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Punitive Damages: Reprehensibility Supports Higher Ratio Punitive Damages to Compensatory Damages

Posted by Ted A. Schmidt | Nov 07, 2022 | 0 Comments

Riley v. Volkswagen Group of Am., No. 20-15882 (9th Cir. October 18, 2022) (J. Gould)


Plaintiffs opted out of the class action filed against Volkswagen for damages arising out of its surreptitious installation of emissions defeat devices in certain Volkswagen and Audis.  These devices allowed the vehicle to produce emissions 40 times the maximum permitted by law in the United States.  In a three-phase trial,  plaintiffs were awarded the following compensatory damages: Riley ($1,080); Robertson ($952); Salzer  ($582); and the Sanwicks ($3,133) and $25,000 each for punitive damages. Plaintiffs did not suffer personal injury.  The district court found the punitive damages to be unconstitutionally high and reduced them to exactly four times each plaintiffs' compensatory awards or: Riley ($4320); Robertson ($3808); Salzer ($2328); and the Sanwicks ($12,532). The Ninth Circuit Court of Appeals vacated the district court and remanded.

The reprehensibility of the conduct of a defendant is the most important factor in evaluating whether a punitive damage award comports with due process. Likewise, a punitive damage award must be proportional to the compensatory damages. Finally, a consideration of other applicable penalties for the conduct should be considered.

The uncovering of this fraudulent scheme revealed Volkswagen's deliberate

indifference to compliance with mandatory emissions standards—Volkswagen

intentionally and fraudulently hid their vehicles' true emissions to the detriment of

their customers and the public at large. Had Volkswagen's abhorrent behavior not

been discovered by a third party, Volkswagen would have continued to defraud its

customers and allow vehicles spewing noxious emissions well above EPA's health-

based standards to operate undetected. Such regulatory standards are not a mere

formality but rather represent the conscious safeguarding of community interests by

a Congressionally-designated federal agency.

Accordingly, the jury's decision here to award $25,000 to each plaintiff (an 8 to 1 ratio) is appropriate even absent personal injury or significant compensatory damages.  In some circumstances, such as these, smaller compensatory damages actually supports the larger ratio.

About the Author

Ted A. Schmidt

Ted's early career as a trial attorney began on the other side of the fence, in the offices of a major insurance defense firm. It was there that Ted acquired the experience, the skills and the special insight into defense strategy that have served him so well in the field of personal injury law. Notable among his successful verdicts was the landmark Sparks vs. Republic National Life Insurance Company case, a $4.5 million award to Ted's client. To this day, it is the defining case for insurance bad faith, and yet it is only one of several other multi-million dollar jury judgments won by Ted during his career. He is certified by the State Bar of Arizona as a specialist in "wrongful death and bodily injury litigation".


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