Supreme Court upholds $48m award to farmers

The Arkansas Supreme Court today upheld a $48m award to farmers in a lawsuit over tainted rice, affirming a circuit judge's ruling that the 2003 Civil Justice Reform Act, which caps punitive damage awards in civil cases at $1m, is unconstitutional.

In a unanimous ruling written by Justice Courtney Hudson Goodson, the high court said Amendment 26 to the Arkansas Constitution gives the General Assembly the power to enact legislation to prescribe the amount of compensation to be paid employees for injury death.

The Civil Justice Reform Act is unconstitutional under Amendment 26 because it "limits the amount of recovery outside the employment relationship," the court said.

Last year, Lonoke County Circuit Judge Phillip Whiteaker declared the cap unconstitutional in his ruling awarding rice farmers $42m in punitive damages and about $6m in compensatory damages in a lawsuit farmers filed claiming their crops were tainted by genetically modified rice produced by Bayer CropScience.

Lawyers for Bayer CropScience asked the state Supreme Court in October to reverse Whiteaker's ruling, arguing that the Civil Justice Reform Act, which limits punitive damage awards to $250,000 or three times the amount of compensatory damages, with a maximum award of $1m, was constitutional.

Donald Scott, attorney for Bayer, said in oral arguments it's the Legislature's job to determine penalties.

Scott Powell of Birmingham, an attorney for Randal Schafer and 11 other rice farmers, argued that Whiteaker's ruling was correct, saying that compensatory damages are for recovery of injuries, while punitive damages are a penalty for conduct.

Powell said today he was pleased with the Supreme Court's ruling.

"It's a great day," he said. "What the Supreme Court said was that the cap that was placed on punitive damages violated the constitution, and a clear reading of the constitution makes it pretty clear that it did."

Powell said the court "looked closely at the (state) constitution … and came to the unanimous conclusion that constitution was clear in what it had to say about these issues."

The ruling, Powell said, "is a wonderful victory for farmers and small business and big business."

The attorney said the farmers have "really struggled over the last five years with the (rice) market losses" because of the genetically engineered rice.

"They're totally innocent, so it's a great victory for them," he said.

The Legislature passed the Civil Justice Reform Act after a jury awarded a $78m judgment against a Mena nursing home in a resident's death. The state Supreme Court reduced the award to $26m in May 2003.

Sen. Gilbert Baker, R-Conway, a co-sponsor of the 2003 law, said today he was "shocked and dismayed" by the Supreme Court's ruling and that it "undermined the process by which Arkansas citizens govern themselves."

The ruling "severely limits the Legislature's authority to carry out the wishes of the majority of Arkansans who understand the wisdom of tort reform," Baker said, noting that the law passed the Senate 34-1 and the House 71-28.

"The democratic process is the major casualty in this legal ruling," he said.

(Published by Arkansas News - December 8, 2011)