Docket Nos. 101231, 101347 cons..

IN THE

SUPREME COURT

OF

THE STATE OF ILLINOIS

INTERNATIONAL UNION OF OPERATING ENGINEERS,

LOCAL 150, Appellant and Cross-Appellee, v. LOWE

EXCAVATING COMPANY, Appellee and Cross-Appellant.

Opinion filed November 30, 2006.

JUSTICE FITZGERALD delivered the judgment of the court,

with opinion.

Justices Freeman, Kilbride, Karmeier, and Burke concurred in the

judgment and opinion.

Justice Garman dissented, with opinion.

Chief Justice Thomas took no part in the decision.

OPINION

This case involves litigation spanning 18 years between plaintiff,

Lowe Excavating Company (Lowe), and defendant, International

Union of Operating Engineers, Local 150 (the Union). In 1988, Lowe

filed a multicount complaint against the Union in the circuit court of

McHenry County, generally alleging that the Union picketed a Lowe

work site with placards containing false information. After a bench

trial, the trial court ruled in favor of the Union. The appellate court

reversed, concluding that Lowe proved a cause of action for trade

libel because the evidence showed that the Union made false
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statements and the statements were made with actual malice. On

remand, the trial court awarded Lowe $4,680 in compensatory

damages and $525,000 in punitive damages. The appellate court

reduced the punitive damages award to $325,000. 358 Ill. App. 3d

1034. We granted the parties’ petitions for leave to appeal. For the

reasons that follow, we reverse the judgment of the appellate court.

BACKGROUND

Lowe is an Illinois corporation that performs excavating and sitepreparation services. In February 1988, Lowe was performing

excavation work at the Canterbury Place Retirement Community in

McHenry County. Specifically, Lowe was working on a portion of the

project known as Ballashire Hall, which was funded by the federal

government through the Department of Housing and Urban

Development (HUD). In order to obtain the contract on this project,

Lowe had to certify its payroll with the federal government, and thus

had to demonstrate that it was paying its employees prevailing wages

and benefits established by the United States Secretary of Labor. 40

U.S.C. §276a (1982).

On February 15, 1988, the Union began picketing the Ballashire

Hall site with placards stating:

“NOTICE TO THE PUBLIC

LOWE EXCAVATING DOES NOT PAY THE

PREVAILING WAGES AND ECONOMIC BENEFITS FOR

OPERATING ENGINEERS WHICH ARE STANDARD IN

THIS AREA

OUR DISPUTE CONCERNS ONLY SUBSTANDARD

WAGES AND BENEFITS PAID BY THIS COMPANY

LOCAL 150

International Union of Operating Engineers, AFL-CIO.”

Lowe was ordered off the project by the general contractor as a

result of the Union’s picketing. On that same day, Lowe filed a

complaint in the McHenry County circuit court seeking a temporary

restraining order (TRO), preliminary and permanent injunctions, and

damages. The complaint alleged a cause of action for tortious

interference with a prospective economic advantage. The Union
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promptly filed a petition for removal of the matter to federal court,

asserting that Lowe’s complaint sought relief for an unfair labor

practice, which was a federal law issue. The federal court found that

it did not possess subject matter jurisdiction over Lowe’s cause of

action and returned the cause to the circuit court.

Lowe subsequently amended its complaint to allege causes of

action for trade libel, tortious interference with a contractual

relationship, tortious interference with a prospective economic

advantage and negligent interference with a contract. Lowe also

continued to seek a TRO and further injunctive relief. The trial court

granted Lowe’s request for a TRO, but denied Lowe’s request for

other injunctive relief as being preempted by federal law. Lowe then

filed an interlocutory appeal of the trial court’s judgment. The

appellate court concluded that the cause of action was not preempted

by federal law and thus remanded the matter for the circuit court to

review Lowe’s motion for a preliminary injunction. Lowe Excavating

Co. v. International Union of Operating Engineers Local No. 150,

180 Ill. App. 3d 39 (1989) (Lowe I). The Union filed a petition for

leave to appeal to this court, which was denied. Lowe Excavating Co.

v. International Union of Operating Engineers, 126 Ill. 2d 560 (1989)

(table). The Union then filed a petition for a writ of certiorari to the

United State’s Supreme Court, which was likewise denied.

International Union of Operating Engineers, Local 150 v. Lowe

Excavating Co., 493 U.S. 975, 107 L. Ed. 2d 502, 110 S. Ct. 499

(1989).

The matter proceeded to a bench trial in April 2000. At trial, the

relevant evidence demonstrated that Lowe has been in business since

1969. Prior to 1988, Lowe employees were not unionized. In 1987,

Colin Darling, a business agent for the Union, received information

about the wages and benefits paid to Lowe employees from two

individuals who were then employed with the company. That same

year, the Union, at the invitation of Lowe’s president, Marshall Lowe,

met with Lowe employees, seeking to represent them for collectivebargaining purposes. Negotiations between the Union and Lowe

stalled. Several months later, in February 1988, the Union decided to

picket Lowe because it believed that the company was not paying

area-standard wages. The decision to picket was made by Darling and
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another Union employee without any further investigation into Lowe’s

wage or benefit packages.

On Friday, February 12, 1988, the Union sent Lowe a mailgram

indicating that it would be picketing at Ballashire Hall because Lowe

was not paying its operating engineers area-standard wages. Lowe

sent a telegram back to the Union which stated: “We are paying area

standards.” The Union nevertheless began picketing the Ballashire

Hall work site on the following Monday, February 15, 1988, at 6 a.m.

The Union claimed that it did not know that Ballashire Hall was

a federally funded project when it began picketing. However, the

evidence presented at trial demonstrated that the Union was quickly

advised of this fact by Bradley Brei, the president of FAMCO, the

company serving as the general contractor of the Canterbury Place

project. Brei testified that, when the picketing started, he approached

Darling and “I asked Mr. Darling why they were even there, that

Ballashire Hall was a HUD project and that I had already filed

certified payrolls with HUD that Lowe Excavating was paying the

prevailing wage rates and I could not understand on what bases ***

he was there or why the pickets were there.” Despite this information,

the Union continued picketing and did not cease until Brei ordered

Lowe to discontinue its work and Lowe’s equipment was removed

from the site.

Lowe remained off the Ballashire Hall project until September

1988, when employees returned to do finishing work. Although the

Union knew at that point, through Colin Darling, that Ballashire Hall

was a federally funded project, it nevertheless picketed the work site.

Lowe was removed a second time from the Ballashire Hall project by

Bradley Brei. According to Marshall Lowe, the company suffered lost

profits of $4,680 as a result of its removal from the Ballashire Hall

project. Additionally, FAMCO declined to do business with Lowe for

five to six years. Brei testified that he did not want to work with Lowe

because he felt the company did not have its “house in order.”

At trial, Lowe presented testimony from Frank Stampler, a

certified public accountant, who stated that an audit of Lowe’s wages

and benefits for the period of January 13, 1988, through February 16,

1988, demonstrated that Lowe employees at the Ballashire Hall

project were actually being paid more than the federal prevailing wage

rate. Additionally, John O’Hagan, president of Human Resources
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Planning Associates, a business which provides compensation, benefits

and insurance planning services, testified that he compared Lowe’s

benefits with those of the Union in 1987 and 1988 at the request of

Marshall Lowe. O’Hagan determined that Lowe’s health and life

insurance plans were superior to the those of the Union.

Marshall Lowe, however, admitted that, prior to August 1988,

Lowe did not pay its employees prevailing wages and was not meeting

the area standards for wages and employee benefits. Marshall Lowe

specified that between 1969 and 1986, Lowe was not paying contract

wage rates received by Union employees and did not offer a

retirement plan for its employees. This practice changed when Lowe

and the Congress of Independent Unions (CIU) entered into a

collective-bargaining agreement in 1988, which provided that Lowe

would pay prevailing wages at all times retroactive to April 15, 1988.

Marshall Lowe added that the Ballashire Hall project was one of the

first prevailing wage projects that Lowe ever worked on and,

therefore, was one of the first times Lowe paid its employees the

prevailing wage.

After hearing the evidence, the trial court ruled in favor of the

Union on all counts. Lowe appealed, and the Union cross-appealed.

