No. 99-1010
In the Supreme Court of the United States
BIG D ENTERPRISES, INC. AND EDWIN G. DOOLEY, PETITIONERS
v.
UNITED STATES OF AMERICA
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT
BRIEF FOR THE UNITED STATES IN OPPOSITION
SETH P. WAXMAN
Solicitor General
Counsel of Record
BILL LANN LEE
Acting Assistant Attorney
General
JESSICA DUNSAY SILVER
JENNIFER LEVIN
Attorneys
Department of Justice
Washington, D.C. 20530-0001
(202) 514-2217
QUESTIONS PRESENTED
1. A jury found that petitioners, a multi-millionaire apartment owner and
his wholly-owned management company, engaged in a pattern or practice of
denying rental apartments to black prospective applicants and specifically
denied an apartment to one victim because her biracial son would be living
with her, in violation of the Fair Housing Act of 1968, 42 U.S.C. 3601 et
seq. The jury awarded each set of victims $500 in compensatory damages and
$25,000 in punitive damages against each defendant. The question presented
is whether the punitive damages award violates due process.
2. Whether punitive damages under the Fair Housing Act of 1968 should be
assessed pursuant to federal or state law.
3. Whether the court erred in denying a mixed motive jury instruction when
the court found insufficient evidence of an alternative, legitimate basis
for denying a black apartment seeker an apartment to rent.
In the Supreme Court of the United States
No. 99-1010
BIG D ENTERPRISES, INC. AND EDWIN G. DOOLEY, PETITIONERS
v.
UNITED STATES OF AMERICA
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT
BRIEF FOR THE UNITED STATES IN OPPOSITION
OPINION BELOW
The opinion of the court of appeals (Pet. App. a1-a29) is reported at 184
F.3d 924.
JURISDICTION
The judgment of the court of appeals (Pet. App. a30-a31) was entered on
July 9, 1999. A petition for rehearing was denied on September 10, 1999
(Pet. App. a32-a33). The petition for a writ of certiorari was filed on
December 9, 1999. The jurisdiction of this Court is invoked under 28 U.S.C.
1254(1).
STATEMENT
On March 14, 1997, the United States filed a complaint against petitioners
Big D Enterprises, Inc., (Big D) and Edwin G. Dooley, the president and
sole shareholder of Big D, alleging violations of the Fair Housing Act of
1968, 42 U.S.C. 3601 et seq. See Pet. App. a3; 11 F. Supp. 2d 1047, 1048
(W.D. Ark. 1998). Dooley owns three apartment buildings in Fort Smith, Arkansas:
Oak Manor, Park Terrace, and Village South. See Pet App. a3; 11 F. Supp.
2d at 1048. Big D manages apartment rentals at the three buildings. See
Pet. App. a3; 11 F. Supp. 2d at 1048. The United States alleged that petitioners
engaged in a pattern or practice of discrimination in denying rental apartments
to blacks, 42 U.S.C. 3614(a), and discriminated specifically against Cynthia
Williams on the basis of race, 42 U.S.C. 3604, 3612(o). The United States
sought injunctive relief and compensatory and punitive damages for Williams
and other identified victims. See 11 F. Supp. 2d at 1049.1
At trial, several former Big D employees testified to petitioners' pattern
of discriminatory treatment of black apartment seekers. Pet. App. a8. Former
apartment managers testified that they repeatedly were instructed by Dooley,
his former wife, Elizabeth Dooley, and his stepdaughter, Tricia Turner,
not to rent to blacks, and that the managers implemented that policy by
lying about apartment availability and by failing to consider applications
from black apartment seekers. Id. at a8-a9. Apartment managers also testified
that they were chastised when, on rare occasions, they did rent to black
applicants. Id. at a8. Moreover, apartment managers and other former Big
D employees testified that Dooley and other senior managers referred to
black applicants as "niggers." Id. at a8-a9.
