### In the 

# United States Court of Appeals For the Seventh Circuit

____________________ No. 16

- 1763
D ONALD E. B EARD , J R

. , Plaintiff

- Appellant ,

v.

W EXFORD H EALTH S OURCES , I NC

. , Defendant

- Appellee

.

____________________ Appeal from the Unit ed States District Court for the Central District of Illinois

. No. 11

- CV

- 3360

— Colin Stirling Bruce
, Judge

.

____________________
A RGUED O CTOBER 30, 2017

— D ECIDED A UGUST 21 , 2018

____________________

Before W OOD , Chief Judge , and B AUER and E ASTERBROOK , Circuit Judges

. E ASTERBROOK , Circuit Judge

. Wexford Health Sources provides medical care to inmates in Illinois’s prisons. Do nald Beard, Jr., an inmate , experiences chronic ankle pain. I n December 2010 he consulted with his prison’s doctors about managing his condition. B eard wanted surgery, but the do ctors ordered conservative treatment. When Beard’s pain pe rsisted, the doctors considered referring Beard for surgical2 No. 16

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evaluation, a step that requires Wexford’s approval. It rejec ted the doctors’ requests for surgical evalua tion , though it authorize d Beard to see a podiatrist in September 2012 and an orthopedist in January 2015

. Beard filed a pro se complaint in September 2011. He a lleged that members of the prison’s medical staff and admi nistrative team were deliberately ind ifferent to his serious medical need in violation of the Eighth Amendment (applied to the states through the Fourteenth), and he sought dama ges plus injunctive relief. The district court recruited counsel, who added Wexford as a defendant and stipul ated to the dismissal of the individual defendants . Beard presented his case against Wexford to a jury, which awarded him $10,000 in compensatory damages and $500,000 in punitive dama ges. Wexford persuaded the judge that the pu nitive

- damages award violates the Fo urteenth Amendment’s prohibition on excessive or arbitrary punishment. The judge reduced pun itive damages to $50,000. Ini tially he offered Beard a choice between retrying the issue of punitive damages and accep ting the re duced award but later withdrew the option and entered a judgment that awarded only $50,000 in punitive damages (plus the jury’s compensatory award)

. Beard’s first argument on appeal is that the district court improperly prevented him from presenting an additional theory of liab ility. Beard convinced the jury to find Wexford directly liable ; he contends that he should have been allowed to argue that Wexford also is vicariously liable for its doctors’ violations of his cons titutional rights. Beard maintains that Iskander v. Forest Park , 690 F.2d 126 (7th Cir. 1982), whichNo. 16

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stopped him from pursuing vicarious liability, should be overruled

. Monell v. Department of Social Services , 436 U.S. 658 (1978), holds that a municipal corporation cannot be vicar iously li able if its employees de prive others of their civil rights. Iskander treats private corporations the same way, when their liability depends on performing governmental functions. Beard maintains that Monell should be limited to gover nmental litigants. But Beard has not explained h ow Iskander harmed him . We asked Beard’s counsel what additional damages he would have sought if Wexford could be found vicariously liable. He did not point to any. So we need not decide whether Iskander should b e overruled; anything we say about the subject would be advisory.
Beard also contends that the district court erred in redu cing the jury’s award of punitive damages without offering him a new trial. Punitive damages punish blameworthy b ehavior and deter defendants from committing future bad
acts

— the more reprehensible a defendant’s conduct and the more easily a defendant can conceal violations, the higher the punitive damages. See, e.g., Zazú Designs v. L’Oréal, S.A. , 979 F.2d 499, 508 (7th Cir. 1992). But excessive punitive

damages awards v iolate the Due Process Clause. See, e.g., State Farm Mutual Automobile Insurance Co. v. Campbell , 538 U.S. 408 (2003); BMW of North America, Inc. v. Gore , 517 U.S. 559 (1996). The Justices have instructed courts to review whether an award of punitive damag es exceeds the Due Process Clause’s bounds by considering the reprehensibility of the defendant’s conduct, the ratio between punitive and compensatory damages, and any civil penalties that punish similar behavior. See, e.g., BMW of North America , 517 U.S. at4 No. 16

