Medvalusa Health Programs, Inc. v. Memberworks, Inc.

deeply is jurisprudence, rooted our and embodies a doctrine centuries legal Republic. older than our Ele- mentary considerations of fairness dictate that individu- opportunity als should have an to know what the law is to conform their conduct accordingly; settled expectations disrupted. should not be lightly For that reason, principle legal that the effect of conduct ordinarily should be assessed under the law that existed when place the conduct took has timeless and universal human appeal.” (Internal quotation marks omitted.) State majority opinion, Footnote 8 of the quoting Faraday, 174, 196, 842 A.2d 567 (2004). I would

Accordingly, plaintiffs dismiss the argument history that the should legislative guide us in this matter presumptively because 4-160 (b) prospective under principles statutory held long construction that have informed this court since at least and there is no reason to construe the statute otherwise in the an express provision necessary absence of or implica- contrary. tion to the

MEDVALUSAHEALTH PROGRAMS, INC.

MEMBERWORKS, INC.

(SC 17116) (SC 17117) C. Sullivan, Vertefeuille and Js. J., Borden, Norcott, Katz, Palmer, Zarella, officially released Argued May 17, October Harris, Barbaras. Miller and Robert A. appel- for the 17116, appellee lant Docket No. SC in Docket No. SC 17117 (plaintiff).

Aaron Bayer S. and Jonathan M. Freiman, with Jeffrey Bobbin, R. Kevin M. Smith whom were and, Longer, Robert M. Kevin M. Kennedy on brief, B. Malech, Steven appellee for the in Docket No. SC 17116, appellant in Docket No. SC 17117 (defendant).

Opinion BORDEN, separate J. This case involves two appeals.1 appeal, defendant, the first the MemberWorks, Inc., appeals judgment Superior from the of the Court con firming an arbitration award in favor of plaintiff, the MedValUSA Health Programs, Inc., awarding plain the compensatory $5 tiff no punitive and million in appeal The defendant claims on damages. that the trial court’s confirmation of the arbitration award violated right process its to due under the fourteenth amend ment of the United States and constitution violated the public policy state’s against damage awards. In the appeal, plaintiff appeals second the from the judgment Superior plaintiff of the Court denying prejudgment and interest on postjudgment the arbitra appeal, plaintiff tion award. On claims that the trial court’s decision was an abuse of discretion. We disagree case, defendant, MemberWorks, Inc., appealed In the first SC judgment Appellate from the of the trial court to the Court. In the second case, plaintiff, Programs, Inc., appealed SC MedValUSA Health judgment Appellate from the of the trial court to the Court. We transferred appeals pursuant both to this § court to Practice Book 65-1 and General (c). Statutes 51-199 defendant and claims advanced both the with the respective appeals and, accordingly, plaintiff their Superior of the Court. judgment we affirm the procedural facts and following The record reveals coiporation Connecticut plaintiff The is a background. Flneberg Andrew Bronfman and Andrew formed subscriptions physician, sell discount health care other medi dental, vision, prescription, hearing cally-related targeted segments gen services to public. corporation eral The defendant is a Connecticut membership service provides programs give variety products consumers access to discounts on many areas, and services in the health care including industry. parties whereby The entered into a contract plaintiff wholesale, to become a nationwide agreed vendor of one of the defendant’s dental and health plans. they contract, After entered into the relations parties deteriorated, between the them to prompting April amend their on agreement 15,1999. amended delayed agreement contract the “start date”2 of the reduced the number of that the plaintiff service units purchase was within months of obligated eighteen the start date. The amendment also the defen changed density dant’s to the number and obligations relating physicians by supple the participating program menting provider the network original (network 1) plaintiff provider made available to the with a second (network 2), plaintiff network to which the would have provided access when network 1 insufficient coverage parties’ within a relationship improve state. The did not and, eventually, plaintiff the notified the defendant that operations it was down its business and “evalu shutting ating options Subsequently, with counsel.” the [its] plaintiff filed a demand for arbitration with the Ameri- 2 parties’ The “start date” is defined the contract as “the date that all readily plaintiff] fulfillment materials and services are available so that [the operations can commence its business hereunder.” 638 contract, for breach of Arbitration Association

can implied good fair faith and the covenant breach of dealing, Unfair Trade a of the Connecticut and violation (CUTPA), § 42-110a et General Statutes Practices Act alleged seq. the defendant had The demand by: (1) agreements original and amended breached failing plaintiff vital information to the to communicate provider (2) failing regarding networks; to ensure provider service networks were sufficient to that the making plaintiffs (3) customers; mis the needs representations the number and distribution about privi admitting physicians 1 in network and about hospitals;3 physicians leges network 1 of network (5) failing withdrawing (4) network; the dental fulfillment, plaintiffs refusing (6) materials;4 deliver requests meetings; (7) refusing to communicate plaintiff writing. plaintiff The other than in with the employed alleged these tac that the defendant further competitive edge purpose gaining over a for the tics began, plaintiff, at a time that the defendant specified offering general to the demand, in the not public membership programs modeled after plaintiff. designed plaintiff panel in favor of the

The arbitration ruled compensatory damages, counts, all but awarded no on plaintiff finding to establish that the had failed certainty. panel found, however, reasonable with engaged in had a number that, because the defendant deсeptive CUTPA, acts in violation of of unfair and provision lOg (a), within 42-1 General Statutes punitive damages, providing for the award of CUTPA justified $5 of million.5The hospital network, Although network did not. network 1 included membership cards and “fulfillment materials” refers to the The term plaintiffs have been made available to the customers. booklets that would may, provides part: 42-110g (a) in relevant “The court § General Statutes may provide equitable discretion, such and in its necessary proper.” relief as it deems or found the acts, as deceptive and defendant’s unfair failure the (1) as follows: may be summarized panel, its communica the nature of plaintiff the to disclose to question which called into with network some tions enter plaintiffs for the availability of that network the the plaintiff to the to disclose prise; the failure (2) history misrepre networks; availability (3) of other contract; under the plaintiff to the obligations its senting timely in a plaintiff refusal to meet with (4) employees its unavailability of one of manner and the plain inform the the failure to calls; (5) for conference from the free dental services about the elimination of tiff plaintiffs to the inadequate responses and its program inquiries concerning requests information, including provide plaintiff failure to services; the dental (6) fulfillment necessitated that elim with new materials timely manner approve in a ination; the failure (7) that all an insistence hospital advertising; (8) lists for and plaintiff writing; be in communications with the of an inaccurate preparation and distribution (9) plaintiff. addition summary meeting of a with plaintiff awarded the panel damages, $70,950 in arbitration $387,794 attorney’s fees costs. to con timely applied to the trial court plaintiff thereafter, Soon the defen-

firm the arbitration award.6 judicial relevant to, had been arbitration or session, may action. The effect in all one of the and the General Statutes correcting General Statutes make judgment parties district part: to any rendered in a civil action in the court in which it is entered. When application award, parties respects judgment “At an award shall to the arbitration notified thereof, any party judge or decree in a civil in which the land is situated or, any providing: resides as, 52-421 time within one § thereof, or decree so entered shall to the 52-417 authorizes or, (b) “The be superior be docketed as if it were rendered in a civil for an order in a subject establishes judgment action; controversy year court for the to all the after an award has been such the effect of confirmation of an or decree and it may confirming a motion and provisions have the same force and concerning when the court judicial district confirming, modifying the award. be enforced as if it to the arbitration of law land, provides rendered in which is not in ...” relating for the vacate the award on three grounds: (1)

dant moved to public policy, the award violated Connecticut embodied process in the due clause of the fourteenth amendment exces- States, against of the constitution United awards; the award violated punitive damage (2) sive public policy against awarding damages reckless, in the absence of intentional CUTPA actions award misconduct; (3) or wanton and disregard patently evidenced a manifest or irrational law in Statutes application of the violation of General denied the defendant’s 52-418 The court (a) (4). plaintiffs application and granted motion to vacate Subsequently, to confirm the arbitration award. in a separate plaintiffs the court denied the motion ruling, postjudgment interest. These prejudgment history appeals procedural followed. Further facts and necessary. will be set forth where

I trial improperly The defendant claims that the court the arbitrator’s award because the award of confirmed was excessive: in violation of the punitive damages (1) process defendant’s to due under the fourteenth right constitution; (2) amendment to the United States .7 public policy in violation of well-defined Connecticut any requires performance payment the award other act than the may money, judge entering judgment or the court or decree direct provided enforcement thereof in the manner law for the enforcement of equitable decrees.” plaintiff properly argues that these claims are not before this court argue panel because the defendant failed to to the arbitration that the failure compensatory place to award should a limit on the amount of panel Regarding that the could award. the defendant’s public policy claim, however, already stated, we have Schoonmaker Cummings Connecticut, P.C., 416, 430, & Lockwood 747 A.2d question (2000), that “often the of whether [an] [violates policy] Thus, will not arise until after the award has been rendered. . . . case, regarding no defer such there would be reason to to the arbitrator question might proceeding.” not have been considered in the arbitration process claim, (Citations omitted.) for the defendant’s due it is As because premised judicial award, upon confirmation of the arbitration the defendant an arbitration that, conclude because We We disagree. action and is not con not constitute state award does by the trial court’s confirmation verted into state action award of panel’s an arbitration award, of that process clause, due implicate does not the may the award be. Further of how excessive regardless because Connecticut does not more, that, we conclude the award of public policy against a well-defined have the award does not violate punitive damages, public policy.

