In Re: TMI , 67 F.3d 1119 ( 1995 )

Opinions of the United
1995 Decisions States Court of Appeals
for the Third Circuit
10-17-1995
In Re: TMI
Precedential or Non-Precedential:
Docket 94-7600
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 94-7600, 94-7601, 94-7602
IN RE: TMI
METROPOLITAN EDISON COMPANY ("MET ED"); PENNSYLVANIA
ELECTRIC COMPANY; JERSEY CENTRAL POWER & LIGHT COMPANY;
GENERAL PUBLIC UTILITIES CORP.; BABCOCK & WILCOX CO.;
MCDERMOTT, INC.; DRESSER INDUSTRIES, INC.; UE & C -
CATALYTIC, INC. (RAYTHEON); BURNS & ROE ENTERPRISES,
Appellants Nos. 94-7600/7601
METRO EDISON COMPANY ("MET ED"); PENNSYLVANIA ELECTRIC
COMPANY; JERSEY CENTRAL POWER & LIGHT COMPANY; GENERAL
PUBLIC UTILITIES CORP.; BABCOCK & WILCOX CO.; MCDERMOTT,
INC.; DRESSER INDUSTRIES, INC.; UE & C - CATALYTIC, INC.
(RAYTHEON); BURNS & ROE ENTERPRISES,
Appellants No. 94-7602
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
(D.C. Civ. Nos. 88-cv-01452, 88-cv-01551, 88-cv-01558)
Argued: May 1, 1995
Before: SCIRICA, McKEE, AND SAROKIN, Circuit Judges.
(Filed October 17, 1994)
ALFRED H. WILCOX, ESQUIRE (ARGUED)
ELLEN KITTREDGE SCOTT, ESQUIRE
Pepper, Hamilton & Scheetz
3000 Two Logan Square
Eighteenth and Arch Streets
Philadelphia, PA 19103
Attorneys for Appellants
1
ARNOLD LEVIN, ESQUIRE (ARGUED)
LAURENCE S. BERMAN, ESQUIRE
FRED S. LONGER, ESQUIRE
Levin, Fishbein, Sedran & Berman
320 Walnut Street, Suite 600
Philadelphia, PA 19106
LEE C. SWARTZ, ESQUIRE
SANDRA L. MEILTON,ESQUIRE
Hepford, Swartz & Morgan
111 North Front Street
Post Office Box 889
Harrisburg, PA 17108
WILLIAM R. WILSON, JR., ESQUIRE
654 North State Street
Jackson, MS 39202
Attorneys for Appellees,
Dorothy L. Aldrich, et al.
LOUIS M. TARASI, JR., ESQUIRE
Tarasi & Johnson
510 Third Avenue
Pittsburgh, PA 15219
Attorney for Appellees,
Estate of Henrietta Adams, et al.
OPINION OF THE COURT
McKEE, Circuit Judge.
In this interlocutory appeal we are asked to determine
whether persons who claim to have been injured by radiation from
a nuclear reactor can recover punitive damages under state law.
For the reasons that follow we conclude that plaintiffs here may
recover punitive damages under Pennsylvania law and we will
therefore affirm the decision of the district court.
2
I. PROCEDURAL HISTORY
These actions were begun in the aftermath of the March 28,
1979 nuclear accident at the Three Mile Island nuclear reactor in
Dauphin County, Pennsylvania ("TMI"). Appellants - corporations
which owned, operated, or supplied materials or services to TMI -
are the defendants in personal injury actions brought by (or on
behalf of) more than 2,000 individuals who resided in the
vicinity of TMI at the time of the accident. Plaintiffs attempt
to recover both punitive and compensatory damages for illnesses
allegedly resulting from exposure to radiation released during
the accident. Because these actions seek damages on account of
the hazardous properties of special nuclear material, they are
"public liability actions" arising under the Price-Anderson Act,
as amended by the Amendments Act of 1988. See The Price-Anderson
Amendments Act of 1988, Pub. L. No. 100-408, 102 Stat. 1066
(1988) (codified at 42 U.S.C. § 2014(hh)) [hereinafter the "Act"
or the "Amendments Act"].
