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State of Arizona v. Asarco LLC

Court of Appeals for the Ninth Circuit
773 F.3d 1050 (2014)
ELI5:

Rule of Law:

A punitive damages award in a Title VII case that complies with the statutory cap established by 42 U.S.C. § 1981a does not violate due process, even when the award is accompanied by only nominal damages, because the statutory scheme itself provides sufficient notice and protection against arbitrary awards.


Facts:

  • Angela Aguilar worked for ASARCO, LLC at its Mission Mine complex from December 2005 to November 2006.
  • During her employment, Aguilar was subjected to sexual harassment.
  • The harassment included lewd, inappropriate, and sexually aggressive behavior directed at her by colleagues.
  • Sexually explicit graffiti and pictures targeting Aguilar were drawn on the walls of a bathroom specifically rented for her use.
  • Aguilar complained to management multiple times about the ongoing harassment.
  • Aguilar's supervisors also subjected her to overly aggressive management and criticism.
  • ASARCO management failed to take prompt or effective remedial action, treating her claims dismissively and not removing the graffiti while she worked there.

Procedural Posture:

  • The State of Arizona sued ASARCO in Arizona state court, and Angela Aguilar filed a separate suit against ASARCO in the U.S. District Court for the District of Arizona under Title VII.
  • The cases were consolidated in the federal district court.
  • Following an eight-day trial, a jury found ASARCO liable for sexual harassment, awarding Aguilar $0 in compensatory damages, $1 in nominal damages, and $868,750 in punitive damages.
  • ASARCO filed a renewed motion for judgment as a matter of law, arguing the punitive award was unconstitutionally excessive.
  • The district court denied ASARCO's motion but reduced the punitive damages award to $300,000 to comply with the statutory cap in 42 U.S.C. § 1981a(b)(3)(D).
  • ASARCO (appellant) appealed the reduced award to the U.S. Court of Appeals for the Ninth Circuit, with Aguilar as the appellee.
  • A three-judge panel of the Ninth Circuit vacated the award, concluding the 300,000-to-1 ratio was excessive and reducing the award to $125,000.
  • The Ninth Circuit then voted to rehear the case en banc.

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Issue:

Does a $300,000 punitive damages award in a Title VII sexual harassment case, where only $1 in nominal damages was awarded, violate the Due Process Clause when the total award is within the statutory cap set by 42 U.S.C. § 1981a?


Opinions:

Majority - Thomas, Chief Judge

No, the $300,000 punitive damages award does not violate the Due Process Clause. The constitutional concerns of fair notice and arbitrariness that underlie the Supreme Court's due process analysis in BMW of North America, Inc. v. Gore are sufficiently addressed by the statutory scheme of 42 U.S.C. § 1981a itself. The statute puts employers on notice of prohibited conduct, requires a high degree of culpability ('malice or with reckless indifference'), and sets a clear, tiered cap on the total sum of punitive and certain compensatory damages. Therefore, a rigid application of the Gore guideposts, particularly the ratio analysis, is inappropriate in this context. The ratio guidepost is especially inapt where only nominal damages are awarded, as nominal damages do not measure the actual harm, and because the statute's consolidated cap creates an inverse relationship between compensatory and punitive damages, which is contrary to the logic of the Gore ratio. The statute itself represents Congress's legislative judgment on appropriate sanctions, satisfying the third Gore guidepost and rendering the award constitutional.



Analysis:

This decision establishes that federal statutory schemes with specific damage caps, like Title VII, significantly alter the traditional common-law due process analysis for punitive damages. The court signals a strong deference to legislative judgments, suggesting that an award falling within a statutory cap is presumptively constitutional. This holding limits the ability of defendants in Title VII cases to challenge punitive awards based on a high ratio to nominal or low compensatory damages, thereby strengthening the statute's deterrent effect, particularly in cases where harm is hard to quantify. The ruling insulates Congressionally-authorized punitive awards from the kind of judicial reduction seen in cases governed purely by common law principles.

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