State of Arizona v. ASARCO: Court Reduces $300,000 Punitive Damage Award in Title VII Action

In State of Arizona v. ASARCO LLC (9th Cir. 10/24/13), the Ninth Circuit considered whether a $300,000 punitive damage award in a Title VII sexual harassment suit violated constitutional limits where the jury awarded no compensatory damages and only one dollar in nominal damages. 

Angela Aguilar worked for ASARCO at a copper mining and refining facility in Arizona. She alleged that two supervisors harassed her, and management failed to remedy the situation. At trial, the jury awarded her no compensatory damages, one dollar in nominal damages, and $868,750 in punitive damages. The district court reduced the punitive damages to $300,000, the statutory maximum under Title VII for an employer of ASARCO’s size. 42 U.S.C. § 1981a(b)(3)(D). 

The Court of Appeal reversed after examining the "guideposts" for determining excessiveness of a punitive damage award: (1) “the degree of reprehensibility of the defendant’s conduct”; (2) “[the] ratio to the actual harm inflicted on the plaintiff”; and (3) “civil or criminal penalties that could be imposed for comparable misconduct.” BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996). 

First, the Court held that the district court did not err in finding that ASARCO's conduct was reprehensible and would support "a very large punitive award." Slip op. at 9-13. 

Second, the Court considered whether the punitive damage award bore "a reasonable relationship to compensatory damages." Slip op. at 13-16. The Court found that this requirement "suggested" that the damages should be reduced. Slip op. at 16. 

Third, the Court held that Title VII's $300,000 punitive damage cap is a "civil penalty" that gives defendants "fair notice . . . of the severity of the penalty that a State may impose" and supports a $300,000 punitive damage award. Slip op. at 16-17. 

The Court concluded that the Constitution did not bar the imposition of a "substantial punitive award," but that the 300,000 to one ratio was excessive. Slip op. at 18-20. Finding no discrimination case upholding a ratio greater than 125,000 to one, the Court held that $125,000 was the highest award that would maintain a "reasonable relationship" between compensatory and punitive damages.  Slip op. at 20. 

The Court remanded and ordered that the district court could order a new trial unless the plaintiff accepts a remittitur to this level. 

The opinion is available here.