The appellate court reversed the judgment of the trial court. Lowe

Excavating Co. v. International Union of Operating Engineers, Local

No. 150, 327 Ill. App. 3d 711 (2002) (Lowe II). The appellate court

concluded that the statement appearing on the placards used by the

Union in picketing Lowe constituted defamation per quod. Lowe II,

327 Ill. App. 3d at 722. The court determined that, after being told by

Brei that Ballashire Hall was a federally funded project, that Lowe’s

payroll had been certified, and that Lowe was paying prevailing

wages, “Darling at least should have entertained serious doubts as to

the truth of the statements contained on the picket signs.” Lowe II,

327 Ill. App. 3d at 723. Because the Union continued to picket even

after possessing this information, the court determined that the Union

acted with reckless disregard for the truth and, therefore, the

defamatory statements made were made with actual malice. The

appellate court rejected the Union’s claim on cross-appeal that Lowe’s

defamation claim was preempted by federal law. Lowe II, 327 Ill. App.

3d at 723.
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The appellate court then concluded that punitive damages could

be appropriate in this case in light of its finding that the Union acted

with actual malice. Lowe II, 327 Ill. App. 3d at 724. The appellate

court thus directed the trial court to consider evidence of Lowe’s

attorney fees in the event that it decided to award punitive damages.

Lowe II, 327 Ill. App. 3d at 725. The court cautioned, however, that

attorney fees could not “be awarded as a separate entity distinct from

punitive damages.” Lowe II, 327 Ill. App. 3d at 725.

The Union sought leave to appeal from this court, and leave to

appeal was denied. Lowe Excavating Co. v. International Union of

Operating Engineers, Local No. 150, 199 Ill. 2d 557 (2002) (table).

The Union then filed a petition for a writ of certiorari to the United

States Supreme Court, which was likewise denied. International

Union of Operating Engineers, Local 150 v. Lowe Excavating Co.,

537 U.S. 1028, 154 L. Ed. 2d 442, 123 S. Ct. 555 (2002).

Upon remand, the trial court first entered a judgment in favor of

Lowe in the amount of $4,680 for actual damages sustained as a result

of the Union’s conduct. Lowe then filed a motion for punitive

damages wherein it asserted that attorney fees plus expenses

amounted to $506,659.78, and ultimately sought punitive damages of

$5 million. The trial court accepted briefing from both parties on the

issue of punitive damages and awarded punitive damages against the

Union in the amount of $325,000. In doing so, the trial court

specifically stated that punitive damages were appropriate in light of

the appellate court’s finding of actual malice. The court added that

punitive damages were necessary to deter the Union from similar

conduct in the future. The court then noted that, while the actual

damages in this case were small, Lowe “incurred substantial attorney’s

fees and expenses in this protracted litigation.” The court specified,

however, that it was “not awarding attorney’s fees.”

The record shows that the court initially considered the fees of

Lowe’s attorney, Gerard C. Smetana, which, according to his

affidavit, totaled $304,101.62. The trial court did not consider the fees

of Smetana’s cocounsel, Michael E. Avakian of the Center on

National Labor Policy, Inc., as it did not appear that Lowe was

responsible for payment of the $194,350 in fees and expenses incurred

by Avakian and his organization. Lowe moved for reconsideration of

the trial court’s punitive damages award, asserting that the trial court
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improperly ignored the fees incurred by Avakian. The trial court

reconsidered and increased the punitive damages award to $525,000.

Both parties appealed. Neither party challenged the compensatory

damages awarded, but both parties took issue with the award of

punitive damages. The Union initially argued that punitive damages

were inappropriate in this case. The appellate court disagreed, holding

that punitive damages are available in defamation actions; that they

were proper in this case because the Union acted with actual malice;

and that the trial court imposed punitive damages for appropriate

purposes, namely, punishing the Union for its malicious conduct and

dissuading the Union from engaging in similar conduct in the future.

358 Ill. App. 3d at 1040-41 (Lowe III).

The Union next raised a common law challenge asserting that the

punitive damages awarded were excessive. The appellate court

rejected this claim, stating that “[n]othing in the record suggests that

the trial court’s award was the product of passion, partiality, or

corruption.” Lowe III, 358 Ill. App. 3d at 1041. The appellate court

added that the trial court carefully considered the nature and enormity

of the Union’s misconduct and attempted to impose a sanction

sufficient to deter the Union from similar offenses, while mindful of

the amount of attorney fees incurred by Lowe. Lowe III, 358 Ill. App.

3d at 1041.

The Union further argued that the punitive damages awarded were

unconstitutionally excessive in violation of the due process clause. The

appellate court agreed, finding that the ratio of punitive damages to

compensatory damages was approximately 115 to 1 and was therefore

“exceedingly disproportionate.” Lowe III, 358 Ill. App. 3d at 1044.

The appellate court thus reduced the punitive damages award from

$525,000 to $325,000, finding that “[s]uch an award *** results in a

constitutionally acceptable ratio of approximately 75 to 1.” Lowe III,

358 Ill. App. 3d at 1046. As a result of this finding, the appellate court

did not address Lowe’s contention that the amount of punitive

damages awarded was insufficient. Lowe III, 358 Ill. App. 3d at 1046.

We allowed the parties’ petitions for leave to appeal, and now

consider whether the award fashioned by the appellate court was

unconstitutionally excessive as urged by the Union, or whether the

award was deficient, as urged by Lowe.
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ANALYSIS

At the outset, we make clear that neither party contests the

compensatory damages awarded in this case. Further, neither party is

raising a common law challenge to the award of punitive damages.

The issue in this case is whether the punitive damages awarded violate

the due process clause of the fourteenth amendment, which prohibits

the imposition of grossly excessive or arbitrary punishments on a

tortfeasor. See State Farm Mutual Automobile Insurance Co. v.

Campbell, 538 U.S. 408, 416, 155 L. Ed. 2d 585, 600, 123 S. Ct.

1513, 1519-20 (2003).

I. Standard of Review

The parties disagree as to the proper standard of review that

should be used in reviewing this constitutional claim. Lowe asserts

that an abuse of discretion standard should be applied and, in support,

cites to Franz v. Calaco Development Corp., 352 Ill. App. 3d 1129,

1138 (2004).

Lowe misstates the holding of Franz. Contrary to Lowe’s

assertions, the Franz court never used an abuse of discretion standard

of review, under any circumstances, to determine the propriety of a

punitive damages award. The Franz court did, however, provide a

clear directive regarding the standard of review that should be used

with respect to the constitutional claims raised herein. Citing Cooper

Industries , Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 149

L. Ed. 2d 674, 121 S. Ct. 1678 (2001), the court explicitly stated:

“The standard of review for the constitutional question of whether a

punitive damages award is excessive in violation of due process is

indeed de novo ***.” Franz, 352 Ill. App. 3d at 1147.

Also relying on the Supreme Court’s decision in Cooper, as well

as statements made by the Court in State Farm, the Union maintains

that de novo review is proper in this case. In Cooper, the Supreme

Court considered the proper standard of review in cases where

punitive damages were alleged to be constitutionally excessive. In

doing so, the Court acknowledged that the assessment of punitive

damages was a form of punishment upon the wrongdoer and thus

looked to jurisprudence in all areas of the law where “constitutional

violations were predicated on judicial determinations that the
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punishments were ‘grossly disproportional to the gravity of ...

defendant[s’] offense[s].’ ” Cooper, 532 U.S. at 434, 149 L. Ed. 2d

at 686, 121 S. Ct. at 1684, quoting United States v. Bajakajian, 524

U.S. 321, 334, 141 L. Ed. 2d 314, 329, 118 S. Ct. 2028, 2036 (1998).

The Court noted that cases of this ilk required “an independent

examination” of the relevant information by reviewing courts. Cooper,

532 U.S. at 435, 149 L. Ed. 2d at 686, 121 S. Ct. at 1685. The Court

further noted that the question of whether a punishment is

constitutionally excessive “ ‘calls for the application of a constitutional

standard to the facts of a particular case, and in this context de novo

review of that question is appropriate.’ ”

The Cooper Court explored the reasons why de novo review was

necessary under these circumstances. The Court explained that the

concept of gross excessiveness is a “fluid concept[ ]” that cannot be

precisely articulated. Cooper, 532 U.S. at 436, 149 L. Ed. 2d at 687,

121 S. Ct. at 1685, quoting Ornelas v. United States, 517 U.S. 690,

696, 134 L. Ed. 2d 911, 918, 116 S. Ct. 1657, 1661 (1996). Concepts

of this nature acquire “ ‘content only through application’ ” and are

best controlled and clarified through independent review. Cooper, 532

U.S. at 436, 149 L. Ed. 2d at 687, 121 S. Ct. at 1685, quoting

Ornelas, 517 U.S. at 697, 134 L. Ed. 2d at 919, 116 S. Ct. at 1662.

