September 20, 2016

Ninth Circuit reduces $1.16 million punitive damages award to $352,000 (Mitri v. Walgreen)

Law 360 reported yesterday on the Ninth Circuit's memorandum disposition in this wrongful termination case in which the plaintiff claimed he was fired for reporting potential Medicare fraud.  It's only five pages long, so there isn't much analysis.  In a nutshell, the jury awarded $88,000 in economic damages and $1.155 million in punitive damages, a ratio of 13 to 1.  The Ninth Circuit determined the punitive damages award was constitutionally excessive and reduced it to $352,000, a ratio of 4 to 1.

Interestingly, the Ninth Circuit noted that a lower ratio was appropriate in light of the "substantial" compensatory damages.  Contrast that approach to the California Court of Appeal's decision in Bullock v. Philip Morris, which held that a compensatory damages award of $850,000 (nearly ten times larger than the award in this case) was not substantial.  The Bullock court reached that conclusion by comparing the amount of the award to the defendant's wealth.  We are not aware of any other decisions following that approach, and the Ninth Circuit certainly didn't follow it here.

The Ninth Circuit also observed that the jury's punitive damages award was excessive in relation to the $10,000 fine that the California Labor Code authorizes for unlawful retaliation against whistleblowers.  California courts have gotten into the habit of saying that such comparisons are "not useful" (see Bullock again), even though the third guidepost of BMW v. Gore calls for courts to "accord substantial deference to legislative judgments concerning appropriate sanctions for the conduct at issue."