No firm has contributed more to the favorable development of the law of punitive damages than Mayer Brown. Mayer Brown lawyers have been involved in all of the significant punitive damages cases before the US Supreme Court since the late 1980s, serving as counsel of record for the business defendant in four of those cases, including BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996), the Court’s landmark case on excessive punitive damages, and Philip Morris USA v. Williams, 549 U.S. 346 (2007).
The firm’s Punitive Damages practice also authored influential amicus briefs for the Chamber of Commerce of the United States in State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408 (2003), and Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424 (2001), and for a consortium of amici in Exxon Shipping Co. v. Baker, 554 U.S. 471 (2008). In addition, members of our Punitive Damages practice have represented business defendants and amici in punitive damages litigation in federal and state courts throughout the United States, including in the capacity of national coordinating counsel. We have assisted clients at all stages of punitive damages litigation, from developing defenses and drafting motions in limine to assisting with post-trial motions and handling appeals.
We have enjoyed a high degree of success in the scores of punitive damages cases in which we have been involved. In several cases, appellate courts reversed and rendered judgment in favor of our clients. In numerous other cases, we succeeded in obtaining new trials or very substantial reductions of the punitive award. Collectively, our clients have saved more than $3.5 billion as a result of appeals and/or post-trial motions handled by our Punitive Damages practice.
Mayer Brown lawyers have published extensively on the subject of punitive damages, including a chapter on litigating punitive damages cases in the multi-volume treatise Business and Commercial Litigation in Federal Courts (Robert L. Haig editor, 4th ed., West 2016). That chapter provides a comprehensive discussion of tactical issues involved in litigating all phases of a case in which punitive damages are sought. In addition, our lawyers have participated in numerous panels on punitive damages, including leading a full-day interactive session on the topic with key clients of the firm.
Representative Supreme Court Matters
- BMW of North America, Inc. v. Gore. A jury in this case held BMW liable for $4,000 in compensatory damages and $4 million in punitive damages for failing to disclose that some of the surfaces of a vehicle sold as new had refinished to repair damage due to exposure to acid rain during transit from Germany. The Alabama Supreme Court reduced the punitive damages to $2 million. The U.S. Supreme Court granted our petition for certiorari and reversed the judgment, holding that the punitive damages were “grossly excessive.” The Alabama Supreme Court subsequently reduced the punitive damages to $50,000. In addition to representing BMW in the Gore case, we assisted BMW in resisting an effort by Gore’s counsel to certify a multi-state class action in Alabama state court.
- Honda Motor Co. v. Oberg. Honda retained us to file a petition for certiorari in this products- liability case involving a $5 million punitive damages exaction. The issue was whether states are required under the Due Process Clause of the Fourteenth Amendment to provide judicial review of the amount of a punitive damages award. The Supreme Court granted our petition and agreed with our position that Honda had a constitutional right to post-verdict excessiveness review.
- Philip Morris USA v. Williams. In this case, the Oregon Supreme Court upheld a $79.5 million punitive award in favor of the widow of a smoker. The U.S. Supreme Court granted our petition for certiorari to address whether the Oregon Supreme Court erred in holding that a jury in an individual case may punish the defendant for harms suffered by non-parties. By a 5-4 margin, the Court agreed with us that a jury may not constitutionally punish a defendant for injuries suffered by non-parties.
Representative Federal and State Matters
- 2660 Woodley Road Joint Venture v. ITT Sheraton Corp. In this case, judgment was entered against Sheraton for $12.6 million in compensatory damages and $17.4 million in punitive damages (remitted by the trial court from $37.5 million) for alleged breaches of its hotel-management agreement, breach of fiduciary duty, and negligent misrepresentation. In addition, it was held liable for $750,000 in antitrust damages, which were trebled for a total antitrust award of $2.25 million. Sheraton retained us to handle the appeal to the Third Circuit, which reversed the antitrust judgment, threw out all except $1.47 million of the compensatory damages, and reduced the punitive damages to $2.03 million.
- Bach v. First Union National Bank. The plaintiff, an elderly widow, sued First Union, alleging that it violated the Fair Credit Reporting Act. The jury awarded $400,000 in compensatory damages and $2.6 million in punitive damages. The Sixth Circuit held that the punitive damages were unconstitutionally excessive, finding the 6.6:1 ratio of punitive to compensatory damages “alarming.” On remand, the district court ordered a remittitur to $2.2 million, thereby reducing the ratio to an only modestly less alarming 5.6:1. We appealed that ruling, and the Sixth Circuit then ordered the district court to reduce the punitive damages to no more than the amount of compensatory damages.