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574

– 75. Applying these guideposts to the jury’s verdict, the district court concluded that an award of punitive damages equal to fifty times compensatory damages violat es the Due Process Clause and must be reduced. The district court’s d ecision is consi stent with the Supreme Court’s caution that “few awards exceeding a single

- digit ratio between punitive and compensatory damages, to a significant degree, will sa tisfy due process.” State Farm , 538 U.S. at 425. So far, so good. But even taking the Court’s caution about single

- digit ratios as a rule, the district court had nine single digits (and an infinite number of fractions) from which to choose. From these options, the court selected: five. It co ncluded that, because a ratio of five to one “better match es the reprehensibility of Wexford’s conduct, the actual harm su ffered by [Beard], and the need for deterrence and punis hment of Wexford”, a punitive

- damages award in excess of $50,000 would offend the Due Process Clause. It also deci ded that the Seventh A mendment did not require it to offer Beard the option of a new trial before it entered judgment on the reduced award.
The decision to limit punitive damages to five times compensatory damages was arbitrary

— why the district court chose a multiplier of five, rather than seven, or three , or nine and one

- half, it did not say. But because the Justices have declined to reduce the relation between compensatory and punitive damages to a formula, any ratio the district court chose would have been arbitrary , though d oubtless influenced by an appreciation of the case’s facts . See Mathias v. Accor Economy Lodging, Inc. , 347 F.3d 672, 678 (7th Cir. 2003). See also State Farm , 538 U.S. at 424

– 25; BMW of North America , 517 U.S. at 582

– 83. So the prudent course when aNo. 16

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distr ict court reduces a punitive

- damages award is to offer the plaintiff a choice between the reduced award and a new trial , for the jury rather than the judge has the principal r esponsibility for factual evaluations . If the plaintiff opts for a new trial, the jury plays its traditional role . And if the plai ntiff accepts the reduced award

— after all, there’s no guara ntee that a second jury will award any punitive damages

— then the plaintiff has willingly for gone the jury option

. E ither way , the jury participates in the process of applying the law to the facts , cf. Pacific Mutual Life Insurance Co. v. Haslip , 499 U.S. 1, 15

– 18 (1991), and the court plays its part by poli cing the range of constitutionally acceptable awards. See M athias , 347 F.3d at 678.
Instead of f ollowing that course and offering Beard the option of a new trial, however, the district court entered an amended judgment awarding Beard exactly $50,000 in pun itive damages. Doing so was a procedural misstep , which calls for a procedural solution: the dis trict court’s judgment must be vacated and the case remanded for the court to offer Beard the option of a new trial on damages. In remanding for the district court to follow prudent pr ocedure, we do not decide whether the Seventh Amendment prohibited the court from unilaterally reducing Beard’s award on constitutional grounds. See, e.g., Ross v. Kansas City Power & Light Co. , 293 F.3d 1041, 1049

– 50 (8th Cir. 2002); Johansen v. Combustion Engineering, Inc. , 170 F.3d 1320, 1330

– 33 (11th Cir. 1999). But see, e.g., Thomas v. iStar Financial, Inc. , 652 F.3d 141, 146

– 47 (2d Cir. 2011); Southern Union Co. v. I rvin , 563 F.3d 788, 792

– 93 & n.4 (9th Cir. 2009). T he Justices have not resolved that i ssue , and the district court should not have addressed it either. Neither party asked the district6 No. 16

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court to decide whether the Seventh Amendment allows a judge to reduce punitive damages without offering a new trial as an alternative . The district court cr eated a constit utional issue by taking a step neither party requested: though Beard and Wexford dispute d whether Beard should have the option of a new trial on both compensatory and punitive damages , Wexford never asked the district court to reduce Beard’s award without offering him any choice at all. Courts must avoid unnecessary constitutional adjudication , see, e.g., Spector Motor Service , Inc. v