The history of the several cases that have been litigated in
this circuit as a result of the TMI accident is as long as it is
complex, and we will only detail those proceedings that bear upon
the issue currently us.1 Plaintiffs seek punitive damages
against defendants General Public Utilities Corporation and
Metropolitan Edison Company [hereinafter "defendants"] for
1
For a review of other related TMI proceedings and the
issues that have been decided in previous rulings, see In re TMI
Litig. Cases Consol. II, 940 F.2d 832, 835 (3d Cir. 1991) ("TMI
II").
3
defendants' alleged willful, wanton and reckless indifference to
information concerning faulty plant equipment and design at TMI.
Plaintiffs rest their claim for punitive damages upon assertions
that defendants were aware of such information yet failed to take
proper precautions to guard against the potentially dangerous
effects of the equipment. Plaintiffs also assert that defendants
falsified leak rate tests and reports submitted to the Nuclear
Regulatory Commission and knowingly operated TMI in violation of
technical specifications.2
Early in the course of the TMI litigation, the district
court recognized the difficulty posed by the question of
plaintiffs' right to recover punitive damages under the Price
Anderson Act. In order to prevent the litigation from being held
up while that issue was addressed, the court bifurcated the
damages claims and deferred consideration of the punitive damages
claims until after resolution of the claims for compensatory
damages. In re TMI Litig. Personal Injury Claims, No. 79-0906
(M.D. Pa. order entered Dec. 30, 1982); App. at 162.
While these and companion TMI cases were being litigated in
state and district court, the Supreme Court decided Silkwood v.
Kerr-McGee Corp., 464 U.S. 238 (1984), which held in part, that
states are precluded from regulating the safety aspects of
nuclear energy but that states still had authority under the Act
2
Defendants pled no contest to possession, use and
operation of a utilization facility in violation of NRC
regulations in a criminal prosecution arising out of the same
nuclear incident that gives rise to this civil suit. See United
States v. Metropolitan Edison Co., CR-83-00188 (M.D. Pa. order
entered Feb. 29, 1984).
4
to control nonregulatory aspects of nuclear facilities. Id. at
240-41, 256. Following the decision in Silkwood, the district
court denied defendants' motion for summary judgment that had
been filed following a Rule 16 conference. See In re Three Mile
Island Litig., 605 F. Supp. 778, 784 (M.D. Pa. 1985) (holding
that punitive damages are recoverable under the Price-Anderson
Act, to the extent that damages assessed under the Act would not
be paid from federal monies) [referred to herein as "TMI I"].
Shortly thereafter, defendants successfully petitioned this court
for interlocutory review of that ruling. We ruled that the
Price-Anderson Act provided no basis for federal jurisdiction,
vacated the district court's order denying summary judgment, and
remanded the matter back to the district court for remand to
state court. See Kiick v. Metropolitan Edison Co., 784 F.2d 490
(3d Cir. 1986).
Meanwhile, Congress enacted the Amendments Act of 1988 which
became effective on August 20, 1988. The Amendments Act created
a federal cause of action, the "public liability action," and
mandated that federal courts shall have both original and removal
jurisdiction over such actions. 42 U.S.C. § 2210(n)(2). This
provision retroactively conferred "arising under" jurisdiction by
way of public liability actions over these cases. See In re TMI
Litigation Cases Consolidated II, 940 F.2d 832 (3d Cir. 1991),
cert. denied sub nom., Gumby v. General Public Utils. Corp., 112
S. Ct. 1262 (1992) ["TMI II"]. The Amendments Act also placed a
"limitation," (more accurately described as a prohibition) on
punitive damages awards in public liability actions where the
5
United States is obligated to make indemnification payments on
behalf of a particular defendant. 42 U.S.C. § 2210(s).
