New Lower Court Ruling Sheds Light on Enforceability of Statutory Non-Economic Damages Cap in Oregon

On January 20, 2017, the Multnomah County Circuit Court released an opinion enforcing the $500,000 statutory cap on non-economic damages in a common law tort action.  This opinion provides valuable insight into how Multnomah County courts, and likely courts in other Oregon counties, will analyze and make determinations on the issue of whether the cap should apply in other cases.

As we discussed in our August 10, 2016 blog, “Oregon’s Supreme Court Revives Statutory Damages Cap”, last year the Oregon Supreme Court released an opinion validating the application of a statutory damages cap in the face of a constitutional challenge to that statute.  Horton v. OHSU, 359 OR 168 (2016).

In Horton, the Court validated the application of a section of Oregon’s Tort Claims Act to apply a $3 million damages cap in a personal injury case.  A jury had found that a young injured boy had suffered in excess of $12 million in damages.  The Horton court held that the damages cap should apply to limit his recovery to $3 million.  The decision reversed prior decisions which had held that certain provisions of Oregon’s Constitution restricted the legislature’s power to limit a plaintiff’s recovery of damages.  Specifically, the Court held that a remedy will be considered constitutionally adequate under the Oregon Constitution’s remedy clause only if it is “substantial.”  This term is not specifically defined, but essentially the Court held that a damages cap is constitutional if it “does not leave plaintiff ‘wholly without a remedy.’”

Oregon attorneys and clients alike have been waiting to see what effect the Horton Court’s holding will have on cases where defendants seek to enforce the $500,000 statutory cap on non-economic damages contained in Oregon’s Tort Claims Act at ORS 31.710.  Recently, a trial court in Multnomah County enforced the non-economic damages cap in a personal injury case, relying upon the Horton holding in support of its ruling.

In Busch v. Republic Services and Allied Waste Services, Multnomah County Court Case No. 15CV13496, a man was hit by defendant’s garbage truck while crossing at a crosswalk.  Plaintiff’s injuries included a severed left leg, which required an above the knee amputation, fractured ribs, and multiple soft tissue injuries.  The case resulted in a $13.5 million verdict for plaintiff, which included $3 million in economic damages and $10.5 million in non-economic damages.

In Busch, the court examined the recent holding in Horton, and determined that Oregon’s statutory cap on non-economic damages would operate to prevent plaintiff from recovering more than $500,000 in non-economic damages.  In doing so, the trial court followed the Supreme Court’s lead in Horton and examined whether application of the damages cap would still leave plaintiff with a “substantial” remedy.

The court in Busch first examined the difference between the legislatively capped damages award and what the damages would be if they were uncapped, and noted that plaintiff’s capped damages amounted to 26% of the uncapped damages award.  The court examined three previous cases — Horton, where the court determined it was constitutional when plaintiff recovered 25% of the uncapped damages; Greist v. Phillips, 322 OR 281 (1995), where the court determined it was constitutional when plaintiff recovered 38% of the uncapped damages; and Clarke v. Oregon Health & Science University, 343 OR 581 (2008), where the court determined that recovering 1.2% of the uncapped damages failed to leave plaintiff with a “substantial” remedy and thus violated the remedy clause contained in Oregon’s Constitution.

The court further examined the legislative purpose in enacting the non-economic damages cap, and determined that the cap was designed to reduce the cost of insurance premiums and the costs of litigation.  The court noted that this objective was accomplished by, in part, setting a cap on non-economic damages, which reduces an insurance provider’s exposure.  The decrease in a carrier’s exposure consequently prevents a corresponding increase of insurance premiums, which in turn increases the availability of insurance to ordinary individuals in Oregon.

Finally, similar to the analysis used in Horton as discussed in our previous blog, the court examined “quid pro quo” factors. The quid pro quo analysis involves situations where the legislature has sought to adjust a person’s rights and remedies as part of a larger statutory scheme that extends benefits to some while limiting benefits of others.  The analysis involves determining whether reduced benefits are still “substantial” in light of the overall statutory scheme.

The Plaintiff in Busch argued that there was no quid pro quo that constituted a meaningful benefit to plaintiff, and therefore the Horton analysis should not apply.  The court rejected this argument, and held that while quid pro quo was less significant in this case than in Horton, it did exist because plaintiffs at large obtained increased access to remedies for injuries caused by defendants, as insurance would be more affordable, and insurance providers received the benefit of limited exposure to non-economic damages.  Ultimately, the court ruled that application of the non-economic damages cap did not violate the plaintiff’s constitutional right to a “substantial” remedy.

In light of the ruling in this case, we can anticipate that Oregon’s statutory cap on non-economic damages in common law tort actions will likely be upheld in more cases in Multnomah County, as the court in the Busch case established a road map on how it and likely other Oregon trial courts will examine the issue.

There are still uncertainties about when the uncapped damages award is so small that it fails to be “substantial,” but it appears that anything above 25% will be deemed sufficient in cases moving forward.  In light of these uncertainties, an affirmative defense should be raised in every case where plaintiff has requested more than $500,000 in non-economic damages.

Blog by: Karlek S. Johnson, Associate, Oregon