Virginia Supreme Court Permits Double-Digit Ratios for Punitive Damages in Coalson v. Canchola

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Numbers have a strong pull on our judgment.  If a law says, “Don’t drive a car unreasonably fast,” it is difficult to know exactly what that means.  Every person on earth could argue at length justifying their own definition of “unreasonably fast.”  But change that law to say, “Don’t drive a car faster than 70 miles per hour,” and all judgment collapses to the single question of whether a car’s speed exceeds 70 mph.  Call it simplicity, efficiency, or laziness, but we love rules based on numbers.  They make decisions easy.  Because numbers mesmerize us, when a law incorporates both a number element and an extra “reasonableness” element, it’s easy to focus on the number part and forget about the rest of the rule.

Take punitive damages, for example.  In State Farm v. Campbell, 538 U.S. 408 (2003), the U.S. Supreme Court laid out just such a mixed rule for the ratio between compensatory and punitive damages:

We decline again to impose a bright-line ratio which a punitive damage award cannot exceed.  Our jurisprudence and the principles it has now established demonstrate, however, that, in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process. Id. at 425.

Even though couched as a non-rule, the Supreme Court effectively stated that punitive damages should not exceed a 9:1 ratio with compensatory damages, unless there is some good reason for a higher ratio.  For example, the Court says that larger ratios may be proper when “a particularly egregious act has resulted in only a small amount of damage.”  Id. But that phrase “single-digit ratio” has been stuck in everyone’s mind ever since.

Recently, the Virginia Supreme Court decided Coalson v. Canchola, a case that highlights the allure of the “single-digit ratio” part of this punitive damage rule, and the disinterest received by the other, less easily quantified factors.

The underlying dispute involved a car accident caused by Canchola while he was driving drunk and on the phone.  Canchola evidently had an “extensive history of driving while intoxicated” spanning more than two decades of convictions in multiple states.  Coalson and her passenger, Stemke, fortunately did not have catastrophic injuries from the collision.  The jury awarded Coalson $5,600, and Stemke $14,000, in compensatory damages.  But since Canchola’s behavior was clearly reprehensible, the jury awarded both Coalson and Stemke $100,000 each in punitive damages.

Now, on to those pesky ratios.  Stemke’s punitive damages to compensatory damages ratio is 1:7, thus, it is within the “single-digit ratio” mentioned in Campbell.  But the same ratio for Coalson is 1:17.  The trial judge looked at the two awards and said that Coalson’s ratio is too high, and thus remitted the punitive damage award to only $50,000 for Coalson to bring it down to “less than a ten percent ratio.”  Even though the trial judge determined that Canchola’s conduct was egregious, the judge couldn’t escape the allure of the number part of the rule.

Coalson says that it was improper for a trial court to compare punitive damage awards in evaluating excessiveness.  The factors to consider when determining punitive damages in Virginia are: (1) the reasonableness between the damages sustained and the amount of the award, (2) the measurement of punishment required, (3) proportionality between the compensatory and punitive damages, and (4) the ability of the defendant to pay.  Coalson, slip op. at 7-8.  However, the court decided that “[comparing verdicts] is not probative of whether a verdict is excessive; rather that determination must be made on the facts and circumstances of each case.”  Id. at 9 (internal quotes omitted).  Given the circumstances of the case, the decision more specifically prohibits the comparison of punitive damage to compensatory damage ratios between cases.

Wishing to discuss the ratios further, Coalson says that while a ratio of 1:17 is high, it is not “unreasonably or strikingly out of proportion” with Canchola’s dangerous conduct.  Id. at 10.  “[T]he amount of punitive damages awarded by the jury does not shock the Court’s conscience.”  Id. at 11.  In reviewing the ratios under the federal constitutional law analysis, Coalson lists a number of permissible reasons for a higher ratio, such as: (a) when a defendant’s conduct is exceptionally reprehensible but causes only small damages, (b) when the potential damages are serious, and (c) when a single digit ratio would “prevent punitive damages from fulfilling their purpose of punishment and deterrence.”  Id. at 13-14.  Coalson implies that all of these factors were implicated by the defendant’s actions in this case.

After having read the opinion a few times, I think there is still a lot of tension between the ratios and the purpose of punitive damages.  The purpose of punitive damages is to protect the public, punish the defendant, and to deter the action in the future, not to compensate the plaintiff.  Therefore, the comparison between the punitive damage award and the compensatory damages is of secondary importance, as each of those purposes can be fulfilled without reference to compensatory damages.  But there are some jurists who elevate the ratio’s importance, maybe in the belief that it’s the only way to make sure the punishment fits the crime.  Coalson says judges should not step in to reduce punitive damage awards when the main reason for the reduction is to produce a “single digit ratio.”  For punitive damages in Virginia, it’s the non-numerical, less-quantifiable, part of the rule that is the more important part.

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