Southern Union Co. v. Irvin

788 above, of the we hold light CONCLUSION unambiguously bars cov Flood Exclusion summary We reverse the district court’s damage to erage Northrop’s for the water judgment Northrop. favor of We re- policy. the excess shipyards under The mand Northrop’s argu- for consideration of Exclusion, to define the Flood

words used proximate ment that California’s efficient ordinary popular in their and understood coverage cause doctrine demands sense, clearly conspicuously preclude damage notwithstanding water the lan- coverage for the water at Nor See, guage of the contract. e.g., Julian v. shipyards. throp’s State Farm Mut. Auto. Co., Underwriters Ins. 35 Cal.4th Hartford Co., 1, Cal.Rptr. 514 P.2d at Ins. 958. 747, 648, 903, Cal.Rptr.3d 110 P.3d Despite unambiguous policy language, (2005). Though parties briefed the however, preliminarily we must consider appeal, issue on we decline to consider it in Northrop’s extrinsic evidence to determine the first instance because it involves factu- an ambiguity. whether creates Barris al considerations.

Industries, Inc., Ent., Inc. v. Worldvision Reversed and Remanded. (9th Cir.1989). For example, Northrop points to a sentence Underwriting provided Detail to Fac

tory by Aon, Mutual which states “[s]torm

surge loss estimates are included in our analysis

windstorm unless mentioned oth sentence, however,

erwise.” This was in cluded on a specifically document address COMPANY, SOUTHERN UNION ing only earthquakes the risks of Plaintiff-Appellee, striking coastal windstorms covered Nor facilities, and, throp like the Named Wind IRVIN, Defendant-Appellant. James M. storm definition in the primary policy, also surge described storm flooding. The No. 06-17347. parties also cite inconclusive and conflict United States Appeals, Court of ing evidence regarding the treatment of Ninth Circuit. previous surge damage storm by caused Georges Hurricanes and Isabel. Neither Submitted Nov. 2007.* claim implicated policy coverage excess Filed Nov. 2008. and the evidence little relevance Amended March construing this policy. excess findWe extrinsic evidence “insufficient to render susceptible

the contract [Northrop’s]

proffered interpretation” of flood as ex

cluding flooding by caused storm surge.

See id. * (D.Nev. slip op. 2008), Mar. panel unanimously cited finds this case suitable Northrop, does not demonstrate otherwise. argument. for decision without oral Fed. unpublished

That case is an memorandum 34(a)(2). R.App. P. Nevada, out holding of the District of and its was based on the reasoning district court’s disagree this which we with here.

to remand for a new trial or simply to order a remittitur. Leatherman Tool Indus., Group Cooper (9th Cir.2002). Taking this case- specific approach, we have found differ- appropriate ent solutions to be in differ- Mandel, Greenberg Traurig, Robert A. ent Compare circumstances. Planned Phoenix, AR, LLP, defendant-ap- for the Parenthood Willamette Columbia/ pellant. Inc. v. American Coalition Activ- of Life Doerner, Saunders, Q. Ferguson, Tom ists, (9th Anderson, L.L.P., Tulsa, OK, Daniel & for Cir.2005)(“remand[ing] for the district plaintiff-appellee. the physi court to order a new trial unless accept remittitur”), cians with In re (9th Valdez, Exxon 472 F.3d Cir.2006) (remitting punitive damage trial, option award with no for a new so JOHN T. F. Before: STEPHEN FERNANDEZ, NOONAN, Circuit and FERDINAND REINHARDT, Judges. Exxon -] end”), as to bring “protracted litigation 128 S.Ct. Shipping reversed on other ^[2605] Co. v. Baker, [171 L.Ed.2d grounds [— U.S. to[an] by (2008). Here, 570] we conclude that it by Order: Concurrence Judge REINHARDT; by Judge appropriate Dissent to afford Southern Union NOONAN. option of accepting the remittitur or re-litigating the case. in light We do so ORDER AMENDING ORDER OF NO- of the possibility that additional evidence 7, 2008, VEMBER AND DENYING might be submitted at a new trial that PETITION FOR REHEARING EN could affect the calculation of a proper AND BANC AMENDED ORDER ratio, punitive damage moreover, and REINHARDT, Judge, Circuit that, recognition while we are not re concurring: quired every do so “[t]o avoid any conflict with the Seventh Amend

