The Ninth Circuit Court of Appeals has just held in the Engquist case that a legislature can limit punitive damages payable to a plaintiff in a pending lawsuit, without violating the Takings Clause. It reasoned that punitive damages are contingent and discretionary, and not a generally applicable right like the right to compensatory damages for an injury. Thus, a legislature can limit them, or require that part of the punitive damages awarded in a case be paid into the state treasury rather than to the plaintiff. This ruling buttresses the constitutionality of tort reform laws that limit punitive damages, which a minority of state courts have declared unconstitutional.
In the same case, the court held that although, in general, a citizen can sue under the Equal Protection Clause for arbitrary treatment aimed only at him, but not at other similarly-situated individuals (the “class-of-one” theory), government employees cannot, because agencies have a freer hand in dealing with their own employees (under concepts of employment-at-will) than they they do in regulating the general public. Thus, to bring an equal protection lawsuit, government employees must show that they were discriminated against based on an irrelevant characteristic that they share with a class of people (race, sex, etc..), not just that they were discriminated against for reasons uniquely associated with their own individual identity.
The defendants successfully argued that allowing government employees to bring a constitutional lawsuit for every allegedly unjustified personnel action would inundate the courts with lawsuits and make it even more difficult to discharge incompetent government employees than it already is.