Defendants eventually moved for partial summary judgment on
plaintiffs' claims for punitive damages. Defendants argued
before the district court that Pennsylvania's allowance of
punitive damages was inconsistent with the compensatory nature of
the Amendments Act as well as that Act's prohibition against
state regulation of the safety aspects of nuclear reactors. The
district court denied partial summary judgment and held that
punitive damages are available in these cases so long as the
money to pay such awards does not come from the United States
Treasury. In re TMI Litig. Consol. Proceedings, Nos. 1:cv-88-
1452, 1:cv-88-1551, 1:cv-88-1558, slip op. at 9 (M.D. Pa. Feb.
18, 1994). Thereafter, the district court certified a number of
issues for interlocutory appeal, including defendants' right to
recover punitive damages. We here only address defendants' right
to recover punitive damages. In companion opinions we address
the remaining issues that were certified for appeal.
II. DISCUSSION.
The question of law certified for appeal by the district
court for this interlocutory appeal is:
Whether Pennsylvania's rules of decision
relating to punitive damages are inconsistent
with the provisions of the federal Price-
Anderson Act, as amended, and therefore may
not serve as rules of decision to be applied
in a "public liability action" under the
Price-Anderson Act.
In re TMI Litig. Consol. Proceedings, Nos. 1:cv-88-1452, 1:cv-88-
6
1551, 1:cv-88-1558, slip op. at 6 (M.D. Pa. July 13, 1994). In
holding that punitive damages awards under Pennsylvania law do
not violate the Price-Anderson Act or its Amendments, the
district court stated:
Defendants argue in great detail that the
award of punitive damages in this case is
inconsistent with the overall scheme adopted
by Congress in the Price-Anderson Act.
However, the Supreme Court addressed
essentially this same argument in Silkwood
and decided that punitive damages were
consistent with applicable federal statutes
and regulation. In addressing the
government's conflict preemption argument,
the Supreme Court explicitly found that
'exposure to punitive damages [does not]
frustrate any purpose of the federal remedial
scheme.' 464 U.S. at 257 (emphasis added). .
. . the Court clearly considered the Price-
Anderson Act to be part of the relevant
federal remedial scheme. By implication,
then, the Silkwood court concluded that
punitive damages were not inconsistent with
the Price-Anderson Act.
Id. at 5. The district court concluded that none of the 1988
amendments to the Price-Anderson Act had changed the Supreme
Court's conclusion. The court reasoned that § 2210(s) of the
Amendments Act, limiting punitive damages, has no retroactive
application, and therefore "that limit does not govern this
case." Id. at 7. In addition, the district court properly
observed that this "court did not interpret the Act as excluding
punitive damages altogether[]" in TMI II. Id. at 8. Finally,
the court noted that the indemnity agreement providing for
coverage for punitive damages, which is available to insureds
under the Amendments Act, 10 C.F.R. § 140.91, Appendix A, ¶2(c),
7
p. 489 (1993), is still unchanged. Id. at 8-9. Based upon this
analysis the district court concluded that plaintiffs could
recover punitive damages and denied defendants' motion for
partial summary judgment. Id.
Because the issue certified for review is purely a question
of law, our review is plenary. Buzzard v. Roadrunner Trucking,
Inc., 966 F.2d 777, 779 (3d Cir. 1992). Our consideration of
this issue is informed by statutory language, legislative history
and the relevant case law.
A. The Language of the Amendments Act
By now, "[i]t is axiomatic that statutory interpretation
begins with the language of the statute itself." Government of
Virgin Islands v. Knight, 989 F.2d 619, 633 (3d Cir. 1993)
(citing Pennsylvania Dep't. of Pub. Welfare v. Davenport, 495
U.S. 552, 557-58 (1990)). "Courts presume that Congress
expressed its legislative intent through the ordinary meaning of
the words it chose to use, and if the statutory language is
unambiguous, the plain meaning of the words ordinarily is
regarded as conclusive." Id. Plaintiffs argue that the plain
meaning of the language in the Amendments Act counsels that
punitive damages are available in these actions. We agree.
