Richard Alexander Williams v. First Advantage Background Services Corporation

947 F.3d 735

• Court: Court of Appeals for the Eleventh Circuit
• Decided: January 9, 2020
• Docket: 17-11447
• Status: Published

Opinion

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[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT ________________________

No. 17-11447 ________________________

D.C. Docket No. 1:13-cv-00222-MW-GRJ

RICHARD ALEXANDER WILLIAMS,

Plaintiff-Appellee,

versus

FIRST ADVANTAGE LNS SCREENING SOLUTIONS INC, f.k.a. LexisNexis Screening Solutions Inc., et al.

Defendants,

FIRST ADVANTAGE BACKGROUND SERVICES CORPORATION, a Florida Corporation,

Defendant-Appellant.

________________________

Appeal from the United States District Court for the Northern District of Florida ________________________

(January 9, 2020) Case: 17-11447 Date Filed: 01/09/2020 Page: 2 of 77

Before MARTIN, JULIE CARNES, and O’SCANNLAIN,* Circuit Judges.

JULIE CARNES, Circuit Judge:

In this Fair Credit Reporting Act (“FCRA”) case, First Advantage

Background Services Corporation (“Defendant”) appeals the denial of its motion

for judgment as a matter of law, or, in the alternative, motion for a new trial or

remittitur. On appeal, Defendant asserts that the jury’s $250,000 compensatory

damages award should be vacated because Richard Alexander Williams

(“Plaintiff”) failed to show evidence of reputational harm. Defendant also

contends that it was entitled to judgment as a matter of law on Plaintiff’s claim that

it willfully violated the FCRA. Finally, Defendant argues that the excessiveness of

the jury’s $3.3 million punitive damages award rendered it unconstitutional under

the Due Process Clause. After careful review, and with the benefit of oral

argument, we affirm the district court’s denial of Defendant’s motion for judgment

as a matter of law to the extent it challenged the reputational harm claim and the

willfulness claim. We, however, vacate the jury’s punitive damages award and

remand the case to the district court to enter a judgment awarding Plaintiff

$1 million in punitive damages.

* Honorable Diarmuid F. O’Scannlain, United States Circuit Judge for the Ninth Circuit, sitting by designation.

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BACKGROUND

I. Defendant’s Procedures

Defendant is a consumer reporting agency that prepares criminal background

reports on individuals. In 2012 Defendant prepared around 9 to 10 million

background reports nationally, and in 2013 it prepared 10 to 12 million background

reports nationally.1 Defendant charged $11 to $12 for each report. As to how

Defendant prepares these reports, Defendant maintains a national criminal file

database that contains criminal records from around the country. When a customer

orders a criminal background check, the consumer’s information is passed through

an automated search of this database.

Defendant’s standard operating procedures for people with non-common

names require a match of at least two identifiers—such as name, date of birth,

social security number, or driver’s license number—before attributing to the

subject of a background investigation the criminal record of a person with the

same, or similar, name. Attribution requires only a “reasonable match,” rather than

an exact match. Defendant looks for middle names or initials, but a match can be

made without one. For example, consider the following two individuals, both of

whom are Florida residents born on the same day with an uncommon name:

1 Prior to February 28, 2013, the background checks were prepared by LexisNexis Screening Solutions, Inc. On that date, Defendant acquired LexisNexis and absorbed all of its liabilities. We refer to both entities as “Defendant.”

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Daniel Atreus Kowalski and Dan Kowalski. Daniel and Dan have a match of two

identifiers—identical dates of birth and “reasonably matching” names. If Dan had

a grand theft auto conviction, while Daniel had no criminal record, a background

report compiled by Defendant on Daniel could nonetheless indicate that he had a

grand theft auto conviction. The fact that Daniel has a reported middle name

would not prevent Dan’s criminal record from being included in a background

report on Daniel. On the other hand, if Dan had a conflicting middle name or

middle initial (e.g., “C.” or “Christopher”), Dan’s conviction would not be

included in Defendant’s background report on Daniel.

Defendant purports to follow a different procedure when a customer requests

a background report on an individual with a common name, such as Joe Smith. In

such a case, Defendant’s policy provides that a member of the records adjudication

team must attempt to locate a third identifier to ensure a reasonably accurate

match. An adjudicator could potentially use Experian to obtain an address history

that might provide more information except for the fact that Defendant’s

agreement with Experian limits the number of employees who can conduct an

Experian search; so Experian is not always utilized. If the adjudicator cannot

locate a third identifier, he or she must so note this fact and obtain a supervisor’s

permission before releasing the criminal background report. Thus, notwithstanding

Defendant’s awareness that a third identifier should be obtained, its actual practice

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permits matching a subject who has a common name with a criminal record based

on only two identifier matches.

Defendant has a dispute system that allows consumers to contest items listed

in their background reports. Between 2010 and 2013, Defendant prepared

3,554,163 reports containing public record information. During that time,

Defendant made 13,392 corrections as a result of customers successfully disputing

Defendant’s inclusion of public records belonging to another individual in their

background reports, yielding a “not-me” or “not mine” error rate of 0.38 percent

nationally.2 During the relevant time period, Defendant’s “not-me” or “not mine”

error rate for Florida reports ranged from 0.28 percent (2013) to 0.64 percent

(2012).

Pertinent here is the fact that Defendant’s system offers no means to ensure

that an investigative subject who has been mispaired with a particular criminal

conviction or arrest of a person with a similar name will not be mismatched in

future background checks with other convictions/arrests of this same person. To

return to our Dan/Daniel example above, assume that Dan was convicted in 2006

of grand theft auto, but a 2008 background report on Daniel erroneously attributed

Dan’s grand theft auto conviction to Daniel. Seeing the error, Daniel immediately

2 “Error rate” here is defined as the number of successful disputes divided by the total number of reports generated.

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disputed the inclusion of the conviction in his background report, resulting in a

revised report. After being released from prison, Dan returns to his life of crime

and is convicted of carjacking in 2013. Although Defendant’s system can prevent

a future misattribution of the disputed 2006 conviction, it provides no means to

prevent other convictions or arrests of Dan, such as the 2013 carjacking conviction,

from being attributed to Daniel in a subsequent background report.

II. Events Leading to the Present Suit

Plaintiff Richard Williams has lived with his mother in Chiefland, Florida,

for his entire life. In February 2012, Plaintiff applied for a customer accounts

representative position at Rent-A-Center East, Inc.’s (“Rent-A-Center”) Chiefland

store. As part of the hiring process, Rent-A-Center asked Defendant to prepare a

criminal background report on Plaintiff.

In preparing the Rent-A-Center background report, Defendant’s employees

examined public records from the Palm Beach County and Levy County courts.

According to the Rent-A-Center report, Defendant used Plaintiff’s first, middle,

and last name, social security number, date of birth, and address to prepare the

report. The report also indicated that Defendant had obtained driver record

information from Florida’s motor vehicle records, and it listed Plaintiff’s driver’s

license number and information.

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On February 28, 2012, Defendant sent an electronic copy of the report to

Rent-A-Center and mailed a copy to Plaintiff. The report stated that the Palm

Beach Circuit and County courts had two case numbers associated with a “Ricky

Williams.” Both cases involved 2009 charges for sale of cocaine. The listed

disposition of the cases was “bench warrant.” Both cases stated that the “SSN on

File” was the same as the first five digits of Plaintiff’s social security number,

though the report indicated that the match between Plaintiff and Ricky Williams

was based on their names and dates of birth. Given the criteria provided by Rent-

A-Center, Plaintiff’s “overall case score” was “ineligible.” Although Richard

Williams is a common name, Defendant did not follow its common-name

procedure, which called for the use of three, not just two, identifiers.

On March 1, 2012, Plaintiff filed a dispute with Defendant and provided a

copy of his driver’s license, which listed his height as five feet, ten inches. After

Plaintiff initiated the dispute, Defendant’s employees ordered copies of the

physical records relating to Ricky Williams’ charges and saw that Ricky Williams’

bench warrant listed his height as six feet, two inches. Upon seeing the

discrepancy in height, Defendant removed the sale-of-cocaine charges from

Plaintiff’s report. On March 12, 2012, Defendant sent Rent-A-Center a revised

background report clearing Plaintiff, but Rent-A-Center did not re-extend its job

offer to Plaintiff.

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Plaintiff subsequently applied for a variety of other jobs. In November

2012, he was hired by the Levy County Sheriff’s Office to be a 911 dispatcher.

Rather than hiring an outside company, the Sheriff’s Office conducted its own

background check on Plaintiff and apparently found no disqualifying information.

Unfortunately, though, Plaintiff could not meet performance expectations while in

training, and he quit after about a month in lieu of being terminated.

In March 2013, Plaintiff was hired by Kangaroo, a gas station. Like the

Sheriff’s Office, Kangaroo ran its own background check. Plaintiff ultimately left

the Kangaroo job because he was not working enough hours, and all of the money

he made was used to pay for his own gas. A few days after quitting his job at

Kangaroo, Plaintiff received a call from Winn-Dixie Stores, Inc. (“Winn-Dixie”),

offering him an interview. Plaintiff subsequently received a job offer for a position

at Winn-Dixie’s Gainesville store, but the offer was contingent on Plaintiff passing

a background check. On April 23, 2013, Winn-Dixie asked Defendant to conduct

a background check on Plaintiff. Two days later, Defendant sent Winn-Dixie an

electronic copy of the background report. The report stated that a search for

“Richard A. Williams” revealed two results from Broward County, Florida’s

records: Ricky Williams’ 2004 conviction for “burglary assault” and Ricky

Williams’ 2004 conviction for aggravated battery on a pregnant woman. The

match was again based on the similarity between Plaintiff’s and Ricky Williams’

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names and on their identical dates of birth, as well as the fact that Plaintiff lived in

Florida, where the crimes had occurred.3 The report listed Plaintiff’s “overall case

score” as “ineligible.”

