State of Arizona v. ASARCO

In a Title VII sexual harassment suit with nominal damages and no compensatory damages, the highest punitive award supportable under due process must fall within the statutory cap and be proportional to the reprehensibility of the defendant’s conduct without exceeding a punitive damages to compensatory damages ratio of 125,000 to 1.

Angela Aguilar, and the State of Arizona on Aguilar’s behalf, alleged sexual harassment under Title VII, constructive discharge, and retaliation against ASARCO, a large copper and refining company. In consolidated federal proceedings, the jury, while finding no compensatory damages, awarded Aguilar one dollar in nominal damages and $868,750 in punitive damages for the Title VII sexual harassment claims. ARASCO then argued that the punitive damages were statutorily and unconstitutionally excessive, and the district court ordered that punitive damages be reduced to $300,000, the statutory cap under Title VII for an employer of ASARCO’s size. On appeal, the Ninth Circuit reviewed the district court’s application of the BMW of North America, Inc. v. Gore “guideposts” in determining the excessiveness of punitive damages: (1) the degree of reprehensibility; (2) “the ratio to the actual harm inflicted on the plaintiff”; and (3) “civil or criminal penalties that could be imposed for comparable misconduct.” Concluding that ASARCO’s highly reprehensible conduct warranted a substantial punitive damage award and noting that the district court had reduced the punitive damages to the $300,000 statutory cap, the panel nevertheless raised its “judicial eyebrows” at the 300,000 to 1 ratio of punitive damages to compensatory damages, a ratio that no court had ever upheld in a discrimination case. Therefore, the panel held that the highest punitive award supportable under due process was $125,000, which maintained the “reasonable relationship” between compensatory and punitive damages required by Gore. Furthermore, the panel concluded that the punitive damage award met the statutory cap under Title VII and was proportional to the reprehensibility of ASARCO’s conduct. VACATED and REMANDED.