August 23, 2011

$1.16 punitive damages verdict returned against Walgreens: will 13:1 ratio stick?

The Fresno Bee has reported that a jury last Friday awarded $88,000 in compensatory damages and $1.16 million in punitive damages to pharmacist Sami Mitri, who said Walgreen fired him in retaliation for reporting Medicare fraud. The case (no. 1:10-cv-00538-AWI -SKO) was brought in federal court under a whistleblower statute.

Five-figure and low six-figure compensatory damages awards have, in some cases, been found to be substantial enough to trigger a presumption that a single-digit ratio between compensatory and punitive damages is the most that can withstand a due process challenge for excessiveness. (See, e.g., the recent case survey discussed here.) The Walgreen award represents a double-digit ratio of more than 13:1. But Walgreen Co. is a pretty big company (the largest drug store company in the U.S.). Under the analysis in the recent Bullock v. Philip Morris opinion (discussed here), might an appellate court find a departure from the single-digit presumptive limit is warranted? Or might a court reviewing the award in this case hew to the U.S. Supreme Court's statement that “The wealth of a defendant cannot justify an otherwise unconstitutional punitive damages award”? (See State Farm Mut. Auto. Ins. Co. v. Campbell (2003) 538 U.S. 408, 427 [123 S.Ct. 1513, 155 L.Ed.2d 585].)

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