August 24, 2020

Seventh Circuit reduces punitive damages to $140 million in case where jury awarded $700 million

In 2016 we reported on a Wisconsin jury's award of $700 million in punitive damages against Tata Consultancy Services for theft of trade secrets.

Tata filed post-trial motions and the trial court reduced the punitive damages to $280 million, and reduced the compensatory damages to $140 million.

The Seventh Circuit has now issued a published opinion affirming the $140 million compensatory award, but further reducing the punitive damages.  

The court concluded that Tata's conduct warranted punishment, but "was not reprehensible 'to an extreme degree.' "  The court then observed that the case presented an unusual situation for determining the ratio of the punitive damages to the harm suffered by the plaintiff, because the plaintiff suffered very little actual harm.  The $140 million in compensatory damages reflected Tata's profits from its misconduct, not harm to the plaintiff.  The Seventh Circuit noted, however, that Tata did not argue that the punitive damages should be compared to any number besides the compensatory damages.  Accordingly, Tata forfeited its right to argue that the award was excessive in relation to the plaintiff's actual harm.

But even comparing the punitive damages to the $140 million compensatory damages award, the court concluded the punitive damages were excessive, and that the reprehensibility of the defendant's conduct could not justify a ratio above one-to-one.  Accordingly, the court ordered the trial court to reduce the punitive damages to $140 million.