Of course, like its first background report concerning Plaintiff issued just a

year before, this second report was also inaccurate in attributing Ricky Williams’

run-ins with the law to Plaintiff. This is not surprising as the employees who

created this Winn-Dixie report lacked access to information regarding Plaintiff’s

prior dispute, the contents of the Rent-A-Center report, or Plaintiff’s driver’s

license, even though Defendant had all of the above information. Further, as with

the Rent-A-Center report, Defendant did not follow its common-name procedure—

that is, obtain a third identifier—in preparing the Winn-Dixie report. Beyond

systemic failures, a note in Defendant’s system indicated that one of its employees

had actually examined the Broward County Department of Corrections’ website

while preparing the Winn-Dixie report. That website not only indicated that Ricky

Williams was six feet, two inches tall but also revealed that he was currently

incarcerated in the Broward County Jail: a fact that might reasonably have

prompted a question whether a Ricky Williams who was presently in jail 300 miles

3 Broward County, Florida is about 300 miles from Gainesville, Florida, which is near where Plaintiff resided.

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away was the same person as Richard A. Williams—the subject of the background

report—who was seeking employment.

On May 2, 2013, Plaintiff contacted Defendant to again begin a dispute

process. In resolving the dispute, Defendant obtained physical copies of Ricky

Williams’ court records, which happened to contain his social security number, and

realized that the social security number found in the records did not match

Plaintiff’s. Defendant could have obtained physical copies of these records before

the report was issued, but had failed to do so. On May 28, 2013, Defendant issued

a revised background report that omitted the burglary and aggravated battery

convictions, but by this time Winn-Dixie had already hired someone else to fill the

position. Nonetheless, Plaintiff was hired by Winn-Dixie approximately six

months later, in November 2013.

III. Procedural History

In November 2013, Plaintiff filed suit against Defendant, alleging violations

of the FCRA.4 In Count I of his second amended complaint, Plaintiff asserted that

Defendant negligently or willfully violated 15 U.S.C. § 1681e(b), 5 which requires

consumer reporting agencies to “follow reasonable procedures to assure maximum

4 Plaintiff also asserted claims against Rent-A-Center and Winn-Dixie, but later voluntarily dismissed these claims. 5 Plaintiff alleged three other claims for violations of the FCRA, which are not at issue on appeal.

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possible accuracy” when preparing a consumer report. 15 U.S.C. § 1681e(b).

Plaintiff alleged that he suffered damages resulting from loss of employment,

reputational harm, and pain and suffering. He requested compensatory and

punitive damages based on Defendant’s violation of § 1681e(b). Plaintiff

proceeded to trial.

In addition to explaining the economic impact caused by the loss of these

two job opportunities, Plaintiff testified at trial as to the emotional impact that

being falsely tagged as a criminal had caused him. He testified that the demeanor

of a Rent-A-Center employee with whom he interacted “changed” once the

background report was issued. The employee told Plaintiff that Defendant’s

“system is accurate and they can find anything and everything about you down to

your juvenile records.” When Plaintiff received the Winn-Dixie report and saw the

error, he felt “horrible” and “really, highly upset.” He began taking an

over-the-counter medication because he was experiencing headaches and insomnia.

Plaintiff’s mother testified that Plaintiff was “bothered” and did not “eat[ ] like he

should have” after Rent-A-Center and Winn-Dixie declined to hire him. She

confirmed that not getting the jobs caused Plaintiff to experience insomnia.

Matthew O’Connor, Defendant’s Vice President of Operations, conceded

that Defendant had within its records the following information before it issued to

Winn-Dixie its second report concerning Plaintiff: (1) an individual named Ricky

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Williams, who had been arrested for sale of cocaine, was a different person than

Plaintiff; (2) Ricky Williams was four inches taller than Plaintiff; and (3) Plaintiff

lived in Chiefland, not Palm Beach, which was 300 miles away and where Ricky

Williams had committed several crimes. He agreed that had Defendant made

available the information from Plaintiff’s dispute regarding the Rent-A-Center

report to the person preparing the Winn-Dixie report, this person would “know

with . . . certainty or virtual certainty” that Ricky Williams and Plaintiff were not

the same person. Notably, O’Connor admitted that notwithstanding Defendant’s

ostensible protocol requiring a third identifier for a subject with a common name,

in practice the finding of a third identifier is “kind of aspirational.”

Plaintiff called Evan Hendricks as an expert witness. Hendricks testified

that “other consumer reporting agencies” have procedures that allow them to use

information obtained in a prior successful dispute when preparing a subsequent

consumer report. He explained:

Equifax has a procedure called cross-blocking which means they know that the problem is the identifiers are dragging in the wrong information about consumer B and consumer A. So they cross-block or flag those identifiers to make sure that anything—any information that’s with that other wrongful identifier, that’s not the subject of our consumer today, is blocked from him or his information from coming in.

And then in Experian they call that the do not combine, where they have the same procedure in place where they make sure they mark or block or flag these identifiers from causing this wrongful mix. These have been standard operating procedures for more than a decade with those two consumer reporting agencies that I have direct knowledge of. 12 Case: 17-11447 Date Filed: 01/09/2020 Page: 13 of 77

Based on everything Hendricks had observed and reviewed, Defendant had

no similar procedure, though he acknowledged that he did not know of any other

background screening company that used the same procedures as Equifax or

Experian. Hendricks opined that, by choosing to use only two identifiers when

preparing a report on an individual with a common name, Defendant was

“basically inviting inaccuracy.” Hendricks admitted, however, that “there is no

hard and fast rule” as to how many identifiers must match in order to pair a

consumer with a criminal record.

After Plaintiff rested, Defendant moved for judgment as a matter of law on

Count I and on Plaintiff’s claim for compensatory damages resulting from the

alleged harm to his reputation. The district court denied Defendant’s motion to the

extent it sought judgment as a matter of law on Plaintiff’s claim that Defendant

negligently violated § 1681e(b), but took the motion under advisement to the

extent Defendant sought judgment as a matter of law on Plaintiff’s claim that

Defendant willfully violated that section. The district court denied judgment as a

matter of law regarding the claim for compensatory damages resulting from the

alleged harm to Plaintiff’s reputation.

During Defendant’s case-in-chief, it called Oscar Marquis as an expert

witness. Marquis explained that public records used in preparing criminal

background reports typically contain only the individual’s name and date of birth, 13 Case: 17-11447 Date Filed: 01/09/2020 Page: 14 of 77

and not a social security number. By contrast, credit agencies such as Experian

and Equifax have access to credit account information, including the individual’s

name, address, social security number, date of birth, and account number. Marquis

was not aware of any criminal background screening company that requires a

match of more than two identifiers to pair a consumer with a criminal record.

During closing arguments, Plaintiff contended that he suffered lost wages of

$78,272. The district court instructed the jury that, in considering damages, it

should take into account any lost wages, emotional harm, or damage to Plaintiff’s

reputation. The jury found that Defendant willfully failed to follow reasonable

procedures to ensure maximum accuracy, as required by § 1681e(b). It awarded

Plaintiff $250,000 in compensatory damages and $3.3 million in punitive damages.

The district court entered judgment in favor of Plaintiff.

Defendant subsequently filed a motion for judgment as a matter of law, or,

in the alternative, a motion for a new trial and/or remittitur. The district court

denied Defendant’s motion. This appeal followed.

DISCUSSION

I. Standard of Review

We review the denial of a renewed motion for judgment as a matter of law

de novo, viewing the evidence and drawing all reasonable inferences in the light

most favorable to the nonmoving party. Proctor v. Fluor Enters., Inc., 494 F.3d

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1337, 1347 n.5 (11th Cir. 2007). “Judgment as a matter of law is appropriate when

a plaintiff presents no legally sufficient evidentiary basis for a reasonable jury to

find for him on a material element of his cause of action.” Id. (quotation marks

omitted). If there is a substantial conflict in the evidence, such that reasonable and

fair-minded persons exercising impartial judgment might reach different

conclusions, the district court must deny the motion. Id.

We review the constitutionality of a punitive damage award de novo, but we

defer to the district court’s factual findings unless they are clearly erroneous.

Action Marine, Inc. v. Cont’l Carbon Inc., 481 F.3d 1302, 1309 (11th Cir. 2007).

“A finding is clearly erroneous when although there is evidence to support it, the

reviewing court on the entire evidence is left with a definite and firm conviction

that a mistake has been committed.” Robinson v. Tyson Foods, Inc., 595 F.3d

1269, 1275 (11th Cir. 2010) (quotation marks omitted).

II. Reputational Harm

Plaintiff asked for compensatory damages based on the emotional distress,

lost wages, and reputational harm caused by Defendant’s conduct. The jury

returned a general verdict awarding $250,000 in compensatory damages; that is, it

did not apportion its calculation based on the three types of harm alleged by

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Plaintiff. On appeal, Defendant argues that Plaintiff failed to present evidence

sufficient to prove damage to his reputation.

Although Plaintiff’s evidence of reputational harm was not earth-shattering,

we conclude that a reasonable jury could find that he suffered harm to his

reputation. At trial, Plaintiff testified that a Rent-A-Center employee’s “demeanor

changed” after issuance of the background report showing that he had been

charged with selling cocaine. The employee insisted to Plaintiff that Defendant’s

“system is accurate and they can find anything and everything about you down to

your juvenile records.” Moreover, Rent-A-Center declined to re-extend a job offer

to Plaintiff even after the correction of his report. We conclude that this is

sufficient for a jury to conclude that Plaintiff suffered some reputational harm. 6

We therefore affirm the district court’s denial of Defendant’s motion for judgment

as a matter of law with respect to reputational harm.

III. Willfulness

Section 1681e(b) provides that “[w]henever a consumer reporting agency

prepares a consumer report it shall follow reasonable procedures to assure

maximum possible accuracy of the information concerning the individual about

whom the report relates.” 15 U.S.C. § 1681e(b). The FCRA does not make

6 Defendant does not challenge the sufficiency of the evidence supporting Plaintiff’s claims for economic and emotional distress damages. 16 Case: 17-11447 Date Filed: 01/09/2020 Page: 17 of 77

consumer reporting agencies strictly liable for all inaccuracies, but instead creates

a private right of action for negligent or willful violations of the FCRA. Cahlin v.

Gen. Motors Acceptance Corp., 936 F.2d 1151, 1156 (11th Cir. 1991); see 15

U.S.C. §§ 1681n(a), 1681o(a). In this case, the jury found that Defendant had

willfully violated the statute. This willfulness finding is significant because

willfulness is a prerequisite to consideration of punitive damages, and here the jury

also awarded substantial punitive damages.

To establish a willful failure to comply with § 1681e(b), a plaintiff must

show that the consumer reporting agency either knowingly or recklessly violated

the statute. Pedro v. Equifax, Inc., 868 F.3d 1275, 1280 (11th Cir. 2017).