In addition, Carol Ragan, one of Big D's former property managers, testified
that Turner specifically instructed her not to rent an available apartment
to Williams because Williams' son is biracial and her former husband is
black. Pet. App. a11. Ragan further testified that Turner instructed her
not to rent an available apartment to Janet Poole and Richard Batts because
they are black. Id. at a10.
After a four-day trial, a jury awarded Williams and her minor son, collectively,
$500 in compensatory damages, $25,000 in punitive damages against Big D,
and $25,000 in punitive damages against Dooley. Pet. App. a1-a2. The jury
also awarded Batts and Poole, collectively, $500 in compensatory damages,
$25,000 in punitive damages against Big D, and $25,000 in punitive damages
against Dooley. Id. at a2. The district court denied Big D's motion for
judgment as a matter of law, new trial, or remittitur of damages. See 11
F. Supp. 2d at 1054.
The court of appeals affirmed. Pet. App. a1-a29. The court first rejected
petitioners' challenge to the sufficiency of the evidence. The court concluded
that the United States presented "overwhelming evidence" (id.
at a12) that "conclusively demonstrated" (id. at a11) that petitioners
engaged in a pattern and practice of denying black prospective applicants,
on the basis of race, the opportunity to rent apartments.
The court of appeals also held that the district court properly rejected
petitioners' request for a mixed motive jury instruction. Pet App. a13-a15.
The court explained that "[s]ubmission of a mixed motive jury instruction
is not warranted if a defendant has failed to present sufficient evidence
of a legitimate motive for the adverse action." Id. at a14. Petitioners
argued that deficiencies in the housing applications submitted by Williams
and by Poole and Batts justified a mixed motive instruction. The court held
that petitioners failed to present evidence that deficiencies in Williams'
application "contributed to her rejection" for the apartment.
Id. at a14-a15. It also held that petitioners failed to raise the issue
of Poole and Batts' application in the district court and could not raise
it for the first time on appeal. Id. at a13 n.2.
The court of appeals also upheld the jury's award of punitive damages. Pet.
App. a17-a21. First, the court rejected petitioners' assertion that Arkansas
law, rather than federal law, governed the measure of punitive damages.
Id. at a16. The court reasoned that interpreting the Fair Housing Act's
anti-discrimination provisions pursuant to state law would lead to "inconsistent
results between the states" and would "thwart the even-handed
application" of the Act's provisions. Ibid. Thus, the court upheld,
consistent with federal law, the admissibility of each defendant's financial
worth as relevant to determining the amount of punitive damages. Id. at
a17.
Finally, the court rejected petitioners' claim that the amount of punitive
damages violated due process. Pet. App. a21. The court explained that there
is no single, mathematical formula to assess the appropriateness of an award
of punitive damages, and that the ratio of punitive damages to compensatory
damages is only one of several factors to consider when reviewing a jury's
punitive damages award. Id. at a18-a19. The reprehensibility of a defendant's
conduct and how the punitive damages award compares to other possible sanctions
are not only independently significant factors in the assessment of damages
but also "naturally impact[] upon the acceptability of the punitive
to compensatory damage award ratio." Id. at a19. If those two other
factors suggest that a high level of punitive damages is appropriate, then
a high ratio, even one as high as 526 to 1, which this Court approved in
TXO Production Corp. v. Alliance Resources Corp., 509 U.S. 443, 459-462
(1993), is appropriate. In contrast, if the conduct in issue is not reprehensible
and the award significantly exceeds other possible penalties, then a ratio
of 4 to 1 or lower may be more appropriate. Pet. App. a19.
Applying those principles, the court of appeals found that the Fair Housing
Act of 1968, 42 U.S.C. 3614(d)(1)(c), which allows civil penalties up to
$50,000 for a first violation, is consistent with the jury's award. Pet.
