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Oregon’s Supreme Court Revives Statutory Damages Caps

On May 5, 2016, the Oregon Supreme Court released an opinion breathing new life into the long neglected statutory damages caps on the books in Oregon.  The opinion will likely have a beneficial effect on risk management and insurance premiums in Oregon.

In  Horton v. OHSU, 359 Or 168 (2016),  the court explained that the legislature has the power to modify substantive and procedural parts of the common law when the existing law no longer adequately serves the needs of society.  This decision reversed prior decisions which had held that certain provisions of Oregon’s Constitution limited the legislature’s power in this area.  The decision gives new life to a number of existing statutory provisions whose operation and constitutionality had been curtailed by a line of decisions over the last fifteen years.

Horton involved a young boy harmed by the medical negligence of doctors at a state hospital.  A jury determined the boy had suffered damages in excess of $12 million.  However, Oregon’s Tort Claim Act  provided that the boy’s damages were limited to $3 million.  The defendant doctor sought to apply the cap to reduce the award, but the trial court refused, citing two provisions of Oregon’s constitution: Art. I Sec. 10 (the remedies clause) and Art. I Sec. 17 (the jury trial clause).  Existing case law supported the trial court’s decision, but the Supreme Court, disavowed those prior decisions and directed the application of the damages cap.

The court held that the damages cap was a permissible exercise of legislative power because, although it modified a common law remedy, the cap left the plaintiff with a “substantial” substitute remedy: $3 million.  It thus did not violate the remedies clause.    Further, the Oregon Tort Claim Act was part of a broader statutory enactment which benefitted some plaintiffs, for example by requiring the state to indemnify employees for their torts and thus providing a solvent defendant, while burdening others, by the application of the caps.  That legislative quid pro quo was an additional factor the court weighed to confirm that the substituted remedy was constitutional.  As to the jury trial clause, the court held that that clause is no longer to be treated as a source of any substantive rights.

The immediate effect is that Oregon’s general statutory cap on non-economic damages, ORS 31.710, will likely apply to many more types of cases.  That law provides that non-economic damages, including emotional distress, pain and suffering, and loss of consortium, are capped at $500,000.  Previous case law had held that the cap could not be applied to common law actions, and so the cap was only applied where the cause of action was statutory, such as employer’s liability, products liability or wrongful death.  It is likely that the cap may now be used in additional categories of cases, including loss of consortium[1] and potentially even common law negligence.  The decision will also prevent further holes being bored into the shield established by other statutory schemes, such as worker’s compensation.

Also of note, a bill was proposed in the Oregon legislature last session to potentially raise the amount of non-economic damages allowed under the cap.  The bill died in committee.  It remains to be seen whether the issue will be raised again this year, and whether its fate will be different, in light of this decision.

[1] On May 26, 2016, the Oregon Supreme Court remanded a case to the Court of Appeals to determine the application of the damages cap to a loss of consortium claim.  Rains v. Stayton Builders Mart, Inc., 359 Or 610.

 

Blog by: Steven Cade, Associate, Oregon

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