PUNITIVE DAMAGES IN CALIFORNIA – 1:1
On November 30, 2009, the California Supreme Court issued its opinion in Roby v. McKesson Corporation, Case No. S149752.(Roby v McKesson ). For the first time, the Court directly addresses the federal constitutional limitations in awarding punitive damages, holding that the punitive damage award should not exceed the amount awarded as compensatory damages:
“. . .we conclude that a one-to-one ratio between compensatory and punitive damages is the federal constitutional limit here. We base this conclusion on the specific facts of this case. We note in particular the relatively low degree of reprehensibility on the part of employer McKesson and the substantial compensatory damages verdict, which included a substantial award of noneconomic damages.” (Id. at 38-39).
Charlene J. Roby sued her former employer McKesson (and her supervisor) for wrongful discharge based on her medical condition and related disability. She suffered from “panic attacks” that temporarily and on short notice prevented her from performing her job. Because of these attacks, Roby missed work and these absences led to her termination. The termination devastated her emotionally and financially, causing her to become agoraphobic and suicidal. Eventually, the U.S. Social Security Administration found her to be completely disabled.
So, she sued McKesson (and her supervisor) alleging wrongful termination in violation of public policy, harassment in violation of California’s Fair Employment and Housing Act (“FEHA”), as well as discrimination and a failure to accommodate in violation of this same state statute, California’s FEHA.
The jury found that Roby was wrongfully discharged based on her medical condition and related disability. Finding both harassment and discrimination, the jury awarded $3,511,000 in compensatory damages and $15 million in punitive damages against McKesson.
On appeal, the court of appeal reduced the compensatory damages to $1,405,000 and the punitive damages to $2 million, and otherwise affirmed the judgment.
The California Supreme Court reversed, with an instruction to the trial court to reinstate a single harassment award of $500,000 against both Mckesson and the supervisor. Thus, the total compensatory award equalled $1,905,000. It further instructed the lower court to modify the punitive damages award against McKesson to $1,905,000, or to be the same amount as the compensatory damage at a ratio of 1:1, based on its discussion and application of recent U.S. Supreme Court cases on this issue (see, State Farm Mut. Auto Ins. Co. v. Campbell (2003) 538 US 408 (State Farm v. Campbell )and BMW of North America v. Gore (1996) 517 US 559) ( BMW v. Gore).
Needless to say, this ruling will evoke much discussion in the cyber world and around the water cooler.
. . .Just something to think about.
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