It is not disputed that these suits are "public liability
actions." See TMI II, 940 F.2d at 857; 42 U.S.C. § 2210(n). Such
actions include suits asserting "any legal liability arising out
of or resulting from a nuclear incident or precautionary
evacuation . . . ." 42 U.S.C. § 2014(w) (emphasis added).
Section 2014(w) does exclude certain types of claims from those
8
that may be brought under that statute. See 42 U.S.C.
§2014(w)(i-iii). Significantly, claims for punitive damages are
not listed as an exception. Accordingly, the district court's
conclusion is further supported by the doctrine of inclusio unius
est exclusio alterius "which informs a court to exclude from
operation those items not included in a list of elements that are
given effect expressly by the statutory language." Williams v.
Wohlgemuth, 540 F.2d 163, 169 n.30 (3d Cir. 1976). Thus, 42
U.S.C. § 2014(w)(i-iii) "`is as significant for what it omits as
for what it says.'" Id. (citation omitted). Our analysis
therefore turns on a determination of whether punitive damages
fall within the scope of "any legal liability" as that phrase is
used in the Act. Obviously, as defendants concede, punitive
damages are a type of legal liability. (Transcript of Oral
Argument at 4-5.) The Supreme Court has reaffirmed that punitive
damages are normally included within the concept of tort
liability:
[O]ne of the hallmarks of traditional tort
liability is the availability of a broad
range of damages to compensate the plaintiff
"fairly for injuries caused by the violation
of his legal rights." . . . [P]unitive or
exemplary damages are generally available in
those instances where the defendant's
misconduct was intentional or reckless.
9
United States v. Burke, 112 S. Ct. 1867, 1871-72 (1992). See
also TXO Production Corp. v. Alliance Resources Corp., 113 S.
Ct. 2711, 2718 (1993) (finding legal liability for punitive
damages by affirming a judgment of $19,000 in compensatory
damages and $10 million in punitive damages).
The Amendments Act was not intended to alter the nature of
the tort claims which constitute public liability actions.
Indeed, the Act directs that "the substantive rules for decision
in such action shall be derived from the law of the State in
which the nuclear incident involved occurs, unless such law is
inconsistent with the provisions of . . ." the Price-Anderson
Act. 42 U.S.C. § 2014(hh). Here, the applicable state law is
that of Pennsylvania, as TMI is located in Pennsylvania. See id.
Historically, Pennsylvania has recognized punitive damages as a
form of liability. See Thompson v. Swank, 176 A.2d 211, 211 (Pa.
1934) ("Where the injurious act is willful, malicious, or wanton,
the jury, according to the malignity shown, without bias or
feeling, may award a reasonable sum in vindication of the rights
of the injured party as exemplary or punitive damages."); Cf.
Martin v. Johns-Manville Corp., 494 A.2d 1088, 1096 (Pa. 1985)
(plurality) ("As a general guide in this area Pennsylvania
recognizes the principles set forth in Section 908(2) of the
Restatement of Torts (Second): `(2) Punitive damages may be
awarded for conduct that is outrageous, because of the
defendant's evil motive or his reckless indifference to the
rights of others. . . .'"); Feld v. Merriam, 485 A.2d 742, 747-48
(Pa. 1984) (same).