De novo review, under such circumstances, serves to “ ‘unify

precedent’ ” and “ ‘stabilize the law.’ ” Cooper, 532 U.S. at 436, 149

L. Ed. 2d at 687, 121 S. Ct. at 1685, quoting Ornelas, 517 U.S. at

697-98, 134 L. Ed. 2d at 919-20, 116 S. Ct. at 1662. Finally, the

Cooper Court explained that de novo review is beneficial because it

provides citizens notice of conduct that will result in punishment and

serves to assure the uniform treatment of individuals engaged in

similar conduct:

“ ‘Requiring the application of law, rather than a

decisionmaker’s caprice, does more than simply provide

citizens notice of what actions may subject them to

punishment; it also helps to assure the uniform general

treatment of similarly situated persons that is the essence of

law itself.’ ” Cooper, 532 U.S. at 436, 149 L. Ed. 2d at 687,

121 S. Ct. at 1685, quoting BMW of North America, Inc. v.

Gore, 517 U.S. 559, 587, 134 L. Ed. 2d 809, 834, 116 S. Ct.
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1589, 1605 (1996) (Breyer, J., concurring, joined by

O’Connor and Souter, JJ.).

In State Farm, the Supreme Court reiterated some of the

principles set forth in Cooper and stated that de novo review was

“mandated” when considering whether a punitive damage award was

unconstitutionally excessive. State Farm, 538 U.S. at 418, 155 L. Ed.

2d at 601, 123 S. Ct. at 1520.

Lowe argues that Cooper and State Farm, and the cases upon

which they relied, do not require that this court utilize a de novo

standard of review because those cases involved punitive damages

awarded by a jury instead of a judge after a bench trial. We find this

distinction to be of no consequence. Whether punitive damages were

awarded by a judge or jury has no impact on the reasons articulated

in Cooper for applying a de novo standard, such as unification of

precedent and stabilization of the law. Accordingly, we review the

constitutional question before us de novo.

II. Constitutionality of Punitive Damages Award

A. Excessiveness

The Union first argues that the appellate court erred in affirming

the trial court’s punitive damages award, as the damages imposed are

unconstitutionally excessive in violation of due process. Lowe

counters that the appellate court erred in reducing the punitive

damages award and asserts that it is entitled to a greater amount of

punitive damages. Lowe adds that the reduced award is deficient

because it will not serve to adequately punish the Union for its

misconduct against Lowe or deter the Union from similar misconduct

in the future.

The parties agree that the relevant test to determine whether

punitive damages awarded are excessive was set forth in the United

States Supreme Court’s opinion in BMW of North America, Inc. v.

Gore, 517 U.S. 559, 134 L. Ed. 2d 809, 116 S. Ct. 1589 (1996), and

recently reiterated in State Farm. In those cases, the Supreme Court

instructed that three guideposts should be considered in reviewing an

award of punitive damages: “(1) the degree of reprehensibility of the

defendant’s misconduct; (2) the disparity between the actual or

potential harm suffered by the plaintiff and the punitive damages
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award; and (3) the difference between the punitive damages awarded

by the jury and the civil penalties authorized or imposed in comparable

cases.” State Farm, 538 U.S. at 418, 155 L. Ed. 2d at 601, 123 S. Ct.

at 1520, citing Gore, 517 U.S. at 575, 134 L. Ed. 2d at 826, 116 S.

Ct. at 1598-99. We now consider each of these guideposts in

reviewing the punitive damages award presently in dispute.

1. Degree of Reprehensibility

In Gore, the Supreme Court stated: “Perhaps the most important

indicium of the reasonableness of a punitive damages award is the

degree of reprehensibility of the defendant’s conduct.” Gore, 517 U.S.

at 575, 134 L. Ed. 2d at 826, 116 S. Ct. at 1599. Courts are instructed

to consider the following factors when determining reprehensibility:

(1) whether the harm caused was physical as opposed to economic;

(2) whether the tortious conduct evinced an indifference to or a

reckless disregard for the health and safety of others; (3) whether the

target of the conduct was financially vulnerable; (4) whether the

conduct involved repeated actions or was an isolated incident; and (5)

whether the harm was the result of intentional malice, trickery, or

deceit, or mere accident. State Farm, 538 U.S. at 419, 155 L. Ed. 2d

at 602, 123 S. Ct. at 1521. Courts are further instructed that:

“The existence of any one of these factors weighing in favor

of a plaintiff may not be sufficient to sustain a punitive

damages award; and the absence of all of them renders any

award suspect. It should be presumed a plaintiff has been

made whole for his injuries by compensatory damages, so

punitive damages should only be awarded if the defendant’s

culpability, after having paid compensatory damages, is so

reprehensible as to warrant the imposition of further sanctions

to achieve punishment or deterrence.” State Farm, 538 U.S.

at 419, 155 L. Ed. 2d at 602, 123 S. Ct. at 1521.

The appellate court considered the factors set forth in Gore and

State Farm in determining the Union’s degree of reprehensibility. The

court concluded that the reprehensibility of the Union’s conduct was

heightened by facts demonstrating that Lowe was financially

vulnerable because it is a small business with only 16 employees and

its reputation is very important to its continued success. The appellate
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court specifically found that the Union’s false allegations against

Lowe were “potentially devastating” to Lowe’s reputation and “could

have financially ruined the company.” Lowe III, 358 Ill. App. 3d at

1043. Further, the appellate court concluded that the Union’s conduct

was not isolated, because the Union picketed on more than one

occasion and continued to picket even after learning that Ballashire

Hall was a federally funded project and Lowe was required to pay

prevailing wages. Lowe III, 358 Ill. App. 3d at 1043. Finally, the court

reiterated its previous holding that the Union’s conduct was the

product of intentional malice. The court stated that the finding of

malice was the “law of the case,” and it declined to alter the holding

in light of evidence demonstrating that the Union knew Lowe’s

payrolls had been certified by the Department of Labor. Lowe III, 358

Ill. App. 3d at 1043.

The Union maintains that the appellate court’s findings were

erroneous because none of the factors required to demonstrate

reprehensibility were proven. Lowe disputes the Union’s claim, but

agrees that the first two reprehensibility factors do not weigh in its

favor. Lowe concedes that the Union’s conduct created a harm that

was economic rather than physical and that the Union’s conduct did

not evince a reckless disregard or indifference to the health and safety

of others. A dispute arises, however, with respect to the third

reprehensibility factor–financial vulnerability. The Union maintains

that the evidence presented at trial was insufficient to demonstrate that

Lowe was financially vulnerable. Lowe asserts that the evidence

demonstrated that it is a small business and this fact proves its

financial vulnerability. Lowe also argues that evidence in the record

demonstrates that the company had to “engage in odd jobs in the

winter to stay afloat until it was recalled for work in the Spring.”

Contrary to Lowe’s contentions and the appellate court’s findings,

we conclude that the record in this case is devoid of evidence

demonstrating that Lowe was financially vulnerable. Lowe claims that

the record shows that it was forced to “engage in odd jobs” after the

picketing. However, the portion of the record Lowe cites merely

demonstrates that, some four to six years after the Ballashire Hall

project, FAMCO contacted Lowe to perform snow removal work.

Lowe cites to nothing in the record indicating that it was required to

do such work to “stay afloat,” as it now contends.
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Further, the fact that Lowe is a “small business” does not, by

itself, prove financial vulnerability. While we agree with the appellate

court that small businesses often rely on reputation to maintain and

attract customers, the evidence presented in this case demonstrated

that Lowe temporarily lost only one customer, FAMCO, as a result of

the Union’s conduct. The evidence also demonstrated that Lowe

operated as a nonunion company paying less than the prevailing wage

rate for the area without incident from 1969 until 1988 when the

Union picketed the Ballashire Hall site. There is no evidence that

Lowe lost any other business as a result of the Union’s conduct.

Moreover, the only financial loss proven was the $4,680 in lost profits

stemming from the Ballashire Hall project. Lowe provided no other

financial information which would demonstrate its vulnerability.

