02 May Punitive Damages…Even with No Montana Cap, There are Parameters
The Montana Attorney General filed his notice on April 22 that he will intervene in the Butte Local Development Group v. Masters Group International appeal, to defend the constitutionality of Montana’s punitive damages cap.
In my last post on the Montana punitive damages cap, I said I trusted a Montana jury not to get too carried away when punishing a defendant who deserves punishment. But, I realize that there are people out there who are scared of runaway juries. What has become the “classic” — or to me, infamous — example is the woman who spilled hot coffee on her lap at McDonalds and secured a verdict which included $2.7 million punitive damages. (I’m not going to spend time here telling you all the reasons it drives me nuts that the Liebeck verdict is the poster-child for tort reform, although it does. If you want to see, essentially how I feel about it, you can take a look at Hot Coffee). I still don’t feel like a Montana runaway jury is a huge danger.
And, even if there is no Montana punitive damages cap, did you know that there is, essentially a Federal punitive damages cap?
No. You’re not going to find a Federal statute that says, “no punitive damages over $10 million shall be awarded,” but, if you know where to look, you’ll find State Farm v. Campbell. Campbell is the United State Supreme Court case that found the Federal Constitution’s Due Process Clause won’t allow punitive damages to grossly outweigh the compensatory damages of a jury verdict. And, although the Campbell Court didn’t want to draw a bright-line rule about the issue, it did state that, “an award of more than four times the amount of compensatory damages might be close to the line of constitutional impropriety.” And, “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 range of 500 to 1, or, in this case, of 145 to 1.”
In Masters, the total compensatory damages the jury found was approximately $42 million. The punitive damages the jury found was $10.5 million. Under Campbell, where the punitive damages are less than the compensatory damages by about 1/4, it seems these punies don’t even come close to “the line of constitutional impropriety.” Instead, what would “come close” to constitutional impropriety would be $168 million in punies in this case.
That the ratio of punitive damages to compensatory in Masters maybe here demonstrates a reason that I believe, in general, a Montana jury really isn’t in danger of running away in indignant anger.