Plaintiff files a sexual harassment lawsuit. Defendant, not surprisingly, disputes liability and damages. Jury comes back and awards (a) compensatory damages of $1.00, and (b) punitive damages of over $850,000.
One problem. Federal law caps punitive damages in such cases at $300,000.
Trial court enters judgment for $300,000. Defendant claims that punitive damage award violates the Due Process Clause. Claiming that the ratio of 300,000 to 1 is way too high.
What's the right result?
(A) Return punitives to $850,000+.
(B) Keep punitives at $300,000.
(C) Reduce punitives to $125,000.
(D) Reduce punitives to $25,000.
(E) Reduce punitives to $2,500.
(F) Reduce punitives to $10.
I'll say at the outset that (A)'s not right. The cap's the cap. So it's really between (B) through (F). I'll also add, in favor of (F), that the Supreme Court has stated that, in general, a 10-1 ratio of compensatory to punitive damages approaches the "outer limit" of what's permissible under the Due Process Clause. But I'll additionally note that the Supreme Court has also said that higher ratios might be justified when "a particularly egregious act has resulted in only a small amount of economic damages."
So what's the right result?
Judge Hurwitz says (B). But Judge O'Scannlain, who authors the majority opinion, says (C).
It's a neat little dispute. The Fifth Circuit has held that the whole "ratio" thing doesn't apply when only nominal damages are awarded, and I (alongside Judge Hurwitz) find that view somewhat sympathetic. By contrast, Judge O'Scannlain thinks it's still applicable, but nonetheless adopts a 125,000-1 award that, in normal settings, would clearly be impermissible.
So definitely worth thinking about.
I've only got one additional thing to say on the issue. The majority adopts -- and expresses into judgment -- an 125,000-1 award because this is "the highest ratio we could locate among discrimination cases." But that's just a factual happenstance. Imagine the most egregious sexual harassment case imaginable, but one with only nominal damages. Huge harassment. Repeated attempted forcible rapes. Disgusting comments and discrimination. Everything imaginable. But only nominal damages of $1 because plaintiff didn't actually see any of this stuff (and in any event got a higher paying job afterwards). I'd imagine that case would be even higher than a 125,000-1 ratio. Indeed, it might have already actually existed, and been settled for much more than that. Would that now be the "highest ratio" the Ninth Circuit could find? Is it really anything like the right standard to say that the constitutional maximum is whatever happens to have come before? Isn't there always a first case -- and always a potentially worse one?
I agree that it's always difficult to pick a seemingly random number out of a hat. Particularly when you're claiming that this particular figure is required by the Constitution itself. But it seems to me that the purported methodology for picking that number here has the illusion of certainty and yet is actually untenable.
Regardless. A fascinating issue.
