Vol. 77, No. 2, February
How Much is Too Much?
Balancing Punitive Damages
In a postverdict review of punitive damages in the wake of Campbell
and Trinity, the authors examine how to balance the ratio of punitive to
compensatory damages and the reprehensibility of the defendant's
underlying conduct in determining how much is too much.
by Robert L. Gegios & William E. Fischer
ith the proliferation of actions alleging
corporate wrongdoing and the increased litigiousness of American
society, more and larger punitive damage awards are being sought and
granted across the nation than ever before.1
Following in step with this trend is increased postverdict scrutiny by
courts of the reasonableness of these awards.
Signifying the importance of the issue, the U.S. Supreme Court has
accepted and decided challenges to large punitive damage awards several
times within the past decade. In doing so, the Court has
"constitutionalized" the analysis, effectively including what has been a
predominantly common-law reasonableness inquiry2 in a multifactor, "substantive due process"
analysis. Most recently, the Supreme Court provided additional guidance
with its 2003 decision in State Farm Mutual Automobile Insurance Co.
The Supreme Court has focused on particular considerations for
determining whether a punitive award is constitutionally excessive: 1)
the reprehensibility of the underlying conduct (itself a balancing test
that contains several subfactors); 2) the proportion of punitive damages
to the actual or possible compensatory damages available in the case;
and 3) the relation of the punitive award to any possible civil or
criminal penalties for the same conduct.4
Since Campbell was handed down, the "ratio" factor has been
highlighted in commentary5 as the greatest
advance in constitutional punitive damage jurisprudence. And yet, by the
Court's own admission, the most important factor is not the ratio, but
rather the egregiousness of the defendant's actions.6 Unfortunately, the relative simplicity of applying
the ratio factor, as opposed to an in-depth inquiry into the
egregiousness of the defendant's conduct, tempts courts to forsake a
serious application of any other considerations in favor of applying a
mathematical equation in determining whether any given punitive award is
acceptable. In practice, however, courts generally have not shown a
willingness to succumb to this temptation.
The greater complication in analysis arises when a defendant,
deserving of a large punitive award because of particularly
reprehensible conduct, succeeds in having the punitive award remitted
for no other reason than that the ratio is higher than the single-digit
"cap" suggested by the Supreme Court.7 This
complication stems from the fact that "reprehensibility" is a
multifactor, subjective balancing test, while "ratio" is a bright-line
rule. To attempt to apply each test coequally is an arduous task:
whereas the bright-line rule would require a result one way or another,
the balancing test allows for significant discretion. The various
decisions of state and federal appellate courts since Campbell
illustrate the struggle that courts have had in applying these two
fundamentally different types of tests to punitive damages. The tension
between the two factors becomes apparent when a court is asked to
determine at what point the conduct in question is sufficiently
egregious, such that the ratio of punitive to compensatory damages may
be justifiably adjusted beyond the single-digit mark suggested by the
As one of the first rulings on the issue after Campbell, the
Wisconsin Supreme Court's decision in Trinity Evangelical Lutheran
Church v. Tower Insurance Co.8 is
instructive as to how much of an emphasis Wisconsin courts will place on
the ratio factor in relation to reprehensibility. Trinity
resulted in a 4-3 split in applying Campbell to a $3.5 million
punitive award, with the court first extensively evaluating the
reprehensibility of the conduct in question. Only after answering the
reprehensibility question did the court engage in a somewhat more
truncated application of the ratio factor. Trinity therefore
stands with several decisions from other jurisdictions9 for interpreting the Campbell test to
treat the reprehensibility of the defendant's actions "as the most
important indicium of reasonableness."10
In turn, the Wisconsin Supreme Court's willingness to undergo a
rigorous reprehensibility analysis acts as a guide to Wisconsin
attorneys litigating punitive awards in the future: While the ratio
factor must play a part in any postverdict argument over the
reasonableness of a punitive award, it is not the end of the story.
