By Bradley C. Myers, Charles S. McCowan, Jr., and M. Dwayne Johnson

The Louisiana Supreme Court recently issued a major decision in favor of industry by reversing the rulings of a trial court and an appellate court that found plaintiffs in a toxic tort case were entitled to an award of punitive damages based on the application of another state’s law.

Kean Miller submitted an amicus brief in Craig Steve Arabie v. CITGO Petroleum Corporation, 2010-C-2608 (La. 3/13/12) on behalf of the Louisiana Chemical Association, the American Chemistry Council, and the Chamber of Commerce of the United States of America in support of CITGO’s successful appeal of the punitive damages award.

On March 13, 2012, the Louisiana Supreme Court in a 5-2 decision, held that under Louisiana’s choice of law principles, the punitive damages laws of Texas could not be applied to a claim for personal injuries that occurred in Louisiana, even though the defendant was a Delaware corporation with its corporate headquarters in Texas.

In overturning the lower courts’ decisions awarding punitive damages (while upholding the compensatory damages awards), the Court provided some much-needed guidance about how the Louisiana Civil Code articles governing choice of law should be interpreted when punitive damages are sought under another state’s law against a corporate defendant domiciled outside Louisiana but with a significant Louisiana presence. Following an accidental release from a wastewater treatment system, fourteen plaintiffs filed suit alleging that they were injured as a result of exposure to fumes from the release. The plaintiffs sought punitive damages under Texas law. (In 1996, Louisiana repealed a law that allowed punitive damages for injuries caused by the wanton or reckless disregard of public safety in the storage, handling, or transportation of hazardous or toxic) Plaintiffs alleged that decisions made at the corporate level in Texas justified the imposition of Texas law. The trial and appellate courts agreed with plaintiffs’ position on punitive damages.

The Supreme Court, however, disagreed. Under the facts presented, the Court held that under the Louisiana Civil Code articles on Choice of Laws, the defendant corporation had to be treated as a Louisiana domiciliary; and, as such, Louisiana law did not allow an award of punitive damages for injuries sustained in Louisiana by Louisiana residents allegedly resulting from an accident that also occurred in Louisiana. The Court analyzed a number of factors in reaching its conclusion, including that all plaintiffs were located in Louisiana, the defendant had a major presence in Louisiana, the events took place in Louisiana and the injuries occurred in Louisiana. In looking at these factors, the Court noted that unless management or corporate level decisions outweighed the allegedly tortious activity that occurred within Louisiana, those corporate-level decisions would not justify the application of another state’s laws. . Therefore, the Court overturned the punitive damages award.

Craig Steve Arabie v. CITGO Petroleum Corporation

Read the amicus brief.