ORDER ment, preferable course is to afford Upon consideration,1 further we amend party grossly awarded the excessive 7, 2008, our order filed November ... damages option of ei commencing at slip op. 152812 as follows: accepting ther puni the remittitur of the

(1) tive award or a new trial on that We add the footnote “4” reference Woessner, following Morgan issue.” slip word “remittitur” at v. op. (9th Cir.1993). 1244, 1258-59 seventh line

(2) The footnote shall read as follows: petition The of Southern Union Co. for rehearing en banc was punitive damage When award ex- circulated to the maximum, judges court, ceeds the judge request- constitutional we and no case-by-case decide on a whether basis ed a vote for en banc consideration. The Judges published Reinhardt and Fernandez concur in 2. The order is as Southern Union Judge this amendment. Company Noonan dissented 548 F.3d 1230 2008), from the order put of November page and we will hereafter refer join does not published in this amendment. parentheses. enees to the order in between the dam DE- the difference rehearing en banc is for petition jury and the civil ages awarded NIED. imposed compa or penalties authorized rehearing or for petition subsequent No Farm, 538 U.S. at rable cases.” State in this may be filed rehearing en banc them, considering at 1520. In matter. puni determine whether the goal our is to achieved their ultimate ob damages tive ORDER punishment, of deterrence and jectives $975,181 jury in this case being dispropor unreasonable or without to Southern Un- compensatory Shipping Exxon Co. v. Bak tionate. See forty of which assessed Company, ion — 2605, 2621, er, U.S. -, 171 128 S.Ct. M. $395,072.38 James against or percent Farm, (2008); 538 U.S. L.Ed.2d 570 State an additional on to assess and went 426, 123 1521, 1524. 419, at at S.Ct. damages against $60,000,000 punitive of punitive the we vacated appeal, Here, him. On pointed not parties the have puni- award, amounted to which cases, if, indeed, there are other similar to the com- 153 times of over damages tive any, comparable penalties to authorized or Union damage award. See S. pensatory begin therefore for similar conduct. We 1001, 1009 Corp., 415 F.3d v. Sw. Gas Co. guideposts. to other two by looking the I). (9th Cir.2005) (S. We then Union already upon touched the sec We have a new trial on a or remanded for remittitur them, of and we do find the over ten to ond The district court at 1011. damages. Id. case, disquieting although in this one ratio opportunity to the offered Southern Union among the infinite choosing a correct ratio to damages punitive of accept remittitur theoretically of ratios available is number million, damage award punitive that is a $4 easy guide-post It is a we will no task.1 compensato- ten times the slightly at over considering repre the return to after first ac- award. Southern Union ry damage issue; that hensibility that is the issue the appeals. cepted. again Irvin to as the most Court itself has referred imposi BMW, “prohibits the guideposts. Due Process the See important of arbitrary pun 1599; 575, 116 excessive or grossly tion of at S.Ct. at see also 517 U.S. Farm Farm, a tortfeasor.” State ishments on at 538 U.S. at 123 S.Ct. State Campbell, 538 U.S. Mut. Auto. Ins. Co. v. 1521. 1513, 1519-20, 155 123 S.Ct. it, of most of the indicia As we see “simple mathe No L.Ed.2d appear do not here. See reprehensibility in this area. exists matical formula” Farm, 123 S.Ct. at 538 U.S. State Gore, Am., 517 U.S. N. Inc. v.

