No. 09-1572

SEP 2 9 2

IN THE

JOSEPH STROUD AND JOVON BROADCASTING,WJYS’TV 62/34,

Vo

JERRI BLOUNT,

Petitioners,

Respondent.

On Petition For Writ Of Certiorari ToThe Appellate Court Of Illinois

REPLY BRIEF

WILLIAM M. HOHENGARTENJESSICA RING AMUNSONJOSHUA M. SEGALJENNER & BLOCK LLP

1099 New York Avenue, NWSuite 900Washington, DC 20001(202) 639-6000

JEROLD S. SOLOVYCounsel of Record

BENJAMIN K. MILLERMICHAEL T. BRODY

JOHN C. ROBERTS JR.JENNER & BLOCK LLP353 North Clark StreetChicago, Illinois 60654-3456(312) 222-9350jsolovy@jenner.com

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TABLE OF CONTENTS

TABLE OF AUTHORITIES .......................................ii

SUMMARY ..................................................................1

ARGUMENT ...............................................................2

I. The Questions Presented Are Preserved ..............2

II. The Punitive Damages Ruling Merits Review ......6

III.The Noe~’~’-Pennington Rulings Merit Review ......9

CONCLUSION ..........................................................13

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TABLE OF AUTHORITIESCASES

BMW of North America, Inc. v. Gore, 517U.S. 559 (1996) ...................................................8

Brinkerhof£-Faris Trust & Savings Co. v.Hill, 281 U.S. 673 (1930) ...................................3

Campbell v. State Farm Mutual AutomobileInsurance Co., 98 P.3d 409 (Utah 2004) ...........7

Lebron v. National Railroad PassengerCorp., 513 U.S. 374 (1995) .................................2

Willow Inn, Inc. v. Public Service MutualInsurance Co., 399 F.3d 224 (3d Cir.2005) ...............................................................8, 9

Yee v. City of Eseondido, 503 U.S. 519(1992) ..............................................................2, 6

STATUTES

42 U.S.C. § 1988 ..................................................3, 9

SUMMARY

Respondent’s contention that Petitioners did notpreserve the questions presented is meritless. Underthis Court’s preservation standard - whichRespondent fails to mention, much less apply - aparty may make any argument in support of a claimraised below. Petitioners easily surpass thatstandard. Not only did Petitioners raise the relevantclaims below, they made essentially the samearguments as set forth in the Petition. Respondent’scontrary assertions, which mischaracterize therecord and the law, represent a misplaced attempt toforestall the Court’s consideration of importantissues of constitutional law on which lower courts aredivided.

On the merits, Respondent fails to refutePetitioners’ showing of a conflict on the first questionpresented, regarding treatment of court-awardedattorneys’ fees under the State Farm and BMWdueprocess analysis. Respondent’s arguments simplyhighlight the confusion in the lower courts. AndRespondent does not and cannot deny that resolutionof this conflict is critical to safeguarding theconstitutional right against disproportionatepunitive damages awards - as this case vividlyillustrates. Indeed, Respondent makes no attempt todefend the analysis below, which plainly is at oddswith the State Farm-BMWframework.

On the second question presented, Respondentincorrectly suggests the court below did not say whatit in fact said when it rejected Petitioners’ Noerr"Pennington objection to the admission of prejudicialtestimony concerning Petitioners’ First Amendment

activity. The lower court unambiguously rejectedNoerr-Pennington based on its erroneous rulingsthat the doctrine applies neither to retaliation claimsnor to past petitioning. Those rulings plainly createconflicts of authority. As for the court’s third reasonfor rejecting Noerr-Pennington- that the testimonywas offered in support of a claim based on otherconduct - Respondent contends this ruling is notworthy of review because it was addressed by afootnote in Pennington. But as the Petition showed,and Respondent does not contest, that footnote wasdictum that is not binding on this Court, yetforestalls the ordinary process of development of thelaw in the lower courts. As such, this Court shouldaddress the issue in this case, where it is actuallypresented, to protect this core First Amendmentright against the chilling effect of the rulings below.