- Baymon v. General Motors Acceptance Corporation. The jury in this case found that GMAC committed fraud, breached an alleged fiduciary duty, breached its contract, and breached the implied duty of good faith and fair dealing by charging Baymon more for “forced-placed” insurance than its actual cost of obtaining the insurance. It awarded $35,000 in compensatory damages and $5 million in punitive damages. The Mississippi Supreme Court reversed and rendered judgment in favor of GMAC on the fraud, fiduciary duty, and good-faith-and-fair-dealing claims. On the breach-of-contract claim, the court ordered a new trial because of instructional and evidentiary errors, as well as improper summations by plaintiff’s counsel. Additionally, the court indicated that both the compensatory damages and the punitive damages were excessive.
- CGB Occupational Therapy v. RHA/Pennsylvania, Inc. Nursing Homes. In this case, our client, Sunrise Senior Living, Inc., was held liable for tortious interference with the at-will relationship between CGB and therapists in its employ. CGB was awarded $109,000 in compensatory damages and $30 million in punitive damages. In response to our post-trial motions, the district court reduced the punitive damages to $2 million. After both parties appealed, the Third Circuit further reduced the punitive damages to $750,000.
- Galarneau v. Merrill Lynch, Pierce, Fenner & Smith, Inc. The plaintiff in this case was a terminated Merrill Lynch broker. She sued Merrill Lynch, alleging claims for, inter alia, defamation. The jury found for Galarneau on her defamation claim, which was based on her allegation that Merrill Lynch’s statement that she was terminated for “inappropriate bond trading” was maliciously false. The jury awarded $850,000 in compensatory damages and $2.1 million in punitive damages. We were retained to handle the appeal. The First Circuit upheld the compensatory award but reversed the punitive award in its entirety, concluding that the plaintiff had not met the standard for imposing punitive damages.
- Hicks v. MIC Life Insurance Company and General Motors Acceptance Corporation. In this case, a Mississippi jury awarded $30 million in punitive damages against GMAC and $6 million against its indirect subsidiary MIC Life Insurance Company for failing to refund $600 in unearned premiums on a credit life-insurance policy. The trial court reduced the punitive damages against GMAC to $5 million and those against MIC Life to $1 million. On appeal, the Mississippi Court of Appeals held that the trial court had committed five different trial errors. It accordingly awarded GMAC a new trial as to all issues and awarded MIC Life a new trial as to all issues except for liability for the refund. On petitions for review by all three parties, the Mississippi Supreme Court affirmed the new trial for GMAC, found the $1 million punitive award against MIC to be unconstitutionally excessive and also held that the trial errors were prejudicial to both GMAC and MIC.
- Jelinek v. Abbott Laboratories. This case arose from Abbott Laboratories’ termination of a specific management position, which required reassignment of the seven employees who held that position. Some of those employees were younger than 40; others were older. Abbott reassigned each to the best available position within his or her region. Plaintiff, however, claimed that his reassignment to an undesirable position was motivated by discrimination based upon his age. An Ohio jury awarded him $700,000 in emotional-distress damages and $25,000,000 in punitive damages. We succeeded in persuading the court of appeals to grant Abbott a new trial.
- Lompe v. Sunridge Partners, LLC. This case was brought by a tenant in an apartment building who was injured when she was overcome by carbon monoxide from a malfunctioning furnace. She was awarded $3 million in compensatory damages (reduced to $2.7 million to account for her comparative fault) and a total of $25.5 million in punitive damages against the owner of the apartment building and its management company. The district court refused to disturb the punitive awards against the two defendants—$3 million and $22.5 million respectively. On behalf of the Chamber of Commerce of the United States, we filed an amicus brief identifying several errors in the district court’s excessiveness analysis. First, the court failed to engage in the exacting review required by the Due Process Clause and improperly deferred to “phantom” factual findings not actually made by the jury. Second, the court failed to heed the Supreme Court’s admonition that the excessiveness inquiry requires courts to determine whether the punitive damages are greater than reasonably necessary to achieve the state’s interests in retribution and deterrence. Third, in analyzing the ratio guidepost, the court both failed to reduce the $3 million compensatory damages to reflect the plaintiff’s negligence and compared the punitive award against each defendant to the full amount of compensatory damages. Finally, the court deviated from the modern trend by refusing to reduce the punitive damages to the amount of compensatory damages or lower. The Tenth Circuit agreed with each of the arguments made in our amicus brief. After overturning the punitive award against the building owner in its entirety on sufficiency-of-the-evidence grounds, the Tenth Circuit reduced the punitive damages against the management company to $1,950,000—representing a 1:1 ratio to that defendant’s share of the compensatory damages (as reduced to account for the plaintiff’s comparative fault).
