Opinion ID: 1856753
Heading Depth: 2
Heading Rank: 2

Heading: Ratio of Actual or Likely Harm to Punitive Damages

Text: The United States Supreme Court in BMW stated that the most commonly cited indicium of an unreasonable or excessive punitive damages award is its ratio to the actual harm inflicted on the plaintiff, and it stated that exemplary damages must bear a `reasonable relationship' to compensatory damages. 517 U.S. at ___, 116 S.Ct. at 1601. However, the Court expressly held that due process does not require a purely mathematical formula: Of course, we have consistently rejected the notion that the constitutional line is marked by a simple mathematical formula, even one that compares actual and potential damages to the punitive award.... Indeed, low awards of compensatory damages may properly support a higher ratio than high compensatory awards, if, for example, a particularly egregious act has resulted in only a small amount of economic damages. A higher ratio may also be justified in cases in which the injury is hard to detect or the monetary value of noneconomic harm might have been difficult to determine.... In most cases, the ratio will be within a constitutionally acceptable range, and remittitur will not be justified on this basis. 517 U.S. at___, 116 S.Ct. at 1602-03 (citations and emphasis omitted). Applying this guidepost to the facts in BMW, the United States Supreme Court reasoned that due process does not require any exact ratio between punitive and compensatory assessments, but that a high ratio might indicate excessiveness, particularly if the conduct of the defendant was not especially reprehensible. The Court noted that the $2 million punitive damages award is 500 times the amount of actual harm suffered, as determined by the jury, and 35 times the total actual harm suffered by the 14 Alabama consumers who had purchased repainted BMWs. 517 U.S. at ___and n. 35, 116 S.Ct. at 1602 and n. 35. The Supreme Court recognized that it had upheld a $10 million punitive damages award in TXO Production Corp. v. Alliance Resources Corp., 509 U.S. 443, 113 S.Ct. 2711,125 L.Ed.2d 366 (1993), where the jury had awarded only $19,000 in actual damages (a punitive damages to compensatory damages ratio of over 500 to 1), but it emphasized that the plaintiffs in that case had faced much greater potential harm and that if the defendant had succeeded in its plan the ratio would have been less than 10 to 1. 517 U.S. at___, 116 S.Ct. at 1602. The Court thus distinguished TXO by finding that there is no suggestion that Dr. Gore or any other BMW purchaser was threatened with any additional potential harm by BMW's nondisclosure policy; it therefore concluded that the 500 to 1 ratio must surely `raise a suspicious judicial eyebrow.' 517 U.S. at ___ and ___, 116 S.Ct. at 1602 and 1603, quoting TXO, 509 U.S. at 481, 113 S.Ct. at 2732 (O'Connor, J., dissenting). Although it is difficult to determine case by case what ratio of punitive damages to compensatory damages is excessive, we reject the easy answer of adopting one ratio that would apply to all and would therefore give a wrongdoer precise notice of the penalty that his misconduct might incur. To do so would frustrate the purpose of punitive damages, which is to punish and deter a defendant's misconduct. A ratio that could be deemed reasonable in many cases might well be insufficient in cases where the defendant has reaped great profit from its conduct, or where its conduct is particularly reprehensible. Indeed, the United States Supreme Court has consistently stated, We need not, and indeed cannot, draw a mathematical bright line between the constitutionally acceptable and constitutionally unacceptable that would fit every case. TXO, 509 U.S. at 458, 113 S.Ct. at 2720, quoting Haslip, 499 U.S. at 18, 111 S.Ct. at 1043. Likewise, we do not draw a bright line here; however, in light of the lesser degree of reprehensibility apparent in this case, as well as the other considerations of this review, we agree that the 500 to 1 ratio of punitive damages to compensatory damages in this case is grossly excessive.