Opinion ID: 784247
Heading Depth: 3
Heading Rank: 3

Heading: Excessive Punitive Damages

Text: 64 Punitive damages may properly be imposed to further a State's legitimate interests in punishing unlawful conduct and deterring its repetition. BMW of North America v. Gore, 517 U.S. 559, 568, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996). Nonetheless, the Constitution places certain limits on the amount of punitive damages that may be imposed. See Cooper Industries v. Leatherman Tool Group, 532 U.S. 424, 433, 121 S.Ct. 1678, 149 L.Ed.2d 674 (2001). The Due Process Clause of the Fourteenth Amendment prohibits the imposition of grossly excessive or arbitrary punishments on a tortfeasor. State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408, 123 S.Ct. 1513, 1519-20, 155 L.Ed.2d 585 (2003). To the extent an award is grossly excessive, it furthers no legitimate purpose and constitutes an arbitrary deprivation of property. Id. at 1520. 65 On appeal, Local 38 argues that the jury's punitive damages award violated the Due Process Clause because the award exceeded Pelella's nominal damages by a 25,000-to-1 ratio. The union raised this argument in a reply brief during the course of this appeal after the Supreme Court decided Campbell. In Campbell, the Supreme Court refused to impose a bright-line ratio which a punitive damages award cannot exceed. Id. at 1524. However, the Court also explained that, in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process. Id. According to Local 38, the ratios discussed in Campbell preclude an award of punitive damages where a plaintiff recovers no actual damages and $1 in nominal damages. 66 As an initial observation, we note that the ratios referred to in Campbell may not apply with equal force when punitive damages are compared to nominal damages. The Campbell Court discussed significant disparities between punitive and compensatory damages. Id. (emphasis added). However, we previously have held that those types of ratios do not necessarily control where punitive and compensatory damages are awarded but the compensatory damages are nominal in nature. Lee v. Edwards, 101 F.3d 805, 811 (2d Cir.1996); cf. Williams v. Kaufman County, 343 F.3d 689, 711 n. 75 (5th Cir.2003) (concluding that the Campbell ratios were inapposite where, among other things, the ratio at issue concerned nominal and punitive awards); Edwards v. Jewish Hospital of St. Louis, 855 F.2d 1345, 1352 (8th Cir.1988) (refusing to hold that punitive damages must bear a reasonable relationship to the amount of nominal damages since the application of the proportionality rule to a nominal damages award would invalidate most punitive damages awards because only very low punitive damages awards could be said to bear a reasonable relationship to the amount of a nominal damages award). 67 Lee instructs that where compensatory damages are nominal, a much higher ratio can be contemplated while maintaining normal respiration. 101 F.3d at 811; cf. Provost v. City of Newburgh, 262 F.3d 146, 164 (2d Cir.2001) (noting that a $10,000 punitive damages award based on a $1 nominal damages award could be deemed consistent with constitutional constraints). In Lee, we held that the use of a multiplier did not serve as the best available tool for the assessment of punitive damages where the compensatory damages were nominal. Lee, 101 F.3d at 811. Instead, we examined punitive awards in similar cases to find the appropriate limits and proportions. Id. Cf. DiSorbo v. Hoy, 343 F.3d 172, 187 (2d Cir.2003) (concluding that the use of a multiplier to assess punitive damages was not the best tool where the jury awarded only nominal compensatory damages, yielding a staggering 650,000-to-1 ratio of punitive damages to compensatory damages). 68 Notwithstanding these observations, we need not decide whether the punitive damages here were grossly excessive in violation of the Due Process Clause. On the face of the record before us, Local 38 never raised this argument with the district court. 8 69 Where a party contends that a punitive damages award is excessive, that issue is ripe for legal challenge after a verdict is entered. See Tronzo v. Biomet, Inc., 236 F.3d 1342, 1348-49 (Fed.Cir.2001). For that reason, excessive punitive damages that violate the Due Process Clause can be challenged through post-trial motions. See, e.g. Rivera-Torres v. Ortiz Velez, 341 F.3d 86, 101-02 (1st Cir.2003); Zhang v. American Gem Seafoods, 339 F.3d 1020, 1042 (9th Cir.2003). 70 We generally will not review a party's contention that the damages award is excessive or insufficient where the party has failed to allow the district court to rule on the matter. O'Connor v. Huard, 117 F.3d 12, 18 (1st Cir.1997); see also Rivera-Torres, 341 F.3d at 102; Total Petroleum v. Davis, 788 F.2d 476, 483 (8th Cir.1986); Carlton v. H.C. Price Co., 640 F.2d 573, 577 (5th Cir.1981). After the jury returned a verdict in Pelella's favor, Local 38 moved for judgment as a matter of law pursuant to Rule 50 and for a new trial pursuant to Rule 59. However, in those motions, the union never argued that the punitive damages award was constitutionally excessive. Local 38 therefore failed to preserve that challenge for appellate review. See Rivera-Torres, 341 F.3d at 102. 71 Although Local 38 bases its due process challenge on a recent Supreme Court case decided during the course of this appeal, that consideration does not lead us to a contrary conclusion. Despite the Supreme Court's references to particular ratios in Campbell, the Court also discussed applicable ratios before Local 38 instituted this lawsuit. For example, in Gore, the Court examined the disparity between punitive and compensatory damages where the punitive damages award was 500 times greater than the compensatory damages award. The Court held that, when the ratio between these awards was a breathtaking 500 to 1, ... the [punitive damages] award must surely `raise a suspicious judicial eyebrow.' Gore, 517 U.S. at 583, 116 S.Ct. 1589 (internal citations omitted). If anything, the 145-to-1 ratio subsequently discussed in Campbell paled in comparison. See Campbell, 123 S.Ct. at 1524. 72 Here, as Local 38 points out, punitive damages exceed nominal damages by 25,000 to 1. Setting aside the merits, if any, of the argument, Local 38 could unquestionably have invoked Gore in the district court proceedings to suggest that the jury's punitive award was constitutionally excessive. The Court's Campbell decision buttressed the ratios discussed in Gore but was not a necessary predicate for a due process challenge. Local 38 failed to raise such a challenge with the court below and the argument is therefore deemed waived. See Anthony v. City of New York, 339 F.3d 129, 136 n. 3 (2d Cir.2003).