“Recklessness” generally requires “action entailing an unjustifiably high risk of

harm that is either known or so obvious that it should be known.” Safeco Ins. Co.

of Am. v. Burr, 551 U.S. 47, 68 (2007) (quotation marks omitted). Thus, a

consumer reporting agency acts in reckless disregard of FCRA requirements if its

“action is not only a violation under a reasonable reading of the statute’s terms, but

shows that the company ran a risk of violating the law substantially greater than

the risk associated with a reading that was merely careless.” Id. at 69.

We conclude that a reasonable jury could conclude that Defendant acted

willfully. Defendant itself had recognized the need to require more than two

identifiers when dealing with a subject who has a common name. For that reason,

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and to ensure “maximum possible accuracy,” its protocol required three identifiers,

absent supervisor approval when that was not possible. Yet, the evidence

suggested that this protocol may have been honored more in the breach than in

actual practice. Specifically, Defendant’s Vice President of Operations agreed that

obtaining a third identifier for an individual with a common name was “kind of

aspirational”: an admission supporting an inference that, in its actual practices,

Defendant consciously disregarded a known risk of violating the FCRA. Certainly,

as pertinent to Plaintiff’s claim, Defendant failed to follow its own procedure

twice: first, when preparing a background report on Plaintiff for Rent-A-Center

and, just a year later, when it was asked to prepare a second report concerning

Plaintiff for Winn-Dixie. Cf. Hinkle v. Midland Credit Mgmt., Inc., 827 F.3d 1295,

1307 (11th Cir. 2016) (concluding that a reasonable jury could find the defendant

“either knowingly or recklessly reported debts as ‘verified,’” in violation of 15

U.S.C. § 1681s-2(b), in part because the evidence suggested that the defendant

knew it might need certain documentation to verify disputed debts, but failed to

obtain such documentation).

Likewise, willfulness by Defendant was shown as to the additional error

infecting the second report generated for Plaintiff. This is so because Defendant

failed to promulgate an adequate procedure to flag the existence of an inaccurate

first report for purposes of future reports concerning that same subject. While

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Defendant apparently had the technological capability to bar future attribution to

Plaintiff of the two criminal charges wrongly attributed to him in the first Rent-A-

Center report—the two 2009 charges against Ricky Williams for cocaine dealing—

and it did not include those charges in the second report, it failed to develop a

means to prevent additional criminal arrests or convictions belonging to Ricky

Williams from being attributed to Plaintiff. And of course, that is exactly what

happened here. In preparing the second Winn-Dixie report, employees found an

additional 2004 burglary-assault conviction and a 2004 aggravated battery

conviction for the same Ricky Williams who was misidentified as Plaintiff in the

first report. Yet, because Defendant had established no procedure to block

attribution to Plaintiff of other criminal charges concerning Ricky Williams or, at

the least, to caution the preparer of subsequent reports that Plaintiff had been the

victim of a previous mismatch between himself and a criminal with the same

birthdate and a similar name, these 2004 convictions were wrongly included in the

subsequent background report drafted for Winn-Dixie.

In short, sufficient evidence supported the jury’s willfulness finding, and the

district court properly denied the motion for judgment as a matter of law.

IV. Punitive Damages

As noted, the jury awarded Plaintiff compensatory damages in the amount of

$250,000. Having found that Defendant acted willfully, the jury was then

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empowered to consider whether punitive damages should be awarded. Concluding

that punishment was warranted, the jury awarded Plaintiff punitive damages in the

amount of 3.3 million dollars. Defendant contends that no punitive damages were

appropriate, but that even if some punishment was supportable, 3.3 million dollars

is an amount so excessive that it violates the Due Process Clause of the

Constitution, and these damages should therefore be reduced. We conclude that

punitive damages were properly awarded, but also conclude that, pursuant to the

standards set out by the Supreme Court, a 3.3 million dollar award was

unconstitutionally excessive.

A. Constitutional Principles

While compensatory and punitive damages are typically awarded at the

same proceeding by the same decisionmaker, they serve different purposes. State

Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 416 (2003). Compensatory

damages are intended to remedy a concrete loss suffered by the plaintiff due to the

defendant’s wrongful conduct and to make that plaintiff whole. Punitive damages,

on the other hand, “are aimed at deterrence and retribution”: to deter the defendant

and others from this type of conduct and to punish the defendant for his particular

wrongful conduct. Id. The discretion to impose punitive damages is not unbridled,

however. Rather, “there are procedural and substantive constitutional limitations

on these awards.” Id. And in the last three decades, the Supreme Court has

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developed standards to be used in assessing whether a particular punitive damages

award has exceeded constitutional limitations.

In Pacific Mutual Life Insurance Company v. Haslip, 499 U.S. 1 (1991), the

Supreme Court considered whether a punitive damages award that was just slightly

more than four times the amount of compensatory damages and “much in excess of

the fine that could be imposed for insurance fraud” under state law 7 violated the

Due Process Clause of the Fourteenth Amendment. Id. at 23. While the Supreme

Court concluded that “the monetary comparisons . . . may be close to the line,” it

determined that the award did not “cross the line into the area of constitutional

impropriety.” Id. at 23–24.

Two years later, in a fractured opinion, the Supreme Court addressed again a

constitutional challenge to punitive damages. In TXO Production Corp. v. Alliance

Resources Corporation, 509 U.S. 443 (1993), the plaintiff filed a common-law

action for slander of title and received $19,000 in actual damages and $10 million

in punitive damages. Id. at 446. Over a due process challenge, a plurality of the

Supreme Court affirmed the punitive damages award, which was 526 times greater

than the compensatory damages. See id. at 446, 453, 466; id. at 469 (Kennedy, J.,

7 The jury returned a general verdict of $1,040,000 for one of the plaintiffs. Haslip, 499 U.S. at 6–7 n.1. The Supreme Court stated that, because the plaintiff asked for $200,000 in compensatory damages ($4,000 of which was for out-of-pocket expenditures), the punitive damages were likely no less than $840,000. Id. at 6–7 n.2. Thus, the punitive damages were likely 4.2 times the compensatory damages.

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concurring in part and concurring in the judgment). Three of the justices found it

“appropriate to consider the magnitude of the potential harm that the defendant’s

conduct would have caused to its intended victim if the wrongful plan had

succeeded, as well as the possible harm to other victims that might have resulted if

similar future behavior were not deterred.” Id. at 460 (emphasis in original).

Moreover, “the dramatic disparity between the actual damages and the punitive

award” was not controlling in this particular case given that the jury could have

reasonably determined that the defendant corporation “set out on a malicious and

fraudulent course” to reduce royalty payments that were owed to the plaintiffs. Id.

at 462. Given the “amount of money potentially at stake, the bad faith of

petitioner, the fact that the scheme employed in this case was part of a larger

pattern of fraud, trickery and deceit, and petitioner’s wealth,” this plurality

determined that the award was not so “grossly excessive” as to violate due process.

Id. Justice Kennedy concurred, noting his own concerns that the jury award may

have been based on “the jury’s raw, redistributionist impulses stemming from

antipathy to a wealthy, out-of-state, corporate defendant,” but nonetheless agreed

that affirmance could be justified based on the jury’s likely finding that the

corporate defendant had acted with malice. Id. at 468–69 (“This was not a case of

negligence, strict liability, or respondeat superior,” but instead the defendant acted

“through a pattern and practice of fraud, trickery and deceit . . . . to defraud and

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coerce those in positions of unequal bargaining power.” (quotation marks

omitted)). 8

In 1996, the Supreme Court overturned a punitive damages award on due

process grounds in BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996). In

Gore, the plaintiff had purchased a BMW from a BMW dealership for

approximately $41,000. Id. at 563. Unbeknownst to the plaintiff, the car had been

repainted before it was purchased, which allegedly lowered its value by about 10

percent. See id. at 563–64. The plaintiff sued the defendant—the American

distributor of BMWs—and received $4,000 in compensatory damages and $4

million in punitive damages, which the Alabama Supreme Court remitted to $2

million. 9 Id. at 565, 567.

In assessing whether this $2 million punitive damages award violated the

Constitution, the Supreme Court concluded that only awards that are “grossly

excessive” in relation to the relevant state interest violate the Due Process Clause

of the Fourteenth Amendment. Id. at 568. The Court noted that “[e]lementary

8 Three justices dissented and would have reversed the punitive damages award as being violative of the defendant’s substantive due process right. Id. at 472–501. 9 The Alabama Supreme Court remitted the punitive damages award based on its finding that the jury had considered an impermissible factor in calculating the award. Gore, 517 U.S. at 567. It did not indicate whether the $2 million figure represented the court’s independent assessment of the appropriate amount of punitive damages or its determination of the maximum amount of an award that would comply with due process. Id. at 567 n.10.

23 Case: 17-11447 Date Filed: 01/09/2020 Page: 24 of 77

notions of fairness” require that a defendant receive fair notice of the severity of

the punishment a state may impose for misconduct. Id. at 574. It set forth three

“guideposts” relevant to the inquiry of whether a defendant had the requisite

notice: (1) the degree of reprehensibility of the defendant’s conduct; (2) “the

disparity between the harm or potential harm suffered by [the plaintiff] and his

punitive damages award”; and (3) the difference between the punitive damages

award and any civil penalties authorized or imposed in comparable cases. Id. at

574–75.

In discussing the second guidepost, the Supreme Court considered the “long

pedigree” of the principle that punitive damages should have a reasonable

relationship to compensatory damages, and stated that approximately 65

enactments in English law between 1275 and 1753 provided for double, treble, or

quadruple damages. Id. at 580–81. Reciting its earlier observations, it noted its

conclusion in Haslip that a ratio of more than 4:1 between punitive and

compensatory damages might be “close to the line” of constitutional impropriety.

Id. at 581. As to its 1993 TXO decision, the Court indicated that “the relevant

ratio” in TXO was no more than 10:1 because the TXO Court had relied on the

difference between the punitive damages and the harm to the plaintiff that would

have resulted had the defendant’s tortious plan succeeded. Id. The Gore Court did

not draw a bright line demarcating the limits of a constitutionally acceptable

24 Case: 17-11447 Date Filed: 01/09/2020 Page: 25 of 77

punitive damages award, but it characterized the 500:1 ratio at issue as

“breathtaking” and stated that such an award “must surely raise a suspicious

judicial eyebrow.” Id. at 583 (quotation marks omitted). It reversed the judgment

and remanded the case for further proceedings. Id. at 586.