We acknowledge that the United States Court of Appeals for the

Third Circuit affirmed a finding by the United States district court that

a “modest family-run business” was financially vulnerable without any

evidence of its financial circumstances. See Willow Inn, Inc. v. Public

Service Mutual Insurance Co., 399 F.3d 224 (3d Cir. 2005). In

Willow Inn, the court awarded punitive damages to the plaintiff after

evidence demonstrated that the defendant insurer acted in bad faith

and withheld payment on Willow Inn’s property damage claim. In

determining reprehensibility, the court found that Willow Inn was

financially vulnerable based on evidence demonstrating that after being

damaged by a tornado, the bar/restaurant was unable to afford

professional help to clear away the rubble and initiate repairs. Instead,

for 36 hours following the tornado, the owner and neighborhood

volunteers worked to protect the building from further damage and

clear away debris to make the surrounding area less hazardous.

Willow Inn, 399 F.3d at 232. Lowe provided no evidence akin to that

presented in Willow Inn which would demonstrate its financial

vulnerability. Accordingly, we find that case to be readily

distinguishable.

Lowe cites to Planned Parenthood v. American Coalition of Life

Activists, 422 F.3d 949 (9th Cir. 2005), to support its assertion that

it was financially vulnerable. In that case, the defendants threatened

and attempted to intimidate several doctors who performed abortions.

The federal appeals court for the Ninth Circuit held that the

defendant’s conduct was reprehensible in light of the physician’s
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financial vulnerability. Specifically, the court determined that the

physician’s livelihoods depended on their practices, and the defendants

intentionally tried to scare the doctors into suspending their practices.

In fact, one doctor stopped practicing because he feared for his life.

Planned Parenthood, 422 F.3d at 958. Lowe argues that its livelihood

and that of its employees depended on its ability to work, just as the

doctors in Planned Parenthood. We find Lowe’s comparison to be

unpersuasive. In Planned Parenthood, the doctors’ entire practice was

negatively affected by the conduct of the defendants, and the doctors

were afraid to perform a medical procedure which was the focus of

their practices. In this case, Lowe was prohibited from working at one

job site and temporarily lost the business of one customer. The record

contains no evidence that Lowe lost other contracts or was unable to

perform excavating work at other locations as a result of the Union’s

conduct. Accordingly, we conclude that the appellate court erred in

finding that Lowe was financially vulnerable.

We now turn to the fourth reprehensibility factor–whether the

Union’s conduct constituted an isolated incident or a repeated act of

misconduct. The appellate court concluded that the Union’s conduct

was repeated, finding that the Union picketed with false information

from February 15, 1988, until June 30, 1988, and then again from

September 28, 1988, until October 11, 1988. Lowe III, 358 Ill. App.

3d at 1043.

The Union asserts that the appellate court erred in considering

picketing conducted at any time other than February 15, 1988. The

Union maintains that in Lowe II, it was held liable for its conduct in

February 1988 only and, therefore, its conduct on other dates should

not have been part of the appellate court’s determination in Lowe III.

Lowe appears to agree that the appellate court’s finding in Lowe III

regarding periods of time between February and June 1988 and

September and October 1988 was not based on the evidence, as Lowe

discusses only two instances of defamation in its briefs. Specifically,

Lowe cites to the Union’s conduct beginning on February 15, 1988,

and its conduct in September 1988 as evidence of repeated acts of

misconduct.

A review of the appellate court’s findings in Lowe II, as well as the

evidence presented in the record and the parties’ representations in

their briefs, demonstrates that the Union falsely picketed Lowe at the
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Ballashire Hall project on February 15, 1988. The Union then returned

to the site on February 16, 1988, and picketed again for some portion

of the day. There was testimony presented which indicated that the

Union returned for a third time on February 17, 1988, but that

testimony was not corroborated and was contradicted. Significantly,

in their briefs, the respective parties do not treat the February

picketing incidents as separate encounters, and Lowe does not argue

that the Union’s act of picketing on at least two, back-to-back days

demonstrates recidivist conduct. Rather, Lowe points to the Union’s

act of returning to Ballashire Hall in September 1988 for picketing as

evidence of the Union’s repeated conduct. We note that there is no

indication in the record, nor do the parties represent that the

September picketing lasted for more than one day.

We also note that there is no indication in the record, nor do the

parties argue, that the Union falsely picketed Lowe on any other

occasions that those previously identified. Although the Union admits

in its brief to picketing Lowe repeatedly at various work sites

throughout 1988, there is no evidence suggesting that picketing at

sites other than Ballashire Hall was false.

With these facts in mind, we are left to determine whether the

Union’s false picketing in February and September 1988 constitutes

repeated conduct supporting a reprehensibility finding.

The Union argues that two instances of picketing falsely in

February and September 1988 do not constitute a pattern of repeated

malfeasance. In support, the Union points to federal jurisprudence

which suggests that “repeated conduct” under the reprehensibility

analysis is “not merely a pattern of contemptible conduct within one

extended transaction ***, but rather specific instances of similar

conduct by the defendant in relation to other parties.” Willow Inn, 399

F.3d at 232. The Union maintains that no evidence was presented to

demonstrate that it falsely picketed anyone other than Lowe and,

therefore, its conduct cannot be construed as repeated malfeasance.

Lowe counters that the Union’s conduct was repeated because it

occurred on more than one occasion. Lowe maintains that the Union’s

“subsequent misconduct in September 1988” should be “counted” as

evidence of recidivist behavior.
-16-

The repeated conduct factor of the reprehensibility test is

grounded in the Supreme Court’s opinion in Pacific Mutual Life

Insurance Co. v. Haslip, 499 U.S. 1, 113 L. Ed. 2d 1, 111 S. Ct. 1032

(1991), one of the precursors to Gore and State Farm. In that case,

the Supreme Court adopted certain factors that should be considered

when determining whether a punitive damage award was excessive or

inadequate. These factors include “the degree of reprehensibility of the

defendant’s conduct, the duration of that conduct, the defendant’s

awareness, any concealment, and the existence and frequency of

similar past conduct.” Haslip, 499 U.S. at 21, 113 L. Ed. 2d at 22,

111 S. Ct. at 1045.

In Gore, the Supreme Court considered whether BMW engaged

in repeated misconduct when it routinely sold cars in the state of

Alabama that had been slightly damaged and repaired as “new”

without disclosing the damages and repairs to the customer. The

Court determined that BMW could not be labeled a recidivist even

though it engaged in similar conduct in other states because its

disclosure policy was not considered fraudulent in those other states.

Gore, 517 U.S. at 577-78, 134 L. Ed. 2d at 827-28, 116 S. Ct. at

1599-1600. Significantly, the Court reached this conclusion despite

evidence demonstrating that a jury in a similar lawsuit had previously

found that BMW’s failure to disclose was fraudulent under Alabama

law and awarded compensatory damages. Gore, 517 U.S. at 565, 134

L. Ed. 2d at 820, 116 S. Ct. at 1594. However, the Court stated:

“Certainly, evidence that a defendant has repeatedly engaged

in prohibited conduct while knowing or suspecting that it was

unlawful would provide relevant support for an argument that

strong medicine is required to cure the defendant’s disrespect

for the law. [Citations.] Our holdings that a recidivist may be

punished more severely than a first offender recognize that

repeated misconduct is more reprehensible than an individual

instance of malfeasance.” Gore, 517 U.S. at 576-77, 134 L.

Ed. 2d at 827, 116 S. Ct. at 1599-1600.

Gore’s treatment of the repeated conduct factor demonstrates that

recidivist conduct is to be considered reprehensible, and further

demonstrates that court’s may look outside the misconduct committed

toward the plaintiff in question to other, similar conduct, when

considering the recidivism factor.
-17-

In State Farm, the Supreme Court reaffirmed these principles.

There, the Court considered whether the defendant insurer, which was

found to have engaged in fraudulent insurance practices by improperly

capping claim payments, was a repeat offender. The Court declined to

label State Farm a recidivist for reprehensibility purposes because the

plaintiffs were unable to present sufficient evidence of other conduct

similar to that which injured them. State Farm, 538 U.S. at 423, 155

L. Ed. 2d at 604-05, 123 S. Ct. at 1523. Looking to Gore, the Court

acknowledged that consideration of a defendant’s similar, past

conduct towards others was relevant to a determination of

reprehensibility, but, where evidence of repeated misconduct of the

sort that injured the plaintiffs in question is “scant,” the conduct that

actually harmed the plaintiffs “is the only conduct relevant to the

reprehensibility analysis.” State Farm, 538 U.S. at 423-24, 155 L. Ed.

