The Colorado Supreme Court issued its opinion in Qwest Services Corp. v. Blood on May 23, 2011.

Exemplary Damages—Willful and Wanton Conduct—Procedural Due Process—Substantive Due Process.

Respondent Andrew Blood, a lineman for Xcel Energy, suffered severe and permanent injuries while working on a wood utility pole owned by Petitioner Qwest Services Corporation (Qwest). Blood sued Qwest for negligence, asserting that Qwest had failed, for decades, to implement a routine pole inspection program that would have detected the internal rot that caused the pole to collapse on top of him. The jury found Qwest 100% at fault and awarded Blood $9,917,600 in economic losses, $1 million in noneconomic losses, $10 million for physical impairment and disfigurement, $750,000 for loss of consortium, and $18 million in exemplary damages. On review, the court of appeals upheld the majority of the award in the published opinion of Blood v. Qwest Services Corp., 224 P.3d 301 (Colo.App. 2009). Qwest then sought certiorari review of the court of appeals’ judgment.

The Supreme Court granted certiorari to review the issue of whether the exemplary damages award violated the Due Process Clause as interpreted in Philip Morris USA v. Williams, 549 U.S. 346 (2007). The Court also granted certiorari on the issue of whether the evidence, on de novo review, was sufficient to demonstrate that Qwest’s conduct was “willful and wanton” beyond a reasonable doubt as required by Colorado’s exemplary damages statute, CRS § 13-21-102(1)(a). Also included within the Court’s review was the issue of whether the exemplary damages award was within a constitutionally permissible range that is not “grossly excessive” in accordance with BMW of N. America v. Gore, 517 U.S. 559 (1996).

The Court affirmed the court of appeals’ judgment upholding the exemplary damages award. As an initial matter, the Court held that Philip Morris does not support Qwest’s facial challenge to § 13-21-102(1). There is no suggestion in the statute that a jury could or should award exemplary damages to punish a defendant for harm to nonparties. Instead, § 13-21-102(1) complies with the holding in Philip Morris to the extent it permits the jury to consider the “rights and safety of others” in assessing the willful and wanton nature—that is, the reprehensibility—of a defendant’s conduct.

The Court also dismissed Qwest’s as-applied challenge to § 13-21-102(1). Qwest argued that the jury considered its lack of a post-accident inspection program and thus directly punished it for harm to nonparties in violation of Philip Morris. The trial court, however, expressly instructed the jury that it was prohibited from considering, for any purpose, Qwest’s lack of a post-accident pole inspection program when assessing exemplary damages. This instruction provided even more protection than required by the Due Process Clause as interpreted in Philip Morris. Because there is no evidence to the contrary, the Court presumed that the jury followed this limiting instruction and refused to consider Qwest’s post-accident conduct in assessing exemplary damages.

Additionally, the Court held, on de novo review, that the evidence was sufficient to demonstrate that Qwest’s failure to implement a periodic pole inspection program, for the forty-six years prior to Blood’s accident, was “willful and wanton” beyond a reasonable doubt and thereby satisfied the requirements for an exemplary damages award under § 13-21-102(1)(a).

Finally, after conducting a de novo review of the record and analyzing the three guideposts announced in Gore, the Court held that Qwest’s conduct, and in particular its failure to implement a periodic pole inspection program, was sufficiently reprehensible to justify an exemplary damages award that was slightly less than compensatory damages. The judgment was affirmed.

Summary and full case available here.