Engle Progeny Case Is Instructive on Arguments About the Size of Awards for Punitive Damages and Non-Economic Damages
On Tuesday, Law360 reported that a Florida state appellate court had reversed a $41 million punitive damages award in a case brought against a tobacco company by the widow of a lifelong smoker. See R.J. Reynolds Tobacco Co. v. Townsend, Case No. 1D10-4585, Slip op. (Fla. App. -- 1st Dist. Feb. 14, 2012). The case is an "Engle progeny" case, in that it is a follow-on individual action arising out of the failed class action in Engle v. Liggett Group, Inc., 945 So.2d 1246 (Fla. 2006). The Townsend case is particularly interesting because the court was confronted with a very high non-economic damages award, as well as a high punitive damages award.
Plaintiff and her husband had married young in 1956 and were married for 39 years. Her husband was a lifelong smoker, and died of cancer at the age of 59. The jury awarded Mrs. Townsend $10.8 million for her emotional distress caused by the death of her husband. (The jury also determined that the husband shared 49% of the fault, and thus the defendant was only liable for roughly half of the award.)
The jury also awarded punitive damages in the amount of $80 million. Given the jury's fault allocations, the trial court entered a judgment that included a $40.8 million punitive damages award against the defendant.
The defendant's appeal was heard before a three-judge panel of Florida's intermediate appellate court. A majority of the panel refused to remit the compensatory award or order a new trial, even though they as much as acknowledged that the award was likely the result of the jury's inflamed passions. But the court did intervene with respect to the punitive damages award, sending the case back to the trial court to either remit the award or order a new trial on punitive damages.
THE COMPENSATORY AWARD
The majority freely acknowledged that the types of non-economic damages at issue in this case -- mental pain and suffering and loss of consortium -- are inherently difficult to measure. But, the majority instructed, Florida's jurisprudence puts the job of measuring such damages in the hands of the jury. Slip op. at 4. The majority did acknowledge that by statute, courts are required to give close scrutiny to damage awards to see whether they exceed a reasonable range of damages. The statute even includes criteria that include whether the award appears to be "indicative of prejudice, passion, or corruption on the part of the jury."
The majority concluded that "[a]lthough the $10.8 million compensatory damage award in this case is higher than the non-economic damage awards affirmed by this Court in the other Engle progeny cases that we have reviewed to date, we cannot say that the award obviously exceeds the 'reasonable range within which the jury may properly operate.'" Slip op. at 6 (citation and footnote omitted). It noted that there was a $5 million award in one post-Engle appeal, and a $7.8 million award in the other. The majority acknowledged that $10.8 million "is certainly at the outer limit of reasonableness for a case such as this," but said it did not shock the judicial conscience.
In his dissent, Judge T. Kent Wetherell II said that $5 million non-economic damage awards previously had "raised my judicial eyebrow, but the $10.8 million award in this case shocks my judicial conscience." Slip op. at 16-17. "[J]uries do not have free reign to turn widows of lifelong smokers into decamillionaires simply because [the defendant] is 'a deep-pocket defendant and "a present-day popular villain" and non-economic damages are difficult to measure," he cautioned.
Judge Wetherell observed that the cases the plaintiff had relied on to justify the compensatory award were cases that involved awards to parents for the death of a child, "which is a far more traumatic loss than the loss of a spouse to lung cancer after a lifetime of smoking." Slip op. at 18-19. He further noted that another case relied on by the majority -- which had let stand a $4.4 million non-economic damages award to a 7-year-old who had lost his mother in a horrific car crash -- had held that $4.4 million was "on the outer limit in size" of award that could be upheld. This award in Townsend was more than double that, and in Judge Wetherell's "view the sheer size of the award is a clear indication that the jury was acting on passion and prejudice."
