Even so, $30 million seems awfully high.
It is awfully high but that doesn’t mean its not justified. As far as I can see, Oberlin made their own bed and I don’t have much sympathy now that they have to lie in it.
I’m trying to figure out how the claim for punitive damages outweighed the compensatory damages by a 2:1 ratio.
I’m used to a system where the compensatory damages are the most significant part of the possible damages; punitives are generally a much small proportion of the total award, not the largest component. Compensatory damages must usually be tied to measurable losses. Compensation for reputation damage is tricky to assess, but in a case like this would have to be tied to business loss in some way; did they lose $6 million in business?
Ah well, different countries, different systems, I guess.
It’s not uncommon in the United States for punitive damage to be higher than compensatory damages. The famous McDonald’s coffee litigation case resulted in $200,000 in compensatory damage and $640,000 in punitive damages though the two parties settled out of court before the appeal. Punitive damage is designed to punish and deter future behavior.
In the Oberlin case, the punitive damage was actually reduced because state law puts limits on that.
One of the most famous U.S. libel cases was filed by correspondent and author Quentin Reynolds against columnist Westbrook Pegler and the Hearst Corporation. In that one (argued and decided in 1955), the defendants were assessed $1 in compensatory damages and $175,000 in punitive damages, an enormous award for the time and the largest in libel judgment history to date.
The jury apparently accepted the idea that Reynolds’ income hasn’t been hurt significantly, but wanted to punish Pegler and Hearst for their actions.
At least in those days, compensatory damage were taxable but punitive damages weren’t, which worked out nicely for Reynolds.
Clearly, we have different systems, then. In Canadian law, the primary purpose of a civil action is to compensate for loss, not to punish. Punitives are rare.
I think the primary purpose in the United States is also to compensate for loss. But punitive damages are applied when the behavior of the offending party was either deliberate or grossly negligent. I honestly don’t know how common punitive damage are awarded here in the United States let alone Canada.
Yes, punitives have the same role in Canada; it’s just the quantum that surprises me. And I had the ratio wrong in my earlier post; the punitives were 3 times the compensation, not double: $11.1 million in compensatory and $33.2 in punitive damages. (Total reduced to $25 million by a state law capping damages).
Did Oberlin College really do $40 million in damages to the bakery? How is that calculated?
I guess I just would say that this award isn’t primarily about compensating loss. The ratio of the punitives to the compensatory award, and the total of $33 million in punitives, doesn’t seem compensatory to me. It’s civil punishment.
Hence the term “punitive.” 
No, they did $11 million in damages. I’m not sure how they arrived at that $11 million figure or how they arrived at $33 million, later reduced to $25 million, in punitive damages. But the jury decided it was reasonable given the evidence of Oberlin College’s behavior.
There’s a reason it’s called punitive damages and not compensatory.
Sure, but it leads to the question : what is the basic purpose of a civil action? Compensation for injury? Or civil punishment?
Based on this case, and the 3 to 1 ratio of the award, I would say that in Ohio, punishment is the predominant purpose. So be it. Just not what I’m used to, and different countries have different priorities in their legal systems.
I don’t find it confusing at all. The primary purpose of a civil action in the United States is for one party to seek redress against another for injuries sustained. If there aren’t any damages for injuries there won’t typically be any punitive damages.
Fair enough. It’s probably not a good idea to base an opinion of the legal system off of one case. Especially when it’s not a typical case.
But that’s not reflected in the award. The ratio suggests that the primary purpose is to punish.
I wouldn’t agree with that. Once you have a major award ($40 million before the cap), that moves the precedent for potential awards upwards.
I think you’re missing the other rationale for allowing punitive damages, something all but a handful of U.S. states and territories permit. It’s not just about punishment - it’s also meant to deter similar behavior in the future.
Ohio’s permitted ratio of punitive to compensatory damages isn’t an outlier. A number of other states have maximum ratios that are higher than Ohio’s. There’s been a perception in recent years that punitive damages can get out of hand; the U.S. Supreme Court has suggested that a punitive to compensatory damages ratio of more than 9:1 likely would violate the due process clause of the Constitution. How that gets figured out is beyond me, but decisions (by juries and courts) typically hinge on how egregious the behavior was and the feeling that a whopping award beyond compensation for actual damages may discourage it from happening again. If (for example) a supplement company sells a product that causes a serious illness for a claimant, the out of pocket expenses for medical care, time lost from work etc. may not add up to a huge sum. However, if the company ignored warnings and has a history of doing this kind of thing, it makes sense to send a clear signal that it won’t be tolerated any more.
One hopes that administrators from Oberlin and other colleges and universities have learned from this debacle.
No, I get that. One of the goals of punishment is deterrence. I’m just amazed at how high the punishment aspect is permitted here in this case, and now you’re telling me it can be even higher in other states. Fair enough, that’s how it’d done in the States.
It’s just quite different from the system I’m used to in Canada, and the further information you’ve given just confirms my impression that the purpose of a civil action in the States is not compensation - it’s punishment, with a side of compensation.
Different strokes and all that.
One might get the impression from the Oberlin matter and others that get flashy headlines, that such cases are typical of civil actions in the U.S.
“…statistical studies by law professors and the Department of Justice have found that punitive damages are only awarded in two percent of civil cases which go to trial, and that the median punitive damage award is between $38,000 and $50,000.”
There’re not common in Canada either, but the magnitude of this award is eye-popping. The largest punitive award I could find in the Supreme Court of Canada in a quick search was $1 million punitives, on a compensatory award of about $1 million. Nothing like $30 million, three times the compensatory award.
And you probably found Whiten v Pilot Insurance Co , 2002 SCC 18, [2002] 1 S.C.R. 595:
https://www.canlii.org/en/ca/scc/doc/2002/2002scc18/2002scc18.html
The punitives there were $1M, and this matter established that punitive damages could be used in Canada, but the threshold for justifying and awarding them was very high. Note especially para. 94, where Justice Binnie lays out the 11 (yep, eleven) points that justify them. His second point in paragraph 94 is quite relevant, and I’d suggest that it underpins any argument about punitive damage causes and awards in Canada:
That one, plus Church of Scientology!
Yes. It can be said (and often is) that Whiten put finer points on Hill v. Scientology. Having read both, I have to agree.