In State of Arizona v. ASARCO LLC, WL 6918577, published December 10, 2014, the Ninth Circuit Court of Appeals held that an award of $300,000 in punitive damages did not violate due process even though no compensatory damages were awarded, and the jury awarded only one dollar in nominal damages to Plaintiff for her Title VII sexual harassment claim.
Plaintiff Angela Aguilar filed a lawsuit against her employer, ASARCO, alleging harassment, constructive discharge, and retaliation under Title VII of the U.S. Constitution. The jury found ASARCO liable on Aguilar’s sexual harassment claims, but not on her constructive discharge or retaliation claims. The jury awarded no compensatory damages, but awarded one dollar in nominal damages and $868,750 in punitive damages. The district court reduced the punitive damages award to $300,000 in accordance with the $300,000 cap on compensatory and punitive damages found in 42 U.S.C. § 1981a. ASARCO appealed, arguing the district court erred by refusing to reduce the punitive damages award further in that the amount of punitive damages violated its due process.
In determining whether the punitive damages award violates the Due Process Clause, the Court of Appeals evaluated the factors outlined in BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996): (1) degree of reprehensibility of defendant’s misconduct; (2) disparity between actual or potential harm suffered by plaintiff and punitive damages award; and (3) difference between punitive damages awarded by jury and civil penalties authorized or imposed in comparable cases. The Court, however, determined that because this case involves claims under a statutory scheme which includes a carefully crafted provision that imposes a cap on punitive damages, it is the statute itself, and not the specific award in this case, that must comport with the due process requirements in Gore.
In determining that §1981a comports with due process, the Court reasoned that Title VII violations often resulted in injuries that were difficult to quantify in physical terms, Title VII’s statutory scheme imposed a $300,000 cap (thereby placing the employer on notice regarding the type of conduct that could subject them to liability), the level of mental culpability or intentionality required and the dollar amount to which they could be subjected, and the jury was instructed that it could not award more than one dollar in nominal damages. The Court further reasoned that it was not appropriate to examine the ratio of a nominal damages award to a punitive damages award to determine if the punitive damages award complied with due process because nominal damages are neither intended to compensate plaintiff for injuries, nor to act as a measure of severity of defendant’s wrongful conduct.
Finally, the Court affirmed the trial court’s award of $350,902.75 for attorneys’ fees and costs finding that even though Plaintiff was only awarded $1 in nominal damages, she was also awarded almost $900,000 in punitive damages (which was reduced to $300,000) clearly making her the prevailing party.
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