Seven years later, the Supreme Court again overturned a punitive damages

award on due process grounds in State Farm Mutual Auto Insurance Company v.

Campbell, 538 U.S. 408 (2003).10 In that case, the plaintiff had caused a fatal car

accident. Id. at 412–13. The defendant—the plaintiff’s insurance company—

decided to contest liability, declined offers to settle for the $50,000 policy limit,

ignored the advice of one of its own investigators, and took the case to trial, which

resulted in a judgment that was $135,849 over the policy limit. Id. at 413. The

defendant initially refused to cover the excess liability or post a bond to allow the

plaintiff to appeal the judgment against him. Id. The plaintiff sued the defendant,

alleging claims for bad faith, fraud, and intentional infliction of emotional distress.

Id. at 414. The jury awarded the plaintiff $2.6 million in compensatory damages

and $145 million in punitive damages, which the trial court reduced to $1 million

and $25 million, respectively. Id. at 415. On appeal, the Utah Supreme Court

10 Between Gore and State Farm, the Supreme Court decided Cooper Industries, Inc. v. Leathermen Tool Group, Inc., 532 U.S. 424 (2001), another case involving punitive damages and due process. We do not discuss Cooper because the issue in that case was not whether the punitive damages award was constitutional, but whether the Ninth Circuit had applied the correct standard of review in considering the constitutionality of the award. Id. at 426.

25 Case: 17-11447 Date Filed: 01/09/2020 Page: 26 of 77

reinstated the $145 million award based on its application of the Gore guideposts.

Id. at 415–16.

The Supreme Court reversed the judgment and remanded the case. Id. at

429. In considering the reprehensibility of the defendant’s conduct—“[t]he most

important indicium of the reasonableness of a punitive damages award”—the

Court articulated the following five factors as relevant: (1) whether the harm

caused was physical, rather than economic; (2) whether the defendant’s conduct

“evinced an indifference to or a reckless disregard of the health or safety of

others”; (3) whether the target of the conduct was financially vulnerable; (4)

whether “the conduct involved repeated actions or was an isolated incident”; and

(5) whether the harm resulted from “intentional malice, trickery, or deceit, or mere

accident.” Id. at 419 (quotation marks omitted). The Court stated that “[t]he

existence of any one of these factors weighing in favor of a plaintiff may not be

sufficient to sustain a punitive damages award; and the absence of all of them

renders any award suspect.” Id.

Turning to the second Gore guidepost, the Supreme Court again declined to

impose “a bright-line ratio” between punitive and compensatory damages that a

punitive damages award cannot exceed. Id. at 425. It stated, however, that “in

practice, few awards exceeding a single-digit ratio between punitive and

compensatory damages, to a significant degree, will satisfy due process.” Id. The

26 Case: 17-11447 Date Filed: 01/09/2020 Page: 27 of 77

Supreme Court discussed the ratio at issue in Haslip (approximately 4:1) and the

Court’s prior conclusion that the punitive damages in Haslip might be close to the

line of constitutional impropriety. Id. It noted that it had “cited that 4-to-1 ratio

again in Gore” and further referenced a “long legislative history” providing for

sanctions of double, treble, or quadruple damages. Id. While the Court did not

consider these ratios to be binding, it found them “instructive.” Id. The Court

concluded that ratios greater than those it had upheld “may comport with due

process where a particularly egregious act has resulted in only a small amount of

economic damages.” Id. (quotation marks omitted). On the other hand, “[w]hen

compensatory damages are substantial, then a lesser ratio, perhaps only equal to

compensatory damages, can reach the outermost limit of the due process

guarantee.” Id.

The take-away from the above Supreme Court cases is as follows. Whether

it is a civil or criminal proceeding, the Due Process Clause requires that a

defendant be put on fair notice of the severity of the punishment that might be

imposed on him for his misconduct. When the punitive damages award in a civil

proceeding is grossly excessive in relation to the relevant state interest underlying

prohibition of the particular conduct at issue, the civil defendant has not received

fair notice and the award is therefore unconstitutional. A reviewing court should

27 Case: 17-11447 Date Filed: 01/09/2020 Page: 28 of 77

evaluate two “guideposts” that are relevant here11 in considering whether fair

notice could be imputed to a civil defendant against whom putatively excessive

damages have been awarded. First, and most importantly, is the degree of

reprehensibility of the defendant’s conduct, which should be evaluated based on

five factors. Specifically, conduct can be deemed reprehensible when (1) the harm

inflicted was physical, rather than economic; (2) the conduct reflected an

indifference to the health or safety of others; (3) the target of the conduct was

financially vulnerable; (4) the conduct involved repeated actions, as opposed to an

isolated incident; and (5) the harm resulted from intentional malice or deceit, as

opposed to being a mere accident. The Court did not require that all five factors be

present to sustain a punitive damages award, but indicated that the absence of all

five would render such an award suspect.

The Supreme Court’s second guidepost looks to the disparity between the

harm or potential harm suffered by the plaintiff and the punitive damages award.

Although it set out no rigid bright-line rule, the Supreme Court has indicated that a

ratio greater than 4:1 between punitive and compensatory damages will likely be

close to the line of constitutional impropriety. Moreover, the Court has noted that

few awards exceeding a single-digit ratio, to a significant degree, will satisfy due

11 The Supreme Court’s third guidepost focuses on a factor not relevant in this case: the difference between the punitive damages award and any civil penalties authorized or imposed in comparable cases. 28 Case: 17-11447 Date Filed: 01/09/2020 Page: 29 of 77

process. Nevertheless, when a particularly egregious act has resulted in only a

small amount of compensatory damages, then a greater ratio may be sustainable.

Conversely, when the plaintiff has received a substantial compensatory damages

award, then a lesser ratio—perhaps just a 1:1 ratio (that is, total damages not

exceeding double the compensatory damages award)—will reach the outermost

limit of the due process guarantee.

With these principles in mind, we turn first to the question whether punitive

damages were even appropriate in this case and then to the more difficult question

whether the $3.3 million punitive damages award in this case exceeded

constitutional limits. We conclude that the jury properly awarded punitive

damages but that the amount of the award violates due process.12

B. Whether Defendant’s Conduct Was Sufficiently Reprehensible to Warrant an Award of Any Punitive Damages

In addressing Defendant’s argument that no punitive damages should have

been awarded, we note that reprehensible conduct alone can justify a punitive

damages award. Action Marine, 481 F.3d at 1322. However, “punitive damages

should only be awarded if the defendant’s culpability, after having paid

12 Although the Supreme Court in Haslip, TXO, Gore, and State Farm considered the limits imposed by the Due Process Clause of the Fourteenth Amendment, we have applied this principle in the context of a federal cause of action, implicitly invoking the Due Process Clause of the Fifth Amendment. See, e.g., Bogle v. McClure, 332 F.3d 1347, 1350, 1362 (11th Cir. 2003) (concluding that a punitive damages award for racial discrimination in a 42 U.S.C. § 1983 suit did not violate due process).

29 Case: 17-11447 Date Filed: 01/09/2020 Page: 30 of 77

compensatory damages, is so reprehensible as to warrant the imposition of further

sanctions to achieve punishment or deterrence.”13 State Farm, 538 U.S. at 419.

Further, the district court’s determination that the defendant’s conduct is

reprehensible is ultimately factual and is therefore only reviewed for clear error.

Johansen v. Combustion Eng’g, Inc., 170 F.3d 1320, 1334 (11th Cir. 1999). “If a

district court’s finding regarding the defendant’s degree of reprehensibility is not

supported by the record or is contrary to the evidence, it is clearly erroneous.” Id.

at 1335 (quotation marks omitted).

In this case, the district court found that “four of the State Farm

reprehensibility [factors] weigh in Plaintiff’s favor, and the fifth is neutral.” The

district court considered this to be “strong evidence” that Defendant’s conduct was

reprehensible enough to support the $3.3 million punitive damages award. As

noted, we agree that the reprehensibility of Defendant’s conduct was sufficient to

warrant the award of some punitive damages.

1. The type of harm

The district court determined that the first State Farm reprehensibility

factor—which looks to whether the harm caused was physical, rather than

economic—weighed in favor of Plaintiff because he suffered emotional harm

13 Further, in identifying the guideposts that should be used in determining whether the amount of a particular punitive damages award exceeds constitutional limits, the degree of reprehensibility of the misconduct is likewise highly significant. 30 Case: 17-11447 Date Filed: 01/09/2020 Page: 31 of 77

(“feeling horrible”) and physical harm (loss of appetite and insomnia), rather than

purely economic damages. The district court’s finding is not clearly erroneous.

Granted, there was no serious or life-threatening physical harm here as

Plaintiff was never hospitalized nor in need of substantial medical treatment. Had

this been the case, this factor would weigh even more heavily in the analysis.

Nevertheless, the district court properly considered Plaintiff’s emotional distress in

weighing this factor. See McGinnis v. Am. Home Mortg. Servicing, Inc., 901 F.3d

1282, 1288–89 (11th Cir. 2018) (finding a high degree of reprehensibility where

the defendant’s conduct caused physical and emotional harm, in addition to

economic harm). Citing Bogle v. McClure, 332 F.3d 1347, 1359, 1362 (11th Cir.

2003) and Goldsmith v. Bagby Elevator Company, Inc., 513 F.3d 1261, 1275, 1283

(11th Cir. 2008), McGinnis noted that we have at least twice upheld substantial

punitive damages awards when the underlying compensatory damages award was

based either entirely or substantially on the plaintiff’s emotional distress.

McGinnis, 901 F.3d at 1290.

And Plaintiff understandably suffered considerable emotional distress when

he was twice wrongly identified as a criminal by Defendant and, as a result, lost

two job opportunities. This emotional distress manifested itself in physical

symptoms. Specifically, Plaintiff testified regarding his diminished appetite,

insomnia, and headaches. Accordingly, this factor weighs in Plaintiff’s favor.

31 Case: 17-11447 Date Filed: 01/09/2020 Page: 32 of 77

2. Indifference to or reckless disregard for health and safety

The district court found that the second factor—whether the defendant’s

conduct evinced an indifference to or a reckless disregard of the health or safety of

others—also weighed in Plaintiff’s favor. According to the district court,

Defendant’s FCRA violations “put Plaintiff’s livelihood at stake,” and the jury

could reasonably infer that losing the Rent-A-Center and Winn-Dixie job

opportunities “affected [Plaintiff’s] ability to pay for basic necessities like food,

water, shelter, and clothing.” The district court also noted that Defendant’s

conduct “affected [Plaintiff’s] mental health and ability to eat and sleep.”