Rather, the ratio factor is more appropriately treated as a gateway
factor and always must be followed by a determination of
reprehensibility. In turn, this gives attorneys a wealth of persuasive
tools to consider and makes it unlikely that a challenge to the
reasonabeness of a large award will be resolved by a one-step, ratio
Wisconsin's Common Law
It has long been established that Wisconsin trial courts have
supervisory power over the amount of punitive damages awarded by
juries.11 In exercising this power,
Wisconsin courts have considered several factors: "the grievousness of
defendant's acts; the degree of malicious intention; the potential
damage which might have been done by such acts as well as the actual
damage; and the defendant's ability to pay."12
A punitive award can never be unreasonably low, because whether
punitive damages should be awarded at all is a matter for the jury's
discretion. However, a high punitive award is justified only when it
serves the state's purposes of punishment and deterrence.13 A disproportionate and excessive award serves no
purpose in relation to those objectives and therefore violates public
policy.14 An award found to be
disproportionate will be dismissed or remitted if the reviewing court
finds evidence of "passion or prejudice" in the jury's
determination,15 and no punitive award may
be given when there is no compensatory award.16 These basic elements are still reflected in
Wisconsin's jury instruction for punitive damages,17 as well as in Wis. Stat. section 895.95, a 1995
enactment that codified the common law. Both include a provision for
considering the defendant's wealth in determining the appropriate
Punitive Damages and Substantive Due Process
The U.S. Supreme Court has formally injected due process principles
into the inquiry over the reasonableness of punitive awards only within
the last 15 years, although it discussed that possibility in several
earlier cases.18 The Court first used a due
process analysis to review (and ultimately uphold) a punitive award in
1991.19 While at the time the Court focused
mainly on whether the procedural safeguards instituted by state courts
were sufficient in imposing meaningful restraints against "unlimited
jury discretion,"20 as the 1990s wore on,
the inquiry became more substantive in nature.
By 1996 the Court, voicing its "concern about punitive damages that
have 'run wild,'"21 had adopted as
constitutional law many common law factors used by states, including
Wisconsin, in determining whether an award is grossly excessive.22 In essence, the Court moved from the procedural
inquiry of ensuring that state judiciaries applied the proper procedure,
to the substantive exercise of directly applying the common law factors.
In doing so, the Court attached its inquiry to a long tradition of
common law iterations of standards (many quite inexact) that governed
the review of a punitive award for reasonableness, such as whether the
award "shock[ed] the judicial conscience,"23 or "raise[d] a suspicious judicial
eyebrow."24 To these, the Court added
whether the award "jar[red] one's constitutional sensibilities."25
The Court's 1996 opinion in BMW of North America Inc. v.
Gore26 marked the first time that the
Court, applying a substantive due process inquiry that imbued state
common law standards with constitutional ramifications, struck down a
punitive award on due process grounds.27
The Court established three guideposts: 1) the degree of
reprehensibility of the [wrong]; 2) the disparity between the harm or
potential harm suffered by [the plaintiff] and his or her punitive
damage award; and 3) the difference between this remedy and the civil
penalties authorized or imposed in comparable cases.28 These guideposts help to establish whether a
defendant has had sufficient notice of the possibility and severity of
the punishment, such that "[e]lementary notions of fairness enshrined in
our constitutional jurisprudence" - that is, substantive due process -
are not offended.29 In a subsequent case,
the Court mandated, as further protection of a defendant's due process
rights, that an appellate court must apply these factors de novo.30
Campbell v. State Farm
The Supreme Court's decision in Campbell v. State Farm once
again struck down a punitive award as unconstitutionally large. In doing
so, Campbell repeated and refined the first two guideposts from
BMW, and added that criminal penalties for comparable conduct
may also be used as a part of the third BMW factor. Drawing
from BMW, the Court noted that reprehensibility of conduct is
determined by considering several factors: "whether: the harm caused was
physical as opposed to economic; the tortious conduct evinced an
indifference to or reckless disregard of the health or safety of others;
the target of the conduct had financial vulnerability; the conduct
involved repeated actions or was an isolated incident; and the harm was
the result of intentional malice, trickery, or deceit, or mere
The Court noted that State Farm's conduct (which included declining
to settle for the policy limits in the face of a near-certain jury
verdict in excess of those limits, the doctoring of company documents,
and misleading the insured as to the amount of personal risk) "merits no
praise," but it nevertheless determined that the defendant was
prejudiced by the introduction of evidence of business practices that,
while suspect, had nothing to do with the plaintiffs' case, and it
concluded that evidence of unrelated, out-of-state conduct was wrongly
admitted.32 This, according to the Court,
offended principles of due process, in that State Farm was given no
notice that the dissimilar acts would be punished, and State Farm was
exposed to punishment in multiple jurisdictions for the same conduct. As
such, the $145 million punitive award in Campbell (on top of a
compensatory award of $1 million) violated BMW's directive that
the award must bear some reasonable relationship to the reprehensibility
of the specific harm caused.
