Opinion
Case No. 3-:01-CV-191.
March 30, 2006
Dorothy B. Bach ("Bach") sued First Union National Bank ("FUNB") claiming a violation of the Fair Credit Reporting Act ("FCRA"), negligence, intentional infliction of emotional distress, defamation, invasion of privacy and a violation of the Fair Credit Billing Act ("FCBA").
Bach's claims were tried to a jury. At the close of Bach's case, the Court granted FUNB's Fed.R.Civ.P. 50(a) Motion for judgment as a matter of law on all of Bach's claims except the FCRA claim. The jury then found that FUNB had wilfully violated the FCRA and awarded Bach $400,000 in compensatory damages and $2,628,600.00 in punitive damages.
After the verdict, FUNB brought a motion for a judgment as a matter of law pursuant to Fed.R.Civ.P. 50(b) and a motion for a new trial or amendment of judgment pursuant to Fed.R.Civ.P. 59(a). This Court denied both of FUNB's Motions. FUNB then appealed to the Sixth Circuit.
BACH'S APPEAL
The Sixth Circuit affirmed this Court's denial of FUNB's Rule 50(b) Motion with respect to the actual damages awarded by the jury and this Court's ruling on FUNB's Rule 59(a) Motion that the compensatory damage award was not excessive. Bach v. First Union National Bank, 149 Fed.Appx. 354, 368 (6th Cir. 2005). The Sixth Circuit also held that this Court did not abuse its discretion in denying FUNB's Fed.R.Civ.P. 59(a) Motion for a new trial. Finally, the Sixth Circuit found that the punitive damages awarded by the jury in this case were unconstitutionally excessive.In determining that the jury's punitive damage award was unconstitutionally excessive, the Sixth Circuit first decided that the jury "was properly able to award punitive damages." Id. at 364. Then, to reach its conclusion that the jury's punitive damage award was unconstitutionally excessive, the Sixth Circuit analyzed the award de novo using the framework set forth in BMW of North America, Inc. v. Gore. 517 U.S. 559, 575 (1996).
In Gore, the Supreme Court set forth three guideposts for courts to consider in reviewing the constitutionality of a jury's punitive damage award. Id. The Gore guideposts are: (1) the reprehensibility of the defendant's conduct; (2) the disparity between the actual harm suffered by the plaintiff and the size of the punitive damage award; and (3) the difference between the punitive damages awarded and the civil or criminal penalties imposed or authorized for comparable misconduct. Id.
Reprehensibility of Defendant's Conduct
The degree of reprehensibility of the defendant's conduct is the most important guidepost in determining the constitutionality of a punitive damage award. State Farm Mutual Automobile Insurance Co. v. Campbell. 538 U.S. 408, 419 (2003). This guidepost is analyzed using, in accordance with State Farm, the following factors: (1) whether the harm caused was physical or economic; (2) whether the conduct showed an indifference or reckless disregard for the health or safety of others; (3) whether the target of the conduct was financially vulnerable; (4) whether the conduct involved repeated actions or was merely the result of an isolated instance; and (5) whether the harm was caused by intentional malice, trickery or deceit or was rather accidental. Bach, 149 Fed.Appx. 364 (citing State Farm, 538 U.S. at 419).The Sixth Circuit initially determined that the first factor was not present because the harm to Bach was economic and not physical. Id. The Circuit Court next determined that the second indicator was not met because FUNB's tortious conduct "occurred in the 'economic realm,'" and did not display an indifference or reckless disregard for the health and safety of others. Id. at 365. Bach, according to the Sixth Circuit, was a financially vulnerable victim and the third factor of the analysis was, therefore, met. Id. The Circuit Court then determined that the fourth factor regarding repeated actions was not satisfied because it was not shown that FUNB's reprehensible conduct was committed against parties other than Bach. Id. Finally, the Sixth Circuit found that the fifth factor was not met because, while this Court's holdings "do not support a finding that FUNB's actions were a product of mere accident," the findings "certainly do not support a finding of intentional malice, trickery, or deceit." Id. at 365-66. The Circuit Court then concluded that, based upon its de novo review, "only one of the five reprehensibility factors is present in this case." Id. at 366.
