When Compensatory Damages Are "Substantial," Third Circuit Adopts a 1:1 Punitive Damages Ratio
Jurinko v. The Medical Protective Company, 2008 U.S. App. Lexis 26263 (3d Cir. December 24, 2008)
The Third Circuit, in a non-precedential (but citable under FRAP 32-1) opinion, recently reduced a punitive damages award in an insurance bad faith case from a compensatory damages to punitive damages ratio of 3:1 to a 1:1 ratio.
In Jurinko, both parties appealed the lower court rulings. (Defendants appealed the verdict and award; plaintiffs, the post-trial motion modifying the verdict and award.) While the Third Circuit upheld the verdict in favor of plaintiffs, it reduced the punitive damages award from $6.25 million to $2 million. The Court ruled that punitive damages were appropriate because of Medical Protective’s “egregious” behavior, but explained that based on the United States Supreme Court’s rulings in State Farm v. Campbell, BMW v. Gore and Exxon Shipping v. Baker, because the compensatory damages awarded were “substantial” and damages “purely economic” (as opposed to physical), a ratio greater than 1:1 would violate Defendants’ due process.
Unfortunately, the Court did not offer any guidance as to what constitutes a “substantial” punitive damages award, opening up another avenue of battle between litigants.