Regarding the proportion between compensatory and punitive damages,
the Court "decline[d] again to impose a bright-line ratio which a
punitive damages award cannot exceed."33
And yet, the Court arguably came closer to that point than ever before.
Although observing that in some situations the egregiousness of the
wrong, or the fact that compensatory damages are unusually small or
difficult to quantify, may merit a higher ratio, the Court strongly
suggested a presumptive limit of single-digit ratios: "Single-digit
multipliers are more likely to comport with due process, while still
achieving the State's goals of deterrence and retribution, than awards
with ratios in the range of [hundreds to one]."34 The ratio should be reduced further when
compensatory damages are substantial, perhaps even to the point of
one-to-one or less. The Court also took a dim view of the consideration
of the depth of a defendant's pockets: "The wealth of a defendant cannot
justify an otherwise unconstitutional damage award."35
Trinity v. Tower
Trinity v. Tower Insurance was already before the Wisconsin
Supreme Court when the Campbell decision was announced.
Trinity dealt with a $3.5 million punitive award against Tower
Insurance for its bad faith in failing to notify the plaintiff of a
mutual mistake in an insurance contract and then initially refusing to
pay a claim under that contract. The compensatory award in the bad faith
case was $17,000, although the possible compensatory damages in the
underlying case totaled nearly $490,000.
The Wisconsin Supreme Court recognized the due process implications
of an unreasonable punitive award in 1996, just after BMW was
decided.36 While at that
time the court included the three BMW guideposts in a list of
six relevant factors, including wealth, collected from previous
cases,37 in the cases that followed the
court used the BMW factors instead and dropped the extra
factors from the analysis.38 However, in
affirming the court of appeals' approval of the punitive award, the
Trinity majority returned to Wisconsin's six common law
factors.39 While Trinity made
clear that the first five factors are fairly subsumed within the
BMW factors, the sixth factor - a defendant's wealth - is not.
Given the disfavor shown by the U.S. Supreme Court to this factor, as
well as the fact that previous Wisconsin case law had all but eliminated
it, the court's inclusion of the wealth factor is noteworthy.
Ultimately, however, that particular factor took no place in the court's
Instead, the majority strictly followed the format set out in
Campbell. In discussing the reprehensibility guidepost, the
court focused on the repeated-action factor. According to the majority,
the reprehensibility factor was satisfied, because Tower had been
censured by the court in a similar instance (albeit 34 years
ago),40 and because Tower's acts were
flagrant and intentional.41 Moving to the
ratio factor, the majority noted that the parties submitted different
figures for the potential harm Trinity may have suffered because of
Tower's bad faith. With little comment, the court accepted Trinity's
$490,000 figure - the amount of damages from the underlying case - in
lieu of Tower's $17,000 figure - the amount of Trinity's costs and fees
in pursuing the bad faith action. Thus, in the majority's estimation,
the ratio of punitive to compensatory damages was an acceptable
seven-to-one. The majority concluded with a comparison of the award to
the possible criminal penalty of $10,000, and noted that "other factors
may be relevant,"42 such as the defendant's
wealth, but chose not to apply them.
A three-justice dissent took issue with the majority on all three
points. Through its criticism of the majority for overstating the
applicability of the reprehensibility factor, the dissent highlighted
that Trinity suffered only economic damages, thus touching on the
growing debate whether actions causing physical injury are more
reprehensible than those causing economic injury and thereby warrant
higher punitive awards.43 This
controversial point was discussed in Campbell,44 in which the U.S. Supreme Court adhered to the
view that physical injury was more deserving of punitive redress, but
the Trinity majority failed to address the issue in making its
determination. Further, the dissent chided the majority for finding that
the defendant's involvement in a similar situation more than 30 years
before made it a "recidivist" and for finding this determinative as to
Focusing also upon the ratio between punitive and compensatory
damages, the dissent pointed out that Trinity was never in danger of
having to pay the $490,000 in damages in the underlying case (in the
dissent's view, either Tower or the liability insurer of the insurance
agent who made the mistake in the first place would have to pay).