We conclude that the district court erred in characterizing this factor as

having been met. In the first place, we read this factor, which looks to whether the

defendant’s conduct showed a reckless disregard for the health or safety of others,

as focusing on something larger than whether the reckless conduct might impact a

particular person’s ability to obtain a particular job. At any rate, the court’s

analysis on this point was based on speculation, and not the record. See Johansen,

170 F.3d at 1335. Although not being hired for the Rent-A-Center and Winn-Dixie

jobs undoubtedly had a temporary, negative financial impact on Plaintiff, there is

no evidence that it actually impinged on his ability to pay for basic necessities.

And to the extent that one can typically expect the loss of a job opportunity to

negatively impact a person’s financial status, that factor is accounted for in the

32 Case: 17-11447 Date Filed: 01/09/2020 Page: 33 of 77

third factor, discussed below. Similarly, to the extent the loss of a job opportunity

might impact one’s health, that is accounted for in the first factor, discussed above.

In short, the mere fact that Plaintiff understandably suffered emotional

distress from twice being wrongfully labeled a criminal falls well short of proof

that Defendant’s conduct revealed an indifference to or reckless disregard for

health and safety. While courts “may consider the risk of harm to others as part of

the reprehensibility analysis,” Action Marine, 481 F.3d at 1320, there is no

evidence indicating that the issuance of an erroneous background report, as a

general matter, presents a risk to the health or safety of others, or that the specific

errors Defendant made in Plaintiff’s case presented a substantial risk of injury to

him.14 Thus, the district court erred in determining that the second State Farm

factor weighs in favor of Plaintiff.

3. Financial vulnerability

The district court found that the third State Farm factor—whether the target

of the misconduct was financially vulnerable—also weighed in Plaintiff’s favor.

The court noted that Plaintiff “had little-to-no income when he applied for the

Rent-A-Center and Winn-Dixie positions,” and that Plaintiff “worked part-time at

14 McGinnis found that this second factor—“indifference to or reckless disregard of the health or safety of others”—was met in its case because the defendant there was well aware of the emotional damage and stress it was wreaking on Ms. McGinnis, but it reacted with only “indifference, obstinacy, and, at times, belligerence.” McGinnis, 901 F.3d at 1288–89. Here, however, Defendant promptly corrected each of the two reports in question once Plaintiff notified Defendant of its error. 33 Case: 17-11447 Date Filed: 01/09/2020 Page: 34 of 77

two funeral homes . . . to make ends meet.” The court found that this case was

particularly compelling because Plaintiff “was of such limited means that he still

lived at home with his mother.”

Defendant argues that the district court’s findings concerning this factor

were speculative. It is true that Plaintiff offered no evidence setting out the precise

status of his financial position when he applied for the Rent-A-Center position.

The only evidence Plaintiff presented as to this issue was his own testimony that he

“was doing . . . graphic designing in between [job interviews] trying to make

money.” He did not state how much money he was making when he applied for

the Rent-A-Center or Winn-Dixie jobs. Moreover, although the district court

assumed that Plaintiff had lived with his mother because of his “limited means,”

Plaintiff never offered an explanation for his living arrangements.

That said, it seems obvious from the evidence that Plaintiff was hardly

swimming in money. When the Rent-A-Center job offer was withdrawn, Plaintiff

sought and obtained other employment. When he lost that job, he obtained a job at

a gas station and had to quit that job because the cost of his own gas to get to work

ate up much of what he was making. Given Plaintiff’s difficulty in maintaining

consistent employment and the income levels of the jobs he sought, one can

reasonably infer some financial vulnerability on his part. It is foreseeable that an

individual relying on the types of jobs Plaintiff was seeking would be greatly

34 Case: 17-11447 Date Filed: 01/09/2020 Page: 35 of 77

impacted by a background check that foreclosed employment in even these

positions. And it is this factor on which the district court’s observations are most

apt concerning the potential impact of Defendant’s error on Plaintiff’s inability to

pay for basic necessities. We therefore conclude that this third factor favors the

imposition of punitive damages.

4. Repeated actions or isolated incidents

“[E]vidence that a defendant has repeatedly engaged in prohibited conduct

while knowing or suspecting that it was unlawful” weighs in a plaintiff’s favor.

Gore, 517 U.S. at 576–77. The district court found that this fourth State Farm

factor also weighed in Plaintiff’s favor. We agree. First, as to Plaintiff, this was

hardly an isolated incident. After Defendant mistakenly attributed another

person’s criminal record to Plaintiff during the background investigation for the

Rent-A-Center job, just a year later it repeated this error when conducting the

Winn-Dixie investigation, again attributing a criminal conviction of this same felon

to Plaintiff.

As to Defendant’s assertion that, in the larger scheme of things, this was an

anomalous case, both parties cite the same statistics to support their positions.

Defendant notes that the error rate for incorrectly attributing information of all

types—not just the type of information at issue here—from someone other than the

subject of the investigation was quite low. Specifically, for the three-year period

35 Case: 17-11447 Date Filed: 01/09/2020 Page: 36 of 77

of time between 2010 and 2013, and based on the number of successful challenges

brought by individuals who disputed inclusion of public records belonging to

another individual, Defendant’s error rate nationally was just 0.38 percent and its

error rate in Florida ranged from 0.28 percent in 2013 to 0.64 percent in 2012.

Plaintiff takes this same evidence and notes that given the large number of

investigative reports generated by Defendant (3.5 million during this time period),

even an admittedly low error rate resulted in the issuance of over 13,000

background reports that incorrectly attributed information from another person’s

public records to the subject of the investigation.

It is true that Plaintiff never introduced evidence breaking down how many

of these 13,000+ errors arose when Defendant had failed to use three identifiers in

a common-name situation. This failure of specific proof constitutes a lapse by

Plaintiff that will come back to haunt him when we explore the question whether

the extremely high amount of punitive damages awarded by the jury here can be

sustained. Nevertheless, as we understand the record, Defendant is neither arguing

that Plaintiff’s case represents an isolated occurrence nor denying that this type of

error occurred from time to time when Defendant failed to use three identifiers for

a subject with a common name. Thus, for purposes of determining whether any

punitive damages could properly be awarded by the jury, we conclude that Plaintiff

36 Case: 17-11447 Date Filed: 01/09/2020 Page: 37 of 77

has satisfied this fourth factor, which looks to whether the Defendant engaged in

repeated reckless conduct.

5. Intentional malice, trickery, or deceit, as opposed to a “mere accident”

The district court found that the fifth State Farm factor was “at best, neutral”

because even if Defendant did not act out of intentional malice, trickery, or deceit,

“its actions weren’t a ‘mere accident.’” It is true that the jury found that Defendant

had acted willfully, and willful conduct connotes something more than a simple

accident; that is, willfulness requires, at a minimum, a showing of recklessness.

Yet, there was no evidence of intentional malice, trickery, or deceit by Defendant,

and it seems that this factor is looking at intentional misconduct—or something

close thereto—which is clearly absent in this case. At worst, Defendant acted

recklessly, but without any intent to harm Plaintiff. And as to both reports

regarding Plaintiff, Defendant promptly corrected its error once advised that it had

made a mistake. Accordingly, we conclude that this factor weighs in Defendant’s

favor.

In sum, three of the five State Farm reprehensibility factors weigh in

Plaintiff’s favor and two factors weigh in Defendant’s favor. Thus, in scoring

reprehensibility, Defendant’s conduct was sufficiently reprehensible to warrant

some amount of punitive damages, albeit that conduct was clearly not at the

highest level of reprehensibility. The question then become whether the punitive 37 Case: 17-11447 Date Filed: 01/09/2020 Page: 38 of 77

damages awarded here were so excessive as to be deemed unconstitutional, thereby

warranting a reduction by this Court. Given the high level of generality in the

standards used to determine this question, the answer is almost always an uncertain

one. And so it is here.

C. Whether the Punitive Damages Awarded Were So Excessive As to Violate Defendant’s Due Process Rights

1. Ratio of punitive damages to actual damages

The Supreme Court has noted that the most important factor in reviewing a

punitive damages award is the reprehensibility of the defendant’s conduct, and the

Court has set out five factors for evaluating reprehensibility. But because it is

difficult to quantify a particular degree of reprehensibility—and still harder to

attach a monetary figure to even a rough quantification—the Court has indicated

that reviewing courts should also look to the ratio between the compensatory

damages award and the punitive damages award in evaluating whether a particular

punitive damages award is so excessive as to be deemed unconstitutional. If the

disparity between a compensatory damages award and the punitive damages award

is too great, the punitive award may be deemed unconstitutional.

But how does one determine when the disparity is so great that a

constitutional violation has occurred? The answer: Not easily. As explained

above, the shorthand guidance extrapolated from the Supreme Court’s decisions is

as follows. The Court has indicated that a ratio greater than 4:1 between punitive 38 Case: 17-11447 Date Filed: 01/09/2020 Page: 39 of 77

and compensatory damages will likely be close to the line of constitutional

impropriety. Moreover, few awards exceeding a single-digit ratio (that is, anything

greater than a 9:1 ratio) to a significant degree will satisfy due process. But the

Court has emphasized that these are not hard and fast rules. Sometime even a 4:1

ratio may be too great. If, for example, the plaintiff has received a substantial

compensatory damages award, then a lesser ratio as low as 1:1 may reach the outer

limits of the due process guarantee and a punitive damages award that exceeds that

ratio will be suspect. On the other hand, if a particularly egregious act has resulted

in only a small amount of compensatory damages, then a greater ratio can be

justified. Accordingly, we will operate under the assumption that a 4:1 ratio is the

Court’s suggested default guideline, but that this ratio may be adjusted depending

on the above factors.

The ratio in this case of punitive damages to compensatory damages is a

little over 13:1. For sure, this is not as “breathtaking” as was the 500:1 ratio in

Gore, but it is also well outside the 4:1 range deemed “close to the line” of

constitutional impropriety in Haslip. Further, it exceeds a single-digit ratio

between punitive and compensatory damages, which according to the Supreme

Court in State Farm raises a red flag that the punitive damage amount likely

violates the due process clause. See State Farm, 538 U.S. at 425 (“[I]n practice,

few awards exceeding a single-digit ratio between punitive and compensatory

39 Case: 17-11447 Date Filed: 01/09/2020 Page: 40 of 77

damages, to a significant degree, will satisfy due process.”). Finally, while a

higher ratio may be acceptable if the compensatory damages award is low, here the

compensatory damages award of $250,000 was clearly not a small amount of

money, particularly given that Plaintiff contended that his lost wages were only in

the $75,000 range. As set out above, higher ratios between compensatory damages

and punitive damages are more reasonably justified when the former is for a

relatively small amount of money.

