Phillips v. Mirac, Inc

Michigan Supreme Court
Lansing, Michigan

Opinion
Chief Justice Justices
Maura D. Corrigan Michael F. Cavanagh
Elizabeth A. Weaver
Marilyn Kelly
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman

FILED JULY 6, 2004

MARGARET PHILLIPS, PERSONAL REPRESENTATIVE
OF THE ESTATE OF REGEANA DIANE HERVEY,
Deceased,

Plaintiff-Appellant,

v No. 121831

MIRAC, INC.,

Defendant-Appellee.

_______________________________

BEFORE THE ENTIRE BENCH

TAYLOR, J.

In this case, we granted leave to appeal to consider

whether MCL 257.401(3), which caps the amount of a lessor’s

liability in motor vehicle leases of thirty days or less,

violates plaintiff’s rights under the Michigan Constitution

to a jury trial,1 equal protection,2 or due process.3 We

1
Const 1963, art 1, § 14.
2
Const 1963, art 1, § 2.
3
Const 1963, art 1, § 17.
hold that this damages cap does not implicate plaintiff’s

right to a jury trial, and does not violate her rights to

equal protection or due process. Therefore, we affirm the

Court of Appeals decision that the statute is

constitutional.

Regeana Diane Hervey died in an automobile accident

while a passenger in a vehicle being driven by Da-Fel Reed.

Reed had leased the vehicle from Mirac, doing business as

Enterprise Rent-A-Car. Margaret Phillips, decedent’s

mother and the personal representative of decedent’s

estate, initiated a lawsuit against Mirac on the basis of

MCL 257.401(3).4 Generally, MCL 257.401(3) establishes

vicarious liability for automobile lessors when permissive

users, such as Reed, are negligent and cause automobile

accidents injuring others. The act also caps the damages

for such lessors at $20,000 for each injured person to a

maximum of $40,000 for each accident.

While reserving for resolution the constitutionality

of the damage caps, the parties before trial executed a

“high-low” agreement for a $150,000 minimum award and a

4
Reed also was sued. A jury found her negligent;
however, she is not a party to this appeal.

$250,000 maximum award. The jury returned a verdict of

$900,000 against Mirac. This would, of course, have been

reduced to $250,000 pursuant to the high-low agreement,

unless the statutory damage caps were constitutional, in

which case the damages would be reduced to $20,000.

The trial court concluded that the damage caps were

unconstitutional on the basis that the statute, in capping

damages, violated the right of trial by jury found in art

1, § 14 of the Michigan Constitution. The essence of its

holding was that the right of jury trial includes the right

of having a jury not only determine damages, but that the

jury’s determination cannot be altered by the Legislature

or courts. The trial court also concluded that the statute

violated the Michigan Constitution’s provision that

guarantees to citizens equal protection of the laws.5 That

is, that it impermissibly causes similarly situated

litigants to be treated differently. Using the same

reasoning, the trial court concluded that the statute also

violates the Michigan Constitution’s guarantee of due

process of law.6

5
Const 1963, art 1, § 2.

6
Const 1963, art 1, § 17.

On appeal, the Court of Appeals reversed in a two-to

one opinion.7 The majority determined that the cap did not

infringe plaintiff’s right to trial by jury for two

reasons. First, because the Legislature can abolish or

modify common-law and statutory rights and remedies, it

necessarily follows that it can limit the damages

recoverable for a cause of action. Second, it decided that

the statute does not infringe the right to a jury trial

because the damages cap does not remove from the jury the

determination of facts and amount of damages. The statute

simply limits the amount of damages that can be recovered

from a lessor of vehicles. Thus, the cap only limits the

legal consequences of the jury’s finding. 251 Mich App at

590-595.

Therefore, having determined that the cap did not

implicate any fundamental right, the majority analyzed

whether the cap violates plaintiff’s right to equal

protection under the rational basis test. The majority

concluded that “it can reasonably be assumed that Michigan

has a legitimate interest in the continued operation of

automobile rental businesses, and protecting those

businesses from large damages awards in jury trials bears a

7
251 Mich App 586; 651 NW2d 437 (2002).

rational relationship to that end.” Id. at 598.

Therefore, the statute did not violate plaintiff’s equal

protection rights. Similarly, because the tests for due

process and equal protection are essentially the same, the

cap also did not violate plaintiff’s due process rights.

Id. at 598.

The Court of Appeals dissent would have held that the

damages cap is unconstitutional because it violates the

right to a jury trial. The dissent explained that

“[b]ecause our constitution confers a right to trial by

jury, and because the right to trial by jury in Michigan

extends to a determination of damages, the damages cap in

the instant case is unconstitutional.” Id. at 599. Thus,

the statutory damages cap renders the jury’s role illusory.

The dissent stated that the Legislature may be free to

abolish a cause of action, but it may not abolish a right

mandated by the Constitution. Id. at 600.

This Court granted plaintiff’s application for leave

to appeal, “limited to whether MCL 257.401(3) constitutes

an unconstitutional denial of plaintiff’s right to a jury

trial, equal protection, or due process.”8

8
468 Mich 943 (2003).

When construing a constitutional provision, we must

give the words their plain meaning if they are obvious on

their face. “If, however, the constitutional language has

no plain meaning, but is a technical, legal term, we are to

construe those words in their technical, legal sense.”

Silver Creek Drain Dist v Extrusions Div, Inc, 468 Mich

367, 375; 663 NW2d 436 (2003); Michigan Coalition of State

Employee Unions v Civil Service Comm, 465 Mich 212, 222

223; 634 NW2d 692 (2001), quoting 1 Cooley, Constitutional

Limitations (8th ed), p 132.

The constitutionality of a statute is a question of

law that is reviewed de novo. Tolksdorf v Griffith, 464

Mich 1, 5; 626 NW2d 163 (2001). Statutes are presumed

constitutional. We exercise the power to declare a law

unconstitutional with extreme caution, and we never

exercise it where serious doubt exists with regard to the

conflict. Sears v Cottrell, 5 Mich 251, 259 (1858);

accord, Taylor v Gate Pharmaceuticals, 468 Mich 1, 6; 658

NW2d 127 (2003). “Every reasonable presumption or

intendment must be indulged in favor of the validity of an

act, and it is only when invalidity appears so clearly as

to leave no room for reasonable doubt that it violates some

provision of the Constitution that a court will refuse to

sustain its validity.” Cady v Detroit, 289 Mich 499, 505;

286 NW 805 (1939).

III

The statute at issue in this case, MCL 257.401,

provides in part:

(3) Notwithstanding subsection (1), a person
engaged in the business of leasing motor vehicles
who is the lessor of a motor vehicle under a
lease providing for the use of the motor vehicle
by the lessee for a period of 30 days or less is
liable for an injury caused by the negligent
operation of the leased motor vehicle only if the
injury occurred while the leased motor vehicle
was being operated by an authorized driver under
the lease agreement or by the lessee's spouse,
father, mother, brother, sister, son, daughter,
or other immediate family member. Unless the
lessor, or his or her agent, was negligent in the
leasing of the motor vehicle, the lessor's
liability under this subsection is limited to
$20,000.00 because of bodily injury to or death
of 1 person in any 1 accident and $40,000.00
because of bodily injury to or death of 2 or more
persons in any 1 accident. [Emphasis added.] [9]

9
Subsection 1 of the statute provides:

This section shall not be construed to limit
the right of a person to bring a civil action for
damages for injuries to either person or property
resulting from a violation of this act by the
owner or operator of a motor vehicle or his or
her agent or servant. The owner of a motor
vehicle is liable for an injury caused by the
negligent operation of the motor vehicle whether
the negligence consists of a violation of a
statute of this state or the ordinary care
standard required by common law. The owner is not
liable unless the motor vehicle is being driven
with his or her express or implied consent or
(continued…)

Thus, this statute imposes on a motor vehicle lessor

vicarious liability for bodily injury or death resulting

from the negligence of the lessee (or a listed member of

the lessee’s family). The statute, however, sets upper

limits on that vicarious liability in the amounts of

$20,000 for each person and $40,000 for each accident.

The Michigan Constitution states that:

The right of trial by jury shall remain, but
shall be waived in all civil cases unless
demanded by one of the parties in the manner
prescribed by law. [Const 1963, art 1, § 14.]

At issue is whether this constitutional provision

makes what the Legislature attempted to do—cap damages even

though a jury found that the damages were greater than the

cap—unconstitutional. That is, does MCL 257.401(3)

unconstitutionally infringe the right of trial by jury?

