Why Courts Should Not Defer To Phantom Factual Findings When Reviewing Punitive Damages Awards For Excessiveness

Everyone who follows punitive damages law knows that the Supreme Court has identified three guideposts for determining whether a punitive award is excessive under the Due Process Clause: (i) the degree of reprehensibility of the defendant's conduct; (ii) the ratio of the punitive damages to the compensatory damages and/or the harm to the plaintiff that was likely to result from the defendant's conduct; and (iii) the disparity between the punitive damages and the legislatively established penalties for comparable conduct. The first guidepost in particular requires an assessment predicated on the facts of the case, which the parties will likely have disputed. How should courts go about resolving those disputes?

Many practitioners and courts assume that in conducting excessiveness review, courts should take the evidence in the light most favorable to the plaintiff, just as they do when determining whether the evidence is sufficient to support a liability finding. Unless the jury has made specific factual findings, however, that assumption is wrong, except to the extent that the facts in question were necessary to the jury's finding of punitive liability. The reason is that whereas a finding of liability necessarily constitutes a factual finding that each indispensable element of the cause of action has been established, the jury's function in setting the amount of punitive damages does nottypically involve determining whether any particular fact has been proven.

Once the punishment-setting stage is reached, the jury generally is not instructed that it must find particular facts. Instead, the jury essentially is asked to make an impressionistic judgment about the amount of punishment to exact. The resulting verdict is the legal equivalent of an ink blot, subject to any number of possible interpretations.

Because it is not possible to tell what facts (if any) the jury found in setting an amount of punitive damages or what relative weight it gave to any facts that may have been found, application of a sufficiency-of-the-evidence standard results in deference being given to what in all probability are phantom factual determinations. It is simply not true that a large punitive verdict necessarily entails a finding of high reprehensibility. A headline-making award might be (and all too often is) based largely or entirely on the defendant's finances; or it might be based on some other unknown or undisclosed consideration.

The California Supreme Court...