November 1, 2012

Second Circuit punitive damages decision draws criticism

Yesterday, the New York Law Journal published an op-ed (subscription required) criticizing a recent decision on punitive damages from the Second Circuit.

The decision in question is Payne v. Jones. A jury awarded $60,000 in compensatory damages and $300,000 in punitive damages against a police officer who assaulted the plaintiff.  The defendant appealed to the Second Circuit, which concluded that any punitive damages award over $100,000 would be excessive in light of the reprehensibility of the defendant's conduct. 

The op-ed criticizes the opinion for, among other things, creating confusion about the appropriate standard of review.  The op-ed suggests the Second Circuit gave insufficient deference to the district court.

I agree with the op-ed that the opinion contains an unnecessarily complicated discussion of the standard of review, but I do not agree that the court gave insufficient deference to the district court.  The Second Circuit cited a 1978 case for the proposition that the traditional standard of review is whether the amount of the award "shock[s] the judicial conscience."  The court then stated that the traditional standard is "informed" by the due process principles contained in the Supreme Court's BMW v. Gore opinion. The Second Circuit noted, however, that BMW involved a federal court reviewing a state court punitive damages award, and that a federal court can overturn a state court punitive damages award only if it violates the Due Process Clause, whereas a federal court has broader supervisory powers over a district court.  In other words, a federal appellate court can second-guess a district court's ruling on the amount of punitive damages even when there is no due process violation.  The court then went on to explain why the award was excessive under the BMW standards.  

Curiously, the Second Circuit did not cite the governing Supreme Court precedent on the standard of review issue: Cooper v. Leatherman.  In that case, the Supreme Court held that appellate courts must apply a de novo standard of review to a lower court's ruling on the excessiveness of a punitive damages award under BMW v. Gore.  Lower courts have held that Cooper v. Leatherman applies regardless of whether the punitive damages award was rendered in state court or federal court.   Indeed, the Second Circuit itself has repeatedly held that de novo review applies to a district court's ruling on excessiveness of punitive damages. One such case involved the same sort factual scenario as Payne - an assault and battery by a police officerDiSorbo v. Hoy.  So there was no need for the Second Circuit to engage in a lengthy discussion of the standard of review.  It should have just followed Cooper (and its own prior decisions) and applied de novo review.  Undoubtedly, it would have reached the same ultimate conclusion and found the award excessive.

Thanks to Richard Montes and Ben Shatz for calling the opinion and the op-ed to my attention.