May 15, 2008

Saunders v. Branch Banking & Trust: Fourth Circuit Affirms 80-to-1 Ratio

The U.S. Court of Appeals for the Fourth Circuit issued an opinion today affirming a punitive damages award that is eighty times larger than the compensatory damages award. Despite the eye-popping ratio, the court's punitive damages analysis is not really a departure from recent U.S. Supreme Court precedent. In State Farm v. Campbell the Supreme Court held that ratios above single digits can be appropriate in cases involving very small compensatory damages. The compensatory award here was only $1,000.

Hat tip to Howard Bashman.