A claim that the arbi We first address the defendant’s violated its right trator’s award of the award was excessive. See process to due because v. 517 U.S. America, Gore, BMW North Inc. generally L. Ed. 2d 809 559, 1589, (1996). 116 S. Ct. 134 protections rights of individual and liber constitutional Edmonson v. only ties extend actions. government 2077, 111 S. Ct. Co., 614, 619, Leesville Concrete 500 U.S. Tribe, 114 L. also L. American (1991); Ed. 2d 660 see p. Ed. 1688. Since (2d 1988) 18.1, Constitutional Law Stanley, rights cases; the civil see United States 3, 4, 18, U.S. 3 S. Ct. 27 L. Ed. 835 the United (1883); pri Supreme that, against States Court has maintained conduct, discriminatory vate “however or wrongful .. . the offers no shield.” [fourteenth [a]mendment quotation marks Jackson v. Metro (Internal omitted.) politan Co., 345, 349, 449, Edison 419 U.S. 95 S. Ct. L. (1974). Therefore, determining Ed. 2d 477 whether process a claimant’s due have been rights violated, inquiiy threshold is whether the conduct challenged inquiry quite constitutes state action. This becomes is complicated when, present case, as the actor entity. private Lynch a See Cremin Merrill Pierce presented panel. Therefore, could not have this claim to the arbitration both properly claims are before this court. Smith, Inc., Fenner & Sup. 1460, (N.D. 957 F. question case, In such a (citing cases). Ill. 1997) question “fairly is whether the conduct becomes Lugar Co., v. Edmondson Oil attributable” to the state. L. 937, 102 (1982). S. Ct. 73 Ed. 2d 482 457 U.S. currently employs Court Supreme The United States whether the conduct of part a two test to determine “First, fairly attributable to the state. private actor is by caused the exercise of some deprivation must be by by the or a rule of privilege or created right [s]tate whom person or imposed conduct [s]tate Second, party . . . responsible. [s]tate person must be a who deprivation with the charged In order to may fairly be said to be a state actor.” Id. actor, a state the court determine whether the actor is “the extent to which the actor relies on must consider: Tulsa see benefits, assistance and governmental Profes Services, Pope, Inc. v. sional Collection 485 U.S. 478 Burton v. L. 2d 1340, (1988); S. Ct. Ed. 565] [108 Parking Authority, 365 U.S. 715 S. Ct. Wilmington [81 per whether the actor is 856, (1961); 6 L. Ed. 2d 45] Terry function, see governmental a traditional forming Adams, 809, S. Ct. 97 L. Ed. v. 345 U.S. 461 [73 1152] Alabama, Marsh 276, v. 326 U.S. 501 S. Ct. (1953); [66 Arts & cf. San Francisco L. 2d (1946); Ed. 265] Comm[ittee], Athletics, Olympic Inc. United States v. 2971, Ct. 97 L. Ed. 2d [544-45, 483 U.S. 522 107 S. 427] injury whether the caused is aggravated (1987); author unique way governmental the incidents Shelley Kraemer, 836, v. 334 U.S. 1 S. Ct. ity, see [68 Edmonson Leesville Concrete L. (1948).” 92 Ed. 1161] considera Co., supra, Applying 500 U.S. 621-22. these act of present case, to the we conclude that the tions Court in the arbitration Superior confirming award into state action. did not convert the arbitratiоn not that the arbitration argue The defendant does or on assistance or benefits panel government relied Indeed, function. governmental a traditional performed has relied instance in which a claimant we can find no panel on dependence by an arbitration on a claimed benefits, and federal courts assistance and government consistently rejected government the “traditional have that an support concluding as function” argument v. Prudential actor. See Davis arbitrator was a state 1995) Cir. (11th 59 F.3d Securities, Inc., argues the defendant Instead, (collecting cases). award ren- confirmation of the Superior Court’s action panel of the arbitration state dered the decision judicial action, the award in the absence of the because, Therefore, only Edmonson would be unenforceable. judi- present to the case is whether factor relevant arbitration award constituted cial confirmation of the authority uniquely aggra- government an incident of injury. vated the defendant’s claimed Kraemer, supra, 334 U.S. is the Shelley Because upon any advocating principal argument case relied actor’s conduct becomes state action private injury on the of the claimed alleged aggravation based way by in a the incidents of unique governmental authority, helpful proce it is to review the factual and Shelley of that case.8 involved a background dural covenant, by restrictive which was to white land agreed any minorities from owners, occupying to exclude subject fifty-seven parcels the of land that were to the Shelley per 4-5. The defendants in were Id., covenant. purchased sons of African-American descent who had subject parcels. Id., the land from an owner of one of parcels subject ‍​​​‌​​​‌​​​‌​​‌​‌‌​‌​‌‌‌‌​‌​‌‌​‌‌​‌‌​‌​‌​​​​​​​‌‍owners of other plaintiffs, 5. The covenant, court, restraining the sued in state seeking possession order the defendants from preventing taking actually separate cases, Shelley involved two the second of which materially Shelley involved that were not distinct from the first case. facts reference, only Kraemer, supra, ease we forth the 334 U.S. 6. For set facts the first case. seeking judgment divesting title from

of the land and revesting the defendants and title with the immediate by person grantor or some other as directed the court. requested The trial court denied the relief on the Id., 6. ground agreement never final and that the had become complete parties because it was the intention of the agreement the that it was not to become effective until by property signed owners, all the a condition that had Supreme The Court of Missouri never been realized. Id. judgment court, reversed the of the trial held covenant was effective and did not vio- the restrictive any rights guaranteed late to the defendants Supreme federal constitution. Id. The United States judicial holding that enforcement of a reversed, Court state restrictive covenant constituted action and rights the covenant violated the defendants’ under the equal protection clause of the fourteenth amendment. judi- reasoned that the action of the Id., 20. court ciary was state action because “but for the active inter- supported courts, vention of the state the full panoply power, [the defendants] of state would have occupy properties question been free to without Id., restraint.” 19. judicial glance,

At first confirmation of an arbitration pattern perfectly. Shelley Judicial confir- award fits the indisputably government an mation is exercise of authority. (actions id., See of state courts and state purposes officials are state action for of fourteenth just amendment). as with the restrictive Furthermore, Shelley, the arbitration award at issue in covenant present had no effect without case would have “supported by courts, active intervention of the the full panoply power Id., Therefore, . . . .” 19. of state analysis guided reasoning same “but for” compel Supreme Shelley would seem to Court judicial the conclusion that the confirmation of an arbi- Shelley’sprece- tration award constitutes state action.

645 least however, at authority proposition, for this dential covenants, racially of restrictive outside the context a landmark praised as Although questionable. at best subject Shelley has also been decision,9 rights civil Indeed, many com- controversy and criticism.10 of much 9 Anniversary: Keeping; Saxer, “Shelley ‘ATime for v. Kraemer's Fiftieth S. ” Away?’ 61, (1998) (noting Throwing that Kan. L. Rev. 83 a Time for 47 U. expansion “Shelley action doctrine as an of state has been celebrated by private restricted constitutional discrimination to be which allows Opinion,” norms”); Henkin, “Shelley 110 Notes for a Revised L. v. Kraemer: promise Shelley (1962) (noting as the was “hailed U. Pa. L. Rev. 473 individual”). another new deal for the 10 Anniversary: Keeping; Saxer, “Shelley ‘ATime for S. v. Kraemer’s Fiftieth ” Away?’ 61, (1998) (noting Throwing a Time 47 U. Kan. L. Rev. 83-84 Shelley’sexpansion criticized because of state action doctrine has been potential private action); to state see also P. of its to convert all action Equal Kurland, Supreme Origin in “The Court 1963 Term—Foreword: Equal Government,” Legislative in Title to the and Executive Branches of the 143, Shelley (1964) (referring L. as “constitutional law’s 78 Harv. Rev. 148 Phoenix,” Finnegan’s Wake”); Graglia, L. “State Action: Constitutional 777, reasoning Shelley (1989) (describing Wash. U. in as “discon- L.Q. clarity certing belief and the because it illustrates with stark both the [c]ourt’s exempt any requirement opinions sense”). truth that it is from that its make Moreover, worry consequences Shelley’s Shelley’s should critics about opined reasoning example, be extended. For Professor Lawrence Tribe has “consistently applied, require Shelley’s reasoning, if would individuals whenever, private agreements to conform their to constitutional standards security always, might potential as almost the individuals later seek the judicial Tribe, supra, proposes enforcement.” L. 1697.One author the follow hypothetical: ing “[Neighbors, zoning regulations, could the absence stop operation dancing not of an adult bookstore or anude establishment community through private in their either the use of covenants or nuisance by protected [fjirst [ajmendment.” law because such activities would be Saxer, supra, S. 47 U. Kan. L. Rev. 65. Another commentator indicates that fundamentally Shelley grounded paradoxical the flaw of is that it is on a principle: may properly charged with . . . discrimination “that the state be give agreement when it does no more than effect to an that the individual entirely Henkin, “Shelley is, hypothesis, involved free to make.” L. Opinion,” (1962). Kraemer: Notes for a Revised 110 U. Pa. L. Rev. Finally, author, commenting expansive Shelley’s one on the nature of conception action, by private “every engaged action state notes that person compelled, prohibited, permitted, i.e., authorized, is either or legal system person added.) (Emphasis within which that lives.” G. Buchanan, History Conceptual “A Search of the State Action Doctrine: The Responsibility (1997). (Part II),” for Governmental 34 Hous. L. Rev.

646 Shelley speculate holding that the of has been mentators effectively e.g., Buchanan, G. See, to its facts. confined Conceptual History Action Doctrine: “A of the State Responsibility (Part II),” for Governmental Search (1997). 665, 34 Hous. L. Rev. 724 Supreme survey subsequent States Court A United Shelley supports this conclu- have discussed cases that Shelley expressed has criticized sion. The court holding, extending its most reservations about expressly Bray v. Alexandria Women’s Health in 753, Ct. 122 L. Ed. 2d Clinic, 263, 266, 506 U.S. 113 S. (1993), abortion clinics and other a case in which 34 groups sought enjoin antiabortion demonstrators Washington, demonstrating in D.C. In from at clinics concurring responding and dis- to Justice Souter’s majority senting opinion, he had relied asserted that proposition during Shelley the sit-ins on for Rights Act, before the Civil 1960’s, was, “there even occupation.” physical (Emphasis legal warrant for the majority original.) then continued: Id., 282 n.14. The “Any upon argument driven to reliance an extension obviously in serious trouble.” Id. that volatile case is minimal criticism, this direct the court’s In addition to precedent Shelley evinces the court’s reliance on аs beyond Shelley’sholding the con reluctance to extend years, text of racial discrimination. Over primarily part Supreme Shelley Court has cited to as introducing problem general language state only proposition the basic state action action, subject amendment strictures and that to fourteenth discriminatory, private is not action, no matter how scrutiny.11 subject More extensive dis- to constitutional American ^[538] S. Ct. ^[11] Morrison, See, U.S. 188, 196, e.g., Cuyahoga Manufacturers 529 U.S. 598, 621, L. Ed. 2d 130 123 S. Ct. Falls Mutual (1999). 1389, v. 120 S. Ct. Buckeye Community Hope Foundation, Ins. Co. ^[155] L. Ed. 2d 1740, Sullivan, ^[349] L. (2003); 526 U.S. Ed. 2d United States ^[658] 40, 50, 119 (2000); in concur appeared have Shelley generally missions of example, opinions. For majority, rather than ring, 267, 268, U.S. 83 S. Ct. Louisiana, Lombard v. African-American students 10L. Ed. 2d 338 three (1963), at a whites student, sitting one white who were owned restaurant only privately lunch counter at a leave. When the students Orleans, New were asked to they subsequently convicted refused, were arrested Id., challenged of criminal mischief. 269. The students of the fourteenth amend their convictions as violative city requiring ment. there were no ordinances Although Supreme of the Court majority opinion the segregation, in the of the requisite found the state action actions city officials, establishing who had issued statements Id., a local custom of 270-73. After similar segregation. place city earlier, occurrence had taken in the one week days mayor stated, prior of New Orleans four super arrest, the defendants’ that he had instructed would police intendent of that no additional sit-ins be “permitted.” Id., majority opinion interpreted 269. The this statement and others as a coercive effect having private concurrence, on In his Id., individuals. 272-73. however, imposition Justice focused on the Douglas penalties criminal on the defendants the Louisiana judiciary. Id., Shelley 278. Justice relied on Douglas any that, independent conclude actions of the executive, judiciary’s penal actions in imposing ties constituted sufficient evidence state action. Id. 227,