- Milton Hambrice, Inc. v. State Farm Fire and Casualty Co. This malicious-prosecution case was brought by an electrical contractor against which State Farm had sought contribution following its payment on a claim for fire damage to a restaurant. The jury awarded the contractor $312,000 in compensatory damages and $7.5 million in punitive damages.Finding insufficient evidence to support two key elements of the claim, the Eighth Circuit reversed the entire judgment.
- Mitchell v. Residential Funding Co. The plaintiffs in this class action obtained second-mortgage loans from Mortgage Capital Resources Corp. (“MCR”), which eventually sold the loans to Residential Funding Co. (“RFC”) and two other lenders. The plaintiffs whose loans were sold to RFC contend that MCR charged them, in the aggregate, $798,832 in closing costs that—although fully disclosed—were prohibited by Missouri’s Second Mortgage Loan Act (“SMLA”), R.S.Mo. §§ 408.231 et seq. They parlayed this claim into a $97 million judgment against RFC—including $92 million in punitive damages. The Missouri Court of Appeals upheld the compensatory award, but granted a new trial on punitive damages after concluding that one of the theories of liability was invalid and that it was impossible to know whether the punitive damages were based on that invalid theory. The parties thereafter settled the case.
- Morgan Stanley & Co. v. Coleman (Parent) Holdings Inc. In this case, the Florida intermediate court of appeals reversed a jury award of $1.58 billion, including $850 million in punitive damages, to billionaire Ronald Perelman’s company, Coleman (Parent) Holdings (“CPH”). CPH had sued Morgan Stanley over the 1998 sale of Coleman Co., in which it was the majority shareholder, to Sunbeam Corp. A jury ruled in CPH’s favor in May 2005, after having been told, as a sanction for alleged discovery misconduct by Morgan Stanley, to assume that the investment bank had conspired with Sunbeam to defraud Perelman by paying for the merger in part with substantially overvalued Sunbeam stock. The Florida appellate court held that CPH failed to prove that it was damaged and accordingly ordered judgment to be entered in Morgan Stanley’s favor.
- Mungin v. Katten Muchin & Zavis. In this case, an African American associate at the Washington office of a Chicago law firm claimed employment discrimination and was awarded $1 million in compensatory damages for alleged emotional distress and $1.5 million in punitive damages. The D.C. Circuit reversed and ordered judgment entered in favor of Katten, finding no evidence to support the plaintiff’s claims of discrimination.
- Navistar International Transp. Corp. v. Vernon Klein Truck & Equipment, Inc. The jury in this dealer-termination case awarded the plaintiff $11 million in compensatory and $15 million in punitive damages, mostly for tortious-interference with contract. The Oklahoma Court of Appeals agreed with our position that the plaintiff could not satisfy the elements of that claim, leaving the plaintiff with less than $300,000 of the original $26 million judgment.
- Philip Morris USA Inc. v. Kayton. The jury awarded the plaintiff in this smoking-and-health case $8 million in compensatory damages (which the trial court reduced to $5 million based upon the plaintiff’s comparative fault) and $16 million in punitive damages. The Florida appellate court reversed the punitive award and remanded for a partial retrial, holding that the jury was improperly allowed to consider conduct that was barred by the statute of repose in connection with its consideration of the plaintiff’s conspiracy claim, which formed the basis for the award of punitive damages.
- Philip Morris USA Inc. v. Naugle. In this case, a Florida jury awarded an individual plaintiff $57 million in compensatory damages and $244 million in punitive damages—according to news accounts, the largest product-liability verdict of 2009. We were retained to assist in preparing the post-trial motions. The trial court reduced the compensatory damages to $12 million and the punitive damages to $25 million. We then briefed the appeal before the Florida intermediate court of appeals, which agreed with our argument that a new trial was required based on the trial court’s finding that the jury had been inflamed by passion and prejudice and had disregarded the court’s instructions.
- Pioneer Commercial Funding Corp. v. American Financial Mortgage Corp. This case arose out of a bank’s set-off of a $1.8 million wire transfer against a debt owed to it by a customer. An entity that held a security interest in the funds that had been set off sued the bank for conversion and was awarded the $1.8 million that had been set off, plus $13.4 million in “consequential” damages and $337.5 million in punitive damages. The trial court ordered a remittitur of the punitive damages to $40.5 million. The Superior Court (Pennsylvania’s intermediate appellate court) then upheld the compensatory component of the judgment, but ordered a new trial on punitive damages both on excessiveness grounds and because of improper argument by plaintiff’s counsel. The Pennsylvania Supreme Court then granted our petition for review and ordered that judgment be entered in favor of the bank on the ground that its setoff had priority over the plaintiff’s security interest in the funds under Pennsylvania law.
