Tuesday, February 14, 2012

$80 Million Punitive Award Unconstitutional; $10 Million Compensatory Award Affirmed In Smoker Case

In R.J. Reynolds Tobacco Company v. Townsend (1D10-4585), the First District upheld a jury verdict against the R.J. Reynolds Tobacco Company for $10.8 million in compensatory damages (prior to deducting due to the 49% of fault attributed to the smoker) but rejected an $80 million punitive damage award as being excessive. Judge Van Nortwick wrote the majority opinion and Judge Marstiller. Judge Wetherell wrote an opinion concurring in part and dissenting in part. The court stated:
The Supreme Court has been “reluctant to identify concrete constitutional limits on the ratio between harm . . . to the plaintiff and the punitive damages award,” State Farm, 538 U.S. at 424. Nevertheless, it has identified a circumstance in which caution is required: “When compensatory damages are substantial, then a lesser ratio, perhaps only equal to compensatory damages, can reach the outermost limit of the due process guarantee.” State Farm, 538 U.S. at 425. As the Supreme Court noted in Gore, however, there is no “simple mathematical formula” that marks the constitutional line. Gore, 517 U.S. at 582. See also State Farm, 538 U.S. at 425 (“We decline again to impose a bright-line ratio which a punitive damages award cannot exceed.”); Martin, 53 So. 3d at 1072 (rejecting RJR’s argument that the United States Supreme Court adopted a bright-line 1 to 1 ratio as a limit on punitive damages).
Here, the $10.8 million compensatory damage award—which is substantial by any measure—justifies a lower ratio than 3.7 to 1. Although we find the $40.8 punitive damage award excessive under the Gore and State Farm criteria, a 1 to 1 ratio is unwarranted, however, because the evidence of the extreme reprehensibility and wantonness of RJR’s conduct was substantial. See Gore, 517 U.S. at 575 (noting that “the most important indicium of the reasonableness of a punitive damages award is the degree of reprehensibility of the defendant’s conduct”).
In sum, applying the Gore and State Farm criteria, in view of the substantial compensatory damages awarded here, we agree with RJR that the $40.8 million punitive damage award in this case is constitutionally excessive. Thus, it was error to deny RJR’s motion for new trial or remittitur. Accordingly, we reverse and remand the punitive damages award for the limited purpose of permitting Appellee to choose between a new jury trial solely to determine punitive damages or acceptance of a remittitur judgment on the punitive damages award to be established by the trial court.
Judge Wetherell agreed with the majority as to three challenges not discussed here but would have also reversed the $10.8 million compensatory damages award which was solely comprised of non-economic pain and suffering damages. 


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