2d at 605, 123 S. Ct. at 1523-24. The lesson gleaned from the analysis

in State Farm is that courts may look externally, to a defendant’s

similar past conduct with respect to other parties, as well as internally,

to a defendant’s conduct towards the plaintiff in question, when

considering recidivism.

Relying on Gore and State Farm, the United States District Court

for the Third Circuit put this guideline into practice in Willow Inn

when it looked to evidence of the defendant’s similar misconduct in

relation to other parties as well as the defendant’s repetitive conduct

towards the plaintiff in question to determine whether the defendant

should be labeled a recidivist. In that case, the defendant insurance

company was found to have improperly withheld insurance claim

payments from the plaintiff. Although the court was disinclined to

label the defendant a recidivist because there was no evidence

presented which demonstrated that the defendant withheld payment

of claims from other persons whom it insured, the court nevertheless

gave some weight to the repeated conduct subfactor in determining

punitive damages. The court stated: “[W]e consider this subfactor to

be relevant, but with less force, insofar as the series of actions and

inaction by PSM which delayed settlement of the claim *** implied a

concerted effort to lessen PSM’s expected payment on the claim.”

Willow Inn, 399 F.3d at 232-33.

Similarly, in Williams v. ConAgra Poultry Co., 378 F.3d 790 (8th

Cir. 2004), the Eighth Circuit found the defendant to have engaged in

repeated racial discrimination against the plaintiff. In doing so, the
-18-

court looked to the plaintiff’s testimony concerning instances in which

he experienced racism, as well as the testimony of other ConAgra

employees who described instances of discrimination that were

factually similar to those described by the plaintiff. ConAgra, 378 F.3d

at 798; see also United States v. Veal, 365 F. Supp. 2d 1034, 1039

(W.D. Mo. 2004) (where court found the defendant’s conduct was

recidivistic after evidence demonstrated that the defendant engaged in

sexual harassment and discrimination against 11 different women and

that the harm suffered by each woman was “severe and persistent”).

Our appellate court’s decision in O’Neill v. Gallant Insurance

Co., 329 Ill. App. 3d 1166 (2002), also provides guidance. The facts

demonstrate that the defendant refused to even consider an offer to

settle a claim resulting from an automobile accident where the

policyholder was clearly negligent and the victim of the accident

suffered severe and permanent injury. The defendant’s conduct

“turned $20,000 worth of contractual duty into a $3,010,063

judgment for a bad-faith refusal to settle” and exposed the

policyholder to financial ruin. O’Neill, 329 Ill. App. 3d at 1168.

In determining whether the punitive damages awarded for the

defendant’s bad-faith refusal to settle were unconstitutional, the court

considered the repetitive nature of the defendant’s conduct. The court

first looked to the defendant’s conduct towards the policyholder and

concluded that there was evidence of repetitive misconduct. The facts

showed that defendant refused to respond to a settlement demand;

ignored repeated advice and pleas from the policyholder, her attorneys

and claims adjusters within the company to settle; employed

unnecessary legal tactics to avoid paying the claim; and lied to and

threatened the policyholder. O’Neill, 329 Ill. App. 3d at 1182-83. As

the court summarized, “Gallant blatantly ignored its policyholder’s

financial security and did virtually nothing to protect her.” O’Neill,

329 Ill. App. 3d at 1183. The court then looked to conduct that

extended beyond the policyholder’s case, and considered evidence

revealing a pattern of conduct, over a five-year period, where the

defendant’s Illinois customers suffered excess judgments based on the

defendant’s refusal to settle within policy limits. O’Neill, 329 Ill. App.

3d at 1172, 1183. In light of this evidence, the court concluded that

defendant’s conduct was reprehensible and ultimately found that the

punitive damages awarded were not unconstitutionally excessive.

O’Neill, 329 Ill. App. 3d at 1185.
-19-

These cases demonstrate that courts are permitted to consider a

defendant’s conduct towards the plaintiff in question, as well as

similar conduct extending beyond the plaintiff’s case, when

determining whether a defendant can be labeled a recidivist for

reprehensibility purposes. Contrary to the Union’s contentions herein,

a court’s consideration of recidivism should not be restricted to

misconduct involving other parties unrelated to the case before the

court. Thus, in applying the relevant analysis to the instant case, we

find that the Union engaged in repeated acts of misconduct where the

evidence demonstrated that it falsely picketed Lowe on more than one

occasion in 1988. However, like the court in Willow Inn, “we consider

this subfactor to be relevant, but with less force.” Willow Inn, 399

F.3d at 232-33. While we certainly do not condone the Union’s

decision to continue to picket Lowe at Ballashire Hall after being

advised that Lowe was paying the prevailing wage on the project, the

fact remains that the Union falsely picketed Lowe at Ballashire Hall on

two days in February 1998 and once in September 1988. There is no

evidence before this court demonstrating that the Union falsely

picketed Lowe, or anyone else, as a matter of course.

The defendants labeled recidivists in the cases reviewed herein

each had a “pattern” of misconduct that typified the manner in which

they did business. There is no evidence of a similar pattern of

misconduct in this case. Accordingly, while we conclude that the

Union’s conduct was repeated for purposes of the reprehensibility

analysis, we afford this factor little weight in our overall assessment

of reprehensibility.

We now turn to the final reprehensibility factor and consider

whether the harm to Lowe was the result of intentional malice,

trickery or deceit, or mere accident. Before addressing the parties’

arguments, we look again to the judgments of the appellate court on

this issue. In Lowe II, the appellate court considered whether the

Union published the defamatory statements about Lowe with actual

malice, i.e., “ ‘with knowledge of their falsity or with reckless

disregard of whether they were true or false.’ ” Lowe II, 327 Ill App.

3d at 722, quoting Linn v. United Plant Guard Workers of America,

Local 114, 383 U.S. 53, 65, 15 L. Ed. 2d 582, 591, 86 S. Ct. 657,

664 (1966). The appellate court recognized that “[r]eckless disregard

for the truth means that the defendant published the statements while

entertaining serious doubts as to the truth of the statements.”
-20-

(Emphasis omitted.) Lowe II, 327 Ill. App. 3d at 722-23. The court

then looked to the facts which demonstrated that Darling was told by

Brei that Ballashire Hall was a federally funded project, that Lowe’s

payroll had been certified and sent to the Department of Labor, and

that Lowe was paying prevailing wages. The court concluded that

“Darling at least should have entertained serious doubts as to the truth

of the statements contained on the picket signs,” and later reiterated

that “the defendant committed a tort with actual malice.” Lowe II, 327

Ill. App. 3d at 723-24. In Lowe III, the appellate court stated that it

“decline[d] to alter the law of the case with regard to the malice

finding.” Lowe III, 358 Ill. App. 3d at 1043.

Lowe now argues that we are bound by the law of the case, and

therefore, must find that the Union acted with intentional malice. The

Union agrees that we are bound by the law of the case, but asserts that

the appellate court did not properly find actual malice. Instead,

according to the Union, the appellate court made a finding of

negligence by stating that “Darling at least should have entertained

serious doubts as to the truth of the statements contained on the

picket signs.” Thus, the Union asserts that if we follow the law of the

case, we must conclude that Darling’s conduct was negligent rather

than the product of intentional malice.

We disagree with the parties’ interpretation of the law of the case

doctrine. As this court explained in Relph v. Board of Education of

De Pue Unit School District No. 103, 84 Ill. 2d 436, 442 (1981):

“Even if the appellate court were bound by the law of the

case it had announced in the first appeals, that limitation

would not apply to this court. Although this court denied

petitions for leave to appeal in both of the previous appeals of

these cases, such action has no precedential effect and in no

way amounts to a consideration of the merits of the cases. Nor

does it indicate approval of the appellate court’s action.

[Citation.]. Therefore, this is the first time these cases have

been before us on the merits. Our review may cover all

matters properly raised and passed on in the course of

litigation. [Citation.]”

See also Garibaldi v. Applebaum, 194 Ill. 2d 438, 447-48 (2000).

Although this case has run the gamut of the appellate process in the

past 18 years, this is our first opportunity to substantively review the
-21-

appellate court’s finding of actual malice. Accordingly, we are not

bound by the law of the case doctrine.

