For those looking for a mathematical bright line rule to determine an acceptable ratio of punitive to compensatory damages, the Tennessee Supreme Court recently backed away from employing a strict ratio based analysis. Prior decisions indicated that a punitive award that was more than 4 times the compensatory award may not withstand constitutional scrutiny (See November 23, 2008 post). In Goff v. Elmo Greer & Sons Construction Co. (November 3, 2009), the Tennessee Supreme Court reduced what was originally a $2,000,000 punitive award to $500,000. While the reduction was significant, the compensatory damage award for the conduct that supporting the punitive award was only $3,305. Thus, even after the reduction, the punitive to compensatory damages ratio was 150:1.
Goff is another decision in the growing body of Tennessee Supreme Court precedent addressing the sufficiency of evidence necessary for a punitive damage award and the factors utilized in determining whether the size of the award violates the defendant’s due rights under the 14thAmendment. In connection with determining whether a punitive award is grossly excessive and violates due process, the court is to focus on the degree of reprehensibility of the defendant's conduct; the disparity between the harm (or potential harm) and the award; and, the difference between the punitive damages and other available penalties. The bottom line is that Goff gives the court a great deal of discretion when reviewing a punitive award and a high punitive to compensatory damage ratio alone will not be enough to make the award suspect.
Dan Berexa
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