Court Issues Guidelines For Determining Whether Punitive Damages Are Excessive

In Bowden v. Caldor, Inc., 1998 Md. Lexis 407 (1998), the Court of Appeals established a nine-part test to guide trial judges in reviewing punitive damages awards for excessiveness. The case involved the detention of Samuel David Bowden, a sixteen-year-old African-American hired by Caldor, Inc. to work as a customer service representative in one of its Baltimore department stores. Soon after Bowden began working, Caldor officials accused him of stealing money and merchandise from the store. Caldor security falsely imprisoned Bowden for several hours, lied about having incriminating evidence, refused Bowden's request to call his parents, coerced him to sign a false confession, had him arrested the following day, and caused his juvenile prosecution without any evidence against him. There was evidence at trial that the officials were motivated by racial hatred.

Bowden filed a civil suit against Caldor and its security personnel seeking compensatory and punitive damages. A jury awarded Bowden $110,000 for compensatory damages and $350,000 in punitive damages. After the verdict, the circuit court granted Caldor's motion for judgment notwithstanding the verdict as to two of the five torts for which the jury awarded damages. Consequently, the compensatory damages were reduced to $60,000, but the punitive damages award was left intact. On appeal, and following the issuance of a writ of certiorari to the Court of Special Appeals, the Court of Appeals affirmed the judgment notwithstanding the verdict, but ordered a new trial to calculate punitive damages for the three remaining torts.

Following the retrial, the jury awarded punitive damages of $9 million. The circuit court reduced the punitive damages to $350,00. The court concluded that an award of punitive damages was analogous to a sentence in a criminal case and, since the Supreme Court in North Carolina v. Pearce, 395 U.S. 711 (1969), held that a harsher sentence cannot be imposed against a criminal defendant following a retrial after a defendant's successful appeal, a higher punitive damages award following appeal was impermissible. The Court of Special Appeals affirmed, also adopting the Pearce analogy and rationale.

The case went again to the Court of Appeals. That court concluded that the Court of Special Appeals and the circuit court both erred in holding that the punitive damages award in the second trial could not exceed the award in the first trial. The court concluded that, contrary to the lower courts' analyses, the civil tort/damages issue raised by Caldor was not analogous to the criminal law/sentencing issue raised in North Carolina v. Pearce and that a jury was free to impose a higher punitive damage award following appeal and remand. But the court did not reinstate the jury verdict. Rather, it issued new guidelines to be used by the trial judge, following remand, for determining whether a punitive damages award is excessive.

Nine criteria were identified. First, the amount of punitive damages "must not be disproportionate to the gravity of the defendant's wrong." Second, because the purpose of punitive damages is to punish not bankrupt the defendant, the amount "should not be disproportionate to . . . the defendant's ability to pay." Third, considering all of the circumstances, the deterrence value of the amount awarded by the jury is relevant. Fourth, the court may consider the legislative policy reflected in statutes setting criminal fines. Fifth, the court may compare the award with other punitive damages awarded in the jurisdiction, particularly in comparable cases. Sixth, evidence that punitive damages have been awarded against the same defendant for the same conduct may be considered by the trial judge. Seventh, when the punitive damages are based on separate torts, a court may consider whether the torts stemmed from a single occurrence or episode. Eighth, the plaintiff's reasonable costs and expenses, including attorney's fees not covered by the award for compensatory damages, may be considered. Ninth, the award of punitive damages should bear a "reasonable relationship" to the compensatory damages awarded.

The case was remanded to the circuit court for further consideration in light of the new guidelines.

For more information, contact Scott P. Burns at 410/752-9743.

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