Opinion ID: 2566656
Heading Depth: 2
Heading Rank: 2

Heading: Ratio of Compensatory Damages to Punitive Damages

Text: ¶ 37 We turn now to the second Gore guidepost: the ratio between actual and punitive damages awarded. State Farm focuses its attention on the Supreme Court's statement that [w]hen compensatory damages are substantial, then a lesser ratio [of compensatory to punitive damages], perhaps only equal to compensatory damages, can reach the outermost limit of the due process guarantee. Campbell II, 538 U.S. at 425, 123 S.Ct. 1513. The compensatory damages award to the Campbells was substantial and, in the Supreme Court's view, provided them complete compensation. Id. at 426, 123 S.Ct. 1513. This is due at least in part to the possibility, recognized by the Supreme Court, that the compensatory damages award for emotional distress incorporated within it a punitive component. [7] Id. ¶ 38 Such a conclusion, though plausible as an abstract proposition, does not account for the circumstances of the compensatory damages award in this case. The jury awarded the Campbells $2.6 million in compensatory damages. The trial court granted State Farm's motion for remittitur and reduced the award to $1 million: $600,000 for Mr. Campbell and $400,000 for Mrs. Campbell. The trial court's ruling was supported by extensive and detailed findings explaining the basis for the reduced compensatory damages award. Based on this thorough record, we conclude that the trial court's compensatory damages award was purged of elements which may have been more properly placed in the category of punitive damages. We are convinced that the combined efforts of the jury and the trial judge ensured that the compensatory damages award was what it purported to be: compensation based on considered evaluation of the degree of emotional harm inflicted on the Campbells by State Farm. Because it is exclusively for actual harm sustained by the Campbells, the compensatory damages award supports a punitive damages award exceeding $1 million. ¶ 39 In its discussion of the relationship between compensatory and punitive damages, the Supreme Court reaffirmed that ratios exceeding single-digits, which it strongly implied mark the outer limits of due process, may be appropriate only where `a particularly egregious act has resulted in only a small amount of economic damages,' or where `the monetary value of noneconomic harm may have been difficult to determine.' Id. at 425, 123 S.Ct. 1513 (quoting Gore, 517 U.S. at 582, 116 S.Ct. 1589). These circumstances are not present here. But, neither is this a proper case to limit a punitive damages award to the amount of compensatory damages. The 1-to-1 ratio between compensatory and punitive damages is most applicable where a sizeable compensatory damages award for economic injury is coupled with conduct of unremarkable reprehensibility. This scenario, likewise, does not describe this case. ¶ 40 Here, the Campbells were awarded substantial noneconomic damages for emotional distress. As the Supreme Court noted, Much of the distress was caused by the outrage and humiliation the Campbells suffered at the actions of their insurer; and it is a major rule of punitive damages to condemn such conduct. Id. at 426, 123 S.Ct. 1513. The trial court valued the extent of the Campbells' injury at $1 million. We have no difficulty concluding that conduct which causes $1 million of emotional distress and humiliation is markedly more egregious than conduct which results in $1 million of economic harm. Furthermore, such conduct is a candidate for the imposition of punitive damages in excess of a 1-to-1 ratio to compensatory damages. Simply put, the trial court's determination that State Farm caused the Campbells $1 million of emotional distress warrants condemnation in the upper single-digit ratio range rather than the 1-to-1 ratio urged by State Farm. ¶ 41 When considered in light of all of the Gore reprehensibility factors, we conclude that a 9-to-1 ratio between compensatory and punitive damages, yielding a $9,018,780.75 punitive damages award, serves Utah's legitimate goals of deterrence and retribution within the limits of due process.