Some of my disagreement with this opinion is founded upon a displeasure with the Supreme Court's opinion about punitive damages in Campbell. But, honestly, much of my disagreement with Justice Benke in this case rests not on an underlying policy choice, but rather the proper interpretation of precedent.
Justice Benke holds that, in this case, which involves clearly fraudulent conduct by the defendant, who was a broker-agent who flat out stole millions and millions of dollars from his principal, a ratio of punitive damages to compensatory damages in excess of 1:1 would be constitutionally excessive. And hence reverses the lower court's award of punitive damages in a 4:1 ratio.
I think that's wrong. Yes, the jury awarded substantial compensatory damages; essentially, $5 million, plus $1.5 million in prejudgment interest (awarded by the court). But that's only because the defendant stole $5 million. And, unlike Campbell, the damage award was all economic loss; there were no "emotional distress" or other damages that might arguably "overlap" with punitive damages -- and, in any event, would have been real damages anyway (even had they been incurred).
Justice Benke holds that because plaintiff was already rich (and hence not "especially vulnerable") and was fully compensated by the compensatory damages, the absolute most that the jury could award in punitive damages consistent with the Due Process clause was a 1:1 ratio. That, to me, both erroneously applies the Supreme Court's decision in Campbell and overly aggressively expands the Due Process Clause beyond its rational limits.
Juries can constitutionally -- indeed, should -- impose punitive damages in excess of 1:1 in a case, as here, involving deliberate theft by a fiduciary from his principal. That's reprehensible conduct, and deserves an exceptional amount of punishment. Including but not limited to the imposition of large punitive damages in order to deter similar types of misconduct in the future.
Under Justice Benke's maximum 1:1 ratio, a defendant should -- and will -- have a rational economic incentive to steal $5 million whenever the probability of getting caught is less than 33%. And that's way, way too often. After all, even if they get caught stealing the $5 million, the Due Process Clause allegedly ensures that they'll only be spanked for $10 million. A $5 million upside and a $10 million downside means that you take the risk whenever you think it's likely (>66.6%) that you won't get caught.
The law doesn't, and shouldn't, work that way. Nor should it be blind to the resulting incentive problem. Sure, my mathematical analysis ignores the risk of potential criminal penalties. But we all know that those penalties are incredibly unlikely in cases like this anyway. Plus, remember, I'm also ignoring the risks that (1) the defendant will be found not liable at trial, or (2) that the punishment imposed at trial would be less than the constitutional maximum.
I think that a jury could rationally, and constitutionally, find that the defendant's conduct here was totally reprehensible and that, in order to deter such misconduct, at 4:1 ratio of punitive damages was required. I don't see a jury here that was out of control or motivated by passion or prejudice. I see a jury that did its job, and did it well, and that appropriately responded to deliberate fraud. I surely don't think that what transpired here was a vioaltion of the Due Process Clause. It was, instead, justice. In my view, the jury's verdict should have been allowed to stand.
POSTSCRIPT - A much-more-mathematically inclined reader than me e-mailed to note -- entirely correctly -- that my math is a bit off; that since the only downside of getting caught is $5 million (sure, you have to pay $10 million, but $5 million of that you stole anyway, so you're only down $5 million net), under the 1:1 ratio, you have a rational economic incentive to steal whenever the probability of getting caught is less than 50%, not (as I said) 33%. So my point is right -- indeed, even more right than I thought -- even though I stink at even the easiest math.