For these reasons, we begin our analysis with antennae raised, as we

consider whether the default 4:1 ratio, or something close thereto, should constitute

the uppermost range in this case, for due process purposes. Before setting out our

analysis in this case, we start with a review of cases from this Circuit, followed by

a review of cases from other circuit courts.

2. Examination of punitive damages cases from this Circuit

We have previously evaluated punitive damages awards with similar ratios

in only two cases: EEOC v. W&O, Inc., 213 F.3d 600 (11th Cir. 2000) and

Goldsmith v. Bagby Elevator Company, Inc., 513 F.3d 1261 (11th Cir. 2008).

Unfortunately, as the underlying conduct in those cases was more reprehensible

than that here, neither is terribly analogous to this case. In W&O, three employees

sued their employer for pregnancy discrimination. W&O, 213 F.3d at 607. The

jury awarded the employees backpay in relatively modest amounts: $3,800.24,

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$6,225.46, and $26,231.43.15 Id. at 609. After taking into account the statutory

cap, each employee also received $100,000 in punitive damages, yielding

approximate ratios of 26:1, 16:1, and 4:1, respectively. Id. at 609, 616. The

aggregate ratio of punitive damages to back pay was 8.3:1. Id. at 616. We

concluded that the punitive damages awards were reasonable. Id. at 616–17.

W&O, however, provides little guidance for this case. First, although the

26:1 and 16:1 ratios were higher than the 13:1 ratio in this case, the compensatory

damages award in W&O was very small in comparison to the more substantial

$250,000 compensatory damages award in this case. As explained above, a higher

ratio is supportable if the amount of compensatory damages is low. See Gore, 517

U.S. at 582. Additionally, the underlying action in W&O challenged a written

policy that expressly discriminated against pregnant women, and the evidence

showed that the owner had made several disparaging comments about pregnant

women. W&O, 213 F.3d at 607–08. The egregiousness of the repetitive,

intentional discrimination at issue in W&O is simply not present here.

Similarly, in Goldsmith, the plaintiff alleged repeated racial discrimination at

his place of employment. Goldsmith, 513 F.3d at 1274–75. The jury awarded the

plaintiff $27,160.59 in back pay, $27,160.59 in damages for mental anguish, and

15 We concluded that we could consider an award of back pay when deciding whether a punitive damages award is disproportionate to the plaintiff’s actual damages award. W&O, 213 F.3d at 615.

41 Case: 17-11447 Date Filed: 01/09/2020 Page: 42 of 77

$500,000 in punitive damages, yielding a ratio of approximately 9:1. Id. at 1275.

We concluded that the punitive damages award did not violate due process. Id. at

1285.

Like W&O, however, Goldsmith provides little guidance. Again, the actual

damages in Goldsmith were much smaller than the compensatory damages in this

case: in fact, one-fifth the size of the compensatory damages here. Further, the

ratio of punitive damages to actual damages (9:1) did not exceed a single-digit

multiplier, as did the 13.1 ratio in this case.

But the most significant difference between Goldsmith and this case is the

substantially greater level of reprehensibility displayed in the facts of Goldsmith,

which involved repeated acts of intentional racial discrimination, harassment, and

retaliation. See id. at 1267 (describing racism as “an evil to be remedied in our

Nation”). Specifically, the plaintiff’s supervisor and another employee repeatedly

used racial slurs against plaintiff, and the company president had also uttered a

racial slur. Id. at 1269, 1273–74. When the plaintiff complained to the

defendant’s vice president, the vice president said, “You are just going to have to

accept it.” Id. (quotation marks omitted). Further, the plaintiff was fired after

filing an EEOC charge, as were other black employees who had been terminated

for reporting racial slurs or filing EEOC charges. Id. at 1271–74.

42 Case: 17-11447 Date Filed: 01/09/2020 Page: 43 of 77

As Goldsmith noted, “[t]he dominant consideration in the evaluation of a

punitive damages award is the reprehensibility of the defendant’s conduct.” Id. at

1283. Justifying its affirmance of the punitives in the case before it, Goldsmith

noted that our court has upheld punitive damages awards that substantially exceed

compensatory damages when the misconduct was “exceedingly reprehensible.” Id.

at 1284. That characterization, the panel noted, applied to the case before it as the

“flagrant disregard of Goldsmith’s federal rights was exceedingly reprehensible,

and there was evidence of a pattern of retaliatory and discriminatory misconduct”

by the defendant. Id. The sort of intentional, malevolent behavior described in

Goldsmith, however, is a far cry from Defendant’s conduct in this case, which was,

at worst, a willful disregard of the possibility that inaccurate information would

find its way into a criminal background report.

Since Gore, our Court has examined whether punitive damages awards

comply with due process in a few other cases, but they involve dissimilar ratios. In

Kemp v. American Telephone & Telegraph Co., 393 F.3d 1354 (11th Cir. 2004),

the jury awarded the plaintiff $1 million in punitive damages, but only $115.05 in

actual damages, after finding the defendant guilty of fraudulent billing practices

and collecting illegal gambling debts, in violation of federal and state Racketeer

Influenced and Corrupt Organizations (“RICO”) statutes. Id. at 1357. Concluding

that a million-dollar award was so excessive as to violate the defendant’s due

43 Case: 17-11447 Date Filed: 01/09/2020 Page: 44 of 77

process right, we vacated the punitive damages award and directed the trial court to

reduce the punitive damages to $250,000. Id. at 1365.

We explained our thinking. Although defendant AT&T “deserved to pay a

serious penalty for its misconduct,” one that would “be large enough to deter []

misconduct,” we concluded that “one million dollars, in relationship to the amount

of harm that occurred in this case, is constitutionally excessive.” Id. As to the

award amount we settled on—$250,000—we acknowledged that the Supreme

Court has said that few awards substantially exceeding a single-digit ratio between

compensatory and punitive damages would satisfy due process and further

acknowledged that a $250,000 punitive damages award, with a compensatory

damages award of only a hundred dollars, greatly exceeded this single-digit ratio.

Id. at 1363, 1364. Yet, given this small amount of compensatory damages, a

punitive damages award that did not exceed a 9:1 ratio would have totaled only

about $1,000, which we concluded “would not effectively punish [defendant]

AT&T for its conduct or serve any deterrent value whatsoever.” Id. at 1365. As to

the $250,000 figure that we finally arrived at, we noted that although “there is no

algorithm that yields a precise figure,” we were “persuaded that an award that was

less than $250,000 would not serve as a meaningful deterrent to a corporation like

AT&T,” but equally persuaded that an “award greater than this amount [] would

prove an unconstitutional windfall.” Id.

44 Case: 17-11447 Date Filed: 01/09/2020 Page: 45 of 77

For sure, the ratio in Kemp is a lot bigger than the 13.1 ratio here. But it’s

understandable that the ratio would necessarily be a lot larger in that case as the

almost nominal compensatory damages award of $115.05 there is dwarfed by the

$250,000 in actual damages here. Clearly, with such a small amount of actual

damages in Kemp, a fairly large multiplier for the punitive damages was necessary

to meaningfully punish and deter the defendant. Additionally, like W&O and

Goldsmith, the Kemp defendant’s conduct was far more reprehensible than

Defendant’s conduct in this case. In finding the defendant guilty under the federal

and state RICO statutes, the jury necessarily determined that the defendant

“intentionally participated in a scheme to defraud another of money or property.”

See id. at 1359. Additionally, we concluded that the defendant played a “critical

role” in the illegal gambling scheme, which “could never have succeeded” without

it. Id. at 1365.

By contrast, Defendant’s conduct in this case was the willful failure to

ensure that reports were accurately generated, which is more aggravated than a

negligent failure would have been, but clearly less egregious than the intentional

fraud at issue in Kemp. Finally, even though the Kemp defendant engaged in

significantly more reprehensible conduct than Defendant did, we nonetheless

vacated the punitive damages award of a million dollars, and further concluded

that, any amount greater than $250,000 “would prove an unconstitutional

45 Case: 17-11447 Date Filed: 01/09/2020 Page: 46 of 77

windfall.” Id. The punitive damages award in this case—$3.3 million—was more

than thirteen times higher than the $250,000 that we said constituted the outside

limit of a constitutional award in the Kemp RICO fraud case: a case that involved

intentional conduct that was more reprehensible.

In Johansen v. Combustion Engineering, Inc. 170 F.3d 1320 (11th Cir.

1999), acidic water from waste areas on the defendant’s former mining site

periodically seeped into streams that flowed downstream through the plaintiffs’

properties. Id. at 1326–27. At trial, the jury awarded each plaintiff modest

compensatory damages ranging between $1,000 and $10,000 each, 16 but awarded

punitive damages in the whopping sum of $45 million for these fifteen property

owners. Id. at 1327. The district court found this to be a “shocking” amount that

would “give the system a black eye,” and it reduced the punitives to $15 million.

Id. After we affirmed the judgment without opinion, the defendant petitioned for

certiorari, arguing that the punitive damages award was unconstitutionally

excessive. The Supreme Court vacated our judgment and remanded the case for

further consideration in light of Gore. Id. On remand, the district court

16 The modest compensatory damages can be explained by the fact that the plaintiffs suffered no personal injuries, risk to human health, diminution in property value, damage to crops or animals, or any other economic loss. Instead the damage was aesthetic and environmental in that the streams looked and smelled bad, the streams no longer contained fish, and the cows would no longer drink from the streams. Id. at 1327. 46 Case: 17-11447 Date Filed: 01/09/2020 Page: 47 of 77

determined that a punitive damages award of $4.35 million would not infringe

constitutional limits, and it awarded that amount. Id.