Instead, the dissent suggested that the proper amount upon which to base
the ratio was the $17,000 in actual damages in the bad faith
action.46 This, in the dissent's view,
would result in a "breathtaking" 200-to-1 ratio, which could not be
tolerated under the Due Process Clause. Further, the dissent noted that
Campbell also was a bad faith case, and the U.S. Supreme Court
based its ratio analysis on the actual compensatory damages in the bad
faith case, not the potential damages in the underlying action. Finally,
the dissent observed that the ratio of punitive damages to the possible
criminal fine, $10,000, was an even more startling 350-to-1.
Litigating the "Close" Case After
Trinity and Campbell
When a punitive award is found not warranted at all, as in the
Wisconsin Court of Appeals' recent Miller Park decision,47 or when an award is so large as to be beyond the
realm of realism, as in the $145 billion tobacco class action award in
Florida,48 the question of whether
"reprehensibility" outweighs "ratio" is of little moment. In the first
instance, the inquiry is mooted, and in the second the ratio is so out
of proportion that it obviously does "jar one's constitutional
sensibilities." Instead, the difficulties and challenges in analysis
arise when cases fall somewhere in the middle; when the bright-line
ratio factor is far less instructive and the various reprehensibility
subfactors must be taken into account.
It is in these cases that the skilled litigator is best able to use
his or her tools of persuasion. In the wake of Trinity and
Campbell, the challenge for litigators in close cases is first
to make evident to the court the fact that the "ratio" factor, despite
its apparent ease of application, is not the "be-all and end-all" of the
inquiry - nor is it even the first factor that should be considered. The
primary teaching of Campbell and those cases that have upheld
punitive awards in excess of the single-digit ratio to compensatory
damages is that the determination of reprehensibility is still paramount
in the substantive inquiry into the reasonableness of punitive awards.
Thus, Campbell provides support for attorneys on either side of
the aisle during a postverdict challenge to a punitive award. For the
plaintiff's attorney, there is room to argue that the conduct being
punished is sufficiently reprehensible to warrant an award beyond a
9-to-1 ratio. For the defense, an argument that the reprehensibility
factors have not been met, coupled with a ratio in excess of single
digits, creates a strong case for remittitur.
In turn, the Trinity decision, albeit with its own
shortcomings and uncertainties, remains instructive on this point by the
very fact that the Wisconsin Supreme Court focused first on the
reprehensibility factor, rather than the ratio. Although clearer
guidance on the point was precluded because the Trinity
majority found the ratio factor also to be satisfied at 7-to-1, the
majority's and dissent's differing applications of the ratio factor
point up just how malleable, and consequently amorphous, that factor may
be. These differing interpretations should act as a caution to attorneys
seeking to justify or strike down a punitive award on the sole basis of
its proportion to compensatory damages.
Reinforcing this conclusion are decisions from a wealth of courts in
other jurisdictions that have upheld awards in excess of single-digit
ratios.49 Illustrative of the line of
reasoning presented in these cases is Judge Posner's recent decision in
Mathias v. Accor Economy Lodging Inc.50 In upholding a large punitive award for a hotel
chain's repeated and flagrant failure to correct an insect infestation,
the court recognized the crucial fact that the ratio consideration
should not stand in the way of the concept that "the punishment should
fit the crime."51 In so stating, Judge
Posner took his cue straight from Campbell, in which the U.S.
Supreme Court, no matter how strong its suggestion that there may be a
maximum allowable ratio under the Constitution, nevertheless noted that
awards with a larger ratio are only presumptively invalid.52 Thus, Judge Posner cautioned, "[although]
punitive damages should be admeasured by standards or rules rather than
in a completely ad hoc manner ... this does not tell us what the maximum
ratio of punitive to compensatory damages should be in a particular
case."53 In essence, Mathias
teaches that, no matter what the ratio, one must always still look to
the reprehensibility factors to decide whether an act is "particularly
egregious,"54 or whether the amount of
compensatory damages does not adequately reflect the harm caused, such
that it would warrant an upward deviation in the ratio.55
Therefore, as a practical matter, it is often more useful for a court
to take note of the ratio of punitive to compensatory damages first.
When the answer to the ratio question obviously dictates remittitur, a
principled application of the reprehensibility analysis comes into play
to enable a decision as to how much the proper punitive award should be.