ARGUMENT

I. The Questions Presented Are Preserved.

In an effort to forestall the Court’s considerationof the important constitutional questions presented,Respondent’s primary argument is that Petitioners"did not raise in the courts below the constitutionalquestion[s] which they now urge this Court toconsider." Opp. 8. But Respondent fails to mention,much less apply, the Court’s preservation standard:"Once a federal claim is properly presented, a partycan make any argument in support of that claim;parties are not limited to the precise arguments theymade below." Yee v. City o£Escondido, 503 U.S. 519,534 (1992); accord Lebron v. Nat’l R.R. PassengerCorp., 513 U.S. 374, 379 (1995).

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Petitioners went far beyond what is requiredunder Yee. Not only did Petitioners raise therelevant claims below, they pressed the mainarguments set forth in the Petition for Certiorari.

1. With respect to the first question presented,both Petitioners’ and Respondent’s initialsubmissions to the Illinois Appellate Court excIudedattorneys’ fees from the State Farm-BMWcomparison of compensatory and punitive damages -treatment consistent with Petitioners’ position beforethis Court. See Pet. 6-7. Accordingly, the precisequestion presented here did not arise until theAppellate Court ~ua ~ponte added attorneys’ fees tocompensatory damages when performing the dueprocess ratio analysis. Petitioners then timely raisedtheir due process objection to that treatment of thefees - first in seeking rehearing in the AppellateCourt, and again in seeking discretionary review inthe Illinois Supreme Court. See Appellants’ Pet. forRehearing 1, 4-9 (Ill. App. Ct.); Pet. for Leave toAppeal 8 (Ill. Sup. Ct.). "The additional federal claimthus made [in seeking rehearing] was timely, since itwas raised at the first opportunity." Brinkerho££-Fari~ Trust & Say~. Co. v. Hill, 281 U.S. 673, 678(1930).

Respondent’s argument that the "only federalissue" Petitioners raised below "concerned a questionof statutory interpretation" under 42 U.S.C. § 1988(Opp. 14) is contradicted by the quotations inRespondent’s own brief, which state that treatingfees awarded under § 1988 as compensatory damagesis an erroneous application of ’"the Gore-Campbell[Le., BMW-State Farm] ratio."’ Opp. 9 (quoting

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Appellants’ Pet. for Rehearing 1). In the AppellateCourt, Petitioners elaborated: "If attorneys’ fees hadbeen properly excluded from the Gore-Campbellcalculus, the ratio of punitive [to compensatory]damages would have been nearly 10:1, which straysfar beyond the proper constitutional benchmark of1:1." Appellants’ Pet. for Rehearing 3-4. Likewise,Petitioners sought review in the Illinois SupremeCourt on the ground that under BMW and State-~rm, "a punitive damage award [must] beproportional to the actual harm suffered by theplaintiff," and that attorneys’ fees as costs may notbe considered compensatory under this analysis’%ecause they do not provide a remedy for the injuryor harm that gave rise to the suit." Pet. for Leave toAppeal, at 8-9; see Mso Mot. for Reconsideration 7(Ill. Sup. Ct.).1

1 Respondent also cites pleadings filed after the state courtdecisions became final. Opp. 13. Although these laterpleadings should not be relevant to whether the issues weretimely presented in the courts below, Respondent’s selective"quotation" and characterization of the later pleadingsunderscores the Opposition’s reckless approach to the record.When the parts omitted by Respondent are included, thesepleadings plainly make the same argument presented in thePetition:

[T]he decision below raises serious due processconcerns regarding the amount of punitivedamages. The United States Supreme Court hasheld that although the constitutionality ofpunitive damages awards cannot be reduced to amathematical formula, the ratio of compensatorydamages to punitive damages is a critical factor.Here, the jury awarded $2,800,000 in punitivedamages. Even assuming that back pay

