November 11, 2008

Missouri Court of Appeal Allows $3.75 Million Punitive Damages Award, 75 Times Greater Than Compensatory Damages

The Missouri Court of Appeals has issued a remarkable opinion allowing $3.75 million in punitive damages in a sexual harassment case in which the compensatory damages were only $50,000.

The jury in this case awarded $6.75 million in punitive damages against auto parts supplier TNT Logistics of North America. The trial judge reduced the amount to $450,000.

TNT argued on appeal that even $450,000 was too much and that the plaintiff deserved no more than $250,000. The Court of Appeals said $6.75 million was excessive but that $450,000 was insufficient.

The Court of Appeals determined that TNT should pay $3.75 million in punitive damages because the extremely reprehensible conduct of the defendant warranted a departure from a single-digit ratio. But the court did not discuss or analyze any of the reprehensibility factors set forth in State Farm v. Campbell, such as whether the conduct involved physical harm, whether the defendant was a repeat offender, or whether the defendant took advantage of the plaintiff's financial vulnerability. Most of those factors appeared not to be present in the case. It is hard to fathom how the court could conclude that a 75-to-1 ratio passes muster under Campbell.

Another curious aspect of the case is that the Court of Appeals gave the plaintiff a choice between accepting the $3.75 million or opting for a new trial. If $3.75 million is the constitutional maximum, what would be the point of affording the plaintiff a new trial? Any award higher than $3.75 million would be excessive, so the plaintiff could not possibly hope to do better at the retrial.