Last month, Iowa Law School professor N. William Hines published a study of close to 500 nation-wide punitive damages awards between 2004 and 2011. He and his researchers looked at all post-trial proceedings, including any appeals, trying to determine the extent to which the courts were following the due-process mandates of State Farm Mutual Automobile Insurance Co. v. Campbell (2003) 538 U.S. 408, BMW of North America, Inc. v. Gore (1995) 517 U.S. 559 and similar SCOTUS decisions. Their conclusion: yes, the courts seem to largely be reducing punitive damages awards in conformance with federal requirements.
Here at CBL, we were interested in whether this would hold for California cases. There seems to be a vague belief outside the borders of the Golden State that our courts are, shall we say, kind of imaginative, and that the Ninth Circuit freely engages in nose-thumbing in the direction of East Capital and First Street NE. Are these views accurate when it comes to punitive damages awards?
Professor Hinds was kind enough to provide an Excel spreadsheet of all his data. The crack CBL data processing division stripped out all the non-California cases, leaving us with 66 State and Federal California cases involving punitive damages. What did we find? To the extent we can measure due process by the final ratio between compensatory and punitive damages, and to the extent that there is a bright line at a ratio of 9, as State Farm suggests, our courts seem to be generally following the law. The following chart shows what we found.
There were two ratios of 10 or more from the State Courts, and two from the Federal Courts. One case involved a jury award of $5,000 compensatory damages and $1.7 million punitive damages, a ratio of 340 to one. The Court of Appeal reduced the punitive damage award to $50,000, resulting in a 10 to 1 ratio. In two of the cases, the compensatory awards were nominal -- $1 or $2 -- with very large punitive awards.
Many thanks to Professor Hines for sharing his data. And hat tip to California Punitive Damages, an Exemplary Blog for its July post on his article, entitled "Marching to a Different Drummer? Are Lower Courts Faithfully Implementing The Evolving Due Process Guideposts to Catch and Correct Excessive Punitive Damages Awards?"