In Bell v. Ct. Maryland, U.S. 84 S. 12 L. Ed. 2d 822 demonstrators who (1964), engaged privately a sit-in at a owned restaurant were arrested for trespass. Maryland Appeals The Court of affirmed the convictions, Supreme and the Court certifi- granted Id., Maryland cation. 228. however, sub- legislature, sequently passed a statute that made it unlawful for deny restaurants to person service to a because of his or her race. Id., majority, therefore, 228-29. The to the the case and remanded

reversed the convictions of whether for consideration Maryland Appeals Court of super- light be nullified should the convictions in his Id., Douglas 228. Justice of law. vening change reached the however, would have opinion, concurring majority 242. Id., Admonishing merits of the case. others,” the conflict to “resolution of leaving was created stated Douglas Justice “[t]he [c]ourt days.” peaceful as in times as well in troubled to sit concurring). concluding J., Id., (Douglas, Maryland as well as other judiciary, the actions of finding for a a sufficient basis actors, formed state action alone judicial action, he first noted state of state finding for a considered sufficient had been confes- the use of coerced involving in “cases action Ct. U.S. 227 S. Florida, Chambers (e.g., sions [60 indigents denial to 716 the 472, (1940)]), L. Ed. 84 judicial proceedings (e.g., in equal protection Griffin 100 L. Ed. 891 585, 12 S. Ct. Illinois, v. 351 U.S. [76 in for punishing of state courts and the action (1956)]), California, Bridges contempt by publication (e.g., L. Bell 190, (1941)]).” 86 Ed. 192 252 S. Ct. 314 U.S. [62 J., concurring). supra, (Douglas, v. Maryland, Negroes action these said, “Maryland’s against he Bell, in any case where the as was as authoritative [s]tate policy. its full force behind way puts another one or places public in was policy segregation The here Maryland enforced accommodation; Id. and her courts.” prosecutors, her police, with her Maryland courts to judicial action of the the Likening Shelley, Douglas in Justice the Missouri courts that of let state courts enforce “Why we refuse to asked, should cities but let state areas of our apartheid in residential If a court in restaurants? apartheid courts enforce case, it is in the other.” state action in one decree is rely should on added that the court Id., 259. He then cases,” “holding “restaurant resolving Shelley [ajmendment requires that what the [fourteenth requires restrictive covenant cases it also in restau- rants.” Id.

Only majority once opinion Shelley has discussed any length—in Abney, at order to it. Evans v. distinguish 435, 436, 628, 396 U.S. 90 S. Ct. 24 L. Ed. 2d (1970), trust, arose from a created in his will Senator A.O. Bacon of Macon, Georgia, city land to the leaving only park. city initially use as a whites The operated park according devise, Senator Bacon’s but after the Supreme Court decision in Brown v. Board Edu cation, 347 U.S. 74 S. Ct. L. 686, 98 Ed. 873 (1954), city recognized that it could no longer constitution ally operate park as segregated. Abney, Evans supra, 437. When the case came before the court for time, city the first had been removed as a trustee private appointed. trustees had been Id., 438. Never theless, Newton, Evans v. 296, 297-98, 382 U.S. S. Ct. 15 L. Ed. 2d 373 (1966), court ruled park that the had to be treated as a institution regardless of who held title, remand, and on Supreme Court of Georgia held that the trust failed purpose because its fulfilled. could no longer be Evans v. Abney, supra, 438-39. The court Georgia further con cluded that the trust could not be saved the doctrine cy pres and that title in the land therefore reverted Id., the heirs. 439. petitioners, African-Americans who had intervened in case, claimed that the deci sion of the Supreme state Court violated their rights to process equal due and protection under the fourteenth Id., amendment. 437. Supreme The Court affirmed the decision of the state court and concluded that there was no violation of the fourteenth amendment. Id., 446. this distinguishing case from Shelley, majority noted that “the effect of the Georgia decision eliminated all discrimination against Negroes park in the by elimi park nating itself, and the termination of park equally by white citi- Negro was a loss shared a enjoyed both would zens of Macon since races have equal to the facili- park’s access right constitutional other Id., Shelley, had it 445. on the ties continued.” judicial action which had affirma- hand, involved “statе tively private a of discrimination enforced scheme By contrast, Justice Brennan Id. against Negroes.” similarity between Evans emphasized his dissent Shelley. is a of a state court’s enforce- case “[T]his prevent parties willing ment of racial restriction to of the from with one another. decision dealing thus, Shelley [supra, under Kraemer Georgia courts pro- 1], equal U.S. state action denying constitutes Abney, supra, (Brennan, J., dis- tection.” Evans with the dissent, Justice Brennan’s contrasted senting). majority’s emphasizes further the reluctance reasoning, beyond realm of Shelley of the court to extend any apply private restrictive covenants to to and all dependent are on court enforcement agreements that in order be effective. Court law does Supreme

Our conclusion that case Shelley to support not the extension of the context judicial confirmation of an arbitration award further the various state and federal supported whether state action exists courts have considered universally, Almost courts under such circumstances. judicial arbitra have concluded that confirmation of an to convert the action of an tion is not sufficient example, arbitrator into state action. For the Seventh Appeals no state action Circuit Court found equal her plaintiff case where the claimed that right because her protection had been violated arbitration panel contained no women. The court noted that arbi remedy.” is a v. Ameri “private self-help tration Smith Assn., Inc., 233 F.3d Cir. (7th can Arbitration fact Moreover, reasoned, it that the courts 2000). “[t]he just they as contracts, enforce enforce [arbitration] contracts, other does not convert the contracts into equal protection state or federal action and so bring play. clause into . . . This is not Shelley Kraemer [supra, 1], or Marsh v. Alabama, 501, U.S. 326 U.S. 66 S. Ct. 90 L. Ed. 265 276, (1946), cases which the private enforcement of contracts had the effect of estab private lishing governments exercising governmental power delegation under from the state.” Smith v. Amer Assn., Inc., supra, ican Arbitration 507. Similarly, Appeals Eleventh Circuit Court of concluded in Davis Securities, Inc., supra, Prudential 59 F.3d 1186, that judicial enforcement of an arbitration award did not convert the award into state action. In Davis, as present case, the defendant claimed that an arbitrator’s award of damages violated the defendant’s right process judicial to due and that the confirmation of the award necessitated of state action. finding Id., 1191. In rejecting the defendant’s argument, the Elev enth Circuit noted that “the holding Shelley . . . has not been beyond extended the context of race discrimi nation.” Id. In fact, reasoned, court Supreme had, Court since Shelley, narrowed the concept of state action, prompting other courts addressing identical issue to decline to find state action based on Shelley's reasoning. Id., 1192.

Other courts that have directly addressed this issue have arrived at the same See, conclusion. e.g., Cremin v. Merrill Lynch Pierce Fenner &Smith, Inc., supra, 957 F. Sup. 1469 (court confirmation of arbitrators’ decision was not state United States v. action); American Soci ety Composers, & Publishers, Authors Sup. 708 F. 95, 96-97 (S.D.N.Y. 1989) (mere approval court of arbi tration was not state cf. action); Glennon v. Dean Witter Reynolds, Inc., 1994 U.S. Dist. LEXIS *43-44 Tenn. (M.D. December 1994) (question of whether judicial confirmation constitutes state action is moot because court will only confirm if it finds that arbitra-

652 Saw not constitutional rights); tor’s award does violate Reed, & Inc., telle Waddell App. 103, v. 304 Div. 2d Y.S.2d 264 that “there 109-10, (2003) (recognizing 754 N. ample authority proposition private for the that a implicate process arbitration does not due concerns in voluntarily participated since, parties where the have involved, there is no state action process, the arbitration of judicial even confirmation not in the but see Commonwealth Associates damage award”);12 Letsos, (S.D.N.Y. 1999) v. F. 2d 177 n.37 Sup. 170, 40 Davis in dicta noting (criticizing “[w]hile private arbitration do not consti procedures utilized of aрplication state . . . the the coercive tute action power of court to confirm and enforce an arbitration a omitted]);

award is another matter” arguably [citation Corp., Knepp Acceptance In re v. Credit 821, B.R. 229 Davis, Ala. but (Bankr. 1999) (following 840-41 N.D. on law articles criticizing opinion dicta based review arbi judicial compelled that claim that confirmation Birmingham News state action); tration can constitute Horn, Co. 1293993, WL *37 (Ala. 2004) (distin criticizing Davis). guishing by upon None of cases relied defendant repeatedly applied has Supreme that the Court arguing private of a actor Shelley’s converting rule the conduct an judicial into state via enforcement involves action the third Edmonson factor—that is, application may imputed whether action be the conduct state injury claimed was private aggra- of a actor because the way by governmental in a incidents of unique vated way of authority. several of these cases We discuss authority Sawtelle, recognizing weight supports the that the while judicial arbitrator’s not con- conclusion that confirmation of an award does Gore, action, America, state concluded that BMW North Inc. v. stitute applicable supra, 559, challenge to a to such an 517 U.S. was nevertheless award, “provides guide determining an whether such because Gore Reed, Inc., App. supra, Div. award is Sawtelle Waddell & irrational.” 2d 110. principal For cases instance,

illustration. one v. Sulli- upon defendant, relied New York Times 11 L. van, (1964), 376 U.S. 84 S. Ct. Ed. 2d 686 any attempt impute did not involve state action to private only question actor’s conduct. The state action presented in that case was whether the Alabama courts’ application petitioner’s of a state rule of law violated the first and fourteenth amendment rights. Id., 265. private a actor had Although brought action, the civil the court did not petitioner’s consider whether the action in the lawsuit constituted state action or bringing was converted to state action the judg- Alabama courts’ ment, presented because that issue was not in the сase. In other words, petitioner’s it was not the action in the suit that bringing injury, constituted the but the state court’s in ruling Thus, favor of him. Sullivan is present not analogous case, wherein the claimed injury underlying private resulted from the conduct of a panel. actor—the arbitration Similarly, Cohen v. Cowles Media Co., 663, 501 U.S. 668, 2513, S. Ct. 115 L. Ed. 2d 586 which a (1991), private involved cause of action promissory estoppel, simply followed ‍​​​‌​​​‌​​​‌​​‌​‌‌​‌​‌‌‌‌​‌​‌‌​‌‌​‌‌​‌​‌​​​​​​​‌‍Sullivan in application that “the holding of state rules of law in state in courts a manner alleged [fjirst to restrict [ajmendment freedoms constitutes ‘state action’ under [fjourteenth [ajmendment.” Just as in Sullivan, in Cohen, presented the issue was not and the court did not address whether private the conduct of a actor was converted into state action actions the court— only question was whether the action of the court itself constituted state action. The other authorities upon by relied the defendant are also distinguishable. Lugar v. Edmondson Oil Co., supra, 941-42, 457 U.S. for example, the court premised its finding state action, in parte the context of ex prop- attachment of erty, on the fact private that the actor at issue case “jointly” acted with the state—not on a finding private

that the state authorized the actor’s conduct. Snia upon by defendant, Two relied other cases Corp., Finance Family dach 337, v. 395 U.S. 89 S. Ct. Shevin, Fuentes 1820, 23 L. Ed. 2d 349 (1969), Ed. 2d 407 U.S. S. Ct. 32 L. (1972), context actions garnishment both arose in the attachments, specific line of cases that prejudgment Lugar. Although not, the court did either culminated in Fuentes expressly ground finding Sniadach or in its Lugar “joint analysis, later state on a action” action resting exactly cases on that characterized those as theory in at the that “whenever arriving conclusion jointly act with creditor in secur officers of the [s]tate require state property dispute,” action ing Oil Lugar Co., Edmondson supra, ment is met. 932-33.