The first step in our analysis is to identify the

scope of the right as enumerated in the Constitution. Our

Constitution from the time of statehood has had a provision

concerning the right of jury trials. In its earliest form,

(…continued)
knowledge. It is presumed that the motor vehicle
is being driven with the knowledge and consent of
the owner if it is driven at the time of the
injury by his or her spouse, father, mother,
brother, sister, son, daughter, or other
immediate member of the family. [MCL 257.401(1).]

the right was expressed in Const 1835, art 1, § 9: “The

right of trial by jury shall remain inviolate.” This was

changed somewhat by Const 1850, art 6, § 27: “The right of

trial by jury shall remain, but shall be deemed to be

waived in all civil cases unless demanded by one of the

parties in such manner as shall be prescribed by law.”

This language was unchanged in Const 1908, art 2, § 13, and

the 1963 Constitution did not change the substance but only

updated the language slightly. As can be seen, we have had

virtually the same provision in our Constitution throughout

our history and the nub of our inquiry must be, then, what

does it mean to say “the right of trial by jury shall

remain”?

This Court, speaking through Justice Thomas M. Cooley

addressed this in 1880, saying:

The Constitution of the State provides that
‘The right of trial by jury shall remain, but
shall be deemed to be waived in all civil cases,
unless demanded by one of the parties in such
manner as shall be prescribed by law.’ Article
vi. § 27. The right is to remain. What right?
Plainly the right as it existed before; the right
to a trial by jury as it had become known to the
previous jurisprudence of the State. [Swart v
Kimball, 43 Mich 443, 448; 5 NW 635 (1880)
(emphasis in original).]

What is to be taken from this is that to determine

what this phrase, “the right of trial by jury shall

remain,” means, one must look to the jurisprudence of the

state. That is, this phrase is a technical legal phrase

with the meaning those understanding the jurisprudence of

this state would give it. As we said in Michigan

Coalition, supra at 223, drawing on Justice Cooley’s method

of analysis, in construing technical legal terms used in a

constitution, “we must suppose these words to be employed

in their technical sense.” Quoting Constitutional

Limitations, supra. It is this technical legal meaning

that the ratifiers of the 1963 Constitution are held to

have adopted. We thus must look for the meaning of “the

right of trial by jury” before 1963, as understood by those

learned in the law at the time. See Conservation Dep’t v

Brown, 335 Mich 343, 346; 55 NW2d 859 (1952).

Considerable insight into this scope of this right,

both historically and as it was understood in the first

half of the twentieth century, is provided in the

encyclopedic article on this issue in the 1918 Harvard Law

Review by Harvard Law professor Austin Wakeman Scott, Trial

by jury and the reform of civil procedure, 31 Harv L R 669

(1918). While, not surprisingly, Professor Scott found

certain elements to have long been regarded as of the

“essence” of trial by jury, such as unanimity,

impartiality, and competence of the jury, id. at 672-674,

he also found that the only matters “properly within the

province of the jury” are questions of fact. Id. at 675.

All other questions, being questions of law, are for the

court. Id. at 677.10 Professor Scott’s article served as

the bedrock for the United States Supreme Court decision,

Tull v United States, 481 US 412; 107 S Ct 1831; 95 L Ed 2d

365 (1987), in which the Court discussed these concepts and

concluded that the jury was confined to finding facts and

that law was for the courts and, moreover, that falling

within the ambit of law was the assessment of civil

penalties. As the Court said, “The assessment of civil

penalties thus cannot be said to involve the ‘substance of

a common-law right to a trial by jury,’ nor a ‘fundamental

10
That this view is accurate seems incontrovertible
when the scholarly Scott article is read, and it is
reinforced by the most renowned commentator on the English
common law in the eighteenth century, William Blackstone,
who noted that the jurors “are judges of fact.” 3 Comm
361, reprinted in 5 Kurland & Lerner, The Founder’s
Constitution 345 (1986), and even Thomas Jefferson, who was
famously no friend of government officials decimating the
power of the common people: “. . . JURIES therefore . . .
determine all matters of fact, leaving to the permanent
judges to decide the law resulting from those facts.”
Thomas Jefferson to the Abbé Arnoux, July 19, 1789,
reprinted in Kurland & Lerner, supra at 364. These ancient
references concerning the status of the common law before
Michigan’s statehood are significant because in our
earliest Constitution, by way of the ordinances of 1787 for
the government of the Northwest Territory, we adopted what
was in essence the English common law in existence on that
date. See In re Sanderson, 289 Mich 165, 174; 286 NW 198
(1939); In re Lamphere, 61 Mich 105, 108; 27 NW 882 (1886);
Stout v Keyes, 2 Doug 184 (Mich 1845).

element of a jury trial.’” Tull, supra at 426. This

holding in Tull was not unexpected because it followed a

similar holding in Galloway v United States, 319 US 372,

392; 63 S Ct 1077; 87 L Ed 1458 (1943), in which the Court

opined that, as expressed in the United States

Constitution, the right of trial by jury extends only to

“its most fundamental elements, not the great mass of

procedural forms and details . . . .”

No other understanding of the proper area for juries

to exercise power can be found in Michigan jurisprudence.

In 1962, in deciding McClelland v Scholz, 366 Mich 423,

426; 115 NW2d 120 (1962), the Court found unexceptional a

court rule that required juries to decide questions that

relate “only to material issues of fact,” a finding that

the Court could not have reached had the rule breached the

“right of trial by jury” provision in the 1908

Constitution. Moreover, this approach echoed a similar

earlier holding in May v Goulding, 365 Mich 143, 148-149

(1961). Further, in giving an overview of the area of the

law in 1994, this Court held: “Juries traditionally do not

decide the law or the outcome of legal conflicts. . . . To

maintain the traditional role of the jury, the jury must

remain the factfinder; a jury may determine what happened,

how, and when, but it may not resolve the law itself.”

Charles Reinhart Co v Winiemki, 444 Mich 579, 601; 513 NW2d

773 (1994).

It is clearly the case that, at the time of the

drafting and ratification of the 1963 Constitution, those

sophisticated in the law understood, and thus the

instrument adopted, that the right of trial by jury

encompassed a jury that could find facts, including the

amount of damages. See, e.g., Wood v Detroit Automobile

Inter-Ins Exchange, 413 Mich 573, 583-584; 321 NW2d 653

(1982). However, regarding the law, it was for the court

to decide that on the basis of the common law, the

Constitution, or the statutes the Legislature had enacted.

This should not be taken as dismissing the jury’s

importance. It is for the jury to assimilate the facts

presented at trial, draw inferences from those facts, and

determine what happened in the case at issue. See, e.g.,

Green v Detroit U R Co, 210 Mich 119, 129; 177 NW 263

(1920). As important as those duties are, however, matters

of law concern the legal significance of those facts.

Accordingly, excluded from the jury’s purview are such

matters as whether a party has met its burden of proof,

whether certain evidence may be considered, which witnesses

may testify, whether the facts found by the jury result in

a party being held liable, and the legal import of the

amount of damages found by the jury.11 Thus, for example,

while a jury may find a defendant has acted negligently and

the amount of damages occasioned thereby, the court may

apply the governmental immunity act, MCL 691.1407, and find

there is no liability, despite the plaintiff’s damages. Or

a jury may find a hunter has been injured and damaged on a

defendant’s property because of the defendant’s negligence,

but the recreational trespass act, MCL 324.73107, will, in

certain circumstances, preclude liability. Moreover,

uncontroversially, after the jury has been dismissed, a

court may enter an order that doubles or trebles the amount

of damages assessed, pursuant to any of the numerous

11
See Etheridge v Med Ctr Hosps, 237 Va 87, 96; 376
SE2d 525 (1989), in which the Supreme Court of Virginia
noted:

“The province of the jury is to settle
questions of fact, and when the facts are
ascertained the law determines the rights of the
parties.” . . . Once the jury has ascertained the
facts and assessed the damages, however, the
constitutional mandate is satisfied. Thereafter,
it is the duty of the court to apply the law to
the facts. [Quoting WS Forbes & Co v Southern
Cotton Oil Co, 130 Va 245, 260; 108 SE 15
(1921)(citations deleted).]

The United States Court of Appeals for the Fourth
Circuit has reached the same conclusion: “[O]nce the jury
has made its findings of fact with respect to damages, it
has fulfilled its constitutional function; it may not also
mandate compensation as a matter of law.” Boyd v Bulala,
877 F2d 1191, 1196 (CA 4, 1989).

statutes that concern postverdict adjustment of damages.12

In many ways this parallels the criminal system. While the

jury is to find the facts, the court defines the crime and

determines the sentence along with any fees or fines to be

imposed on the basis of the guidance and requirements set

forth by the Legislature. The damage cap is of a piece

with these numerous examples that for generations have not

been successfully challenged on the basis of constitutional

infirmity and that reflect the previously unchallenged

understanding springing from a recognition that juries

decide only facts.