BMW of 1521; Planned Parenthood Colum of 1589, 1602, L.Ed.2d v. Am. Coal. Inc. bia/Willamette of Life Activists, 957-60 2005). was not to some Any harm caused Nevertheless, point has the Court it was inflicted “(1) poor struggling person; degree the of guideposts: to three ed that Irvin very large company upon miscon of the defendant’s reprehensibility —one unsavory, by thought was (2) claims to have duct; the actual disparity between Moreover, the harm was not way. plaintiff potential harm suffered or (3) safety award; disregard reckless physical; damages and the however, purposes, a ratio of one to one as tional it saw noting, when It worth that - Shipping, upper limit." Exxon federal the "fair Supreme a ratio for Court selected at -, at 2633. U.S. purposes, than constitu- law rather maritime involved; calling Southern down Apollyon of others was not Un- the wrath of vulnerable; financially upon and the him ion was not and his finances. isolated, it although was not a incident was fine, it, as we see the Constitution say we that mere accident. When permits a three to one of punitive ratio to isolated, we do not intend to incident was compensatory damages in this but condone Irvin’s actions either at the time $1,185,217.14 not That more. is the sum of is, wrongdoing or at trial.2 That we in addition to compensatory damages fact that Irvin an do not overlook the held $395,072.38. ratio, In selecting this we important position, gave which him public have considered whether the amount of great wrong to aid or others.3 Ir- power punitive damages results in is commen- vin, showed, evidence abused and achieving surate with the two purposes we power significant misused his and caused have mentioned without exceeding the con- damage to Southern Union—he has been limit. stitutional have that We determined $400,000 pay ordered to close to of com- it is in this case. In stating, empha- so we But, pensatory damages for that. the evi- that size where the constitutional limit lies prove dence not does Irvin obtained respect vary with will (or sought) any personal gain from his from case to ease. Determining that limit actions, certainly gain no of a financial art, science; is an not a no mathematical nature, whether or not that was the case. controls; single formula no asymptote de- So, true, always as is we return to the fines the limit for all cases. question of much enough, how is and of We see no proper reason to remand this when the limit constitutional is reached. case to the district court pro- for further commendable, Irvin far is from but he has ceedings regarding punitive damages. egregious physical not inflicted or econom- “Having already afforded the district court weak, upon ic harm and we cannot opportunity an to review the in award[] say even on the basis of the evidence that instance, the first we believe it is appropri- he sold his office for financial gain. He ate to remit rather than again to remand.” pay

will also have to compensatory dam- Parenthood, Planned 422 F.3d at 963. ages. That award of damages was not Therefore, paltry by any or minimal we reverse the means. It was dis trict Undoubtedly judgment substantial. court’s regarding puni Irvin’s behavior jurors award, tive outraged damage and the district and judge, vacate it. We all of whom listened to and saw him in reduce the award to the amount of $1,185,217.14. quarters close of a courtroom setting. We also remand so that the Still, wrong wrong-headed and though may he district court order a new trial unless is, we do justification not see constitutional Southern accepts Union the remittitur.4 If trial, actually sought 2. At impede Irvin to simply trial or to order a remittitur. Leather jury's I, Indus., search for truth. S. Union 415 F.3d Group Cooper man Tool 285 F.3d (9th Cir.2002). Taking 1151 this case- specific approach, we have found different 3. The Commission he appropriate of which was a member solutions to be in different cir "has sometimes been Compare dubbed the fourth cumstances. Planned Parenthood of government branch of the of Arizona.” S. Inc. v. American Coali Columbia/Willamette I, (Fernandez, J., Activists, Union 415 F.3d at 1014 (9th tion 422 F.3d 965 of Life concurring dissenting). Cir.2005)("remand[ing] for the district court physicians accept to order a new trial unless a remittitur”), Valdez, punitive damage 4. When a award exceeds the with In re Exxon maximum, Cir.2006) (9th constitutional we (remitting decide on a case- by-case punitive basis whether to damage option remand for a new award with no for a damages may appropri- be an punitive run in interest shall post judgment accepted, date of award from the punitive the reduced to achieve both the on ate amount August judgment, entry original purposes. and deterrent The same Parenthood Colum Planned 2003. See punitives against of of a amount v. Am. Coal. Inc. bia/Willamette of Life earning year, billion a company with $1 Activities, 1013, 1022 billion, hardly worth of would net $50 2008). objectives. either of these serve as to the and VACATED REVERSED that the defendant’s wealth precept The damage award and punitive amount of if we are to achieve should be considered bear parties shall REMANDED. pun of deterrence and the intended effects appeal. on their own costs Browning-Ferris See, hardly e.g., novel. ishment REINHARDT, Judge, Circuit Disposal, us. v. Kelco Ind concurring: 106 L.Ed.2d U.S. (1989) (O’Connor, J., concurring order, I I in the would