10
Defendants assert that the Price-Anderson Act has three
relevant objectives: "(1) assure the availability of funds to
compensate persons injured; (2) limit liability to the funds so
provided, to encourage private industry to invest in the nuclear
power alternative; (3) achieve resolution of nuclear accident
claims as efficiently and expeditiously as possible." Brief of
Appellants at 6. Defendants argue that Pennsylvania's punitive
damages rules are premised upon retribution, deterrence and
punishment, and that they therefore can not apply to operators of
nuclear reactors after the Price-Anderson Act and the 1988
Amendments. See Kirkbride v. Lisbon Contractors, Inc., 555 A.2d
800, 803 (Pa. 1989) ("the purpose of punitive damages is to
punish a tortfeasor for outrageous conduct and to deter him or
others from similar conduct"). Accordingly, defendants argue
that the inherently penal nature of punitive damages in
Pennsylvania is inconsistent with the purposes and policies of
the public liability action, and the Act therefore precludes
plaintiffs from recovering punitive damages. We disagree.
As noted above, defendants' position is undermined by the
very language of the statue it is based upon. The Amendments Act
does specifically prohibit punitive damages, but that prohibition
is far more narrow than defendants' construction suggests.
Section 2210(s) states:
Limitation of punitive damages
No court may award punitive damages in
any action with respect to a nuclear incident
or precautionary evacuation against a person
11
on behalf of whom the United States is
obligated to make payments under an agreement
of indemnification covering such incident or
evacuation.
42 U.S.C. § 2210(s). However, even this prohibition is limited
and applies only "with respect to nuclear incidents occurring on
or after Aug. 20. 1988." Because TMI occurred in 1979, well
before the effective date of the 1988 Amendments, the qualified
prohibition does not apply here. See 42 U.S.C. § 2210 note (1988)
(Effective Date of 1988 Amendment). Again, the language "is as
significant for what it omits as for what it says." Williams,
supra.
Moreover, we concluded in TMI II that imposition of state
remedies in a public liability action would not frustrate the
objectives of the Price-Anderson Act. TMI II, 940 F.2d at 859.
It was there noted that "[t]he ban on punitive damages applies
only to nuclear incidents occurring after August 20, 1988, which
does not include this case. . . . It should also be noted that
punitive damages remain available when the government is not
obligated to make payments under an indemnification agreement.
See 42 U.S.C. § 2210(s) (1988)." Id. at 874 n.6 (Scirica, J.
concurring).
In Silkwood, the Court held that the Atomic Energy Act3 had
not preempted a state authorized award of punitive damages. 464
U.S. at 256. Although the Price-Anderson Act did not control the
analysis in Silkwood, the Court concluded that "the discussion
preceding its enactment and subsequent amendment indicates that
3
42 U.S.C. §§ 2011-2284 (1976 ed. and Supp. V).
12
Congress assumed that persons injured by nuclear accidents were
free to utilize existing state tort law remedies." Id. at 251-
52. The defendants in Silkwood had argued that an award of
punitive damages "frustrates Congress' express desire `to
encourage widespread participation in the development and
utilization of atomic energy for peaceful purposes'" as expressed
in the Atomic Energy Act, 42 U.S.C. § 2013(d), and that such an
award "conflicts with Congress' express intent to preclude dual
regulation of radiation hazards." Id. at 257-58. The Court
disagreed. "[T]he award of punitive damages in this case does
not hinder the accomplishment of the purpose stated in §2013(d)".
The Court further stated; "Congress did not believe that it was
inconsistent to vest the NRC with authority over the safety
aspects of nuclear development while at the same time allowing
plaintiffs . . . to recover for injuries caused by nuclear
hazards." Id. at 257-58.
Thus, although Congress clearly intended to preempt state
regulation of nuclear safety standards when it enacted Price-
Anderson, "the award of punitive damages would not impede the
congressional goal of promoting nuclear safety." TMI II, 940
F.2d at 859. All that has changed since TMI II is the enactment
of the 1988 Amendments, and it is clear from the unambiguous
language of those Amendments that Congress did not intend to
change the result the Supreme Court had reached in Silkwood.