Alternatively, when the ratio question yields a proportion somewhere
above the Supreme Court's suggested 9-to-1 threshold but the proportion
is not obviously excessive, the reprehensibility factor should again be
applied to ensure that the punishment does indeed fit the crime. In
either case, it is readily apparent that, although the ratio factor must
be addressed in any postverdict review of a punitive award, it can
rarely be used as a sole basis for upholding or reversing that award.
Instead, the most important measure of an award's reasonableness remains
the reprehensibility of the defendant's conduct.
In his dissent in BMW, Justice Scalia stated that "the
Court's new rule of constitutional law is constrained by no principle
other than the Justices's subjective assessment of the 'reasonableness'
of the award in relation to the conduct for which it was
assessed."56 While Justice Scalia's
unsuccessful protest against the "constitutionalization" of punitive
damage law is not the focus of this article, his comment is telling. In
cases in which the outcome of the punitive damages review is not obvious
under the ratio factor, courts must fall back upon the subjective
assessment required under the reprehensibility analysis. Of the three
guideposts provided by the U.S. Supreme Court to be used in determining
whether a punitive award is constitutionally justified, the ratio factor
is thus revealed as the blunt instrument that it is. The ratio of
punitive to compensatory damages becomes a paramount consideration only
when an award is obviously far too large, and the ratio's utility is
greatly diminished when the "fit" of the punitive award is anything less
For the majority of cases, then, the analysis returns full circle to
the type of subjective balancing required under the common law. Thus,
while Campbell presents a cautionary lesson, the arena of the
postverdict review of punitive awards nevertheless remains an important
battleground where attorneys have at their disposal a wealth of
persuasive tools under the reprehensibility factor. The law of punitive
damages as it now stands still leaves great latitude for discretion in
the trial court, as well as for savvy lawyering. As long as such
latitude exists, hard-fought battles over punitive damages are
Robert L. Gegios, U.W.
1981 cum laude, is a shareholder at the Milwaukee firm of Kohner, Mann
& Kailas S.C., concentrating in complex business and commercial
litigation and counseling in national and international settings.
William E. Fischer, Marquette 2003 cum laude, is an
associate at the firm, concentrating in complex business litigation. He
served as the Marquette Law Review managing editor and received its 2003
Golden Quill Award for excellence in scholarly legal writing.
1See cases and authorities cited in
Victor E. Schwarz, et al., I'll Take That: Legal and Public Policy
Problems Raised by Statutes that Require Punitive Damages Awards to be
Shared with the State, 68 Mo. L. Rev. 525, 525 nn.1-2 (2003).
2See Pacific Mut. Life Ins. Co.
v. Haslip, 499 U.S. 1, 15 (1991) ("Punitive damages have long been
a part of traditional state tort law." [quoting Silkwood v.
Kerr-McGee Corp., 464 U.S. 258, 255 (1984)]).
3538 U.S. __, 123 S. Ct. 1513
4Campbell, 123 S. Ct. at
5See, e.g., Gary S.
Becker, How to Put the Right Cap on Punitive Damages, 2003 Bus.
Wk. 28 (Sept. 15, 2003) (arguing for strict ratio limits on punitive
damage awards); John Gibeaut, Supreme Court Tightens Punitive
Damages: State Farm Case Further Defines Constitutional
Restrictions, ABA J. E-Report (Apr. 11, 2003) <<a
6See BMW of N. Am. Inc. v.
Gore, 517 U.S. 559, 575 (1996) ("Perhaps the most important
indicium of the reasonableness of a punitive damages award is the degree
of reprehensibility of the defendant's conduct.").
7See, e.g., McClain v.
Metabolife Int'l Inc., 259 F. Supp. 2d 1225, 1235 (N.D. Ala. 2003)
("[T]he court will simply use the top one digit multiplier suggested by
[Campbell], and accordingly will reduce" the punitive award in
accordance therewith); Bocci v. Key Pharm. Inc., 76 P.3d 669,
675 (Or. Ct. App. 2003) (finding that conduct is reprehensible but
nevertheless remitting punitive award from a 45-to-1 ratio to a 7-to-1
82003 WI 46, 261 Wis. 2d 333, 661
9See cases collected
infra note 49.
10Trinity, 2003 WI 46,
¶57 (quoting Jacque v. Steenberg Homes Inc., 209 Wis. 2d
605, 628, 563 N.W.2d 154 (1997)).