Thus we conclude that the damages cap contained in MCL

257.401(3) does not offend the constitutional right of

trial by jury because the amount the plaintiff actually

receives was never within those things a jury can decide.

12
Statutes doubling or trebling damages include MCL
125.996, 230.7, 257.1336; statutes that set a minimum
recoverable amount include MCL 14.309, 339.916, 445.257,
445.911, 550.1406; statutes that provide for adding costs,
fees, interest or penalties to awards include MCL 35.462,
125.1449m; court-determined remittitur and additur is
provided for in MCR 2.611(E); and postverdict reduction of
awards to present value is permitted by MCL 600.6306(1)(c).
“[T]he practice of awarding damages far in excess of actual
compensation for quantifiable injuries was well recognized
at the time the Framers [of the United States Constitution]
produced the Eighth Amendment [relating to excessive bail,
fines, or cruel or unusual punishment].” Browning-Ferris
Ind of Vermont, Inc v Kelco Disposal, Inc, 492 US 257, 274;
109 S Ct 2909; 106 L Ed 2d 219 (1989).

Damage caps are constitutional in causes of action

springing out of the common law because the Legislature has

the power under our Constitution13 to abolish or modify

nonvested, common-law rights and remedies. Donajkowski v

Alpena Power Co, 460 Mich 243, 256 n 14; 596 NW2d 574

(1999). The case is even more convincing when, as here,

the liability—an owner’s liability for the negligent

driving of a permissive user—is a statutory creation. If

the Legislature can create a cause of action, it must be

able to eliminate or modify it. Karl v Bryant Air

Conditioning Co, 416 Mich 558, 573-576; 331 NW2d 456

(1982). Otherwise, one Legislature could bind a subsequent

Legislature to not undo its work. This is impermissible.

Pittsfield Twp v Washtenaw Co, 468 Mich 702, 713; 664 NW2d

193 (2003), citing Malcolm v East Detroit, 437 Mich 132,

139; 468 NW2d 479 (1991). That being so, it logically

follows that the Legislature can also take the less drastic

step of leaving the cause of action intact, but limiting

the damages recoverable for a particular cause of action

13
Art 3, § 7 of the Michigan Constitution states:

The common law and the statute laws now in
force, not repugnant to this constitution, shall
remain in force until they expire by their own
limitations, or are changed, amended or repealed.

from a particular defendant.14 See Karl, supra at 577;

Shavers v Attorney General, 402 Mich 554, 623; 267 NW2d 72

(1978).

Like the congressionally imposed civil penalties

discussed in Tull, supra at 426, the Michigan Legislature’s

limits on defendant’s liability do not involve the

“‘substance of a common-law right to a trial by jury,’” or

a “‘fundamental element of a jury trial.’” (Citations

deleted.) These are things that are not under the umbrella

of the right. In other words, MCL 257.401(3) only limits

the legal consequences of the jury’s finding regarding the

liability. Plaintiff’s right to a jury trial is not

implicated. She has had a jury trial and the jury

determined the facts of her case. The jury’s function is

complete. It is up to the court to determine the legal

effect of those findings, whether it be that her damages

14
We note that the Legislature has limited a
plaintiff’s ability to fully recover his assessed damages
in other circumstances, such as where he is more than fifty
percent at fault, MCL 600.2955a (constitutionality upheld
in Wysocki v Kivi, 248 Mich App 346; 639 NW2d 572 [2001])
and 500.3135; if he was operating his own vehicle while
uninsured, MCL 500.3135(2)(c); if a judgment in his favor
was discharged in bankruptcy, MCL 600.2914; if his claim
involves noneconomic damages in a products liability
action, MCL 600.2946a (constitutionality upheld in Kenkel v
Stanley Works, 256 Mich App 548; 665 NW2d 490 [2003]).

are capped, reduced, increased, tripled, reduced to present

value, or completely unavailable.

Plaintiff also asserts that MCL 257.401(3) violates

our Constitution’s Equal Protection Clause, which provides

in part, “No person shall be denied the equal protection of

the laws . . . .” Const 1963, art 1, § 2. It is her

argument that she, unlike plaintiffs in litigation not

concerning rental cars, cannot recover what the jury has

decided are her damages. Thus, she argues, she is denied

the equal protection of the law under the Michigan

Constitution.

At issue, then, is whether the different treatment

given to plaintiffs in cases of this sort is

constitutional. As is apparent, when any statute is

passed, the Legislature is almost invariably deciding to

treat certain individuals differently from others. This

exercise of discrimination between citizens means, for

example, that some pay taxes at one rate, while others pay

at another rate. Or some get a tax or social service

benefit that others do not, and so on. Line drawing of

this sort is inherent in all governments and in ours it is

done at the state level by the Legislature, Const 1963, art

4, § 1, and locally by local legislative bodies. The

Constitution of Michigan was, in fact, written in large

part to institutionalize this method of decision-making.

Thus, it is apparent that when the Legislature acts, it

cannot be that the mere occurrence of different outcomes

between two citizens is in itself sufficient to make an act

unconstitutional. Otherwise, what the Constitution gives

with one hand—the right to representative government—it

would have taken away with the other—the equal protection

guarantee. Accordingly, courts here and elsewhere in the

United States have been very guarded about overruling the

legislatures’ decisions by declaring unconstitutional the

classifications that a legislature defined. Indeed, the

undesirability of courts entering into this area prompted

United States Supreme Court Justice Oliver Wendell Holmes

to deride all arguments of this sort as “the usual last

resort of constitutional arguments.” Buck v Bell, 274 US

200, 208; 47 S Ct 584; 71 L Ed 1000 (1927). Yet, even with

this reluctance, the courts have been willing to intervene

in a narrow class of cases.

As the law has developed, the first category of such

cases is where “strict scrutiny,” as the courts have

described it, has been applied to the legislative decision.

For a decision to be subject to such scrutiny, it must be a

classification that is based on “suspect” factors such as

race, national origin, ethnicity, or a “fundamental right.”

Harvey v Michigan, 469 Mich 1, 6-7; 664 NW2d 767 (2003);

Plyler v Doe, 457 US 202, 216-217; 102 S Ct 2382; 72 L Ed

2d 786 (1982). When such review is called for, the courts

require “the State to demonstrate that its classification

has been precisely tailored” and it must “serve a

compelling governmental interest.” Plyler, at 216-217;

DeRose v DeRose, 469 Mich 320, 353; 666 NW2d 636

(2003)(“narrowly tailored”). If this is missing, the

statute falls to the Constitution.

The second type of case in which courts will intervene

are those described as cases that implicate intermediate

level scrutiny. Here, the court, using “heightened

scrutiny,” reviews legislation creating classifications on

such bases as illegitimacy and gender. Harvey, supra at 8.

Under this standard, a challenged statutory classification

will be upheld only if it is substantially related to an

important governmental objective. Id.

The third level is “rational basis” review. Under

this test, “courts will uphold legislation as long as that

legislation is rationally related to a legitimate

government purpose.” Crego v Coleman, 463 Mich 248, 259;

615 NW2d 218 (2000). This highly deferential standard of

review requires a challenger to show that the legislation

is “‘arbitrary and wholly unrelated in a rational way to

the objective of the statute.’” Id., quoting Smith v

Employment Security Comm, 410 Mich 231, 271; 301 NW2d 285

(1981).

In the present case, plaintiff claims that the

discrimination imposed on her should be evaluated on the

basis of strict scrutiny. She characterizes the right at

issue as the right to a jury trial. However, rights are

always to be identified at “the most specific level at

which a relevant tradition protecting, or denying

protection to, the asserted right can be identified.”

Michael H v Gerald D, 491 US 110, 127 n 6; 109 S Ct 2333;

105 L Ed 2d 91 (1989). This means that, rather than

describing the right sweepingly, we are to define it with

the most precision possible. In this case, we conclude

that the right at issue here is not the overarching right

to have a jury trial but, more precisely, a claimed right

to have a jury’s assessment of damages be unmodifiable as a

matter of law.

