While this case is not specifically related to the development industry, we believe the constitutional issues will be important to this blog’s audience and our public sector clients.

In May 2016, the Oregon Supreme Court upheld a controversial statutory cap on damages recoverable from state agencies and employees, in the process overruling two important Oregon cases. The decision in Horton v. OHSU changes the landscape for courts analyzing legislative limits on damages and other remedies. More than anything else, it protects the limited liability of public entities and their employees.

Horton involved a six-month-old boy, Tyson Horton, who underwent an operation at OHSU. The doctors cut across blood vessels, requiring Horton to undergo a liver transplant and additional surgeries. In 2013, a jury awarded $12 million to Horton. Shortly after trial, OHSU and one of the doctors asked the trial judge to reduce the verdict to $3 million based on the Oregon Tort Claims Act’s cap on damages. The judge denied the motion in part, and the case went straight to the Oregon Supreme Court.

In a lengthy, long-awaited decision, the Court reversed the trial judge and upheld the liability cap.

The Court first overruled its own seminal decision in Smothers v. Gresham Transfer, which held that the Remedy Clause of the Oregon Constitution prevents the legislature from modifying the common law as it existed in 1857, when the Oregon Constitution was adopted. The Horton Court disagreed, explaining that the Remedy Clause does not lock the legislature “into a static conception of the law as it existed in 1857.” In other words, the common law and its remedies should, and do, change over time.

As the Court explained, the Oregon Tort Claims Act extends benefits to some, adjusts benefits to others, and balances the state’s interest in immunity with a person’s right to a remedy. It acts, in essence, as a quid pro quo. It ensures that an injured person will recover from a solvent entity—an assurance that would not exist if the person could recover only from a state employee.

The Court recognized that the capped amount is not sufficient to fully compensate Horton for his particular damages. But the $3 million cap amount is not “insubstantial in light of the overall statutory scheme,” and is more than a “paltry fraction of the damages.”

The Horton Court further held that the right to a jury trial guaranteed by Oregon’s constitution places no substantive limits on the statute beyond those imposed by the Remedy Clause. In doing so, the Court overruled another of its key decisions, Lakin v. Senco Products, which held that a cap on noneconomic damages violated the jury trial right.

Horton is limited to the facts that the case presented—the Court expressed no opinion whether other types of damages caps are constitutional. Those issues are left to be resolved in pending and future cases.