B the award The next claims that arbitration defendant public policy against violates Connecticut awards, grounded in Connecticut com- punitive damage States, the mon law in the constitution of United America, Gore, BMW Inc. v. North interpreted by as of The further supra, U.S. 559. defendant contends 517 policy applies equally judicial this to and arbitration awards. disagree. We It applicable

We the standard of review. begin with was undisputed is that the submission arbitration “ voluntary Generally, par- the and unrestricted.13 [w]hen 13 provides: excep- parties’ The clause of the contract “With the arbitration injunctive seeking other of Informa- tion of or relief for violation Confidential any party above, dispute arising pursuant of a to Section of or tion C [out] arbitrability any relating relating Agreement, including issues or to this clause, finally scope by settled arbitration will be arbitration this . rules of the Arbitration . . accordance with the American Association upon judgment rendered the United Arbitration Act and States jurisdiction. by may by any arbitrator(s) be court with entered metropolitan Stamford, arbitration will held in the CT area.” be authority to arbitration and establish agree ties submission, the terms of their through the arbitrator of the award is deline judicial of our review the extent scope parties’ agreement.” (Internal ated Health England State v. New quotation omitted.) marks A.2d Union, 127, 134, 271 Conn. Employees Care is scope of the submission “When (2004). subject award is not to de unrestricted, resulting as the award long novo review even for errors of law so Garrity McCaskey, conforms to the submission.” 1, 4-5, (1992). Conn. 612 A.2d 742 [however] “[W]here a consensual arbitral award on the party challenges policy, and where that that it violates ground basis, colorable de novo legitimate, has a challenge appropriate award is in order to determine review of the public policy.” whether the award does in fact violate & Lockwood Connecti Cummings Schoonmaker cut, P.C., 416, 429, (2000). 747 A.2d 1017 Because the defendant’s claim has a color- legitimate, appropriate. award is basis, able de novo review the may An arbitrator’s award be vacated if it violates public policy. England clear v. New Health Care State Employees Union, suрra, 271 Conn. 134. This rule is judicial exception general restricting an to the rule exception, however, review of arbitral awards. Id. The “narrowly construed and ... is limited to situations interpreted where the contract as would violate some explicit public policy that is well defined and dominant, and is to be ascertained reference to the laws and precedents and not from considerations legal general supposed public quotation interests.” marks (Internal Id., public policy 135-36. “Our view that omitted.) authority exceptions narrowly to arbitral should be con support Paperworkers in . . . strued finds United Union, Misco, International AFL-CIO v. 484 Inc., U.S. 29, 44, 108 364, 98 S. Ct. L. Ed. 2d 286 (1987), [where] Supreme policy United States Court concluded that a machinery by per- operation dangerous against alcohol, or while drugs under the influence of sons permit not a court ‘firmly sense,’ in common did rooted arbitration award.” New Haven to set aside an 530, 411, 417, 208 Conn. AFSCME, 15, Council Local be Therefore, the award must A.2d 186 (1988). public clearly strong violative of “clearly illegal or quotation marks added; internal policy.” (Emphasis Employees Health Care England State v. New omitted.) party Furthermore, challeng- 135. Union, supra, “[t]he illegality burden of proving the award bears the ing clearly public policy is demonstrated.” or conflict with AFSCME, State v. quotation omitted.) marks (Internal 80, 91, AFL-CIO, Council Local A.2d 169 (2001). award on face of a to an arbitral

Thus, challenge step process: in a two engage we public grounds, well-defined explicit, “whether an First, we determine be identified.” public policy (Internal dominant can England State v. New Health quotation omitted.) marks so, Conn. 137. “If Employees Union, supra, 271 Care if the arbitrator’s award violated then [we] [decide] marks Id. quotation omitted.) public policy.”14(Internal upholding argument, the arbitrator’s The dissent’s that our decision policy favoring arbitration, clearly cannot defined award violates inquiry. public policy prong demon- Rather than survive this second issue, following public policy dissent offers the a violation of the at strate decision, parties opt speculation: light will not to include arbitration of our support no evidence in of this in their contracts. The dissent offers clauses likely is, prediction alternative—that and does not consider the more will, instead, opt parties to include in who are concerned about such result caps precludes punitive damages language that either or arbitration clauses judicial subjects altogether, award to review. or an arbitral premised point argument put generally, on the dissent’s is To more language parties engaged negotiation contract will over the notion possibility all, an arbitration clause at because of the decide not to include breach, panel that, the arbitration will render an excessive in the event of a will able to on the award that a court not be overturn judicial exception scope public policy generally to the limited basis of the wholly speculative. assumption As we have of such awards. This review terms—including stated, parties negotiating are over contractual who on arbitral awards vacating waxy about We have been stringent in the “implicit because public policy grounds the rule of exception of this confines and narrow is the notion determinations, to arbitrators’ deference broadly as so interpreted must not be exception that the v. South Windsor Windsor the rule.” South to swallow 15, 800, 255 Conn. 1480, Council Local Police Union (2001). 770 A.2d 14 815, determining variety of sources looked to a

We have public violates a well-defined arbitral award whether an sources, possible cited, examples as policy, and have case law. Schoon decisions and administrative statutes, P.C., Connecticut, Cummings v. & Lockwood maker have in which we 428. In those cases 252 Conn. supra, public policy grounds, on vacated an arbitral award commonly grounded most been policy has public public requiring Rather than the General Statutes. type source, how particular on a policy grounded be party a has satisfied its whether ever, determining negotiate incorрorate be able to over an arbitration clause—will whether to absolutely no reason to assume as well. There is the terms of that clause contract, they that, they will clause in their if want to include an arbitration they appropriate impossible negotiate deem on whatever limits find it judicial powers, scope review of the exercise the arbitrators’ and of puni- potential powers, including award of for an excessive of those damages. tive envisaged Moreover, astronomical awards we believe it relevant that the unlikely. Simply theoretically possible, very dissent, although are hypothe- magnitude award of the because we can conceive of an arbitration likely dissent, to occur. not mean that such an award sized does hypotheses. ought unrealistic We to make rules of law based on not public argument Thus, rests on the dissent’s entire the fact that “ ‘clearly speculative consequences that it fails to makes evident [demon- ” policy. AFSCME,AFL-CIO, Council a violation of the State strate]’ Specifically, 80, 91, (2001). we have 257 Conn. 777 A.2d 169 Local only public policy exception applies when the award is stated that “[t]he clearly strong public policy.” (Emphasis illegal clearly of a or violative England added; quotation omitted.) Health marks State New internal 1199, AFL-CIO, 771, 783, Employees Union, Care District public policy (2003). never found a clear violation of A.2d 729 We have purely speculative premised to do so now. result and decline on the existence of a well-defined demonstrating burden of public policy, inquiry we have instead focused our on policy clearly is in fact dis public whether the alleged purported they cernible in the source. Because establish act, provide of an criminal statutes often illegality public policy. example, a clear for a For in Groton basis America, 35, 36-37, 254 Conn. United Steelworkers of the trial court’s deci 757 A.2d 501 we affirmed (2000), award that sion an arbitration reinstated vacating had employment emрloyee of an who been convicted employer’s following of embezzlement of his funds plea of nolo contendere because the award had violated public policy embezzlement found in Gen against eral Statutes 53a-119 which criminalizes embez (1), § type larceny. public zlement it as a defining policy embezzlement, held, we against “encompasse[d] may employer required that an not be to employment reinstate the of one who has been con employer’s funds, victed of embezzlement of his trial, plea, whether that conviction follows a a guilty plea Id., or a 46-47. We also found nolo contendere.” clearly public policy a dominant and defined in State AFSCME, 387, AFL-CIO, Council Local 252 Conn. 467, 472-73, 747 A.2d 480 where we affirmed (2000), the trial court’s decision to vacate an arbitration award that had ordered the reinstatement of a correction offi cer who had been convicted of harassment under Gen an placing anonymous, eral Statutes 53a-183 (a), § call to a telephone legislator obscene and racist state facility telephone from a correctional while he was on duty had violated the public policy because the award expressed harassment as in the statute. against policy clearly We have also public found defined instance, noncriminal statutes. For in Board Trustees College Teachers, v. Federation Technical A.2d 1247 we trial 184, 187, (1979), affirmed the court’s decision to vacate an arbitration award that had bar of a collective provisions pursuant ordered, plaintiff and the the union between gaining agreement full- colleges, technical for state of trustees board who by the board employed faculty members time accrue fifteen year were entitled to days per worked 171 concluded year. We per leave days of sick in General policy codified violated were faculty members those (a) Statutes 5-247 year. days per sick twelve and one-half only entitled Employ Care England Health v. New Id., 194. Stаte General we held that Union, supra, 271 Conn. ees 17a- and (a) 17a-247b (e), (b) Statutes 17a-238 §§ dominant clearly defined and established (a) 247c retar of mental department protecting of public policy policy mistreatment, and that from dation clients rein ordered the when an arbitrator not violated was to have who was found employee an statement of a client. abused from exclusive source not been the

