Petition for Writ of Certiorari — Continentalenental Carbon Co. v. Action Marine Marine, Inc. (No. 07-257)

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07-257 AUG 24 2007 |

No. 07- OFFICE OF THE CLERK

In the Supreme Court of the Anited States

CONTINENTAL CARBON CO. AND CHINA SYNTHETIC RUBBER

CoRP..,

Petitioners,

Vv.

ACTION MARINE, INC. ET AL..

Respondents.

On Petition for a Writ of Certiorari to

the United States Court of Appeals

for the Eleventh Circuit

PETITION FOR A WRIT OF CERTIORARI

H. THOMAS WELLS, JR. EVAN M. TAGER

PETER S. FRUIN Counsel of Record

Maynard, Cooper & Gale NiCKOLAIG. LEVIN

1901 Sixth Ave. Nori Mayer, Rrown. Rowe &

2400 AmSouth/Harbert Maw LLP

Plaza 1909 K St... NW

Birmingham, AL 35203 Washington, DC 20006

(205) 254-1000 (202) 263-3000

J. BRETT BUSBY

Mayer, Brown, Rowe &

Maw LLP

bg 700 Louisiana St.. Suite 3400

Houston, TX 77002

(713) 238-2606

Counsel for Petitioners

WILSON-EPES PRINTING CO . INC. — (202) 789-0096 - WASHINGTON D C. 20002

QUESTIONS PRESENTED

This petition challenges a $17.5 million award of punitive

damages for petitioners’ failure to do more to prevent peri-

odic releases of carbon black during the manufacturing proc-

ess. There are no claims of physical injury, only property

damage. And the compensatory damages of $1,915,000 are

substantial by any definition: Among other things, they in-

clude the costs of remediating properties that tested negative

for carbon black, rermbursement for a company’s ordinary

business debts (such as a mortgage and a truck loan), and

compensation for the emotional distress allegedly suffered by

the owner of the company.

The general question presented is whether the $17.5 mil-

lion punitive award is unconstitutionally excessive under

BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996),

and State Farm Mutual Automobile Insurance Co. v. Camp-

bell, 538 U.S. 408 (2003). More specifically, this case raises

qucstions about the application of the three BMW guideposts,

each of which has divided the lower courts:

1. Whether courts applying the reprehensibility guide-

post should consider how the defendant’s conduct compares

to. conduct in other punitive damages cases in determining

whether the amount of punitive damages is out of proportion

to the gravity of the offense.

2. Whether, aid if so in what circumstances, a puni-

tive/compensatory ratio in excess of 1:1 is allowable when

the amount of compensatory damages is “substantial” and

other forms of punishment and deterrence, including signifi-

cant attorneys’ fees for “bad faith” and extensive injunctive

relief, have already been imposed.

3. Whether, in applying the comparable penalties guide-

post, a reviewing court may disregard the most realistic legis-

lative penalty and instead speculate about the remote possi-

bility of a severe, yet unprecedented and extremely unlikely,

fine.

RULE 29.6 STATEMENT

Petitioner Continental Carbon Co. is wholly owned by

CCC USA Corporation, which is two-thirds owned by Peti-

tioner China Synthetic Rubber Corporation and one-third

owned by Taiwan Cement Corporation. Both China Syn-

thetic Rubber Corporation and Taiwan Cement Corporation

are publicly traded in Taiwan. No publicly owned company

owns more than 10% of China Synthetic Rubber Corpora-

tion’s or Taiwan Cement Corporation’s stock.

TABLE OF CONTENTS

Page

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CONSTITUTIONAL, STATUTORY, AND 7

REGULATORY PROVISIONS INVOLVED...................04. l

SE eile Aikncnilectid a Aketebinctbisttendaitiiadrivcnetien veseesoceorsn l

REASONS FOR GRANTING THE PETITION ................... 8

I. THE LOWER COURTS ARE SPLIT AND

NEED GUIDANCE ON THE PROPER

APPLICATION OF THE BMW GUIDEPOSTG. ............ 9

A. There Is A Conflict Regarding Whether

Reviewing Courts Should Consider The Full

Spectrum Of Punishable Conduct When

Applying The Reprehensibility Guidepost................. 9

B. There Is A Conflict Regarding The Maximum

Permissible Ratio When Compensatory

Damages Are “SuOstantial.” .........cccecsecsesscecsesccsvevenes 14

C. There Is A Conflict Regarding The Propriety

Of Speculating About Severe, But Highly

Unlikely, Legislative Fines When Applying

The Comparable Penaltics Guidepost. ..................... 18

Il. THE ELEVENTH CIRCUIT’S DECISION IS

REPRESENTATIVE OF A PERVASIVE

FAILURE AMONG THE LOWER COURTS TO

HEED THE CONCERNS UNDERLYING THIS

COURT'S PUNITIVE DAMAGES CASES. ................23

TABLE OF CONTENTS—continued

Page

Il. THIS COURT SHOULD GRANT PLENARY

REVIEW IN BOTH THIS CASE AND EXXON

VALDEZ OR, ALTERNATIVELY, GRANT

REVIEW IN ONE AND HOLD THE OTHER............. 29

CFP RIE ionicsectaiedenentosvcbubvndnnisiigassasdcsiasatheiawniiiononiatones 30

TABLE OF AUTHORITIES

Page(s) a

CASES:

Advocat, Inc. v. Sauer,

Be ee tee te, SOE CATR. 2003) oo. iccccscccccccurvccccssersseses 28

Alaska Dep't of Envtl. Conserv. v. EPA, a

I i os ss aceusentvereasepdvddonaiens 3 4

Asa-Brandt, Inc. v. ADM Investor Servs., Inc., 4

Pe Tae Fr Ge DD hac siseoccecccssoncssccsvacccoonscevens’s 11

Bach v. First Union Nat'l Bank, 4

A ee CN Ee I FD vic vntsc cosccoceviccnacndonsedgsveays 9,14 4

Bains LLC v. ARCO Prods. Co., a

ME Fe FOIE GAME. COUP) occcccneccscccccvesdcssorccossesoes Hy 4

BMW of N. Am., Inc. v. Gore, ! ;

SF Me TR OTIND cscncresovssexnsavseicosecesensencenssnindavess passim 4

Bocci v. Key Pharms., Inc.,

76 P.3d 669 (Or. Ct. App.), modified, 79 P.3d 908

vf) kG Sige sees ae Sameera ea 28 4

Boerner v. Brown & Williamson Tobacco Co., 4

FP TI FI CBAC, ZS) ois csccsescccascvecerccovccccccases 12,14 4

Bogie v. McClure, 332 F.3d 1347 (11th Cir. 2003).......... _ ;

Cambio Health Solutions, LLC v. Reardon, i

% 2007 WL 627834 (6th Cir. Feb. 27, 2007).................2.. 27

Campbell v. State Farm Mut. Auto. Ins. Co.,

98 P.3d 409 (Utah 2004) «0... .ceseeeceeeeseees 16, 17, 22, 26 4

Casumpang v. Int'l Longshore & Warehouse Union, ‘

Local 142 F. Supp. 2d 1201 (D. Haw. 2005) ................ 15 ;

Ceimo v. Gen. Am. Life Ins. Co.., :

2003 WL 25481095 (D. Ariz. Sept. 17, 2003), 4

aff'd, 137 F. App’x 968 (9th Cir. 2005)... 15 :

Chicago Title Ins. Corp. v. Magnuson,

BF 0d ee CN iO PWT Biiibntcencicatosonuabscsrsardaisesoseies AO

TABLE OF AUTHORITIES—continued

Page(s)

City of Modesto Redevelopment Agency v. Dow

Chem. Co., 2006 WL 2346275

oD Be 21

City of Warner Robins v. Holt,

S70 S.6.20 250 (es CL App. E99B) .............0.c00secesvrnees 17

Claiborne v. United States, 127 S. Ct. 551 (2006).............. 30

Clark v. Chrysler Corp.,

436 F.3d 594 (6th Cir. 2006)...................0. 14, 15, 20, 21

Cooper Indus., Inc. v. Leatherman Tool Group, Inc.,

I isa sicacks osicorsnniroydcdseietebncbiutanetevvcsmesers 10

zarnik v. Illumina, Inc.,

2004 WL 2757571 (Cal. Ct. App. Dec. 3, 2004) .......... 15

Daka, Inc. v. McCrae, 839 A.2d 682 (D.C. 2003).............. 18

Eden Elec., Lid. v. Amana Co.,

BFS ae Oe CE FOS). 6 oosinsescccconssenvovsesvessavenes ye

In re Exxon Valdez,

490 F.3d 1066 (9th Cir. 2007)............... 1S, 22, 26,27, 29

In re Exxon Valdez, 472 F.3d 600 (9th Cir. 2006) .......... 7,29

In re Exxon Valdez, 270 F.3d 1215 (9th Cir. 2001) ............ 24

Goddard v. Farmers Ins. Co.,

120 P.3d 1260 (Or. Ct. App. 2005), modified on

reconsideration, 126 P.3d 682 (Or. Ct. App.

2006), rev. granted, 143 P.3d 239 (Or. 2006) ............... 1]

Greenberg v. Paul Revere Life Ins. Co.,

91 F. App’x 539 (9th Cir. Jan. 12, 2004) ................ 19, 28

Honda Motor Co. v. Oberg, 512 U.S. 415 (1994) .............. 8

Inter Med. Supplies, Lid. v. EBI Med. Sys.; Inc.,

Fe Ce BI ors sO nc neve cn esceecensenisessees 24, 25

James v. Horace Mann Ins. Co.,

ee ape PE Ais, BOD vac cvssiveciseiceoocecainsensensyenescedies 22

vil

TABLE OF AUTHORITIES—continued

Page(s)

Jet Source Charter, Inc. v. Doherty,

55 Cal. Rptr. 3d 176 (Cal. Ct. App. 2007)... 15

Jim Ray, Inc. v. Williams,

_$.W.3d __, 2007 WL 1831790 (Ark. Ct. App.

De i 21

Johansen v. Combustion Eng'g, Inc.,

Se BE I Gay CTF Peieees Sonne cecccoveresersececees Sai

Kemp v. AT&T Co., 393 F.3d 1354 (11th Cir. 2004).... 13, 22

Kent v. United of Omaha Life Ins. Co.,

430 F. Supp. 2d 946 (D.S.D. 2006),

rev'd in part on other grounds,

Pe Fe Fe tT irerckrcsvs vecestnsccenensceevecenesseeess 15

Leatherman Tool Group, Inc. v. Cooper Indus., Inc.,

Ek Fe Ee BE nccanticecentyscovsneicetcovuveteensins 2!

Life Ins. Co. v. Johnson,

Fe ee ING BONED saiccvesccnscovestotscoscscecsnstonenton 13

Mathias v. Accor Econ. Lodging, Inc.,

EE de TS CTI es ID ni teisthincevsonseeseessnccosseontiage 19

McCreary Cty. v. ACLU, $43 U.S. 924 (2004)... ee 30

Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996)........0...00..0000 18

Memphis Cmty. Sch. Dist. v. Stachura,

ee ee eI foe cote Saratiches ott cadiicovevncienntioeiprions 24

Meredith v. Jefferson Cty. Bd. of Educ.,

a I I A i ia dent datnisesinp denis en omonermanbous 30

Pac. Mut. Life Ins. Co. v. Haslip, 499 U.S. 1 (1991).... 25, 28

Parents Involved in Cmty. Sch. v. Seattle Sch. Dist.

PO Fs EC Bia cisnie as iindnesiirveicosvvsssivevene 30

Park v. Mobil Oil Guam, Inc..,

2004 WL 2595897 (Guam Nov. 16, 2004) 2000000. 21

Vili

TABLE OF A®'THORITIES—continued

Page(s)

Philip Morris USA v. Williams,

ee ie I RIED cic vexscctceovsosoveeeseesicvubenseceeses passim

Philip Morris USA v. Williams,

ee sc, dcnanecescndsovecerdvectendeeovse eda 8

Pichler v. UNITE,

457 F. Supp. 2d 524 (E.D. Pa. 2006) ...............s00008 25, 26

Planned Parenthood of Columbia/Willamette, Inc. v.

Am. Coal. of Life Activists, 422 F.3d 949 (9th Cir.

2005), cert. denied, 547 U.S. 1111 (2006).......... 7, Say 52

Rhone-Poulenc Agro §.A. v. DeKalb Genetics Corp.,

SOS FI TSG6 He. Civ, DOGS} vcscccecssesesecsevcecccssceses 16, 28

Rita v. United States, 127 S. Ct. 551 (2006) ......... eee 30

Roby v. McKesson HBOC,

2006 WL 3775897 (Cal. Ct. App. Dec. 26, 2006),

rev. granted, 156 P.3d 1014 (Cal. 2007) ....0.. ee 15

Seltzer v. Morton, 154 P.3d 561 (Mont. 2007).............. 16, 28

Simon v. San Paolo U.S. Holding Co.,

Fe lac katnitesntavcanirwoersesucvosenssnscavonscaane 1]

Be Fe CS aire vccicsccecrccccsecensevescsnenss 24

State Farm Mut. Auto. Ins. Co. v. Campbell,

Csi iceebacticeniwecepuedresacetvereddss passim

Steel Techs., Inc. v. Congleton,

—_§.W.3d _, 2007 WL 1790599 (Ky. June 21,

Se os dalnnaigpconcenesinpwe’ ra

Stogsdill v. Healthmark Partners, L.L.C.,

i FN i O initne nies ccsecedececsnvseeseraenkantensds 27

Tellabs, Inc. v. Makor Issues & Rights, Ltd.,

ec chptnertonensssvenncede 10

Tony Gullo Motors I, L.P. v. Chapa,

Re ee EE Pe ES BOE vrcticertecenieccehsksnstsevenvedosenasas 21

TABLE OF AUTHORITIES—continued

Page(s)

Trinity Evangelical Lutheran Church & Sch.-

Freistadt v. Tower Ins. Co.,

GOT TR We ie FO Oe ie SD cocaseccccecevesecsvcvccccsscocccesecees 16

TXO Prod. Corp. v. Alliance Res. Corp.,

A Fas MR ee sicscusecctvevoscescees 9,10

Union Pac. R.R. v. Barber,

BF BW Fe ee CTI, BE isvovesacenecccescosccevecevescoss 16, 19

United States v. Ashland, Inc..,

Rie ye | 14

Van Orden v. PEFTV , DAF Wee FER (ZOOS) ooccvcsccescvcdecsesyenees 30

Walker v. Farmers Ins. Exch.,

63 Cal. Rptr. 3d 507 (Cal. Ct. App. 2007) .............. 15, 18

Williams v. ConAgra Poultry Co.,

ROR RR ae es | 15

Willow Inn, Inc. v. Pub. Serv. Mut. Ins. Co.,

Re en Bee | 19

Zhang v. Am. Gem Seafoods, Inc.,

BR eT 8 28

CONSTITUTIONAL, STATUTORY, AND REGULA-

TORY PROVISIONS:

eS, eo ce cunen voveosevees I

Oe Fa ee ta ica thd daciers oveuereeescgeceee

ak ee tie RR 20

PLA. COE & Fre CEP De Pie i rictkcncvicesevevscsavs seeeesss 1, 6, 7, 20

CRETE ag TR i is

MISCELLANEOUS:

1 Dan B. Dobbs, LAW OF REMEDIES (2d ed. 1993) ............. 24

TABLE OF AUTHORITIES—continued

Page(s)

Clarence Morris, Punitive Damages in Tort Cases,

AD Fes ac PE CO Fa 0 BE Pcocrenvecesvcdvcdedeisncescevccoccetios 24

Petition for Certiorari, Exxon Shipping Co. v. Baker,

PU, SEE Cis PAI, Be IO OD vncesecevercesesescvcscecveoceves 30

Respondent’s Brief, State Farm Mut. Auto. Ins. v.

Campbell, No. 01-1289 (U.S. Oct. 17, 2002),

RP in cau dushecbicsubebaiuaminanrtineensiers 17

Robert L. Stern et al., SUPREME COURT PRACTICE

(8th ed. 2000) .......... ERR PSE SGP ea Ca aI IS Ee OORT. ed 30

PETITION FOR A WRIT OF CERTIORARI

Continental Carbon Co. and China Synthetic Rubber

Corp. (collectively “CCC”) respectfully petition for a writ of

certiorari to review the judgment of the United States Court

of Appeals for the Eleventh Circuit in this case.

OPINIONS BELOW

The opinion of the court of appeals (App., infra, la-32a)

is reported at 481 F.3d 1302. The order of the court of ap-

peals denying rehearing (App., infra, 55a) is unreported. The

orders of the district court denying petitioners’ post-trial mo-

tions (id. at 33a-47a), entering injunctive relief (id. at 48a-

54a), and entering final judgment on the claims submitted to

the jury (/d. at 56a) are unreported.

JURISDICTION

The judgment of the court of appeals was entered on

March 21, 2007, and a timely petition for rehearing was de-

nied on May 18, 2007. Justice Thomas extended the time for

filing a petition for writ of certiorari to August 27, 2007. The

jurisdiction of this Court is invoked under 28 U.S.C.

§ 1254(1).

CONSTITUTIONAL, STATUTORY, AND

REGULATORY PROVISIONS INVOLVED

The Due Process Clause of the Fourteenth Amendment

to the United States Constitution provides in relevant part:

“No State shall * * * deprive any person of life, liberty, or

property, without due process of law.” U.S. Const. amend.

XIV, § 1.

0.C.G.A. § 13-6-I1 and ALA. CODE § 22-22A-5(18)(c)

are included in the appendix at 57a.

STATEMENT

Over the past decade and a half, this Court repeatedly

has expressed concern about awards of punitive damages

that, “today, may be many times the size of such awards in

the 18th and 19th centuries.” Philip Morris USA v. Williams,

127 S. Ct. 1057, 1064 (2007). To assist courts in determining

when a punitive award is unconstitutionally excessive, the

Court has identified three guideposts: (i) the degree of repre-

hensibility of the misconduct; (ii) the ratio between the puni-

tive and compensatory damages (or potential harm in the un-

usual circumstance of a thwarted attempt); and (iii) the dif-

ference between the punitive damages and the legislative

and/or administrative penalties for comparable misconduct.

BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 574-85 (1996).

And it has required “[e]xacting appellate review” of the trial

court’s analysis of these guideposts to ensure that the amount

of punitive damages is “based upon an application of law,

rather than a decisionmaker’s caprice.” State Farm Mut.

Auto. Ins. Co. v. Campbell, 538 U.S. 408, 417-18 (2003) (in-

ternal quotation marks and alterations omitted).

