Should Juries Be Informed that Municipality Will Indemnify Officer's § 1983 Liability for Constitutional Wrongdoing?

Iowa Law Review

Volumn 86, Issue 4, 2001, Pages 1209-1249

  Schwartz, Martin A ^a  

^a NONE

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EID: 0347669070     PISSN: 00210552     EISSN: None     Source Type: Journal    
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References (234)

1. Section 1983 provides in relevant part: Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory or the District of Columbia, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress. 42 U.S.C. § 1983 (1994). A § 1983 claim may be asserted against a state or local official in the official's personal capacity. Hafer v. Melo, 502 U.S. 21, 29 (1991); see infra text accompanying notes 12-18 (discussing the absolute immunity defense and the qualified immunity defense). The great majority of § 1983 claims are claims for monetary relief against a state or local official in the official's personal capacity. Section 1983 claims are also assertable against municipalities, but only when the violation of federally protected rights can be attributed to enforcement of a municipal policy or practice. Monell v. Dep't of Soc. Servs. of N.Y., 436 U.S. 658, 690-91 (1978). State entities are generally shielded from monetary liability under § 1983, both because a state is not a "person" within the meaning of § 1983, Will v. Mich. Dep't of State Police, 491 U.S. 58, 71 (1989), and because the Eleventh Amendment immunizes states from monetary liability in federal court, Edelman v. Jordan, 415 U.S. 651, 662-63 (1974). For an analysis of the principles governing § 1983 actions, see infra Part I.
2. See infra Part II (discussing indemnification of compensatory and punitive damages in § 1983 actions).
3. See Memphis Cmty. Sch. Dist. v. Stachura, 477 U.S. 299, 305-06 (1986) ("We have repeatedly noted that 42 U.S.C. § 1983 creates 'a species of tort liability.'" (quoting Carey v. Piphus, 435 U.S. 247, 253 (1978))); accord City of Monterey v. Del Monte Dunes, 526 U.S. 687, 709-10 (1999); Heck v. Humphrey, 512 U.S. 477, 483 (1994); see also Monroe v. Pape, 365 U.S. 167, 187 (1961) (noting that § 1983 should be read against the "background of tort liability"). This does not necessarily mean that private insurance and government indemnification are the same or even sufficiently similar or that the two should be treated the same for evidentiary purposes. See infra Part IV (discussing indemnification versus insurance).
4. FED. R. EVID. 411 & advisory committee's note; see infra Part V (discussing the decisional law governing disclosure indemnification in § 1983 actions).
5. See infra Part V.
6. West v. Atkins, 487 U.S. 42, 48 (1988); Gomez v. Toledo, 446 U.S. 635, 640 (1980); Flagg Bros. v. Brooks, 436 U.S. 149, 155 (1978).
7. See Chapman v. Houston Welfare Rights Org., 441 U.S. 600, 617-18 (1979) (citing Senator Edmund's 1871 debate on an analogous act, "All civil suits . . . which this act authorizes, are not based upon it; they are based upon the right of the citizen. The act only gives a remedy.") (citation omitted); accord Albright v. Oliver, 510 U.S. 266, 271 (1994) (supporting the proposition that § 1983 is not a source of substantive rights); Graham v. Connor, 490 U.S. 386, 389 (1989) (same); Baker v. McCollan, 443 U.S. 137, 140 n.3 (1979) (same). On the issue of enforcing federal statutory rights under § 1983, see 1A MARTIN A. SCHWARTZ & JOHN E. KIRKLIN, SECTION 1983 LITIGATION: CLAIMS AND DEFENSES ch. 4 (3d ed. 1997 & Supp. 2000). In the author's experience, the overwhelming number of § 1983 damages actions are premised upon alleged constitutional rather than statutory violations.
8. 490 U.S. 386 (1989).
9. Id. at 393.
10. Id. at 394. The Court in Graham held that excessive force claims arising out of a law enforcement officer's use of force during an investigatory stop, arrest, or other seizure are governed by a Fourth Amendment objective reasonableness standard. Id.; see also Tennessee v. Garner, 471 U.S. 1, 7-22 (1985) (analyzing a deadly force claim using the Fourth Amendment). Under this standard, the constitutionality of the officer's use of force is evaluated in light of the particular circumstances "from the perspective of a reasonable officer on the scene." Graham, 490 U.S. at 396. The Court in Graham stated in dicta that excessive force claims asserted by detainees are governed by a due process punishment standard, id. at 395 n.10 (citing Bell v. Wolfish, 441 U.S. 520, 550-59 (1979)), and that prisoner excessive force claims are governed by the Eighth Amendment Cruel and Unusual Punishment Clause, Graham, 490 U.S. at 398; accord Hudson v. McMillian, 503 U.S. 1, 1-2 (1992) (supporting the same proposition); Whitley v. Albers, 475 U.S. 312, 320-21 (1986) (same).
11. See Hafer v. Melo, 502 U.S. 21, 22-23 (1991) (holding that "state officials sued in their individual capacities are 'persons' for the purpose of § 1983"). Suing an official in an official capacity is tantamount to suing the governmental entity. Id.; see also Ky. Bureau of State Police v. Graham, 473 U.S. 159, 166 (1985) (explaining that in such a suit "the party in interest is the entity"); Brandon v. Holt, 469 U.S. 464, 471-72 (1985) (holding a judgment against "a public servant 'in his official capacity' imposes liability on the entity he represents"). On the various distinctions between personal capacity and official capacity claims, see Hafer, 502 U.S. at 25-29.
12. Mireles v. Waco, 502 U.S. 9, 9-10 (1991); Stump v. Sparkman, 435 U.S. 349, 349-51 (1978); Pierson v. Ray, 386 U.S. 547, 553 (1967); Bradley v. Fisher, 80 U.S. 335, 346-48 (1871).
13. Kalina v. Fletcher, 522 U.S. 118, 131 (1997); Buckley v. Fitzsimmons, 509 U.S. 259, 273 (1993); Burns v. Reed, 500 U.S. 478, 494 (1991); Imbler v. Pachtman, 424 U.S. 409, 422-23 (1976).
14. Briscoe v. LaHue, 460 U.S. 325, 328 (1983).
15. See, e.g., Bogan v. Scott-Harris, 523 U.S. 44 (1998) (holding that local legislators are absolutely immune from suit under § 1983); Tenney v. Brandhove, 341 U.S. 367 (1951) (holding that the civil rights statute did not create civil liability for legislators acting in the sphere of legitimate legislative activities).
16. See Wilson v. Layne, 526 U.S. 603 (1999) (holding that officers were entitled to defense of qualified immunity); Anderson v. Creighton, 483 U.S. 635 (1987) (finding that an agent was protected by qualified immunity from civil liability if the agent can establish that a reasonable officer could have believed that the search adhered to the Fourth Amendment); Harlow v. Fitzgerald, 457 U.S. 800 (1982) (holding that presidential aides are entitled only to qualified immunity).
17. Harlow, 457 U.S. at 801.
18. Will v. Mich. Dep't of State Police, 491 U.S. 58, 71 (1989). A state official sued in an official capacity is considered a § 1983 "person" when sued for prospective relief. Id. at 71 n.10.
19. See Edelman v. Jordan, 415 U.S. 651 (1974) (holding that the Eleventh Amendment prohibited the retroactive payment of benefits found to have been wrongfully withheld). Although a state may voluntarily waive its Eleventh Amendment immunity from federal court liability, states rarely choose to do so. See SCHWARTZ & KIRKLIN, supra note 7, § 8.11 (stating that the Eleventh Amendment protects states from monetary liability in federal court); see also ERWIN CHEMERINSKY, FEDERAL JURISDICTION § 7.6 (3d ed. 1999) (stating that the test for voluntary waiver of the Eleventh Amendment is so stringent that few such waivers are found). In enacting the original version of § 1983, Congress did not intend to abrogate the states' Eleventh Amendment immunity. Quern v. Jordan, 440 U.S. 332, 345 (1979). Nevertheless, under an exception to Eleventh Amendment immunity, state officials may be sued in their official capacities for prospective relief under the doctrine of Ex parte Young, 209 U.S. 123 (1908). Will, 491 U.S. at 71.
20. See Monell v. Dep't of Soc. Servs. of N.Y., 436 U.S. 658, 663 n.7, 685-86 (1978) (finding that municipalities are "persons" within meaning of § 1983, thereby overruling Monroe v. Pape, 365 U.S. 167 (1961), on this point).