Statutes have public policy. of found clear statements which we have on one occa- city and, to charters also have looked We In Water- Professional Conduct. Rules of sion, to the Furlong, Assn. 390, 423, 162 Conn. bury Teachers city that a charter we concluded (1972), 294 A.2d 546 to establish a well- a sufficient basis provision provided case, In that we public policy. and dominant defined decision to vacate an arbitra- the trial court’s affirmed retire- contribution to the a teacher’s limiting tion in with pay of her accordance system percent ment decision 425. We our Id., grounded the union contract. provided Waterbmy charter, which on 2731 of the to be made “The rate of contributions part: relevant system shall the retirement participant of a teacher added; internal percent be three pay.” (Emphasis of 422. We with Id., agreed quotation omitted.) marks violated a that the award had conclusion trial court’s 425. In Schoonmaker public policy. Id., clearly stated v. Cummings Connecticut, P.C., supra, & Lockwood we looked to the Rules Professional public policy. Conduct as the source for In that case, plain- we concluded that an arbitrator’s that the finding postemployment tiff had forfeited his right benefits practicing noncompetition law violation of a provi- partnership sion in a did agreement not violate the attorney clients’ access to an facilitating of their choice embodied in rule 5.6 of the Rules Id., Professional Conduct. 418. In analyzing rule 5.6 to implicated discern the nature of policy, we focused purpose on “the of the rule, exрress its language, the manner in jurisdictions which courts other have applied Id., its restriction.” 438. On the basis of that analysis, we purpose concluded that of the rule was to ensure clients the freedom of counsel of their Id. choice. cases,

In other we have found that the statute relied upon public policy as a for the ground alleged was too tenuously subject related matter to constitute a clearly ground public policy. for a defined and dominant v. example, AFSCME, AFL-CIO, For State Council 4, 2663, supra, 81-82, Local we concluded that the state did not meet its burden of proving pay an arbitration award that overtime granted to staff attorneys for the commission on human rights and opportunities violated what the state claimed was a public clear policy professional employ- of prohibiting ees from receiving compensation. overtime In arguing public for the existence of the policy, pointed the state to the Federal Fair Labor Standards Act, U.S.C. 213§ (1), statute, and the related state General (a) Statutes 5-245 (b). AFSCME, AFL-CIO, 4, State Council § supra, Local 90-92. 2663, pur- We concluded that the pose of those statutes is violated when workers are paid less than therein, the amount set forth and that employers purpose do not violate the of the statutes those than with benefits greater employees by providing Windsor case, South In another Id., 93-94. required. 1480, Council Union Local Police Windsor South Court’s Appellate we reversed Conn. supra, and disagreed an arbitral vacating judgment reinstate town to plaintiff which ordered award, for officer police as a position to his member a union of a town’s specific public policy violated “the town, force police its duty the fitness control over We con- omitted.) marks quotation (Internal . . . .” and 7-294d 7-274, 7-276 General Statutes §§ cluded that of Connect- Regulations (j) or 7-294e-16 (a) (10), town’s establish a all of which Agencies, State icut police a board of commissioners authority to establish officers, pro- for town entry requirements level and set public purported basis to establish the vided a sufficient the various statutes analyzing 813-15. policy. Id., they did not establish we concluded that regulations, control over policy that “a town has explicit public an duty police a officer such for fitness for termination (Emphasis had been officer who as terminated].” [the Id., 819. added.) we have that, although

Thus, our case law establishes variety in a public policy grounded to find a willing been to establish sources, party seeking the existence heavy showing burden of policy bears public policy. well-defined and dominant of such a statement of past have in the found clear Indeed, we form, such as a objectively stated some conduct. professional or rule of city charter statute, in such a not decide that a statement we do Although predicate as the for the always required form princi- adhere to the exception, we nonetheless defined “explicit, must be well ple public policy that the marks omit- quotation . . . .” (Internal and dominant Employees Care England v. New Health State ted.) supra, 271 Conn. 137. Union, principles these Applying present case, to the we conclude that the defendant has failed to sustain its panel’s burden of that the arbitration establishing clearly a public pol violated demonstrated Connecticut icy excessive awards. In against damage fact, only panel’s puni statute relevant to the arbitration award of damages supports opposite tive conclusion. The panel’s award was based on the that the finding defen dant violated which CUTPA, expressly allows the award punitive damages, not, express terms, and does its provide capa on damages the amount of awarded. See 42-1lOg General Statutes (a).15 § punitive argues The defendant that the absence of a limit on against backdrop public policy awards in CUTPAmust be read against punitive established common law of this state excessive damage awards. Because we conclude that our case law does not еstablish public policy against awards, reject a well-defined and dominant such we this contention. Moreover, disagree that, previous we with the dissent based on court pursuant 42-110g (a), implied § awards we infer should that this is an punitive damages agree limit on awarded under CUTPA.Even if we were to judicial might involving that a limit such be inferred a case a action based upon CUTPA, question reach, a we do not such an inference would be support clear, public policy insufficient to well-defined and dominant against imposition private, of excessive in a consensual proceeding. rely past arbitration The mere fact that the dissent must on the practices implied punitive the trial such an court limit on the infer CUTPA, damages provision recognizes at the same time that it that other expressly provide supports damages, statutes for limits on our precedents clear, conclusion that our are insufficient to establish a well- public policy against punitive damages. defined and dominant excessive Put way, suggest clear, another it is counterintuitive to that there is a weE- pubhc pohcy may only by defined and dominant that be identified inference sample precedents from a smaE of trial court cases and other that neither expressly clearly imply they pohcy. state nor rest on such a mean, decide, any This not do does and we not arbitral award of punitive damages, grossly excessive, judicial no matter how is insulated from may grossly review. We can that there conceive be such excessive award justified vacating that the court would be it on the basis of the arbitrators’ partiality; (a) (2); disregard evident see General Statutes 52-418 or manifest appeal, however, of the law. The defendant does not claim on that this award fits either of criteria. those necessarily disagree We also with the dissent that our decision means compensatory damage an award wih be unreviewable under America, BMW North contends that

The defendant of public a establishes 517 U.S. Gore, supra, Inc. v. awards. punitive damage policy excessive against that a Court concluded Supreme States Gore, the United remittitur, which, after punitive damages, of jury award in violation of $2 was excessive million, grossly was 574-75. process. Id., 567, to due right the defendant’s only with was concerned Gore, however, The court in fourteenth clause of the process whether the due exces imposing grossly barred a slate from amendment 562. There Id., on a tortfeasor. punitive damages sive presence on the premised decision was fore, the already have found lacking state an element we action, present case. under the factual circumstances public pol a of a supports finding Gore Thus, although punitive excessive icy imposition grossly against an we do not address by state, issue damages a basis for opinion, concluding this it cannot serve as public policy imposi a against that Connecticut has by private actor, tion of excessive panel.16 an arbitration such as by advocated the defendant as a The second source policy exces- public against for ground demonstrating presented, public policy exception. question That is a that has not been argued briefed or before us. solely that, regardless application The dissent contends of Gore’s well-defined, action, domi- state we should infer from that case a clear public policy against general, and con- nant present public policy. Although in the case violates that clude that the award may agree we the constitution be a source of with dissent that appropriate case, application disagree we with the of Gore for in an inference, purpose present in the case. Were we to draw such an we application meaningless would render Gore’s own stated limitation of its requirement. Moreover, circumventing the state action state actors applicable reasoning employed be to other due same the dissent would process protеctions well, including procedural process, paving as due thus way variety private through constitutionalizing a wide conduct analysis. imposition public policy We decline to countenance this indirect private norms on actors. constitutional is the state’s common law. punitive damage sive awards however, and the defendant has found, We have not any clearly or line of decisions produced, not decision of a well-defined and domi demonstrating the existence imposition of excessive public policy against nant punitive Instead, attempts the defendant damages. public policy principles from ‍​​​‌​​​‌​​​‌​​‌​‌‌​‌​‌‌‌‌​‌​‌‌​‌‌​‌‌​‌​‌​​​​​​​‌‍various estab glean practices, our case law and court such as: a lished authority jury to overturn a award as reviewing court’s Gray Fanning, excessive; 115, 117, see v. 73 Conn. power to reduce the amount A. 831 court’s (1900); jury award; 17-3; prohibition Practice Book Hanna jury punitive awards of against damages; Sweeney, 494, 62 A. 785 the limita (1906); 78 Conn. misconduct, puni of wilful or wanton tion, cases attorney’s fees, to the exclusion of damages tive Bodner v. United Services punitive damages; traditional Assn., Automobile 610 A.2d 1212 480, 492, Conn. punitive rule that “common law (1992) (citing general plain are ... in Connecticut limited to damages attorney’s tiffs fees and nontaxable and the rule costs”); penalty contracts, clauses in but prohibiting permitting clauses. Norwalk Door Closer Co. liquidated damages Eagle Co., Lock & Screw 681, 686, 220 A.2d (1966). all of rules evince a con- Although generalized these awards, prac- with the cases and limiting damage cern heavy satisfy tices cited the defendant fail to its burden of a well-defined and dominant demonstrating public policy punitive damages. excessive Put against find in way, simply another we fail to the combination courts, limitations on awards in general damage public policy against kind of well-defined and dominant justify that would setting on the private, aside a consensual arbitration award of the confines and narrow stringent of the basis exception.17 II con- case, plaintiff in this appeal sеcond in denying abused its discretion the trial court tends that interest. postjudgment prejudgment its motion facts are relevant additional following disagree. We plaintiffs claim. to our consideration applied for confirmation plaintiff that the At the time requested prejudgment award, it also of the arbitration The trial Statutes 37-3a.18 § to General pursuant interest did not rule award, but the arbitration court confirmed interest. Sub prejudgment for plaintiffs request on pre seeking motion both plaintiff filed a sequently, the postjudgment to 37-3a and pursuant interest judgment § 52- 37-3a and to General Statutes pursuant §§ interest plaintiffs court denied the In a later ruling, 421 (b).19 interest on postjudgment prejudgment motion support arguments that the defendant’s ground award were not to vacate the arbitration of its motion plaintiffs the court denied Subsequently, frivolous. respect to postjudg with open judgment motion to ment interest. 17 rule, originating in Hanna Thus, disagree with the dissent that the we Sweeney, supra, 494, limiting punitive damages at common law 78 Conn. clear, attorney’s litigation is sufficient to establish fees and the costs of public policy against excessive well-defined and dominant previously, generally. we stated it is counterintuitive To reiterate what clear, suggest and dominant there is a well established implication only may from common-law inference and be identified they clearly imply precedents expressly are based state nor that neither policy. such a on 18 part: “Except pro- provides (a) as § 37-3a in relevant General Statutes per 52-192a, 37-3b, interest at the rate of ten vided in sections 37-3c and more, may year, in civil actions or be recovered and allowed cent a and no 909, including proceedings chapter actions to recover under arbitration money money rate, greater after as for the detention of loaned at a payable. it . . .” becomes opinion. See footnote 6 of this plaintiff that, purpose because the of arbi- argues provide speedy disputes,

tration is to resolution of deference accorded to a trial court’s determi- generally regarding prejudgment postjudgment nation inter- est not adhered to in an should be the context of arbitration award. We disagree.

