Pennsylvania Supreme Court Will Not Establish a Bright Line Rule Limiting Punitive Damages Awards Against Defendants

By Robyn D. Kazatsky and Timothy Clements

August 3, 2023

The Supreme Court of Pennsylvania’s decision in Bert v. Turk [J-59A-2022 and J-59B-2022] on July 19, 2023, will have a significant impact on the future of punitive damages awards against defendants in Pennsylvania. Justice Christine Donohue, writing for the majority, upheld a previous ruling by the Pennsylvania Superior Court (The Bert Co. v. Turk, 257 A.3d 93 (Pa. Super. 2021)), which rejected defendants’ claim that a punitive damages award against multiple defendants, which was 11.2 times higher than a compensatory damages award ($2.8 million v. $250,000, respectively) was grossly excessive, and therefore, unconstitutional. Instead, the Court found that unless the defendants are a single entity under the eyes of the law, there is no reason to aggregate their damages when computing these ratios.  More importantly, the Court held that even if a 10 to 1 ratio is surpassed, this does not mean the award is unconstitutionally excessive.  Instead, the Court will need to determine whether the award is justified based on the individual nature and degree of wrongdoing of each, particular defendant.  What does that mean for defendants in Pennsylvania?  It means the sky’s the limit when it comes to a punitive damages award.

In the underlying lawsuit, The Bert Company sued defendants, Matthew Turk, First National Insurance Agency, LLC (“FNIA”), First National Bank (“FNB”), and FNB Corporation. Turk was a senior vice president at Northwest Insurance in 2016, when he hatched a plan with First National to systematically takeover Northwest Insurance’s book of business and key employees. Turk and First National wanted to poach Northwest Insurance’s highest-producing employees, as well as their clients, thereby forcing Northwest to sell its remaining book of clients at a significant discount. In 2018, Northwest filed suit, and a jury found defendants liable for breach of contract, breach of fiduciary duty, civil conspiracy, and unfair competition. The jury awarded Northwest Insurance $250,000 in compensatory damages and an aggregate total of $2.8 million in punitive damages. 

Defendants appealed the punitive damages award to the Pennsylvania Superior Court, arguing the aggregate ratio of punitive to compensatory damages (11.2 to 1) was unconstitutionally excessive.  However, the Court rejected defendants’ argument.  Instead, the Superior Court agreed with the trial court who computed ratios for each individual defendant using the amount of punitive damages assessed against that defendant compared to the compensatory damage imposed on that same defendant. This led to ratios of 1.8 to 1 for Turk, 2 to 1 for FNB, 2 to 1 for FNB Corporation, and 6 to 1 for FNIA. Calculating the ratios as to each individual defendant resulted in “constitutionally sound” ratios, which were “not so outrageous as to shock the trial court’s conscience.’” The Bert Co., 257 A.2d at 119 (citing Trial Court PTM Opinion, 4/29/2019, at 25). 

On appeal to the Supreme Court of Pennsylvania, the Court once again struck down defendants’ argument that the aggregate ratio was excessive, and instead, affirmed the Superior Court’s holding that ratios are not to be calculated aggregately, but instead, as to each, individual defendant.  Moreover, even in cases where the ratio may surpass 10 to 1, the Supreme Court refused to draw a mathematical bright-line ratio between constitutionally acceptable and unacceptable amounts of punitive damages. Instead, courts will need to determine if an award is justified based on the individual nature and degree of wrongdoing of any particular defendant.  The Court reasoned that while  compensatory damages are meant to compensate injury, punitive damages are meant to inflict punishment for reprehensive conduct. 

So what is the takeaway for defendants in Pennsylvania in light of the Court’s July 19, 2023 opinion? Even if an award of punitive damages to compensatory damages results in a ratio of 10:1 or higher, it will only be deemed excessive if it shocks the conscience of the Court. “[A]t some point the amount of punitive damages may be so disproportionate when compared to the character of the act, the nature and extent of the harm and the wealth of the defendant, that it will shock the court’s sense of justice.  In those rare instances, the court is given discretion to remit the damages to a more reasonable amount.” DiSalle v. P.G. Pub. Co., 544 A.2d 1345 (Pa. Super. 1988).  But until and unless that occurs, it appears there is currently no limit on the amount of punitive damages that may be assessed against defendants in Pennsylvania.

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