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To be sure, one aspect of Petitioners’ argumenthas always been that even if attorneys’ fees may beincluded on the compensatory side of the due processratio when the fees were awarded by the factfinderas damages under the substantive law, it violatesdue process to count attorneys’ fees as compensatorydamages when they were awarded by the court ascosts, as occurred here pursuant to § 1988. But thatis the very same argument Petitioners make to thisCourt in seeking certiorari. See Pet. 16-17. TheCourt might adopt a rule excluding attorneys’ feesfrom the due process ratio in all cases, as somecourts have done, or allow fees to be counted ascompensatory damages only when the substantivelaw so provides, as other courts have held. Id. Butunder either rule, the approach of the court belowviolates the Constitution.

constitutes compensatory damages (rather thanequitable relief), the total compensatory damagesplus back pay awarded amounts to only $282,350,leading to an extreme 10:1 ratio of punitivedamages compared to harm actually suffered. But[the Appellate] Court did not analyze the ratio inthis way, choosing instead to include the award of$1,182,832 in attorneys’ fees as compensatorydamages for purposes of a due process analysis.[The Appellate] Court therefore upheld thepunitive damages award because it resulted in"only" a 1.8:1 ratio. Contrary to the court’s ruling,the plain language of § 1988 makes clear that "areasonable attorney’s fee [is] part of the costs," notdamages.

Mot. to Recall and Stay 3 (Ill. App. Ct.) (citations omitted);a/~oAppl, for Extension of Time 5 (U.S.).

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2. Respondent’s assertion that the secondquestion presented was not preserved is equallybaseless. The Appellate Court expressly found thatPetitioners preserved their Noerr-Penningtonobjection to admission of evidence concerning lawfulpetitioning of criminal justice authorities for redressagainst Respondent’s violation of Illinois’s criminaleavesdropping law. Pet. App. 39a.2 In arguing non-preservation, Respondent focuses on a singlealternative argument in the Petition concerning onlyone of the three erroneous Noerr-Pennington rulingschallenged here: the argument that even if Noerr-Pennington permitted evidence of constitutionallyprotected petitioning in some circumstances, theremust still be a heightened showing that theprobative value of such evidence outweighs theprejudice to First Amendment rights. Pet. 34-35;in£ra at 11; Opp. 32-33 & n.27. But as Respondentconcedes, Petitioners’ primary argument below - asin this Court - was that Noerr-Pennington alwaysprecludes admission of such evidence. Opp. 32.Offering a fallbaek argument in support of the sameclaim - that Noerr-Pennington at least requiresexclusion of the evidence in this ease, even if not inevery ease - is proper. See Yee, 503 U.S. at 535.

II. The Punitive Damages Ruling Merits Review.

On the merits, Respondent has failed to refutePetitioners’ showing that the Illinois court’s punitive

2 In so ruling, the Appellate Court rejected Respondent’scontention (Opp. 31) that, by eliciting certain other testimonyrelating to petitioning of civil law authorities, Petitionersopened the door to allowance of the testimony at issue here.

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damages ruling under State r i and BMWwarrants review. At the outset, [,ondent does notand cannot deny that this quion is criticallyimportant. By counting court-~.arded attorneys’fees as compensatory relief, the court below radicallyskewed the State Farm-BMW quantitative analysis.In this very case, the attorneys’ fees dwarfed theactual compensatory relief awarded by the jury;indeed, the trial court made its fee award long afterthe jury’s verdict. See Pet. 15. Allowing the trialcourt to artificially inflate the "compensatory relief’by adding its own fee award to the factfinder’sdamages award would render the quantitativeguideposts established by this Court essentiallymeaningless.

Respondent’s contention that there is no conflictof authority concerning this vital question is patentlyincorrect. Respondent asserts that the UtahSupreme Court’s remand decision in State Farm is"too opaque" to give rise to a direct split with thedecision below. Opp. 16. But there is nothing"opaque" about the Utah Supreme Court’s holdingthat "attorney fees" may not be "included as part ofthe denominator in calculating a ratio betweencompensatory and punitive damages." Campbell v.State Farm Mut. Auto. Ins. Co., 98 P.3d 409, 419(Utah 2004). The court below held just the opposite:"attorneys fees should be taken into account as partof the compensatory damages factor in the Goreanalysis." Pet. App. 30a. The two courts reachedpolar opposite conclusions on the question presented.The conflict is clear.