The decision of whether to interest under 37- grant “primarily equitable 3a is an determination and a matter lying within the discretion of the trial court.” (Internal quotation omitted.) State, marks O’Hara A.2d “In (1991). determining whether discretion, the trial court has abused its we must make every presumption reasonable in favor of the correct- ness of . . . its action. The court’s determination the award of regarding interest should be made view justice of the demands of rather than through appli- . any arbitrary may cation of rule. . . Whether interest be depends money awarded on whether the involved payable . . . and whether the detention of the money is wrongful or is not under the circumstances.” omitted; quotation internal (Citation omitted.) marks v. D’Onfro, App. 543, 550-51, Bower 696 A.2d 1285 (1997). primary

The trial court cited as its reason for denying plaintiffs for pursuant motion interest to 37-3a that the defendant had not wrongfully withheld the money opposition appli- because its in to the arguments support cation to confirm the award and in of its motion to vacate the award were not frivolous. This was an appropriate equitable consideration within the discre- tion of the trial trial decision, court. The court’s there- fore, was not an abuse of discretion. judgment is affirmed. opinion SULLIVAN,

In this C. and PALMER J., KATZ, VERTEFEUILLE, Js., and concurred. joins, dis- NORCOTT, J., whom

ZARELLA, J., with as it holds majority insofar with the I senting. agree an arbitration judicial confirmation that the with and am I disagree state action. does not constitute I B of part majority’s conclusion by the perplexed well-defined not have a this state does opinion its that public policy against and dominant is evident my view, In such awards. damage century and is a founda- nearly a spans in case law that system, includ- dispute resolution principle any tional $5a million I Because believe ing arbitration. of this the circumstances award under punitive damage but also undermines only poliсy, violates that case not arbitration policy encouraging equally well settled respect- I dispute resolution, an efficient method of as fully dissent. facts in order rendition of the expanded

I set forth an proper by this case their place posed the issues attorney, an and Bronfman, Andrew context. decided professional, Andrew a real estate Fineberg, they believed on a business venture to embark subscrip- They planned to sell would be lucrative. highly other medical services physician, hospital tions country who other- persons throughout located health insurance at rea- wise would not have access to vision, Bronfman sonable rates. In order to execute Inc., Programs, formed MedSaver Health Fineberg Health Pro- predecessor plaintiff, to the MedValUSA an agreement entered into grams, Inc., and, MemberWorks, Inc., provides which defendant, with the discounts membership that offer consumer programs care, in the health variety products on a and services Pursuant to that finance and entertainment industries. was to assemble networks the defendant agreement, providers care hospitals and other health physicians, plaintiffs targeted to the that would render services The also preferred agreement constituencies at rates. plaintiff the defendant to deliver to the certain obligated materials,1 provide and and fulfillment to marketing support plaintiffs services to the customers and sales parties invested a substantial Although force. both in energy venture, amount of time and the defendant and to deliver never was able to establish networks satisfactory related materials and services that were plaintiff. its and May, 2000, plaintiff closed business arbitration, claiming thereafter filed a demand for two, respectively, one and that the defendant counts parties’ implied duty contract and the had breached faith fair The also good dealing. plaintiff alleged and the defendant had in unfair engaged count three that deceptivе practices trade in violation of the Con- Unfair Trade Practices Act (CUTPA), necticut General seq. plaintiff sought compen- Statutes 42-110a et The attorney’s satory punitive fees and damages, pursuant CUTPA, interest and costs. panel,

In the before the arbitration proceedings plaintiff perform that the defendant’s failure to argued solely its was not the result of obligations contractual product calculated, but also was the of a ineptitude, plan plaintiffs deliberate to undermine the business visionary concept usurp plaintiffs and to business plaintiff for its own benefit. The asserted that the defen- $39.8 approximately dant’s actions caused it to lose compensatory dam- profits sought million lost plaintiff in that further ages argued amount. compensatory rise to the gave certain actions damage claim also warranted “substantial” damage plaintiff, however, award under CUTPA. The suggest appropriate did not to the arbitrators an dollar membership pro- Fulfillment materials included cards and information plaintiffs duced for the benefit of the members. See footnote 4 of the majority opinion. award, legal amount for that nor did it articulate the by which should be measured. standard it responded that, October, 1999, The defendant as of substantially had fulfilled its under the obligations it parties’ It claimed that the agreement. terms of the was not due to its action or plaintiffs lack of success plaintiffs to the but, instead, inaction was attributable provide a suffi- failure to mobilize its business and to support cient infrastructure to a national sales effort. Indeed, proceed- the course of the arbitration during ings, Fineberg plaintiff admitted that the had not hired any employees, entered into contracts with binding space office or independent contractors, secured adver- product any way. tised its substantial panel plaintiff The arbitration found in favor of the on any compensatory all counts but did not award damages plaintiff because the not established them with “[had] certainty.”2 reasonable the Notwithstanding absence of any proved panel actual awarded the damages, $5 plaintiff million in connection with the defendant’s violation of CUTPA. Although the panel arbitration legal upon did not cite the standards which it relied in determining award, the amount of the it noted several incidents of deceptive unfair and acts that, view, justified its such a result. incidents, These aptly by which are summarized the majority, included: “(1) plaintiff the failure to disclose to the the nature of its communications with original provider net [the work], question some of which called into the availabil ity plaintiffs of that network for the enterprise; (2) failure to plaintiff availability disclose to the networks; history other (3) its misrepresenting plaintiff to the under obligations contract; (4) plaintiff timely refusal to meet with the in a manner and unavailability of one of its employees for conference fact, the arbitration panel did not award even nominal damages. plaintiff (5) about the failure to inform the calls; program from the of free dental services elimination plaintiffs request inadequate responses to the its and plain- provide (6) the the failure to for information ... by that materials necessitated tiff with new fulfillment timely approve (7) in a man- failure to elimination; advertising; (8) hospital an insistence that lists for ner writing; plaintiff and be in with the all communications preparation (9) of an inaccurate and distribution plaintiff.” summary meeting with the of appeal contends that court, to this the defendant On million $5 violates the state’s deeply punitive damages against that the United law of this state and rooted in the common agree. I States constitution. nearly years, to the this court has adhered

For Sweeney, 78 Conn. in Hanna rule first announced punitive damages (1906), A. that 492, 494-95, 62 attorney’s limited to fees common law are under the expenses. adopting litigation rule, In that we and other recognized common-law doctrine that the traditional damages jury to award unfettered discretion affords a only compensate plaintiff for his or her thаt not punish wrongdoer. injury, id., 493-94. See but also prevailed Although rule we observed that the traditional jurisdictions, we nonetheless declined in most general noting was at odds with “the it, that it embrace compensation Id., . . . .” 494. in civil cases rule of punitive damages awarded that Instead, we concluded “expenses plaintiff must be limited to in this state litigation . . . taxable costs.” Id. suit, in the less Nearly years eighty reaffirmed our commit- later, we Waterbury Petroleum common-law rule ment to the Co., & Fuel Inc. v. Canaan Oil Products, plaintiff (1984). in that case had 208, 477 A.2d urged measure to abandon our conservative this court an permit jurisdictions “join majority and [that] ‘punish serves to which ‘punitive’ damages amount reck- wantonly who act wrongdoers and deter’ we observed invitation, lessly.” Id., declining 235. many fac- have discussed authorities “[v]arious mea- and their damages propriety ets of the views.” conflicting have offered civil cases and sure in justifica- various that, “[although Id., 237. We noted punish- of deterrence as the elements tions, such availability of in favor of the have been offered ment, cases remark . . . [c]ountless in the law. never been a favorite such have punitive damage Typically, . . . those who disfavor that such point prospect to the awards in civil cases caprice of the frequently are the result damages may be assessed jurors, damages of that such prejudice no rela- unpredictable are and bear in amounts which of such prospect and that the act, tion to the harmful may chilling have a assessed in such a manner damages internal omitted; conduct.” (Citation effect on desirable quotation marks Id. omitted.) of awards explained that, permitting

We further “[i]n do, as we damages but such punitive damages, limiting payment provides a for the our rule strikes balance—it which would be other- litigation, of a victim’s costs of a clear refer- him, establishing wise unavailable to while jury fairly in at the amount arriving ence to guide our that, “although award.” Id. We also stated of the of the ever one, light rule is a limited when viewed provide in еffect for costs of does rising litigation, [it] in addition punishment and deterrence some element Thus, limiting victim. compensation to the less litigation awards to the costs of damage salutaiy purpose costs, taxable our rule fulfills fully for the harm inflicted on compensating a victim injustice which potential him while for avoiding may the exercise of unfettered discretion result from Berry jury.” Id., years a 237-38. later Eight

Loiseau, 786, 825, Conn. 614 A.2d 414 we (1992), once affirmed our continued adherence to that again nearly Thus, century, rule. we have remained steadfast in our commitment to a common-law measure indisputably one of the most in the nation. conservative backdrop, the legislature this common-law

Against for certain punitive damage has authorized awards catego causes action. These statutes fall into three limit amount of the award to no ries: those that (1) incurred;3 damages (2) more than two times the actual specific, modest, those that albeit dollar designate awards;4 limit for such those that authorize (3) but leave the amount of the award punitive damages, provision to the discretion of the court.5 The of CUTPA present case, namely, at in the General Statutes issue type. provides is of the latter It 42-110g (a), § “[t]he 3E.g., (b) (punitive damage § General Statutes 35-53 awards limited to equal misap- twice actual loss realized from wilful and malicious amount product liability propriation secrets); (in of trade General Statutes 52-240b action, punitive damages equal must “not . . . exceed an amount to twice plaintiff’). awarded to the (punitive damages E.g., (b) (2) § 46a-89 limited to General Statutes discriminatory $50,000 practice dwelling for related to rental or sale of or property provision public accommodations); commercial or in General (d) (punitive damages limited “the lesser of five thousand § Statutes 46a-98 to discriminatory per dollars or one cent of the net worth of the creditor” for practices); (a) (3) (in § General Statutes 52-564a civil action based credit may shoplifting, $300 merchant recover no more than on defendant’s act of punitive damages). in 5 by employee E.g., (b) (in brought alleging § 16-8d action General Statutes misfeasance, retaliation for disclosure of substantial malfeasance or nonfea of, company, “may management alia, public sance in inter service court punitive (e) (“punitive damages”); § award General Statutes 19a-550 dam may ages finding in be assessed” in civil action which there is wilful or deprivation rights patients’ rights); reckless under bill of General Statutes punitive employers 31-51q(authorizing damage against wrong awards who § fully discipline employees exercising discharge or for their constitutional punitive rights); (authorizing damages against § General Statutes 36a-618 banking laws). loan brokers who violate certain may, discretion, court its 42-1 lOg (a).