However, having reviewed the issue on the merits, we

nevertheless agree with the appellate court’s conclusion that the

Union acted with intentional malice. The facts of this case

demonstrate that Darling either knew that the statements contained on

his picket signs were false or, at the very least, seriously doubted their

veracity. Nevertheless, he chose to picket Lowe at the Ballashire Hall

project, on two occasions, demonstrating a reckless disregard for the

truth or falsity of the statements. We thus find that the Union acted

with intentional malice and, therefore, its conduct can be characterized

as reprehensible.

We note that our overall finding of reprehensibility rests mostly on

only one of the five factors set forth in Gore, because, as previously

explained, the repeated conduct factor lends marginal weight to a

finding of reprehensibility based on the facts of this case. We are thus

reminded of the Supreme Court’s cautionary statement in State Farm:

“The existence of any one of these factors weighing in favor of a

plaintiff may not be sufficient to sustain a punitive damages award.”

State Farm, 538 U.S. at 419, 155 L. Ed. 2d at 602, 123 S. Ct. at

1521; see also Turner v. Firstar Bank, N.A., 363 Ill. App. 3d 1150,

1163-64 (2006) (where the court found that the presence of only one

reprehensibility factor was insufficient to sustain a punitive damages

award 20 times higher than the compensatory damages award); Clark

v. Chrysler Corp., 436 F.3d 594, 605 (6th Cir. 2006) (where court

held that the presence of only one reprehensibility factor was

insufficient to sustain a large punitive damages award).

2. Disparity Between Actual Harm and the Punitive Damages Award

Turning to the second Gore guidepost, we must consider the ratio

between the actual harm suffered by Lowe and the punitive damages

awarded. See Gore, 517 U.S. at 580, 134 L. Ed. 2d at 829, 116 S. Ct.

at 1601; State Farm, 538 U.S. at 418, 155 L. Ed. 2d at 601, 123 S.

Ct. at 1520. Lowe suffered $4,680 in actual damages and was

awarded punitive damages of $325,000. The ratio between the actual

harm and the punitive damages is approximately 75 to 1. The Union

argues that this ratio is unconstitutional and unreasonable and, in

support, cites several cases from other jurisdictions where punitive
-22-

damages exceeding a single-digit ratio were deemed unconstitutionally

excessive and thus reduced. Lowe counters that the double-digit ratio

was not excessive because the Union’s conduct was particularly

egregious and the monetary value of the noneconomic harm was hard

to detect and difficult to determine. In fact, Lowe asserts that the

punitive damages awarded by the appellate court were deficient, and

urges that the amount of punitive damages awarded should be

increased.

In considering whether a punitive damages award is constitutional,

courts are instructed to consider whether there is a reasonable

relationship between the punitive damages award and the potential and

actual damages resulting from the defendant’s conduct. Gore, 517

U.S. at 581, 134 L. Ed. 2d at 830, 116 S. Ct. at 1602. The Supreme

Court has “consistently rejected the notion that the constitutional line

is marked by a simple mathematical formula” (Gore, 517 U.S. at 582,

134 L. Ed. 2d at 830, 116 S. Ct. at 1602) and has declined “to impose

a bright-line ratio which a punitive damages award cannot exceed.”

State Farm, 538 U.S. at 425, 155 L. Ed. 2d at 605, 123 S. Ct. at

1524. Nevertheless, the Court has cautioned that “in practice, few

awards exceeding a single-digit ratio between punitive and

compensatory damages, to a significant degree, will satisfy due

process.” State Farm, 538 U.S. at 425, 155 L. Ed. 2d at 605-06, 123

S. Ct. at 1524. The Court has also said that a punitive damages award

of “ ‘more than 4 times the amount of compensatory damages’ might

be ‘close to the line.’ ” Gore, 517 U.S. at 581, 134 L. Ed. 2d at 830,

116 S. Ct. at 1602, quoting Haslip, 499 U.S. at 23-24, 113 L. Ed. 2d

at 23, 111 S. Ct. at 1046. The Court has, however, recognized that

“because there are no rigid benchmarks that a punitive damages award

may not surpass, ratios greater than those we have previously upheld

may comport with due process where ‘a particularly egregious act has

resulted in only a small amount of economic damages.’ ” State Farm,

538 U.S. at 425, 155 L. Ed. 2d at 606, 123 S. Ct. at 1524, quoting

Gore, 517 U.S. at 582, 134 L. Ed. 2d at 831, 116 S. Ct. at 1602.

In this case, the trial court originally awarded Lowe $325,000 in

punitive damages. The trial court then reconsidered the award and

raised it to $525,000 after being persuaded to consider additional

attorney fees. Although the trial court stated on the record that it was

not awarding attorney fees, the punitive damages award is very close
-23-

to the amount of attorney fees and expenses incurred by Lowe, which

was reported to be $506,659.78.

The appellate court reviewed the award and found it to be

unconstitutionally excessive. It thus reduced the award to $325,000,

the amount originally granted by the trial court. In doing so, the

appellate court acknowledged that the ratio between actual and

punitive damages was in the double-digit range, but concluded that the

ratio was appropriate because Lowe’s reputation was injured and a

small amount of compensatory damages was awarded. Lowe III, 358

Ill. App. 3d at 1044-45. The appellate court relied on three cases to

support the proposition that higher ratios in the double-digit range are

appropriate where the amount of compensatory damages is minimal.

In Routh Wrecker Service, Inc. v. Washington, 335 Ark. 232, 980

S.W.2d 240 (1998), the court approved a 75 to 1 ratio where the

plaintiff was awarded only $1,000 in compensatory damages.

Similarly, in Deters v. Equifax Credit Information Services, Inc., 202

F.3d 1262 (10th Cir. 2000), the court upheld a 59 to 1 ratio where the

plaintiff was awarded $5,000 in compensatory damages. Finally, in

Jones v. Rent-A-Center, Inc., 281 F. Supp. 2d 1277 (D. Kan. 2003),

the court upheld a 29 to 1 ratio where the plaintiff was awarded

$10,000 in punitive damages.

We find the court’s reliance on these cases to be misplaced. A

review of the facts of those cases demonstrates that the high, doubledigit ratios awarded to the parties were less the result of small

compensatory damages awards and more the result of particularly

egregious conduct which caused the plaintiffs great personal harm.

For example, in Routh, the court awarded punitive damages that were

75 times higher than compensatory damages after hearing evidence

demonstrating that the defendant wrongfully accused the plaintiff of

stealing a car from the defendant’s business and then swore out an

affidavit for an arrest warrant knowing that the plaintiff did not steal

the car. The plaintiff was subsequently arrested at his place of

employment, handcuffed, booked and placed in a cell. The defendant

did not drop the charges, but pursued them until they were ultimately

dropped by the prosecution. Routh, 335 Ark. at 236, 980 S.W.2d at

242. The plaintiff was not only humiliated, he also suffered emotional

and physical distress, including headaches and dramatic weight loss.

Routh, 335 Ark. at 241, 980 S.W.2d at 244. The court concluded that

the ratio of compensatory damages to punitive damages of 75 to 1
-24-

was appropriate in that case because the defendant’s egregious and

reprehensible conduct resulted in “extreme psychological pressure and

turmoil.” Routh, 335 Ark. at 242, 980 S.W.2d at 245.

Likewise, in both Deters and Jones, the plaintiffs were victims of

extreme acts of sexual harassment in their respective workplaces. The

Deters court found the 59 to 1 ratio of compensatory to punitive

damages to be appropriate in light of the “particularly egregious”

conduct of the defendants. Deters, 202 F.3d at 1273. The court added

that a greater ratio is appropriate in cases where the injury suffered is

“primarily personal” and noted that punitive damages awards are

available in sexual harassment cases even in the total absence of

compensatory damages. Deters, 202 F.3d at 1273. Relying on the

rationale in Deters, the Jones court upheld a ratio of 29 to 1, citing the

“personal” nature of the injury sustained by the plaintiff. Jones, 281 F.

Supp. 2d at 1289-90.

The Union’s conduct in the instant case is not comparable to the

conduct of the defendants in Routh, Deters and Jones. Here, Lowe did

not suffer a physical or emotional injury, and the injury sustained was

not of a personal nature, as a corporation cannot be personally

affronted. Lowe’s injury cannot be compared to the humiliation

suffered by individuals who endure sexual harassment in the

workplace, and is also not comparable to the injury sustained by an

individual who is arrested at his workplace for a crime he did not

commit, handcuffed, and placed in a cell. While ratios ranging from 75

to 1 to 29 to 1 may have been appropriate under those circumstances,

we cannot conclude that a ratio in that range is appropriate here where

the Union’s conduct was much less egregious.