Regrettably, lower courts often apply the BMW guide-

posts mechanically without considering this Court’s broader

concerns about the size of punitive awards, such as whether

they are “tantamount to a severe criminal penalty” (BMW,

517 U.S. at 585), “extraordinary by historical standards” (id.

at 594 (Breyer, J., concurring)), or excessive in relation to a

“State’s legitimate interests in punishing unlawful conduct

and deterring its repetition” (id. at 568). Moreover, courts

routinely misapply the guideposts, weakening their “con-

straining power to protect against serious and capricious dep-

rivations [of property]” (id. at 590 (Breyer, J., concurring)).

This case is emblematic. In affirming a $17.5 million puni-

tive award that is over nine times the compensatory damages,

while ignoring the punitive and deterrent effect of the com-

pensatory damages, attorneys’ fees, and injunctive relief, the

Eleventh Circuit applied the BMW guideposts in a manner

that deprived them of their “constraining power.” Review is

necessary because the Eleventh Circuit's decision is unfaith-

ful to the Court’s precedents and conflicts with numerous de-

cisions applying those precedents.

1. CCC’s operations. CCC owns a plant in Phenix City,

Alabama, that manufactures carbon black. R52, 534. Carbon

black is a highly engineered product that is manufactured by

heating feedstock oil to a high temperature in a low-oxygen

reactor. R218-19. The resulting product is smoke that in-

cludes both carbon black and waste gases. R84. The carbon

black is separated from the gases, processed, and formed into

small pellets for ease of handling and shipment. R217, 226.

Carbon black has many commercial applications. Its

most popular use is in making tires. CCC also sells carbon

black for use as pigment in rubber and plastic items, inks,

and many other useful products. Dkt. 38, at 3.

While the plant originally had one production unit, Unit

1, CCC built a second production unit in 1999, Unit 2, to

meet expanding demand for carbon black. R224. During con-

struction, CCC worked with the Alabama Department of En-

vironmental Management (“ADEM”) to identify and install

the best available pollution-control technology.’ R221-22,

347, 563. For example, each unit has several large “bagfilter”

compartments, cach of which contains several hundred bags

that collect the carbon black after it is produced. R217, 221,

559-60. A thermal oxidizer is designed to incinerate any par-

ticulate matter not captured by the bagfilters (including car-

bon black) at 1700 degrees Faluenheit. R221, 332, 343. The

gas stream that comes out of the thermal oxidizer is vented

through a stack. R350. Electronic probes called Triboguards

detect any solid particles in the stream and sound an alarm if

anything is amiss so that employees can investigate. R223,

345-46, 350.

ADEM recognized that this technology, while the best

available, was not perfect and issued a permit to CCC to emit

Under the Clean Air Act, State agencies- not industry-

determine the best available pollution control technology. See

Alaska Dep't of Envtl. Conserv. v. EPA, 540 U.S. 461, 468-69

(2004).

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120 tons per year of particulate matter, including carbon

black. R327-28, 937-38. Unfortunately, some carbon black

emissions did occur: Unit | developed leaks (R167-68, 372,

425, 497, 1335, 1340), while Unit 2 had insufficient bagfilter

capacity, causing premature bag failure (R71-75, 367-68).

Nevertheless, uncontradicted evidence showed that CCC

identified and remedied the causes of er-issions when they

occurred (PX17) and repaired and replaced parts of its exist-

ing plant (R74-75, 167, 182-83, 385, 572). CCC also built

new plant facilities, including two additional bagfilter com-

partments for Unit 2 in 2003. R75, 1361. These additional

bagfilter compartments “pretty much” solved the Unit 2

problems. R1361.

A group of nearby property owners—a boat dealership,

Action Marine, Inc.; its owner John Tharpe; the City of Co-

lumbus, Georgia; and city resident Owen Ditchfield—-were

dissatisfied with these measures. They claimed that carbon

black had periodically escaped from CCC’s plant and been

carried by the wind onto their properties, causing a black dis-

coloration.” And they wanted CCC to do more to remedy the

emissions sooner. In particular, they wanted CCC to replace

Unit | instead of trying to repair the leaks first. R167-68,

372, 425, 497, 1335, 1340. And they asserted that CCC

waited too long to replace the Unit 2 bagfilter system. R71-

75, 367-68.

2. Respondents sue CCC and receive a huge verdict.

These property owners—respondents in this Court—

eventually brought claims against CCC for negligence, nui-

sance, trespass, and wantonness under Georgia law. Respon-

” Action Marine claimed that its boats were discolored and that it

was therefore losing customers. R1052-53. The City claimed that

carbon black emissions had blackened the roof of the Civic Center

and caused black streaking at nearby city facilities. R1010-11,

1224, 1230-32. Owen Ditchfield claimed that the material dirtied

the paint on his houses and the finish on his vehicles. R! 188-90.

dents sought recovery for their property damage, injunctive

relief, punitive damages, and attorneys’ fees for “bad faith”

under O.C.G.A. § 13-6-11. They did not claim any physical

illness or injury.”

CCC contested several elements of the various causes of

action as well as the extent of respondents’ damages: Several

of the properties for which the City sought recovery tested

negative for carbon black. R1447, 1613, 1795-96; R1448,

1794, PX104B-63; R1451-53, 1616, PXIO4A-2, 104B-21,

DX162, at 5. Moreover, only tiny amounts of carbon black

were present on all of respondents’ other propertics except

one of Action Marine’s boats. R1786-89, 1802-03, 1817,

1825, 1863-64; DX162. On these properties, microscopic ex-

amination revealed that other dark particles such as mold

spores and pollen—not carbon black—were responsible for

the discoloration. R1782-83, 1791-92.

The jury nevertheless returned a general verdict for re-

spondents and awarded them $1,915,000 in compensatory

damages: $45,000 to Ditchfield, $100,000 to Tharpe for emo-

* Moreover, there was no evidence that the carbon black emissions

posed a health risk to the community. Though the Eleventh Circuit

disagreed, its position’ was-based on the erroneous belief that

CCC’s Material Safety Data Sheets (““MSDSs”") proved that carbon

black emissions were possibly carcinogenic to humans. App., in-

fra, 24a & n.20. In fact, the MSDSs state that the U.S. National

Toxicology Program and the U.S. Occupational Safety and Health

Administration have not designated carbon black as a carcinogen.

PX32-17. While one agency, [ARC, has concluded that carbon

black has possible carcinogenic effects based on rat inhalation

studies, and therefore classified carbon black as a class 2-B car-

cinogen, even it acknowledged that “‘/iJhere is inadequate evi-

dence in humans for the carcinogenicity of carhon black.” Id.

(emphasis added). Plaintiffs presented no evidence that either hu-

mans or animals could potentially get cancer or suffer other ad-

verse health effects from the periodic, atmospheric releases of car-

bon black at issuc here.

tional distress, $1.2 million to Action Marine for lost busi-

ness value, and $570,000 to the City for remediation costs.

Dkt. 216. The City’s award included $132,350 for properties

that did not test positive for carbon black. PX113, at 19-20;

Appellants’ Br. 17 n.2. And Action Marine’s award included

lost profits as well as $795,000 for payment of ordinary busi-

ness debts, such as a mortgage and a truck loan, that Action

Marine claimed it would have paid down with those profits

but for the discoloration. Rl 111-16; PX79, Ex. 5. The jury

also awarded respondents $17.5 million in punitive damages,

as well as $1,294,000 in attorneys’ fees based on a finding of

“bad faith.” Dkt. 216; Dkt. 217.

3. The district court enters judgment for respondents.

The district court denied CCC’s post-trial motions and en-

tered judgment on the verdict. App., infra, 33a-47a. The

court recognized that the $17.5 million punitive award was

over nine times the compensatory damages and seventy times

the maximum civil penalty of $250,000 under Alabama law

(the state with regulatory authority over the plant). /d. at 45a-

46a & n.6 (citing Ala. Code § 22-22A-5(18)(c)). But the

court held that these disparities were permissible, relying

primarily on Johansen v. Combustion Engineering, Inc., 170

F.3d 1320 (11th Cir. 1999), a pre-State Farm case that al-

lowed $4.35 million in punitive damages even though that

amount “was around 100 times the amount of actual damages

awarded by the jury” and “100 times greater than the maxi-

mum penalty that could have been imposed.” App., infra,

4Sa-47a & n.6.

The district court also ordered extensive injunctive re-

lief. App., infra, 48a-54a. CCC had to replace or repair sub-

stantial parts of the Unit | bagfilter system; submit to air and

video monitoring; and file progress reports subject to court

verification. Jd. at 49a-53a. A CCC employee estimated that

these measures would cost at least $4.2 million. R475-76.

4. The court of appeals affirms. CCC appealed to the

Eleventh Circuit, which affirmed the judgment. App., infra,

la-32a. As relevant here, the court concluded that CCC’s

conduct was “exceedingly reprehensible” and supported

$17.5 million in punishment. /d. at 23a-26a. But the court

admitted that it reached its reprehensibility conclusion with-

out comparing CCC’s conduct to the misconduct in other pu-

nitive damages cases, instead basing its holding “on the facts

before us in this case alone.” /d. at 25a-26a.

The court also held that a 5.5:1 ratio—which it reached

by adding the $1,294,000 attorneys’ fees award for “bad

faith” to the compensatory damages of $1,915,000 to produce

a total denominator of $3.2 million — was acceptable. /d. at

27a-29a. Relying on Ninth Circuit decisions, the court rea-

soned that while “ratios in excess of 1:1 and/or 4:1 may only

rarcly satisfy due process requirements,” and “a 1:1 ratio [is]

the general rule when substantial compensatory damages

have been awarded,” this case was “the rare exception” in

which a higher ratio was allowed. /d. at 28a-29a & n.24 (cit-

ing In re Exxon Valdez, 472 F.3d 600, 624 (9th Cir. 2006);

and Planned Parenthood of Columbia/Willamette, Inc. v. Am.

Coal. of Life Activists, 422 F.3d 949, 962 (9th Cir. 2005),

cert. denied, 547 US. 1111 (2006)).

Finally, the court held that Alabama Code § 22-22A-

5(18)(c) provided fair notice of a $17.5 million punishment.

App., infra. 29a-32a As the court explained, that provision

limited fines to $25,000 “per violation” and up to $250,000

“per order.” /d. at 30a. But nothing in the statute, it noted,

expressly precluded ADEM from issuing multiple orders. /d.

at 30a-31a. Thus, the court believed that it was reasonable to

assume that, “if Alabama citizens have found themselves the

victims of [CCC’s] malfeasance,” ADEM would have issued

repeated orders, ultimately fining CCC “several million dol-

lars.” /d. at 31a. Accordingly, it held that the $17.5 million

punitive award satisfied duc process. /d. at 31a-32a.

REASONS FOR GRANTING THE PETITION

This Court has long cautioned that “punitive damages

pose an acute danger of arbitrary deprivation of property.”

Honda Motor Co. v. Oberg, 512 U.S. 415, 432 (1994). In

BMW, it adopted three guideposts to help courts identify

when a “multimillion dollar penalty” is “grossly excessive”

and a “lesser” award would adequately advance the State’s

interests in punishment and deterrence. 517 U.S. at 584-85.

Unfortunately, BMW did not have its intended effect.

Hence, the Court was compelled to provide additional guid-

ance in State Farm. Although it found State Farm’s conduct

“reprehensible,” the Court held that “a more modest punish-

ment” than the $145 million awarded by the jury “could have

satisfied the State’s legitimate objectives.” 538 U.S. at 419-

20. The Court suggested that, “in light of the substantial

compensatory damages,” a “punitive damages award at or

near the amount of compensatory damages”—$1 million—

was likely the constitutional maximum. /d. at 429.

Yet even State Farm did not stem the tide of large puni-

tive awards. Thus, in 2006 this Court granted certiorari to re-

view a $79.5 million punitive award. See Philip Morris USA

v. Williams, 126 S. Ct. 2329 (2006). In Philip Morris, the

Court agreed to consider whether: (i) the Due Process Clause

prohibits juries in individual cases from punishing defendants

for injuries suffered by non-parties; and (ii) the $79.5 million

punitive award was unconstitutionally excessive. Philip Mor-

ris USA v. Williams, 127 S. Ct. 1057, 1062 (2007). Because

the Court ruled for Philip Morris on the first issue, it did not

need to reach the excessiveness issue. /d. at 1065.

This case offers a perfect opportunity to provide the

guidance on the proper application of the BMW guideposts—-

and on the excessiveness inquiry more generally—that the

lower courts sorely need but that the disposition in Philip

Morris forestalled. The Eleventh Circuit's conclusion that a

$17.5 million punitive exaction is constitutionally acceptable

is irreconcilable with the concerns about arbitrary punish-

ments that this Court repeatedly has expressed. Moreover,

that court’s strained application of the BMW guideposts di-

rectly conflicts with numerous decisions by other federal cir-

cuit courts and state courts of last resort. The depth, breadth,

and significance of these conflicts strongly support certiorari.

I. THE LOWER COURTS ARE SPLIT AND NEED

GUIDANCE ON THE PROPER APPLICATION OF

THE BMW GUIDEPOSTS.

The Eleventh Circuit’s application of each BMW guide-

post conflicts with numerous federal circuit court and state

supreme court decisions. Review is necessary and appropri-

ate because these issues that have divided the lower courts

arise with regularity in punitive damages litigation.

A. There Is A Conflict Regarding Whether Review-

ing Courts Should Consider The Full Spectrum

Of Punishable Conduct When Applying The

Reprehensibility Guidepost.

The first guidepost—the degree of reprehensibility— is

“(t]he most important indicium of the reasonableness of a

punitive damages award.” State Farm, 538 U.S. at 419 (in-

ternal quotation marks omitted). Here, the Eleventh Circuit

concluded that CCC’s conduct was “exceedingly reprehensi-

ble.”’ App., infra, 23a-26a. In so holding, the court expressly

“declined [CCC’s] invitation” to compare its conduct to that

of defendants in other punitive damages cases. App., infra,

25a-26a. Instead, citing the three-Justice plurality’s rejection

of a “comparative approach” in 7XO Production Corp. v. Al-

liance Resources Corp., 509 U.S. 443, 458 (1993), the court

based its reprehensibility “conclusion on the facts before us

in this case alone.” App., infra, 26a. The Sixth Circuit has

likewise expressed “war[iness] of any attempt to graft our

ruling here onto another set of facts” because of its percep-

tion that 7X¥O forecloses a comparative approach. Bach v.

First Union Nat'l Bank, 486 F.3d 150, 156 (6th Cir. 2007).

But the TXO plurality did not affirmatively condemn

comparisons with other cases; it merely refused to “enshrine”

a comparative analysis as part of a “test.” 509 U.S. at 458.

Indeed, as the Eleventh Circuit acknowledged (App., infra,

26a), the plurality “[did] not rule out the possibility that the

fact that an award is significantly larger than those in appar-

ently similar circumstances might, in a given case, be one of

many relevant considerations.” /bid. (emphasis omitted). In

any event, the plurality’s decision not to embrace any par-

ticular “test” commanded only three votes, and the Court’s

punitive damages jurisprudence has since taken a different

path. Of particular significance, the Court in BMW directed

lower courts to apply three guideposts when reviewing a pu-

nitive award for excessiveness. 517 U.S. at 574-85. In de-

scribing the reprehensibility guidepost, the Court explained

“that some wrongs are more blameworthy than others.” /d. at

575. That is a tacit recognition that some comparison with

the conduct in other cases is essential.

Moreover, as the Court later emphasized in requiring “de

novo” application of the guideposts, “‘assur[ing] the uniform

general treatment of similarly situated persons * * * is the es-

sence of law itself.’” Cooper Indus., Inc. v. Leatherman Tool

Group, Inc., 532 U.S. 424, 436 (2001) (quoting BMW, 517

U.S. at 587 (Breyer, J., concurring)). Disregarding the results

in other cases is antithetical to the even-handed application of

justice that this Court has required and is destined to lead to

an upward spiral of punitive damages awards. As the Court

has made clear, the reprehensibility guidepost is supposed to

ensure that the amount of punitive damages is not out of pro-

portion to “‘the enormity of [the] offense.’” BMW, 517 U.S.

at 575. That objective becomes illusory if courts persist in

evaluating the offense in isolation instead of placing it on a

spectrum of punishable conduct informed by other punitive

damages cases. Cf. Tellabs, Inc. v. Makor Issues & Rights,

Lid., 127 S. Ct. 2499, 2510 (2007) (“The strength of an infer-

ence cannot be decided in a vacuum. The inquiry is inher-

ently comparative * * *.”); BMW, 517 U.S. at 594 (Breyer, J.,

concurring) (“[a] punitive damages award of $2 million for

intentional misrepresentation causing $56,000 of harm is ex-

traordinary by historical standards”).

Accordingly, the Eighth and Ninth Circuits and the Cali-

fornia Supreme Court have recognized that the reprehensibil-

ity guidepost requires courts to compare the misconduct at is-

sue to the conduct in other punitive damages cases-—i.e., to

place the conduct on a spectrum of reprehensibility. See, e.g.,

Bains LLC v. ARCO Prods. Co., 405 F.3d 764, 775 (9th Cir.

2005) (misconduct in connection with the performance of “a

socially valuable task” is less reprehensible than conduct

serving no legitimate purpose, such as “intentional, repeated

ethnic harassment”); Asa-Brandt, Inc. v. ADM Investor

Servs., Inc., 344 F.3d 738, 747 (8th Cir. 2003) (affirming

$1.25 million punitive award for breach of fiduciary duty be-

cause the misconduct, “according to the hierarchy of repre-

hensiveness, was clearly more reprehensible than the conduct

in [BMW], and is at a similar level to the conduct in State

Farm”), Simon v. San Paolo U.S. Holding Co., 113 P.3d 63,

76 (Cal. 2005) (reducing punitive award from $1.7 million to

$50,000 in part because the fraud at issue was “of relatively

low culpability” compared to “the universe of cases warrant-

ing punitive damages under California law”); cf. Goddard y.

Farmers Ins. Co., 120 P.3d 1260, 1262, 1282-84 (Or. Ct.

App. 2005) (reducing $25 million punitive award to

$2,589,822 because defendant’s “manifestly malicious and

deceitful” misconduct fell in the middle of the egregiousness

spectrum when compared to other cases), modified on recon-

sideration, 126 P.3d 682 (Or. Ct. App. 2006), rev. granted,

143 P.3d 239 (Or. 2006).

This conflict potentially affects every punitive damages

case because all reviewing courts must apply the reprehensi-

bility guidepost. The issue is also very significant in this

case: Had the Eleventh Circuit been willing to compare

CCC's conduct —the failure to do more to prevent periodic

releases of carbon black during the manufacturing process—

to the conduct of defendants in other punitive damages cases,

the outcome likely would have been different. CCC’s con-

duct involved a lesser degree of reprehensibility because car-

bon black production is a “socially valuable” task. See Bains,

405 F.3d at 775. Moreover, other courts have reduced puni-

tive awards to amounts well below $17.5 million even

though the misconduct at issue was markedly more egregious

than CCC’s periodic failure to prevent carbon black releases.