With the right properly understood, we turn to whether

it is of the sort to which strict scrutiny applies. The

United States Supreme Court has developed a test for strict

scrutiny that this Court has followed when interpreting our

own Constitution. See, e.g., DeRose, supra. Because this

case clearly does not result in discrimination by race,

national origin, or ethnicity, nor affect an interest that

is fundamental, that is, “an interest traditionally

protected by our society,” Michael H, supra at 122, this

statute does not warrant strict scrutiny review. While

rights such as this may be “important and valuable,” they

are not encompassed by strict scrutiny unless they are

“implicit in ‘the concept of ordered liberty.’” People v

Gonzales, 356 Mich 247, 260; 97 NW2d 16 (1959), citing

Palko v Connecticut, 302 US 319; 58 S Ct 149; 82 L Ed 288

(1937). The right to full recovery in tort is not only not

a fundamental right, it is not a right at all, as the

discussion above makes clear. Therefore, strict scrutiny

does not apply.

Concerning intermediate scrutiny, this legislative

action has nothing to do with allegations of gender or

illegitimacy and thus heightened scrutiny is inappropriate.

This leaves the rational basis test as the proper

foundation for analysis. Rational basis applies to social

and economic legislation, of which this is an example.

Romein v Gen Motors Corp, 436 Mich 515, 525; 462 NW2d 555

(1990). The rational basis test considers whether the

“classification itself is rationally related to a

legitimate governmental interest.” Shavers, supra at 554,

quoting United States Dep’t of Agriculture v Moreno, 413 US

528, 533; 93 S Ct 2821; 37 L Ed 2d 782 (1973). But the

rational basis test does not test “the wisdom, need, or

appropriateness of the legislation . . . .” Crego, supra

at 260. We examine the purpose with which the legislation

was enacted, not its effects: “That the accommodation

struck may have profound and far-reaching consequences

. . . provides all the more reason for this Court to defer

to the congressional judgment unless it is demonstrably

arbitrary or irrational.” Duke Power Co v Carolina Envir

Study Group, 438 US 59, 83-84; 98 S Ct 2620, 57 L Ed 2d 595

(1978). In discerning the purpose, we look to “any set of

facts, either known or which could reasonably be assumed,

even if such facts may be debatable.” Harvey, supra at 7.

Applying this law, we conclude that this statute, obviously

designed to reduce insurance costs for automobile lessors,

could have been seen as a measure that, because costs of

operations are reduced, increases the number of providers

from which Michigan consumers may choose, or even just to

enhance automobile sales for our leading domestic industry

as more lessors transact business in the state. Moreover,

as we are informed by a brief amicus curiae, the amendment

of MCL 257.401, limiting lessor’s liability removed

Michigan from the small remaining minority of states that

still impose unlimited liability on automobile lessors.

This could be seen as joining with other states in viewing

vicarious liability as unwise public policy, at least in

these circumstances. Thus, the legislation is rationally

related to legitimate governmental interest.

Because MCL 257.401(3) satisfies the rational basis

test, it does not violate the rights granted by the Equal

Protection Clause of the Michigan Constitution.

Plaintiff also argues that MCL 257.401(3) violates her

substantive due process rights under the Michigan

Constitution, which provides in pertinent part that no

person shall “be deprived of life, liberty or property,

without due process of law . . . .” Const 1963, art 1, §

17. To analyze whether a plaintiff’s due process rights

have been violated, we determine “whether the legislation

bears a reasonable relation to a permissible legislative

objective.” Detroit v Qualls, 434 Mich 340, 366-367 n 49;

454 NW2d 374 (1990). This is, in essence, the same test

employed in the equal protection analysis, and we reach the

same result. Therefore, because we find that MCL

257.401(3) does not violate plaintiff’s rights under

Michigan’s Equal Protection Clause, we also find it does

not violate her rights under Michigan’s Due Process Clause.

By holding that damage caps legislation is permissible

and inoffensive to the Constitution, we join many other

states in reaching this conclusion. Some of the more well

written opinions include the Supreme Court of California,

which stated in Fein v Permanente Med Group, 38 Cal 3d 137,

161; 695 P2d 665; 211 Cal Rptr 368 (1985), “[W]e know of no

principle of California—or federal—constitutional law which

prohibits the Legislature from limiting the recovery of

damages in a particular setting in order to further a

legitimate state interest.” The Supreme Judicial Court of

Massachusetts, in English v New England Med Ctr, Inc, 405

Mass 423, 427; 541 NE2d 329 (1989), held, “the personal,

substantive right of a tort victim to recover damages is

not a fundamental interest.” (Quotation marks deleted.)

The Supreme Court of Appeals of West Virginia similarly

upheld damages caps in Robinson v Charleston Area Med Ctr,

Inc, 186 W Va 720, 729; 414 SE2d 877 (1991), saying, “the

‘rational basis’ test for state constitutional equal

protection purposes is applicable in this jurisdiction to

. . . statutory limitation on remedies in certain common

law causes of action, such as statutory ‘caps’ on the

recoverable amount of damages.” The Supreme Court of

Indiana, in Johnson v St Vincent Hosp, Inc, 237 Ind 374,

396; 404 NE2d 585 (1980), stated, concerning a similar

statutory cap on damages, “It is not a presumption which

prevents recovery of more than that amount, but the policy

of the law in the statute. The limitation is not a denial

of due process on this basis.” The Supreme Court of

Virginia, in Etheridge, 237 Va 95, 96, noted, “[A] remedy

is a matter of law, not a matter of fact,” and “although a

party has the right to have a jury assess his damages, he

has no right to have a jury dictate through an award the

legal consequences of its assessment.”

Reinforcing the findings of a majority of state

supreme courts on this issue is the analysis of the United

States Supreme Court that “statutes limiting liability are

relatively commonplace and have consistently been enforced

by the courts.” Duke Power, 438 US 88-89 n 32 (citations

deleted).

What these courts have been unwilling to do is to

usher in a new Lochner15 era. It was during that era when,

for a time after the industrial expansion of the United

States began in the mid-nineteenth century and, on the

basis of strained constitutional interpretation, the United

15
Lochner v New York, 198 US 45; 25 S Ct 539; 49 L Ed
937 (1905).

States Supreme Court threw out economic regulations that

had been won in the political process. The central theme

of the Lochner jurisprudence was, as Justice Peckham wrote

of the ill-fated New York state effort to regulate the

hours of bakers, “[A]re we all . . . at the mercy of

legislative majorities?” Id. at 59. He and a majority of

the Court concluded, “No.”16 Yet, by the mid-1930s, in

Nebbia v New York, 291 US 502, 537; 54 S Ct 505; 78 L Ed

940 (1934), Justice Owen Roberts’s majority opinion for the

Court stated that “a state is free to adopt whatever

economic policy may reasonably be deemed to promote public

welfare . . . . With the wisdom of the policy adopted,

. . . the courts are both incompetent and unauthorized to

deal.” From that time, economic regulation, such as the

16
This case is taken as the signature case of this
era, without doubt, because of the striking dissent of
Justice Oliver Wendell Holmes, in which, regarding economic
regulation, he famously said:

This case is decided upon an economic theory
which a large part of the country does not
entertain. If it were a question whether I agreed
with that theory I should desire to study it
further and long before making up my mind. But I
do not conceive that to be my duty, because I
strongly believe that my agreement or
disagreement has nothing to do with the right of
a majority to embody their [sic] opinions in law.
[Lochner v New York, 198 US 75 (Holmes, J.,
dissenting).]

measure we deal with today, has consistently been held to

be an issue for the political process, not for the courts.

Along with the noted jurisdictions, we are unwilling to

turn our backs on this law. It is into this mainstream

that we again steer our economic regulation jurisprudence.

We hold that the damages cap in MCL 257.401(3) is

constitutional and does not violate plaintiff’s rights to a

jury trial, equal protection, or due process under the

Michigan Constitution. Therefore, we affirm the decision

of the Court of Appeals.

Clifford W. Taylor
Maura D. Corrigan
Robert P. Young, Jr.
Stephen J. Markman

S T A T E O F M I C H I G A N

SUPREME COURT

MARGARET PHILLIPS, PERSONAL REPRESENTATIVE
OF THE ESTATE OF REGEANA DIANE HERVEY,
Deceased,

Plaintiff-Appellant,

v No. 121831

MIRAC, INC.,

Defendant-Appellee.

_______________________________

WEAVER, J. (concurring in part and dissenting in part).

I concur in the majority’s conclusion that MCL

257.401(3), which caps the amount of a lessor’s liability

in motor vehicle leases of thirty days or less, does not

violate plaintiff’s constitutional rights to a jury trial,1

equal protection,2 or due process.3 But I do so pursuant to

my own reasoning, which is set forth below.