. McLaughlin , 323 U.S. 101, 104

– 05 (1944) , and whether the Seventh Amendment prohibits a judge from reducing p unitive damages on constitutional grounds without offering a new trial is a question the district court did not need to answer. Beard must be given the o ption of a new trial as a matter of sound procedure, not co nst i tutional law.
I f Beard chooses a new tri al, the jury must be allowed to consider both compensatory and punitive damages. Cf. Ga soline Products Co. v. Champlin Refining Co. , 283 U.S. 494 , 500 (1931). The constitutional limit on p unitive damages d epend s on the reprehensibility of the defendant’s c onduct and the ratio between compensatory and punitive damages. See, e.g., BMW of North America , 517 U.S. at 574

– 75. Because co mpensatory and punitive damages are correlated, the y must be considered jointly . But a second jury need not reconsider Wexford’s liability. Damages and liability present distinct issues, and the jury’s award does not suggest that it held Wexford liable based on passion or prejudice or otherwise disobeyed the district court’s instructions. See Cobige v. Ch icago , 651 F.3d 780, 785 (7t h Cir. 2011).No. 16

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Though we remand to correct the district court’s proc edural mistake, Beard asks that we also decide whether he is entitled to punitive damages exceeding five times the co mpensatory award

. When a plaintiff challenges both the pr ocedure and substance of a district court’s decision to reduce an award of punitive damages, procedural errors do not stop us from evaluating whether the reduction was otherwise proper. See Adams v. Chicago , 798 F.3d 539 (7th Cir. 2015) . See also Ash v. Geo rgia

- Pacific Corp. , 957 F.2d 432, 438 (7th Cir. 1992) . But in Adams the district court reduced the jury’s award because it lacked evidentiary support; the panel in Adams could evaluate the substance of the district court’s opinion without making a constitu tional decision. That’s not true here: because the district court held that the jury’s award of punitive damages violated the Due Process Clause, reviewing the merits of the district court’s decision to cap punitive damages at five times compensatory damag es would require unnecessary constitutional analysis, which is to be avoided. Spector Motor Service , 323 U.S. at 104

– 05

. And not only by us. The parties assume that only the Constitution limits a jury’s award of punitive damages. Their appellate briefs dis pute whether the jury’s award vi olates the Due Process Clause and cite cases such as State Farm , BMW of North America , and Mathias

. Yet because those

cases arose under state law the Constitution imposes the o nly federal restraint. Beard’s complaint arises under a federal statute. As a result, State Farm , BMW of North America , and Mathias matter only if the Due Process Clause is the least upper bound on an award of punitive damages under §1983. See Exxon Shipping Co. v. Baker , 554 U.S. 471, 501

– 03 (2008); Pe rez v. Z Frank Oldsmobile, Inc. , 223 F.3d 617, 625 (7th Cir. 2000).8 No. 16

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The Supreme Court has not addressed whether there is a nonconstitutional limit on punitive

- damages awards under §1983. But in Exxon Shipping it concluded that a jury’s award of punitive damages in admiralty cannot exceed compens atory damages as a matter of federal law

. The Justices derived the limit by taking the median of the ratio of compensatory to punitive damages in verdicts actually issued by juries. See 554 U.S. at 512

– 14. Cases such as Smith v. Wade , 461 U.S. 30 (1983), Howlett v. Rose , 496 U.S. 356 (1990), and Browning

Ferris Industries of Vermont, Inc. v. Kelco Disposal, Inc. , 492 U.S. 257, 278 (1989), imply that, if there is a nonconstitutional li mit on punitive dam ages in suits under §1983, it is also su pplied by a uniform federal rule, not the law of the forum state. See, e.g., Wilson v. Garcia , 471 U.S. 261 (1985); United States v. Kimbell Foods, Inc. , 440 U.S. 715 (1979). But none of these cases tells us how the limit should be derived. Courts could follow the Supreme Court’s approach in admiralty and establish a nonconstitutional limit on pun itive

