TXO Production Corp. v. Alliance Resources Corp., 509 U.S. 443 (1993)

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certiorari to the supreme court of appeals of west virginia

No. 92-479. Argued March 31, 1993—Decided June 25, 1993

In a common-law slander of title action in West Virginia state court, respondents obtained a judgment against petitioner TXO Production Corp. for $19,000 in actual damages and $10 million in punitive damages. Accepting respondents' version of disputed issues of fact, the record shows, inter alia, that TXO knew that respondent Alliance Resources Corp. had good title to the oil and gas development rights at issue; that TXO acted in bad faith by advancing a claim on those rights on the basis of a worthless quitclaim deed in an effort to renegotiate its royalty arrangement with Alliance; that the anticipated gross revenues from oil and gas development—and therefore the amount of royalties that TXO sought to renegotiate—were substantial; that TXO was a large, wealthy company; and that TXO had engaged in similar nefarious activities in other parts of the country. In affirming, the State Supreme Court of Appeals, among other things, rejected TXO's contention that the punitive damages award violated the Due Process Clause of the Fourteenth Amendment as interpreted in Pacific Mut. Life Ins. Co. v. Haslip, 499 U. S. 1.

Held: The judgment is affirmed. 187 W. Va. 457, 419 S. E. 2d 870, affirmed.

Justice Stevens, joined by The Chief Justice and Justice Blackmun, concluded in Parts II and III that the punitive damages award did not violate the substantive component of the Due Process Clause. Pp. 453-462. (a) With respect to the question whether a particular punitive award is so "grossly excessive" as to violate the Due Process Clause, Waters-Pierce Oil Co. v. Texas (No. 1), 212 U. S. 86, 111, this Court need not, and indeed cannot, draw a mathematical bright line between the constitutionally acceptable and the constitutionally unacceptable that would fit every case. It can be said, however, that a general concern of reasonableness properly enters into the constitutional calculus. See Haslip, 499 U. S., at 18. Although the parties' desire to formulate a "test" is understandable, neither respondents' proposed rational-basis standard nor TXO's proposed heightened-scrutiny standard is satisfactory. Pp. 453-458.


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