21. Id at 682. For a discussion about the issue of municipal liability based on the decision of a final policymaker, see City of St. Louis v. Praprotnik, 485 U.S. 112, 137 (1988) (stating that only municipal officers having final policymaking authority may subject municipal government to § 1983 liability); Pembaur v. City of Cincinnati, 475 U.S. 469, 470 (1986) (same). Municipal liability may be based upon deliberately indifferent training deficiencies, City of Canton v. Harris, 489 U.S. 378, 379 (1989), deliberately indifferent supervision, SCHWARTZ & KIRKLIN, supra note 7, § 7.18, and, in extreme cases, deliberately indifferent hiring practices, Bd. of County Comm'rs v. Brown, 520 U.S. 397, 415 (1997).
22. 445 U.S. 622 (1980).
23. Id. at 638; see also Leatherman v. Tarrant County, 507 U.S. 163, 166 (1993) ("[U]nlike various government municipal officials, municipalities do not enjoy immunity from suit - either absolute or qualified under § 1983."); Burge v. Parish of Tammany, 187 F.3d 452, 466-67 (5th Cir. 1999) (holding that absolute prosecutorial immunity is not available in an official capacity suit); Goldberg v. Town of Rocky Hill, 973 F.2d 70, 72-73 (2d Cir. 1992) (holding that a municipality may not assert legislative immunity).
24. 453 U.S. 247 (1981).
25. Id. at 258-60.
26. Id. at 267; see also Vt. Agency of Natural Res. v. United States, 120 S. Ct. 1858, 1869 n.15 (2000) (discussing the rationale of Fact Concerts, Inc.); Ciraolo v. City of New York, 216 F.3d 236 (2d Cir.), cert. denied, 121 S. Ct. 484 (2000) (same).
27. See Smith v. Wade, 461 U.S. 30, 35 (1983) (holding that punitive damages may be awarded under § 1983 against an official who acted with evil intent or callous disregard for the plaintiffs federally-protected rights); see also Kolstad v. Am. Dental Ass'n, 527 U.S. 526, 535 (1999) (same).
28. Fact Concerts, Inc., 453 U.S. at 269.
29. Bell v. City of Milwaukee, 746 F.2d 1205 (7th Cir. 1984) (discussing punitive damage liability); see also Haile v. Village of Sag Harbor, 639 F. Supp. 718, 723-24 (E.D.N.Y. 1986) (holding that indemnification of punitive damages does not make the municipality a real party in interest); see also infra Part II (discussing punitive damages).
30. This is not particularly surprising since § 1983 does not address a host of other important issues that may arise in § 1983 actions, such as immunities, statute of limitations, survivorship of claims, wrongful death actions, and damages. 42 U.S.C. § 1988(a) provides that when the federal law in a § 1983 action is "deficient," federal courts should employ the state law of the forum as long as the state law is not inconsistent with the policies of § 1983. There is no clear dichotomy between issues that should be resolved on the basis of uniform federal principles and those that should be resolved pursuant to § 1988 on the basis of state law. See SCHWARTZ & KIRKLIN, supra note 7, § 12.1 (discussing the dichotomy between federal and state law). For example, the U.S. Supreme Court has held that state law governs such questions as the limitations period and survivorship, but that federal law governs questions of immunity. Id. at vol. 1B, ch. 9, vol. 1C, chs. 12, 13, 16.
31. Allen v. City of Los Angeles, 92 F.3d 842, 845 n.1 (9th Cir. 1996) (citing Banks v. City of Emeryville, 109 F.R.D. 535 (N.D. Cal. 1985)).
32. See Allen, 92 F.3d at 845; Graham v. Sauk Prairie Police Comm'n, 915 F.2d 1085, 1093 (7th Cir. 1990); Coleman v. Smith, 814 F.2d 1142, 1147 (7th Cir. 1987); Hibma v. Odegaard, 769 F.2d 1147, 1155 (7th Cir. 1985); Turk v. McCarthy, 661 F. Supp. 1526, 1535 (E.D.N.Y. 1987); Holman v. Walls, 648 F. Supp 947, 955-56 (D. Del. 1986); Banks v. City of Emeryville, 109 F.R.D. 535, 539, 541 (N.D. Cal. 1985); Wiehagen v. Borough of N. Braddock, 594 A.2d 303 (Pa. 1991); Williams v. Horvath, 548 P.2d 1125, 1131-32 (Cal. 1976) (all indicating that a claim for indemnification in a § 1983 action must be based upon state law). But see Oladeinde v. City of Birmingham, 118 F. Supp. 2d 1200, 1207-08, 1211, 1214 n.8 (N.D. Ala. 1999) (holding indemnification in § 1983 actions is a matter of federal law). Federal court cross-claims or impleader claims for indemnification may come within what was formerly called jurisdiction, which is now subsumed under the statutory rubric "supplemental jurisdiction." See Allen, 92 F.3d at 845 (holding that the district court did not abuse its discretion in exercising supplemental jurisdiction over police officers' cross-claim for indemnification of attorneys' fees and costs); Jocks v. Tavernier, 97 F. Supp. 2d 303, 310 (E.D.N.Y. 2000) (supplemental jurisdiction exercised over police officers' cross-claims for indemnification); Harris v. Rivera, 921 F. Supp. 1058, 1062 (S.D.N.Y. 1995) (supplemental jurisdiction exercised over cross-claim for indemnification); Turk v. McCarthy, 661 F. Supp. 1526, 1535-36 (E.D.N.Y. 1987) ("pendent jurisdiction" exercised over cross-claims for indemnification).
33. Interpretation of state indemnification law often involves multiple statutory provisions, resolution of the relationship between state statutes and local ordinances, and consideration of state court interpretations of these provisions. For an example of the potential complexities involved in deciphering state indemnification law, see Oladeinde v. City of Birmingham, 118 F. Supp. 2d 1200, 1214 (N.D. Ga. 1999).
34. See Nicole G. Tell, Representing Police Officers and Municipalities: A Conflict of Interest for a Municipal Attorney in a Section 1983 Police Misconduct Suit, 65 FORDHAM L. REV. 2825, 2836 (1997) (discussing municipalities' decisions to indemnify police officers).
35. See, e.g., N.Y. PUB. OFF. LAW § 18(4) (a) (McKinney 1983); N.Y. GEN. MUN. LAW § 50-K(3) (McKinney 2000); WIS. STAT. § 895.46 (1993); see also KEETON ET AL., PROSSER AND KEETON ON TORTS § 132 (5th ed. 1984) (stating that all state indemnification statutes authorize indemnification "only for acts committed within the scope of official duties"); Tell, supra note 34, at 2836.
36. See, e.g., N.Y. GEN. MUN. LAW § 50-K(3) (McKinney 2000); see also City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 269 n.30 (1981) (observing that a number of state statutes authorizing indemnification of punitive damages "specifically exclude indemnification for malicious or willful misconduct by the employees").
37. 769 F.2d 1147 (7th Cir. 1985).
38. See id. at 1152 (relying upon state law interpretations of the Wisconsin indemnification statute including Cameron v. City of Milwaukee, 307 N.W.2d 164 (Wis. 1981), and Scott v. Min-Aqua Bats Water Ski Club, Inc., 255 N.W.2d 536 (Wis. 1977)).
39. 915 F.2d 1085 (7th Cir. 1990).
40. Id. at 1093 (finding that the Wisconsin scope of employment requirement was narrower than § 1983's "color of state law requirement").
41. Id. at 1095.
42. Galvani v. Nassau County Police Indemnification Review Bd., 674 N.Y.S.2d 690, 691 (N.Y. App. Div. 1998) (concluding that the injured party has no standing to challenge the county's decision not to indemnify the police officer). In coming to its conclusion, the court quoted Blood v. Board of Education, 509 N.Y.S.2d 530, 533 (N.Y. App. Div. 1986) (stating that the New York indemnification statute was "primarily directed at saving imperfect and, therefore, fallible public employees from the potentially ruinous legal consequences following from unintentional lapses in the daily discharge of their duties").