In Boerner v. Brown & Williamson Tobacco Co., 394

F.3d 594 (8th Cir. 2005), for instance, the Eighth Circuit held

that the defendant’s “conduct was highly reprehensible”:

Pall Mall cigarettes were extremely carcinogenic

and extremely addictive * * *; the sale of this defec-

tive product occurred repeatedly over the course of

many years despite American Tobacco’s knowledge

that the product was dangerous to the user’s health;

and American Tobacco actively misled consumers

about the health risks associated with smoking.

Moreover, the reprehensible conduct [led to] a mest

painful, lingering death following extensive surgery.

Id. at 602-03. The Eighth Circuit nevertheless reduced the

$15 million punitive award to $5 million. /d. at 603.

In Planned Parenthood, anti-abortion activists put up

“WANTED” posters threatening doctors who provided abor-

tions. 422 F.3d at 958. The risk of harm was so serious that

the FBI “warned [the] physicians to purchase bullet proof

vests.” /bid. Applying State Farm, the Ninth Circuit never-

theless reduced punitive awards totaling $109 million to just

over $4.7 million. 422 F.3d at 963.

In Eden Electrical, Lid. v. Amana Co., 370 F.3d 824 (8th

Cir. 2004), the district court could “hardly think of a more

reprehensible case of business fraud.” /d. at 828-29. Yet the

Eighth Circuit affirmed the district court’s determination that

the $17,850,000 punitive award was unconstitutionally ex-

cessive and had to be reduced to $10 million. /hid.

And in Kemp v. AT&T Co., 393 F.3d 1354 (11th Cir.

2004), AT&T was found to have participated in a “large-

scale corporate” effort “to exploit customers who were un-

sophisticated and economically vulnerable” by misleadingly

presenting gambling debts as “legitimate” long-distance

phone charges. /d. at 1363. Despite evidence indicating that

“AT&T intended to target financially vulnerable individuals”

with its illegal gambling scheme (ibid.), the Eleventh Circuit

reduced the punitive damages from $1 million to $250,000,

concluding that even $250,000 would be “a meaningful de-

terrent to a corporation like AT&T.” /d. at 1365; see also Life

Ins. Co. v. Johnson, 701 So. 2d 524, 526-29 (Ala. 1997) (re-

ducing punitive damages from $15 million to $3 million

where defendant engaged in pattern of selling worthless

Medicare supplement policies to “elderly, uneducated, single

black women”).

Under no stretch of the imagination can CCC’s con-

duct—which did not cause physical injury or target vulner-

able individuals—-be placed in the same league of hcinous-

ness as the conduct of these other defendants. Review is nec-

essary to clarify whether the Eleventh Circuit erred in disre-

garding the results in other cases, thereby allowing the

aberrational award against CCC to stand.”

* The Eleventh Circuit’s reprehensibility assessment is flawed even

if CCC’s conduct is evaluated in isolation. First, the court stated

that CCC “continued its course of action and inaction undeterred

by both the prospect and reality of litigation.” App., infra, 25a. But

uncontradicted evidence showed that CCC identified and remedied

the causes of emissions when they occurred, repaired and replaced

parts of its existing plant, and built new facilities to curtail emis-

sions—all before judgment was entered. See p. 4, supra.

Second, the court concluded that it was “of no consequence”

“that Alabama permitted [CCC] to release carbon black into the

atmosphere” because the permit did not allow for property dam-

B. There Is A Conflict Regarding The Maximum

Permissible Ratio When Compensatory Damages

Are “Substantial.”

In State Farm, this Court explained that “[w]hen com-

pensatory damages are substantial, then a lesser ratio, per-

haps only equal to compensatory damages, can reach the

outermost limit of the due process guarantee.” 538 U.S. at

425 (emphasis added). Heeding this guidance, several courts,

including the Sixth and Eighth Circuits, have reduced puni-

tive awards to amounts at or near compensatory damages

when the latter were “substantial.”’ See, e.g., Bach, 486 F.3d

at 156 (6th Cir.) (reducing $2,228,600 punitive award for

violation of Fair Credit Reporting Act to $400,000, the

amount of compensatory damages, because “the plaintiff has

received a substantial compensatory award, and a ratio of 1:1

or something near to it is an appropriate result”); Clark v.

Chrysler Corp., 436 F.3d 594, 608 (6th Cir. 2006) (reducing

$3 million punitive award for death caused by defective truck

design to $471,258.26, the amount of compensatory dam-

ages); Boerner, 394 F.3d at 603 (8th Cir.) (reducing ratio

age. App., infra, 25a-26a n.21. But the existence of a permit to

emit carbon black reduces CCC's culpability by undercutting the

argument that simply letting emissions occur was reprehensible.

Third, the court suggested that the degree of reprehensibility

was increased because of CCC's “willingness to elude accountabil-

ity.” /d. at 25a. It relied in part on evidence that CCC “apparently”

was warmed by ADEM prior to inspections. /bid. But even if such

warnings occurred, there was no evidence that CCC affirmatively

sought them. Punishing a defendant for actions by a third party

raises serious due process concerns. See, e.g., United States v. Ash-

land, Inc., 356 F.3d 871, 874 (8th Cir. 2004) (discussing “funda-

mental{] unfair{ness]” of “punishing a defendant based solely on

the conduct of another party”).

* The jury found 50% comparative fault; thus, the plaintiff received

only $235,629.13. Using this figure as the denominator, one mem-

ber of the two-judge majority treated the punitive/compensatory

from 3.7:1 to 1.2:1 where compensatory damages were

$4,025,000); Williams v. ConAgra Poultry Co., 378 F.3d

790, 798 (8th Cir. 2004) (reducing $6,063,750 punitive

award for racial harassment to $600,000, the amount of com-

pensatory damages); Jet Source Charter, Inc. v. Doherty, 55

Cal. Rptr. 3d 176, 178 (Cal. Ct. App. 2007) (reducing $26

million punitive award for repeated breaches of fiduciary

duty and fraud to $6.5 million because |:] is maximum ratio

when the harm is cconomic, the plaintiff is not vulnerable,

and the compensatory damages are “‘substantial”).°

Other lower courts have refused to follow this guidance,

however. The Ninth Circuit has held that, “in cases where

there are significant economic damages and punitive dam-

ages are warranted but behavior is not particularly egregious,

a ratio of up to 4 to | serves as a good proxy for the limits of

constitutionality.” Planned Parenthood, 422 F.3d at 962. It

allows even higher ratios if the behavior is more egregious.

See ibid.; see also /n re Exxon Valdez, 490 F.3d 1066, 1093-

94 (9th Cir. 2007) (per curiam) (declaring 5:1 ratio permissi-

bl -ven though compensatory damages and settlement pay-

ratio as being 2:1. Clark, 436 F.3d at 606-07. The other member of

the majority believed that the full amount of compensatory dam-

ages should be used as the denominator and therefore considered

the ratio to be 1:1. /d. at 613-14 (Kennedy, J., concurring).

* See also Kent v. United of Omaha Life Ins. Co., 430 F. Supp. 2d

946, 959-60 (D.S.D. 2006), rev'd in part on other grounds, 484

F.3d 988 (8th Cir. 2007), Casumpang v. Int'l Longshore & Ware-

house Union, Local 142, 411 F. Supp. 2d 1201, 1220 (D. Haw.

2005); Ceimo v. Gen. Am. Life Ins. Co., 2003 WL 25481095, at *2

(D. Ariz. Sept. 17, 2003), aff'd, 137 F. Appx 968, 970 (9th Cir.

2005) (unpublished), Walker v. Farmers Ins. Exch., 63 Cal. Rptr.

3d 507, 513 (Cal. Ct. App. 2007); Roby v. McKesson HBOC, 2006

WL 3775897, at *19 (Cal. Ct. App. Dec. 26, 2006) (unpublished in

relevant part), rev. granted, 156 P.3d 1014 (Cal. 2007); Czarnik vy.

Illumina, Inc., 2004 WL 2757571, at *t1 (Cal. Ct. App. Dec. 3,

2004) (unpublished).

ments totaled $513.i million, because conduct was in “mid-

range” on spectrum of reprehensibility). Likewise, the Fed-

eral Circuit has held that a 4:1 ratio is the “threshold where

the punitive award may become suspect.” Rhone-Poulenc

Agro S.A. v. DeKalb Genetics Corp., 345 F.3d 1366, 1372

(Fed. Cir. 2003) (upholding 3.33:1 ratio where compensatory

damages were $15 million). And several state supreme courts

have allowed ratios above 4:1 even when the compensatory

damages exceeded several hundred thousand dollars.’

The current case deepens this conflict. The compensa-

tory damages of $1,915,000 are indisputably “substantial”

and afford respondents “complete compensation” for their in-

juries. State Farm, 538 U.S. at 425-26. For example, one re-

spondent recovered damages to remediate properties that

tested negative for carbon black; another recovered damages

to reimburse it for ordinary business debts (such as a mort-

gage and a truck loan); and a third recovered damages for the

emotional distress of worrying about the harm to his business

allegedly caused by carbon black discoloration. See p. 6, su-

pra. Yet the $17.5 million punitive award is over nine times

higher. Even if the $1,294,000 award of attorneys’ fees for

“bad faith” is added to the denominator, as the court of ap-

peals held it should be, the ratio is still 5.5:1.

” See Seltzer v. Morton, 154 P.3d 561, 611 (Mont. 2007) (permit-

ting $9.9 million in punitive damages where compensatory dam-

ages were $1.1 million because “substantial compensatory dam-

ages do not always require low single-digit ratios”); Union Pac.

R.R. v. Barber, 149 S.W.3d 325, 348 (Ark. 2004) (upholding $25

million punitive award, even though compensatory damages were

$5.1 million, because 5:1 ratio was not “breathtaking”); Campbell

v. State Farm Mut. Auto. Ins. Co., 98 P.3d 409, 419 (Utah 2004)

(holding, on remand, that 9:1 ratio comported with due process de-

spite compensatory damages of $1 million); Trinity Evangelical

Lutheran Church & Sch.-Freistadt v. Tower Ins. Co., 661 N.W.2d

789, 803 (Wis. 2003) (upholding $3.5 million punitive award that

was over seven times the potential harm of $490,000).

Indeed, the Eleventh Circuit’s treatment of the attorneys’

fees implicates two additional splits. First, the courts are di-

vided as to whether a reviewing court may enhance the de-

nominator by the amount of attorneys” fees. In conflict with

the Eleventh Circuit, the Utah Supreme Court has held that

State Farm precludes doing so.*

Second, whether or not it is appropriate to include attor-

neys’ fees in the denominator, the courts are in disarray re-

garding the significance of a large fee award to the exces-

siveness inquiry. Taking no account of the fact that an award

of attorneys’ fees has punitive and deterrent effects,” the

Eleventh Circuit used the fee award to justify upholding an

amount of punitive damages that it might otherwise have

found excessive in relation to the compensatory damages. '°

By contrast, the D.C. Court of Appeals has held that, because

substantial attorneys’ fees include “‘a certain punitive ele-

ment{,]”” they “favor{] a lesser rather than greater award of

"In State Farm, the plaintiff argued that the denominator should

include over $800,000 in attorneys’ fees and expenses in addition

to $I million in compensatory damages. Resp. Br., 2002 WL

31387421, at *17n.5 (U.S. Oct. 17, 2002). This Court nevertheless

stated that the ratio was 145:1 ($145 million to $1 million), not

80.5:1, the ratio if fees and expenses were included. 538 U.S. at

426. On remand, the Utah Supreme Court explained that “the con-

siderable attention given by the Supreme Court to the issue of

compensatory damages and the methodology for arriving at a con-

stitutionally permissible ratio of compensatory to punitive dam-

ages convinces us that we would not be at liberty to consider a

substitute denominator.” 98 P.3d at 419.

* See, e.g., City of Warner Robins v. Holt, 470 S.F.2d 238, 240

(Ga. Ct. App. 1996) (recognizing that attorneys” fees awarded un-

der Georgia law “may often have a somewhat punitive cffect on

the party against whom they are awarded” even if their primary

purpose Is compensatory).

' See App., infra, 27a (finding it unnecessary to decide whether

9:1 ratio would be constitutional).

punitive damages.” Daka, Inc. v. McCrae, 839 A.2d 682, 701

n.24 (D.C. 2003). Similarly, the California Court of Appeal

recently held that a 1:1 ratio was the constitutional maximum

because the “substantial” emotional-distress damages and at-

torneys’ fees contained a “punitive element.” Walker v.

Farmers Ins. Exch., 63 Cal. Rptr. 3d 507, 513 (Cal. Ct. App.

2007). This Court’s review is necessary to resolve these con-

flicts and provide guidance on the proper application of the

ratio guidepost.

C. There Is A Conflict Regarding The Propriety Of

Speculating About Severe, But Highly Unlikely,

Legislative Fines When Applying The Compara-

ble Penalties Guidepost.

This Court has instructed reviewing courts to consider

legislatively established penalties for comparable conduct

because principles of comparative institutional competence

warrant giving “substantial deference” to “legislative judg-

ments conceming appropriate sanctions for the conduct at is-

sue.” BMW, 517 U.S. at 583 (internal quotation marks omit-

ted). In addition, the magnitude of legislative penalties bears

on whether the defendant had “fair notice” of the size of the

punishment to which it could be subjected. /d. at 584. Fi-

nally, this guidepost accounts for the fact that juries lack the

expertisc, perspective, and resources of expert regulatory

agencies. As Justice Breyer has aptly put it in an analogous

context, it is “anomalous” to “grant greater power * * * to a

single state jury than to state officials acting through state

administrative or legislative lawmaking processes.” Med-

tronic, Inc. v. Lohr, 518 U.S. 470, 504 (1996) (Breyer, J.,

concurring in part and concurring in the judgment).

Perhaps because this Court has not yet provided a de-

tailed analysis of this guidepost, lower courts consistently

have expressed confusion about its proper application. As the

Third Circuit remarked: “[T]he Supreme Court has not de-

clared how courts are to measure civil penalties against puni-

tive damages, and many courts have noted the difficulty in

doing so. We are similarly unsure as to how to properly ap-

ply this guidepost, and we are reluctant to overturn the puni-

tive damages award on this basis alone.” Willow Inn, Inc. v.

Pub. Serv. Mut. Ins. Co., 399 F.3d 224, 237-38 (3d Cir.

2005) (citations omitted).

In particular, the lower courts are divided regarding

whether it is appropriate to compare the punitive damages to

theoretical maximum penalties that are rarely if ever imposed

in practice, or whether courts instead must focus on the pen-

alties that realistically could be anticipated for the conduct

before them. Though this Court in State Farm rebuked the

Utah Supreme Court for “speculat[ing] about the loss of State

Farm’s business license, the disgorgement of profits, and

possible imprisonment” in the absence of any evidence that

those fines realistically could have been imposed (538 U.S. at

428), some lower courts have disregarded this admonition

when considering the relevance of highly severe-—but also

highly unlikely—penalties. See, e.g., Mathias v. Accor Econ.

Lodging, Inc., 347 F.3d 672, 678 (7th Cir. 2003) (noting that

[w]e are sure that the defendant would prefer to pay the pu-

nitive damages assessed in this case than to lose its license”

even though there was no evidence that such a penalty was

remotely possible for the conduct at issue); Greenberg v.

Paul Revere Life Ins. Co., 91 F. App’x 539, 542 (9th Cir. Jan.

12, 2004) (observing in insurance bad-faith case that “possi-

ble civil sanctions for this type of conduct include the sus-

pension or revocation of an insurer’s licenses, which * * *

could be worth hundreds of millions of dollars”); Union Pac.

R.R. v. Barber, 149 $.W.3d 325, 350 (Ark. 2004) (holding in

case involving train accident caused by failure to clear vege-

tation near grade crossing that $25 million punitive award

satisfied the third’ guidepost because it was “comparable” to

“the total civil penalties authorized by law,” which court de-

termined to be $9.9 million by adding the maximum daily

state and federal fines for overgrown vegetation and treating

each day as a separate violation).

This case is a perfect example. In analyzing the third

guidepost, the Eleventh Circuit relied on a theoretical maxi-

mum penalty that was virtually unthinkable in practice:

While Alabama’s environmental statute authorizes ADEM to

impose fines of $25,000 per violation up to a total of

$250,000 “per order,” the court speculated that ADEM could

have issued repeated orders, ultimately fining CCC “several

million dollars.” App., infra, 30a-31a (citing Ala. Code § 22-

22A-5(18)(c)). Nothing in the record substantiates the court’s

assumptions. ADEM never issued any orders because of fu-

gitive emissions by CCC. Moreover, there is no indication

that ADEM ever had, ever would, or even could, issue multi-

ple retrospective orders so as to evade the $250,000 limit on

its power to punish. Indeed, while the court of appeals stated

that “evidence in the record indicates that [CCC] did indeed

violate conditions of its permit” (App., infra, 31a), there was

no evidence quantifying particular emissions. Thus, as the

court ultimately admitted, it was engaging in pure conjecture.

See ibid. (court was not “capable of guessing as to the fre-

quency of Continental’s violations”).

In contrast, the Sixth Circuit and other courts have fo-

cused on more realistic penalties grounded in the evidence

before the court. In Clark, for instance, a design defect in a

truck had contributed to a driver’s death. 436 F.3d at 597.

Under the version of 49 U.S.C. § 30165(a) in effect at the

time, the National Highway Traffic Safety Administration

(“NHTSA”) could issue fines for design defects of $1,000

per vehicle, up to a maximum of $800,000 for a related series

of violations. /d. at 608. The district court held that the third

guidepost supported the $3 million punitive award because

NHTSA could theoretically issue penalties above $800,000

or revoke the defendant's business license in extreme cir-

cumstances. /bid. The Sixth Circuit reversed, noting that no

evidence in the record showed that such severe penaltics

were realistic and citing State Farm’s warming against engag-

ing in speculation. /bid. The court proceeded to hold that the

ies

“civil penalties that could be imposed for comparable con-

duct do[} not support the award.” /bid.

The Texas Supreme Court similarly refused to consider

tne possibility that a car dealer would lose its license due to

the fraud at issue because the plaintiff “provide[d] no proof

that such a sancti»n has ever been awarded in a case like

this.” Tony Gullo Motors I, L.P. v. Chapa, 212 $.W.3d 299,

309 (Tex. 2006). Likewise, the Guam Supreme Court con-

cluded that the “‘maximum fine provided by the statute’” is

irrelevant where it “bears no ‘relation to the egregiousness of

the [fraud in the] case.’” Park v. Mobil Oil Guam, Inc., 2004

WL 2595897, at *16 (Guam Nov. 16, 2004). And the Arkan-

sas Court of Appeals held that theoretically severe penalties,

such as loss of license, had “no application” because there

was no proof that a lesser sanction had been ineffective in the

past, and “the record [did not] demonstrate conduct so egre-

gious and so widespread that the civil penalty of business-

closure was a real prospect” for the fraud at issue. Jim Ray,

Inc. v. Williams, __ S.W.3d __, 2007 WL 1831790 (Ark. Ct.