Disparity Between Harm Suffered and Size of Punitive Award
At the second State Farm guidepost, the Sixth Circuit found that the 6.6:1 ratio of punitive to compensatory damages in Bach's case is "alarming." Id. It is "alarming" according to the Sixth Circuit, "considering the fact that much of the compensatory damage award must be attributable to Bach's pain and suffering." Id. "This fact," according to the Sixth Circuit, "compels the conclusion that the punitive damage award is duplicative, and that either a new trial on punitive damages or a remittitur of the damages awarded is appropriate." Id. Comparison of the Punitive Damage Award with Comparable Civil or Criminal PenaltiesThe Sixth Circuit found the third State Farm guidepost not particularly helpful. It is not particularly helpful, according to the Circuit Court, because the past punitive damage awards cited by both parties are not authorized and imposed civil penalties and the penalties provided by the FCRA are not applicable to actions brought by private citizens.
Conclusion
Based upon its de novo review using the State Farm guideposts, the Sixth Circuit concluded that the punitive damages awarded to Bach by the jury are unconstitutionally excessive. The award of punitive damages was, therefore, reversed and the case was remanded to this Court "for either a new trial on the punitive damages issue or for a remittitur of the jury verdict." Id. at 367.
NEW TRIAL OR REMITTITUR
On remand, this Court is bound by the determinations of the Sixth Circuit unless one of three circumstances are met. National Hockey League Players Association v. Plymouth Whalers Hockey Club, 419 F.3d 462, 470 (6th Cir. 2005). The three circumstances are: (1) substantially different evidence is subsequently raised; (2) a subsequent contrary and controlling view of the law is decided; or (3) a decision is clearly erroneous and would work a manifest injustice. Id. (citing Hanover Ins. Co. v. Am. Engineering Co., 105 F.3d 306, 312 (6th Cir. 1997)). None of these circumstances are now present in this case nor do either of the Parties argue that one or more of them is present. Therefore, this Court and the Parties are bound by the Sixth Circuit's determination regarding the punitive damage award in this case.
Per an agreement between Bach, FUNB and this Court, Bach and FUNB have both filed Opening and Reply Briefs regarding a remittitur of the punitive damage award. The issue is, therefore, fully briefed and ripe for decision. Bach's arguments regarding the punitive damage award will first be addressed followed by FUNB's arguments and the Court's decision regarding a remittitur.
Bach's Arguments
Bach argues that the punitive award should be remitted to $2,228,600. The basis of this argument is that a remittitur to $2,228,600 eliminates the possibility of the duplication of the compensatory award, the only specific concern stated by the Sixth Circuit.
Bach also argues that the maximum punitive damage award the Constitution permits is at least $1,600,000 (a 4:1 ratio of punitive to compensatory damages). See McHugh v. Olympia Entertainment Inc., 37 Fed.Appx. 730 (6th Cir. 2002) (6:1 ratio approved where violence was involved), Diesel Machinery, Inc. v. B.R. Lee Industries, Inc., 418 F.3d 820 (8th Cir. 2005) (4.5:1 ratio approved).
Bach further argues that the Supreme Court has determined that a district court has a somewhat superior advantage over courts of appeals primarily with respect to issues turning on witness credibility and demeanor. Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 440 (2001). This distinct advantage comes into play in a decision regarding the amount of punitive damages because there is no mathematical formula to determine the maximum amount of punitive damages allowed by the Constitution in a particular case. BMW of North America, Inc. v. Gore, 517 U.S. 559, 582-83. In fact, the Supreme Court has said, "[t]he precise award in any case, of course, must be based on the facts and circumstances of the defendant's conduct and the harm to the plaintiff." State Farm, 538 U.S. at 425.
Bach next urges this Court to engage in another analysis of the Gore factors. However, as indicated above, this Court has no new information regarding the Gore factors, other than the Sixth Circuit's analysis, and, therefore, declines to engage in a further review.