I dissent from the majority’s conclusion that the

right to trial by jury must be interpreted according to the

meaning that those “learned in the law” would give the

1
Const 1963, art 1, § 14.
2
Const 1963, art 1, § 2.
3
Const 1963, art 1, § 17.
phrase. Our primary rule of constitutional interpretation

must be the common understanding that the people would have

given the constitutional provision at the time of

ratification, not the meaning that those “learned in the

law” would give it.

Facts and Proceedings Below

Plaintiff’s decedent, Regeana Hervey, was killed in a

car accident on October 27, 1997, when Da-Fel Reed, the

driver of the car in which Ms. Hervey was a passenger, lost

control of her vehicle and struck another vehicle. Ms.

Reed had leased the car that she was driving from defendant

Mirac, Inc., which does business as Enterprise Rent-A-Car.

The parties stipulated that the lease was for a period of

thirty days or less. Decedent’s mother, plaintiff Margaret

Phillips, sued Ms. Reed, as well as defendant. The suit

against defendant was premised on the owner’s liability

statute, MCL 257.401.4

Before trial, the parties entered into an agreement

that collection of a judgment against defendant Mirac,

Inc., would exceed $20,000 only if MCL 257.401(3), which

imposes a $20,000 cap on defendant’s liability, were deemed

unconstitutional. The parties further agreed that even if

4
Ms. Reed is not a party to this appeal.

the cap were deemed unconstitutional, the maximum judgment

to be entered on the verdict would be $250,000 and the

minimum judgment to be entered on the verdict would be

$150,000. Additionally, the agreement recognized that Ms.

Reed was uncollectible, and plaintiff agreed that she would

not seek entry of a judgment against Ms. Reed on any

verdict.

Following a jury trial in November 1999, the jury

found Ms. Reed negligent and awarded plaintiff $900,000 in

damages. Plaintiff then requested that a judgment of

$250,000 be entered against defendant Mirac, Inc., on the

verdict, while defendant requested that a judgment of

$20,000 be entered on the verdict. In determining which

judgment to enter, the trial court concluded that MCL

257.401(3) was unconstitutional and entered a judgment

against defendant for $250,000.

First, the trial court determined that the statute

violated plaintiff’s right to a jury trial. The trial

court stated that the 1963 Constitution, court rule, and

case law all provide for the right to a jury’s assessment

of damages and that this right must be preserved.

Consequently, the Legislature could not impose a cap on the

jury’s assessment of damages and its attempt to do so in

MCL 257.401(3) violated the constitutional right to have a

jury assess damages, as that right existed in 1929, before

the ratification of Michigan’s current Constitution in

1963. The trial court found more persuasive decisions from

those states that had similarly concluded that damage caps

violate the right to a jury trial. But the trial court did

acknowledge that the Legislature could eliminate the

owner’s liability statute altogether.

Second, the trial court determined that the statute

violated plaintiff’s rights to equal protection under the

law. The trial court reasoned that the right to a jury

trial was a fundamental right and, therefore, required a

strict scrutiny review. The trial court concluded that,

because there was no compelling governmental interest in

regulating Michigan’s car rental industry, the statute

failed the strict scrutiny test.

Third, the trial court concluded that the statute

violated the constitutional right to due process for the

same reasons that the statute violated the right to equal

protection.5

5
The trial court also concluded that the statute did
not violate the separation of powers doctrine. That issue
is not before this Court.

Defendant appealed, and the Court of Appeals reversed

in a two-to-one published opinion.6 Addressing the right to

a jury trial, the Court of Appeals majority held that the

cap did not infringe plaintiff’s right to trial by jury for

two reasons. First, because the Legislature can abolish or

modify common-law and statutory rights and remedies, it

necessarily follows that it can limit the damages

recoverable for a cause of action. Second, the statute

does not infringe the jury’s right to decide cases because

the damages cap does not remove from the jury the

determination of facts and amount of damages. The statute

simply limits the amount of damages that can be recovered

from a lessor of vehicles. Thus, the cap only limits the

legal consequences of the jury’s finding. 251 Mich App

590-595.

Next, the majority addressed whether the cap violates

plaintiff’s right to equal protection under the law.

Because the statute at issue is social or economic

legislation, the majority examined it under the rational

basis test. The majority concluded that it was reasonable

to assume that Michigan has a legitimate interest in the

continued operation of automobile rental businesses and

6
251 Mich App 586; 651 NW2d 437 (2002).

that protecting these businesses from large damage awards

was rationally related to that purpose. Therefore, the

statute did not violate plaintiff’s equal protection

rights. Similarly, because the tests for due process and

equal protection are essentially the same, the cap also did

not violate plaintiff’s due process rights. Id. at 595

598.

The Court of Appeals dissenter would have held that

the damages cap is unconstitutional because it violates the

right to a jury trial. The dissenter explained that

“[b]ecause our constitution confers a right to trial by

jury, and because the right to trial by jury in Michigan

extends to a determination of damages, the damages cap in

the instant case is unconstitutional.” Id. at 599. The

statutory damages cap renders the jury’s role illusory.

While the Legislature may be free to abolish a cause of

action, it may not abolish a right mandated by the

Constitution. Id. at 600.

Plaintiff appealed and this Court granted leave to

appeal, “limited to whether MCL 257.401(3) constitutes an

unconstitutional denial of plaintiff’s right to a jury

trial, equal protection, or due process.”7

7
468 Mich 941 (2003).

Standard of Review

The constitutionality of a statute is a question of

law that is reviewed de novo. Tolksdorf v Griffith, 464

Mich 1, 5; 626 NW2d 163 (2001). Statutes are presumed

constitutional. This Court has stated:

No rule of construction is better settled in
this country, both upon principle and authority,
than that the acts of a state legislature are to
be presumed constitutional unless the contrary is
shown; and it is only when they manifestly
infringe some provision of the constitution that
they can be declared void for that reason. In
cases of doubt, every possible presumption, not
clearly inconsistent with the language and the
subject matter, is to be made in favor of the
constitutionality of the act.

The power in declaring laws unconstitutional
should be exercised with extreme caution, and
never where serious doubt exists as to the
conflict . . . . These rules are founded in the
best reasons; because, as suggested by my brother
Manning, while the supreme judicial power may
interfere to prevent the legislative and other
departments from exceeding their powers, no
tribunal has yet been devised to check the
encroachments of that judicial power itself.
[Sears v Cottrell, 5 Mich 251, 259-260
(1858)(emphasis in original).]

Analysis

The statute at issue in this case, MCL 257.401,

provides in part:

operation of the leased motor vehicle only if the
injury occurred while the leased motor vehicle
was being operated by an authorized driver under
the lease agreement or by the lessee's spouse,
father, mother, brother, sister, son, daughter,
or other immediate family member. Unless the
lessor, or his or her agent, was negligent in the
leasing of the motor vehicle, the lessor's
liability under this subsection is limited to
$20,000.00 because of bodily injury to or death
of 1 person in any 1 accident and $40,000.00
because of bodily injury to or death of 2 or more
persons in any 1 accident. [Emphasis added.] [8]

Right to a Jury Trial

Plaintiff asserts that MCL 257.401(3) violates art 1,

§ 14 of the Michigan Constitution, which provides:

The right of trial by jury shall remain, but
shall be waived in all civil cases unless

8
Subsection 1 of the statute provides:

demanded by one of the parties in the manner
prescribed by law. In all civil cases tried by
12 jurors a verdict shall be received when 10
jurors agree.

I disagree that the statute violates the right to a jury

trial and find the Court of Appeals analysis on this point

persuasive. But before explaining my rationale for

concluding that the statute is constitutional, I wish to

note my continued disagreement with rules of constitutional

interpretation set forth in the majority opinion. Our

primary rule of constitutional interpretation must be the

common understanding that the people would have given the

constitutional provision at the time of ratification, not

the meaning that those “learned in the law” would give it.

See, e.g., Adair v Michigan, 470 Mich 105, 143; ___ NW2d

___ (2004) (Weaver, J., dissenting in part and concurring

in part); Silver Creek Drain Dist v Extrusions Division,

Inc, 468 Mich 367, 382; 663 NW2d 436 (2003) (Weaver, J.,

concurring in part and dissenting in part). Therefore, on

this important point, I dissent from the majority opinion.