Respondent’s further suggestion (Opp. 17) thatthe Utah court was simply interpreting this Court’smandate just serves to reinforce the conflict betweenthe decision below and this Court’s precedents. SeePet. 17-19. Nonetheless, Respondent argues (Opp.25) that this Court’s decisions cannot be taken attheir word when they direct quantitative comparisonof punitive damages to the "actual harm asdetermined by the jury," BMW of North America,Inc. v. Gore, 517 U.S. 559, 582 (1996), because thatrule would purportedly bar punitive damages in abench trial. That is merely a debater’s point, as theCourt self-evidently used the word "jury" asshorthand for "factfinder." At the same time, thesubstance of the Court’s holdings is unmistakable:punitive damages must be compared to the actualharm reflected in the factfinder’s verdict under thesubstantive law. See Pet. 17-18. The decision belowconflicts with that rule.

The remainder of Respondent’s argumentconcerning the first question quarrels withPetitioners’ reading of certain lower court cases. Butnone of those quibbles alters the fundamental pointthat there is a conflict and an array of approaches inthe lower courts. For example, Respondent takesissue with Petitioners’ discussion of Willow Inn, Inc.v. Public Service Mutual Insurance Co., 399 F.3d 224(3d Cir. 2005), in which the Third Circuit (like theIllinois court below, which relied on Willow Inn)counted attorneys’ fees as compensatory damagesunder State Farm and BMW. The Petition forCertiorari stated that Willow Inn applies the samerule as the decision below because the attorneys’ fees

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were "awarded by the court as collateral relief." Pet.19-20. Respondent disagrees and argues that theThird Circuit’s treatment of the fees as compensatoryrelief actually turned on its reading of thesubstantive Pennsylvania statute that applied,under which "fees ... are to be consideredcompensatory damages." Opp. 21 (citing Willow Inn,399 F.3d at 421). Assuming that Petitioners’ readingof Wil]ow Inn is the better one, it merely heightensthe conflict of authority, because it moves Willow Innfrom agreeing with the decision below to conflictingwith it. According to Respondent, the Third Circuitpermits fees to be counted as compensatory relief inthe due process analysis only when the fees areawarded by the factfinder as compensatory reliefunder the applicable substantive law. See Pet. 20-21(identifying other cases taking this approach). Thatis contrary to the decision below, which includedcourt-awarded fees even though the substantive lawplainly defines them as "costs." 42 U.S.C. § 1988.

In short, the existence of a substantial conflictbetween the decision below and other decisions fromfederal appellate and state supreme courts isundeniable. This Court should provide the guidanceneeded on this important issue.

III. The Noorr-.Pom~i~gton Rulings Merit Review.

Respondent also fails to refute Petitioners’showing that the Illinois court’s Noerr-Penni~gtonrulings warrant the Court’s review. As the Petitionexplains, the decision below includes threecertworthy rulings rejecting Noerr’Pennington. Pet.23-36. Respondent begins with the third ruling:

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that the evidence of protected petitioning wasintroduced to hold Petitioners liable for otherconduct, rather than imposing liability for the FirstAmendment activity as such. Respondent contendsthis ruling is "settled law" because it was addressedin a footnote in Pennington. Opp. 28-30. But thatcontention ignores the central point of the Petitionabout this issue: the Pennington footnote is puredictum, which constrains the lower courts but notthis Court. Pet. 33-34. The existence of that dictummakes the case for certiorari on this issue especiallycompelling because it blocks percolation of the issuein the lower courts and can only be corrected by thisCourt. At the same time, because the dictum lacksstare decisis effect, there is no need to showunworkability or the other factors demanded byRespondent (Opp. 30-31), which are relevant onlywhen the Court reconsiders prior holdings withprecedential force. See Pet. 33.