. . . .” General Statutes § in order to eliminate enacted CUTPA legislature competition “unfair methods discourage or to in the conduct of deceptive practices or acts or unfair Statutes 42-110b any trade or commerce.” General § attorney hampered general that the (a). Recognizing legisla limited staffing, in his enforcement efforts statutory scheme, sought “to ture, design its private litigants help in which to create a climate practices on or acts.” enforce the ban [such] Hinchliffe Corp., 607, 618, v. American Motors objective, advance that A.2d 810 In order to (1981). who establishes CUTPA plaintiff the statute affords a comprehensive more liability remedy “a far [that is] under common simple damages than the recoverable Specifically, plaintiff may 617. a recover both Id., law.” 42-1 attorney’s fees; lOg costs and General Statutes § punitive 42-110g General Statutes (d); damages. under are Accordingly, punitive damages CUTPA (a). merely compensate plaintiff not intended but, rather, harm caused the defendant serve they broader, purpose. First, private twofold foster practices by enforcement of unfair trade providing reasonable incentive to See v. Amer litigate. Hinchliffe supra, Second, they ican Motors 617-18. deter Corp., the defendant and others from future violа engaging See, Tingley Systems, tions of CUTPA. Inc. v. Norse e.g., Inc., 49 Cir. Viewed in Systems, (2d 1995). F.3d implicate this under CUTPA light, public policy they concerns are designed because protect and to vindicate the interest. See Free Management Co., 674, 679, man v. Alamo Conn. 607 A.2d 370 (1992). however, did that legislature recognize, punitive

absence of a definitive standard for measuring under CUTPA could rise to give 674 risk, that safeguard against In order to

awards. authority make such awards vested the legislature Statutes jury; rather than General court, in the it believed presumably because lOg (a) (g); 42-1 likely more to fix dam- a court would be that with are reasonable and consistent at amounts that ages of the statute. goals articulated a formula this court never has Although CUTPA, under awards measuring See traditionally have been modest. past made in cases 103, Div. 2d Reed, Inc., App. & 304 Sawtelle v. Waddell damage 112, 754 (2003) (surveyingpunitive N.Y.S.2d “the awards noting range CUTPA and awards under marks omit quotation $250 $450,000” from [internal Appeals Second Circuit Court of Notably, the ted]). punitive damage that the recently largest has observed “solely without CUTPA for economic loss award under approximately pattern practice allegations of [was] Technologies International, Fabri v. United $340,000.” Cir. Advanced Inc., 109, (2d 2004), citing 387 F.3d Appraisal Ser Services, Inc. v. Associated Financial App. 22, 33, 830 A.2d 240 vices, Inc., (2003). 79 Conn. only does Thus, not finding. Our research confirms public policy law evince a conservative our common Waterbury Petro punitive damages; see stance toward Co., supra, v. Oil & Fuel Products, Inc. Canaan leum Sweeney, supra, 237-38; Conn. Hanna line of decisions so, too, upholding does the ‍​​​‌​​​‌​​​‌​​‌​‌‌​‌​‌‌‌‌​‌​‌‌​‌‌​‌‌​‌​‌​​​​​​​‌‍494-95; under CUTPA. See Sawtelle v. awards punitive damage Div. 112-14 Inc., supra, App. 2d Reed, Waddell & I believe that majority, Unlike the cases). (surveying clearly implies the existence of case law foregoing public policy against a well-defined and dominant punitive damages. imposition of excessive Gore, 517 U.S. America, In BMW North Inc. 134 L. Ed. 2d 809 (1996), 116 S. Ct. 585-86, Supreme grossly Court concluded United States pro- the due awards violate damage to the United amendment of the fourteenth cess clause an plaintiff brought in Gore States constitution. Inc. America, (BMW), BMW of North against action he after Alabama’s fraud statute others, under among from purchased that he had the new car discovered that delivery. repainted prior to and damaged BMWhad been compensatory $4000 in awarded him jury 563. The Id., id., 565; punitive damages; $4 million in $2 reduced to subsequently was latter of which Id., 567. On Supreme Court. by million the Alabama Supreme Court, however, the United States appeal to $2 “grossly the million award was that court held that process, of due therefore, a violation excessive,” and, that its miscon- warning BMW did not have fair because penalty. Id., 574-75. spawn such a severe duct could award the court evaluated the result, reaching reprehensi- “the (1) degree three against guideposts: the “ratio bility conduct”; id., 575; (2) defendant’s inflicted on to the actual harm punitive damages] [of the difference between plaintiff’; id., 580; (3) and the civil or criminal “the comparable miscon- imposed that could be for penalties Id., duct . . . .” 583. that Gore is relevant to its

The defendant contends because it is based on funda- public policy argument that, warning mental notions of fairness and fair law, public “forge strong with the common together puni- substantive limits on awards of placing words, large tive In other if an award is so damages.” that it would violate the constitution if issued a court an award law, then we also should conclude that such public policy when it is made an arbitra- contravenes I panel. Although tion believe Connecticut’s than the set policy is even more restrictive limitations that, I with the defendant at a Gore, agree forth any punitive minimum, damage the state disfavors [e]lementary award that is so it “offends large fairness notice enshrined in notions of [and as] [federal] . . . jurisprudence .’’Id., constitutional 574. In reach I do not hesitate to embrace ing conclusion, consti principles public policy when, tutional as a source of it present case, because, as in the makes sense to do so notes, as the defendant is difficult to cоnceive of “[i]t point public policy a more elemental of for than origin guarantees.”6 nation’s constitutional majority rejects this argument, however, con- in . . . cluding that court Gore was concerned “[t]he only with due process whether the clause of the four- a from imposing grossly teenth amendment barred state a . . . Thus, excessive on tortfeasor. supports public policy Gore of a although finding imposition punitive of against grossly excessive by the state ... it cannot serve as a damages basis that Connecticut has a concluding imposition punitive against private an actor, panel.” such as arbitration (Citation emphasis In an omitted; added.) providing such abbrevi- response argument, majority ated to the defendant’s import fails to consider the broader of Gore in the impact context of this case and disregards of its equally important decision on another policy, namely, arbitration as an efficient and economic favoring system dispute resolution. public policy

In its the defendant does not argument, contend that Gore is relevant to this case because the process substantive due of the United States guarantees apply constitution to the arbitral forum. Rather, defendant invokes the in underlying principles of Gore any support of its claim that damage 6See, e.g., Technologies Corp., 576, 585, Faulkner v. United public policy (1997) (recognizing 693 A.2d 293 can trace its roots to provisions). constitutional satisfy it not even that is so excessive that does grossly standards of fairness and the minimal constitutional irrespective of the forum public policy notice violates I with the defendant for the agree which it is issued. and further note that the previously reasons set forth and notice that the United principles same of fairness process relied on in a due Supreme finding States Court apply arbitration, violation in Gore also the context they even are rooted in a different doctrine. though principle particular, they are inherent the basic any from damages arising contract, contract law that disputes, one to arbitrate must be within the including contemplation parties they reasonable when Garrity McCaskey, enter into the contract. See 1, 11, Conn. 612 A.2d 742 the discre- (1992) (“although by par- tion conferred on the arbitrator the contracting broad, ties is modem contract exceedingly principles faith and fair that even con- good dealing recognize purposes tractual discretion must be exercised for rea- sonably contemplation within the of the contracting punitive A award can be within parties”). damage the contemplation parties only they if had fair warn- they of it when entered into the ing agreement to arbi- trate. Despite parallel concepts, majority, these the while that a excessive dam- conceding grossly award that offends the fairness and age princi- notice ples of public policy by Gore would violate if issued a court of law, concludes that the same award rendered by panel an arbitration would not. simply That does not make sense to me because the latter award provides no more notice and is no less unfair than the former. Thus, analysis in limiting process its to whether the due applies, majority clause the completely ignores the point of the defendant’s argument reaches flawed conclusion that is based on a distinction without difference. meaningful majority’s

I also find it troubling that ill-conceived is not this reasoning case, confined to but extends to by an arbitrator no any punitive award issued damage may rationale, be. Under its matter how that award large $5 $50 award or even a billion punitive damage a million policy and, therefore, award would not violate judicial review.7 It does not would be immune from prompted majority to write “that the astronomical This observation theoretically possible, very dissent, although envisaged are awards unlikely ought . not to make rules of law based on unrealistic . . [and] [w]e majority opinion. response, simply hypotheses.” In I note Footnote 14 of the any find an need not look further than this case to astronomical that we my punitive damage because, view, $5a million award in the major- importantly, damages fits that bill. More absence of even nominal apply punitive damage ity reasoning disagree to a does not that its would any merely worry size, suggests that we need not about the award of but position incompatible with a sound that I believe is reach of its decision—a acjjudicative process. alarming, threatening I more and even more to the state’s What find even arbitration, however, apparently nothing policy encouraging is that there compensa- majority’sreasoning preclude applying that would it from proceedings. Thus, grossly tory damage excessive awards in arbitration subject compensatory punitive damage not be to review or awards would today’s majority’s decision, After I wonder the courts under the rationale. conscience, expose any attorney could, good his client to the risk how damages by agreeing clause in a contract. to an arbitration by merely majority responds registering disagree- to this concern its necessarily “decision means that an excessive ment with the notion that its public policy compensatory damage under the award will be unreviewable cursory majority opinion. rendering exception.” Footnote 15 of majority principled disagree- response, again basis for its once offers no why my observation, explain would with nor does it its rationale also ment compensatory damage awards. not embrace excessive majority might suggests that an excessive award be The nevertheless by grounds §in the law the courts on set forth 52-418and case renewable particular, majority interpreting provision. In notes that it that See id. may grossly that the conceive that there be such a excessive award “can justified vacating in it on the basis of arbitrators’ evident court would be [an] partiality; (a) (2); disregard or manifest of the § see General Statutes 52-418 majority opinion; see, e.g., Garrity McCaskey, law.” Footnote 15 of the supra, grounds 223 Conn. 8-9. I do not believe that either these safeguard against vacating award is sufficient to the risk of an arbitration by acknowledge punitive damage Although I excessive awards arbitrators. punitive damage might grossly be evidence of that a excessive partiality, generally would not be arbitrator’s the size of the award alone partiality corruption prove “there has been evident or on sufficient to that part any (a) (2). . . .” 52-418 arbitrator . General Statutes majority’s deci predict to that the foresight take much preferred as a to shun arbitration parties sion will cause expose will because it dispute resolution method awards punitive damage virtually them to unlimited s.8 I from the court any without recourse meaningful by majority, namely, ground regard an arbitra- With to the second cited law, that, disregard in for a case we have stated order tor's manifest of the show, doctrine, inter that the defendant must to come within the reach of alia, ignored governing alleged the arbitrators law to have been that “[t]he quotation defined, explicit, clearly applicable.” (Internal marks and well [is] majority’s Garrity McCaskey, supra, light omitted.) of the 223 Conn. 9. comprehend exception apply holding today, I how that would cannot ample majority evidence of future cases of this nature. If the cannot find public policy disfavoring punitive excessive a well-defined and dominant damages panel, a defendant awarded an arbitration then how could possibly disregarded defined, explicit, establish the arbitrator a “well (Internal clearly applicable” limiting those awards? and law the amount of quotation Moreover, omitted.) marks even if a defendant somehow could Id. only hurdle, exception apply in which clear that would those cases appreciate clearly an the existence of a record reveals that “arbitrator [d] governing legal principle ignore pay but to or no attention to it.” decide[d] quotation reasons, (Internal omitted.) foregoing I maintain marks Id. For the judicial public policy exception path that the is the most viable for the punitive grossly review of awarded in an arbitral forum consistency. certainty because it offers 8 majority my prediction “wholly speculative” because states parties completely it assumes that will avoid arbitration and “does not likely is, parties consider the who are concerned more alternative—that will, instead, opt language about such a result to include in arbitration clauses caps precludes punitive damages altogether, subjects that either or or an judicial punitive [damage] arbitral award to review.” Footnote majority opinion. Although predicting I realize that human behavior is not majority’s science, simply an exact it defies common sense to think that the parties disputes, particu- discourage arbitrating will not decision from their larly they applies punitive when realize that its rationale to excessive dam- ages potentially compensatory damages. to excessive See footnote 7 opinion. by majority of this I further believe that the scenario advanced entirely plausible many parties unwilling sign is not because will be particularly they damages, clause that if bear eliminates or limits counterparts. Indeed, more risk from the venture than their when faced provision, they may prefer law, litigate with such a in a court of where them, simply away full remedies are available to or walk from the contract. provisions I also note that contract limit that eliminate or wrongdoers engage egregious escape would allow who misconduct to appropriate punishment in situations that warrant a reasonable 680 in addition majority opinion,