First, as the Court of Appeals noted, the damages cap

contained in MCL 257.401(3) does not violate plaintiff’s

right to a jury trial because the Legislature has the power

under our Constitution to abolish or modify common-law and

statutory rights and remedies. Donajkowski v Alpena Power

Co, 460 Mich 243, 256 n 14; 596 NW2d 574 (1999). Art 3, §

7 of the Michigan Constitution states:

The common law and the statute laws now in
force, not repugnant to this constitution, shall
remain in force until they expire by their own
limitations, or are changed, amended or repealed.

Where the Legislature can completely eliminate a cause of

action, it logically follows that the Legislature can also

take the less drastic step of limiting the damages

recoverable for a particular cause of action. See Kirkland

v Blaine Co Med Ctr, 134 Idaho 464, 468; 4 P3d 1115 (2000);

Murphy v Edmonds, 325 Md 342, 373; 601 A2d 102 (1992). In

other words, if the Legislature can completely eliminate an

owner’s liability, it follows that it may take the less

drastic step of limiting an owner’s liability.9

9
The dissent acknowledges that the Legislature can
repeal a statute, but then concludes that it cannot take
the less drastic step of limiting the remedy provided by
the statute because to do so abrogates a citizen’s
constitutional rights. Post at 4. This makes no sense.
Before the enactment of MCL 257.401, an “owner of a motor
vehicle was not liable for the negligence of a person to
whom he had loaned it” unless the vehicle was used in
operation of the owner’s business. Moore v Palmer, 350
Mich 363, 392; 86 NW2d 585 (1957). It was only through the
Legislature’s enactment of MCL 257.401 that a cause of
action against motor vehicle owners was created. If the
Legislature can completely eliminate this cause of action
that it created against the owner of a motor vehicle
without violating the Constitution, it certainly may take
the less drastic step of limiting the remedy for the cause
of action it created.

Second, as the Court of Appeals also explained, MCL

257.401(3) does not violate plaintiff’s right to a jury

trial because the provision does not infringe the jury’s

right to decide the case. The jury still determines the

facts and the damages incurred by plaintiff. It is only

after the jury has done so that the cap is applied to limit

liability. Thus, MCL 257.401(3) only limits the legal

consequences of the jury’s finding regarding the liability.

As the Maryland Court explained in Murphy, supra at 373:

The General Assembly, however, did not
attempt to transfer what is traditionally a jury
function to the trial judge. Instead, the
General Assembly abrogated any cause of action
for noneconomic tort damages in excess of
$350,000; it removed the issue from the judicial
arena. No question exists concerning the role of
the judge versus the jury with respect to
noneconomic damages in excess of $350,000.
Therefore, no question concerning the
constitutional right to a jury trial is
presented.

I find it noteworthy that the limitation on damages in

this case applies only to limit the lessor’s liability.

There is no cap on the damages that limits the liability of

the lessee or operator of the vehicle. This distinction is

recognized in MCL 257.401(4), which provides:

A person engaged in the business of leasing
motor vehicles as provided under subsection (3)
shall notify a lessee that the lessor is liable
only up to the maximum amounts provided for in
subsection (3), and only if the leased motor
vehicle was being operated by the lessee or other

authorized driver or by the lessee's spouse,
father, mother, brother, sister, son, daughter,
or other immediate family member, and that the
lessee may be liable to the lessor up to amounts
provided for in subsection (3), and to an injured
person for amounts awarded in excess of the
maximum amounts provided for in subsection (3).
[Emphasis added.]

Thus, a plaintiff has the opportunity for a complete

recovery against the party whom the jury has determined to

be negligent—the lessee or operator of the vehicle, and

this opportunity makes plaintiff’s argument that the cap

violates the right to a jury trial even less convincing.10

10
The recognition of this possibility of recovery was
relied on in a recent Florida case upholding the
constitutionality of a similar Florida statute. The
Florida Court explained:

[Fla Stat 324.021, which limits the
liability of short-term motor vehicle lessors]
does not violate this section of the Florida
Constitution by limiting plaintiff’s right to
trial by jury. Under this statute, a jury still
retains the ability to fully assess all damages
against those at fault. Section 324.021 merely
limits a plaintiff’s available damages from the
owner of the vehicle. A plaintiff retains the
ability to recover fully from the lessee or
operator of the vehicle. [Enterprise Leasing Co
South Central, Inc v Hughes, 833 So 2d 832, 838
(Fla App, 2002).]

I note that I do not consider the possibility of
complete recovery from the negligent party to be a
constitutional prerequisite for upholding a damages cap.

For these reasons, I conclude that MCL 257.401(3) does

not violate plaintiff’s right to a jury trial.

Equal Protection

Plaintiff also asserts that MCL 257.401(3) violates

her right to equal protection under the law. Michigan’s

Equal Protection Clause provides in part, “No person shall

be denied the equal protection of the laws . . . .” Const

1963, art 1, § 2. Equal protection challenges are reviewed

using one of three levels of scrutiny: rational basis,

heightened or intermediate scrutiny, and strict scrutiny.

Harvey v Michigan, 469 Mich 1, 6-7; 664 NW2d 767 (2003). I

disagree with plaintiff’s contention that the statute at

issue in the present case should be reviewed under a strict

scrutiny standard because the right to a jury trial is a

fundamental right. The strict scrutiny standard of review

typically applies to laws in which classifications are

based on “suspect factors” such as race, ethnicity, or

national origin. Id. at 7. Social or economic

legislation, on the other hand, is generally subject to

review under the rational basis test. People v Perlos, 436

Mich 305, 332; 462 NW2d 310 (1990. Tort reform

legislation, such as the statute in the present case, is

typically treated as socioeconomic legislation that is

subject to rational basis review. See Stevenson v Reese,

239 Mich App 513, 517-518; 609 NW2d 195 (2000).

The rational basis test considers whether the

“classification itself is rationally related to a

legitimate governmental interest.” Id. But it does not

test “the wisdom, need, or appropriateness of the

legislation . . . .” Crego v Coleman, 463 Mich 248, 260;

615 NW2d 218 (2000). I agree with the Court of Appeals

that

this legislation passes that test because it can
reasonably be assumed that Michigan has a
legitimate interest in the continued operation of
automobile rental businesses, and protecting
those businesses from large damage awards in jury
trials bears a rational relationship to that end.
[251 Mich App 598.][11]

Because the statute satisfies the rational basis test, it

does not violate the rights granted by the Equal Protection

Clause.12

11
The dissent makes much of the other measures that
might have been taken by the Legislature to address the
concerns of car rental companies. Post at 5-6, 8-9. In my
opinion, such analysis usurps the Legislature’s role to
weigh interests and policy considerations when enacting a
statute.
12
I note that had a majority of this Court in Harvey,
not overruled the heightened scrutiny articulated in
Manistee Bank & Trust Co v McGowan, 394 Mich 655; 232 NW2d
636 (1975), consistently with my dissent in Harvey, I
would have employed the “fair-and-substantial-relation-to
the-object-of-the-legislation” test from Manistee Bank when
(continued…)

Due Process

Lastly, plaintiff argues that MCL 257.401(3) violates

her due process rights. The Michigan Constitution provides

in pertinent part that no person shall “be deprived of

life, liberty or property without due process of law.”

Const 1963, art 1, § 17. The test for due process is

“whether the legislation bears a reasonable relation to a

permissible legislative objective.” Shavers v Attorney

General, 402 Mich 554, 612; 267 NW2d 72 (1978). This is

essentially the same test employed in the equal protection

analysis. Doe v Dep’t of Social Services, 439 Mich 650,

682 n 36; 487 NW2d 166 (1992). Therefore, for the same

reasons that MCL 257.401(3) does not violate the rights

secured by the Equal Protection Clause, it also does not

violate those secured by the Due Process Clause.

Conclusion

I agree that the damages cap is constitutional and

does not violate plaintiff’s rights to a jury trial, equal

(…continued)

analyzing plaintiff’s equal protection claim in this case.

See Harvey, supra at 16-19 (Weaver, J., dissenting).

However, even under this heightened scrutiny, I would have

concluded that the statute is constitutional and does not

violate plaintiff’s equal protection rights.

protection, or due process. Therefore, I concur in the

result of the majority opinion, but under my own reasoning.

I dissent from the majority’s conclusion that the right to

a jury trial must be interpreted according to the meaning

that those “learned in the law” would give the phrase.

Rather, our primary rule of constitutional interpretation

must be the common understanding that the people would have

given the constitutional provision at the time of its

ratification.

Elizabeth A. Weaver

S T A T E O F M I C H I G A N

SUPREME COURT

MARGARET PHILLIPS, PERSONAL REPRESENTATIVE
OF THE ESTATE OF REGEANA DIANE HARVEY,
DECEASED,

Plaintiff-Appellant,

v No. 121831

MIRAC, INC,

Defendant-Appellee.

