$200K punitives award reduced to $25K

A Virginia judge has reduced the $200,000 in punitive damages awarded by a jury for defamation where the jurors only awarded $1 in compensatory damages.

The defendant argued that the punitives award didn’t result from a fair and impartial decision by the jury.

Judge Michael F. Devine of the Fairfax Circuit Court agreed.

“The award of $200,000 in punitive damages is excessive, unreasonable, shocks the Court’s conscience, and violates the Due Process Clause of the Fourteenth Amendment and is impermissible under the First Amendment,” he wrote.

The decision is Grundy v. Charles H. Brown, III, D.D.S. PC, et al. (VLW 022-8-054).

Defamation claim

Richard Grundy and Charles Brown are dentists. Brown hired Grundy in 2013 and terminated him in 2018.

The dentists sued each other claiming, among other things, defamation per se and breach of contract.

Brown alleged that Grundy defamed him by complaining to the Board of Dentistry that he overcharged patients, mismanaged patient information, failed to notify patients of data breaches, caused patient injuries due to untrained staff and voided product warranties.

Brown didn’t present evidence showing he was damaged by Grundy’s complaint, which was confidential and wasn’t published to anyone outside of the regulatory agency.

In May 2022, a jury found that both Grundy and Brown had breached contracts and defamed the other. In total, Grundy was awarded $1,502,300 in compensatory damages and $500,000 in punitive damages.

Brown received $500 in compensatory damages for his breach of contract claim and $1 in compensatory damages and $200,000 in punitive damages for his defamation claim.

Grundy moved for remittitur of Brown’s punitive damages for defamation.

Not ‘particulary egregious’

Grundy argued that the $200,000 punitive damages award was so excessive, particularly when compared to the nominal award of compensatory damages, that it suggested the award didn’t result from a fair and impartial decision by the jury.

Devine said that courts consider several factors in deciding on a motion for remittitur, including the reasonableness between the damages and the punishment required; whether the award will amount to a double recovery; the proportionality between compensatory and punitive damages; and the ability to pay.

The judge also said the court must consider the award’s effect on Grundy’s free speech rights under the First Amendment.

“The First Amendment requires that ‘[w]here a punitive damages award is substantially in excess of what ordinarily might be expected as punishment for the particular conduct, the reviewing court has a duty to anull the award unless the circumstances are so egregious as to constitute a sufficient punishment for the wrongful activity,’” he wrote.

In determining whether an award should be set aside because it violates the Fourteenth Amendment, the court said that “[o]nly when an award can be fairly categorized as ‘grossly excessive’ in relation to [the State’s legitimate interests in punishment and deterrence] does it enter the zone of arbitrariness that violates the Due Process Clause of the Fourteenth Amendment.”

Generally speaking, while a ratio greater than single digits between compensatory and punitive damages won’t satisfy due process, “[l]arger ratios ‘may comport with due process where a particularly egregious act has resulted in only a small amount of economic damages [] or where the injury is hard to detect or the monetary value of noneconomic harm might have been difficult to determine.’”

Devine posited that the jury awarded nominal damages to Brown because he didn’t present evidence showing he was damaged by Grundy’s false statements.

However, the judge cautioned that “an award that is 200,000 times the amount of compensatory damages must be based upon conduct that is ‘particularly egregious.’”

Here, Grundy’s confidential complaint wasn’t published to anyone outside the Board of Dentistry and no evidence showed that Brown’s ability to practice was or could have been threatened, even if the allegations had been believed.

Devine found that Grundy “likely understood that the effect of a false complaint would be more of annoyance, outrage, inconvenience, and embarrassment rather than professional or economic ruin.”

The judge next pointed out that the maximum fine for making a false statement to law enforcement or perjury is $2,500.

Based on the evidence, Devine determined that Grundy’s degree of reprehensibility was low and that his defamatory act, “while wrongful, was not ‘particularly egregious.’”

Having held that the punitive damages award was excessive and unconstitutional, the judge granted Grundy’s motion for remittitur and reduced the award to $25,000.

‘Highly unusual’

Alan Croft and Lawrence McClafferty, of McCandlish & Lillard in Leesburg, have represented Grundy since 2018, when they filed the dentist’s complaint against Brown.

They told Virginia Lawyers Weekly the jury trial was cut short in March 2020 by COVID. The case became notable later that year when Devine held that Brown engaged in “reckless” spoliation of evidence and ordered him to pay Grundy $140,554.65 in attorneys’ fees and costs. (See “Judge tags dentist $140K for deleting evidence,” https://valawyersweekly.com/2020/10/05/judge-tags-dentist-140k-for-deleting-evidence/.)

According to a transcript of the hearing, Devine called the spoliation a “disaster” of paper discovery.

Croft and McClafferty described how they looked at each other and simultaneously said “remittitur” after reading the jury’s $200,000 punitive damages award to Brown.

“That award was highly unusual, considering that the jury originally awarded zero in compensatory damages to Brown for his defamation claim, then raised it to one dollar after the parties agreed an amount must be set in order to have punitive damages,” Croft noted.

Brown must now choose to accept the remittitur, ask for a new trial on damages or appeal.

“But Devine has already said that he won’t give more than $25,000 because he saw no error with the jury’s award of nominal damages,” McClafferty said.