In view of the sweeping changes effectuated in the
Amendments Act, Congress could easily have completely precluded
punitive damages in every case arising out of a nuclear incident
13
or precautionary evacuation. However, Congress declined to
extend its punitive damages limitation that far. The district
court correctly reasoned:
In passing the [Amendments] Act, Congress
clearly had an opportunity to overturn the
Supreme Court's pronouncement in Silkwood. In
"transform[ing] . . . the entire Price-
Anderson landscape . . . [w]ith the passage
of the Amendments Act," TMI II, 940 F.2d at
857, Congress did not hesitate to overturn
several prior decisions of the Third Circuit
with which it disagreed. See 42 U.S.C.
§2014(hh) (providing for federal jurisdiction
over suits arising out of all nuclear
incidents and reversing Stibbitz [sic] v.
General Pub. Utils. Corp., 746 F.2d 993 (3d
Cir. 1984), cert. denied, 469 U.S. 1214
(1985); and Kiick v. Metropolitan Edison Co.,
784 F.2d 490 (3d Cir. 1986). Yet, despite
its substantial revision of the nuclear
regulatory scheme, Congress only partially
limited Silkwood's holding.
. . . While a statement in the
legislative history indicates that Congress
did not intend any inference for or against
the applicability of punitive damages in
other cases be drawn from the provision, see
S. Rep. No. 70, 100th Cong., 1st Sess. 27,
(1987), the failure of Congress to completely
reverse Silkwood at the very least indicates
that Congress did not believe an award of
punitive damages in prior cases to be so
inconsistent with the purposes of the Act
that it must be changed.
In re TMI Litig. Consol. Proceedings, Nos. 1:cv-88-1452, 1:cv-88-
1551, 1:cv-88-1558, slip op. at 6-7 (M.D. Pa. Feb. 18, 1994).
B. Legislative History
Presented with the unambiguous language of the Act we need
not, and ordinarily should not, look to its legislative history
14
for clarification. Nevertheless, "[a] court may consider
persuasive legislative history that Congress did not intend the
words they selected to be accorded their common meaning. A
construction inconsistent with a statute's plain meaning,
however, is justifiable only when clear indications of a contrary
legislative intent exist." Knight, 989 F.2d at 633 (citations
omitted).
We disagree with defendants' position that references in the
Act's legislative history suggest that punitive damages would
"undermine" the "compensatory purposes" of the legislation and
make it unworkable. Brief of Appellants at 20. The availability
of punitive damages does not undermine Congress' compensatory
scheme as set forth in the insurance/indemnification provision of
the Amendments Act. In the discussion which preceded the
Amendments Act, the House Committee eliminated a proposed
amendment to preclude punitive damages entirely. In so doing,
the House Committee confirmed that the holding of Silkwood is
still controlling authority on that issue:
The current Act [pre-1988 Amendments]
does not expressly state whether a court may
award punitive damages in connection with a
claim arising out of a nuclear incident. Nor
does the Act expressly state whether private
financial protection funds or government
indemnity funds could be used to pay punitive
damages if imposed. In 1984, in Silkwood v.
Kerr-McGee Corporation, 464 U.S. 238, the
U.S. Supreme Court resolved the first of
these two issues when it held that the Atomic
Energy Act, as amended by the Price-Anderson
Act, does not prevent a court from imposing
punitive damages under state tort law. The
15
Court did not address the second issue,
however, whether private financial protection
or government indemnity funds available under
the Price-Anderson Act could be used to pay a
punitive damages award.
During the 99th Congress, the
Subcommittee on Energy and the Environment
approved an amendment to H.R. 3653 that would
have prohibited use of either private
financial protection or government indemnity
funds available under the Act to pay punitive
damage awards. The purpose of this amendment
was to prevent the limited funds available
for compensating actual injuries from being
used to pay punitive awards. A serious
question arose, however, whether the
amendment subjected NRC licensees and DOE
contractors to unlimited liability for
punitive damages, thereby undermining one of
the primary tenets of the Act. Accordingly
the Committee subsequently agreed to
eliminate the amendment, thus restoring
current law on the issue.