therefore submit that public policy disfavoring exces to the state’s violating undermines the well estab punitive damages, also sive Even the policy favoring arbitration. lished is that this latter majority implicitly concedes expressly See, e.g., and stated. dominant, well-defined 4, Dept. Local Public AFSCME, Council (“we 866 A.2d 582 Health, 617, 626, (2005) 272 Conn. public policy favoring arbitra strong are mindful of the Corridor Pipe Corp. v. Northeast England New tion”); A.2d 348 329, 337, (2004) Conn. Foundation, 271 dispute resolu is favored (“ [method [a] [arbitration formalities, is intended to avoid the because it tion] ordinary litigation” and vexation of delay, expense by statutory beyond damage authorized the contract. Because that public interest, designed protect I do not believe are away. private parties encourage to contract them that we should judicial provide expanded respect With to arbitration clauses that punitive damage awards, it that General Statutes 52- is clear review of may narrowly grounds vacate an on which courts circumscribes expand seriously question party award, them whether a can arbitration and I 42, 46, by Pina, App. (1999) A.2d 961 Pina v. contract. Cf. jurisdiction (parties on a court such cannot contract “to confer [when] statute, jurisdiction statutorily precluded”). Although § is a state 52-418 Compare courts are divided on that issue. it is relevant to note that federal Co., 2001) (holding Pipeline (10th 936-37 Cir. Bowen v. Amoco 254 F.3d judicial may expand parties of arbitration awards not contract to review by noting beyond grounds Arbitration Act and that Sev authorized Federal Appeals suggested Eighth have in dicta that Circuit Courts of enth contractually Lapine “they reject expanded standards”) with too would Corp., 884, 889(9th 1997) (“[f]ed Technology Corp. Kyocera 130F.3d Cir. beyond expand of an arbitration award eral courts can their review parties agreed”) grounds, when . . . the have so Arbitration Act’s] [Federal Corp., Gateway Technologies, Inc. v. MCI Telecommunications 64 F.3d permit expanded judicial 1995) (parties’ agreement (5th 996-97 Cir. Moreover, “acceptable”). federal courts was review of arbitration award expanded judicial parties review if it were clear that could contract for even awards, punitive damage I do not understand how a court would conduct majority concludes, principles review, if, of Gore do not as the reasons, foregoing apply I For all of the submit that to the arbitral forum. majority likely it “more alternative” advanced is the so-called majority opinion. “speculative” 14 of the is the one. Footnote quotation marks v. omitted]); International [internal Stratford Firefighters, AFL-CIO, Ass n. 998, Local 108, 127, 728 A.2d 1063 (1999) (Connecticut public policy has “strong arbitration as an alter favoring native method dispute see also resolution”); Garrity v. McCaskey, supra, 7; 223 Conn. Paranko v. State, 200 51, 56-57, Conn. Bridgeport A.2d 508 (1986); Bridgeport Local 102, 107, Conn. 438 A.2d 1171 (1981).

For all of reasons, I foregoing would hold that Connecticut case law governing punitive award of damages under the common law and CUTPA, together with the Supreme United States Court’s decision in Gore, supports the conclusion that the state has a well- defined and public policy dominant against grossly punitive awards. In damage order to deter mine whether a damage award issued an panel arbitration violates that I policy, apply would guideposts three Gore, set forth in as further illuminated in State Farm Mutual Automobile Ins. Co. v. Campbell, 538 U.S. 408, 123 S. Ct. L. 155 Ed. 2d 585 (2003). my view, such an approach provide would the courts

with a principled and efficient method for identifying awards that acceptable exceed bounds, while respect ing the substantial deference that traditionally we afford arbitrators’ decisions. See, e.g., State New England Health Employees Care Union, District 1199, AFL- CIO, 271 Conn. 127, 134, 855A.2d 964 I (2004). therefore turn my application attention to an of the three guide posts to the facts of present case.

This case ordinary involves an contract dispute between private parties. two The defendant’s miscon- implicated duct only economic harm and pose did not a risk to the safety health and of others. See State Farm Mutual Automobile Ins. Co. v. Campbell, supra, 538 U.S. 419 (in assessing reprehensibility of defendant’s conduct, courts should consider whether “the harm Fur- opposed economic”). as physical

caused was puni- has thermore, fact that our limited legislature liability cases product to twice tive damages awarded; see Gen- compensatory damages amount 52-240b; though even conduct eral Statutes § the award compensatory damage forms the basis of physical well-being entails risk to the such cases often award the conclusion that the consumers, supports dispute is excessive. grossly in this commercial the the ratio respect guidepost, With second United compensatory damages, punitive damages Supreme “bright- has that there no Court stated is States cannot ratio a award line which awards practice [however], . . . few exceed. [I]n punitive and com- ratio between exceeding single-digit satisfy to a will pensatory degree, damages, significant Ins. Co. process.” State Farm Mutual Automobile due case, present 425. In the Campbell, supra, 538 U.S. that the ratio is infinite because it suffices to note arbitrators’ satisfaction plaintiff prove could not to the damages. it had even nominal that suffered us to “the The which directs consider guidepost, third . punitive . . and the disparity between penalties imposed comparable authorized or civil 428; also cases”; (internal quotation omitted) id., marks punitive award supports damage the conclusion that is excessive. The maximum present grossly in the case by for the defen- penalty legislature civil authorized $5000. is Statutes CUTPA violation See General dant’s punitive $5 award damage 42-110o million (b). the defendant exceeds that amount against issued nearly fifteen greater a factor of It also times 1000. dispute than the award issued in a business highest misconduct, ongoing pattern did not entail an Technologies Interna- $340,000. See Fabri United is, short, all tional, supra, guide- 387 F.3d 126. three Inc., punitive $5a posts suggest damage million under the circumstances of this case is grossly exces- and, therefore, sive should be vacated.

Finally, it is relevant to note that other courts have applied the Gore even when the guideposts defendant punitive does not claim that a award violatеs damage process his or her due rights, merely but contends that it is See, excessive. Lee v. e.g., Edwards, 101 F.3d Cir. (2d 1996) that Gore “should . (finding assist . . in the application of standard which [the] [a court] damage award that deem[s] judicial ‘shocks conscience’ In”). fact, courts have [the] applied principles specific Gore within the con- text anof arbitration particular award. Of significance is Sawtelle v. Reed, Waddell & Inc., supra, App. Div. 2d in which Appellate Division Supreme Court of New applied York the guideposts to vacate a $25 punitive million damage under CUTPA on the ground that panel arbitration had manifestly disregarded Id., the law. 111-14. The court stated that only “Gore is not applicable to process analysis due punitive award but damage provides also a guide for whether determining such an award is Id., irrational.” Upon application 110. of the guideposts, the court con- cluded that the award ran afoul of Gore because: (1) the defendant’s conduct was sufficiently not egregious $25 to warrant a punitive million damage award; ‍​​​‌​​​‌​​​‌​​‌​‌‌​‌​‌‌‌‌​‌​‌‌​‌‌​‌‌​‌​‌​​​​​​​‌‍id., Ill; (2) “award the total compensatory dwarf[ed] by a factor of [twenty-three]”; id.; and (3) amount of the “vastly award was proportion” out of penalties the civil authorized statute punitive and the damages awarded in comparable Id., cases. 112; cf. Sanders v. Gardner, 7 F. Sup. 2d 176-79 (E.D.N.Y. 1998) (applying Gore guideposts, concluding that arbi- trators manifestly had not law disregarded in awarding $10 punitive million in damages against securities bro- ker-dealer, and that Gore noting and its progeny “help analysis puni- the relevant excessiveness

illustrate tive damages”). I summarize,

To would conclude Connecticut public policy against and dominant has well-defined Because I believe damages. grossly case violates that present that the award pro- of the arbitration compromises integrity with cess, the case to the trial court I would remand disposi- of that light to vacate the award. direction majority tion, not the issue that I would reach namely, II part opinion, of its whether addresses plaintiff award the improperly trial declined to court award. on the arbitration interest I dissent. Accordingly, respectfully v. MICHAEL STATE OF CONNECTICUT ROSS 17422) (SC 17423) (SC Vertefeuille, Zarella, Lavery, Sullivan, J., Norcott, Dranginis and C. Flynn, Js.

Case Details

Case Name: Medvalusa Health Programs, Inc. v. Memberworks, Inc.

Court Name: Supreme Court of Connecticut

Date Published: May 17, 2005

Citation: 872 A.2d 423

Docket Number: 17116, 17117

Court Abbreviation: Conn.