Looking to the record, Judge Wetherell said the only conceivable explanation for the amount of the award was plaintiff's counsel's request, in closing argument, that the jury look to the salary of one of the defendant's experts and one of its executives as "reasonable gauges or measuring sticks" to value the time Mrs. Townsend lost with her husband because of his death from cancer. Judge Wetherell concluded:
[I]t appears that this false comparison was merely intended to shift the jury's focus in assessing damages onto the wealth of the defendant who caused the damages, and to that end, counsel's argument was nothing more than a thinly-veiled invitation for the jury to lavishly compensate Appellee for the death of her husband simply because [the defendant] could afford to do so. This argument was improper because compensatory damages should be based on the loss suffered by the plaintiff, not the defendant's ability to pay; however, it clearly worked, as reflected by the eight-figure compensatory damage award assessed by the jury.
Slip op. at 20. The only evidence of Mrs. Townsend's non-economic damages, according to Judge Wetherell, "consisted of little more than her testimony describing her long and happy marriage and testimony that her husband's death has been 'very hard' on Appellee. Surely the law requires more than a sympathetic plaintiff testifying that she is saddened by the death of a loved one to justify such a large non-economic damage award." Slip op. at 22.
THE PUNITIVE DAMAGES AWARD
In beginning its analysis of the punitive damages award, the court recited the purposes of punitive damages and cited the line of U.S. Supreme Court precedents establishing that due process imposes a limit on the amount of such awards.
The real issue in Townsend was the relationship between the amount of the compensatory award and the amount of the punitive damages award. The majority noted that the precedents indicated that the ratio of punitive damages to compensatory damages ordinarily cannot exceed the single digits, and it recognized that the U.S. Supreme Court had indicated in one case that a ratio of 4 to 1 "might be close to the line of constitutional impropriety." Slip op. at 12 (citation omitted). The court calculated the ratio here as being 3.7 to 1. Nevertheless, it held that the punitive damage award in this case was constitutionally excessive. Why?
There are two reasons. First, the court measured the $40.8 million punitive award against other reported punitive awards in tobacco litigation. It noted that the award here was much more than the $25 million award that had been approved on appeal in another case that involved "essentially the same conduct."
Second -- and perhaps even more important -- the court observed that the compensatory award itself was huge and at the outer limits of acceptability. The court looked to the U.S. Supreme Court's analysis in State Farm v. Campbell, where the high court instructed that "[w]hen compensatory damages are substantial, then a lesser ratio, perhaps only equal to compensatory damages, can reach the outermost limit of the due process guarantee." Slip op. at 13 (citation omitted). The Townsend court then looked to the reasoning of the Eighth Circuit in Boerner v. Brown & Williamson Tobacco Co., 394 F.3d 594 (8th Cir. 2005). In Boerner, the jury had awarded roughly $4 million in compensatories, and $15 million in punitive damages. The Eighth Circuit, looking at the size of the compenatory award, said that a rough 1:1 ratiio was warranted, finding the punitive award excessive under state and federal due process guarantees. It thus reduced the punitive award to $5 million.
The Townsend majority was unwilling to pick a ratio or a number for the punitive award in its case. It said the evidence of reprehensibility did not make a one-to-one ratio the outer limit of a constitutional punitive damages award. And it returned the case to the trial court, either for a new trial on punitive damages or a remittitur that the plaintiff could agree to. Although he agreed with the majority that the punitive damages award was excessive, Judge Wetherell, in his opinion, disagreed with the majority's statement that "a 1 to 1 ratio is unwarranted," and also disagreed with the majority's conclusion that the punitive damages in Townsend should not be capped at the $5 million that had been awarded in another Engle progeny case, "particularly in light of the majority's observation (with which I agree) that there is 'nothing in the record to suggest that [the defendant's] conduct toward [Appellee] was any more wanton or reprehensible than it was toward [the plaintiff in the other case]." Slip op. at 16 n.11.
The Townsend decision is instructive because it demonstrates the types of evidence and arguments that both sides use in arguing about the size of damage awards. Evidence of awards from other cases, as well as record evidence of what was argued in the particular case, is extremely important in crafting an argument for or against the size of a particular damage award.