Opinion ID: 2206228
Heading Depth: 4
Heading Rank: 2

Heading: Disparity Between Actual Harm and the Punitive Damages Award

Text: Turning to the second Gore guide-post, we must consider the ratio between the actual harm suffered by Lowe and the punitive damages awarded. See Gore, 517 U.S. at 580, 116 S.Ct. at 1601, 134 L.Ed.2d at 829; State Farm, 538 U.S. at 418, 123 S.Ct. at 1520, 155 L.Ed.2d at 601. 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 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, 116 S.Ct. at 1602, 134 L.Ed.2d at 830. 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, 116 S.Ct. at 1602, 134 L.Ed.2d at 830) and has declined to impose a bright-line ratio which a punitive damages award cannot exceed. State Farm, 538 U.S. at 425, 123 S.Ct. at 1524, 155 L.Ed.2d at 605. 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, 123 S.Ct. at 1524, 155 L.Ed.2d at 605-06. 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, 116 S.Ct. at 1602, 134 L.Ed.2d at 830, quoting Haslip, 499 U.S. at 23-24, 111 S.Ct. at 1046, 113 L.Ed.2d at 23. The Court has, however, recognized that because there are no rigid bench-marks 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, 123 S.Ct. at 1524, 155 L.Ed.2d at 606, quoting Gore, 517 U.S. at 582, 116 S.Ct. at 1602, 134 L.Ed.2d at 831. 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 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, 295 Ill.Dec. 344, 832 N.E.2d 495. 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, double-digit 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 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, 116 S.Ct. at 1602, 134 L.Ed.2d at 831; State Farm, 538 U.S. at 425, 123 S.Ct. at 1524, 155 L.Ed.2d at 606. 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. In Argentine v. United Steelworkers 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, 300 Ill.Dec. 927, 845 N.E.2d 816. 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 3 ½ years.