- damages awards under §1983 empirically. In Exxon Shipping , however, the Justices sat as “a common law court of last review”. 554 U.S. at 507. Section 1983 is a statute, so any nonconstitutional cap derived by courts also must r espect the limits on punitive damages chosen by Congress. See Kunz v. DeFelice , 538 F. 3d 667, 678

– 79 (7th Cir. 2008). The text of §1983 does not mention punitive damages. So the Justices have looked to the common law to fashion rules for awarding punitive damages under §1983 , just as they have looked to the common law to establish rules of absolute and qualified immunity . See Smith , 461 U.S. at 34. When §1983 was enacted in 1871, many states did not impose bright

- line caps on punitive damages; juries had consider a-No. 16

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ble discretion in awarding them. See, e.g., Williamson v. Western Stage Co. , 24 Iowa 171, 172 (1867); Schneider v. Hosier , 21 Ohio St. 98, 113 (1871); Myers v. San Francisco , 42 Cal. 215, 217 (1871). And because verdicts and written decisions often awarded total amounts rather than separating compensatory and punitive damages, see, e .g., Dalton v. Beers , 38 Conn. 529, 531 (1871), it is difficult to determine at what point courts considered punitive

- damages awards excessive. Nor does a single method of limiting punitive damages prevail among the states today. By our count (and with som e simplific ations), twenty

- nine states impose a generally applicable cap on punitive damages. Some rely on ratios, see, e.g., Alaska Stat. §09.17.020(f) (ratio of 3 to 1); Colo. Rev. Stat. §13

- 21

- 102(1)(a) (ra tio of 1 to 1) ; and others on dollar cap s or fo rm ula s , see, e.g., Va. Code §8.01

- 38.1 ($350,000 cap); Kan. Stat. §60

- 3701(e) (limit depends on defendant’s annual gross i ncome); twenty

- one states impose no generally applicable li m it on punitive

- damages awards. Fashioning a uniform federal rule from the states’ diverse approache s is not an a ttractive prospect . See Exxon Shipping , 554 U.S. at 509

– 11.
Because state law does not provide a clear limit that could be adopted as a matter of federal common law , courts could consider how other federal laws handle damages that exceed the compensatory amount . Con gress has capped supplemental awards at twice compensatory damages in a ntitrust (15 U.S.C. §15), racketeering (18 U.S.C. §1964(c)), and patent law (35 U.S.C. §284)
, and at compensatory damages for violations of the Fair Labor Standards Act (29 U.S.C. §216(b)) . This might suggest that punitive

- damages awards under §1983 also should be limited to treble dam ages or less

. We have not found any federal statute that authorizes a mu ltiplier greater than three , though some statutes establish do l-10 No. 16

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lar limits in lieu of multipliers . For example, 42 U.S.C. §1981a(b)(3) sets a limit for the combination of punitive and certain compensatory damages that runs from $50,000 to $300,000, depending on the defendant’s number of empl o yees. We need not choose which of these options is best. We raise the subject only to call attention to it so that statutory decisions precede constitutional adjudication. Both legal and factual issues are open on remand. Because we vacate the judgment and remand for the di strict court to offer Beard the choice between a reduced pun itive

- damages award and a new trial limited to damages , we also vacate the award of attorney’s fees and costs. Until we know whether Beard prefers to take his chances on a new trial (and, if he does, the measure of his success), saying an ything about fees would be premature. See Hensley v. Ecke rhart , 461 U.S. 424 (1983). Still, we remind the district court that any award of attorney’s fees must comply with Murphy v. Smith , 138 S. Ct. 784 (2018).

V ACATED AND R EMANDED