Cheatham v. Pohle
789 N.E.2d 467 (2003)
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Rule of Law:
A state statute that allocates a portion of a punitive damages award to a state fund does not constitute an unconstitutional taking of property, as a plaintiff has no vested common law property right in a claim for punitive damages until it is collected.
Facts:
- Doris Cheatham and Michael Pohle divorced in 1994.
- Pohle retained nude photographs of Cheatham that he had taken, as well as photos of them engaged in a consensual sexual act.
- In early 1998, Pohle made photocopies of the photographs.
- Pohle added Cheatham's name, work location, phone number, new husband's name, and attorney's name to the photocopies.
- Pohle then distributed at least sixty copies of these annotated photographs around the small community where both he and Cheatham lived and worked.
- Cheatham subsequently sued Pohle, alleging invasion of privacy and intentional infliction of emotional distress.
Procedural Posture:
- Doris Cheatham sued Michael Pohle in an Indiana trial court.
- A jury returned a verdict for Cheatham, awarding her $100,000 in compensatory damages and $100,000 in punitive damages, and the trial court entered judgment on the verdict.
- Cheatham, as appellant, appealed to the Indiana Court of Appeals, challenging the constitutionality of the statute allocating 75% of her punitive damage award to the state.
- Pohle, as appellee, cross-appealed on other grounds.
- The Court of Appeals held that the statute was unconstitutional because it demanded an attorney's 'particular services' without just compensation, but rejected Cheatham's takings claim.
- The State of Indiana intervened and petitioned for rehearing, which the Court of Appeals denied.
- The State of Indiana then petitioned for transfer to the Supreme Court of Indiana, which was granted.
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Issue:
Does Indiana's statute, which directs that seventy-five percent of a punitive damages award be paid to a state fund and twenty-five percent to the plaintiff, constitute an unconstitutional taking of private property without just compensation in violation of the U.S. and Indiana Constitutions?
Opinions:
Majority - Justice Boehm
No. The Indiana statute allocating seventy-five percent of a punitive damages award to the state does not constitute an unconstitutional taking of property. Punitive damages are quasi-criminal in nature, designed to punish and deter wrongdoers rather than to compensate the plaintiff. Because civil plaintiffs have no common law right or vested property interest in a claim for punitive damages, the legislature is free to modify or abolish them. The statute defines the plaintiff's interest from the outset as only twenty-five percent of any potential award; therefore, the state is not 'taking' property that ever belonged to the plaintiff. The plaintiff's property right only vests in the portion that the statute allows her to receive.
Dissenting - Justice Dickson
Yes. The Indiana punitive damages allocation statute constitutes an unconstitutional taking of private property. While a prejudgment claim for punitive damages is not a property interest, that interest vests and becomes the plaintiff's property upon the entry of a final judgment by the trial court. In this case, the trial court entered a judgment for $100,000 in punitive damages in favor of Doris Cheatham, making it her property. The statute's subsequent requirement to pay seventy-five percent of that judgment to the state is a confiscation of a vested property right, which violates the Takings Clauses of the U.S. and Indiana Constitutions.
Analysis:
This decision solidifies the view of punitive damages as a public, quasi-criminal sanction rather than a private compensatory remedy. It affirms the broad power of state legislatures to control and limit punitive damage awards, including channeling a significant portion to public funds. The court's reasoning—that a plaintiff has no property right in the state's portion because the statute defines the right from its inception—creates a significant barrier for future takings challenges against similar 'split-recovery' statutes. This case provides a clear legal framework for other states to divert punitive damage awards to public purposes without constitutional impediment.
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