March 26, 2010

A Curious Punitive Damages Opinion from Florida

Florida has been making a lot of punitive damages news lately. In addition to the series of big punitive awards being handed out to smokers and their heirs, Florida's intermediate appellate court issued an interesting (and in my mind, questionable) opinion this week in Lawnwood Medical Center v. Sadow.

In Lawnwood, the jury awarded nominal tort damages against a hospital for slandering a doctor, and then added $5 million in punitive damages. The hospital appealed the award as excessive under the Florida law and the Due Process Clause of the federal constitution.

The District Court of Appeal (Fourth District) analyzed the U.S. Supreme Court's decisions in BMW v. Gore and State Farm v. Campbell, noted the ratio-based analysis in those cases, but suggested that those decisions might only apply to the specific types of misconduct involved, and not to cases involving malice. The court then suggested that cases involving malice are perhaps governed by the U.S. Supreme Court's earlier decision in TXO v. Alliance, which the Florida court viewed as imposing no ratio limits on punitive damages imposed for malicious conduct.

Obviously I am influenced by my perspective as a defense lawyer, but I think the court's analysis is deeply flawed. Nothing in BMW and Campbell suggest that the Supreme Court's three-guidepost test is inapplicable to cases involving malice. To the contrary, Campbell expressly contemplated that the test would be applied to cases involving malice. Campbell instructs lower courts to consider a variety of factors when analyzing the reprehensibility of the defendant's conduct (the first "guidepost"), including whether the defendant acted with malice. That wouldn't make much sense if the whole analysis is inapplicable to malice cases. Campbell suggested that in some situations involving extreme reprehensibility and small compensatory damages, ratios in excess of single digits might be permissible. But the court did not suggest that ratio limitations are simply inapplicable in such cases. Such an exception would dramatically undermine the BMW/Campbell analysis, given that malice is perhaps the most frequent basis for imposing punitive damages under state law.

Fortunately, the Florida court in Lawnwood stopped short of actually holding that BMW and Campbell are inapplicable to malice cases. Instead, the court certified the following question to the Florida Supreme Court:

Are punitive damages of $5,000,000 arbitrary or excessive under the Federal Constitution where the jury awarded no compensation beyond presumed nominal damages but found that defendant intentionally and maliciously harmed plaintiff by slanders per se?
Stay tuned to see what the Florida Supreme Court does with this issue.

Hat tip: Florida Legal Blog