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Florida’s Second DCA Vacates Punitive Damages Award Which Equals 100% of Defendant’s Net Worth

In the consolidated cases of State Farm Mutual Automobile Insurance Company v Arthur L. Brewer and Barbara J. Brewer / William Edward Goellner v. Arthur L. Brewer and Barbara J. Brewer, the Second District Court of Appeal reversed an award of punitive damages equal to 100% of defendant’s net worth as unconstitutional.

This case arises from a 2008 auto accident where a physician fell asleep at the wheel and caused an accident.  There was disputed evidence that he had consumed prescription sleeping medication before embarking on a three hour drive from The Villages to Sebring, Florida.  The case went to trial and the jury awarded approximately $740,000 to the plaintiff and his wife.  During the punitive phase, the only evidence was that the defendant-doctor had a networth of $284,000.  The jury returned a punitive award of $284,000.  In short, the jury’s punitive award was exactly 100% of defendant’s net worth.

In these circumstances, the trial court “must consider whether the award is out of proportion to the defendant’s net worth.”  As the court summarized, “put simply, an award of punitive damages that bankrupts or financially devastates the defendant is unconstitutionally excessive.”

The appellate court, however, questioned how to draw the line between “constitutionally permissive” and “unconstitutionally excessive.”  It noted a few guiding rules: (1) exceeding the defendant’s net worth is unconstitutional but that (2) even large awards which are still a small percentage of the defendant’s net worth can be affirmed.  Moreover, public policy favors the payment of judgments which, arguably, suggests some conservative assessment.

Here, the punitive award was for 100% of defendant’s net worth (not “exceeding” that amount).  The Second District noted a 2012 case from the Fourth DCA, Young v. Becker & Poliakoff, where a punitive award exceeding 40% of the defendant’s net worth was held to be excessive.  With that in mind, the appellate court reversed and remanded.

 

Christopher B. Hopkins

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