Tennessee Supreme Court Just Says No to Ratios
In a decision issued November 3, 2009, the Tennessee Supreme Court made clear that there is no bright line test for the ratio between compensatory and punitive damages. The case, Goff v. Elmo Greer & Sons, is a must read for anyone interested in business torts, although it's a nuisance/blasting case, not a business tort case. In Goff, the jury awarded around $3,000 in compensatory damages and then hit the defendant for a whopping $2,000,000.00 in punitives. The trial court reduced the award to $1,000,000 to conform to the amount requested in the pleadings. On appeal, the Tennessee Supreme Court reduced the punitives award to $500,000, still a ratio of about 150 to 1.
Many lawyers have focused on language from the United States Supreme Court's decision in State Farm v. Campbell, to conclude that a punitive award can never exceed nine times the compensatory award. Not surprisingly, the defense lawyers in Goff argued that the award violated due process because the punitive verdict exceeded a single digit ration to the compensatory award.
In evaluating the constitutionality of the award in Goff, the Tennessee Supreme Court put this notion to rest. With a very nice (and helpful) string cite, the Court recognized that other courts "have been willing to affirm ratios exceeding single digits when damages were relatively low but the actions of the wrongdoer were egregious. The Court's decision can be read to conclude that the focus on the single digit ration reflects an overly restrictive view that does not comport with the Supreme Court's jurisprudence on the subject.
This decision should prove most helpful to plaintiffs in all kinds of tort cases where injuries may be slight but conduct is egregious.