43. The City of New York has "represent[ed] that it does not make a decision whether to indemnify an employee until the jury has returned a verdict in the action in which the employee is named as a defendant." Nevares v. Morrissey, No. 95 Cov. 1135 (JGK), 1998 WL 265119, at *7 (S.D.N.Y. May 22, 1998); Tell, supra note 34, at 2836 n.74 ("In New York City, . . . the decision whether to indemnify is made subsequent to litigation when the municipality can better evaluate the police officer's actions and calculate how much public money has already been spent on the defense."). Although some courts have agreed with the City that it need not make the indemnification decision until the final judgment, Nevares, 1998 WL 265119, at *7-10; Bolusi v. City of New York, 671 N.Y.S.2d 478, 478 (N.Y. App. Div. 1998), other courts, although acknowledging the general principle that indemnification claims do not ripen until the judgment in the underlying action is entered, "have applied an exception to this principle pursuant to which supplemental jurisdiction has been exercised over cross-claims for indemnification in the interests of judicial economy so that all parties may establish their rights and liabilities in one action." Jocks v. Tavernier, 97 F. Supp. 2d 303, 312 (E.D.N.Y. 2000); Woo v. City of New York, 1996 WL 457337, at *13 (S.D.N.Y. Sept. 6, 1996); Harris v. Rivera, 921 F. Supp. 1058, 1062 (S.D.N.Y. 1995). In Nassau County, New York, indemnification is determined prior to the County's provision of representation. Tell, supra note 34, at 2836 n.74 (citing N.Y. GEN. MUN. LAW § 50-1 (McKinney 1986)). The timing issue could arise in the private insurance context as well. "In some states, statutory provisions affirmatively require that carriers notify insureds promptly of any basis they intend to assert in denying coverage." TORTS & INS. PRACTICE SECTION OF A.B.A., LITIGATING THE COVERAGE CLAIM 16 (1991). For example, New York Insurance Law § 3420(d) requires an insurer disclaiming liability to give written notice of the disclaimer "as soon as reasonably possible" to the insured, the injured person, and any other claimant. Whether an insurer has given such notice as soon as "reasonably possible" is a question of fact that depends on all the facts and circumstances. Hartford Ins. Co. v. County of Nassau, 389 N.E.2d 1061, 1062-63 (N.Y. 1979). Failure to give effective notice of disclaimer precludes denial of coverage. Id.; accord Frazier v. Royal Ins. Co. of Am., 110 F. Supp. 2d 110, 116 (N.D.N.Y. 2000); Albert J. Schiff Assoc., Inc. v. Flack, 417 N.E.2d 84, 87 (N.Y. 1980).
44. 548 P.2d 1125 (Cal. 1976).
45. Most decisions concerning indemnification in § 1983 actions look to state law indemnification policies and assume that indemnification of an officer's monetary liability is not forbidden by § 1983. See cases cited supra, note 32. As discussed in the text below, the Ninth Circuit held that even municipal indemnification of punitive damages does not violate § 1983. Cornwell v. City of Riverside, 896 F.2d 398 (9th Cir. 1990); see also Cunningham v. Gates, 229 F.3d 1271, 1292-93 (9th Cir. 2000) (finding that indemnification of a police officer did not violate plaintiffs § 1983 rights); Trevino v. Gates, 99 F.3d 911 (9th Cir. 1996) (holding that the indemnification of municipal officers against liability did not violate plaintiffs civil rights in a § 1983 claim).
46. Williams, 548 P.2d.at 1134. Although compensating the § 1983 plaintiff for the actual injuries suffered is the prime purpose of a § 1983 compensatory claim, a secondary purpose is deterring future violations. SCHWARTZ & KIRKLIN, supra note 7, § 16.7. Although indemnification does not frustrate the compensation goal, it may frustrate the deterrence.
47. Williams, 548 P.2d at 1134.
48. Id. at 1133.
49. The petition for writ of certiorari in Trevino v. Gates, 99 F.3d 911 (9th Cir. 1996), contains the following summary: Of the 15 states and one United States territory who [sic] have legislated on the issue of whether or not a local governmental entity (or a state) may opt to indemnify government officials for punitive damages, nine states permit such indemnification, four states and one territory prohibit it, one state permits legislation to permit it, and one state permits the purchase of liability insurance to provide such indemnification. It is permitted in California (Cal. Govt. Code § 825[b] [West 1996]); Colorado (Colo. Rev. Stat. § 24-10-114, 24-10-118[5] [1996]); Maine (Me. Rev. Stat. Ann. tit. 14 § 8112 [1996]); Maryland (Md. Cts. and Jud. Proc. § 5-403 [1984]); Minnesota (Minn. Stat. § 466.07 [1996]); New Jersey (N.J. Rev. Stat. § 59:10-1 [1966] [state], 59:10-4 [political subdivisions]); New York, but only for police (N.Y. Gen. Mun. Law § 50-j [McKinney 1996] [enabling statute], 50-1 [requiring Nassau County to indemnify police], 50-m [same for Suffolk County], 50-n same for other police in Nassau County), and prohibits it otherwise (N.Y. Pub. Off. Law [West 1996] § 18); Ohio (Ohio Rev. Code Ann. § 9.87 [Baldwin 1996] [state], § 277.44.07 [political subdivisions]); and, Oklahoma (Okla. Stat. § 162 [1996]). It is prohibited in Illinois to political subdivisions (111. Rev. Stat. ch. 745 § 10/2-302 [West 1996]); Kansas (Kan. Stat. Ann. § 75-6109 [1996]); North Dakota (N.D. Cent. § 32-12.1-03 [1996]); and Virgin Islands (V.I. Code Ann. tit. 10 § 102 [1996]). Nebraska permits it for state employees with the approval of the state legislature (Neb. Rev. Stat. § 81-8.239.05 [1996]); and, Iowa permits the purchase of insurance to provide indemnification (Iowa Code § 670.8 [1996]).
50. See City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 269 n.30 (1981) (providing references to state statutes).
51. Haile v. Village of Sag Harbor, 639 F. Supp. 718, 723 (E.D.N.Y. 1986); see also Bell v. City of Milwaukee, 746 F.2d 1205, 1271 (7th Cir. 1984) (holding that municipalities may voluntarily indemnify an officer for punitive damages liability). For a full discussion of Fact Concerts, Inc., see supra notes 24-28 and accompanying text.
52. See supra notes 43-47 and accompanying text (analyzing the issue of indemnification of § 1983 actions generally).
53. See Hartford Accident & Indem. Co. v. Village of Hempstead, 397 N.E.2d 737, 742 (N.Y. 1979) (finding that the deterrence purpose of punitive damages would be lost if insurance would cover a damage award); see also Biondi v. Beekman Hill House Apartment Corp., 731 N.E.2d 577, 580 (N.Y. 2000) (finding that "bad faith" justifies a "public policy limitation on indemnification"); Home Ins. Co. v. Am. Home Prods. Corp., 550 N.E.2d 930, 935 (N.Y. 1990) (finding that insurance indemnification for punitive damages is against state public policy); Pub. Serv. Mut. Ins. v. Goldfarb, 425 N.E.2d 810, 814 (N.Y. 1981) (stating that an insurer could not be compelled to indemnify for damages resulting from an intentional tort). In Derechin v. State University of New York, 963 F.2d 513, 519 (2d Cir. 1992), the court, in upholding a district court's prohibition against state reimbursement of a sanction imposed upon the state's attorney, observed that "eighteen states. . . have held that insurance policies covering punitive damages . . . are void as against public policy." The court cited to R. L. BLATT ET AL., PUNITIVE DAMAGES: A STATE BY STATE GUIDE TO LAW AND PRACTICE § 5.3 (1991). Legislative bodies, however, can overturn or modify public policy. Hartford Accident & Indem. Co., 397 N.E.2d, at 742 ("[P]ublic policy is generally determined by the Legislature.").
54. 983 F.2d 459 (3d Cir. 1992).
55. Id. at 477-84 (Higginbothan, J., dissenting).
56. Id. at 480 (Higginbothan, J., dissenting).
57. 121 F.3d 808 (2d Cir. 1997).
58. Id. at 816 n.6.
59. See supra note 49 (noting that nine states have passed legislation which allows the government to indemnify governmental officials for punitive damages).
60. See City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 269 (1981) (suggesting that a responsible official may be deterred by shame and humiliation); see also R. Emery & I. Maazel, Why Civil Rights Lawsuits Do Not Deter Police Misconduct: The Conundrum of Indemnification and a Proposed Solution, 28 FORDHAM URB. L.J. 587, 590 (2000) (referring to the "public humiliation" from a jury finding that a police officer violated the Constitution).