We recognize that low compensatory damages awards may

support higher ratios where a particularly egregious act has resulted

in a small amount of economic damage, or where an injury is hard to

detect and the harm is difficult to determine. See Gore, 517 U.S. at

582, 134 L. Ed. 2d at 831, 116 S. Ct. at 1602; State Farm, 538 U.S.

at 425, 155 L. Ed. 2d at 606, 123 S. Ct. at 1524. In our estimation,

the best way to determine whether a given ratio is appropriate is to

compare it to punitive damages awards in other, similar cases. See

Romanski v. Detroit Entertainment, L.L.C., 428 F.3d 629, 646 (6th

Cir. 2005). The parties have not cited a case squarely on point with

the one before us, but we have found cases which provide some

guidance on this issue.
-25-

In Argentine v. United Steel Workers of America, 287 F.3d 476

(6th Cir. 2002), the plaintiffs were elected officers of their union. They

stridently criticized the defendant’s conduct during contract

negotiations and were thus removed from their positions by the

defendant without due process. The defendant accused the plaintiffs

of mishandling the union’s funds and usurped the plaintiffs’ elected

authority without proper notice and hearing. The plaintiffs were

awarded $9,406 in compensatory damages and $400,000 in punitive

damages. The defendant argued that the punitive damages award was

excessive under Gore. The court determined that the defendant’s

conduct was reprehensible because the defendant acted deliberately to

violate the plaintiffs’ free speech rights and harm their reputations for

the defendant’s own benefit. The court concluded that, although the

compensatory damages were small “and without a ready monetary

value,” a ratio of 42.5 to 1 was reasonable. Argentine, 287 F.3d at

488.

In Turner, a case recently decided by our appellate court, the

plaintiff was awarded $25,000 in compensatory damages for property

stolen from her when her car was wrongfully repossessed by the

defendant and $500,000 in punitive damages. The facts demonstrated

that the defendant had a “systemwide” problem in its bill tracking

system, and that it ignored the problem despite being aware that the

system was only 50% accurate. The defendant’s conduct resulted in

“multiple wrongful repossessions” throughout a one-year period.

Turner, 363 Ill. App. 3d at 1155. The plaintiff’s car was wrongfully

repossessed and she lost $25,000 worth of equipment which she

stored in her car as a result. The plaintiff tried, with assistance of

counsel, to obtain reimbursement from the defendant for these stolen

items for nearly two years before she filed suit. During that time, even

though plaintiff was able to provide documentation showing that she

had paid off her car loan in full, the defendant reported her to three

major credit bureaus and continued to report her for 31⁄2 years.

3. Sanctions for Comparable Misconduct

Gore instructs us to consider the difference between the punitive

damages awarded by the jury and the civil penalties authorized or

imposed in comparable cases. See Gore, 517 U.S. at 583, 134 L. Ed.

2d at 831, 116 S. Ct. at 1603; State Farm, 538 U.S. at 428, 155 L.

Ed. 2d at 607-08, 123 S. Ct. at 1526. The purpose of this guidepost
-26-

is to “ ‘accord substantial deference to legislative judgments

concerning appropriate sanctions for the conduct at issue.’ ” Gore,

517 U.S. at 583, 134 L. Ed. 2d at 831, 116 S. Ct. at 1603, quoting

Browning-Ferris Industries of Vermont, Inc. v. Kelco Disposal, Inc.,

492 U.S. 257, 301, 106 L. Ed. 2d 219, 254, 109 S. Ct. 2909, 2934

(1989) (Brennan, J., concurring, joined by Marshall, J.). It is

uncontested that no comparable Illinois law imposes a civil penalty,

such as a fine, for defamation. As the legislature has not spoken on

this issue, it is not necessary for us to further consider this guidepost.

See State Farm, 538 U.S. at 428, 155 L. Ed. 2d at 608, 123 S. Ct. at

1526; see also Turner, 363 Ill. App. 3d at 1164-65 (“Neither party has

presented any cases or statutes regarding this factor that are

comparable in a meaningful sense to this case, nor is this court aware

of any such cases or statutes. Accordingly, this guidepost is of

minimal value in our assessment”).

Before fashioning a punitive damages award in this case, we take

note of the observations of the Seventh Circuit set forth in Mathias v.

Accor Economy Lodging, Inc., 347 F.3d 672 (7th Cir. 2003). There,

the court pointed out several considerations that should be made in

determining an appropriate compensatory to punitive damages ratio

that are relevant to the case at bar. Specifically, the court cautioned

that compensatory damages do not always “do the trick” in cases

where the harm is largely dignatory because these damages may be

too slight to give the victim an incentive to sue and are insufficient to

deter and punish the defendant. Mathias, 347 F.3d at 677. Further, the

court noted that an award of punitive damages can prevent a

defendant from profiting from wrongful conduct. Mathias, 347 F.3d

at 677. Finally, the court considered whether a defendant’s wealth

enables it to mount an extremely aggressive defense, making litigation

too costly for a plaintiff and making it difficult for a plaintiff to find a

lawyer willing to handle an involved case for modest stakes. Mathias,

347 F.3d at 677.

In addition to these considerations, we acknowledge that we are

permitted to take into account the amount of the attorney fees

expended in a case when assessing a punitive damages award. Lowe

II, 327 Ill. App. 3d at 724-25, citing E.J. McKernan Co. v. Gregory,

252 Ill. App. 3d 514, 535-36 (1993). We also consider the need to

achieve the goals of punishment and deterrence. Gore, 517 U.S. at

568, 134 L. Ed. 2d at 822, 116 S. Ct. at 1595; State Farm, 538 U.S.
-27-

at 416, 155 L. Ed. 2d at 600, 123 S. Ct. at 1519; O’Neill, 329 Ill.

App. 3d at 1178-79.

With all of these principles in mind, we hold that a punitive

damages award of $325,000, at a ratio of approximately 75 to 1, is

unconstitutionally excessive in light of the Union’s conduct in the

instant case. We find that an award of punitive damages against the

Union in the amount of $50,000, for a double-digit ratio of

approximately 11 to 1, would be reasonable and constitutional. As our

analysis demonstrates, the Union’s conduct was minimally

reprehensible, and the appellate court’s award of punitive damages far

exceeded awards given in other cases where the conduct exhibited

was much more egregious. Furthermore, Lowe did not present

evidence demonstrating that it sustained any injury to its reputation

that extended beyond its strained and ultimately reconciled

relationship with FAMCO. We cannot presume such damage, as the

evidence does not warrant it. Indeed, the evidence shows that Lowe

was a nonunion company paying less than the prevailing wage from

1969 until 1988. While Lowe’s business decisions in this regard have

no bearing on the issue before us, it stands to reason that companies

that did business with Lowe were aware of its practices, and remained

Lowe customers nonetheless.

We recognize that the $50,000 awarded here does not come close

to covering the attorney fees and costs which were incurred

throughout the duration of this protracted litigation. While attorney

fees can be considered when awarding punitive damages, it is not

within the purview of this court to award such fees outright, nor

should they be awarded under the guise of a punitive damages award.

E.J. McKernan Co., 252 Ill. App. 3d at 546; Anderson v. Ferris, 128

Ill. App. 3d 149, 156 (1984). We have considered the cost of the

litigation, as well as the goals of punishment and deterrence in

fashioning the punitive damages award, and even after making those

considerations, we find an award of $50,000 to be appropriate.

B. Fairness

The Union argues that any amount of punitive damages awarded

to Lowe in the instant case are unconstitutional because the Union

lacked notice that it was at risk for such a severe punishment. The

Union maintains that no other court has imposed liability for
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defamation based on false picketing and, therefore, the Union did not

have fair notice that its conduct could result in a punitive damages

award. The Union failed to raise this claim of unfairness below, and

raises it for the first time in this appeal. Accordingly, it is forfeited.

Marshall v. Burger King Corp., 222 Ill. 2d 422, 430-31 (2006).

However, we note that, even if we were to consider this claim, it

would be deemed meritless, as it is well established that punitive

damages can be awarded in defamation cases where a party, acting

with actual malice, publishes false information about a person or

entity. Bryson v. News America Publications, Inc., 174 Ill. 2d 77,

109-10 (1996); Edward v. Paddock Publications, Inc., 327 Ill. App.