H.R. Rep. No. 104, 100th Cong., 1st Sess., pt.1, at 19 (May 21,
1987) (emphasis added). The then current law on the issue of
punitive damages was expressed in the holding of Silkwood. Thus,
the legislative history reveals that the compromise in the
legislative process led to a statute permitting punitive damages,
despite the House Committee's reservations concerning such
awards. See id. ("the Committee remains opposed to punitive
damage awards in connection with claims arising under the Price-
Anderson Act because such awards could have the effect of
diminishing the limited funds available to compensate actual
injuries"). Thus, Congress decidedly declined the opportunity to
expressly eliminate punitive damages.
Subsequent consideration of the Amendments Act in the Senate
also indicates Congress' intent to allow punitive damages:
16
Section 13 prohibits courts from
awarding punitive damages under State law in
any action that involves a nuclear incident
if the action is brought against a Department
of Energy Contractor, subcontractor or
supplier indemnified under the Price-Anderson
Act. The provision insures that the Federal
taxpayers will not have to pay punitive
damages, consistent with established Federal
policy, most forcefully stated in the Federal
Tort Claims Act (28 U.S.C. 2674), that
punitive damages may not be awarded against
the Federal Government.
This provision does not preclude the
award of punitive damages against persons,
including licensees of the Commission, who
are not indemnified by DOE under the Price-
Anderson Act. The Committee intends no
preference, for or against the awarding of
punitive damages in suits against such
persons, be inferred from the inclusion of
this provision in the bill.
S. Rep. No. 70, 100th Cong., 1st Sess. 27 (June 12, 1987),
reprinted in 1988 U.S.C.C.A.N. 1424, 1440 (emphasis added).
Similarly, the Committee on Environment and Public Works,
concluded:
The bill clarifies that an award of
punitive damages is prohibited if the award
would result in any obligation of the United
States to make any payments for public
liability. This reflects the longstanding
policy that the Federal government should not
be liable for punitive damages.
Thus, all punitive damages would be
prohibited in actions involving DOE
contractors indemnified under section 170 r.
Punitive damage awards also would be
prohibited in suits against licensees covered
by the retrospective premium system, if, as a
result of such an award, payments beyond the
primary and secondary layers of financial
17
protection would be necessary, since the
United States is obligated to provide a
source of funding for such claims.
The bill does not otherwise affect
current law regarding punitive damages.
S. Rep. No. 218, 100th Cong., 2d Sess. 12-13, reprinted in 1988
U.S.C.C.A.N. 1476, 1487-88 (emphasis added).
It is hard to imagine more lucid declarations of
Congressional intent, and we will not judicially amend this
statute or subvert the policy of the legislation by adopting
defendants' arguments to the contrary.
C. Purpose of Punitive Damages
As noted above, defendants accurately characterize the
purposes of punitive damages under Pennsylvania law. See Martin
v. Johns-Manville Corp., 494 A.2d 1088, 1096 (Pa. 1985) ("In
Pennsylvania, the function of punitive damages is to deter and
punish egregious behavior.") (citations omitted).4 However,
those penal objectives are not necessarily in conflict with the
Amendments Act.
Defendants correctly point out that the 1988 Act created a
system of mandatory insurance premiums in order to create a fund
to compensate those who were injured in nuclear accidents. This
scheme causes all operators of nuclear reactors to collectively
shoulder the cost of damages paid to anyone who recovers in a
public liability action. Defendants rely in part upon Esmond v.
4
We note that Pennsylvania law is consistent with the
Supreme Court's characterization of punitive damages. See Gertz
v. Robert Welch, Inc., 418 U.S. 323, 350 (1974) (describing
punitive damages as "private fines levied by civil juries to
punish reprehensible conduct and to deter its future
occurrence").