61. See Williams v. Horvath, 548 P.2d 1125, 1133 (Cal. 1976) (analyzing § 1983 indemnification generally, rather than with specific regard to punitive damages).
62. See Cornwell v. City of Riverside, 896 F.2d 398, 399 (9th Cir. 1990) (holding that a city is not bound by a jury's finding of lack of good faith justifying an award of punitive damages in a civil rights action when the city makes its decision to indemnify its employee); infra text accompanying notes 68-69 (discussing Cornwell in more detail).
63. 453 U.S. 247 (1981).
64. Id. at 269 n.30.
65. See Keenan v. Philadelphia, 983 F.2d 459, 479 n.3 (3d Cir. 1992) (Higginbotham, J., dissenting) (noting that the Supreme Court, in Fact Concerts, Inc., "only implicitly and with qualifications approved municipal indemnification agreements").
66. 746 F.2d 1205 (7th Cir. 1984).
67. Id. at 1279; see also Haile v. Village of Sag Harbor, 639 F. Supp. 718, 723 (E.D.N.Y. 1986) (holding that the municipal obligation to indemnify officer's liability for punitive damages does not make the municipality the real party in interest in violation of the Supreme Court's decision in Fact Concerts, Inc.).
68. 896 F.2d 398 (9th Cir. 1990).
69. Id. at 400; see Trevino v. Gates, 99 F.3d 911, 918 (9th Cir. 1996) ("A city council does not violate section 1983 if it indemnifies officers against punitive damages awards on a discretionary, case by case basis, and complies in good faith with the requirements of Cal. Gov. Code § 825(b)."); accord Cunningham v. Gates, 229 F.3d 1271, 1292-93 (9th Cir. 2000) (reflecting the Trevino view of city council's discretion). California Government Code § 825(b) authorizes municipalities to indemnify punitive damages if the municipality finds that the employee acted within the course of employment, in good faith, and "in the apparent best interests of the public entity," and payment would be "in the best interests of the public entity." CAL. GOV'T CODE § 825(b) (West 1996). The circuit court in Trevino also held that a city's discretionary decisions to indemnify police officers for punitive damages when it finds that doing so "would be in the best interest" of the city does not constitute ratification of unconstitutional police conduct. Trevino, 99 F.3d at 920. Courts which hold similarly to the Trevino court on this point include Freeman v. Santa Ana, 68 F.3d 1180, 1188 (9th Cir. 1995), Brown v. City of Chicago, 573 F. Supp. 1375, 1379 (N.D. Ill. 1983), and Ekergren v. City of Chicago, 538 F. Supp. 770, 773 (N.D. Ill. 1982).
70. Cornwell, 896 F.2d at 399.
71. Id.
72. Id.
73. Id. at 400.
74. See supra text accompanying note 60 (discussing the rationale for indemnification of punitive damages).
75. Cornwell, 896 F.2d at 399. This argument was not applicable in Cornwell, however, because the plaintiff in that case refused to accept the city's indemnification of punitive damages. See Keenan v. City of Philadelphia, 983 F.2d 459, 480 n.4 (3d Cir. 1992) (Higginbotham, J., dissenting) (noting that while the plaintiff in Cornwell insisted that the officers pay the punitive damages and rejected the city's offer to pay, the plaintiff in Keenan was "quite content" to accept the city's offer). The court in Cornwell observed that if § 1983 plaintiffs had the option to accept or reject the city's indemnification of punitive damages, they "would have an extraordinary weapon with which to negotiate with individual defendants." Cornwell, 896 F.2d at 400. The circuit court refused to add this "weapon" to the range of existing § 1983 remedies.
76. On the issue of whether indemnification and insurance should be treated the same way for evidentiary purposes, see infra Part IV.
77. 1 M. GRAHAM, HANDBOOK OF FEDERAL EVIDENCE § 4.11.1 (4th ed. 1996); CHRISTOPHER B. MUELLER & LAIRD C. KIRKPATRICK, EVIDENCE § 4.30 (1999); J.W. STRONG, MCCORMICK ON EVIDENCE § 201 (5th ed. 1999); WIGMORE ON EVIDENCE § 282a (James H. Chadburn rev., 1976); C. WRIGHT & M. GRAHAM, FEDERAL PRACTICE AND PROCEDURE § 5361 (1980).
78. 1 M. GRAHAM, HANDBOOK OF FEDERAL EVIDENCE § 4.11.1 (4th ed. 1996); CHRISTOPHER B. MUELLER & LAIRD C. KIRKPATRICK, EVIDENCE § 4.30 (1999); J.W. STRONG, MCCORMICK ON EVIDENCE § 201 (5th ed. 1999); WIGMORE ON EVIDENCE § 282a (James H. Chadburn rev., 1976); C. WRIGHT & M. GRAHAM, FEDERAL PRACTICE AND PROCEDURE § 5361 (1980).
79. 1 M. GRAHAM, HANDBOOK OF FEDERAL EVIDENCE § 4.11.1 (4th ed. 1996); CHRISTOPHER B. MUELLER & LAIRD C. KIRKPATRICK, EVIDENCE § 4.30 (1999); J.W. STRONG, MCCORMICK ON EVIDENCE § 201 (5th ed. 1999); WIGMORE ON EVIDENCE § 282a (James H. Chadburn rev., 1976); C. WRIGHT & M. GRAHAM, FEDERAL PRACTICE AND PROCEDURE § 5361 (1980).
80. 1 M. GRAHAM, HANDBOOK OF FEDERAL EVIDENCE § 4.11.1 (4th ed. 1996); CHRISTOPHER B. MUELLER & LAIRD C. KIRKPATRICK, EVIDENCE § 4.30 (1999); J.W. STRONG, MCCORMICK ON EVIDENCE § 201 (5th ed. 1999); WIGMORE ON EVIDENCE § 282a (James H. Chadburn rev., 1976); C. WRIGHT & M. GRAHAM, FEDERAL PRACTICE AND PROCEDURE § 5361 (1980).
81. 1 M. GRAHAM, HANDBOOK OF FEDERAL EVIDENCE § 4.11.1 (4th ed. 1996); CHRISTOPHER B. MUELLER & LAIRD C. KIRKPATRICK, EVIDENCE § 4.30 (1999); J.W. STRONG, MCCORMICK ON EVIDENCE § 201 (5th ed. 1999); WIGMORE ON EVIDENCE § 282a (James H. Chadburn rev., 1976); C. WRIGHT & M. GRAHAM, FEDERAL PRACTICE AND PROCEDURE § 5361 (1980).
82. GRAHAM, supra note 77, § 4.11.1, at 585-86; 2 WIGMORE, supra note 77, § 282a.
83. See FED. R. EVID. 411 advisory committee's note ("More important, no doubt, has been the feeling that knowledge of the presence or absence of liability insurance would induce juries to decide cases on improper grounds."); see also Eichel v. N.Y. Cent. R.R. Co., 375 U.S. 253, 255 (1963) ("It has long been recognized that evidence showing that the defendant is insured creates a substantial likelihood of misuse."); Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977) (stating that consideration of insurance coverage "injects into the damage determination a foreign, diverting, and distracting issue which may effectuate a prejudicial result").
84. 2 WIGMORE, supra note 77, § 282a(3), at 148.
85. Pub. L. No. 93-595, 88 Stat. 1926 (1975).
86. FED. R. EVID. 411.
87. CHRISTOPHER B. MUELLER & LAIRD C. KIRKPATRICK, FEDERAL EVIDENCE § 152 (2d ed. 1994). Rule 411 "underwent no substantive changes during the rule-making process, and was enacted by Congress in the form proposed by the Advisory Committee and the Supreme Court, attracting no attention during the committee hearings." Id. (citation omitted).
88. Id. § 153.
89. WRIGHT & GRAHAM, supra note 77, § 5361. For a review of the rulemaking process that led to the congressional adoption of the Federal Rules of Evidence, see Paul R. Rice & Neals-Erik Deiker, A Short History of Too Little Consequence, 191 F.R.D. 678, 682-84 (2000).