- Rockwell International Corp. v. Wilhite. This case involved a $210 million punitive exaction imposed because of the escape of small quantities of PCBs from one of Rockwell’s facilities. The Kentucky Court of Appeals initially reversed and ordered the entry of judgment in favor of Rockwell, concluding that the testimony of the plaintiffs’ valuation expert should not have been admitted and that no other evidence supported the judgment. The Kentucky Supreme Court in turn held that the evidentiary error warranted a new trial, not entry of judgment in favor of Rockwell, and remanded for consideration of Rockwell’s remaining arguments. The Court of Appeals then granted judgment in favor of Rockwell and added for good measure that the punitive award was the product of passion and prejudice caused by plaintiffs’ improper closing arguments.
- Steele Software Systems Corp. v. First Union National Bank. In this case arising out of First Union’s termination of a contract under which Steele performed certain title search and appraisal services for the bank, a Maryland jury awarded Steele $39 million in fraud damages, $37 million in overlapping contract damages, and $200 million in punitive damages—at the time the largest punitive award ever entered by a Maryland state court. Accepting our argument that Steel had failed to prove the elements of its fraudulent-inducement claim, the Maryland Court of Special Appeals granted judgment to First Union on both fraud and punitive damages, leaving only the contract award standing.
- Tomao v. Abbott Laboratories. We assisted in briefing the post-trial motions in this case, in which the jury awarded plaintiff a total of $7 million for her claims of discrimination and retaliation under the ADA and ADEA. The ADA discrimination award was subject to a statutory cap of $300,000, leaving an uncapped award of $3.3 million in punitive and compensatory damages for the ADEA retaliation claim. Based on our arguments, the court reduced that award to less than $30,000. We appealed the balance of the verdict. The case settled after the argument.
- Turley v. ISG Lackawanna, Inc. The plaintiff in this case alleged that his employer failed to respond adequately to acts of racial harassment perpetrated by co-workers. He brought claims under various statutes, and also alleged intentional infliction of emotional distress under New York law. The jury held the employer and its parent company liable on the statutory claims for $1 million in compensatory damages and $20 million in punitive damages. And it held the employer liable for $250,000 in compensatory damages and $4 million in punitive damages on the intentional-infliction claim. The district court ordered a remittitur of the punitive damages to a total of $5 million. After the plaintiff accepted the remittitur, our clients appealed to the Second Circuit, which held that the punitive damages remained excessive and that no more than a 2:1 multiple of the compensatory damages—i.e, $2.5 million—is permissible.
- TVT Records v. Island Def Jam Music Group and Lyor Cohen. This case arose from a dispute between two record companies, plaintiff TVT Records and defendant Island Def Jam Music Group (“IDJ”), over the rights to the services of the recording artist Ja Rule and the music producer Irv Gotti; IDJ’s president, Lyor Cohen, was also named as a defendant. A jury found the defendants liable for fraud, breach of contract, and tortious interference with contract. It awarded compensatory damages of approximately $24 million against both defendants, jointly and severally, and punitive damages against IDJ in the amount of $52 million and against Cohen in the amount of $56 million. We were retained by Cohen to assist with post-trial proceedings and appeal. The district court granted a substantial remittitur of the punitive award against Cohen, from $56 million to $3 million. On appeal, we challenged the liability findings on the fraud and tortious-interference claims. The Second Circuit agreed with our position as to both, leaving standing only the $126,720 in compensatory damages for the unchallenged breach-of-contract count.
- Udac v. Takata Corp. This products-liability case involved allegations that Takata’s seatbelt buckle was defective and caused severe injuries to the plaintiff when he was ejected during a vehicle rollover. The jury found for the plaintiff and returned a verdict of $17 million, including $12.5 million in punitive damages. The Intermediate Court of Appeals for Hawaii agreed with our contention that the trial court had erroneously excluded expert testimony tending to show that the plaintiff was not wearing his seatbelt, erroneously admitted a patent for an unrelated buckle, and erroneously instructed the jury on a failure-to-warn theory. The court also agreed that the evidence was insufficient to support punitive liability.
- White v. Ford Motor Company. In this products liability case in which the plaintiffs alleged that their three-year-old son was killed as a result of a defective parking brake in their Ford truck, a federal jury in Nevada awarded nearly $151 million in punitive damages, which the district court reduced to $69 million. The Ninth Circuit ordered a new trial on punitive damages, agreeing with our contention that the district court erred in declining to instruct the jury that it had to limit its punishment to conduct affecting Nevada residents. On remand, the jury awarded $52 million in punitive damages. The Ninth Circuit then ordered a second new trial on punitive damages because of the district court’s error in refusing to instruct the jury that it could not punish Ford for the impact of its conduct on non-parties. The case settled before the third trial.