App. a19-a20. The court noted that the district court specifically declined
to impose civil penalties in light of the punitive damages award. Id. at
a20. The court of appeals also reasoned that describing petitioners' conduct
as "egregious may be an understatement" given their "systematic
and deliberate exclusion of an entire race of people." Ibid. The court
of appeals therefore concluded that the ratio of punitive to compensatory
damages was not disproportionate, and the punitive damages award did not
violate due process. Id. at a21.2
ARGUMENT
The decision of the court of appeals is correct and does not conflict with
any decision of this Court or another court of appeals. The application
by the court of appeals of settled principles of law to the facts of this
case does not raise any important issue of federal law. Accordingly, the
petition should be denied.
1. a. Petitioners mistakenly contend (Pet. 11-19) that the court of appeals
erred in affirming the award of $100,000 in punitive damages, which they
assert was so great in proportion to the $1,000 in compensatory damages
that it violated their due process rights. Applying this Court's precedents,
the court of appeals correctly upheld the punitive damages award.
As the court of appeals explained, this Court has identified three primary
factors that a reviewing court should consider when determining whether
a punitive damages award is so excessive that it violates due process: (1)
the degree of reprehensibility of a defendant's conduct, (2) the ratio between
the actual and potential harm and the size of the award, and (3) the availability
of comparable sanctions. See BMW of N. Amer., Inc. v. Gore, 517 U.S. 559,
575 (1996) (emphasis added). Thus, "the ratio of compensatory to punitive
damages * * * is simply one factor that a court must consider when evaluating
whether a punitive damage award violates due process." Pet. App. a18.
Moreover, there is no "mathematical bright line between the constitutionally
acceptable and the constitutionally unacceptable [ratio] that would fit
every case." BMW, 517 U.S. at 583 (citing TXO Prod. Corp. v. Alliance
Resources Corp. 509 U.S. 443, 458 (1993)); see also Pacific Mut. Life Ins.
Co. v. Haslip, 499 U.S. 1, 21-22 (1991).
[L]ow awards of compensatory damages may properly support a higher ratio
than high compensatory awards, if, for example, a particularly egregious
act has resulted in only a small amount of economic damages. A higher ratio
may also be justified in cases in which the injury is hard to detect or
the monetary value of noneconomic harm might have been difficult to determine.
BMW, 517 U.S. at 582. Moreover, as the court of appeals explained, the other
two factors, reprehensibility and comparative sanctions, influence how high
a punitive to compensatory damages ratio is acceptable. Pet. App. a19.
Indeed, this Court has stated that "[p]erhaps the most important indicium
of the reasonableness of a punitive damages award is the degree of reprehensibility
of the defendant's conduct." BMW, 517 U.S. at 575. "[E]vidence
that a defendant has repeatedly engaged in prohibited conduct while knowing
or suspecting that it was unlawful would provide relevant support for an
argument that strong medicine is required to cure the defendant's disrespect
for the law." Id. at 576-577.3 Here, petitioners engaged in deliberate
and repeated discriminatory acts in violation of a statute enacted more
than 25 years ago.
Moreover, under 42 U.S.C. 3614(d)(1)(c), the district court could have imposed
civil penalties of $50,000 on each of petitioners, an amount identical to
the jury's punitive damages award. As the court of appeals noted, the district
court expressly declined to impose civil penalties because the jury had
assessed punitive damages. Pet. App. a20. The fact that petitioners were
liable under the statute for alternative sanctions comparable to the punitive
damages award not only suggests that the award was not disproportionate
but also allays any concern that they did not receive "fair notice
* * * of the penalty" (Pet. 9, 16 (quoting BMW, 517 U.S. at 574)) that
they might face.
Finally, this case epitomizes a situation in which a high ratio between
compensatory and punitive damages is appropriate. Here, as in most cases
of racial discrimination in housing, repeated acts of intentional discrimination
caused minimal economic injury to individuals, but have grave societal costs.