3d 533, 566 (2001); Krasinski v. United Parcel Service, Inc., 208 Ill.

App. 3d 771, 773 (1991); Winters v. Greeley, 189 Ill. App. 3d 590,

599 (1989).

III. Lowe’s Claims

As previously stated, Lowe asserts in its cross-appeal that the

punitive damages award of $325,000 fashioned by the appellate court

was deficient and should be increased. We decline to address this

claim in light of our decision herein.

CONCLUSION

For the reasons stated, we reverse the judgment of the appellate

court and affirm the judgment of the circuit court as modified by a

reduction in the award of punitive damages from $325,000 to

$50,000.

Appellate court judgment reversed;

circuit court judgment affirmed

as modified.

CHIEF JUSTICE THOMAS took no part in the consideration or

decision of this case.
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JUSTICE GARMAN, dissenting:

Because I believe the majority’s decision in this case does not

adequately vindicate the goals of punitive damage awards, I

respectfully dissent. While the majority cites the goals of punishment

and deterrence as informing its punitive award against the union, the

resulting award of $50,000 does not achieve the purpose of those

goals.

I agree with the majority’s analysis and consideration of the

guideposts for reviewing the constitutionality of an award of punitive

damages set forth in Gore and further developed in State Farm. State

Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408,

418, 155 L. Ed. 2d 585, 601, 123 S. Ct. 1513, 1520 (2003), citing

BMW of North America, Inc. v. Gore, 517 U.S. 559, 575, 134 L. Ed.

2d 809, 826, 116 S. Ct. 1589, 1598-99 (1996). These guideposts are

“(1) the degree of reprehensibility of the defendant’s misconduct; (2)

the disparity between the actual or potential harm suffered by the

plaintiff and the punitive damages award; and (3) the difference

between the punitive damages awarded by the jury and the civil

penalties authorized or imposed in comparable cases.” State Farm,

538 U.S. at 418, 155 L. Ed. 2d at 601, 123 S. Ct. at 1520. In

considering these guideposts courts must keep in mind the underlying

goals of punitive awards.

An award of punitive damages serves “to further a State’s

legitimate interests in punishing unlawful conduct and deterring its

repetition.” Gore, 517 U.S. at 568, 134 L. Ed. 2d at 822, 116 S. Ct.

at 1595; State Farm, 538 U.S. at 416, 155 L. Ed. 2d at 600, 123 S.

Ct. at 1519. Punitive damages have been described as “private fines,”

intended to deter future wrongdoing as well as punish a defendant.

Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S.

424, 432, 149 L. Ed. 2d 674, 684, 121 S. Ct. 1678, 1683 (2001). Not

surprisingly, fashioning appropriate punitive awards in furtherance of

these goals can be difficult in certain situations.

Here, defendant’s conduct was reprehensible based upon the fact

that it was intentional and malicious. However, defendant’s conduct

of false picketing, while malicious, was not nearly as egregious as

sexual harassment or wrongful prosecution. Deters v. Equifax Credit

Information Services, Inc., 202 F.3d 1262 (10th Cir. 2000) (sexual

harassment); Jones v. Rent-A-Center, Inc., 281 F. Supp. 2d 1277 (D.

Kan. 2003) (sexual harassment); Routh Wrecker Service, Inc. v.
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Washington, 335 Ark. 232, 980 S.W.2d 240 (1998) (defendant

wrongfully accused and swore out an arrest warrant against plaintiff

for a crime he did not commit). Moreover, the award by the appellate

court would result in disparity between the compensatory damages

suffered by plaintiff and the punitive damages awarded at a ratio of

almost 75 to 1. These facts do not end the analysis, however. In fact,

the majority acknowledges that there is no bright-line ratio to follow

when considering the disparity between the actual harm suffered by a

plaintiff and the punitive damages awarded and explains that courts

have considered a variety of other factors in fashioning punitive

awards. Slip op. at 20-21, 25. Despite this, the majority focuses too

greatly on the size of the ratio, fails to adequately utilize the other

factors courts consider in fashioning punitive awards, and loses sight

altogether of the underlying goals of punitive damages.

While the United State Supreme Court has stated that “few

awards exceeding a single-digit ratio between punitive and

compensatory damages *** will satisfy due process,” there is no

bright-line ratio and courts consider a variety of factors when

departing from single-digit ratios. State Farm, 538 U.S. at 425, 155

L. Ed. 2d at 605-06, 123 S. Ct. at 1524. Where compensatory

damages are inadequate to give victims any incentive to sue and thus

insufficient to deter and punish defendants, punitive awards with high

ratios are more appropriate. Mathias v. Accor Economy Lodging,

Inc., 347 F.3d 672, 676-77 (7th Cir. 2003). Such awards are also

more appropriate where a defendant’s wealth enables it to mount such

an extremely aggressive defense that plaintiffs never bring suits in the

first place. Mathias, 347 F.3d at 677. In these situations the extreme

litigation costs imposed by the defendant’s practices and the potential

difficulty these costs impose on a plaintiff’s ability to find a lawyer

willing to fight in a case of modest stakes make high-ratio punitive

awards more appropriate. Mathias, 347 F.3d at 677. Similarly, highratio awards are more appropriate where the attorney fees expended

in a case are especially great. Lowe Excavating Co. v. International

Union of Operating Engineers Local No. 150, 327 Ill. App. 3d 711,

724-25 (2002), citing E.J. Mckernan Co. v. Gregory, 252 Ill. App. 3d

514, 535-36 (1993).

While the majority identifies these factors, it does not appear to

actually utilize them in concluding that a punitive damages award of

$325,000, at a ratio of approximately 75 to 1, is unconstitutionally
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excessive, while an award of $50,000, at a ratio of 11 to 1, is

reasonable and constitutional. Although the majority’s analysis and

resulting 11 to 1 ratio award make clear its belief that this is a

situation where an award exceeding a single-digit ratio between

punitive and compensatory damages meets the requirements of due

process, the majority’s $50,000 award is not sufficient to achieve the

punishment and deterrence purposes of punitive awards. Simply

providing any double-digit ratio does not prove, in and of itself, an

appropriate consideration of all the factors courts must utilize in

finally setting an award.

This case has been going on since February 17, 1988, when

plaintiff first filed suit. The compensatory damages plaintiff was able

to establish amounted to only $4,680. Its attorney fees were much

greater. When plaintiff filed its original motion for punitive damages

on August 15, 2003, it attached affidavits of its company president as

well as its attorneys. The company president’s affidavit provided that

plaintiff had, at that point, paid $225,925.83 in fees and expenses on

the case. The attorneys’ affidavits provided that fees and expenses

actually totaled over $500,000.

These facts make evident that this is a situation where, under

similar circumstances, compensatory damages may be too inadequate

to give a victim an incentive to sue in the first place, and thus

insufficient to punish and deter a defendant. Additionally, this case

provides a strong example of a situation where, without a significant

punitive award, extreme litigation costs could make it difficult for a

plaintiff to find a lawyer willing to fight for such modest stakes. In

fact, in making its findings concerning punitive awards, the trial court

in this case specifically stated that it considered “the small amount of

actual damages awarded to the Plaintiff, the additional harm to the

Plaintiff caused by the Defendant’s actions which caused the Plaintiff

to be involved in protracted litigation and to expend substantial

amounts for attorney’s fees.” Finally, the attorney fees expended by

plaintiff in this case are unquestionably high.

Considering the above, and despite the flaws identified by the

majority in the appellate court’s analysis of the Gore and State Farm

factors, I do not feel that a punitive award of $50,000 goes far

enough. While an award of $325,000 leads to a high ratio between

punitive and compensatory damages, it does provide an amount truly

informed by the facts of this case and the underlying goals of punitive
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damages. Like the majority, I would therefore not strictly adhere to a

single-digit ratio. Having found this a situation appropriate for a

double-digit award ratio, I would go further than the majority to

appropriately punish defendant for its intentionally malicious conduct

as well as deter it and others from considering similar courses of

conduct in the future. Similarly situated potential plaintiffs must know

that they will receive adequate compensation to justify filing suit in

these types of cases, or to offset the extreme litigation costs

occasioned by overly and wrongfully aggressive defendants.

Upholding the appellate court’s punitive damages award of $325,000

would accomplish these tasks and truly reflect a consideration of the

factors which courts utilize in fashioning high-ratio punitive to

compensatory awards.