under these fraudulently sold policies. The practice was a sham and would never have been permitted in this state if the activities of insurance agents were properly regulated. However, as reprehensible as Life of Georgia's conduct was, it is not the most odorous this Court has been required to review. Without in any way condoning the conduct, we nevertheless are compelled, when comparing this conduct with other acts perpetrated upon Alabama citizens, to reduce the award against the defendant Life of Georgia to $5 million. Pacific Mutual Life Insurance Co. v. Haslip, 499 U.S. 1, 111 S.Ct. 1032, 113 L.Ed.2d 1 (1991). It is the opinion of this Court that $5 million is not excessive for punishment and deterrenee specific to Life of Georgia, considering all of the facts of this case.
Justice Maddox in his writing, concurring in part and dissenting in part, has attached statistics appearing on pages he designates as Appendix A to his special writing, and he cites the data included on those pages. Those pages appearing as Justice Maddox's Appendix A were not authenticated and were merely attached to a brief filed in this case. The writing on those pages has no probative value.
V. Prospective Application of the Procedures Announced in this Case
The new procedures announced in this case shall be applied in all cases in which punitive damages are sought (excluding all actions for wrongful death) which are filed more than 90 days after the certificate of judgment issues in this case. We are persuaded by the arguments of both parties that these new procedures, including allocation of part of the punitive damages award, should not be applied in this case or in any other case filed within 90 days after the issuance of the certificate of judgment in this case. Inevitably, the new procedures announced here will affect settlement negotiations, and they may, as suggested by some amici curiae, promote more settlements. These and other considerations convince us that these procedures should have prospective effect only. Accordingly, we hold that the procedures announced in this opinion shall be applied in all punitive damages cases (excluding wrongful death cases) filed more than 90 days after the certificate of judgment issues in this case.
Summary of Holdings I. Bifurcation
The trial of all cases in which punitive damages are sought (excluding cases based upon wrongful death causes of action), that are filed more than 90 days after the certificate of judgment issues in this case, shall be bifurcated. The jury shall first determine liability and the amount of compensatory damages, if any. The plaintiff must prove a prima facie case of conduct supporting an award of punitive damages, and the jury's decision must be based upon clear and convincing evidence. If the jury finds against the defendant, it will also decide, by a special verdict, whether the evidence justifies the imposition of punitive damages. If the jury returns the special verdict in the affirmative, the trial shall resume.
In the second part of the trial, all evidence shall be admitted that is relevant to the question of what amount would be appropriate to accomplish the purposes punitive damages were designed to serve, and it shall be admitted in accordance with § 6-11-23(b), which provides:
"(b) In all cases wherein a verdict for punitive damages is awarded, the trial court shall, upon motion of any party, either conduct hearings or receive additional evidence, or both, concerning the amount of punitive damages. Any relevant evidence, including but not limited to the economic impact of the verdict on the defendant or the plaintiff, the amount of compensatory damages awarded, whether or not the defendant has been guilty of the same or similar acts in the past, the nature and the extent of any effort the defendant made to remedy the wrong and the opportunity or lack of opportunity the plaintiff gave the defendant to remedy the wrong complained of shall be admissible; however, such information shall not be subject to discovery, unless otherwise discoverable, until after a verdict for punitive damages has been rendered. . . ."
All evidence that has heretofore been admissible at post-verdict Hammond/Green Oil hearings, can be introduced under this new procedure, before the jury retires to consider its punitive damages verdict. However, the fact of the existence of liability insurance and the amount thereof cannot be disclosed to the jury. In addition, the discovery of financial information concerning the defendant will be limited as provided in § 6-11-23(b) and shall be limited to information that is relevant to the issue in the case. The net worth of the defendant may or may not be relevant, depending upon the nature of the case. Again, we reiterate that a defendant is not to be punished for its size or its success; instead, it may be punished only for the tortious conduct proved in the trial of the case. This new procedure is intended to allow the jury to decide, based upon all the evidence that is relevant to that inquiry, the award that the specific defendant before the jury should be required to pay as punishment for the specific conduct made the basis of the action.
If the punitive damages verdict is challenged in a post-verdict motion as excessive or inadequate, it must still be considered by the trial judge through the procedures set out in Green Oil Co. v. Hornsby, supra, and Hammond v. City of Gadsden, supra.
II. Allocation
All punitive damages (excluding all damages in actions based upon wrongful death) awarded by judgments entered as a result of the new bifurcated procedure established by this opinion shall be allocated as follows: After any post-verdict review is concluded by the trial court, and after appellate review, if any, the amount of the judgment as finally determined shall be paid into the trial court. The trial court shall order all reasonable expenses of the litigation, including the plaintiff's attorney fees, paid. In doing so, the trial court will enforce any agreement between the plaintiff and counsel for the plaintiff as to attorney fees. The trial court shall then order the clerk of the court to divide the remaining amount equally between the plaintiff and the State general fund. The State shall have no vested right in any private lawsuit in which punitive damages are sought and shall not be permitted to intervene or participate in any way in the trial or settlement of such cases. Court approval is not required to settle such cases. In the case of settlement, the parties need not designate any part of the settlement as punitive damages, and no part of the settlement proceeds shall be paid into the general fund. In summary, the right of the parties to try and settle any lawsuit is unaffected by this opinion. Settlement of these cases, like all others, is encouraged.
III. Reduction of the Punitive Award
The award of $12.5 million in punitive damages is reduced to $5 million.
IV. Prospective Application
The new procedures announced in this case shall be applicable only to cases in which punitive damages are sought (excluding all actions based upon wrongful death) and only to cases that are filed more than 90 days after the certificate of judgment issues in this case.
Judgment
That portion of the judgment awarding compensatory damages is affirmed. The award of punitive damages is reduced to $5 million. If the plaintiff does not, within 28 days of the date of this opinion, file in this Court a remittitur of $7.5 million, then the defendant shall be granted a new trial.
APPLICATIONS GRANTED; OPINION WITHDRAWN; OPINION SUBSTITUTED; AFFIRMED CONDITIONALLY.
ALMON, HOUSTON, KENNEDY, INGRAM, and COOK, JJ., concur.
HOOPER, C.J., concurs in the result in part and dissents in part.
MADDOX and BUTTS, JJ., concur in part and dissent in part.