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From $30M to $2M to 750K

The Supreme Court's directive to keep punitive damages within a single-digit multiplier of compensatories has borne fruit in a Third Circuit decision.

In the suit, a Pennsylvania physical therapy firm claimed that a Virginia nursing home management company had lured two Philly-area nursing homees to terminate its contract with the therapy firm, and had hired away five of its therapists afterwards. The resulting tortious interference claim has taken seven years now, with two trials and two appeals. A federal jury originally awarded $685K in compensatory damages and $30 million in punitives. The compensatory amount had earlier been reduced to $109,000 by the 3rd Circuit, and the amount of punitives that was allowed was in dispute. The district judge on remand this to $2 million, claiming that the 19:1 "is not constitutionally excessive given the facts of this case -- including the wealth of [the] defendant and the state's interest in punishment and deterrence.". The 3rd Circuit Court of Appeals had little sympathy for this reasoning, reducing the punitives award further, to $750,000, a 7:1 ratio.

Plaintiffs' lawyers' fees will likely be around $270K for seven years' worth of intensive litigation, and this will hopefully chill others similarly placed not to spin the punitives roulette wheel.



Rafael Mangual
Project Manager,
Legal Policy

Katherine Lazarski
Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.