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Saturday, April 12, 2014

A Five-Thousand to One Punitive to Compensatory Damages Ratio

From Fox News' late-night show, Red Eye, I learned about the unpleasant story of James Caroll Butler, who attempted to spike his coworker's coffee with urine. The coworker, Michael Utz, fortunately did not drink the tainted coffee, and sued Butler for the emotional distress that Utz suffered as a result of Butler's actions.

In his lawsuit, Utz asked for quite a bit of money:
Utz, a plant mechanic for the town’s environmental services department since 2002, claimed that the urine-laced coffee pot caused him severe emotional distress, asking the court to award him $728,000 ($378,000 in compensatory damages and $350,000 punitive damages).
In the end, Utz did not get the hundreds of thousands of dollars he sought in his complaint. But the jury did end up awarding him $5,001. Why the extra dollar?
According to court records, the jury awarded Utz $1 in compensatory damages and $5,000 toward punitive damages.
As a bit of background for those unfamiliar with these remedies, compensatory damages are meant to make the plaintiff whole and repair harm done by the defendant. Punitive damages, on the other hand, are meant to deter the defendant from carrying out similar conduct in the future, and by awarding punitive damages, the jury expresses that the defendant's conduct was particularly reprehensible.

As loathsome as Butler's conduct was, if he were to appeal, I think that he would have a good chance at having those damages reduced. In State Farm Mut. Automobile Ins. Co. v. Campbell, the Supreme Court struck down an award of $25 million in punitive damages accompanying a reward of $1 million in compensatory damages. The Court stated:

[W]e have been reluctant to identify concrete constitutional limits on the ratio between harm, or potential harm, to the plaintiff and the punitive damages award. . . . We decline again to impose a bright-line ratio which a punitive damages award cannot exceed. Our jurisprudence and the principles it has now established 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. (citations omitted)
While the Court refused to state a solid rule, it heavily insinuated that a punitive damages award more than nine times the amount of  the compensatory damages would be struck down as a violation of due process.

Here, the jury awarded only one dollar in compensatory damages, meaning that the punitive damage award was five thousand times the compensatory award. While the jury may have wanted Butler to be punished (and while Butler was also convicted of misdemeanor criminal assault for his actions), the composition of the award clearly indicates that the jury thought that Utz suffered very little, but Butler's action was very bad.

I think that the jury could have awarded Utz substantial damages for emotional distress. But they didn't, and with a ratio like this, I could see this award being overturned if Butler is inclined to appeal -- though keeping this incident in the news may not be Butler's favorite outcome.

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