App. June 27, 2007); cf. Leatherman Tool Group, Inc. v.

Cooper Indus., Inc., 285 F.3d 1146, 1149 (9th Cir. 2002) (re-

ducing $4.5 million punitive award to $500,000 on remand

from this Court because, “cven assuming that as a general

matter ‘severe’ awards might be appropriate in some cases,

[the plaintiff} has not shown that the award here was compa-

rable to the amount that might have been recovered in civil

penalties in a comparable case’’).

Like the conflicts involving the other BMW guideposts,

this tssue arises with considerable frequency in punitive

damages litigation. Environmental cases are one example; of-

ten, there are high per-day penalties for statutory violations

but no evidence as to the actual number of violations or of

the relevant agency’s actual fining practice. See, e.g.,

Johansen, 170 F.3d at 1337; City of Modesto Redevelopment

Agency v. Dow Chem. Co., 2006 WL 2346275, at *14 (Cal.

Super. Ct. Aug. 1, 2006) (unpublished). Insurance bad-faith

cae

cases are another example; the statutory scheme often pro-

vides for a range of penalties, including the loss of the in-

surer’s license. See, e.g., State Farm, 538 U.S. at 428.

This issue also is very important. Many lower courts al-

ready tend to treat the comparable penalties guidepost as an

inconsequential part of the punitive damages analysis. See,

e.g., Exxon Valdez, 490 F.3d at 1094 (noting that, “[i]n sev-

eral recent decisions we have not discussed the [third guide-

post] at all,” and concluding that third guidepost supported

$2.5 billion punitive award solely because “the matter of

spilling oil in navigable water has clearly been taken quite se-

riously by legislatures”) (citations omitted); Kemp, 393 F.3d

at 1364 (the third guidepost “is accorded less weight in the

reasonableness analysis than the first two guideposts”);

James v. Horace Mann Ins. Co., 638 S.E.2d 667, 672 (S.C.

2006) (stating that statutory penalties have little relevance

where they “were set at ‘such a low level, there is little basis

for comparing it with any meaningful punitive damage

award’”); Campbell, 98 P.3d at 419 (holding, on remand, that

a wide disparity between $9,018,780.75 punitive award and

$10,000 maximum legislative penalty for comparable con-

duct was irrelevant because “the quest to reliably position

any misconduct within the ranks of criminal or civil wrong-

doing based on penalties affixed by a legislature can be quix-

otic”); cf. Steel Techs., Inc. v. Congleton, __ $.W.3d _.,

2007 WL 1790599, at *10 (Ky. June 21, 2007) (concluding

that the third guidepost supported $1 million punitive award

even though maximum fine was $10,000 because the “differ-

ence [between the punitive award and maximum fine] is sig-

nificantly less than that encountered in Gore and Campbell’).

This guidepost will effectively become a nullity if courts can

rely on high (but unlikely) theoretical maxima or assume

away all possible limitations on the amount of fines, as the

Eleventh Circuit did here. Review is necessary to make clear

that the Eleventh Circuit should have focused on more realis-

tic penalties.

il. THE ELEVENTH CIRCUIT’S DECISION IS REP-

RESENTATIVE OF A PERVASIVE FAILURE

AMONG THE LOWER COURTS TO HEED THE

CONCERNS UNDERLYING THIS COURT’S PU-

NITIVE DAMAGES CASES.

This case also exemplifies a tendency of many courts to

apply the guideposts mechanically without considering the

core constitutional problems that led this Court to address

this subject in the first place. As this Court has recognized,

punitive damages “serve the same purposes as criminal pen-

alties, [but] defendants subjected to punitive damages in civil

cases have not been accorded the protections applicable in a

criminal proceeding.” State Farm, 538 U.S. at 417. Civil ju-

ries that are typically subject to few constraints, that lack the

expertise of regulators, and that may even possess “biases

against big business” (ibid.) can all too easily impose multi-

million-dollar punitive awards that are “tantamount to a se-

vere criminal penalty” (BMW, 517 U.S. at 585) and that

dwarf “the size of such awards in the 18th and 19th centu-

ries,” even after adjustment for inflation (Philip Morris, 127

S. Ct. at 1064).

The Court accordingly has explained that “‘[i]t should be

presumed [that] a plaintiff has been made whole for his inju-

rics by compensatory damages, so punitive damages should

only be awarded if the defendant's culpability, after having

paid compensatory damages, is so reprehensible as to warrant

the imposition of further sanctions to achieve punishment or

deterrence.” State Farm, 538 U.S. at 419. Even if some puni-

tive damages are appropriate, the reviewing court should

consider whether “‘a less drastic remed[y] could be expected

to achieve [adequate punishment and deterrence].” BMW,

517 U.S. at 584.

This guidance reflects the basic understanding that,

while punitive damages are an important means of achieving

punishment and deterrence, they are not the only way to ac-

complish those objectives. “Punitive damages aside,”

ran

“[djeterrence * * * operates through the mechanism of dam-

ages that are compensatory.” Memphis Cmty. Sch. Dist. v.

Stachura, 477 U.S. 299, 306-07 (1986) (emphasis in origi-

nal).'' Awards of attorneys’ fees also “provide significant de-

terrence.” Smith v. Wade, 461 U.S. 30, 94 (1983) (O’Connor,

J., dissenting). And so does injunctive relief. Cf. Jn re Exxon

Valdez, 270 F.3d 1215, 1244 (9th Cir. 2001) (various costs

incurred by defendant as a result of its conduct “should be

considered as part of the deterrent already imposed”).

Likewise, compensatory damages and awards of attor-

neys’ fees often can have a punitive effect. See State Farm,

538 U.S. at 426 (“Much of the distress was caused by the

outrage and humiliation the Campbells suffered at the actions

of their insurer; and it is a major role of punitive damages to

condemn such conduct. Compensatory damages, however,

already contain this punitive element.”); pp. 17-18, supra.

The guideposts announced in BMW and refined in State

Farm were supposcd to help courts determine when a puni-

tive award exceeds the amount needed to punish and deter

and therefore constitutes an arbitrary deprivation of property.

Some courts have kept this ultimate inquiry in mind, reduc-

ing large punitive awards to an amount at or below the com-

pensatory damages or throwing them out entirely after taking

into account the punitive and deterrent effects of the compen-

satory award and other obligatory payments.

In Inter Medical Supplies, Ltd. v. EB] Medical Systems,

Inc., 181 F.3d 446 (3d Cir. 1999), for instance, the jury

'' See also 1 Dan B. Dobbs, LAw OF REMEDIES § 3.1, at 282 (2d

ed. 1993) (“{e]ven if the defendant is not subject to punitive dam-

ages, an ordinary compensatory damages judgment can provide an

appropriate incentive to meet the appropriate standard of behav-

ior”); Clarence Morris, Punitive Damages in Tort Cases, 44 HARV.

L. REV. 1173, 1182 (1931) (“ifthe ‘compensatory’ damages are

large, the defendant is severely admonished without the addition of

any punitive damages”).

awarded over $100 million in punitive damages and $48 mil-

lion in compensatory damages for breach of contract and

fraud. The district court reduced the punitive award to $50

million. /d. at 454. The Third Circuit held that the reduced

punitive award was still unconstitutionally excessive. /d. at

467. As the court explained, the plaintiff was not “weak” and

“the harm inflicted on [it] was economic * * * and hence

‘less worthy of large punitive damages awards than torts in-

flicting injuries to health or safety.’” /bid. Moreover, “large

compensatory damages have been awarded.” /bid. The court

accordingly held that $1 million was the constitutional

maximum because a greater amount was “not ‘reasonably

necessary to punish and deter.’” /d. at 470 (quoting Pac. Mut.

Life Ins. Co. v. Haslip, 499 U.S. 1, 22 (1991)).

Similarly, in Chicago Title Insurance Corp. v. Mag-

nuson, 487 F.3d 985 (6th Cir. 2007), the jury awarded $32.4

million in punitive damages and $10.8 million in compensa-

tory damages for tortious interference with a contract. The

Sixth Circuit held that a new trial was required on damages,

but no punitive damages would be allowed. /d. at 998. The

court reasoned that there “were no physical injuries or threat

to personal safety as a result of [the misconduct]}” or any evi-

dence of recidivism. /d. at 1001. And the plaintiff “was not a

financially vulnerable victim.” /bid. Thus. the court held,

while there was evidence of malice, this evidence did not by

itself prove that ““‘the defendant’s culpability, after having

paid compensatory damages, is so reprehensible as to warrant

the imposition of further sanctions to achieve punishment or

deterrence.’” /bid. (quoting State Farm, 538 U.S. at 419).

Likewise, in. Pichler v. UNITE, 457 F. Supp. 2d 524

(E.D. Pa. 2006), a federal district court in Pennsylvania de-

nied a request for punitive damages under the Driver's Pri-

vacy Protection Act (“DPPA”™), 18 U.S.C. § 2724. There, a

union had violated DPPA by recording certain license plate

numbers to get the owners’ addresses from motor vehicle re-

cords. Pichler, 457 F. Supp. 2d at 530. The court held that

punitive damages were inappropriate, even if the union’s be-

havior was willful and reckless. Jd. at 531. The union had

discontinued the illegal activity before judgment and knew

that it would have to pay “costly damage awards” for future

DPPA violations. /d. at 532. This sufficed “to achieve deter-

rence without imposing punitive damages.” /bid. Moreover,

the statutory damages were over $4 million, and the attor-

neys’ fees and costs were likely to be “considerable.” /bid.

These awards would “amply punish[]” the union for its mis-

conduct. /bid. Thus, “mindful” of State Farm’s admonition

that punitive damages should be awarded only if necessary to

achieve punishment or deterrence (id. at 531), the court disal-

lowed punitive damages (id. at 532).

Regrettably, these decisions are in the minority: Many

lower courts have misunderstood (or even affirmatively

flouted) this Court’s guidance and upheld multi-million-

dollar punitive awards even when compensatory damages

were “substantial” and “a more modest punishment” would

have sufficed. State Farm, 538 U.S. at 419-20, 425. The Utah

Supreme Court’s decision on remand in State Farm is illus-

trative. Though this Court suggested that a punitive award “at

or near” the $1 million compensatory award was the constitu-

tional maximum (id. at 429), the Utah Supreme Court upheld

more than $9 million in punitive damages (98 P.3d at 413).

Another example is the Ninth Circuit’s recent decision in

Exxon Valdez. There, the court allowed $2.5 billion in puni-

tive damages to a class of fishermen following th: Exxon

Valdez tanker disaster—“the largest punitive damages award

affirmed by a federal court” (490 F.3d at 1071 (Kozinski, J.,

dissenting from denial of rehearing)}—cven though Exxon

spent $2.1 billion remediating the harm, paid $513.1 million

in compensatory damages and settlement payments to the

plaintiffs, and paid the United States and Alaska $125 mil-

lion in fines and $900 million for damage to the environment.

The dissenting judge, meanwhile, would have upheld the en-

tire $4.5 billion punitive award because it was a single-digit

multiple of the compensatory damages and settlement pay-

ments. See id. at 1102 (Browning, J., dissenting).

The present case is another excellent example. The $17.5

million punishment here is “many times the size of [punitive]

awards in the 18th and 19th centuries” (Philip Morris, 127 S.

Ct. at 1064) and “is tantamount to a severe criminal penalty”

(BMW, 517 U.S. at 585). The most realistic comparable pen-

alty is no more than $250,000 (1/70th of the punitive award).

See p. 20, supra. And by no means does the misconduct here

fall in the upper echelons of reprehensibility. See pp. 11-13,

supra. Finally, the jury awarded substantial compensatory

damages of $1,915,000 as well as $1,294,000 in attorneys’

fees for “bad faith,” while the district court ordered extensive

injunctive relief that has cost CCC millions more. These

awards and costs provide significant punishment and deter-

rence in their own right and eliminate the need for $17.5 mil-

lion in “further sanctions.” State Farm, 538 U.S. at 419; see

also pp. 23-24, supra. The Eleventh Circuit nevertheless up-

held the entire punitive award by manipulating the ratio of

punitive to compensatory damages to get it into the mid-

single digits and reading State Farm to allow such ratios

whenever there is a “finding of reprehensibility” (App., infra,

29a).

These examples are far from unique: Numerous other

courts also have missed this Court’s point, giving single-digit

ratios a constitutional “free pass” even when the compensa-

tory damages exceeded several hundred thousand dollars and

a lower punitive award might have satisfied the objectives of

punishment and deterrence.

= See, e. g., Cumbio Health Solutions, LLC v. Reardon, 2007 WL

627834, at *7 (6th Cir, Feb. 27, 2007) (unpublished) (upholding $5

million punitive award that was 5.65 times the compensatory dam-

ages and prejudgment interest of $884,291.18 because it was “well

within the Supreme Court's single-digit prescription”); Stogsdill v.

Healthmark Partners, L.L.C., 377 F.3d 827, 833 (8th Cir. 2004)

The fundamental error of these courts is their belief that

the second guidepost is not merely one of several possible

indicia of excessiveness, but instead is a safe harbor for mas-

sive exactions. That premise seriously misunderstands this

Court’s precedents. BMW indicates that “[i]n most cases, the

(holding that $2 million punitive award was permissible, even

though “the compensatory damages award [of $500,000] is sub-

stantial * * * and the punitive damages award is many times [the

defendant’s}] net worth” because this Court approved a 4:1 ratio in

Haslip), Rhone-Poulenc, 345 F.3d at 1372 (Fed. Cir.) (taking no

account of the absolute amount of the punitive award and reason-

ing that the 3.33:1 ratio of punitive to compensatory damages

“does not even approach the possible threshold of constitutional

impropriety”); Zhang v. Am. Gem Seafoods, Inc., 339 F.3d 1020,

1044 (9th Cir. 2003) (upholding $2.6 million punitive award where

compensatory damages were $260,000, because the ratio was

“slightly more than seven to one” and “[w]e are aware of no Su-

preme Court or Ninth Circuit case disapproving of a single-digit

ratio between punitive and compensatory damages”); Bogle v.

McClure, 332 F.3d 1347, 1362 (11th Cir. 2003) (upholding ap-

proximately $2 million in punitive damages to each of seven de-

fendants despite “substantial” compensatory damages of $500,000

because the ratio “in this case is in the neighborhood of 4:1, a

range which the Supreme Court has found to be ‘instructive’”),

Greenberg, 91 F. App’x at 542 (upholding $2.4 million punitive

award in insurance bad faith case in which compensatory damages

were $547,445.42 on ground that 4.4:1 ratio at issue was “similar

to the 4:1 ratio in BMW and well within the ‘single digit ratio’ that

marks the outer limits of permissible disparities”); Advocat, Inc. v.

Sauer, 111 S.W.3d 346, 361 (Ark. 2003) (allowing $21 million

punitive award that was 4.2 times the remitted compensatory dam-

ages of $5 million, because a ratio of 4.2:1 is not “breathtaking”);

Seltzer, 154 P.3d at 611 (Mont.) (discussed above at p. 16 n.7);

Bocci v. Key Pharms., Inc., 76 P.3d 669, 675 (Or. Ct. App.) (stat-

ing that 4:1 “apparently is something of a benchmark for the

United States Supreme Court,” and reducing 45:1 ratio to 7:1

where compensatory damages were $500,000), modified, 79 P.3d

908 (Or. Ct. App. 2003).

ratio will be within a constitutionally acceptable range, and

remittitur will not be justified on this basis.” 517 U.S. at $83

(emphasis added). It does not say that, if the ratio is modest,

the punitive award is perforce permissible. Rather, as dis-

cussed above, BMW, State Farm, and Philip Morris all sug-

gest a broader concern with the risk of arbitrariness that

arises when the absolute amount of punitive damages ex-

ceeds the fine that would be imposed in a criminal proceed-

ing attended by full criminal safeguards or in an administra-

tive proceeding supervised by an expert agency.

This Court’s cases also reflect the paramount principle

that no award should be greater than reasonably necessary to

serve the State’s goals of deterrence and retribution. Applica-

tion of that limiting principle necessarily entails considering

the deterrent effect of other forms of liability imposed upon

the defendant as a consequence of its punishable conduct.

The courts that treat the ratio guidepost as a safe harbor have

lost sight of this critical consideration entirely.

Because the Eleventh Circuit committed precisely that

error here, review is warranted to make clear that a single-

digit ratio is not a free pass. This case presents an excellent

opportunity to remind the lower courts that they must scruti-

nize the absolute size of punitive awards to ensure that fines

that could or would never be imposed by a criminal sentencer

or expert administrative agency are not levied through the

civil process with its comparatively weaker protections and

that, in determining whether an award is excessive, they must

take account ef other deterrents faced by the defendant.

Iii. THIS COURT SHOULD GRANT PLENARY RE-

VIEW IN BOTH THIS CASE AND EXXON VAL-

DEZ OR, ALTERNATIVELY, GRANT REVIEW IN

ONE AND HOLD THE OTHER.

As discussed above, the Eleventh Circuit’s analysis of

the ratio and reprehensibility guideposts relied on the Ninth

Circuit's decision in Exxon Valdez. App., infra, 26a, 29a.

Exxon has recently filed a petition for certiorari, arguing,

among other things, that the Ninth Circuit’s treatment of the

ratio and comparative penalties guideposts was fundamen-

tally unsound. See Exxon Shipping Co. v. Baker, No. 07-219.

Given the similar issues raised by these cases, the Court

should grant plenary review in both to provide maximum

guidance to the lower courts. In recent years, this Court has

followed this practice in cases involving constitutional chal-

lenges to school assignment plans,'° criminal sentencing,’

and religious displays.'° Granting both petitions is especially

warranted here because, as in Philip Morris, Exxon has

raised issues that, if decided in its favor, would make it un-

necessary for this Court to reach Exxon’s excessivencss ar-

guments.

At minimum, the Court should grant review in one of the

cases and hold the other. See Robert L. Stern et al., SUPREME

COURT PRACTICE § 4.16, at 255 (8th ed. 2000) (““Where the

petition for certiorari presents a question that is identical

with, or similar to, an issue already pending before the Su-

preme Court in another case in which certiorari has been

granted, the issue is obviously important and the Court will

either grant the petition and set the case for argument or

postpone consideration of the petition until the other case has

been decided and then make summary disposition of the case

in accordance with that decision.”’).

CONCLUSION

The petition for a writ of certiorari should be granted.

'* Parents Involved in Cmty. Sch. v. Seattle Sch. Dist. No. 1, 126 S.