Neither side was happy. The plaintiffs appealed, arguing that the district

court erred in holding that the $15 million award given after the first trial was

unconstitutionally excessive. The defendant appealed, arguing that the $4.35

million announced by the district court, post-remand, was also unconstitutionally

excessive. Id. at 1327–28. On appeal, we rejected the plaintiffs’ argument, and

concluded that a $15 million award would be “grossly excessive.” As to the $4.35

million reduced amount, arrived at by the district court on remand, that figure

produced ratios high enough to “raise a suspicious judicial eyebrow.” Id. at 1338

(quotation marks omitted). Nonetheless, we noted the Supreme Court’s

admonition that a low award of compensatory damages will support a higher ratio

than will a high compensatory amount, and further that a higher ratio may also be

justified when the injury is hard to detect—such as the initially covert

environmental damage to the streams—or when it is difficult to value the non-

economic harm. Id. We found this to be such a case. The actual damages were

small and the State’s interest in deterring environmental pollution was strong. Id.

47 Case: 17-11447 Date Filed: 01/09/2020 Page: 48 of 77

Moreover, the defendant in Johansen was “a large and extremely wealthy

international corporation.”17 Id.

We determined that this situation was one in which a substantial disparity

between actual damages and punitive damages would not be unconstitutionally

excessive because the actual damages were “relatively small,” and the state’s

interest in deterring environmental pollution was strong. Id. at 1338. Once again,

our case is distinguishable from Johansen. Here, the compensatory damages were

not “relatively small.” Id. Moreover, given the potential state civil fines for

environmental pollution, the defendant in Johansen was on “fair notice [] that it

might be subject to a substantial penalty for pollution of the streams running

through its property.” Id. at 1339.

Our other cases evaluating, and approving, punitive damages awards all

involved significantly lower ratios than the ratio at issue here. Indeed, all four

cases considered ratios that were within or close to the 4:1 ratio mentioned in

Haslip, Gore, and State Farm. See McGinnis, 901 F.3d at 1290 (5.9:1); Myers v.

Cent. Fla. Invs., Inc., 592 F.3d 1201, 1221 (11th Cir. 2010) (approximately 5:1);

17 The evidence in this case does not clearly reveal how wealthy Defendant is. In closing argument, Plaintiff’s counsel asked the jury to impose somewhere between (1) 10% of the company’s cash on hand ($10.8 million), which would total $1,080,000, or (2) 1% of the value of the division of the company that was involved in conducting the background check (whose value counsel suggested could be determined by looking at its purchase price of $336 million), which would total $3.3 million.

48 Case: 17-11447 Date Filed: 01/09/2020 Page: 49 of 77

Action Marine, 481 F.3d at 1321 (approximately 5.5:1); Bogle, 332 F.3d at 1362

(approximately 4:1). Of these four cases, McGinnis had the most similar monetary

award ($3 million in punitive damages and $506,000 in compensatory damages),

but it involved a “high degree of reprehensibility” not present here. 18 McGinnis,

901 F.3d at 1285, 1287–88. Otherwise, none of the cases involved compensatory

or punitive damages awards comparable to the awards here. Accordingly, these

cases do little to illuminate the proper disposition of this case.

3. Examination of out-of-circuit punitive damages cases

Given the dearth of controlling precedent from this Court and the Supreme

Court, we look to see whether our sister circuits provide any persuasive authority.

Of the seventeen out-of-circuit cases in which the damages ratio was comparable

to the ratio in this case (between approximately 10:1 and 15:1), the punitive

damages award was affirmed in eight cases and vacated in nine. See EEOC v. Fed.

Express Corp., 513 F.3d 360, 377–78 (4th Cir. 2008) (12.5:1 ratio affirmed);

18 In McGinnis, the jury determined that the defendant mortgage company acted with the specific intent to harm. The defendant raised the monthly mortgage and escrow payments owed by the plaintiff, yet would never explain the reason for the increase, notwithstanding the plaintiff’s repeated and increasingly frantic requests for an explanation. And, indeed, the defendant was not entitled to the increased payments it was demanding. McGinnis, 901 F.3d at 1286–87, 1289. “Undeterred, [the defendant] continued to demand payment of the unexplained amount, collect unwarranted late fees, and proceed to foreclosure without ever justifying the increase,” insisting that the plaintiff “was required to pay any amount [the defendant] demanded.” Id. at 1292. We concluded that all five of the Gore reprehensibility guideposts had been satisfied and that a punitive to compensatory damage ratio of 5.9:1 was not grossly excessive. 49 Case: 17-11447 Date Filed: 01/09/2020 Page: 50 of 77

Alexander v. City of Milwaukee, 474 F.3d 437, 454–55 (7th Cir. 2007) (affirming a

range of ratios, the highest of which was approximately 11:1); Casillas-Diaz v.

Palau, 463 F.3d 77, 86 (1st Cir. 2006) (affirming 10:1 ratio as to the first of two

plaintiffs); Bielicki v. Terminix Int’l Co., 225 F.3d 1159, 1165–66 (10th Cir. 2000)

(12:1 ratio affirmed); United Phosphorus, Ltd. v. Midland Fumigant, Inc., 205 F.3d

1219, 1230–31 (10th Cir. 2000) (9.65:1 ratio affirmed); Parsons v. First Inv’rs

Corp., 122 F.3d 525, 530–31 (8th Cir. 1997) (11:1 ratio affirmed); Dean v. Olibas,

129 F.3d 1001, 1007–08 (8th Cir. 1997) (14:1 ratio affirmed); Davis v. Rennie, 264

F.3d 86, 117 (1st Cir. 2001) (10:1 ratio affirmed); Lompe v. Sunridge Partners,

LLC, 818 F.3d 1041, 1069, 1073 (10th Cir. 2016) (11.5:1 ratio vacated); Ondrisek

v. Hoffman, 698 F.3d 1020, 1029, 1031 (8th Cir. 2012) (10:1 ratio vacated); S.

Union Co. v. Irvin, 563 F.3d 788, 791–92 (9th Cir. 2009) (10:1 ratio vacated);

Bridgeport Music, Inc. v. Justin Combs Publ’g, 507 F.3d 470, 488, 490 (6th Cir.

2007) (9.5:1 ratio vacated); Stogsdill v. Healthmark Partners, L.L.C., 377 F.3d

827, 833–34 (8th Cir. 2004) (10:1 ratio vacated); Clark v. Chrysler Corp., 436 F.3d

594, 606, 608 (6th Cir. 2006) (13:1 ratio vacated); Lust v. Sealy, Inc., 383 F.3d

580, 589, 591 (7th Cir. 2004) (10:1 ratio vacated); Williams v. ConAgra Poultry

Co., 378 F.3d 790, 793, 799 (8th Cir. 2004) (10:1 ratio vacated); Watkins v.

Lundell, 169 F.3d 540, 546–47 (8th Cir. 1999) (15:1 ratio vacated).

50 Case: 17-11447 Date Filed: 01/09/2020 Page: 51 of 77

Notably, the compensatory damages award in each of the affirmed cases

with similar ratios was smaller—some of them significantly so—than the

compensatory damages award here, rendering those cases somewhat

distinguishable from this case. The largest of these compensatory damages awards

was $170,100, and each of the others was less than $100,000. Bielicki, 225 F.3d at

1162 ($170,100, comprising awards of $60,700, $77,800, and $31,600 to each of

three plaintiffs, which the Tenth Circuit considered in the aggregate); Davis, 264

F.3d at 116–17 ($100,000); United Phosphorus, 205 F.3d at 1224, 1231

($67,694.03); Casillas-Diaz, 463 F.3d at 80 ($50,000 awarded to the first of two

plaintiffs); Alexander, 474 F.3d at 442 (ranging from $9,500 to $50,000); Parsons,

122 F.3d at 527 ($26,949.51); Fed. Express Corp., 513 F.3d at 363 ($8,000); Dean,

129 F.3d at 1007 ($5,000).

The cases with similar ratios in which our sister circuits vacated the punitive

damages awards provide some support for Defendant’s position that the punitive

damages here were unconstitutionally excessive. In all but one of the vacated

cases, the compensatory damages were either comparable to or higher than the

compensatory damages in this case. See Ondrisek, 698 F.3d at 1024 ($3 million

each for two plaintiffs); Lompe, 818 F.3d at 1068–69 ($1.95 million); Williams,

378 F.3d at 793 ($600,000); Stogsdill, 377 F.3d at 829 ($500,000); S. Union Co.,

563 F.3d at 792 ($395,072.38); Bridgeport Music, 507 F.3d at 475 ($366,939);

51 Case: 17-11447 Date Filed: 01/09/2020 Page: 52 of 77

Clark, 436 F.3d at 606 ($235,629.13); Watkins, 169 F.3d at 543 ($235,000); Lust,

383 F.3d at 589 ($27,000).

In seven of the nine cases in which the punitive damages were deemed

excessive, the punitive damages award was remanded for remittitur to a ratio of 4:1

or less. See Ondrisek, 698 F.3d at 1030–31 (4:1); Lompe, 818 F.3d at 1075–76

(1:1); Williams, 378 F.3d at 799 (1:1); Stogsdill, 377 F.3d at 833–34 (4:1); S.

Union Co., 563 F.3d at 792 (3:1); Bridgeport Music, 507 F.3d at 490 (no more than

approximately 1:1 or 2:1); Clark, 436 F.3d at 608 (2:1). In one case, the punitive

damages award was remanded for a remittitur of a ratio of less than 6:1. Lust, 383

F.3d at 589, 591 (5.6:1). And in the remaining case, the Eighth Circuit did not

specify the amount by which the punitive damages award should be remitted, but

commented that it was “not persuaded that the award should exceed a 4-to-1 ratio.”

Watkins, 169 F.3d at 547.

We have also examined fifteen out-of-circuit cases involving compensatory

damages awards comparable to (within $50,000 of) the damages in this case. See

In re C.R. Bard, Inc., 810 F.3d 913, 917 (4th Cir. 2016) ($250,000); Thomas v.

iStar Fin., Inc., 652 F.3d 141, 149 (2d Cir. 2011) (approximately $280,700);

Mercado-Berrios v. Cancel-Alegria, 611 F.3d 18, 20 (1st Cir. 2010) ($213,000);

Craig Outdoor Advert., Inc. v. Viacom Outdoor, Inc., 528 F.3d 1001, 1020 (8th

Cir. 2008) ($250,000 total); Clark, 436 F.3d at 606 ($235,629.13); Casillas-Diaz,

52 Case: 17-11447 Date Filed: 01/09/2020 Page: 53 of 77

463 F.3d at 80 ($250,000 awarded to the second of two plaintiffs); Farfaras v.

Citizens Bank & Tr. of Chicago, 433 F.3d 558, 560 (7th Cir. 2006) ($200,000);

Stamathis v. Flying J, Inc., 389 F.3d 429, 433 (4th Cir. 2004) ($250,000); DiSorbo

v. Hoy, 343 F.3d 172, 186 (2d Cir. 2003) ($250,000); Zimmerman v. Direct Fed.

