June 21, 2010

Texas Jury Hits JDA Software with Big Punitive Damages, But How Big?

Various media outlets are reporting that a jury in Dallas has awarded $246 million in damages against DJA Software Group in a software-licensing dispute with Dillard's Inc. Exactly how much of that award is punitive damages, I can't tell.

The Wall Street Journal reports that the jury awarded $238 million in punitive damages. The Associated Press, however, says the jury awarded $238 million in "indirect or punitive damages." Reuters reports that the jury awarded $238 million in "consequential, special or punitive damages."

To the non-legal press, those might not seem like significant differences. But for purposes of analyzing whether the award is excessive, it obviously makes a big difference whether the $238 million was entirely punitive damages, or whether it included some compensatory damages. If the jury really awarded $8 million in compensatory damages and $238 million in punitive damages, JDA could virtually guarantee that the punitive damages would be overturned as excessive. Under that scenario, the punitive damages award would quite possibly be reduced to $8 million, resulting in a 1-to-1 ratio.

But if a big chunk of the $238 million includes compensatory damages, the analysis changes dramatically. The award might not be reduced at all, if the total compensatory damages already exceed the punitive damages.

Bradenton.com, the website for the Bradenton Herald, contains a press release from Susman Godfrey, counsel for Dillard's, indicating that the jury actually awarded $96 million in various types of compensatory damages and $150 million in punitive damages. Assuming that's accurate, the punitive damages may be excessive, but Dillard's may still end up with a total award in excess of $100 million (assuming there are no other defects in the award besides the excessiveness of the punitive damages).

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