Ct. 2351. (2006); Meredith v. Jefferson Cty. Bd. of Educ., 126 S.

Ct. 2351 (2006).

* Rita v. United States, 127 S. Ct. 551 (2006); Claiborne v. United

States, 127 S. Ct. 551 (2006).

'* McCreary Cty. v. ACLU, 543 U.S. 924 (2004); Van Orden v.

Perry, 543 U.S. 923 (2004).

por Frere” Mae ee ae [71 eae

J cS

Respectfully submitted.

H. THOMAS WELLS, JR. EVAN M. TAGER

PETER S. FRUIN Counsel of Record

Maynard, Cooper & Gale NiCKOLAIG. LEVIN

1901 Sixth Ave. North Mayer, Brown, Rowe &

2400 AmSouth/Harbert Maw LLP

Plaza 1909 K St., NW

Birmingham, AL 35203 Washington, DC 20006

205) 254-1000 (202) 263-3000

J. BRETT BUSBY

Mayer, Brown, Rowe &

Maw LLP

700 Louisiana St., Suite 3400

Houston, TX 77002

(713) 238-2606

Counsel for Petitioners

AUGUST 2007

APPENDICES

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APPENDIX TABLE OF CONTENTS

Appendix A: Opinion of the United States Court

of Appeals for the Eleventh Circuit (Mar.

Be end ethee aia aaa satin Sedat was socieguennbsives oxecveccesceses la-32a

Appendix B: Opinion and Order of the United

States District Court for the Middle District

of Alabama Denying Defendants’ Motion

for Judgment as a Matter of Law or, in the

Alternative, Motion for New Trial or, in the

Alternative, Motion for Remittur (Jan. 23,

Appendix C: Injunctive Relief Order by the

United States District Court for the Middle

District of Alabama (July 5, 2005)............0.0..0000... 48a-54a

Appendix D: Order of the United States Court

of Appeals for the Eleventh Circuit Denying

Petition for Rehearing and Rehearing En

I IN I a Na sl sseaveduenvnrnesiis 55a

Appendix E: Final Judgment as to Claims Sub-

mitted to Jury for the United States District

Court of the Middle District of Alabama

Sir Me I hcdedetah Ceca dscchi ad scenester oineccvipacukececcesmueces 56a

Appendix F. Additional Statutory Provisions .................... 57a

as ‘s i ~ 3 a > eat sy

APPENDIX A

United States Court of Appeals, Eleventh Circuit.

ACTION MARINE, INC., John Tharpe, et al., Plaintiffs-

Appellees,

CONTINENTAL CARBON INCORPORATED, China Syn-

thetic Rubber Corporation, Defendants-Appellants.

No. 06-11311

March 21, 2007

Before DUBINA and WILSON, Circuit Judges, and

CORRIGAN, * District Judge.

DUBINA, Circuit Judge:

Appellants, Continental Carbon Co., Inc. (“CCC”), and

its parent company, China Synthetic Rubber Corp. (“CSRC”)

(collectively, “Continental”),' defendants in the underlying

lawsuit, appeal the district court’s denial of their post-trial

motion for judgment as a matter of law or, in the alternative,

a new trial or, in the alternative, an amendment of the final

judgment (hereinafter “post-trial motion”). Having reviewed

the parties’ briefs and the evidence in the record, and with the

benefit of oral argument, we affirm the district court's order

and the judgment entered on the jury's verdict.

* Honorable Timothy J. Corrigan, United States District Judge for

the Middle District of Florida, sitting by designation.

' CSRC’s relationship with CCC was the subject of some dispute

during this litigation, including the trial; however, in this appeal.

CSRC does not challenge the district court’s finding that it is

CCC's parent corporation, and CSRC does not now deny making

decisions that exposed it to liability in the instant case. Nor do the

defendants contend that information known by CCC's manage-

ment should not be imputed to CSRC.

I. BACKGROUND

A. Facts

Continental owns and operates a manufacturing plant in

Phenix City, Alabama, that produces carbon black, a sub-

stance the company describes as follows:

a highly engineered product manufactured by heat-

ing feedstock oil to a high temperature in a low-

oxygen reactor. The resulting product is smoke that

includes both carbon black and waste gases. The

carbon black is separated from the gases, processed,

and formed into small pellets for case of handling

and shipment. [Continental] sells carbon black for

use in making tires, rubber and plastic items, inks,

and other . . . products.

[ Appellants’ Br. at 3 (citations to the record omitted)].

According to trial testimony, the separating process oc-

curs in stages using filters located in what is known in the in-

dustry as bagfilter compartments. Pressurized smoke carrics

carbon black through the compartments, where the bagfilters

capture the carbon black. In a closed system such as exists in

the Phenix City plant, if everything is working perfectly, no

carbon black should escape, and the remaining gasses are ex-

pelled through exhaust towers.

Originally, the Phenix City plant housed one production

unit (“Unit 1°). Although Continental received complaints

from neighboring property owners regarding carbon black

emissions from this unit, the damage giving rise to the pre-

sent lawsuit occurred in conjunction with Continental’s ef-

forts to double the plant’s production by commissioning a

second unit in 1999 (“Unit 2”). Along with the construction

of Unit 2, Continental installed a thermal oxidizer for the

purpose of combusting any carbon black particles that escape

either production unit before the air emanating from the bag-

filter compartments is expelled.

poe 1a

The appellees (collectively, “the property owners’’),

which include the City of Columbus, Georgia (“the City”),

own property located across the Chattahoochee River and

within approximately | 1/2 miles from Continental’s Phenix

City plant.’ The property owners, all of whom are Georgia

‘citizens, also include Action Marine, Inc. (“Action Marine”),

which during the relevant time operated a retail boat sales

and maintenance business along the river; John Tharpe

(“Tharpe”), Action Marine’. sole shareholder and principal

agent; and Owen Ditchfield (“Ditchfield”), who owns a resi-

dence and rental home in the area.

According to the property owners, the Phenix City plant

repeatedly emitted carbon black into the air, which then car-

ried the pollutant, known to be oily, adhesive, and penetrat-

ing, onto their properties, thereby darkening them. Specifi-

cally, the City contends that the carbon black damaged the

Columbus Civic Center both externally and internally via the

facility’s air intake system. Other City-owned properties al-

legedly damaged include recreational facilities located in the

City’s South Commons Sports and Entertainment Complex

as well as Rigdon Park. In pursuing this civil action, the City

sought damages for cleanup and monitoring costs. Ditchfield

sought damages for cleanup costs, diminution of property

value, and emotional distress in connection with carbon black

contamination of both of his properties.

Action Marine alleges that the carbon black damaged its

inventory of boats to such an extent that the company was

forced to sell those it could at a loss. Creditors eventually re-

possessed Action Marine’s boat inventory, which Tharpe had

personally guaranteed, and the business shut down. Action

Marine sought damages to recover for the lost value of its

business.

~ Some of the properties are only approximately a 1/2 mile from

Continental’s Phenix City plant.

‘

“4

When Action Marine’s creditors failed to recoup all that

was owed from the company, they pursued deficiency judg-

ments against Tharpe personally. To make matters worse,

unable to return customers’ boats in a clean condition and

thought by some to be selling used boats as new, Tharpe be-

came the butt of jokes among the fishermen who had for-

merly patronized his business. Tharpe therefore sought dam-

ages for emotional distress and loss of reputation.

Importantly, the property owners accused Continental of

intentionally damaging their properties. They claimed that

Continental chose to continue operating its Phenix City plant

despite knowing that the plant’s constant leaks were pollut-

ing their properties. Rather than fix the leaks, the property

owners contend, Continental engaged in a strategy of denial,

deception, and subterfuge. Therefore, the property owners

sought punitive damages.

B. Procedural History

Alleging diversity jurisdiction pursuant to 28 U.S.C.

§ 1332 (2000), Action Marine and Tharpe originally filed this

lawsuit as a class action stating common law tort claims of

negligence, wanton conduct, breach of duty to wam, fraud,

misrepresentation, deceit, nuisance, trespass, and strict liabil-

ity. In addition to Continental, named defendants included

Taiwan Cement Corp. (“Taiwan”) as well as Charles Barry

Nicks (“Nicks”) and Todd Miller (“Miller”), both individu-

ally and in their representative capacity as agents of Conti-

nental.

Eventually, the City, Ditchfield, and Phillips Homes,

Inc. (“Phillips”), were added as plaintiff class representatives,

but the district court subsequently denied class certification.

The district court then granted summary judgment in favor of

Taiwan and the individual defendants, Nicks and Miller, on

all claims against them. The court also granted summary

judgment in favor of the remaining defendants on the claims

of fraud, misrepresentation, deceit, and strict liability as well

we y

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as the City’s and Action Marinc’s claims for emotional dis-

tress. Phillips stipulated to a dismissal of its claims without

prejudice, and the remaining plaintiffs acquiesced in the dis-

missal of the claim alleging a breach of a duty to warn.

Therefore, the lawsuit proceeded to trial on the property

owners’ claims of negligence, wanton conduct, nuisance, and

trespass.

After a 10-day trial, an Alabama jury returned a verdict

in favor of the property owners on all claims and determined

that Continental’s actions warranted punitive damages. The

jury awarded compensatory damages in the amounts of

$45,000 to Ditchfield; $100,000 to Tharpe; $570,000 to the

City; and $1.2 million to Action Marine for a total of

$1,915,000. The jury also awarded $1,294,000 in attorney

fees and assessed punitive damages at $17.5 million.

Following entry of the final judgment on the jury’s ver-

dict, Continental timely filed its post-trial motion challenging

the sufficiency of the evidence presented in support of the

tort claims as well as the amount and propriety of the com-

pensatory and punitive damages awarded. Prior to ruling on

the motion, the district court determined that the property

owners were entitled to permanent injunctive relief, to which

the parties later consented. Approximately six months after

entry of final judyiment on the claims for injunctive relicf, the

district court denied Contincental’s post-trial motion. Conti-

nental now appeals that decision.”

Il. ISSUES

1. Whether the evidence was sufficient to reasonably in-

fer that carbon black was a cause-in-fact of the alleged dis-

coloration.

2. Whether the evidence was sufficient to reasonably in-

fer that Continental acted with the mental state required by

‘ Continental concomitantly appealed the award of injunctive re-

lief; we have already dismissed that aspect of the appeal as un-

timely.

Georgia law to prove the property owners’ claims and lift

Georgia’s statutory cap on punitive damages awards.

3. Whether the compensatory damages awarded to Ac-

tion Marine were improper.

4. Whether Tharpc, as personal guarantor of Action Ma-

rine’s debt and its principal agent, may pursue a claim

against Continental for emotional distress and/or loss of

reputation.

5. Whether the punitive damages award was unconstitu-

tionally excessive.

lil. STANDARDS OF REVIEW

We review the “denial of a motion for judgment as a

mattcr of law de novo, and will reverse only if ‘the facts and

inferences point overwhelmingly in favor of one party, such

that reasonable people could not arrive at a contrary ver-

dict.”” Flury v. Daimler Chrysler Corp., 427 F.3d 939, 945 n.

12 (11th Cir. 2005), cert. denied, 126 S. Ct. 2967 (2006). De

novo review is the proper standard also for reviewing the dis-

trict court’s denial of judgment as a matter of law with re-

spect to the claims for punitive damages. Boyd v. Homes of

Legend, Inc., 188 F.3d 1294, 1298 n. 9 (11th Cir. 1999) (not-

ing that the issue “presents a pure question of law’); see also

Toole v. Baxter Healthcare Corp., 235 F.3d 1307, 1317 (11th

Cir. 2000).

The district court’s denial of a motion for a new trial is

reviewed for an abuse of discretion. Middlebrooks v. Hill-

crest Foods, Inc., 256 F.3d 1241, 1247 (11th Cir. 2001).

“Deference to the district court ‘is particularly appropriate

where a new trial is denied and the jury’s verdict is left un-

disturbed,”” as in this case. /d. at 1247-48 (quoting Rosen-

field v. Wellington Leisure Prods., Inc., 827 F.2d 1493, 1498

(11th Cir. 1987)).

Finally, the istrict court’s decision to sustain the

amount of compensatory and punitive damages awards pur-

suant to state law is reviewed for “clear abuse of discretion.”

Middlebrooks, 256 F.3d at 1249. Its decision that the punitive

damages award does not run afoul of the federal Constitution,

however, is subject to de novo review, though we “defer to

the District Court’s findings of fact unless they are clearly er-

roneous.” Cooper Indus., Inc. v. Leatherman Tool Group,

Inc., 532 U.S. 424, 436, 440 n.14, 121 S. Ct. 1678, 1685-86,

1688 n.14 (2001).

IV. DISCUSSION

A. Causation

Continental contends that the evidence at trial was insuf-

ficient to support an award with respect to any of the prop-

erty Owners’ tort claims. Focusing solely on the scientific

evidence offered through the parties’ experts, Continental ar-

gues that the property owners failed to prove that carbon

black, as opposed to other ostensibly dark substances, caused

any of the damage alleged. Alternatively, according to Conti-

nental, the scientific evidence similarly failed to demonstrate

that the damage attributable to carbon black was “substan-

tial,” which Continental argues is required to prove the tres-

pass and nuisance claims.

1. In General

According to Continental, chemical analyses conducted

by the parties’ experts failed to establish the presence of any

carbon black on several of the City’s properties at issue and,

with respect to all but one of the remaining properties, estab-

lished a concentration of less than one percent of the total

dark material on the property. Consequently, Continental

contends, the testing proved at most that carbon black caused

de minimis damage.

At oral argument, the property owners conceded that two

of the propertics allegedly damaged, for which the jury

awarded compensatory damages, tested negative for carbon

black but contended nonctheless that the location of these

two properties and the similarity between their discoloration

and that of the neighboring properties that tested positive for

carbon black allow for an inference that carbon black caused

the damage alleged.* The property owners rely on circum-

stantial evidence as well to counter Continental’s claim that

the positive test results revealed only trace amounts of carbon

black.

The scope of our inquiry is defined by the arguments

raised in the parties’ briefs. Importantly, Continental does not

dispute that all of the properties at issue were discolored and

does not contend that the discoloration itself was insubstan-

tial. Nor does Continental contend that the observable discol-

oration of the properties differed materially from one prop-

erty to another. Furthermore, Continental does not attempt to

convince us that the discoloration was not suggestive of car-

bon black. Instead, Continental contends that no reasonable

* The property owners focus on the issue of proximate cause. Con-

tinental’s relevant arguments are limited to the issue of factual

causation, however, and Continental actually acknowledges that

cases addressing the issue of proximate cause “are inapposite.”

[Reply Br. at 7 n.6]. Therefore, we are concerned only with factual

causation.

> Continental denies the ability to accurately identify carbon black

with the naked eye; however, evidence in the record includes con-

tradictory testimony from CCC employees. For example, Ng-Leng

Lee, a plant manager for CCC and at one time plant manager in

Phenix City, testified at his deposition that he believed CCC em-

ployee Greg Johnstone, who had reported a complaint of carbon

black fallout, was capable of recognizing carbon black pollution

upon seeing it. In addition, Nicks testified that he paid a car dealer-

ship with his own money to have cars cleaned after inspecting the

vehicles and satisfying himself (though not to a scientific cer-

tainty) that the cars had been blanketed with carbon black from the

Phenix City plant. Also, the property owners’ microscopist, Garth

Freeman, Ph.D., who specializes in carbon analysis, testified that

the effects of carbon black deposits are visible without a micro-

scope and “can form a comet appearance when it lands on mate-

rial, and so in some circumstances there are physical appearances

fact finder could conclude that the discoloration was in fact

caused by carbon black without a chemical analysis estab-

lishing the presence of carbon black in such concentrations as

to compel the conclusion that carbon black, and nothing else,

caused the alleged discoloration.

Our substantive legal analysis in this diversity case is

governed by Georgia law, which provides that “[a]s a general

rule, issues of causation are for the jury to resolve and should

not be determined by a trial court as a matter of law except in

plain and undisputed cases.” Ogletree v. Navistar Int'l

Transp. Corp., 535 S.E.2d 545, 548 (Ga. Ct. App. 2000).

With respect to factual causation . . . [, while] a

reasonable inference sufficient to create a trial

issue of fact cannot be based on mere possibil-

ity, conjecture, or speculation . . . [, t]he plain-

tiff [nccd only] . . . introduce evidence which

affords a reasonable basis for the conclusion

that it is more likely than not that the conduct

of the defendant was a cause in fact of the re-

sult.

/d. (citations & quotations omitted) (emphasis added).

Viewed in the plaintiffs’ favor, the evidence at trial,

which inciuded numerous documents and photographs as

well as testimony from Ditchfield, Tharpe, the Mayor of Co-

lumbus, employees (past and present) of CCC, and experts in

microscopy, air quality, and wind direction modeling, tended

to show that (1) Continental's Phenix City plant emitted car-

bon black on numerous, perhaps innumerable, occasions dur-

ing the relevant time period; (2) wind carrying carbon black

from the Phenix City plant frequently blew toward the prop-

erty owners’ properties; (3) the propertics were in close prox-

imity to the plant; (4) the properties all were similarly discol-

ored; and (5) the dark substance on the properties was at least

of the way carbon black might deposit that would strongly indicate

that that was carbon black.” [Trial Tr. at 862).

10a

reasonably suggestive of carbon black. Furthermore, most of

the samples the property owners’ expert obtained from the

properties tested positive for carbon black, and the properties

that tested negative were located immediately adjacent to

properties with positive test results.

Surely a fact finder would welcome a chemical analysis

establishing to a scientific certainty the presence and precise

concentration of the pollutant on the properties allegedly

damaged. In the instant case, the jury was free to hold the

property owners accountable for failing to provide such cer-

tainty, but Continental has failed to cite any Georgia case that

requires the property owners to establish scientific certainty.°

We conclude that such precision is not necessary in this case.

The evidence in the record provides a reasonable basis for

concluding that Continental’s carbon black caused the dis-

coloration alleged.’ Georgia law requires nothing more.

2. Substantial Damage

Continental contends that the property owners cannot

succeed on their trespass and nuisance claims unless they can

prove that the damage caused by carbon black was “substan-

tial.” [Appellant’s Br. at 20]. We do not need to decide

whether Continental’s view of Georgia law is correct.

As already noted, Continental does not contend that the

discoloration alleged by the property owners was insubstan-

tial. Relying again on the results of the microscopic analyses

* Satterfield v. J.M. Huber Corp., 888 F. Supp. 1567, 1570-71

(N.D. Ga. 1995), the case on which Continental primarily relies, is

inapposite because the Satterfield court relied on a lack of evi-

dence, generally, and specifically noted the lack of any expert tes-

timony whatsoever regarding the issue of causation.