90. FED. R. EVID. 411 advisory committee's note.
91. Id.
92. FED. R. EVID. 411.
93. An inadvertent disclosure by counsel or a witness that a party is insured rarely results in a mistrial; the usual remedy is for the trial judge to strike the reference to insurance and ask the jury to disregard it. Rios v. Bigler, 67 F.3d 1543, 1550 (10th Cir. 1995) ("Inadvertent references to insurance, however, 'are not generally grounds for mistrial or reversal.'" (quoting Zanetti Bus Lines v. Hurd, 320 F.2d 123, 129 (10th Cir. 1969))); GRAHAM, supra note 77, § 4.11.1; MUELLER & KIRKPATRICK, supra note 83, § 153; STRONG, supra note 77, § 201. The reluctance to grant a mistrial is supported partly by the assumption that in many types of actions, jurors probably believe the defendant is covered by liability insurance. GRAHAM, supra note 77, § 411.1. Reversal is required only when the disclosure of liability insurance was deliberate. Id. § 411.1; see also Raybestos Prods. Co. v. Younger, 54 F.3d 1234, 1240 (7th Cir. 1995); Pickwick Stage Lines, Inc. v. Edwards, 64 F.2d 758, 762-63 (10th Cir. 1933); James Stewart & Co. v. Newby, 266 F. 287, 295-96 (4th Cir. 1920); MUELLER & KIRKPATRICK, supra note 83, § 153.
94. Most of the litigation under the enumerated "exceptions" has centered on the admissibility of liability insurance to show a witness's bias. See Charter v. Chleboard, 551 F.2d 246, 248-49 (8th Cir. 1997) (holding that it was reversible error to exclude evidence that the witness was employed by defendant's insurer); Conde v. Starlight 1, Inc., 103 F.3d 210, 213-14 (1st Cir. 1997) (finding no problem with repeated reference to the witness as an "adjuster"); Palmer v. Kruger, 897 F.2d 1529, 1537-38 (10th Cir. 1990) (affirming cross-examination references to insurance policy to show witness bias); Granberry v. O'Barr, 866 F.2d 112, 114 (5th Cir. 1988) (finding no abuse of discretion for failure to allow evidence of insurance policy on cross-examination of eyewitness who worked for insurance company); Varlack v. SWC Caribbean, Inc., 550 F.2d 171, 176-77 (3d Cir. 1977) (finding no error in asking witness whether he had prepared a written statement for the insurance company). In the same vein, counsel are allowed to question and challenge prospective jurors about their employment by or interest in insurance companies. STRONG, supra note 77, § 201; 2 WIGMORE, supra note 77, § 282a(3). For other examples of permissible purposes for evidence of liability insurance coverage see Morrisey v. Welsh Co., 821 F.2d 1294, 1305 (8th Cir. 1987) (upholding evidence of liability insurance admitted to show reason safety inspections were made), and Posttape Assocs. v. Eastman Kodak Co., 537 F.2d 751, 757-58 (3d Cir. 1976) (finding the fact that plaintiff had liability insurance relevant to show plaintiff knew of alleged trade custom of limiting liability of entities like defendant).
95. FED. R. EVID. 411.; MUELLER & KIRKPATRICK, supra note 83, § 154; 1 M. GRAHAM, HANDBOOK OF FEDERAL EVIDENCE § 411.1 (5th ed. 2001).
96. Pinkham v. Burgess, 933 F.2d 1066, 1072 (1st Cir. 1991); Granberry, 866 F.2d at 114; Morrisey, 821 F.2d at 1306; Charter, 551 F.2d at 249. Rule 403 provides that: "Although relevant, evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time or needless presentation of cumulative evidence." FED. R. EVID. 403. When evidence, like a party's liability insurance, may be admissible for one purpose though not for another purpose, the trial judge in making the Rule 403 evaluation must consider the likely effectiveness of a limiting instruction. FED. R. EVID. 403 advisory committee's note; GRAHAM, supra note 77, § 411.1.
97. Larez v. Holcomb, 16 F.3d 1513, 1524 n.3 (9th Cir. 1994); DSC Communications Corp. v. Next Level Communications, 929 F. Supp. 239, 246-47 (E.D. Tex. 1996); 23 WRIGHT & GRAHAM, supra note 77, § 5364; see infra Part V.B (discussing the approach of the Larez court regarding the punitive damages issue).
98. See STRONG, supra note 77, § 201; 2 WIGMORE, supra note 77, § 282a (criticizing the exclusionary rule for liability insurance); 23 WRIGHT & GRAHAM, supra note 77, § 5362 (stating that scholars "almost without exception, have been critical of the 'archaic legal principal' upon which Rule 411 is based"); Leon Green, Blindfolding the Jury, 33 TEX. L. REV. 157, 164 (1954) (stating that scholars "almost without exception" have been critical of the liability insurance exclusionary rule that is subject to an "avalanche" of scholarly criticism).
99. STRONG, supra note 77, § 201.
100. 2 WIGMORE, supra note 77, § 282a; see also Ede v. Atrium S. OB-GYN 642 N.E.2d 365, 368 (1994) (stating that it is "naïve" to think that jurors do not know doctors in malpractice cases are covered by liability insurance: "The legal charade protecting juries from information they already know keeps hidden from them relevant information that could assist them in making their determinations."). The court also states that given the "sophistication" of jurors, the Rule 411 exclusionary rule "does not merit the enhanced protection it has been given[,]" and that the "second sentence of Evid. R. 411, which allows courts to operate in a world free from truth-stifling fictions, ought to be embraced." Id.; Young v. Carter, 173 S.E.2d 259, 260 (1970) (Hall, J., concurring): The time has come to end this continuing charade over whether or not a defendant has liability insurance. It holds the law up to ridicule by laymen and thereby contributes to an unfortunate disrespect for law, order, courts and justice . . . . Any juror who doesn't know that there is liability insurance in the case by this time should probably be excused by virtue of the fact that he or she is an idiot. It has also been argued that there is no empirical support for the view that juries will award higher damages if they know the defendant is protected by liability insurance. STRONG, supra note 77, § 201.
101. Green, supra note 94, at 164.
102. STRONG, supra note 77, § 201.
103. WRIGHT & GRAHAM, supra note 77, § 5364; see also Green, supra note 94, at 164 n.22 (discussing alternate methods including remittitur). Wright and Graham characterize the justifications for the exclusionary rule set forth in the advisory committee note to Rule 411 as "shabby." WRIGHT & GRAHAM, supra note 77, § 5364. On the issue of remittitur, see infra note 220.
104. See WRIGHT & GRAHAM, supra note 77, § 5363 (stating that "there are a few common law decisions applying the insurance rule by analogy to these arrangements").
105. See Larez v. Holcomb, 16 F.3d 1513, 1519 n.6 (9th Cir. 1994) (Pregerson, J., concurring in part and dissenting in part) (stating that it is unclear whether Rule 411 "reaches jury instructions concerning indemnification by the government").
106. Griffin v. Hilke, 804 F.2d 1052, 1058 n.3 (8th Cir. 1986); see infra notes 109-16 and accompanying text (discussing Griffin v. Hilke).
107. Derechin v. State Univ. of N.Y. 963 F.2d 513, 518 (2d Cir. 1992). New York courts have also analogized statutory indemnification of governmental officers to private insurance contracts. Polak v. City of Schenectady, 585 N.Y.S.2d 844, 846 (1992); Giordano v. O'Neill, 517 N.Y.S.2d 41, 42 (1987); Garcia v. Abrams, 471 N.Y.S.2d 161, 163 (1984); see Oladeinde v. City of Birmingham, 118 F. Supp. 2d 1200 (N.D. Ala. 1999) (relying on insurance principles to decide indemnification issues).
108. WRIGHT & GRAHAM, supra note 77, § 5363, at 445. Wright and Graham note that "Liability insurance" is the title of Rule 411. Id. at 445 n.60. Rule 403 is set forth in supra note 92.
109. WRIGHT & GRAHAM, supra note 77, § 5363, at 445; see DSC Communications Corp. v. Next Level Communications, 929 F. Supp. 239 (E.D. Tex. 1996) (noting that admissibility of an indemnification agreement should be evaluated under Rule 403, not Rule 411).
