October 7, 2010

Punitive Damages Cannot Exceed Compensatory Damages By More Than a 9-1 Ratio

U.S. District Judge Timothy Savage reduced a punitive damage award from $500,000 to $270,000, ruling that the constitutional maximum for a punitive damage award is ordinarily no more than 9 times the compensatory award.  In this case, the jury awarded plaintiff $30,000 in compensatory damages and $500,000 in punitive damages.  Under his ruling, Judge Savage reduced the punitive damage award to $270,000.

Judge Savage made the reduction in punitive damages even though he found that the defendant was a repeat violator of the Fair Credit Reporting Act, having been admonished by the Third Circuit in the 1997 case of Cushman v. Trans Union, No. 96-1553, United States Court of Appeals for the Third Circuit, 115 F.3d 220 (3rd Cir. June 9, 1997), that it not merely repeat information it received from its original source.  Regardless, Judge Savage reduced the punitive damage award, finding that the 9 to 1 ratio (or $270,000) was sufficient to deter Trans Union from disregarding its legal obligations.
Interestingly, Judge Savage awarded the plaintiff $110,000 in attorney’s fees and costs.  He did not add that award to the compensatory damages to increase the “base” by which the punitive damage award could be calculated.

Dixon-Rollins v. Experian Information Solutions, Inc. et al., Civil Action No. 09-0646, United States District Court for the Eastern District of Pennsylvania, 2010 U.S. Dist. LEXIS 100013 (E.D. Pa. Sept. 23, 2010).