Friday, November 07, 2008

Southern Union Co. v. Irvin (9th Cir. - Nov. 7, 2008)

The jury initially awarded Southen Union Company (a corporate plaintiff) around $400,000 in compensatory damages against the not-very-nice chairman of the Arizona Corporation Commission, and also awarded $60 million in punitive damages. That's a ratio of over 150 to 1, which, not surprisingly, didn't stand, and the Ninth Circuit reversed back in 2005.

On remand, the district court gave Southern Union the option of accepting $4 million in punitives -- a ratio of around 10 to 1 -- and Southern Union (wisely, IMHO) accepted. Another appeal. This time, though, the panel is split.

The majority (Judges Reinhardt and Fernandez) conclude: Sorry, still too high. We admit that defendant is a very bad man. Who has done very bad things. Nonetheless, three to one is all that we're willing to allow here. So $1.2 million (plus postjudgment interest, of course).

Judge Reinhardt concurs to say that he's particularly influenced by the fact that we're talking about a rich (and hardly vulnerable) plaintiff here and a hardly rich defendant. "So don't get me wrong. I'm not capping out at a 3-1 ratio in the much more typical case involving a vulnerable plaintiff and wrongdoing wealthy corporation. Let me make that crystal clear." (I'm paraphrasing, obviously, but I read that as his central -- and important -- point.)

Judge Noonan dissents. "The defendant's a bad person. The district court was in the best position to judge things. Ten to one seems fine to me. I'm more than happy to defer to that." (Again, I'm totally summarizing.)

A neat little fight, with a not-so-typical lineup, about punitive damages ratios. Worth at least a quick read.