TXO Production Corporation v. Alliance Resources Corporation Page 2

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Media for TXO Production Corporation v. Alliance Resources Corporation

Audio Transcription for Oral Argument - March 31, 1993 in TXO Production Corporation v. Alliance Resources Corporation

Carter G. Phillips:

The West Virginia Supreme Court certainly seemed to indicate that, although it is a little difficult to understand on this record on what basis you would reach that conclusion in light of the slander of title claim.

You will recall that in the trial of this case, there was--

Byron R. White:

Yes, but if the case comes to us, we should... I suppose we would not quarrel with that judgment of the... that there was malice.

Carter G. Phillips:

--Well, there is no basis in the jury's verdict necessarily to find malice because the jury was told that it could award punitive damages simply for reckless disregard and without malice.

So, that... it's not clear to me that as it comes to this Court, that there is necessarily a jury finding of malice.

There is an appellate finding.

Byron R. White:

Yes, but do you lose the case if we assume there's malice?

Carter G. Phillips:

Oh, no, of course not.

We don't lose the case on that basis.

Byron R. White:

Well, that's what I thought.

So--

Carter G. Phillips:

My basic point--

[Laughter]

We're in agreement on that, Justice White.

But my basic point is that as you evaluate the relationship of the $10 million award, which is really where I think you have to start the legal analysis against what is going on here, in truth there isn't all that much that is going on here.

William H. Rehnquist:

--Well--

Carter G. Phillips:

And even if you accept that it gets you over the threshold of some punitive award, it certainly doesn't take you into the $10 million range for this kind of tort.

William H. Rehnquist:

--But certainly if you're looking for reasons why the jury might have found $10 million, it's more likely that they found malice than that they simply found reckless disregard.

Wouldn't you agree with that?

Carter G. Phillips:

I would agree with that, Mr. Chief Justice.

I would also, however, conclude that if you are looking to how the jury got to a $10 million award in this case, it is quite clear.

The question... the jury was provided with evidence of the wealth of the defendant in the case, TXO, and was asked by counsel in closing argument to award some percentage of that wealth over as a punitive award, that that would be the fair way to proceed.

And that is the only numerical evidence in this record, frankly, that can you get anywhere near $10 million.

David H. Souter:

Mr. Phillips, on that point, if the State of West Virginia had had, prior to your client's conduct here, a clear rule, whether it be a rule of statute or previously announced common law, to the effect that punitive damages may be awarded by reference not merely to the verdict in the tort action, but by reference to the extent... the economic extent of the harm either intended or potentially threatened by the tort, even though not realized, would you say that there was either a procedural or a substantive due process violation in applying that rule?

Carter G. Phillips:

The... if that rule, which is obviously the rule that respondents in a sense urge the Court to adopt--

David H. Souter:

That's how you get a basis for $10 million, if there is one, yes.

Carter G. Phillips:

--Right, and their... and that is part of their quest to come up with a number of $5 to $8 million because that is the potential gain.

We would still have a problem with that because you still have an extraordinary award that is difficult to justify by reference to the underlying conduct involved here, and--

David H. Souter:

Well, but let me start just with the general proposition, which is what I was trying to get at with my question.

Would there be as a general judgment... would there be a procedural or substantive due process defect in that rule?