Court Opinion

ID: 9625932
Source: CourtListenerOpinion
Date Created: 2023-08-22 07:56:38.237623+00
Date Added: 2024-06-11T18:06:17.892609
License: Public Domain

EASTAUGH, Justice,
concurring.
Although I agree with the result reached by the court on all issues, I am writing separately to explain my reasoning on the punitive damages award and the remittitur. The court’s opinion discusses factors potentially bearing on the award of punitive damages. I agree with that discussion in the abstract, but the only factors germane here are those which these parties agreed would govern this jury’s deliberations.
*179The punitive damages instruction allowed the jury “to decide an amount that would fairly accomplish the purposes of punishment and deterrence.” The instruction submitted" only these factors to the jury: the magnitude and flagrancy of the offense, the importance of the policy violated, Norcon’s wealth, and the amount of compensatory damages. We have long discussed these factors in analyzing punitive damages issues in Alaska,24 but they offer a jury little guidance. Whether they offer too little is not before us here; Norcon did not object to the substance of the punitive damages instruction.25 My comments concern several of these factors.
Norcon argues that the punitive damages-compensatory damages ratio is excessive. The instruction did not limit the jury to a maximum ratio.26 And in my view, a fixed ratio may result in punitive damages awards which are either too large or too small, and thus not optimally effective in punishing and deterring outrageous conduct.27 If compensatory damages are small relative to the expense of litigating, restricting a jury to a fixed ratio may prevent it from entering an award that is large enough to deter or punish outrageous conduct. For example, applying a fixed three-to-one ratio in this case would limit punitive damages to $31,033. Such an award would be unlikely to deter conduct like that of Norcon after Kotowski reported Po-sehn’s harassment. It would be insufficient to encourage employers like Norcon to adopt and enforce effective anti-harassment policies and procedures, and would probably make it more economic to litigate such claims than to avoid and cure the problem revealed by Ko-towski’s report.
At the other end of the scale, if compensatory damages are very large, even a ratio as low as three-to-one could lead to a needlessly large, and thus not optimal, punitive damages award. And a compensatory award that is very large relative to the cost of adopting and enforcing effective anti-harassment policies and procedures may also justify a relatively smaller punitive award.
Likewise, the cost of prosecuting a case relative to the potential size of a compensatory award may bear on the size of an optimal punitive damages award and thus on the punitive damages-compensatory damages ratio. Norcon employed Kotowski only briefly. Consequently when she reported Posehn’s harassment, Norcon could anticipate that any wage loss claim would be modest. Indeed, the expense and aggravation of litigation and the prospect of modest compensatory damages awards would deter some ex-employees in Kotowski’s position from pursuing any claim. Therefore, the relatively high (forty-eight-to-one) ratio following remittitur here is still within permissible limits.
Nonetheless, I agree with the remittitur the court requires because $500,000 is, in my view, the largest punitive damages award that can be justified here. Posehn’s conduct was outrageous and Norcon’s corporate response to Kotowski’s complaint was appalling. But the remittitur is appropriate because unexplained evidence of a defendant’s wealth or annual earnings provides little insight into the size of award needed to alter or punish corporate culture. There is no evidence of how much Norcon saved annually by failing to adopt and enforce an effective anti-harassment policy and by failing to educate and supervise supervisors like Posehn and *180those who tacitly approved his conduct. One can only guess at the maximum amount necessary to convince Norcon that it must change its corporate ways. In my view, an award no larger than $500,000 should be ample to remove all profit derived by tolerating such practices and to punish Norcon. Any larger award is therefore both unnecessary and inefficient.28 Given the annual earnings discussed in note 20 of the court’s opinion, any larger award would be unreasonable.

. See, e.g., Sturm, Ruger & Co. v. Day, 594 P.2d 38, 48 (Alaska 1979), overruled on other grounds, Dura Corp. v. Harned, 703 P.2d 396, 405 n. 5 (Alaska 1985).

. The legislature has now enacted a statute listing factors to be considered in punitive damages cases. AS 09.17.020(c). That statute does not apply to Kotowski's cause of action, which accrued before the statute’s effective date. Ch. 26, § 55, SLA 1997.

. Moreover,
[t]his court has refused to prescribe a definite ratio between compensatory and punitive damages. Though comparing punitive and actual damages awards is one way to determine if punitive damages are excessive, other factors, such as the magnitude and flagrancy of the offense, the importance of the policy violated, and the defendant’s wealth, are equally important to the determination.
Cameron v. Beard, 864 P.2d 538, 551 (Alaska 1993) (citations omitted).

.Cf. BMW of North America, Inc. v. Gore, 517 U.S. 559, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996) (recognizing that higher ratios may be justified by circumstances).

. See A. Mitchell Polinsky and Steven Shavell, Punitive Damages: An Economic Analysis, 111 Harv. L.Rev. 869, 879-80 (1998).