Pacific Mutual Life Insurance Company v. Haslip

PETITIONER: Pacific Mutual Life Insurance Company
RESPONDENT: Haslip
LOCATION: Clark County Jail

DOCKET NO.: 89-1279
DECIDED BY: Rehnquist Court (1990-1991)
LOWER COURT: Supreme Court of Alabama

CITATION: 499 US 1 (1991)
ARGUED: Oct 03, 1990
DECIDED: Mar 04, 1991

ADVOCATES:
Bruce A. Beckman - on behalf of the Petitioner
Bruce J. Ennis, Jr. - on behalf of the Respondents

Facts of the case

Question

Media for Pacific Mutual Life Insurance Company v. Haslip

Audio Transcription for Oral Argument - October 03, 1990 in Pacific Mutual Life Insurance Company v. Haslip

William H. Rehnquist:

We'll hear argument first in Number 89-1279, Pacific Mutual Life Insurance Company v. Cleopatra Haslip.

Mr. Beckman.

Bruce A. Beckman:

Mr. Chief Justice, and may it please the Court:

This matter is here on writ of certiorari to review a judgment of the Alabama Supreme Court.

That judgment affirmed and awarded punitive damages against the Petitioner, Pacific Mutual Life Insurance Company, on a respondeat superior basis for fraud committed by a sales agent in collecting and pocketing premiums from a policy of group health insurance issued by another carrier, Union Fidelity Life Insurance Company, and also on individual policies of life insurance issued by Pacific Mutual.

The insurance was issued to cover employees of the City of Roosevelt, which is a small town in Alabama.

During the course of the trial, all counts asserted by plaintiffs alleging any wrongdoing against Pacific Mutual directly were dismissed and abandoned, so that the sole basis of the award was respondeat superior, or the fraud of the agent.

The major portion of the award went to Mrs. Haslip because she incurred medical expenses during a period which would have been covered by the Union Fidelity policy had the agent not misappropriated the premiums.

She was apparently unable to pay the hospital expenses, and a judgment was entered against her.

And that appears to explain the great disparity in the award that went to her, and the relatively nominal awards that went to the other plaintiffs.

Sandra Day O'Connor:

Now, I suppose we do not know the breakdown of compensatory and punitive damages here?

Bruce A. Beckman:

Justice O'Connor, under Alabama law, the punitive damage award to Mrs. Haslip would have been at least $840,000, because the maximum... she had a prayer for $3 million of punitive damages, and a prayer for her actual damages, plus emotional distress damages of $200,000.

The award to her was $1,040,000, so that if we assumed that she got the full general, actual, economic damages, and emotional distress damages, for which she prayed, the punitive award still would have been at least $840,000, and that would have been the computation under Alabama law.

The plaintiffs themselves submitted the case to the Alabama Supreme Court--

Antonin Scalia:

Excuse me.

Why do you say that would be the computation under Alabama law?

Is it impossible, under law... under Alabama law, to give a plaintiff more than the plaintiff prays for?

Bruce A. Beckman:

--Yes, and under the cases that were cited, in fact by the Respondents here, that would be the computation of the award.

It would be at least $840,000, because the actual other damages would not exceed $200,000.

And as I said, the plaintiffs here submitted--

Antonin Scalia:

Are there Alabama cases that set aside judgments for more than what is prayed for?

Bruce A. Beckman:

--It is my understanding that there are, Justice Scalia.

I cannot cite them to you at this point.

The plaintiffs--

Antonin Scalia:

I think it makes sense to say she asked for so much, and--

Bruce A. Beckman:

--Yes.

Antonin Scalia:

--and you subtract that from the total.

But the jury could have said in the jury room, couldn't it, well, she asked for that much, but we really think that her emotional distress was even more than that and we'll give her even more?

Bruce A. Beckman:

That could happen, but they would then have been limited to the prayer under Alabama law.

And again--