CCL President Robert S. Peck told the South Dakota Supreme Court today that Fern Johnson's lawsuit against United Parcel Service and Liberty Mutual Insurance exposed a corporate policy and business plan designed to close workers compensation claims, despite the workers' eligibility for lifetime benefits, despite a 13-year legal journey that confirmed those benefits, and despite a court order requiring the payment of those benefits. As a result, he said, significant punitive damages were warranted to vindicate the state's interest in assuring that workers injured on the job receive the compensation that the law mandates and vindicate the judiciary's interest in having its orders obeyed.

     Fern Johnson sued the two companies after obtaining a court order and defending her claims before the South Dakota Supreme Court. Less than seven months after winning her case, her benefits were cut again. She first brought an administrative claim before the state department of labor and won back those benefits. She then brought a bad-faith insurance claim in court. Represented by South Dakota's Goodsell Quinn law firm, Johnson won a $500,000 jury verdict for compensatory damages and a $45 million punitive damage verdict. The trial judge, although indicating her agreement with the jury's award and stating that it was not the product of passion and prejudice, felt compelled to reduce the punitive damages to $10 million. 

     UPS and Liberty Mutual appealed to the state supreme court, claiming that there should have been no liability because they relied upon the advice of counsel, a prominent South Dakota lawyer. They asserted that the trial judge improperly limited that counsel's testimony and denied them a fair trial. Alternatively, if the liability was properly assessed, the defendants argued that the punitive damages were constitutionally limited to a 1:1 ratio. Johnson cross-appealed for restoration of the full $45 million.

     In Peck's portion of the argument, he recited evidence that showed that the defendants had already decided to take away Johnson's benefits before consulting counsel, that counsel's advice had been admitted and considered by the jury and that only his reasoning for it, which was immaterial, was kept out, and that the defendants had spent more on attorney fees than the total liability they claimed was constitutionally mandated, indicating that a further reduction in punitive damages would not achieve its purposes of deterring and punishing their misconduct. He further noted that the full $45 million punitive damage judgment would not harm either company, with their shares of it amounting to 0.5 and 2.5 percent of their net worth, respectively. 

     The case is under submission.