110. Larez v. Holcomb, 16 F.3d 1513, 1524 (9th Cir. 1994) (Pregerson, J., concurring in part and dissenting in part). In DSC Communications Corp., 929 F. Supp. at 243, the district court, citing Judge Pregerson's opinion in Larez, 16 F.3d at 1524, listed the following characteristics of liability insurance: 1. The insurer is paid to take the risk in question; 2. the insurer is well able to pay; 3. the insurer has agreed to indemnify the insured from liability to third persons as contrasted with coverage from losses sustained by the insured; 4. the insurer will spread the loss among its policy holders; 5. the insured will be disinclined to take an action which might cause the insurer to pay on a liability claim since the insured's premiums will rise; and 6. the insured is insuring a future risk. The district court in DSC Communications Corp. found that the indemnification agreement at issue satisfied the first two characteristics, but not any of the remaining ones. The court thus concluded that the jury's possible misuse of the indemnification agreement should be evaluated under Rule 403 rather than under Rule 411. Id. at 245 n.4.
111. See infra Part VI (discussing whether the jury should be informed of indemnification).
112. Lawson v. Trowbridge, 153 F.3d 368, 379 (7th Cir. 1998) (dictum); Larez, 16 F.3d at 1519-20; Green v. Baron, 879 F.2d 305, 310 (8th Cir. 1989); Griffin v. Hilke, 804 F.2d 1052, 1057 (8th Cir. 1986); Joseph v. Brierton, 739 F.2d 1244, 1249-50 (7th Cir. 1984) (implicit holding).
113. 804 F.2d 1052 (8th Cir. 1986).
114. Id. at 1056-57.
115. Id. at 1056.
116. Id. at 1057.
117. Id. at 1057. One of the decisions relied upon in Griffin was decided under Rule 411. See Higgins v. Hicks Co., 756 F.2d 681, 684-85 (8th Cir. 1985) (noting that evidence of state's liability insurance was not admissible under Rule 411 to eliminate any bias of jurors as taxpayers of defendant state). The other decisions relied upon in Griffin were decided prior to the adoption of the Federal Rules of Evidence, namely Transit Casualty Co. v. Transamerica Insurance Co., 387 F.2d 1011 (8th Cir. 1967), and Halladay v. Verschoor, 381 F.2d 100 (8th Cir. 1967).
118. Griffin, 804 F.2d at 1057.
119. Id. at 1058.
120. Id. In a follow up case to Griffin, the Eighth Circuit directed the district court that at the new trial, it "should not instruct the jury that the State of Iowa will indemnify the defendants" because such an "instruction is extremely prejudicial." Green v. Baron, 879 F.2d 305, 310 (8th Cir. 1989). The Eighth Circuit is thus strongly opposed to the jury learning about governmental indemnification. In its view, instructing the jury about indemnification is not just error, but "extremely prejudicial" error. Id.
121. 16 F.3d 1513 (9th Cir. 1994).
122. Id. at 1515.
123. Id. at 1516.
124. Id.
125. Id. at 1518, 1520; see infra text accompanying notes 163-79 (discussing punitive damages).
126. Larez, 16 F.3d at 1519-20.
127. Id. at 1519.
128. Id. The district court had explained: It's because the jury in these civil rights cases sometimes [is] concerned that the officer might have to pay damages that they award, and if he does, they are concerned that maybe he won't have the ability to do so just because of the salary that they assume that officers make. . . . [S]o the reason that the instruction is given is because if the jury is worried about who is going to pay, this instruction tells them that the City may pay. Id. at 1519 n.5.
129. Id. at 1518.
130. 804 F.2d 1052, 1057 (8th Cir. 1986).
131. 879 F.2d 305, 310 (8th Cir. 1989); see supra note 116 (discussing the court's opposition to informing juries of governmental indemnification). For a discussion of the two Eighth Circuit decisions, see supra notes 109-13 and accompanying text.
132. Larez, 16 F.3d at 1520 n.6 ("Rule 411 expressly covers the admissibility of evidence of insurance for purposes of determining liability, but it is unclear whether it reaches jury instructions concerning indemnification by the government.").
133. Id. at 1519.
134. Id.
135. Id.
136. Id.
137. Larez, 16 F.3d at 1519.
138. Id. at 1520.
139. Id. at 1525 (Pregerson, J., concurring in part and dissenting in part). Judge Pregerson quoted Mark Twain by stating "'when in doubt, tell the truth.'" Id. Judge Pregerson opined, without supporting authority, that "jurors very likely already know that a government employee in a civil rights case personally will not pay any damage award against him or her." Id. For a discussion of why this conclusion by Judge Pregerson is problematic, see infra text accompanying notes 215-16.
140. Larez, 16 F.3d at 1524 (Pregerson, J., concurring in part and dissenting in part).
141. Id. Judge Pregerson opined that even if Rule 411 were applicable, it would not bar the indemnification instruction because the instruction went only to the issue of damages. He also noted that Rule 411 "'does not prohibit the use of evidence of insurance where it is relevant to the issue of damages or punitive damages.'" Id. at 1524 n.3 (citing 23 WRIGHT & GRAHAM, supra note 77, § 5364, at 449 n.20, for the proposition that the common law exclusionary rule for liability insurance was not applicable when evidence was sought to be introduced to prove damages). For further discussion of indemnification versus insurance, see supra Part IV.
142. The Larez court's analysis of disclosure of punitive damages is discussed infra Part VB.
143. Lawson v. Trowbridge, 153 F.3d 368, 380 (7th Cir. 1998); Joseph v. Brierton, 739 F.2d 1244, 1246-48 (7th Cir. 1984). These two decisions are discussed in the text infra.
144. 739 F.2d 1244 (7th Cir. 1984).
145. Id. at 1246.
146. Id.
147. Id. at 1247.
148. Id. at 1245.
149. Joseph, 739 F.2d at 1247.
150. Id. The instruction stated: If you decide liability in this case and therefore turn to the question of damages, do not concern yourself with the defendants' ability to pay. If there is a judgement that problem will be addressed later. A judgement, if any, should reflect your decision as to the appropriate amount of damages to be awarded to the plaintiff. . . .
151. Id. at 1247. Although the circuit court acknowledged that this instruction is given "all the time" because it may help a conscientious jury avoid being influenced by extraneous considerations, it was inadequate to cure the improper statements made by defense counsel because "the efficacy of such an instruction is always uncertain," in part because "[t]elling a jury not to think about something may simply rivet the jurors' attention to it." Id. at 1247. Judge Posner's assertion has been supported empirically. An experiment was conducted in which people were asked not to think of a white bear. Each person was then isolated in a laboratory room. The people who participated in the experiment had a hard time not thinking about a white bear. D.M. WEGNER, WHITE BEARS AND OTHER UNWANTED THOUGHTS 2-3 (V. King ed., 1989).
152. 153 F.3d 368 (7th Cir. 1998).
153. Id. at 379. The plaintiff in Lawson alleged under § 1983 that he was arrested without probable cause, that while in custody government officials failed to provide medical care for his disease, schizophrenia, and that they aggravated his condition by placing him in solitary confinement for long periods of time. Id. at 370.
154. Id. at 378.
155. Defense counsel stated: They've been doing a good job that very few of us would want to do for very little pay and have accumulated very little assets for all their time in public service. And in making all of your award I ask you to keep in mind that they have received very little compensation for what they have done. I ask you to keep in mind their situation, their financial situation and to make your award an award that keeps all of that firmly in perspective. Id. at 379.
156. Id. "The circuit court noted that although evidence of the officer's financial circumstances is inadmissible if the defendant will be indemnified, the district court allowed the defendant officers to highlight their financial circumstances, perhaps because [plaintiff] did not object." Id. at 379.
157. WIS. STAT. § 895.46 (1997).
158. Lawson, 153 F.3d at 379.
159. Id.
160. Id. at 372.
161. Id.
162. Id. at 379.
163. Lawson, 153 F.3d at 380 (referring to the "general rule" against admitting evidence of a "collateral source"); see also id. at 379 (explaining that courts generally exclude evidence of indemnification because of "fear that it will encourage a jury to inflate its damages because it knows the government - not the individual defendants - is footing the bill." (citing Larez v. Holcomb, 16 F.3d 1513, 1519 (9th Cir. 1994))).
164. Lawson, 153 F.3d at 379 (quoting Kemezy v. Peters, 79 F.3d 33, 37 (7th Cir. 1996) ("We have noted the inappropriateness of allowing the defendant to plead poverty if he will be indemnified."))