_______________________________

CAVANAGH, J. (dissenting).

Michigan’s Constitution provides our citizens with the

right to trial by jury. Const 1963, art 1, § 14. Because

I believe the right to a jury trial is a fundamental right

that encompasses the right to have our citizens awarded

damages based on the jury’s determination and because I

believe MCL 257.401(3),1 the damages cap in this case,

1
MCL 257.401(3), covering civil actions and the
liability of a lessor of a motor vehicle, states the
following:

Notwithstanding subsection (1), a person
engaged in the business of leasing motor vehicles
who is the lessor of a motor vehicle under a
lease providing for the use of the motor vehicle
by the lessee for a period of 30 days or less is
liable for an injury caused by the negligent
operation of the leased motor vehicle only if the
injury occurred while the leased motor vehicle
(continued…)
violates plaintiff’s right to a jury trial, as well as

plaintiff’s equal protection and substantive due process

rights, I respectfully dissent.

I. THE CONSTITUTIONAL RIGHT TO A TRIAL BY JURY

“The right of trial by jury shall remain, but shall be

waived in all civil cases unless demanded by one of the

parties in the manner prescribed by law.” Const 1963, art

1, § 14. “The right to jury trial in civil litigation is

of constitutional dimension.” Wood v Detroit Automobile

Inter-Ins Exchange, 413 Mich 573, 581; 321 NW2d 653 (1982).

The right to a jury trial is a fundamental right, “regarded

as the great bulwark of the liberty of the citizen.” McRae

v Grand Rapids, L & D R Co, 93 Mich 399, 401; 53 NW 561

(1892); see also People v Smith, 383 Mich 576, 578; 177

NW2d 164 (1970) (“Trial by jury is a basic constitutional

right.”).

(…continued)
was being operated by an authorized driver under
the lease agreement or by the lessee's spouse,
father, mother, brother, sister, son, daughter,
or other immediate family member. Unless the
lessor, or his or her agent, was negligent in the
leasing of the motor vehicle, the lessor's
liability under this subsection is limited to
$20,000.00 because of bodily injury to or death
of 1 person in any 1 accident and $40,000.00
because of bodily injury to or death of 2 or more
persons in any 1 accident.

The right to a jury trial also encompasses the right

to have the jury determine damages. Leary v Fisher, 248

Mich 574, 578; 227 NW 767 (1929). In Aho v Conda, 347 Mich

450, 455; 79 NW2d 917 (1956), this Court stated that “the

question of damages is fundamentally a jury question.” In

Rouse v Gross, 357 Mich 475, 481; 98 NW2d 562 (1959), this

Court stated, “The right of trial by jury ordinarily refers

to a right to present or defend an actionable claim to 1

jury to the point of jury verdict and judgment.” See also

Rich v Daily Creamery Co, 303 Mich 344, 349; 6 NW2d 539

(1942); Sweeney v Hartman, 296 Mich 343, 347; 296 NW 282

(1941).2 It is perplexing, to say the least, that the

2
While the majority uses a scholarly article written
in the Harvard Law Review to support its position, I
believe that cases decided by justices from this Court are
more persuasive in determining the rights of Michigan
citizens. The majority does cite two Michigan cases—May v
Goulding, 365 Mich 143, 148-149; 111 NW2d 862 (1961), and
McClelland v Scholz, 366 Mich 423, 426; 115 NW2d 120
(1962)—for the unremarkable proposition that a jury cannot
decide an issue of law. However, the cases cited have
nothing to do with the issue of the jury determining
damages. None of the questions submitted to the jury in
May and McClelland that were deemed improper by this Court
had anything to do with damages.

I also vehemently disagree with the majority that “the
right of trial by jury” is a “technical legal phrase” that
is to be determined “as understood by those learned in the
law at the time.” Ante at 10. The primary rule of
constitutional interpretation is “common understanding.”
Macomb Co Taxpayers Ass’n v L’Anse Creuse Pub Schools, 455
Mich 1, 6; 564 NW2d 457 (1997). “A constitution is made
(continued…)

majority argues that the damages cap does not implicate

plaintiff’s right to a jury trial. The majority argues

that damages were “never within those things a jury can

decide.” Ante at 15. But a jury does decide damages.

Merely because the majority deems a damages determination

to be part of the “great mass of procedural forms and

details,” ante at 12, and not within the jury’s purview,

does not change the fact that part of the jury’s historic

role has been to determine damages. Thus, the damages cap

invades the jury’s role. Because of the $20,000 damages

cap, when the amount of damages determined by the jury is

over $20,000, the jury’s determination is of no

consequence. The right to a jury trial is illusory in the

most severe cases, those in which the amount of damages

exceeds $20,000. Surely, this illusory “right” does not

comport with our citizens’ constitutional right to trial by

jury. The right to a jury trial is not satisfied by

providing jurors the opportunity to announce an award and

then have it arbitrarily ignored with no regard for the

(…continued)
for the people and by the people. The interpretation that
should be given it is that which reasonable minds, the
great mass of the people themselves, would give it.” Id.,
quoting Livingston Co v Dep’t of Management & Budget, 430
Mich 635, 642; 425 NW2d 65 (1988) (quoting Cooley’s Const
Lim 81) (quotation marks deleted).

facts of the case. Our constitutional mandates certainly

must be afforded more than mere lip service. While the

Legislature can change, amend, or repeal a statute, it

cannot abrogate a citizen’s constitutional right to trial

by jury. Because the damages cap is applied automatically,

without regard to the jury’s assessment of damages, the

damages cap violates our citizens’ constitutional right to

trial by jury.

Because the right to a jury trial is a fundamental

right, the damages cap must withstand strict scrutiny to be

deemed constitutional. Doe v Dep’t of Social Services, 439

Mich 650, 662; 487 NW2d 166 (1992). Under a strict

scrutiny analysis, a statute will be upheld if it is

precisely tailored to serve a compelling governmental

interest. Id. In this case, the alleged “compelling”

governmental interest that prompted the damages cap is the

continued viability of the automobile rental industry. The

Legislature’s response to the alleged crisis in the

automobile rental industry was to restrict recovery for the

most severely injured plaintiffs. No matter the merits of

the claim, the Legislature restricted a victim’s damages,

resulting in an arbitrary limit on the amount of damages a

victim can recover. This means that the victims who are

the most severely injured will have their damages reduced

the most, while less seriously injured victims can fully

recover. Even if one were to agree that a crisis existed

and that such a crisis may be considered a compelling

governmental interest, the Legislature’s action was not

precisely tailored. There were numerous other measures the

Legislature could have taken, such as requiring automobile

rental drivers to be insured, that would have addressed the

alleged crisis while not making such a sweeping restriction

to our citizens’ fundamental right.

Notably, the Legislature’s decision to limit the

amount of recovery from the automobile rental industry

makes the industry less accountable to the public, and it

is the public’s interests that are to be protected by the

statute. Because of the damages cap, the industry has no

incentive to ensure that drivers are insured. Assuming

that the automobile rental industry was being held liable

for damages that totaled such an amount as to threaten the

viability of the industry, then the industry necessarily

recognized that the number of uncollectible drivers was

causing this problem. The simple solution would be to

mandate that drivers are insured, thereby ensuring that

victims would have a viable avenue by which to collect

damages.

The concurrence asserts that a victim still has a

cause of action to recover from the driver of the rented

automobile. However, this alternate avenue of recovery

belies reality. As discussed, there is no mandate

requiring the automobile rental industry to ensure that

rental drivers are insured. An automobile rental company

can rent to an uninsured driver knowing that a severely

injured victim would likely have no way to recover from the

driver for any damages caused. Therefore, while the

concurrence claims that this is an alternate avenue for

recovery, in reality, this avenue is often a dead end.

Thus, because even a cursory review of other available

measures indicates that the statute is not precisely

tailored to serve a compelling governmental interest, it

cannot withstand strict scrutiny. Therefore, the damages

cap at issue is unconstitutional.

II. EQUAL PROTECTION AND SUBSTANTIVE DUE PROCESS

Our Constitution states, “No person shall be denied

the equal protection of the laws . . . .” Const 1963, art

1, § 2. Further, our Constitution provides, “No person

shall . . . be deprived of life, liberty or property,

without due process of law.” Const 1963, art 1, § 17. The

test to determine if legislation comports with substantive

due process is essentially the same as the test used for

equal protection. Shavers v Attorney General, 402 Mich

554, 612-613; 267 NW2d 72 (1978). To resolve a due process

or equal protection challenge, this Court must identify the

objective that the challenged statute seeks to achieve.

