In the recent decision of Arbino v. Johnson & Johnson, __ Ohio St.3d __, 2007-Ohio-6948, the Ohio Supreme Court upheld the constitutionality of two provisions of the Ohio Revised Code which limit noneconomic and punitive damages in certain tort actions. The first statutory provision considered by the Supreme Court was R.C. § 2315.18, which caps noneconomic damages (i.e. intangible losses such as pain and suffering, loss of consortium, mental anguish, etc.) at the greater of (1) $250,000, or (2) three times the economic damages (up to a maximum of $350,000). Pursuant to the statute, this damage cap does not apply if the plaintiff suffered “[p]ermanent and substantial physical deformity, loss of use of a limb, or loss of a bodily organ system,” or “[p]ermanent physical functional injury that permanently prevents the injured person from being able to independently care for self and perform life-sustaining activities.” R.C. § 2315.18 (B)(3)(a) through (b).
The second statutory provision upheld by the Supreme Court was R.C. § 2315.21, which generally limits punitive damages recoverable in a tort action from the same defendant to a maximum of two times the amount of compensatory damages. Notably, in circumstances where the defendant is a small employer (i.e. an entity with not more than 100 full-time permanent employees or, if the company qualifies as a manufacturer, with not more than 500 full-time permanent employees), punitive damages are further limited to a maximum of two times the amount of the compensatory damages awarded to the plaintiff from the defendant or ten percent of the employer’s net worth, whichever is lesser.
As a practical matter, the Supreme Court’s ruling in this case represents a significant victory for companies who routinely face and defend tort and product liability actions. The damage caps serve to diminish the risks faced by those types of businesses and provide a degree of security to a defendant facing a tort claim. This decision may also provide insight into how the current Ohio Supreme Court will rule on upcoming constitutional challenges to Ohio’s employer intentional tort statute, R.C. § 2745.01, which severely restricts the ability of an employee to bring such a claim against his employer. However, there was considerable disagreement between the majority and dissenting justices in Arbino. As such, depending on the composition of the Ohio Supreme Court, future rulings on the constitutionality of tort-reform provisions, such as R.C. § 2745.01, may be more favorable to plaintiffs.