The Ninth Circuit Court of Appeals recently vacated a Nevada federal jury award of $10 million in punitive damages against Paul Revere Life Insurance Company and Unum Provident. Merrick v. Paul Revere Life Insurance Company et al., Nos. 05-16380, 05-17059 (August 31, 2007). On appeal, the Ninth Circuit held that the trial court improperly declined to instruct the jury that, when calculating punitive damages, it may only consider the defendants’ conduct toward the plaintiff, not toward any nonparties. Finding that the evidence presented at trial had created a significant risk that the jury would examine the defendants’ conduct toward nonparties in making its punitive damages decision, the Ninth Circuit ruled that the lack of proper jury instructions was a due process violation. As noted by the Ninth Circuit, according to the United States Supreme Court’s decision in Philip Morris USA v. Williams, 127 S. Ct. 1057 (2007), the Due Process Clause “forbids a State to use a punitive damages award to punish a defendant for injury that it inflicts upon nonparties.”

The full text of the Ninth Circuit’s decision may be found here.