11See Malco v. Midwest
Aluminum Sales Inc., 14 Wis. 2d 57, 64, 109 N.W.2d 516 (1961)
(adopting the Powers rule for punitive damages, which entails
giving the plaintiff the choice of accepting the remittitur of the
jury's award or having a new trial to determine punitive damages);
Management Computer Servs. Inc. v. Hawkins, Ash, Baptie, &
Co., 206 Wis. 2d 158, 190-91, 557 N.W.2d 67 (1996) (reaffirming
Malco); see also Wangen v. Ford Motor Co., 97 Wis. 2d
260, 278-85, 294 N.W.2d 437 (1980) (recounting the history of punitive
damage awards in Wisconsin).
12Fahrenberg v. Tengel,
96 Wis. 2d 211, 234, 291 N.W.2d 516 (1980) (citing Herrmeyer v.
Kleeman, 76 Wis. 2d 410, 414, 415, 251 N.W.2d 445 (1977);
Malco, 14 Wis. 2d at 66; Dalton v. Meister, 52 Wis. 2d
173, 180, 188 N.W.2d 494 (1971)); see also Fuchs v. Kupper, 22
Wis. 2d 107, 111, 125 N.W.2d 360 (1963) (ability of defendant to pay);
Wangen, 97 Wis. 2d at 302 (reiterating the factors).
13See, e.g., Wangen, 97
Wis. 2d at 303 ("[a]n award which is more than necessary to serve its
purposes (punishment and deterrence) or which inflicts a penalty or
burden on the defendant which is disproportionate to the wrongdoing is
excessive and is contrary to public policy.").
Fahrenberg, 96 Wis. 2d at 223 (a punitive verdict is rendered
"perverse" when it "reflects highly emotional, inflammatory or
immaterial considerations, or an obvious prejudgment with no attempt to
be fair."(citation omitted)).
16Tucker v. Marcus, 142
Wis. 2d 425, 446-48, 418 N.W.2d 818 (1988); but see Jacque v.
Steenberg Homes Inc., 209 Wis. 2d 605, 563 N.W.2d 154 (1997)
(allowing a punitive award in the case of intentional trespass to land,
despite a nominal compensatory award).
17Wis. J.I.-Civil 1701.1
18See, e.g., Aetna Life Ins.
Co. v. Lavoie, 475 U.S. 813, 828-29 (1986); Bankers Life &
Cas. Co. v. Crenshaw, 486 U.S. 71, 76-80 (1988);
Browning-Ferris Indus. of Vt. Inc. v. Kelco Disposal Inc., 492
U.S. 257, 276-77 (1989).
19Haslip, 499 U.S. 1
20Id. at 18.
22See, e.g., TXO Prod. Corp.
v. Alliance Res. Corp., 509 U.S. 443 (1993) (plurality opinion)
(conducting a substantive inquiry into an award of $10 million in
punitive damages); Honda Motor Co. Ltd. v. Oberg, 512 U.S. 415
(1994) (Oregon Constitution's abrogation of common-law judicial review
of large punitive awards violated the Fourteenth Amendment).
23Fahrenberg, 96 Wis. 2d
24TXO, 509 U.S. at
25Haslip, 499 U.S. at
26517 U.S. 559 (1996).
27The question of why the Court
felt the need to interject a constitutional analysis into what was
traditionally a common law inquiry by state courts is not strictly
within the purview of this article. However, the dissent by Justice
Scalia in BMW adequately voices the counterpoint position that
the procedural guarantees of the Fourteenth Amendment should not be
subverted into use "as a secret repository of substantive guarantees
against 'unfairness'..." Id. at 598-99 (Scalia, J.
28Id. at 575.
29Id. at 574.
30Cooper Indus. Inc. v.
Leatherman Tool Group Inc., 532 U.S. 424 (2001).
31Campbell, 123 S. Ct.
33Id. at 1524.
35Id. at 1525.
36Management Computer Servs.
Inc. v. Hawkins, Ash, Baptie, & Co., 206 Wis. 2d 158, 557
N.W.2d 67 (1996).
37Id. at 194 (citing
BMW of N. Am., 517 U.S. at 582; Tucker, 142 Wis. 2d at
447; Fahrenberg, 96 Wis. 2d at 235-36).
38Jacque, 209 Wis. 2d at
Lutheran Church v. Tower Ins. Co., 2003 WI 46, ¶53, 261 Wis.
2d 333, 661 N.W.2d 789.
