The Associated Press is reporting (via The Wall Street Journal) that the U.S. Supreme Court has denied Massey Energy Co.’s cert. petition in a case involving a $260 million jury verdict, including $100 million in punitive damages. The case involved a contract dispute between Massey Energy and Wheeling-Pittsburgh Steel Co. According to the story, Massey’s cert. petition raised an issue regarding the failure of a West Virginia Supreme Court justice to recuse himself after making derogatory comments about Massey’s CEO.

Ironically, the Supreme Court recently granted a cert. petition involving judicial disqualification and the West Virginia Supreme Court. Can you guess the name of the party who opposed cert. in that case? The party who allegedly benefited from a West Virginia Supreme Court justice’s failure to recuse himself? You guessed it: Massey Energy.

The second panel at the recent national Federalist Society Conference that had discussions of punitive damages was called “The Roberts Court and Federalism.” The panel was moderated by the Hon. David Sentelle of the DC Circuit Court of Appeals and the panelists included the Hon. Walter Dellinger III, former Solicitor General of the United States, Dean John Eastman of the Chapman University School of Law, Professor Jeffrey Rosen of George Washington University School of Law, and the Hon. Paul Clement, former Solicitor General of the United States.

Professor Dellinger noted that he sees a tension in two competing visions held by various parts of the “conservative” legal movement between states rights and free markets. He speculated that similar fissures might develop in the “progressive” legal movement during the Obama era between old line liberals who see the states as barriers to civil rights and the broad group of plaintiff’s lawyers and environmentalists who want rigorous state regulation and pro-plaintiff state rules. This change in focus in the liberal legal movement came to the forefront after the massive state attorney general tobacco settlement which showed how attorney generals could become profit centers for their states. Now states rights look more appealing for those who want high punitive damages and greater regulation. Professor Dellinger wonders if this focus on states rights by some in the liberal community will continue when the Obama administration and the Democrats in Congress begin enacting greater regulations at the national level. Once an Obama-run agency determines the “right” balance of regulation, will the states-rights liberals still want to see 50 competing regulatory schemes in the states? And, what will conservative judges do when faced with aggressive federal regulations promulgated by the new powers in Washington?

Professor Dellinger noted that Justice Scalia’s dissent in BMW and State Farm show he does not believe in using substantive due process to invalidate state decisions even though, as shown by his vote in Exxon Shipping, he clearly believes in the need for limitations on punitive damages.

Professor Rosen discussed what he referred to as the “constitution in exile” movement supposedly made up of the conservative legal establishment. He also focused on the tensions within the conservative legal movement between states rights and federal power. He discussed a 1984 debate at the Cato Institute between then-Judge Scalia and Professor Epstein of the University of Chicago. Professor Epstein argued that courts should promote economic liberty and Judge Scalia said that the Lochner case should remain dead and that substantive due process should not be revived in any form including promoting economic liberty. Professor Rosen says this tension between states rights conservatives and federal deregulation conservatives continues. He said the BMW v. Gore case is a victory for the deregulation conservatives in that it applied substantive due process to set aside a state punitive damage award. It is a loss for states rights conservatives.