This very case shows how the rule adopted below,and suggested by the Pennington dictum, subvertsfundamental rights. Petitioner Stroud petitionedcriminal justice officials two full years afterRespondent’s alleged retaliatory discharge. Pet. 5.That First Amendment conduct shows only thatPetitioner was trying to enforce his rights underIllinois criminal law; it has no relevance to the long-past discharge. Yet the courts below allowedevidence of it to inflame the jury’s passions, asreflected in an enormous anddisproportionatepunitive damages award. Thesuggestion thatPetitioners have not been punished forconstitutionally protected activity blinks reality.

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Respondent argues that evidence of FirstAmendment activity might be relevant in othercases, such as where a white supervisor is a memberof the Ku Klux Klan and fires a minority employee.Opp. 31. But even assuming that such evidence wereever admissible, it would only be so where itsprobative value greatly outweighed its prejudicialand chilling effect on First Amendment rights.Multiple courts have so held. Pet. 35-36. Under anyconstitutional rule, the evidence should not havebeen admitted against Petitioners here. The Courtshould revisit the Pennington dictum to guardagainst further encroachments on this core right.

The logic of Respondent’s arguments concerningthe Illinois court’s other two Noerr-Penningtonrulings is difficult to follow, but appears to be thatthe court did not mean what it said. Respondentnowhere denies that the Appellate Court’s refusal toapply Noerr-Pennington to petitioning that hasalready been completed creates a split with thisCourt and with numerous courts of appeals. See Pet.30-32. Instead, Respondent contends the AppellateCourt did not refuse to apply Noerr-Pennington tocompleted petitioning activity. Opp. 34-35. That isincorrect. To be sure, the Appellate Court recitedthat "the doctrine may also be applied where a partycontends that another party’s completed lawsuit isunlawful." Pet. App. 42a-43a. But then, ignoringthat principle, the court rejected Petitioners’ Noerr-Pennington objection on the very ground that"defendants have already had their ’day in court’ ontheir civil eavesdropping claim against Blount, andthe State’s Attorney decided that there were no

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grounds to charge Blount criminally." Pet. App. 43a.Whatever passing lip service the court may havepaid to Noerr-Pennington’s applicability to completedconduct, it applied a very different rule of decisionhere, in conflict with numerous other courts.

As for the Appellate Court’s first Noerr-Pennington rationale - that the doctrine does notapply to retaliation claims - Respondent again doesnot contest that this ruling conflicts with thedecisions of this Court and multiple courts ofappeals. See Pet. 25-29. Instead, Respondentengages in verbal contortions to argue that this isnot actually what the court below held. Respondent’sarguments cannot be squared with the court’sopinion. Respondent never mentions the operativelanguage of the Appellate Court’s ruling, which isunmistakably clear: the court "decline[d] to extendthe applicability of the Noerr-Pennington doctrine toprovide immunity from retaliation claims." Pet. App.41a-42a. Given this plain language, Respondent’sclaim (Opp. 36) that "[n]othing in the decision belowsuggests that the Appellate Court would refuse toapply the Noerr-Pennington doctrine in similareases," including "retaliation eases," is inexplicable.3

3 Respondent also misleadingly contends that the Appellate

Court "recognized that the Noerr-Pennington doctrine doesgenerally apply in cases (including retaliation cases) involvinglabor law or business and economic interests." Opp. 35. But tounderscore its view that the doctrine does not apply in othercases, the court below stated: "Notably, the United StatesSupreme Court has never applied the doctrine in a case that didnot involve the Sherman Act, the National Labor Relations Act,or business and economic interest disputes betweencompetitors." Pet. App. 40ao

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The Noerr-Pennington rulings belowreview.

CONCLUSION

The petition should be granted.

plainlymerit

WILLIAM M. HOHENGARTENJESSICA RING AMUNSONJOSHUA M. SEGALJENNER & BLOCK LLP1099 New York Avenue, NWSuite 900Washington, DC 20001(202) 639-6000

September 29, 2010

Respectfully submitted,

JEROLD S. SOLOVYCou~2sel of Record

BENJAMIN K. MILLERMICHAEL T. BRODYJOHN C. ROBERTS JR.JENNER & BLOCK LLP353 North Clark StreetChicago, Illinois 60654-3456(312) 222-9350jsolovy@jenner.com

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