Earlier this year, the Ninth Circuit granted en banc review in Arizona v. ASARCO LLC to consider whether a punitive damages award that is subject to Title VII’s cap of $300,000 could nonetheless be unconstitutionally excessive when the compensatory damages are nominal and the ratio of punitive to compensatory damages accordingly is high.
In a post about the case a few weeks before the argument, I expressed the view that the parties and the courts were focused on the wrong question and that the right question is whether, as a matter of federal common law, a punitive award at the high end of the range is appropriate under the facts of the particular case. And in a subsequent post, I explained why under that approach the punitive award in ASARCO should be considered excessive.
Yesterday, in an opinion by newly minted Chief Judge Sidney Thomas the en banc Ninth Circuit unanimously held that the concerns underlying the Supreme Court’s due process decisions—that the defendant receive fair notice of the extent of punishment to which it could be subjected and that defendants not be subjected to arbitrary punishments—are fully satisfied by Title VII’s cap.
I won’t bore readers with a comprehensive summary of the court’s analysis. Suffice it to say that the court explained why, in its view, a punitive award within the Title VII cap does not run afoul of any of the three excessiveness guideposts articulated in BMW v. Gore.
Critically, the size of the cap—$300,000 for compensatory and punitive damages combined— seemed important to the en banc panel. The court appears to have left open the question whether an award under a different cap could still violate due process. For example, Montana caps punitive awards at the larger of $10 million or 3% of the defendant’s net worth. If that cap is upheld by the state supreme court (as Andy Frey and Rory Schneider contend it should be in this post), ASARCO should not preclude a federal district court from reviewing a punitive award that is within the Montana cap for excessiveness under the BMW guideposts.
The Ninth Circuit also did not address the contention that under Title VII itself courts have an obligation to reserve the highest amounts of punitive damages for the most egregious misconduct. While it is unlikely that courts within the Ninth Circuit will deem themselves at liberty to conduct such an analysis post-ASARCO, the argument remains open in other circuits. Because the Seventh Circuit already has taken this position, there is good reason to hope that courts in other circuits will embrace it.