Bach's final argument is a review of the purposes of punitive damages and a review of the evidence in this case. Bach correctly identifies the two purposes of punitive damages as retribution and deterrence. Id. at 416. Further, the financial capacity of the defendant must be seriously considered in determining whether a punitive damage award will effectively punish and deter. Romanski v. Detroit Entertainment, L.L.C., 428 F.3d 629, 467-49 (6th Cir. 2005).
While this is the law, there is no need to engage in another review of the same evidence. The jury heard the evidence regarding punitive damages and made a decision, this Court reviewed the evidence regarding punitive damages and reached a decision and the Sixth Circuit reviewed the punitive damage issue de novo and reached a decision. The analysis next turns to FUNB's arguments regarding the amount of punitive damages to be awarded in this case.
FUNB's Arguments
FUNB first argues that the Court should remit the punitive damage award to less than the amount of the compensatory damage award. This argument is based upon the Sixth Circuit's previous decision in this matter and its subsequent decision in Clark v. Chrysler Corp. 436 F.3d 594 (6th Cir. 2006).
In Clark, the Sixth Circuit applied the Gore guideposts to Defendant Chrysler's actions and concluded that Chrysler's misconduct did not constitute a high level of reprehensibility because only one of the five factors used to evaluate the reprehensibility of Chrysler's actions was found to be present. Id. at 608. The Court also concluded that the 13:1 ratio of punitive to compensatory damages was unjustifiably large and that there was a wide gap between the punitive damage award and comparable civil damages. Id. The Sixth Circuit then awarded punitive damages in a 2:1 ratio to compensatory damages. Id.
From this, FUNB concludes that Clark stands for the proposition that when, as here, (1) the conduct involves only a single reprehensibility factor and (2) the compensatory damages are in the range of $400,000, a 1:1 ratio is the constitutional maximum. However, this argument is not persuasive because Clark can easily be distinguished from this case.
First, the Sixth Circuit's ultimate decisions were different. In Clark, the Sixth Circuit reviewed the punitive damage award de novo and concluded that a specific amount of punitive damages was appropriate. After a de novo review in this case, the Sixth Circuit did not identify a specific amount for the punitive damage award.
If the Sixth Circuit thought a 1:1 ratio was appropriate in this case, it surely would have said so. Instead, the Sixth Circuit remanded this matter to this Court which has conducted the trial, heard the evidence, observed the demeanor and credibility of the witnesses and observed the jury.
In addition, the specific 1:1 ratio that FUNB urges this Court to apply is not embraced by the majority opinion in Clark which ultimately established a 2:1 ratio based upon the specific facts in that case. The Clark Court notes that the Supreme Court "has emphasized that 'an award of four times the amount of compensatory damages might be close to the line of constitutional impropriety.'" Id. at 606 (citing State Farm, 538 U.S. at 425). Also noted in Clark is the Supreme Court's refusal to impose a bright line ratio which a punitive damage award cannot exceed while noting that few awards exceeding a single-digit ratio will pass constitutional muster. Id.
Second, while FUNB attempts to make a favorable comparison, the facts in this case are different from the facts in Clark. In general, this is a case brought by a consumer against a bank and Clark is a case brought by the spouse of a deceased accident victim against an automobile manufacturer. From this basis, the facts and the evaluation of the Gore guideposts differ significantly between this case and Clark. Therefore, based upon the Supreme Court's statement in State Farm that, "[t]he precise award in any case, of course, must be based on the facts and circumstances of the defendant's conduct and the harm to the plaintiff," it would be improper for this Court to set a punitive damage ceiling for this case by importing a ratio from another case with different facts and circumstances.
FUNB also cites a recent out-of-circuit district court ruling, Casumpang v. Int'l Longshore Warehouse Union Local 142, 411 F.Supp.2d 1201 (D.Hawai'i 2005), to support its contention that a 1:1 ratio is at or over the constitutional maximum. However, this comparison suffers from all of the infirmities that FUNB's comparison to Clark suffers with one addition. The remittitur in Casumpang occurred in large part because the defendant was a local union and public policy requires that labor unions in particular be protected from financially devastating punitive awards. Id. at 1218. The analysis turns next to this Court's decision.