165. Id. at 379.
166. Id. (citation omitted); see also Bernier v. Bd. of County Road Comm'rs, 581 F. Supp. 71, 78 (W.D. Mich. 1983) (observing that, in a wrongful death suit, "should the nature of defendant's proofs be such that the jury might infer defendant's inability to pay a judgment, evidence that defendant has liability insurance may become admissible as an exception to the general prohibition of insurance contained in Fed. R. Evid. 411."). The circuit court in Lawson concluded that given the jury's decision to assess only nominal damages against the defendant officers, the district court's order "was not harmless." 153 F.3d at 380.
167. Compare Larez v. Holcomb, 16 F.3d 1513, 1521 (9th Cir. 1994) (concluding it is improper to inform a jury about indemnification of punitive damages), with Perrin v. Anderson, 784 F.2d 1040, 1047-48 (10th Cir. 1986) (holding that the district court did not err in allowing defense counsel to inform jury defendant officers will be personally liable for punitive damages). See Lewis v. Parish of Terrebonne, 894 F.2d 142, 146 (5th Cir. 1990) (finding that the district court did not err in excluding evidence that some defendant officers had insurance against punitive damages); O'Neill v. Krzeminski, 839 F.2d 9, 13 (2d Cir. 1988) (upholding the district court's refusal to instruct the jury that the city, which had an indemnification agreement with defendants, was not a defendant in the instant case and should not be considered in determining amount of punitive damages).
168. 16 F.3d 1513 (9th Cir. 1994).
169. Id. at 1520.
170. Id.
171. Id.
172. Id. at 1521.
173. Larez, 16 F.3d at 1521; see supra notes 117-38 and accompanying text (detailing the facts and disposition of the Larez case).
174. Larez, 16 F.3d at 1521.
175. Id.
176. Id. (discussing Keenan v. City of Philadelphia, 983 F.2d 459, 477-84 (3d Cir. 1992) (Higginbotham, J., dissenting), which "point[ed] out [the] tension between [the] deterrent rationale for punitive damages and taxpayer indemnification of punitive awards. . ."). The Ninth Circuit has also rejected attempts by § 1983 plaintiffs to introduce evidence of municipal indemnification of punitive damages in order to show municipal ratification of police misconduct. Trevino v. Gates, 99 F.3d 911, 918 (9th Cir. 1996) (finding that a city's discretionary decision to indemnify police officers for punitive damages is not a ratification of unconstitutional police conduct); Freeman v. Santa Ana, 68 F.3d 1180, 1190 (9th Cir. 1995) (upholding the district court's determination that evidence of indemnification offered on the issue of municipal liability was more prejudicial than probative, especially since the police chiefs policymaking authority provided alternative basis for holding city liable); see also supra note 69 (describing Trevino and similar cases).
177. Larez, 16 F.3d at 1524-25 (Pregerson, J., concurring in part and dissenting in part); see supra notes 135-37 and accompanying text (detailing the dissent's arguments).
178. Larez, 16 F.3d at 1525 (Pregerson, J., concurring in part and dissenting in part).
179. Id.
180. Id.; see supra text accompanying note 135 (citing the identical quotation).
181. Id. (citing People v. Ignacio, 825 F.2d 459, 462 (9th Cir. 1988)).
182. Larez, 16 F.3d at 1519.
183. Id. at 1524 (Pregerson, J., concurring in part and dissenting in part).
184. 894 F.2d 142 (5th Cir. 1990).
185. Id. at 144. The circuit court remanded the case to have the district judge determine any damages suffered by Lewis prior to his self-induced death. Id. at 149-50.
186. Id. at 146.
187. Id.
188. Id.; see also Carr v. City of Florence, 729 F. Supp. 783, 787 (N.D. Ala. 1990) (excluding evidence of a city council resolution authorizing indemnification of punitive damages, allowing evidence of defendant officer's personal finances, and distinguishing between the two by noting that evidence of indemnification "very well might influence the jury to render a large punitive award, not accomplishing the purpose of punishing the tortfeasor but getting into the deep pockets of the indemnitor . . .").
189. 839 F.2d 9 (2nd Cir. 1988).
190. Id. at 10.
191. Id. Punitive damages of $125,000 were assessed against one officer, $60,000 against a second officer, and $35,000 against the third. Id. 188. Note should be taken of the various ways in which the indemnification disclosure issue arises. Usually, it is plaintiffs counsel who would like the jury to know that the defendant will be indemnified, undoubtedly with the hope that this will prompt the jury to award greater damages. See, e.g., Larez v. Holcomb, 16 F.3d 1513, 1518 (9th Cir. 1994) (requiring a new trial on the issue of damages when the jury learned of defendant's indemnification); Lewis v. Parish of Terrebonne, 894 F.2d 142, 146 (5th Cir. 1990) (excluding evidence of defendant's insurance over plaintiffs objection); Griffin v. Hilke, 804 F.2d 1052, 1508 (8th Cir. 1986) (district court committed prejudicial error in allowing plaintiffs counsel, during summation, to inform the jury about indemnification). There are also cases like O'Neill in which defense counsel would like the jury to know that the defendant officer will be paying any judgment from personal finances. See, e.g., Lawson v. Trowbridge, 153 F.3d 368, 375 (7th Cir. 1998) (finding error when defendants entered evidence of limited financial resources while at the same time plaintiffs were not allowed to enter evidence of likely indemnification); Perrin v. Anderson, 784 F.2d 1040, 1045 (10th Cir. 1986) (finding no error when defense counsel stated that judgment against defendants would be paid by them and no one else); Joseph v. Brierton, 739 F.2d 1244, 1249 (7th Cir. 1984) (holding that defense counsel could not take advantage of an order against entering evidence of indemnification by claiming a large judgment would ruin defendants). In O'Neill, Lawson, and Joseph, defense counsel sought to mislead the jury into believing that the defendant officers would pay the judgment out of their personal funds.
192. 453 U.S. 247 (1981).
193. See supra text accompanying notes 24-28 (determining that municipalities are immune from punitive damages).
194. O'Neill, 839 F.2d at 13.
195. 784 F.2d 1040 (10th Cir. 1986).
196. Id. at 1045.
197. Id. at 1047.
198. Id.
199. Id.
200. Perrin, 784 F.2d at 1048 (citing City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 269 (1980) (stating that punitive damages in § 1983 actions should be based upon official's "personal financial resources")); see Mathie v. Fries, 121 F.3d 808, 816 (2d Cir. 1997): a fact-finder can properly consider the existence of such an [indemnification] agreement as obviating the need to determine whether a defendant's limited financial resources justifies some reduction in the amount that would otherwise be awarded. It would be entirely inappropriate for a defendant to raise the issue of his limited financial resources if there existed an indemnity agreement placing the burden of paying the award on someone else's shoulders.
201. 839 F.2d 9 (2d Cir. 1988); see supra text accompanying notes 189-91 (refusing to instruct the jury that the defendants would be indemnified).
202. 894 F.2d 142 (5th Cir. 1990); see supra text accompanying notes 180-84 (stating that knowledge of indemnification is not relevant).
203. 16 F.3d 1513 (9th Cir. 1994); see supra text accompanying notes 117-38 (describing the case).
204. This was what the court did in Larez v. Holcomb, 16 F.3d 1513 (9th Cir. 1994). After analyzing the issues separately, the Larez court held that it is reversible error to inform the jury about either compensatory or punitive damages. See supra text accompanying notes 117-38, 163-76 (vacating the award of damages and remanding).
205. See Perrin v. Anderson, 784 F.2d 1040 (10th Cir. 1986) (noting that the ultimate source of payment of punitive damages is relevant); see also supra text accompanying notes 192-96 (explaining the decision in Perrin).
206. Memphis Cmty. Sch. Dist. v. Stachura, 477 U.S. 299, 307 (1986); Carey v. Piphus, 435 U.S. 247, 254 (1978); SCHWARTZ & KIRKLIN, supra note 7, § 16.7. Compensatory damages also have a secondary deterrence purpose. See supra note 46 (noting the dual purposes of a § 1983 compensatory claim).
