$300,000 in Punitive Damages Upheld for Discrimination Plaintiff with $1 in Nominal Damages

The Court of Appeals for the Ninth Circuit upheld a $300,000 punitive damage award for a sexual harassment victim. In Arizona v. ASARCO, LLC, a mine worker received no compensatory damages, $1 in nominal damages, and more than $350,000 in attorneys’ fees and costs after winning at trial. The jury awarded $868,750 in punitive damages, but the award was reduced to $300,000 by the trial court—the maximum amount allowed under Title VII. The defendant appealed, arguing the punitive damage award was unconstitutionally high.

A three-judge panel reviewed the appeal initially, and found that the punitive damage award was unconstitutionally high under BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996). Gore addressed state common law claims in which the United States Supreme Court found a $2 million punitive damages award “grossly excessive” and unconstitutional when the plaintiff only received $4,000 in compensatory damages. It analyzed constitutionality using three factors: (1) the degree of reprehensibility of the defendant’s conduct, (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award, and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases. Applying these factors, the Ninth Circuit panel reduced the award to $125,000, reflecting the highest nominal damages to punitive damages ratio the court could find in case law.

The Court of Appeals then reviewed the case en banc and upheld the $300,000 award. The court found that the statutory cap in Title VII—not Gore—was determinative. Since Congress had already built in checks within Title VII to protect employers against unreasonable punitive damages awards, including a standard of culpability and different statutory caps for smaller employers, any award within those caps would be constitutional.