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State of Arizona v. ASARCO LLC, No 11-17484 (9th Cir. Dec. 10, 2014) (en banc)

The Ninth Circuit, ruling en banc, overrules a prior panel decision and holds that the BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (1996), ratio test for excessiveness of punitive damages is essentially unnecessary for evaluating a capped award under Title VII governed by 42 U.S.C. § 1981a(b)(3)(D).

State of Arizona v. ASARCO LLC, No 11-17484 (9th Cir. Dec. 10, 2014) (en banc): Angela Aguilar and the State of Arizona (which filed the original action to enforce the employee's civil rights in state court, then removed to federal district court) won a sexual harassment trial against a mining company. "The jury awarded no compensatory damages, but awarded $1 in nominal and $868,750 in punitive damages." The district court denied a motion for judgment as a matter of law, though it did cap punitive award at $300,000 in accord with 42 U.S.C. § 1981a.

The defendant contended that the punitive damage award must be evaluated under the Gore standards, and that the ratio of punitive to other financial damages ($1) was grossly disproportionate. The original panel opinion in this case agreed (with a dissent) that the Gore factors were relevant even to capped Title VII punitive damage awards, and directed a new trial unless plaintiff accepted a remittitur to $125,000. Arizona v. Asarco, LLC, 733 F.3d 882 (9th Cir. 2013).

On rehearing en banc, the court unanimously upholds the original $300,000 judgment. Echoing other decisions, such as EEOC v. Federal Express Corp., 513 F.3d 378 (4th Cir. 2008), and Abner v. The Kansas City Southern RR Co., 513 F.3d 154, 102 FEP 616 (5th Cir. 2008), the court holds that a separate due-process analysis essentially redundant when Congress has already decided the maximum allowable punitive damage award.

On rehearing, the defendant - unsatisfied with the gift that the original panel gave it - went for overkill, arguing that "the award should be reduced below the $2500 per offense punitive damages amount awarded in Mendez v. County of San Bernardino, 540 F.3d 1109, 1120-23 (9th Cir. 2008)."

The court notes that the three guideposts set by Gore to measure excessiveness - degree of reprehensibility, disparity between the harm suffered and the punitive award, and comparison to civil penalties authorized or imposed in comparable cases - were developed to measure common-law damages. By comparison, when Congress actually sets the award range, the Gore guideposts are less relevant:

"Here, Aguilar has asserted a claim under a statute, Title VII, which includes a carefully crafted provision, § 1981, that imposes a cap on punitive damages. The landscape of our review is different when we consider a punitive damages award arising from a statute that rigidly dictates the standard a jury must apply in awarding punitive damages and narrowly caps hard-to quantify compensatory damages and punitive damages."

The court explains that Title VII already polices the interests enforced by Gore. It "clearly sets forth the type of conduct, and mind-set, a defendant must have to be found liable for punitive damages." It also "sets a cap on certain types of compensatory damages, combined with punitive damages" which is graduated to the size of the employer, topping out at $300,000 for the largest employers.

Title VII also puts employers on notice about the largest possible awards. "Moreover, the statute dramatically reduces the chance of random, arbitrary awards, because the statute articulates the degree of culpability that a defendant must have before being subject to liability and restricts damages awards to a range between $0 and $300,000."

For these reasons, "Gore's ratio analysis" between actual and punitive damages "has little applicability in the Title VII context because § 1981a governs punitive damages .... By establishing a consolidated damages cap that includes both specified compensatory and punitive damages, Congress supplanted traditional ratio theory and effectively obviated the need for a Gore ratio examination."

The panel also affirms that there was sufficient evidence of willfulness to support the award, that the district court did not err in admitting evidence of sexually explicit graffiti similar to what Aguilar saw, and the attorney's fee and cost award of $350,902.75 was reasonable.

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