40Id. ¶ 57.
41Id. ¶ 62.
42Id. ¶ 69.
43Id. ¶ 102 (Sykes,
44Campbell, 123 S. Ct.
45Trinity, 2003 WI 46,
¶ 104 (Sykes, J., dissenting).
46Id. ¶ 106 (Sykes,
47Wischer v. Mitsubishi Heavy
Indus., 2003 WI App 202, __ Wis. 2d __, __ N.W.2d __ (disallowing
$99 million punitive award for failure to meet the factors set forth in
Wis. Stat. section 895.95).
48Ligget Group Inc. v.
Engle, 853 So. 2d 434 (Fla. Ct. App. 2003) (disallowing $145
billion punitive award against tobacco industry as grossly excessive in
light of fact it would bankrupt each tobacco company defendant many
Asa-Brandt Inc. v. ADM Investor Serv. Inc., 344 F.3d 738 (8th
Cir. 2003) (affirming award of $1.25 million in punitive damages when
compensatory damages were nominal for breach of fiduciary duty);
Mathias v. Accor Econ. Lodging Inc., 347 F.3d 672 (7th Cir.
2003) (affirming punitive award with 37.2-to-1 ratio to compensatory
damages because of particular reprehensibility of the wrong and large
net worth of defendant); Lincoln v. Case, 340 F.3d 283 (5th
Cir. 2003) (allowing punitive award of $55,000 based on compensatory
award of $500 for violation of FHA, because damage was difficult to
quantify); Jones v. Rent-A-Center Inc., 281 F. Supp. 2d 1277
(D. Kan. 2003) (affirming award with 29-to-1 ratio in sexual harassment
case, because of particularly egregious conduct); Southern Union Co.
v. Southwest Gas Corp., 281 F. Supp. 2d 1090 (D. Ariz. 2003)
(approving ratio of 153-to-1 because of particularly egregious conduct
under reprehensibility analysis); Simon v. San Paolo U.S. Holding
Co., __ Cal. Rptr. 3d __, 2003 WL 22847318 (Cal. Ct. App. Dec. 2,
2003) (approving award with 340-to-1 ratio).
50347 F.3d 672 (7th Cir.
51Id. at 676.
54Campbell, 123 S. Ct.
at 1524. For an example of a court finding the defendant's actions
"particularly egregious," see Southern Union, 281 F. Supp. 2d
at 1099-1105 (upholding award with ratio of 153-to-1 in case of
"particularly reprehensible actions by a public official in violation of
the public trust").
55See, e.g., Craig
v. Holsey, 2003 WL 22785340 *5 (Ga. Ct. App. Nov. 25, 2003) (taking
into account potential for death due to defendant's conduct in approving
award with ratio of 22-to-1).
56BMW of N. Am., 517
U.S. at 599 (Scalia, J., dissenting).
The latest decision in the legal odyssey ensuing from the 1989
grounding of the Exxon Valdez in Prince William Sound, In re Exxon
Valdez, 296 F. Supp. 2d 1071 (D. Alaska 2004), provides new support
for the thesis of our article, "How Much is Too Much? Balancing Punitive
Damages," which appeared in the February 2004 issue. Our article posits
that, although the U.S. Supreme Court has effectively imposed a "soft
cap" on the ratio of punitive to compensatory damages, courts and
attorneys alike must also look to the reprehensibility of the conduct in
question in litigating and finally deciding just how much of a punitive
award is too much.
Judge Holland's Jan. 28, 2004, opinion illustrates this point in a
40-page analysis, which ultimately concludes that the original $5
billion award, although truly "breathtaking," nevertheless withstands
constitutional scrutiny given Exxon's highly reprehensible conduct,
paired with the incalculable effects that the oil spill has had on the
lives and livelihoods of tens of thousands of Alaskans. The opinion
represents the third opportunity for the district court to review the
jury's 1994 punitive award in light of the U.S. Supreme Court's
BMW and Campbell decisions. Although the Court found
the $5 billion award justified, it nevertheless remitted the award to
$4.5 billion pursuant to the order of the Ninth Circuit in the case.
The Valdez litigation is unique because it combines highly
reprehensible conduct with a massive punitive award, a situation that
the U.S. Supreme Court has yet to confront, and that may ultimately
provide the platform for the Supreme Court's next foray into punitive
Robert L. Gegios
William E. Fischer