” We note that the only other circuit to address a similar argument

in a case factually on point is in agreement. Bradley v. Armstrong

Rubber Co., 130 F.3d 168, 173-74 (Sth Cir. 1997) (concluding that

scientific testing was not required for a jury to infer the presence of

carbon black).

lla

conducted by the parties’ experts, Continental merely con-

tends that the property owners failed to demonstrate that car-

bon black was the cause of this damage. Because we have al-

ready determined that the property owners’ circumstantial

evidence was sufficient to prove that carbon black caused the

discoloration, it follows that the evidence also was sufficient

to prove that carbon black caused substantial damage to all of

the properties. Holman v. Athens Empire Laundry Co., 100

S.E. 207, 210 (Ga. 1919) (holding that for smoke to consti-

tute a nuisgnce “it must be such as to produce a visible, tan-

gible, and appreciable injury to property”).

B. Continental's Culpability

Continental contends that the evidence was insufficicnt

to satisfy the scienter requirements of the property owners’

wanton conduct, trespass, and punitive damages claims as

well as that which is necessary to overcome Georgia’s cap on

punitive damages. The latter standard requires a showing of

“specific intent to cause harm” and thus erects the highest

scienter obstacle the property owners necded to overcome.”

*“{W]anton conduct is that which is ‘so reckless or so charged

with indifference to the consequences . . . as to justify the jury in

finding a wantonness equivalent in spirit to actual intent.” //endon

v. DeKalb County, 417 S.E.2d 705, 712 (Ga. Ct. App. 1992) (quot-

ing Truclove v. Wilson, 285 S.E.2d 556, 559 (Ga. Ct. App. 1981)),

quoted in Chrysler Corp. v. Batten, 450 S.E.2d 208, 212 (Ga.

1994). Trespass to personal property requires a showing of willful

damage, O.C.G.A. § 51-10-6(a) (2000), which equates to an “ac-

tual intention to do harm or inflict injury.” //endon, 417 S.E.2d at

712. A showing of either willfulness or wantonness is sufficient to

satisfy the standard for awarding punitive damages. O.C.G.A.

§ 51-12-5.1(b) (2000). We note also that the property owners must

prove their entitlement to punitive damages with clear and con-

vineing evidence. O.C.G.A. § 51-12-5.1(b).

Continental has waived tts argument on appeal that, under

Georgia law, the tort of wanton conduct applies only in conjunc-

tion with a risk to “human life.” [Appellant’s Br. 12]. Continental

l2a

O.C.G.A. § 51-12-5.1(f), (g) (2000). A showing of specific

intent to cause harm necessarily would satisfy the other sci-

enter requirements; therefore, we begin our analysis with

Continental’s argument that Georgia’s statutory cap limiting

punitive damages requires us at least to grant a remittitur.

Because we conclude from the record that the evidence was

sufficient to prove that Continental acted with specific intent

to cause harm, it is unnecessary to discuss Continental’s ar-

guments concerning the other scienter requirements.

Preliminarily, we recognize that an appellant challenging

a jury finding regarding an actor’s state of mind faces a for-

midable hurdle. We long ago cautioned courts in granting

judgment as a matter of law “when resolution of the disposi-

tive issue requires a determination of state of mind. Much

depends on the credibility of the witnesses testifying as to

their own states of mind.” Croley v. Matson Navigation Co.,

434 F.2d 73, 77 (Sth Cir. 1970).? Accordingly, we afford

great deference to the jury’s relevant conclusions as well as

those of the district judge first asked to overturn the jury’s

finding.

1. The Meaning of Specific Intent to Cause Harm

By statute, Georgia caps punitive damages at $250,000

per plaintiff unless “it is found that the defendant acted, or

failed to act, with the specific intent to cause harm.” § 51-12-

5.1(f), (g); see also Bagley v. Shortt, 410 S.E.2d 738, 739

failed to object to the district court’s relevant jury instruction or

raise this argument before the district court in its post-cnal motion.

See Access Now, Inc. v. Sw. Airlines Co., 385 F.3d 1324, 1331-35

(11th Cir. 2004) (discussing this circuit's frequently applied rule

that we will not consider “an issue . . . raised for the first time in an

appeal”).

* In Bonner v. City of Prichard. 661 F.2d 1206, 1209 (Lith Cir.

1981) (en banc), we adopted as binding precedent all decisions of

the former Fifth Circuit handed down prior to close of business on

September 30, 1981.

l3a

(Ga. 1991) (holding that the cap establishes a limit on the

amount that can be awarded “any one plaintiff’). Reading

into the term “specific intent” a requirement that the property

owners demonstrate that Continental acted for the sole ne-

farious purpose of injuring them, both Continental and the

L.S. Chamber of Commerce (“Chamber’’), as amicus curiae,

contend that the property owners fell short. Continental has

waived a key aspect of this argument, however.

At trial and without objection, the district court in-

structed the jury that “[s]pecific intent to cause harm is where

the actor desires to cause the consequences of his act or

where the actor believes that the consequences of his act are

substantially certain to result from [it].” [Trial Tr. 2,027].

This language reflects, verbatim, the definition adopted by

the Georgia Court of Appeals, which equates specific intent

in the punitive damages context to intent as defined in the

Restatement (Second) of Torts. See J.B. Hunt Transport, Inc.

v. Bentley, 427 S.E.2d 499, 504 (Ga. Ct. App. 1992); Viauw v.

Fred Dean, Inc., 418 S.E.2d 604, 608 (Ga. Ct. App. 1992);

Restatement (Second) of Torts § 8A (1965); see also Council

of Superior Court Judges, Georgia Suggested Pattern Jury In-

structions, Vol. I: Civil Cases, § 66.711 (4th ed. 2004) (sug-

gesting the same definition as that the district court utilized in

this case and the Georgia Court of Appeals utilized in Bentlev

and Viau).

Continental now contends that specific intent requires

something more. In essence, Continental and the Chamber

contend that the consequences of Continental's actions or in-

action must have been not only substantially certain to result

but also the end purposely sought. Thus, to avoid the cap, ac-

cording to Continental and the Chamber, the property owners

must demonstrate that Continental continued to operate tts

leaky facility in order to pollute the property owners’ proper-

ties rather than, for example, to make or save moncy.

At trial, Continental failed to object to the relevant jury

instruction and later failed to raise this same argument in tts

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post-trial motion. Indeed, Continental’s brief in support of its

post-trial motion unequivocally adopted the district court’s

definition after noting Georgia’s reliance on the Restatement.

[Br. in Supp. of Defs.’ Post-Trial Mot. at 20]. Not only has

Continental failed to acknowledge its lack of objection to the

jury instructions, but it has also failed to argue for the appli-

cation of one of the exceptions to our rule regarding a party’s

waiver of an issue raised for the first time on appeal. See,

e.g., Access Now, Inc., 385 F.3d at 1331-35; see also supra

note 8. Moreover, in its brief on appeal, Continental neither

expressly challenges the district court’s jury instruction nor

requests a revicw of the instruction for plain error. See Fed.

R. Civ. P. S1(c) & (d). Consequently, Continental has waived

this argument.'°

We therefore decline to consider whether Continental’s

proffered definition of “specific intent,” to the extent it di-

verges from the definition provided by the district court, is

correct. Instead, we review the evidence in the record to de-

termine whether it allows for an inference that Continental at

least believed that the contamination was “substantially cer-

'° We disagree with Continental's contention that we must enter-

tain its argument anyway and find that the cases upon which Con-

tinental relies have no bearing in this case. See Boyle v. United

Techs. Corp., 487 U.S. 500, 513-14, 108 S. Ct. 2510. 2519-20

(1988) (concluding only that it was not impermissible for the

Fourth Circuit Court of Appeals to issue a ruling based on a legal

standard different from the standard provided in the district court’s

jury instructions); City of St. Louis v. Praprotnik, 485 U.S. 112,

120, 108 S. Ct. 915, 922 (1988) (holding that the defendant's fail-

ure to object to a jury instruction would not foreclose review of the

relevant legal issue raised on appeal when the defendant’s “legal

position in the District Court . . . was consistent with the legal

standard it” advocated on appeal, and the Court of Appeals had

“very clearly considered, and decided,” the issue on appeal).

‘if

15a

tain” to result from its actions or inaction. We conclude that

the evidence was sufficient to support such a finding."

2. Sufficiency of the Evidence

The evidence at trial demonstrated that by the late 1990s,

if not sooner, Continental was aware that Unit | had fallen

into a state of disrepair, a condition Nicks, the Phenix City

plant manager from 1999 to 2004, agreed was “deplorable.”

(Trial Tr. at 389]. In 1998, Ken Wilder, at the time the

Phenix City plant manager, along with Todd Miller, then

CCC’s Corporate Director of Safety, Health, and Environ-

mental Affairs, attended a citizens meeting at the Columbus

City Manager’s office. [Pls.’ Ex. 2]. According to Wilder’s

notes, which he submitted in a memorandum to Nicks, the

purpose of the meeting was to discuss complaints of pollu-

tion that the citizens apparently believed was carbon black.

The citizens provided detailed descriptions of the fallout on

their property, and Ditchfield discussed problems he had

been having since 1982. Notably, Wilder’s memorandum ac-

knowledged that “{iJn 1982 the plant had a problem resulting

in carbon black on residents[’ homes] in the Oakland Park

area. Continental Carbon paid to have the homes of residents

cleaned.” [Pls.” Ex. 2-1]. Nevertheless, pointing to chemical

analyses conducted by McCrone Associates, Inc., and reter-

ring to the “elemental composition” of the samples tested,

Wilder assured the attendees that the pollution was not car-

bon black despite knowing that at least one of McCrone’s

previous analyses suggested that it was.'*

'' Continental similarly waived its current arguments that it lacked

notice of the possibility that the district court would interpret the

specific intent requirement as it did and that the Rule of Lenity

compels an alternate interpretation.

Approximately one year before the mecting with the Columbus

citizens, CCC had submitted a sample of dark material from Ac-

tion Marine to McCrone for an analysis. McCrone shared the re

sults with Gary Shafer, then the Phenix City plant’s Director of

l6a

Apparently dissatisfied with Continental’s explanation,

the complaints continued, and Nicks, after becoming plant

manager, grew increasingly disgusted with the condition of

the facility. Around that same time, two separate teams of

CCC employees, one of which included Nicks, evaluated

Unit | and recommended destructing and rebuilding the sys-

tem almost entirely. CSRC then sent a team of its own, which

arrived at a different conclusion and recommended not re-

building Unit 1.'° Continental scrapped the project and did

not resume meaningful efforts to resuscitate the rebuilding

plan until 2004. Even then, internal company E-mails re-

Safety, Health, and Environmental Affairs. According to

McCrone’s report, the carbon black reference sample provided by

CCC contained primarily carbon and a trace of sulfur. The Action

Marine sample contained, inter alia, carbon and sulfur, which

McCrone somewhat dismissively concluded “may indicate a trace

of your carbon black.” [Pls.’ Ex. 80-1].

At trial, Nicks testified regarding this analysis and described

McCrone as an “independent laboratory.” [Trial Tr. at 287]. The

jury was free to conclude otherwise. In a facsimile transmission to

Tharpe informing him of the test results, McCrone described the

elemental composition of the sample, including the existence of

carbon and sulfur. Despite having already conveyed to CCC the

possibility that the sample contained carbon black, McCrone’s

note to Tharpe concluded, “Therefore, although the black particu-

late on the wipe looks like the carbon black both visually and with

the microscope, the elemental data show the two to be different.”

[Pls.” Ex. 80-2] (emphasis added). At trial, Nicks acknowledged

that the information provided by McCrone to Tharpe was inconsis-

tent with the information McCrone provided to CCC and agreed

that one possible explanation was that McCrone had lied for CCC.

[Trial Tr. at 292}.

'* Continental anticipated that rebuilding Unit 1 would cost in ex-

cess of $4 million. All expenditures exceeding $200,000 required

the approval of CSRC president Peter Wu, Ph.D., who also served

as CCC’s chief executive officer and vice-chairman of its board.

17a

vealed, Continental planned to extend completion of the pro-

ject to at least 2006.

In 1999, Continental constructed Unit 2 and installed the

thermal oxidizer. When developing plans for Unit 2, Conti-

nental made an economic decision to limit the number of

bagfilter compartments, thereby rendering Unit 2 incapable

of sustaining the flow of air needed to maintain acceptable

production levels. Rather than reduce production, however,

Continental overloaded Unit 2, and the bagfilters, which the

manufacturcr designed to last one year, began splitting and

leaking in half that time. Indeed, some evidence suggested

that the bagfilters failed after only three or four months.

Emissions and complaints continued despite the opera-

tion of the thermal oxidizer, the supposed catchall. In April

2001, in response to complaints from Tharpe, an investigator

with the U.S. Environmental Protection Agency sat across

the river from the Phenix City plant and documented a car-

bon black emission from two exhaust stacks that CCC had

not even received a permit to operate. Nicks later became

aware that samples taken from Action Marine following the

emission tested positive for carbon black. Approximately six

months later, with no steps having been taken to correct the

problems with Unit 2, Nicks sent an e-mail, copied to Juan

D. Rodriguez, at the time CCC’s senior vice-president of op-

erations, describing Unit 2 as “constantly operating with

some small] leak up to a[{n] intolerable leak.” [Pls.’ Ex. 5].

Nevertheless, Continental did not finally approve the addition

of two bagfilter compartments until July 2002, approximately

ten months later.

Continental’s attitude regarding carbon black emissions

was further evidenced by its failure to attempt to accurately

monitor the carbon black being released into the environ-

ment. Nicks testified that he had no means of determining

how much carbon black his facility released into the air. Ac-

cording to Nicks, the plant relied solely on cmployces’ visual

observation to determine whether any black smoke drifted

18a

from the facility. Nobody was assigned to monitor the emis-

sions on a full-time basis, however, and testimony confirmed

that visually monitoring black emissions at night from the

plant was virtually impossible.

The plant did utilize an alarm system designed to detect

solid and liquid particles in the exhaust plumes; however, ac-

cording to Randy Wangle, a former maintenance superinten-

dent at the Phenix City plant, Continental had a policy of

simply cleaning and resetting the alarm without addressing

leaks unless the alarm sounded several times within an hour.

We have closcly reviewed the massive record in this

case, and, as the foregoing discussion demonstrates, we con-

clude that the evidence, which was clear and convincing, was

more than sufficient to demonstrate that Continental operated

the Phenix City plant and failed to correct the problems

plaguing it with the “specific intent to cause harm” to the

property owners, as that term is defined by the jury instruc-

tions which govern this case.'*

C. Compensatory Damages

1. The Proper Measure of Action Marine's Damages

The purpose of compensatory damages is “to place an

injured party in the same position as it would have been in

had there been no injury . . ., that is, to compensate for the in-

jury actually sustained.” //ome Ins. Co. v. N. River Ins. Co.,

'* The cases upon which Continental primarily relies do not com-

pel a different outcome. See Wal-Mart Stores, Inc. v. Johnson, 547

S.E.2d 320, 322-25 (Ga. Ct. App. 2001) (concluding that the cvi-

dence was sufficient to find that the defendant, Wal-Mart, acted

with specific intent to harm the plaintiff despite evidence that

would allow a fact finder to conclude that the plaintiff was the vic-

tim of poor communication and confusing circumstances); Bentley,

427 S.E.2d at 505 (finding that the cap applied in a case involving

injuries caused by an exhausted truck driver); Viau, 418 S.E.2d at

608 (finding that the cap applied in a case involving injurics

caused by an intoxicated driver).

Bay $

19a

385 S.E.2d 736, 742 (Ga. Ct. App. 1989). Continental con-

tends that the damages awarded to Action Marine improperly

include a windfall of approximately $800,000 in debt in-

curred in the ordinary course of business. This argument does

not take into account the evidence that Continental’s actions

led to Action Marine’s demise and thus its inability to gener-

ate revenue and repay its debts.'> Although the parties fail to

cite relevant Georgia law, the Georgia Supreme Court re-

jected an argument similar to Continental’s in circumstances

sufficiently similar to the instant case for this court to do the

same. See Bennett v. Smith, 267 S.E.2d 19, 19-20 (Ga.

1980).'°

Without objection from Continental, at trial Action Ma-

rine presented as an expert Edward Sauls, who was at the

time a certified public accountant, certified valuation analyst

with an accreditation in business valuation, and a certified fi-

nancial forensic analyst. In great detail, Sauls explained to

the jury the basis for his conclusion that an award of $1.2

million was necessary to “place [Action Marine and its

owner, Tharpe] in the positien financially that they otherwise

'S Continental does not challenge the sufficiency of the evidence

linking its carbon black to Action Marine’s closing beyond what

has already been discussed. Therefore, we assume without decid-

ing that Action Marine proved that the discoloration of its boats

proximately caused its insolvency.

‘* Not entirely analogous, Benne?t is nonetheless instructive. The

plainuffs in Bennett operated an egg farm and contended that the

defendants had sold them contaminated feed. which “caused the

plaintiffs’ hens to stop laying eggs.” /d. at 19. After distinguishing

the case from more typical breach of contract cases involving in-

complete transactions, the Georgia Supreme Court concluded that

the plaintiffs could recover “lost revenues as damages without de-

ducting production expenses therefrom, since the plaintiffs’ evi-

dence showed that they incurred the same expenses they would

have incurred had the hens continued to lay eggs.” /d. at 20 (em-

phasis added).

20a

would have been had it not been for the actions of the Defen-

dant.” [Trial Tr. at 1097]. In other words, he testified as to

“what .. . Action Marine [would] be worth today had they

not lost. . . profits.” [Trial Tr. at 1110).

He further explained the three common “approaches to

valuation” and led the jury through his application of the “‘as-

set-based” approach. Essentially, based on what Sauls con-

cluded Action Marine would be worth but for Continental’s

conduct, he determined that a purchaser as of the trial date

would assume Action Marine’s liabilities of $795,243 and

pay an additional $653,166 for a total of $1,448,409. He fur-

ther reduced the total to account for variables that are not im-

portant here and concluded that $1.2 million would be neces-

sary to compensate Action Marine for the pollution damage.

[Trial Tr. at 1117-18].

On cross-examination, Continental did not challenge

Sauls’s valuations and focused solely on the basis for his

conclusion that Action Marine’s losses were attributable to

the carbon black contamination. Moreover, Continental nei-

ther offered an alternative methodology nor presented an ex-

pert of its own to provide a different quantum of damages.

Continental now contends that Sauls’s application of the as-

sct-based approach was incorrect. We disagree. See Dunn v.

Comm'r of Internal Revenue, 301 F.3d 339, 352-53 (Sth Cir.

2002) (approaching asset-based valuation from the perspec-

tive of a “willing buyer”); Okerlund v. United States, 53 Fed.

Cl. 341, 347 n.4 (Fed. Cl. 2002) (“Under the asset based ap-

proach, the value of a business is equal to the cost that would

be incurred in acquiring a group of assets of similar utility”).

