Friday, December 12, 2014
The Ninth Circuit, sitting en banc, this week affirmed a lower court's $300,000 puntive damage verdict in a Title VII sexual harassment case in which the court awarded no compensatory damages and just $1 in nominal damages.
The ruling distinguishes BMW v. Gore, the 1996 case in which the Supreme Court ruled that excessive punitives could violate due process. Gore involved a common law tort claim with no statutory cap on punitive damages. This case, State of Arizona v. ASARCO LLC, in contrast, involved a Title VII claim with a statutory cap on both compensatories and punitives. That difference, the statutory cap, drove the result.
The case arose out of a sexual harassment complaint by an employee at ASARCO's Mission Mine complex in Sahuarita, Arizona. The plaintiff alleged that during her time at ASARCO she was subjected to sexual harassment, retaliation, intentional infliction of emotional distress, and was constructively discharged.
The jury awarded no compensatory damages, but awarded $1 in nominal damages and $868,750 in punitives. The trial court later reduced the punitives to $300,000, the statutory max for a Title VII claim. (The court also awarded attorneys' fees and costs in the amount of $350,902.75.) ASARCO appealed, arguing that the punitive damage award violated Gore.
The Ninth Circuit rejected that argument. The court said that because Title VII caps both compensatories and punitives, a punitive damage award within the statutory cap satisfies the underlying constitutional considerations that animated Gore (even if the punitives amounted to 300,000 times the damages). In particular, the statutory cap gave the defendant fair notice of the severity of a penalty for a Title VII violation (where the defendant in Gore, a tort case, had no such fair warning), the cap sets out a clear amount, and it states the degree of culpability a defendant must have had, thus reducing the chance of random or arbitrary awards. Moreover, "Gore's ratio analysis has little applicability in the Title VII context," because the statutory cap doesn't lend itself to a ratio analysis the way a common law damage award does. (Under Title VII's caps, the punitive damages can't increase proportionally to the harm, because they're capped.)