Remittitur
The Sixth Circuit has reviewed the jury's award of punitive damages in this case de novo and has reached two specific findings that are relevant to the remittitur that it ordered. First, the Sixth Circuit determined that the 6.6:1 ratio of punitive to compensatory damages was unconstitutionally excessive. Second, the Sixth Circuit determined that punitive damage award is duplicative of the compensatory damage award. The Sixth Circuit found no other measurable error nor did it provide a specific amount of punitive damages that would not be unconstitutionally excessive.This Court has nothing further to add to the initial jury award and this Court's subsequent conclusions regarding punitive damages, conclusions which have already been reviewed de novo by the Sixth Circuit. In light of the decisions reached by the Sixth Circuit as a result of their de novo review and this Court's reverence for the Constitutionally-created right to a jury trial, a process that was provided to both Parties, the punitive damage award is remitted to $2,228,600.
The $2,228,600 is reached by reducing the jury's punitive damage award by the jury's compensatory damage award to insure that the punitive damages are not duplicative of the compensatory damages while maintaining the sanctity of the initial jury award. The result is a 5.56:1 ratio of punitive to compensatory damages.
This proposed punitive damage award complies with the specific findings of the Sixth Circuit while maintaining the sanctity of the initial jury award. The specific findings of the Sixth Circuit are complied with because the ratio of punitive to compensatory damages is reduced and there can no longer be any concern that the punitive damage award duplicates in part the compensatory damage award.
Regarding the sanctity of its decision, the results indicate that the jury did not reach the punitive award by simply multiplying some number times the compensatory award. The jury, after extensive deliberation, awarded a rather precise amount of $2,628,600. See Kemp v. American Telephone Telegraph Co., 393 F.3d 1354 (11th Cir. 2004) (Supreme Court's second Gore guidepost regarding ratios was not intended to prevent juries from levying punitive damage awards that provide a meaningful deterrent against corporate misconduct). This precise amount has been reduced to the maximum amount that comports with the due process rights of FUNB.
The punitive damages amount determined by this court as a basis for a remittitur is informed by the Supreme Court's determinations that there is no mathematical formula to determine the maximum amount of punitive damages allowed by the Constitution in a particular case and that a district court has a somewhat superior advantage over courts of appeals primarily with respect to issues turning on witness credibility and demeanor. This advantage was implicitly recognized by the Sixth Circuit when, instead of specifying the amount of punitive damages to be awarded in this case, the Circuit Court deferred to this District Court for such a determination.
Turning now to implementation, a remittitur entails offering the plaintiff the choice between a new trial and a reduced amount suggested by the court. Johansen v. Combustion Engineering, 170 F.3d 1320, 328 (11th Cir. 1999), rehearing denied, 182 F.3d 938 (11th Cir. 1999), cert. denied, 528 U.S. 931 (1999). However, in this case, FUNB argues that a new trial is not required. This argument is based upon a decision wherein the Eleventh Circuit reasoned that a constitutionally reduced verdict, as is the case here, is not a remittitur because a court orders a remittitur when it believes the jury's award is unreasonable on the facts and a constitutional reduction is a determination that the law does not permit the damage award in question. Id. at 1331.
While the Eleventh Circuit's reasoning in Johansen is persuasive, it has been foreclosed here by the Sixth Circuit's opinion in this case. The Sixth Circuit specifically remanded this matter "for either a new trial on the punitive damages issue or for a remittitur of the jury verdict." Bach, 149 Fed.Appx. at 367.
Therefore, Bach is given until not later than twenty days following entry of this order to agree to punitive damages in the amount of $2,228,600. If Bach does not elect to remit the punitive damage award to $2,228,600, a new trial on the issue of punitive damages will be scheduled.
DONE and ORDERED.