See Robert G. Schwemm, Housing Discrimination: Law and Litigation §
25.3(2)(b), at 25-18 (1995). Beyond the harm that petitioners' pattern and
practice of discrimination inflicted on the identified victims, it posed
potential harm to other unnamed blacks that Big D managers may have rejected
through lies or failure to consider their applications. Moreover, the jury
could reasonably consider the need to deter not only Big D and Dooley, but
others in similar business positions. See Pet. App. a18-a21; Dean v. Olibas,
129 F.3d 1001, 1007 (8th Cir. 1997); 11 F. Supp. 2d at 1054. Because housing
discrimination can be practiced by subtle means that are difficult to detect,
when a pattern of discrimination has been proved strong measures are appropriate
to punish the discrimination and to deter future violations.
b. Contrary to petitioners' assertions (Pet. 11-19), the decision of the
court of appeals does not conflict with any decision of this Court, any
other decision of the Eighth Circuit, or any decision of another court of
appeals. As we have explained above, the determination whether an award
of punitive damages is excessive requires a fact-specific analysis in each
case. Thus, petitioners' comparisons of the amount of punitive damages awarded
here with awards in other cases, particularly cases involving violations
of other statutes, cannot in themselves demonstrate any conflict among decisions.
For example, although in one circumstance, this Court stated that a 4 to
1 ratio of punitive damages to compensatory relief "may be close to
the line," see Haslip, 499 U.S. at 23, the Court has upheld ratios
of 10 to 1 for potential harm, and 526 to 1 for actual harm, see TXO, 509
U.S. at 459-462. Further, reviewing courts' assessments or reductions of
awards in contexts very different from the case at bar, or based on different
legal standards, have little or no bearing on whether the jury's award here
violates due process. See, e.g., Kimzey v. Wal-Mart Stores, Inc., 107 F.3d
568, 576-577 (8th Cir. 1997) (punitive damages award in employment case
reduced in light of Missouri law, which considers aggravating and mitigating
circumstances); Patterson v. PHP Healthcare Corp., 90 F.3d 927, 942-943
(7th Cir. 1996) (remand of punitive damages award in employment discrimination
case), cert. denied, 519 U.S. 1091 (1997).
Petitioners have cited no case in which a court of appeals reduced a punitive
damages award for victims of racial discrimination in housing because it
was excessive and violated due process. Indeed, the court's affirmance of
the jury's award is consistent with other housing discrimination cases.
See, e.g., Littlefield v. McGuffey, 954 F.2d 1337, 1349 (7th Cir. 1992)
(intentional, racial discrimination against renter and subsequent harassment,
including death threats, supported $100,000 punitive damages award); Phillips
v. Hunter Trails Community Ass'n, 685 F.2d 184, 191 (7th Cir. 1982) ($50,000
punitive damages award each to a husband and wife, who were denied opportunity
to purchase home, upheld due to "ample evidence of intentional disregard"
of plaintiffs' civil rights). Accordingly, the Eighth Circuit's affirmance
of the jury's award is correct and consistent with other judicial decisions.
2. Petitioners also assert (Pet. 25-28) that punitive damages under the
Fair Housing Act of 1968 (FHA) should be assessed pursuant to Arkansas rather
than federal law, and, therefore, the jury's consideration of petitioners'
wealth was improper because it was forbidden by state law as unduly prejudicial.
The district court and court of appeals correctly rejected that contention.
See Pet. App. a16-a17; 11 F. Supp. 2d at 1052. That ruling accords with
the decisions of other courts of appeals and does not warrant this Court's
review.4
When a cause of action arises out of a federal statute, federal law governs
the scope of the available remedy. See Burnett v. Grattan, 468 U.S. 42,
55 & n.18 (1984); F.D. Rich Co. v. Industrial Lumber Co., 417 U.S. 116,
127 (1974). Accordingly, federal law controls damages determinations for
a federal cause of action. See, e.g., Sullivan v. Little Hunting Park, Inc.,
396 U.S. 229, 238-240 (1969). Although state law may sometimes be incorporated
into federal law as the federal rule of decision, the court of appeals here
determined, in accordance with this Court's precedent, that incorporation
of the law of individual states would frustrate the need for a uniform national
standard. Pet. App. a16 (citing Kamen v. Kemper Fin. Servs., Inc., 500 U.S.