Although concur (“Blackstone to our discus- part dissenting part) another consideration add assessing the relevant factors sion of ‘quantum, particular, that the remarked damages. can, pecuniary ought fines neither nor be, by any law. ascertained invariable damages are to achieve If money changes itself from a The value punish- of deterrence and purposes twin [1233], causes; events, ment, we thousand and at all what is see Order at 15282-83 fortune, of a impact may consider the must ruin to one man’s be matter in upon particular ”) the defendant award (quoting to another’s.’ indifference limit. The the constitutional determining Blackstone, 4 William Commentaries compensa- to punitive ratio of appropriate *371); H.R. may vary the amount of tory damages with (1991) (“[Jjuries Rep. No. at 73 102 - net damages and the compensatory financial normally take the defendant’s cases, In the defendant. some

worth of standing awarding punitive into account similar, may be be- although the conduct a damages; recognized courts have that damages or compensatory cause of lower may appropriate against be higher amount worth, higher a higher defendant’s net wealthy particularly large employer, a or may necessary to achieve a deter- ratio be cases, deterrence.”); punitive effect. In other rent or Restate to ensure effective a opposite, (Second) (1979) (“In the variables are the where § ment of Torts may appropriate. lower ratio be damages, the trier of assessing punitive consider the character of properly fact can $10,000 if example, compensatory For act, the nature and extent the defendant’s a defendant against is awarded $10,000 that the defen- $50,000, plaintiff of the harm to the then with a net worth of moreover, ratio, trial, damage litigation in rec bring "protracted new so as to that, end”), required grounds by ognition while we are not to do reversed on other [an] to - -, Baker, any every avoid conflict with Shipping “[t]o U.S. so in Co. v. Exxon Amendment, preferable the Seventh L.Ed.2d 570 Here, party afford the awarded the appropriate to course is to we conclude that it is punitive damages ... accepting grossly excessive option of afford Southern Union the option accepting the remittitur of the re-litigating We do of either the case. the remittitur or new on that award or a trial light possibility that additional of the so Woessner, Morgan might at a new trial issue.” evidence be submitted 1993). proper 1258-59 the calculation of a that could affect awarded; compensatory damages or intended to cause and the and the dant caused defendant.”). wealth of the penalties civil or criminal that could be comparable misconduct. us, an award of In the ease before over Gore, 574-585, 517 U.S. at 116 S.Ct. 1589. compensatory of the ten times the amount Unavoidably reviewing a court must exer that would damages is far in excess one judgment cise its own in applying these reasonably objectives. the twin accomplish guideposts to the facts established in the hardly proposed punitive damages are case. with the need to deter the The court must exercise further commensurate like him from com- wrong-doer judgment or others in determining legal whether its they are mitting similar offenses. Nor conclusion, after applying legal these impose commensurate with the need to guides, is that the constitution has been punishment sufficient on this defendant. Undeniably, violated the award. in the rule, subjec absence of a mechanical sum, my I separately express write judges tive views of the affect the decision. agreement today that the ratio arrived at “ Karlan, ‘Pricking See magic figure, although is not a it Lines’: The here, but, Clause, proper important, ratio more to Due Damages Process Punitive overlooked, point make the sometimes and Criminal Punishment.” 88 Minn. ratio; rather, there should be no fixed in a L.Rev. But judgment this number of cases the ratio must be deter- must be based on facts. light

mined in purposes two dis- who She heard the case is in the best cussed above. position to determine the facts. In the function, exercise of this she is analogous NOONAN, Judge, Circuit dissenting: to a sentencing judge a criminal case: appeals up What’s a court of to when she has all heard the witnesses and formed equipped decides that it is better to deter judgment of the defendant’s demeanor delinquency mine defendant’s and to as Industries, credibility. Cooper appropriate penalty sess the than the U.S. at 121 S.Ct. 1678. What the judge who heard testimony and who reviewing court is not free to do is to make experienced has even the defendant’s mis up suppress facts or facts established at conduct in her court? A federal court of court, trial. The legal question before the appeals duty has a definite when it reviews damages do the pro- awarded offend due punitives. an award of In a federal law, cess of is not to be confused with the must decide whether are so question: would I have awarded these unexpected excessive and so that they of damages if I were the judge. district Our fend the principle of fairness in enshrined court, latter, I suggest, has answered the the Due Process Clause of the Fifth query. irrelevant Amendment. See BMW North America of Gore, v. 517 U.S. No need here to set out at length the (1996). ques 134 L.Ed.2d 809 The legal facts established at trial and stated our tion is be decided de novo. Cooper opinion upholding liability. Irvin’s South- Industries, Inc. v. Leatherman Tool Irvin, (9th ern Union v. 415 F.3d 1001 Inc., 424, 435-436, Group, 532 U.S. 121 Cir.2005). I summarize those facts and (2001). 1678, 149 L.Ed.2d 674 rationally what could be inferred from Irvin, them: the chairman of the Arizona reaching