O’Brien v Hazelet & Erdal, 410 Mich 1, 13-14; 299 NW2d 336

(1980). The claimed objective of implementing the damages

cap is to ensure the continued viability of the automobile

rental industry. However, the entire statute’s broader

objective “is for the benefit of the public and the

prevention of unrecompensed injury . . . .” Miller v

Manistee Co Bd of Rd Comm’rs, 297 Mich 487, 493; 298 NW 105

(1941), overruled in part by Mead v Michigan Pub Service

Comm, 303 Mich 168; 5 NW2d 740 (1942).

The statute at issue establishes several

classifications, among them it distinguishes between

victims who were injured by a motor vehicle and victims

injured by a rented motor vehicle. Within this latter

classification, the statute also distinguishes between

those with severe injuries and those with lesser injuries.

Because the classifications and the arbitrary damages cap

impermissibly interfere with a fundamental right–the right

to trial by jury–the legislation is reviewed by strict

scrutiny. Harvey v Michigan, 469 Mich 1, 12; 664 NW2d 767

(2003). As explained in section one, the legislation

cannot withstand strict scrutiny because, even assuming a

compelling governmental interest, it is not precisely

tailored.

Further, even evaluating the damages cap under

rational-basis review, it is highly suspect. To prevail

under rational-basis review, it must be shown that the

legislation is “‘arbitrary and wholly unrelated in a

rational way to the objective of the statute.’” Id. at 7,

quoting Smith v Employment Security Comm, 410 Mich 231,

271; 301 NW2d 285 (1981). A classification reviewed under

“[rational] basis passes constitutional muster if the

legislative judgment is supported by any set of facts,

either known or which could reasonably be assumed, even if

such facts may be debatable.” Harvey, supra at 7.

While a plaintiff bears a heavy burden to rebut the

presumption that a statute is constitutional, it is not an

insurmountable hurdle. Rational-basis review does not mean

that, merely because a crisis is alleged by representatives

of an industry, any action taken is a valid and

constitutional one.

Regarding the damages cap at issue, there is no

indication that past damages awards were threatening the

automobile rental industry. Further, a concern over future

damages awards and the viability of the automobile rental

industry is so tenuous that it is unable to withstand

rational-basis scrutiny. Because the damages cap is

arbitrary and not rationally related to a legitimate

governmental objective, the damages cap violates

plaintiff’s equal protection and substantive due process

rights. No matter the intentions of the Legislature, if a

statute improperly contravenes the rights afforded our

citizens by the Constitution, we must strike down that

legislation.

III. THE CONSTITUTIONALITY OF DAMAGES CAP IN GENERAL

The damages cap in this case differs from other forms

of remedies that affect damages awards, such as remittitur,

additur, and treble damages. Remittitur, additur, and

treble damages are based on the facts presented at trial.

See Moore v Spangler, 401 Mich 360, 371, 373; 258 NW2d 34

(1977); Shepard v Gates, 50 Mich 495, 497-498; 15 NW 878

(1883). Remittitur or additur is used only after a court

has determined that a party has not received a fair trial

because the verdict is clearly or grossly excessive or

inadequate. The damages cap in this case, however, is an

arbitrary amount that limits recovery regardless of the

jury award or the facts presented at trial.

On a broader level, the impetus behind damages caps is

that they are necessary to ensure that certain defendants

are not driven out of business by runaway jury verdicts.

However, our justice system has numerous mechanisms to

ensure that verdicts are just. Summary disposition,

directed verdict, judgment notwithstanding the verdict, and

remittitur are all readily available mechanisms to make

certain that verdicts are fair. And, of course, our

nation’s centuries-old jury system was designed to ensure a

fair trial for all parties. While I do not contend that a

damages cap can never be constitutional, we must not

blindly accept claims of a crisis made by those who have a

distinct interest in seeing liability limited.

Other jurisdictions have also held that damages caps

applied to various causes of actions are unconstitutional.

In Kansas Malpractice Victims Coalition v Bell, 243 Kan

333, 342, 345-346; 757 P2d 251 (1988), overruled in part by

Bair v Peck, 248 Kan 824; 811 P2d 1176 (1991), the Kansas

Supreme Court stated that when the trial court enters

judgment for less than the jury verdict, it “is an

infringement on the jury’s determination of the facts, and,

thus, is an infringement on the right to a jury trial.”

The court further stated:

Pain and suffering have no known dimensions,
mathematical or financial. There is no exact
relationship between money and physical or mental
injury or suffering, and the various factors
involved are not capable of proof in dollars and

cents. For this very practical reason the only
standard for evaluation is such amount as
reasonable persons estimate to be fair
compensation for the injuries suffered, and the
law has entrusted the administration of this
criterion to the impartial conscience and
judgment of jurors, who may be expected to act
reasonably, intelligently and in harmony with the
evidence. [Bell at 346, quoting Domann v Pence,
183 Kan 135, 141; 325 P2d 321 (1958).]

In Morris v Savoy, 61 Ohio St 3d 684, 690; 576 NE2d

765 (1991), the Ohio Supreme Court found no rational

relationship between a medical malpractice damages cap and

public health or welfare, and further held that the cap was

unreasonable and arbitrary. Numerous other cases have also

held that damages caps are unconstitutional. See also Best

v Taylor Machine Works, 179 Ill 2d 367, 409; 689 NE2d 1057

(1997) (for a list of jurisdictions); Tenold v Weyerhaeuser

Co, 127 Ore App 511, 524-525; 873 P2d 413 (1994); Henderson

v Alabama Power Co, 627 So 2d 878, 891 (Ala, 1993),

overruled in part Ex parte Apicella, 809 So 2d 865 (Ala,

2001) (“[I]t is improper for the legislature to substitute

itself for the jury and to fix an arbitrary, predetermined

limit” on the jury’s award.); Brannigan v Usitalo, 134 NH

50, 57; 587 A2d 1232 (1991); Sofie v Fibreboard Corp, 112

Wash 2d 636, 638; 771 P2d 711 (1989); Condemarin v Univ

Hosp, 775 P2d 348, 364 (opinion by Durham, J.), 367

(Zimmerman, J., dissenting in part and concurring in part)

(Utah, 1989); Lucas v United States, 757 SW2d 687, 690-691

(Tex, 1988); Coburn v Agustin, 627 F Supp 983, 996-997 (D

Kan, 1985); Carson v Maurer, 120 NH 925, 940-941, 943-944;

424 A2d 825 (1980) (“It is simply unfair and unreasonable

to impose the burden of supporting the medical care

industry solely upon those persons who are most severely

injured and therefore most in need of compensation.”);

Arneson v Olson, 270 NW2d 125, 126, 135 (ND, 1978); Wright

v Central DuPage Hosp Ass’n, 63 Ill 2d 313, 329-330; 347

NE2d 736 (1976).3

The breadth of decisions from jurisdictions around our

nation should give us pause before we allow dubious

allegations to erode our citizens’ constitutional rights.

No industry should be allowed to shift its burden of

responsibility and accountability to the shoulders of the

severely injured merely because it claims to be in crisis.

3
Although many of these deal with damages caps in
medical malpractice cases, the fact that the caps have been
deemed unconstitutional is relevant to the issue in this
case. The medical “crisis” that has led to medical
malpractice damages caps being enacted has received much
more study than the alleged crisis in the automobile rental
industry. Yet, as the above cases indicate, numerous
jurisdictions have rejected the arguments that the damages
caps are constitutional or necessary.

IV. CONCLUSION

Thomas Jefferson considered trial by jury to be “the

only anchor ever yet imagined by man, by which government

can be held to the principles of its constitution.”4 Today,

the majority casts our citizens adrift by finding their

constitutional rights are expendable merely because of an

alleged “crisis” in the automobile rental industry. The

majority merrily “steer[s] our economic regulation

jurisprudence,” ante at 28, into the mainstream, while

ignoring the citizens who are severely injured along the

way. Therefore, I must respectfully dissent. I would

reverse the decision of the Court of Appeals because the

damages cap violates plaintiff’s fundamental right to a

jury trial, as well as plaintiff’s equal protection and

substantive due process rights.

Michael F. Cavanagh
Marilyn Kelly

4
Thomas Jefferson, Letter to Thomas Paine, July 11,
1789. Wulffrith’s Quotations,

(accessed May 20, 2004).

Phillips v. Mirac, Inc

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