$5,000,000 Punitive Damages Award for Race Harassment Reduced on Due Process Grounds

Plaintiff,? Bains? LLC,?? ?is? a? company? owned? by three American citizen Sikh brothers born in India which was hired by ARCO to haul gasoline fuel. ARCO repeatedly abused the owners and their drivers delaying their deliveries by ignoring their arrival, requiring them to stand in the rain while others sat in their trucks, falsely accusing them of safety ?violations, ?forcing ?them? to ?clean ?up ?the spills? of other? drivers, mocking? their? religiously observant clothes, and using racial epithets against them.????? ?ARCO initially ignored the Plaintiffs?complaints and then terminated their contract. ?A jury awarded $50,000 in compensatory damages for a Washington state law breach of contract claim, $1 nominal (actual) damages for race ?discrimination ?in ?violation ?of ?42 ?U.S.C. ?? 1981,? ?$5,000,000? ?in? ?punitive? ?damages,? ?and $442,065 in attorneys? fees, plus costs exceeding $10,000.?? ?The Ninth Circuit rejected several challenges to the verdict holding that:? ?(1) a corporation has standing to bring a section 1981 claim; (2) the jury?s award of nominal damages was not irreconcilable with a finding that the ethnic discrimination? ?caused? ?economic? ?harm? ?to? ?the corporation (the only kind of harm a company can suffer); (3) the Court need not address whether ARCO had a mixed motive or would have terminated its contract with Bains absent its discriminatory motive because the jury verdict established that ARCO harassed Bain employees and interfered with the company?s trucking business for racial reasons; and (4) an ARCO supervisor witnessed the racial harassment so ARCO is vicariously liable for its failure to remedy and prevent the misconduct.? ?Despite finding ?that ?it ?was? a ??case ?of ?highly reprehensible conduct?that caused economic harm to a corporation,? the Court reduced the five million dollar punitive damages award on due process grounds relying on State Farm Mutual ?Automobile ?Ins. ?Co. ?v. ?Campbell, ?538 U.S. 408 (2003), which found that except in rare cases punitive damages should not exceed nine times the compensatory damages.? ?The Ninth Circuit held that:?? ?The jury found $50,000 of actual harm, and as this is not the ?rare case? for which? ?State? ?Farm?? leaves? ?room,? ?the? ?ratio approach suggests that punitive damages could not,?? ?consistent?? ?with?? ?due?? ?process?? ?exceed $450,000.?? ?Remanding for a new trial or a remittitur? ??to? ?a? ?figure? ?somewhere? ?between $300,000 and $450,000? the Court explained that it came to the higher number because it is nine times the $50,000 in compensatory damages awarded by the jury and the lower number because ?the civil penalty authorized in Title VII for comparable harm suggests that Congress regards $300,000 as the highest appropriate amount in somewhat comparable cases.??? This case is currently pending on a request for en banc review.? ?Bains LLC v. Arco Products Co., No. 02-35906 (04/19/05; Kleinfeld, Gould, Tallman).