In this determination of consti- Commission, Corporation tutional worked deter- by law the court guided is to be degree reprehensibility minedly period of for a of the of- of four months to fense; punitives the ratio of the promote to the of an merger utility Arizona utility another and to defeat at company with 1096. Such intentional fabrication of by merger proposed Southern Union evidence confirmed his consciousness of million more beneficial to the over $100 guilt and added to the reprehensibility of court, Irvin company. Arizona testified his conduct. the motive of his machinations was apparent It is not to me how this court public good and that his calculated overlook, neglect, can or minimize these course to achieve his end was within the findings of the judge. trial It equally jury official scope of his duties. The did not apparent to me how this court can contrary, not his tale. To the believe duty by treat the dereliction of a high

jury punitives that reflected out- public official though as it were a run-of- outrageous rage Irvin’s conduct. As his judicial the-mill tort. I take notice of the welfare, public motive was not the what report existence and conclusion of a to the prompted outrageous his behavior? Rul- legislature. 201(b); Arizona Fed.R.Evid. ing punitives, on the award of the district Agency Transmission Northern of Califor- court found as a fact that one motive con- Co., nia v. Sierra Power Pacific “personal sisted Irvin’s interests.” Cir.2002). promi- Irvin was a Southern Union Co. Southwest Gas Republican, nent holding high elective of- Corp., F.Supp.2d fice in Republican-controlled Arizona. The Because challenged Southern Union its Arizona House of Representatives conduct- rival in court before the Irvin-backed an investigation ed of his conduct as com- through, transaction went no bribe was corporations missioner of and recom- But paid. jury consider what a rational impeachment mended his “high crimes could have inferred from the fact that a and misdemeanor under the Arizona con- young protégé of Irvin with little else to stitution.” In the Matter the Arizona of except recommend him this connection was House Representatives Investigation paid super-large to be fee for help his Allegations Certain Against Corpo- State arranging the deal. One does not need to Irvin, ration Commissioner James M. identify look further to “personal Irvin’s I:Vol. Southern Union v. AZ H.R. interests.” Rep., Leg., 46th Irvin re- The district court also found: signed a week after the report became purposeful Irvin’s persistence this ef- known. Central to report was Irvin’s fort was matched his efforts at conceal- affecting conduct the Southern Union ment. As far possible, his activities to merger. merger kept block the were from his fel- I do not cite the report as further evi- Co., low commissioners. Southern Union already dence of the conduct established in F.Supp.2d at 1094. Afterwards he court, but as a measure reprehensi- up wrongdoing covered his to ensure the bility of Irvin’s conduct. Punitives cannot outcome of the scheme. Id. When South- punish be used to a defendant for harming challenged ern Union him and began litiga- persons not before the court. Philip Mor- tion, his effort at concealment continued. ris, Williams, v. USA 549 U.S. persevered He in hiding wrongful his acts 166 L.Ed.2d 940 throughout particular the trial and in while time, At the same “Evidence of actual testifying jury. before the Egregiously, harm nonparties help can evidence, show arranged he the manufacture of plaintiff conduct that harmed the purported notes of also telephone his wife’s conversation, persuaded posed which he a substantial risk of harm his coun- to the present genuine sel to to the court. general public, particularly Id. and so was already- have Id. As we reprehensible.” high

determined, “exploitation Irvin’s noneconomic and the office”

public in his fabricating evidence by him

done to be proper factors were in court

defense award. South- punitives in the

considered v.

ern Union denied has not been process Due and un- office public faithless

this man defense. in his own

scrupulous

I dissent. Petitioner, ANDRZEJEWSKI,

Melissa AVIATION

FEDERAL

ADMINISTRATION,

Respondent.

No. 06-75730. Appeals, Court of

United States Circuit.

Ninth Sept. 2008.*

Submitted Dec. 2008.

Filed April

Amended * 34(a)(2). R.App. unanimously P. panel finds this case suitable argument. See Fed. without oral for decision

Case Details

Case Name: Southern Union Co. v. Irvin

Court Name: Court of Appeals for the Ninth Circuit

Date Published: Mar 27, 2009

Citation: 563 F.3d 788

Docket Number: 06-17347

Court Abbreviation: 9th Cir.