90, 98 (1991)).
Applying federal law, the court of appeals correctly held that a defendant's
financial worth is admissible to evaluate the amount of punitive damages.
See City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 270 & n.31
(1981). Thus, the district court appropriately admitted evidence of petitioners'
financial worth. The jury was properly instructed, and it assessed punitive
damages separately against Big D and Dooley based on the specific circumstances
of each defendant. 4 Tr. 1148-1150, 1161-1162. See McFadden v. Sanchez,
710 F.2d 907, 912-914 & n.6 (2d Cir.), cert. denied, 464 U.S. 961 (1983).
Petitioners have cited no authority that supports their contention that
a punitive damages award under the Fair Housing Act should not be governed
by federal law because the Act does not contain specific criteria for awarding
punitive damages. Indeed, that claim is inconsistent with decisions of those
courts of appeals that have reviewed punitive damage awards under the Fair
Housing Act of 1968. See, e.g., Ragin v. Harry Macklowe Real Estate Co.,
6 F.3d 898, 909 (2d Cir. 1993); United States v. Balistrieri, 981 F.2d 916,
936 (7th Cir. 1992), cert. denied, 510 U.S. 812 (1993); Littlefield, 954
F.2d at 1345, 1349; Asbury v. Brougham, 866 F.2d 1276, 1283 (10th Cir. 1989);
Hunter Trails, 685 F.2d at 191; see also Schwemm, supra, § 25.3(3)(b),
at 25-35 to 25-38.
3. Finally, petitioners contend (Pet. 20-24) that the district court erred
in denying a "mixed motive" jury instruction because they presented
evidence of an alternative reason for denying Ms. Williams' application.
Petitioners' objection raises only a factual dispute with the lower courts'
evaluation of the evidence, and it presents no issue of general importance
warranting this Court's review.
The district court and court of appeals correctly determined that petitioners
failed to present evidence that supported a "mixed motive" instruction.
The court of appeals noted that "no witness corroborated appellants'
allegation that deficiencies in Williams' application contributed to her
rejection." Pet. App. a15. The court concluded, consistent with the
decisions of this Court, that "[a]ppellants' naked assertion without
more is not sufficient evidence of a legally permissible motive." Ibid.
Cf. Texas Dep't of Community Affairs v. Burdine, 450 U.S. 248, 255 n.9 (1981)
(A presumption established by a prima facie case is not rebutted by "[a]n
articulation not admitted into evidence[.] Thus, the defendant cannot meet
its burden merely * * * by argument of counsel").
CONCLUSION
The petition for a writ of certiorari should be denied.
Respectfully submitted.
SETH P. WAXMAN
Solicitor General
BILL LANN LEE
Acting Assistant Attorney
General
JESSICA DUNSAY SILVER
JENNIFER LEVIN
Attorneys
FEBRUARY 2000
1 Carol Ragan, a former employee of Big D, and Oak Manor Apartments were
also initially named as defendants. Before trial, the United States and
Ragan entered into a consent decree. Oak Manor Apartments was later removed
from the caption at the United States' request because it is not an independent
legal entity.
2 The court also rejected several additional claims that petitioners have
not raised in this petition. Pet. App. a23-a29.
3 In assessing reprehensibility, this Court examines the nature of the injury,
the extent to which the defendant engaged in repeated, unlawful behavior,
the presence (or absence) of a "safe harbor," the presence of
bad faith, and the presence of misconduct either through "deliberate
false statements * * * or concealment of evidence of improper motive."
BMW, 517 U.S. at 575-579.
4 Moreover, petitioners' claim is not properly before this Court because
they did not raise it in a timely manner in the district court. At trial,
petitioners objected to the introduction of their respective financial worth
solely on the ground that the United States had not made out a prima facie
case of either defendant's liability for punitive damages. 3 Tr. 694-695.
Petitioners did not contend until their motion for a new trial or remittitur
that evidence regarding the wealth of joint tortfeasors is prohibited under
state law as unduly prejudicial.