Opinion ID: 624286
Heading Depth: 1
Heading Rank: 6

Heading: Disparity between Actual and Punitive Damages

Text: The Supreme Court has held that [t]he precise award of punitive damages must be based upon the facts and circumstances of the defendant's conduct and the harm to the plaintiff. Id. at 425, 123 S.Ct. 1513. For this reason, the Court has been reluctant to identify concrete constitutional limits on the ratio between harm ... to the plaintiff and the punitive damages award. Id. at 424, 123 S.Ct. 1513 (citation omitted). The Court's jurisprudence [does] demonstrate[], however, that, in practice, few awards exceeding a single digit-ratio between punitive and compensatory damages, to a significant degree, will satisfy due process. Id. at 425, 123 S.Ct. 1513. Moreover, an award of more than four times the amount of compensatory damages might be close to the line of constitutional impropriety. Id. (citing Haslip, 499 U.S. at 23-24, 111 S.Ct. 1032). Nonetheless, the Court has made clear that the amount of compensatory damages awarded plays a role in determining whether a punitive damage award is appropriate. When compensatory damages are substantial, then a lesser ratio, perhaps only equal to compensatory damages, can reach the outermost limit of the due process guarantee. Id. UPS argues that because the jury's award of $630,307 in actual damages was substantial, its $2 million punitive damages verdict was excessive under the Fourteenth Amendment. We agree. Although the overall ratio of actual to punitive damages in this case probably does not push the boundaries of due process requirements, the jury awarded Jones a substantial compensatory damage award in light of the injuries he suffered. Given his substantial recovery of compensatory damages, we conclude that the jury's punitive damage award was grossly excessive and therefore in violation of UPS' due process rights.
A review of comparable employment cases supports our conclusion that the jury's punitive damage award was excessive. For example, in Morgan v. New York Life Insurance a jury awarded a former insurance company executive $6 million in compensatory damages and $10 million in actual damages in his age discrimination lawsuit against his former company. 559 F.3d 425, 428 (6th Cir.2009). The Sixth Circuit, citing the Supreme Court's decision in State Farm v. Campbell , determined that the jury's compensatory damage award was substantial and that the $10 million punitive damage award therefore violated the insurance company's due process rights. Id. at 442. In Watson v. E.S. Sutton, Inc., another analogous case, a corporation appealed a jury verdict awarding a former employee over $2 million in compensatory and punitive damages after finding that the corporation unlawfully retaliated against her. 225 Fed.Appx. 3, 4 (2nd Cir.2006). Applying the three factor test set forth in Campbell, the Second Circuit upheld the jury's punitive damage award, noting that it was only half the size of the compensatory damages award. Id. at 5. We also note that outside of the employment arena, courts have struck down large punitive damage awards when compensatory damages have been substantial. See Mendez-Matos v. Municipality of Guaynabo, 557 F.3d 36, 55 (1st Cir.2009) (striking down a $350,000 punitive damage award in a § 1983 case because the $35,000 compensatory damage award amply compensated the plaintiff); Bridgeport Music, Inc. v. Justin Combs Publ'g, 507 F.3d 470, 488-89 (6th Cir.2007) (overturning a punitive damage award of $3.5 million in a copyright infringement case when the plaintiff received a substantial compensatory award of $366,939); Boerner v. Brown & Williamson Tobacco Co., 394 F.3d 594, 603 (8th Cir.2005) (striking down a punitive damage award of $15 million in a design defect case because the plaintiff received a substantial compensatory damage award of over $4 million). In conclusion, having considered the degree of reprehensibility, the size of the punitive damage award compared to the compensatory damage award, and comparable cases, we conclude that the jury's award of $2 million was constitutionally excessive. We therefore reverse the judgment of the district court. Based on these factors, and relying on the Supreme Court's statement in State Farm Mut. that [w]hen compensatory damages are substantial, then a lesser ratio, perhaps only equal to compensatory damages, can reach the outermost limit of the due process guarantee, 538 U.S. at 425, 123 S.Ct. 1513, we determine that a punitive damage award equal to the compensatory damage award is the maximum constitutionally allowable award under these particular facts. See Continental Trend Resources, Inc. v. OXY USA Inc., 101 F.3d 634, 642 (10th Cir.1996) (determining the maximum constitutionally permissible punitive award based on our review of the record). We remand for the district court to enter a punitive damage award equal to the compensatory damage award. [8]
The judgment of the district court is AFFIRMED in part and REVERSED in part as follows: The district court's denial of UPS's motion for judgment as a matter of law is AFFIRMED. The district court's denial of UPS's motion for a new trial based on improper jury instructions and submission of the amount of damages to the jury is AFFIRMED. The district court's denial of UPS's motion for a new trial regarding the amount of punitive damages is REVERSED and REMANDED for the limited purpose of entering a punitive damage award equal to the compensatory damage award.