207. Joseph v. Brierton, 739 F.2d 1244, 1247 (7th Cir. 1984).
208. Larez, 16 F.3d at 1519.
209. Joseph, 739 F.2d at 1247.
210. Greer v. Miller, 483 U.S. 756, 766 n.8 (1987); City of Los Angeles v. Heller, 475 U.S. 796, 798 (1986).
211. Joseph, 739 F.2d at 1247.
212. J.W. STRONG, MCCORMICK ON EVIDENCE § 201, p.717 (5th ed. 1999) (stating that a jury should be instructed to decide a case on the basis of "the facts and the substantive law, rather than upon sympathy, ability to pay, or concern about proliferating litigation and rising insurance premiums"). But see Green, supra note 94, at 161 ("[T]he identities of the parties to the litigation and such financial responsibility as their identities impart are of the highest relevancy, both to the issues of liability and to the issues of damages.").
213. See supra notes 77-85 and accompanying text (discussing the justifications for the liability insurance exclusionary rule).
214. See supra notes 94-99 and accompanying text (setting forth criticisms of the liability insurance exclusionary rule).
215. 16 F.3d 1513 (9th Cir. 1994).
216. Id. at 1525 (Pregerson, J., concurring in part and dissenting in part).
217. See id. at 1519 ("Instead of focusing the jury's attention on the injury actually suffered by the plaintiff, we would be subjecting the jury to a flurry of largely irrelevant assertions and counter-assertions concerning who may or may not be financially harmed by a particular award.").
218. See id. at 1524 (Pregerson, J., concurring in part and dissenting in part) ("Any danger of award inflation . . . does not, in my opinion, outweigh the danger of allowing a deflated award by omitting the instruction.")
219. There is no guarantee that jurors who are given relevant evidence will not misuse it. After all, the law of evidence is filled with numerous
220. This type of instruction has been suggested by eminent scholars who have criticized the exclusionary rule for liability insurance. See supra text accompanying notes 98-99 (discussing the possible alternatives to the exclusionary rule for liability insurance).
221. Joseph v. Brierton, 739 F.2d 1244, 1247 (7th Cir. 1984); see supra text accompanying notes 196-204 (noting the purpose of compensatory damages in § 1983 actions).
222. See supra text accompanying note 99 (describing alternate methods including remittitur).
223. A district court that finds damages excessive can order a new trial, a new trial limited to damages, or can give the plaintiff the option of accepting the damages the court considers justified. FED. R. CIV. P. 59; WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 2815 (1995) (discussing Rule 59). For an example of the use of remittitur of compensatory damages in § 1983 actions, see Williams v. Patel, 104 F. Supp. 2d 984, 997 (C.D. Ill. 2000); Mendoza v. City of Rome, 872 F. Supp. 1110, 1126 (N.D.N.Y. 1994); and Sanders v. City of Indianapolis, 837 F. Supp. 959, 965 (S.D. Ind. 1992). For an example of the use of remittitur of punitive damages in § 1983 actions, see infra cases cited in note 228. Claims that compensatory damages are excessive are also subject to appellate review. See, e.g., Wulf v. City of Wichita, 883 F.2d 842, 870 (10th Cir. 1989). Federal appellate courts are increasingly overturning jury awards of damages. W. Glaberson, Juries, Their Powers Under Siege, Find Their Role Is Being Eroded, N.Y. TIMES, March 2, 2001, at Al.
224. Larez v. Holcomb, 16 F.3d 1513, 1519 (9th Cir. 1994).
225. Id. at 1525 (Pregerson, J., concurring in part and dissenting in part).
226. City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 270 (1981) ("[E]vidence of tortfeasor's wealth is traditionally admissible as a measure of the amount of punitive damages that should be awarded."); Mason v. Okla. Tpk. Auth., 182 F.3d 1212, 1214 (10th Cir. 1999) (holding that plaintiff is not obliged to present evidence of defendant's financial status); Mathie v. Fries, 121 F.3d 808, 816 (2d Cir. 1997) (holding that the factfinder in a bench trial may consider the existence of an indemnity agreement in determining whether punitive damages should be reduced in light of defendant's limited financial resources); Kemezy v. Peters, 79 F.3d 33, 34 (7th Cir. 1996) (holding that the defendant bears the burden of producing evidence of personal net worth); King v. Macri, 993 F.2d 294, 298 (2d Cir. 1993) (holding that the defendant may present evidence of financial status at trial, but the trial judge may decline to consider such evidence on a post-trial motion to reduce the award by remittitur); Faison v. Nationwide Mortgage Corp., 839 F.2d 680, 691 (D.C. Cir. 1987) (holding that the punitive damages awarded should take into account defendant's ability to pay in order to carry out the "intended sanction"); Hollins v. Powell, 773 F.2d 191, 198 (8th Cir. 1985) ("[I]n assessing punitive damages, it is appropriate to consider the defendant's net worth."); Harris v. Harvey, 605 F.2d 330, 340 (7th Cir. 1979) (holding that although the circuit court may have considered the punitive damages "unduly high," defendant failed to show that personal financial circumstances warranted a lesser amount); Zarcone v. Perry, 572 F.2d 52, 56 (2d Cir. 1978) (noting that defendant's net worth is relevant in determining punitive damages because a $60,000 award may bankrupt one person but be a minor annoyance to another); see also RESTATEMENT (SECOND) OF TORTS § 908(2) cmt. e (1965) (noting that a defendant's wealth is relevant in determining punitive damages). The burden is on the defendant to introduce evidence of financial circumstances. Mason, 182 F.3d at 1214; Mathie, 121 F.3d at 816; Kemezy, 79 F.3d at 36; Hutchinson v. Stuckey, 952 F.2d 1418, 1422 n.4 (D.C. Cir. 1992); Harris, 605 F.2d at 340; Zarcone, 572 F.2d at 56 (holding that the defendant has the burden of showing his modest means because these facts are "peculiarly" within his power); see also Davis v. Mason County, 927 F.2d 1473, 1485 (9th Cir. 1991) (although plaintiffs conceded that evidence of defendant deputy sheriffs net worth would have been relevant, deputies neither offered this evidence before the jury nor objected when the jury was not instructed on this issue; circuit court refused to consider deputies' argument that the jury should have been instructed that their net worth should be considered in assessing punitive damages"). But see Keenan v. City of Philadelphia, 983 F.2d 459, 479-84 (3rd Cir. 1992) (Higginbotham, J. dissenting) (arguing that plaintiff should bear burden of introducing evidence of defendant's net economic worth when municipal indemnification is involved).
227. See Kemezy, 79 F.3d at 36 (dictum) (noting that when the defendant will be fully indemnified for punitive damages, evidence of her net worth is inadmissible); see also Mathie, 121 F.3d at 816 (offering a similar proposition).
228. 784 F.2d 1040 (10th Cir. 1986).
229. Id. at 1048.
230. See supra notes 192-96 and accompanying text (discussing the implications of the Perrin decision).
231. See supra note 220 (describing other appropriate measures of correction). For examples of the use of remittitur of punitive damages in § 1983 actions, see generally Lee v. Edwards, 101 F.3d 805 (2d Cir. 1996) (using concept); King v. Macri, 993 F.2d 294 (2d Cir. 1993) (same); Leather v. Ten Eyck, 97 F. Supp. 2d 482 (S.D.N.Y. 2000) (same); Fall v. Indiana University Board of Trustees, 33 F. Supp. 2d 729 (N.D. Ind. 1998) (same); Blissett v. Eisensmidt, 940 F. Supp. 449 (N.D.N.Y. 1996) (same); and Niemann v. Whalen, 928 F. Supp. 296 (S.D.N.Y. 1996) (same). Appellate review of punitive damages is an aspect of constitutionally adequate process. Morgan v. Woessner, 997 F.2d 1244 (9th Cir. 1993) (applying standard in § 1983 action); see Lee v. Edwards, 101 F.3d 805 (2d Cir. 1996) (addressing appellate review of § 1983 punitive damages). While this Article was in its final stage of production, the United States Supreme Court held that constitutional challenges to punitive damages claimed to be excessive are subject to de novo review. Cooper Indus., Inc. v. Leatherman Tool Group, 2001 WL 501732 (May 14, 2001)
232. See 4 M. SCHWARTZ & G. PRATT, SECTION 1983 LITIGATION: JURY INSTRUCTIONS, Instruction § 18.07.1 (2000) (outlining the elements of such instructions); see also McKinley v. Trattles, 732 F.2d 1320, 1326 n.2 (7th Cir. 1984) (setting forth "accurate and complete" punitive damages instruction).
233. See supra Part IV (discussing evidentiary exclusionary provisions).
234. See supra Part III (providing overview of numerous critiques).