18
Liscio, 224 A.2d 793 (Pa. Super 1966), to argue that punitive
damages can not be imposed on any particular defendant or group
of defendants without violating this collective approach to
compensation. They suggest that "Pennsylvania's law does not
permit one personally guilty of conduct which warrants imposition
of punitive damages to `shift the burden of punitive damages to
his insurer.'" Brief of Appellants at 15 (quoting Esmond, 224
A.2d at 800). We do not think that Esmond prohibits punitive
damages in a public liability action. Under the scheme of
compensation established by the Amendments, an award of punitive
damages which required payment out of the second layer of
liability would presumably be spread vicariously through the
industry, and no one facility would be penalized more than
another. See 42 U.S.C. § 2210(b). This is not totally
inconsistent with Esmond wherein the court stated, "[i]n general,
allowing one who is only vicariously liable for punitive damages
to shift the burden of satisfying the judgment to his insurer
does not conflict with the rule of policy that we announce
today." 224 A.2d at 800.
As a practical matter we are, of course, aware of the
possibility that several large punitive damage awards here, as
with any mass tort litigation involving a limited fund, might
deplete the fund. In Juzwin v. Amtorg Trading Corp., 705 F.
Supp. 1053, 1055 (D. N.J.) modified, 718 F. Supp. 1233, 1235 (D.
N.J. 1989), then district judge Sarokin noted the particular
dangers that plague punitive damage awards in mass tort
19
litigation and expressed concerns which we share in deciding the
availability of punitive damages in these cases:
Defendants can be held liable over and over
again for the same conduct, a result which
would be barred by virtue of the right
against double jeopardy in a criminal matter.
Although an award in an individual case may
be fair and reasonable, the cumulative effect
of such awards may not be. . . .
Payment to individual plaintiffs rather
than to a fund or class raises special
problems in mass tort litigation. There is a
decided risk that the earlier claimants will
deplete the available assets to pay later
claimants. Such a risk may exist even as to
compensatory damages, but it would seem
inappropriate to impose repeated penalties on
a company if the result is to deny
compensatory damages to subsequent claimants.
See also Dunn v. HOVIC, 1 F.3d 1371, 1393 (3d Cir. 1993)
(dissenting opinion arguing against punitive damages awards in
mass tort cases in general and in asbestos cases in particular).
As we explained in Dunn, "[w]e do not disagree with the
concerns that have been expressed about punitive damages awards .
. . . We differ instead with those who would have the judiciary
resolve the conflicting policy arguments." Id. at 1387. We have
neither the authority nor the desire to usurp Congress'
policymaking function regarding the benefits and burdens of
punitive damages in mass tort cases; rather, we are constrained
to interpret the law as written. In doing so, however, we call
attention to the possible inequities built into a statutory
scheme such as is before us here, where plaintiffs must resort to
a finite fund to get compensatory as well as punitive damages.
Because there is no conflict between the Amendments Act and
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the substantive laws of Pennsylvania which allow punitive
damages, we will instruct the district court to proceed with the
litigation of these matters in a manner consistent with this
opinion. In so doing, we emphasize that the district court has
authority to prioritize the various claims if punitive damages
are awarded and that the Price-Anderson Act's tri-level insurance
scheme is easily adaptable to such a prioritization of claims. It
cannot be gainsaid that "[i]f there is a limited fund, priority
should be given to compensating those who have been injured
rather than conferring windfalls on those who have already been
compensated." Juzwin, 705 F. Supp. at 1055. We see nothing in
the Act that precludes a district court from using its discretion
to limit or even preclude punitive damages in accordance with the
financial constraints of the fund and the Act's prohibition
against punitive damage awards being paid out of the federal
layer of insurance. However, we do not express any view as to
whether the district court should so exercise its discretion. We
leave the resolution of this issue to the district court.
III. CONCLUSION
For the reasons set forth herein, we will affirm the ruling
of the district court granting plaintiffs the right to attempt to
recover punitive damages, and remand these matters for further
proceedings consistent with this opinion.
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