February 5, 2013

Ninth Circuit affirms order reducing $10M punitive damages award to $2.4M

The Ninth Circuit's unpublished decision in Dawe v. Corrections USA is terse, as they usually are.  It contains no statement of facts and skimpy analysis, so it's difficult to tell exactly what the case is all about.  But the opinion contains two holdings of note:

1.  As to one defendant, the court affirmed a combined compensatory and punitive damages award that exceeded the defendant's net worth by a factor of four.  The court said "There is no constitutional prohibition of awards in excess of a party's net worth."  That's a little surprising, because the opinion elsewhere seems to apply California law, which does prohibit punitive damages that exceed the defendant's ability to pay.

2.  The court affirmed the district court's reduction of the total punitive damages from $10,085,000 to $2,368,406, resulting in a roughly one-to-one ratio of punitive damages to compensatory damages.  The court cited State Farm's holding that a one-to-one ratio can "reach the outermost limits of the due process guarantee" when compensatory damages are substantial. The court said that even though the defendant acted with malice and the plaintiff was financially vulnerable, the constitution would not permit a ratio in excess of one to one.