Even if Sauls was mistaken in his calculations, Continental

had every opportunity to highlight his error for the jury.

We conclude that the district court did not err in denying

Continental’s motion for remittitur or a new trial on damages.

Action Marine’s proffered measure of damages did not

impermissibly include damages not attnbutable to Continen-

2la

tal’s carbon black, and the expert testimony was sufficient to

support the compensatory damages awarded.

2. Tharpe’'s Ability to Recover Damages

Continental contends that Tharpe may not recover dam-

ages because his injuries, as sole shareholder of Action Ma-

rine, are derivative of his company’s injuries. Again, we dis-

agree. In Georgia, a sole shareholder’s status as personal

guarantor of his corporation’s debt gives rise to an independ-

ent, legally compensable injury when tortious acts directed at

the corporation injure the shareholder in that capacity. Wi/-

liam Goldberg & Co., Inc. v. Cohen, 466 S.E.2d 872, 881-82

(Ga. Ct. App. 1995). Continental offers no reason to believe

that a similar rationale would not apply with respect to the

independent injuries inflicted upon Tharpe’s business reputa-

tion, which was so intertwined with that of his corporation as

to be virtually inseparable. See O.C.G.A. § 41-1-1 (1997) (“A

nuisance is anything that causes hurt, inconvenience, or dam-

age to another .. . .”); Anderson v. Fussell, 44 S.E.2d 694,

696 (Ga. Ct. App. 1947) (“The body, reputation, and property

of the citizens are not to be invaded without responsibility in

damages to the sufferer.”); cf’ Curl v. First Fed. Sav. & Loan

Ass'n of Gainesville, 257 S.F.2d 264, 265-66 (Ga. 1979) (up-

holding a jury verdict in favor of a plaintiff in a wrongful

foreclosure suit seeking damages for. inter alia, injury to her

reputation in the community). Therefore, we conclude that

the district court did not err in allowing Tharpe’s claims to go

to the jury.

D. Constitutionality of the Punitive Damages Award

“Punitive damages may properly be imposed to further a

State’s legitimate interests in punishing unlawful conduct and

deterring its repetition.” B.M.W. of N. Am., Inc. v. Gore, 517

U.S. 559, 568, 116 S. Ct. 1589, 1595 (1996).'” “It should be

'’ Georgia law allows punitive damage awards in cases involving

“aggravating circumstances in order to penalize. punish, or deter a

defendant.” O.C.G.A. § 51-12-5.1(a) (2000).

22a

presumed a plaintiff has been made whole for his injuries by

compensatory damages, so punitive damages should only be

awarded if the defendant’s culpability, after having paid

compensatory damages, is so reprehensible as to warrant the

imposition of further sanctions to achieve punishment or de-

terrence.” State Farm Mut. Auto. Ins. Co. v. Campbell, 538

U.S. 408, 419, 123 S. Ct. 1513, 1521 (2003).

The United States “Constitution imposes a substantive

limit on the size of punitive damages awards[,]” however.

Honda Motor Co., Ltd. v. Oberg, 512 U.S. 415, 420, 114 S.

Ct. 2331, 2335 (1994). “A decision to punish a tortfeasor by

means of an exaction of exemplary damages is an exercise of

state power that must comply with the Due Process Clause of

the Fourteenth Amendment.” /d. at 434-35, 114 S. Ct. at

2342. We are therefore charged with reviewing the jury’s

award to determine whether it “can fairly be categorized as

‘grossly excessive’ in relation to” the state’s legitimate inter-

ests, Gore, 517 U.S. at 568, 116 S. Ct. at 1595, and to “en-

sure that the measure of punishment is both reasonable and

proportionate to the amount of harm to the plaintiff and to the

gencral damages recovered.” Campbell, 538 U.S. at 426, 123

S. Ct. at 1524.

When determining whether a punitive damages award is

unconstitutionally excessive, we are guided by “(1) the de-

gree of reprehensibility of the defendant's misconduct; (2)

the disparity between the actual or potential harm suffered by

the plaintiff and punitive damages award; and (3) the differ-

ence between the punitive damages awarded by the jury and

the civil penalties authorized or imposed in comparable

cases.””'* Jd. at 418, 123 S. Ct. at 1520. We do not view these

“guideposts” as an “analytical straitjacket,” Zimmerman v.

Direct Fed. Credit Union, 262 F.3d 70, 81 (Ist Cir. 2001),

' Defendants do not challenge the amount of the punitive damages

award as excessive under Georgia law other than as already dis-

cussed.

23a

and we maintain as our overarching aim eliminating the risk

that a defendant is punished arbitrarily or without fair notice

of the possible consequences of its actions. Gore, 517 U.S. at

574, 116 S. Ct. at 1598 (noting that due process requires a

person to have “fair notice not only of the conduct that will

subject him to punishment, but also of the severity of the

penalty that a State may impose’’).

1. Reprehensibility

Of the three guideposts, the reprehensibility of a defen-

dant’s conduct is the most relevant; punitive “damages im-

posed on a defendant should reflect ‘the enormity of his of-

fense.’” Gore, 517 U.S. at 575, 116 S. Ct. at 1599. In evalu-

ating reprehensibility, we consider

whether: the harm caused was physical as op-

posed to economic; the tortious conduct

evinced an indifference to or a reckless disre-

gard of the health or safety of others; the target

of the conduct had financial vulnerability; the

conduct involved repeated actions or was an

isolated incident; and the harm was the result

of intentional malice, trickery, or deceit, or

mere accident. The existence of any one of

these factors weighing in favor of a plaintiff

may not be sufficient to sustain a punitive

damages award; and the absence of all of them

renders any award suspcct.

Campbell, 538 U.S. at 419, 123 S. Ct. at 1521 (citations

omitted).

The reprehensibility determination “must begin with the

identification of the state’s interest and an assessment of the

strength of that interest.” which are questions of law.

Johansen v. Combustion Eng'g, Inc., 170 F.3d 1320, 1334

(1 tth Cir. 1999). We assume from the parties’ arguments that

24a

the relevant interest served in this case is Georgia’s “strong

interest in deterring environmental pollution.” /d. at 1335."”

We note that the district court found that the evidence

had “established a pattern of intentional misconduct . . . lead-

ing to repeated damage to Plaintiffs’ properties.” The district

court also described Continental’s approach to dealing with

the public and the property owners as “less than honest.”

In addition, the district court referred to evidence regard-

ing the potential health hazards associated with inhalation or

ingestion of carbon black, including a finding documented in

Continental’s Material Safety Data Sheet that carbon black is

a possible cause of cancer in humans. The district court,

therefore, did not clearly err when concluding that Continen-

tal’s actions reflected an indifference to or a reckless disre-

gard of the health or safety of others.”°

We conclude that the district court’s findings are sup-

ported by the record, and we agree with the district court that

these facts support a finding that Continental’s actions were

“so reprehensible as to warrant the imposition of further

sanctions.” Campbell, 538 U.S. at 419, 123 S. Ct. at 1521.

We go further, however, to note briefly those aspects of the

facts in this case that justify the punitive damages actually

awarded.

’ Although Johansen concerned water pollution, our rationale (i.e.

Georgia's legislative enactments addressing pollution) applies

equally in this case. See O.C.G.A. § 12-9-23 (2006) (establishing

civil penalty of up to $25,000 per day for violations of the Georgia

Air Quality Act, §§ 12-9-1 to 12-9-25).

~*° The evidence does not conclusively establish that carbon black is

carcinogenic in humans. Continental suggests that lack of certainty

renders its conduct less reprehensible. On the contrary, the risk of

releasing a possible carcinogen into the environment, even when,

or perhaps especially when, the possibility is not well defined,

counsels for the adoption of extraordinary precautions and justifies

extraordinary penalties when available precautions are consciously

ignored.

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25a

With respect to the pattern and duration of Continental’s

intentional misconduct, the events at issue spanned more than

five years, and Continental continued its course of action and

inaction undeterred by both the prospect and reality of litiga-

tion. In addition, the harm inflicted cannot adequately be

characterized as solely economic. Continental’s actions re-

sulted in the destruction of a once successful business and in-

terfered with the use and enjoyment of municipal property.

Moreover, according to the evidence, the City, which is ac-

countable to all of its citizens, was compelled to approve

special funding for and devote extraordinary labor resources

to the cleaning of its damaged properties.

The evidence also demonstrated Continental’s willing-

ness to clude accountability. An employee of the Alabama,

Department of Environmental Management (“ADEM”) ap-

parently offered the Phenix City plant management advanced

warning of impending, supposedly surprise, government in-

spections. Furthermore, the properties at issue are located in

a state whose government could offer the property owners no

regulatory protection. Indeed, Nicks testified that when rep-

resentatives from the Georgia Department of Natural Re-

sources surprised him with an unannounced visit to inspect

the plant, he denied them entry.

Finally, we note that Continental’s actions likely harmed

a great number of people and businesses who are not partics

to this litigation. While punitive damages may not be

awarded to punish for harm inflicted on nonparties, we may

consider the risk of harm to others as part of the reprehensi-

bility analysis. Philip Morris U.S.A. v. Williams, 549 U.S.

___, 127 S. Ct. 1057, 1063-64 (2007).

We conclude, therefore, that Contincntal’s actions and

P . ° . 9 .

inaction were exceedingly reprehensible.”' We decline Con-

*' The fact that Alabama permitted CCC to release carbon black

into the atmosphere is of no consequence and, in any case, does

not negate the reprehensibility of Continental's actions. As Conti-

26a

tinental’s invitation to compare its actions with those of other

defendants in dissimilar contexts and base our conclusion on

the facts before us in this case alone. Cf TXO Prod. Corp. v.

Alliance Res. Corp., 509 U.S. 443, 458, 113 S. Ct. 2711,

2720 (1993) (plurality) (“[W]hile we do not rule out the pos-

sibility that the fact that an award is significantly larger than

those in similar circumstances might, in a given case, be one

of many relevant considerations, we are not prepared to en-

shrine petitioner’s comparative approach in a ‘test’ for as-

sessing the constitutionality of punitive damages awards.”

(emphasis added)). A substantial penalty beyond the com-

pensatory damages awarded was fully warranted. See Jn re

Exxon Valdez, 472 F.3d 600, 625 (9th Cir. 2006) (reducing

punitive damages award to $2.5 billion despite actual dam-

ages, including those paid to settle numerous ciaims, of

$504.1 million); Bogle v. McClure, 332 F.3d 1347, 1362

(11th Cir. 2003) (upholding a punitive damages award of

$13.3 million imposed on the board of trustees for a public

library system and the board’s dircctor despite a compensa-

tory damages award exceeding $3 million when the defen-

dants’ wrongful actions were intentional and evidenced ef-

forts to cover up their wrongful intent); cf Johansen, 170

F.3d at 1339 (upholding a punitive damages award of $4.35

million, which represented nearly 100 times the compensa-

tory award, in a pollution case involving conduct deemed

“not very reprehensible, with no aggravating factors pre-

sent”), cert. denied sub nom. Combustion Eng'g, Inc. v.

McGill, 528 U.S. 931, 120 S. Ct. 329 (1999).

nental acknowledged at trial, its permit did not empower the com-

pany to damage property. Further, the Supreme Court has noted

that “[lJawful out-of-state conduct may be probative when 1 dem-

onstrates the deliberateness and culpability of the defendant's ac-

tion in the State where it is tortious.” Campbell, 538 U.S. at 422,

123 S. Ct. at 1522.

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27a

2. The Difference Between Actual or Likely Damages

and the Punitive Damages Award

We next ask “*whether there is a reasonable relationship

between the punitive damages award and the harm likely to

result from the defendant’s conduct as well as the harm that

actually has occurred.’” TXO Prod. Corp., 509 U.S. at 460,

113 S. Ct. at 2721 (quoting with added emphasis Pac. Mut.

Life Ins. Co. v. Haslip, 499 U.S. 1, 21, 111 S. Ct. 1032, 1045

(1991)), quoted in Gore, 517 U.S. at 581, 116 S. Ct. at 1602.

This determination has not yet been reduced to a “simple

mathematical formula.” Gore, 517 U.S. at 582, 116 S. Ct. at

1602. Instead, the Supreme Court has endorsed the view that

“ratios greater than those [the Court has] previously upheld

may comport with due process where ‘a particularly egre-

gious act has resulted in only a smal! amount of cconomic

damages.’"” Campbell, 538 U.S. at 425, 123 S. Ct. at 1524

(quoting Gore, 517 U.S. at 582, 116 S. Ct. at 1602). Con-

versely, “[w]hen compensatory damages are substantial, then

a lesser ratio, perhaps only equal to compcnsatory damages,

can reach the outermost limit of the due process guarantee.

The precise award in any case, of course, must be based on

the facts and circumstances of the defendant's conduct and

the harm to the plaintiff.” /d.

Continental contends that a punitive to compensatory

damage ratio of 9:1 is unconstitutional in light of the substan-

tial compensatory award and the Supreme Court's relevant

directives. We need not address this question directly, how-

ever, because the relevant ratio is actually 5:1.

In Georgia, awards of attorney fees in tort cases involv-

ing bad faith are compensatory in nature. See 0.C.G.A. § 13-

6-11 (2006 Supp.);~ City of Warner Robins v. Holt, 470

** When first adopted, the statute referred specifically to “bad faith

in making [a] contract” and was codified in the section of the

Georgia Code governing contracts. O0.C.G.A. § 13-6-11 (1982). In

1984, the statute was amended to remove the language limiting its

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28a

S.E.2d 238, 240 (Ga. Ct. App. 1996) (holding that the pur-

pose of an award of attorney fees and litigation expenses “is

to compensate an injured party, in order that such parties are

not further injured by the cost incurred as a result of the ne-

cessity of seeking legal redress for their legitimate griev-

ances”); Ross v. Hagler, 433 S.E.2d 124, 127 (Ga. Ct. App.

1993) (noting that an award of attorney fees under section

13-6-11 is not punitive in nature); Privitera v. Addison, 378

S.E.2d 312, 317 (Ga. Ct. App. 1989) (describing fees award-

able under section 13-6-11 as an element of ‘“‘actual dam-

ages”). The attorney fees in this case were premised on a

finding of bad faith pursuant to section 13-6-11. Conse-

quently, we include the attorney fees as part of the measure

of actual damages for the necessary comparison. See Willow

Inn, Inc. v. Pub. Sve. Mut. Ins. Co., 399 F.3d 224, 234-37 (3d

Cir. 2005) (relying on state law to define the character of an

attomey fee award and including the fee award in its calcula- -

tion of actual damages).

The question we must ask then is whether a punitive

damages award of $17.5 million is proportionally related to

the compensatory damage award of approximately $3.2 mil-

lion. Under the circumstances of this case, we think it is.

We have not overlooked the Supreme Court’s guidance,

described by the Court as “not binding” but “instructive,”

Campbell, 538 U.S. at 425, 123 S. Ct. at 1524, that ratios in

excess of 1:1 and/or 4:1 may only rarely satisfy due process

applicability to contract cases, and it has since been applied in

cases involving tort claims. See, e.g., St. Paul Fire & Marine Ins.

Co. v. Clark, 566 S.E.2d 2, 11 (Ga. Ct. App. 2002).

** The district court's reliance on the 9:1 ratio constitutes a legal

determination involving the definition of compensatory damages,

which we review de novo. Thus, we do not mean to suggest that

the district court’s calculations were factually clearly erroneous.

294

requirements.** The facts before us, we believe, compel ap-

plication of what the Court may someday unequivocally en-

dorse as the rare exception. See /n re Exxon Valdez, 472 F.3d

at 624 (concluding that a ratio of approximately 5:1 ($2.5 bil-

lion:$504 million) was constitutionally sound despite finding

that the conduct at issue was neither intentional nor malicious

and that previous efforts to correct the damage mitigated rep-

rehensibility); Planned Parenthood of Columbia/Willamette,

Inc. v. Am. Coalition of Life Activists, 422 F.3d 949, 962 (9th

Cir. 2005) (developing, based on the relevant Supreme Court

precedents, a gencral guideline allowing for a sinyle-digit ra-

tio greater than 4:1 in cases involving “significant economic

damages and more egregious behavior’), cert. denied, 126 S.

Ct. 1912 (2006). As we have already concluded, the evidence

supporting the district court’s finding of reprehensibility

alone justifies the punitive damages award.”

3. Comparable Civil and Criminal Penalties for Similar

Conduct

Lastly, we must consider “the available civil and crimi-

nal penalties the state provides for” Continental’s misconduct

* See Campbell, 538 U.S. at 425, 123 S. Ct. at 1524 (endorsing a

1:1 ratio as the general rule when substantial compensatory dam-

ages have been awarded and noting the Court's historical view that

“an award of more than four times the amount of compensatory

damages might be close to the line of constitutional impropriety’).

But see TXO Prod. Corp., 509 U.S. at 462, 113 S. Ct. at 2722 (up-

holding a punitive damages award in excess of 526 times the ac-

tual damages awarded); //as/ip, 499 U.S. at 23, 111 S. Ct. at 1046

(upholding a punitive damages award “more than 4 times the

amount of compensatory damages, . . . more than 200 times the

out-of-pocket expenses of [the plaintiff], and... much in ex-

cess of the fine that could be imposed for insurance fraud").

““ We reach this conclusion without considering the likely harm

that would have resulted had Continenta! been permitted to con.

tinue polluting the property owners’ property. Obviously, this fac-

tor would only strengthen our conclusion.

30a

to determine whether Continental had notice that it could be

ordered to pay the amount awarded. Johansen, 170 F.3d at

1337. “[A] reviewing court engaged in determining whether

an award of punitive damages is excessive should ‘accord

“substantial deference” to legislative judgments concerning

appropriate sanctions for the conduct at issue.’” Gore, 517

U.S. at 583, 116 S. Ct. at 1603 (quoting Browning-Ferris In-

dus. of Vt., Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 301,

109 S. Ct. 2909, 2934 (1989) (O’Connor, J., and Stevens, J.,

concurring in part and dissenting in part)). This factor, how-

ever, “is accorded less weight in the reasonableness analysis

than the first two guideposts.” Kemp v. Am. Tel. & Tel. Co.,

393 F.3d 1354, 1364 (11th Cir. 2004).

We must first decide whether to look to the law of Geor-

gia, which has the grcater interest in deterring Continental’s

conduct in this case, or the law of Alabama, which has regu-

latory authority over Continental. We assume from the par-

ties’ arguments that Alabama law is the appropriate guide.

Relying on provisions in the Alabama Environmental

Management Act (“AEMA”), Continental contends that the

potential penalty in Alabama could not exceed $250,000 and

therefore could not provide notice of a potential civil penalty

of $17.5 million. See Ala. Code § 22-22A-5(18)(c) (2006

Repl. Vol.). While it is true that the relevant provision of the

AEMA limits “the total penalty assessed in an order issued”

(emphasis added) by the regulating agency, the statute does

not limit the number o/ such orders the agency may issue. /d.

In other words, ADE™ is empowered to assess a penalty of

up to $25,000 per victsiten up to a total of $250,000 per or-

der. Jd. That does not mean that after issuing such an order,

ADEM cannot again assess penalties against a polluter who

was the subject of a $250,000 fine. To so interpret the statute

would lead to absurd results and defeat the Act's stated intent

“to improve the ability of the state to respond in an efficient,

comprehensive and coordinated manner to environmental

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problems, and thereby assure for all citizens of the state a

safe, healthful and productive environment.” § 22-22A-2.°°

Conceivably, then, Alabama could fine Continental

$250,000 for every ten violations. As we stated in Johansen,

however, “[i]f a statute provides for a range of penalties de-

pending on the severity of the violation, . . . it cannot be pre-

sumed that the defendant had notice that the state’s interest in

the specific conduct at issue in the case is represented by the

maximum fine provided by the statute.” 170 F.3d at 1337.

Thus, we cannot simply presume that Alabama would have

fined Continental an incalculable number of times or would

have assessed the maximum amount each time. Nor are we

capable of guessing as to the frequency of Continental’s vio-

lations, though evidence in the record indicates that it did in-

deed violate conditions of its permit and thus the AEMA. See

venerally § 22-22A-5(18).

We do not find ourselves utterly without guidance, how-

ever, for “the extent of the defendant’s statutory notice is re-

lated to the degree of reprehensibility of his conduct.” 170

F.3d at 1337. Considering the reprehensibility of Continen-

tal’s conduct, we can surmise that if Alabama citizens had

found themselves the victims of Continental’s malfeasance,

ADEM would have vigorously enforced the relevant statutes

and fined Continental closer to the maximum amount al-

lowed, perhaps several times if necessary. Continental con-

sequently was on notice that its actions could result in civil

penalties that far exceed the per-order cap limiting ADEM’s

discretion, and we do not believe it implausible that vigorous

enforcement would have led to an accrual of fines totaling

several million dollars. We are thus satisfied that the award

“" We do not intend to suggest that the penalties assessable pursu-

ant to the AEMA provide the “most relevant ‘other sanction.”

Johansen, 170 F.3d at 1337. Continental focuses solely on the

AEMA, as did the district court, apparently. The property owners

offer no alternative.

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32a

was not grossly disproportionate to the penalties Continental 4

faced for its actions. Moreover, we conclude that the punitive a

damages award was not unconstitutionally excessive. a

V. CONCLUSION 4

In sum, the evidence and the relevant law supported the q

jury’s verdict, the final judgment, and the district court’s de- oe

cision to deny Continental’s post-trial motion. Accordingly, 4

we affirm the district court’s order and the judgment entered 4

on the jury’s verdict.

AFFIRMED.

CAAA -

se Ee Sh ee ae

APPENDIX B

United States District Court, M.D. Alabama,

Eastern Division.

ACTION MARINE, INC., et al., Plaintiffs,

Vv.

CONTINENTAL CARBON, INC.., et al., Defendants.

No. 3:01-CV-994-MEF

Jan. 23, 2006

MEMORANDUM OPINION AND ORDER

FULLER, Chief J.

This cause is before the Court on the Defendants’ Mo-

tion for Judgment as a Matter of Law or, in the Alternative,

Motion for New Trial or, in the Alternative, Motion for Re-

mittitur (Doc. # 248) filed on February 14, 2005. The Court

has carcfully considered the Brief in Support of Defendants’

Motion for Judgment as a Matter of Law or, in the Altcrna-

tive, Motion for New Trial or, in the Alternative, Motion for

Remittitur (Doc. # 281) filed on April 20, 2005 and the Plain-

tiffs’ Opposition to Defendants’ Motion for Judgment as a

Matter of Law or, in the Alternative, Motion for New Trial

or, in the Alternative, Motion for Remittitur (Doc. # 290)

filed on May 20, 2005. For the reasons set forth in this

Memorandum Opinion and Order, the Detendants’ Motion

for Judgment as a Matter of Law or, in the Alternative, Mo-

tion for New Trial or, in the Alternative, Motion for Remitti-

tur (Doc. # 248) is due to be DENIED.

BACKGROUND

On August 13, 2001, Action Marine, Inc. (hereinafter

“Action Marine”) a Georgia business, and its owner John

Tharpe (hereinafter “Tharpe”) filed suit in this Court’ against

Continental Carbon Incorporated (hereinafter “Continental

' Action Marine invoked this Court's jurisdiction pursuant to 28

U.S.C. § 1332.

34a

Carbon”), Barry Nicks” (hereinafter “Nicks”), Todd Miller

(hereinafter “Miller’”’),’ China Synthetic Rubber Corporation

(“China Synthetic”), and Taiwan Cement Corporation (here-

inafter “Taiwan Cement”)* (hereinafter collectively referred

to as “Defendants”). Action Marine’s original complaint in-

cluded the following claims: Negligence (Count 1); Wanton

Conduct (Count Il), Breach of Duty to Warn (Count III);

Fraud, Misrepresentation, and Deceit (Count IV); Nuisance

(Count V); Trespass (Count V1); Common Law Strict Liabil-

ity (Count VII); and Permanent Injunction (Count VIII). Al-

though, the Complaint stated that Action Marine brought this

action as a class action pursuant to Rule 23 of the Federal

Rules of Civil Procedure, this Court later denied Plaintiffs’

request for class certification.

On January 22, 2002, Action Marine filed an Amended

Complaint (Doc. # 28). By this amendment, Action Marine

added two additional named plaintiffs: the City of Columbus,

Georgia (hereinafter “City of Columbus”) and Phillips

Homes, Inc. (hereinafter “Phillips Homes”), a Georgia busi-

ness. On February 14, 2002, Plaintiffs again amended their

allegations by filing the Second Amended Complaint (Doc. #

34). The Second Amended Complaint added Owen Ditch-

field (hereinafter “Ditchfield”), a citizen of Georgia as a

named plaintiff to the action.

Defendants filed dispositive motions which were granted

in part and denied in part. Plaintiffs abandoned some of their

claims. On August 11, 2004, the trial of this cause began.

Plaintiffs presented the following claims to the jury: nui-

sance, trespass, negligence, and wantonness. All parties

* Nicks is incorrectly denominated in the Second Amended Com-

plaint as Nix.

* Action Marine alleged that Nicks and Miller were employees of

Continental Carbon’s Phenix City plant.

* China Synthetic and Taiwan Cement are the parent corporations

of Continental Carbon.

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35a

agreed that the substantive law of Georgia applied to this

case. The presentation of evidence and witnesses lasted for

ten days. During this time, the jury heard testimony from

both fact witnesses and expert witnesses. Some of that testi-

mony was conflicting and necessarily required the jury to

make credibility determinations. Defendants made a motion

for judgment as a matter of law at the close of the Plaintiffs’

case on the seventh day of the trial. The Court granted this

motion in part and denied it in part. Defendants presented

evidence in opposition to Plaintiffs’ claims including its own

fact witnesses and expert witnesses. Defendants renewed

their motion for judgment as a matter of law at the close of

their case in chief. The Court denied the renewed motion for

judgment as a matter of law.

The Court asked the parties to submit proposed jury in-

structions and proposed verdict forms. The Court conducted

a charge conference where the jury instruction and verdict

forms were discussed with counsel. On the ninth day of trial,

the Court instructed the jury and they began their delibera-

tions. The jury submitted several questions to the Court dur-

ing their deliberations and the Court addressed all such ques-

tions after conferring with counsel.

On the tenth day of trial, the jury returned a verdict for

Plaintiffs. In returning this verdict in favor of the Plaintiffs.

the jury completed a nine page Verdict Form (Doc. # 216)

and answered twenty special interrogatories. The jury

awarded $1.2 million dollars in compensatory damages to

Action Marine; $100,000 in compensatory damages to John

Tharpe; $45,000 to Owen Ditchfield; and $570,000 to the

City of Columbus, Georgia. After the verdict, Defendants

orally renewed their motion for judgment as a matter of law.

The Court denied the renewed motion for judgment as a mat-

ter of law.

After the return of the verdict on liability and compensa-

tory damages, additional testimony was presented in support

of Plaintiffs’ claims for punitive damages and attorneys’ fees.

36a

The Court provided the jury with further jury instructions and

a verdict form addressing the punitive damages and attor-

neys’ fees issues. The jury returned a verdict in Plaintiffs’ fa-

vor. In returning this supplemental verdict on attorneys’ fees

and punitive damages, the jury competed [sic] a Supplcmen-

tal Verdict Form (Doc. # 217) which required them to answer

three specific interrogatories. The jury awarded Plaintiffs

$17,500,000 in punitive damages and $1,294,000 in attor-

neys’ fees* and specifically found that Defendants acted or

failed to act with a specific intent to harm the Plaintiffs.

At the conclusion of the jury trial in this case, there still

remained pending before this Court Plaintiffs” claims for in-

junctive relief. This Court required further submissions on

the issue of injunctive relief. Persuaded that injunctive relief

was appropriate, but concerned that prior submissions failed

to provide sufficient information to allow the Court to shape

the injunctive relief, the Court required additional submis-

sions on the injunctive relief. The parties negotiated a settle-

ment of the injunctive claims and submitted a proposed order

setting forth the injunctive relief to which they had agreed. In

early July of 2005, this Court entered an injunction.

In addition to the post judgment motions now pending

before this Court [sic]. The parties have been litigating some

post judgment claims regarding sanctions against Defendants

for conduct during pretrial discovery which was not discov-

ered until after the conclusion of the trial. This Memorandum

Opinion and Order will not touch on those sanctions because

that matter has been referred to Magistrate Judge McPherson

who, consistent with the practice of this district, is more in-

timately familiar with the course of discovery in this litiga-

tion and the patterns of the parties’ conduct during discovery.

. Attorneys’ fees were awarded pursuant to O.C.G.A. § 13-6-11,

and punitive damages were awarded pursuant to O.C.G.A. § 51-

12-5.1.

37a

DISCUSSION

A. Motion for Judgment as a Matter of Law

A motion for judgment as a matter of law as to a particu-

lar issue should be granted when “there is no legally suffi-

cient evidentiary basis for a reasonable jury to find for [thc

non-movant] on that issue.” Fed. R. Civ. P. 50(a1); Wood v.

Green, 323 F.3d 1309, 1312 (11th Cir. 2003). Thus, as the

Eleventh Circuit has explained,

[t]he jury’s verdict must stand unless there is no lIe-

yally sufficient evidentiary basis for a reasonable

jury to find for that party on that issue. It is the

jury’s task—not ours—to weigh conflicting evidence

and inferences, and determine the credibility of the

witnesses. If reasonable jurors could reach different

results, we must not second guess the jury or substi-

tute our judgment for its judgment.

Shannon v. Bellsouth Telecomms., Inc., 292 F.3d 712, 715

(1 }th Cir. 2002) (internal quotations and citations omitted.)

Defendants raise several arguments in support for their

motion for judgment as a matter of law relating to the suffi-

ciency of the evidence on various issucs. This Court ts not

convinced by any of these arguments. The jury attentively

listened to the witnesses and had an ample opportunity to re-

view the cxhibits dusting their deliberations and when they

were published at trial. Moreover, the jury was carefully in-

structed on all of the applicable law and provided with a very

specific verdict form. This Court is persuaded that there ex

ists a legally sufficient evidentiary basis in support of every

aspect of the jury's verdict challenged by Defendants in their

current motion for judgment as a mattcr of law. Accordingly,

to the extent that Defendants argue that they are entitled to

judgment as a matter of law, their motion (Doc. # 248) 1s due

to be DENIED.

38a

B. Motion for a New Trial

Pursuant to Federal Rule of Civil Procedure 59(a)(1), a

motion for a new trial may be granted as to all or any of the

partics and on all or part of the issues tried to a jury “for any

of the reasons for which new trials have heretofore been

granted in actions at law in the courts of the United States.”

In support of their alternative motion for a new trial, Defen-

dants contend that the verdict rendered by the jury after this

ten day trial is against the great weight of the evidence. The

Court does not agree. To the extent that Defendants have ar-

gued that they are entitled to a new trial because any aspect

of the jury’s findings was against the great weight of the evi-

dence or unsupported by the evidence, their motion for a new

trial on those bases are due to be DENIED.

Defendants contend that they are entitled to a new trial

due to purported errors within the jury charges, the verdict

form, rulings on the admissibility of evidence, and a ruling

requiring a witness to be produced at trial. (Doc. # 248 at 22-

25) The Court has considered each and every one of these

grounds and find them to be wholly without merit. Accord-

ingly the motion for new trial is due to be DENIED to the ex-

tent that it is predicated on these grounds.

Defendants contend that the compensatory damages in

this case are not supported by evidence. Defendants also con-

tend that damages awarded to Action Marine are legally im-

proper. (Doc. # 248 at 27). On these contention, they seck ei-

ther a new trial or remittitur. The Court does not agree that

the compensatory damage awards are legally flawed as De-

fendants contend. Accordingly, the alternative motions for

new trial or remittitur on such arguments are due to be DE-

NIED.

Defendants argue that the size of the punitive damage

award and the “inflammatory rhetoric of Plaintiffs’ counsel”

compel the conclusion that the verdict in the second phase of

the tial was the produce [sic] of passion and prejudice.

39a

Based on.this argument Defendants seek a new trial on puni-

tive damages. The Court is not persuaded that Defendants are

entitled to a new trial based on this argument. The punitive

damage award is not grossly disproportionate to the compen-

satory damages award. Moreover, the Court does not agree

with the Defendants’ characterization of Plaintiffs’ counsels’

rhetoric in this case. The motion for a new trial on punitive

damages is duc to be DENIED.

C. Motions Relating to Punitive Damage Awards

Defendants contend that the punitive damages awarded

by the jury in this case are imprdper and excessive. They ask

this Court either to grant judgment as a matter of law on pu-

nitive damages, or to order a new trial on punitive liability, or

to remit the punitive damages awarded. Defendants argue

that their conduct does not satisfy the standard for the award

of punitive damages under Georgia law, that the award

should be reduced pursuant to § 51-12-5.1(g) of the Georgia

Code, and that the punitive damages awarded were excessive

under both Georgia law and the United States Constitution.

The Court will address each of these arguments in turn.

1. Georgia’s Standard for the Imposition of Punitive

Damages

Section 51-12-5.1 of the Georgia Code controls punitive

damiayes in tort actions under Georgia law. Punitive damages

under this statute are intended solely to punish, penalize, or

deter a defendant. Pursuant to O.C.G.A. § 51-12-5.1, punitive

damages may only be awarded in tort actions in which it is

proven by clear and convincing evidence that the defendant's

conduct showed willful misconduct, malice, fraud, wanton-

ness, Oppression, or an entire want of care which would raise

the presumption of conscious indifference to consequences.

Defendants contend that they are entitled to judgment as a

matter of law or a-new trial on punitive liability because the

standard for the imposition of punitive damages was not met

in this case. The Court disagrees. The jury was correctly in-

40a

structed on the applicable law and heard sufficient evidence

on which to base the award of punitive damages under Geor-

gia law. Accordingly, Defendants are not entitled to judg-

ment as a matter of law in Defendants’ favor on Plaintiffs’

claims for punitive damages. Moreover, Defendants are not

entitled to a new trial because the Court is not persuaded that

the jury’s finding of punitive liability is against the weight of

the evidence. Defendants’ motions are due to be DENIED to

the extent that they are based on these grounds.

2. Georgia Code § 51-12-5.1(g)

Under Georgia law, the maximum amount of moncy that

a jury may award to any one plaintiff as punitive damages is

limited to $250,000. See O.C.G.A. § 51-12-5.1(f) & (g).

Georgia law does provide that punitive damages awards may

exceed this cap if “it is found that the defendant acted, or

failed to act, with the specific intent to cause harm.” /d. If a

jury finds that a defendant acted or failed to act with specific

intent to cause harm, “there shall be no limitation regarding

the amount which may be awarded as punitive damages....”

O.C.G.A. § 51-12-5.1(f). The Court finds that the jury in this

case was properly instructed on the imposition of punitive

damages and that they answered a specific interrogatory

which affirming that they had found the specific intent to

cause harm which under Georgia law presents a basis for sus-

taining a damage award in excess of the statutory cap. The

Court does not agree that Plaintiffs failed to adduce sufficient

evidence that Defendants acted with specific intent to harm

Plaintiffs. The Court is not persuaded that the jury's factual

detcrmination of specific intent should be disturbed. Accord-

ingly, the motion is due to be DENIED to the extent that De-

fendants contend that the punitive damage award should have

been capped pursuant to Georgia law.

4la

3. Analysis of Amount of Punitive Damages Under

Georgia Law

Defendants contend that the punitive damage award is

excessive and must be either vacated or remitted under Geor-

gia law.

In determining the reasonableness of an award of

punitive damages [under Georgia law], courts

should consider whether: (1) the misconduct caused

personal injury or merely damage to property; (2)

the actor’s misconduct was active or passive; and

(3) a rational relationship exists between the mis-

conduct and the amount of the award.

Lightning v. Roadway Express, Inc., 60 F.3d 1551, 1559

(11th Cir. 1995). Defendants’ misconduct caused damage to

property and the risk of personal injury, albeit a risk not real-

ized by these Plaintiffs. Their misconduct was active. In this

Court’s view a rational relationship exists between the mis-

conduct and the amount of the award. Having evaluated the

reasonableness of the award in this case by evaluating the

requisite factors, the Court is satisfied that the award is not

unreasonable or excessive. Accordingly, the motion is due to

be DENIED to the extent that it is predicated on the conten-

tion that the punitive damage award is excessive under Geor-

gia law.

4. Constitutional Principles of Due Process

Having addressed the issues relating to the appropriate-

ness of the amount of punitive damages awarded under

Georgia law, the Court will now consider whether the award

satisfies the constitutional principles of due process. As an

initial matter, the Court finds that both the statutes of Ala-

bama, where Defendants’ plant is located, and Georgia,

where Defendants’ emissions settled, express a strong inter-

est in deterring environmental pollution. This interest sup-

ports a substantial punitive damage award.

42a

“In our judicial system compensatory and punitive dam-

ages, although usually awarded at the same time by the same

decisionmaker, serve different purposes.” State Farm Mut.

Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003) (internal ci-

tation omitted). Whereas “[c]ompensatory damages are in-

tended to redress the concrete loss that the plaintiff has suf-

fered by reason of the defendant’s wrongful conduct . . . pu-

nitive damages serve a broader function; they are aimed at

deterrence and retribution.” /d. (internal citations and quota-

tions omitted). For this reason, th

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