Credit Union, 262 F.3d 70, 72 (1st Cir. 2001) ($200,000); Watkins, 169 F.3d at 543

($235,000); Pavon v. Swift Transp. Co., 192 F.3d 902, 906 (9th Cir. 1999)

($251,218); Barnes v. Logan, 122 F.3d 820, 821 (9th Cir. 1997) ($261,561);

Mathie v. Fries, 121 F.3d 808, 810 (2d Cir. 1997) ($250,000); Cont’l Trend Res.,

Inc. v. OXY USA Inc., 101 F.3d 634, 635 (10th Cir. 1996) ($269,000).

The punitive damages awards were vacated in six of these cases, Clark, 436

F.3d at 608, DiSorbo, 343 F.3d at 189, Watkins, 169 F.3d at 547, Mathie, 121 F.3d

at 817, Cont’l Trend Res., 101 F.3d at 643, Mercado-Berrios, 611 F.3d at 30, and

upheld in nine, C.R. Bard, 810 F.3d at 918, Thomas, 652 F.3d at 149–50, Craig

Outdoor Advert., 528 F.3d at 1021, Casillas-Diaz, 463 F.3d at 86, Farfaras, 433

F.3d at 560, Stamathis, 389 F.3d at 433, Zimmerman, 262 F.3d at 72, Pavon, 192

F.3d at 910, Barnes, 122 F.3d at 825. The majority of the affirmed cases involved

ratios of 2:1 or less. Casillas-Diaz, 463 F.3d at 86 (2:1 as to the second of two

plaintiffs); Zimmerman, 262 F.3d at 82 (2:1); Pavon, 192 F.3d at 910 (1.2:1);

Stamathis, 389 F.3d at 443 (1.4:1); Barnes, 122 F.3d at 821, 824 (approximately

1:1); Farfaras, 433 F.3d at 560, 567 (0.5:1). Only two of these cases had ratios

53 Case: 17-11447 Date Filed: 01/09/2020 Page: 54 of 77

higher than 2:1, and both of them were lower than the ratio in this case. Craig

Outdoor Advert., 528 F.3d at 1020 (8:1); C.R. Bard, 810 F.3d at 931 (7:1). As to

the cases in which the punitive damages award was vacated, two involved ratios

close to the ratio in this case. See Clark, 436 F.3d at 605–06 (approximately 13:1);

Watkins, 169 F.3d at 546 (approximately 15:1).

The last case, Watkins suggests that the punitive damages award in this case

is unconstitutionally excessive. In Watkins, the plaintiffs sued the defendants for

breach of contract and fraud regarding a sale of land. Watkins, 169 F.3d at 542.

Although the defendants agreed to a settlement, they refused to make any

payments in accordance with the settlement or comply with the agreement’s other

terms. Id. In addition, the property the defendants used as security for the

agreement “turned out to be worthless.” Id. The Eighth Circuit stated that it could

fairly be inferred “based on previous conduct, conduct during the settlement, and

subsequent conduct, that [one of the defendants] induced the settlement agreement

knowing he would never pay any amount.” Id. at 546. Moreover, the defendant

gave worthless property as security, made false assurances, and repeatedly

attempted to avoid and delay his obligations to the plaintiffs. Id. The district court

found that the defendant “engaged in a pattern, practice or scheme characterized by

fraud and deceit.” Id. (quotation marks omitted). The Eighth Circuit agreed that

54 Case: 17-11447 Date Filed: 01/09/2020 Page: 55 of 77

the defendant’s conduct was reprehensible, but was “not persuaded that the award

should exceed a 4-to-1 ratio.” Id. at 546–47.

In this case, by contrast, Defendant did not intentionally engage in fraud or

deceit. At worst, it acted with reckless disregard for its obligations under the

FCRA. Yet, notwithstanding the greater reprehensibility of the Watkins

defendant’s conduct, the Eighth Circuit concluded that the punitive damages award

should not exceed a 4:1 ratio. Id.

D. Determination of the constitutionality of the present award

Trying to extrapolate guiding principles from the caselaw is a migraine-

inducing exercise, as the dissection of the above cases well reveals. Instead of a

firm, fixed mathematical formula for assessing whether a particular punitive

damages award is so grossly excessive as to violate a defendant’s due process

rights, we instead have guidelines that are so flexible as to almost lose their status

as an objective standard. At bottom, the problem is not that that the particular

guidelines for determining reprehensibility are not reasonable—they are quite

sensible—but that the caselaw thus far has provided no consistent means of

monetizing those guidelines. For example, what is a low level of reprehensible

conduct as compared to a high level, and how do we monetize those degrees of

reprehensibility, and the resulting harm, to determine when a punitive damages

award is grossly excessive, versus just slightly excessive? In figuring out whether

55 Case: 17-11447 Date Filed: 01/09/2020 Page: 56 of 77

the ratio between punitive and compensatory damages is too high, how do we

gauge whether the compensatory damages award is for a “significant” amount of

money (which calls for a lower ratio between the two types of damages) or—if we

deem the compensatory damages to be insignificant—whether the underlying

conduct was “egregious” enough to allow us to reject the 4:1 ratio-guideline

suggested by the Supreme Court? Cf. Williams v. ConAgra Poultry Co., 378 F.3d

790, 799 (8th Cir. 2004) (“It is not that [a high] ratio violates the Constitution.

Rather, the mathematics alerts the courts to the need for special justification.”).

In reversing a punitive damages award of $3 million and holding that those

damages should not have exceeded a 1:1 ratio to a $582,000 compensatory

damages award, the Seventh Circuit recently elaborated on the flexible and inexact

approach that a reviewing court must take in evaluating a due process challenge to

a punitive damages award:

The disparity guidepost is not a mechanical rule. The court must calculate the ratio to frame its analysis, but the ratio itself does not decide whether the award is permissible. The answer might be yes, despite a high ratio, if the probability of detection is low, the harms are primarily dignitary, or if there is a risk that limiting recovery to barely more than compensatory damages would allow a defendant to act with impunity. It might be no, even with a low ratio, if the acts are not that reprehensible and the damage is easily or already accounted for. Rather than simply move numbers around on a verdict form to reach a single- digit ratio, courts should assess the purpose of punitive damages and the conduct at issue in order to evaluate the award.

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Saccameno v. U.S. Bank Nat’l Ass’n, 943 F.3d 1071, 1089–90 (7th Cir. 2019)

(citations omitted).

Stated less elegantly, it is ultimately up to the reviewing court to eyeball the

punitive damages award and, after weighing the egregiousness of the particular

misconduct and the harm it has caused, decide whether the award is grossly

excessive. As a practical matter, the elasticity of the guidelines means that each

court’s decision will be very fact-specific and that it may yield few overarching

principles that can be applied to future cases.

Yet, we cannot throw up our hands in frustration just because the exercise is

so imprecise. In the first place, the Supreme Court has advised us that we must

pursue this inquiry when a punitive damages award is challenged as being

unconstitutional. As the Supreme Court has noted, a punitive damages award can

be so out of whack that it screams a violation of due process, and we are obliged to

make that assessment. And it is only through the development of caselaw that

more defined principles can emerge. Plus, reviewing courts at least have some

guidelines to follow. In contrast, juries are often left to pick a number out of the

sky, tethered to nothing more than the jury’s emotional reaction to the misdeed of a

corporation with deep pockets.19 With the above caveats, we embark on an

19 The instructions to the jury here included no definition of reprehensibility or any mention of the factors that the Supreme Court has said should inform a decision as to whether the defendant’s conduct was sufficiently reprehensible to warrant punitive damages. 57 Case: 17-11447 Date Filed: 01/09/2020 Page: 58 of 77

analysis of the punitive damages award in this case. We conclude that it is

1. Application of the above principles to this case

As noted, the Supreme Court in Gore set out two guideposts that are relevant

here in determining whether the defendant was on fair notice of the severity of

punishment that might be imposed for its misconduct: (1) the degree of

reprehensibility of the defendant’s conduct and (2) the disparity between the harm

suffered by the plaintiff and the punitive damages award.

The jury in this case awarded Plaintiff $250,000 in compensatory damages

and $3.3 million in punitive damages. As to the degree of disparity between the

punitive damages award and the harm to Plaintiff, the above figures represent a

13.1 ratio between the punitive and compensatory damages. The Supreme Court

has stated that a 4:1 ratio will typically be close to the line of constitutional

propriety and that few awards exceeding a single-digit ratio to a significant degree

will satisfy due process. The 13:1 ratio here obviously violates those benchmarks.

While the Supreme Court has made clear that its suggested benchmarks do not

create a binding rule and that each case should be considered on its own facts, we

will assume this 4:1 ratio to be a default position for purposes of framing our

analysis.

58 Case: 17-11447 Date Filed: 01/09/2020 Page: 59 of 77

We therefore turn back to an assessment of the reprehensibility of

Defendant’s conduct to determine whether a greater ratio is necessary in this case

to achieve the goals of punitive damage: punishment and deterrence. Given the

amount of compensatory damages awarded to Plaintiff, we conclude that

Defendant’s conduct was not reprehensible enough to justify a ratio higher than

4:1, meaning that the jury’s verdict amount involving a much higher ratio was

As noted, the jury reasonably found that Defendant willfully violated the

FCRA by knowingly or recklessly failing to follow reasonable procedures to assure

the maximum possible accuracy of the information included in its criminal

background reports, and specifically in its preparation of Plaintiff’s two reports.

As to punitive damages based on this willful violation, Plaintiff met three of the

five Gore factors used to gauge a defendant’s level of reprehensibility. We

therefore conclude that Defendant’s conduct was reprehensible enough to warrant

the imposition of punitive damages. Yet, while Defendant’s conduct was

sufficiently reprehensible to support an award of punitive damages, it was not, in

the grand scheme of things, severely reprehensible.

To recap, Defendant’s procedures were deemed unreasonable as to both

reports because, contrary to its own formal policy concerning the preparation of a

criminal background report for a person with a common name, its actual practice

59 Case: 17-11447 Date Filed: 01/09/2020 Page: 60 of 77

permitted the use of only two, instead of three, identifiers. In this case, the

Plaintiff and the person whose criminal record was wrongly attributed to Plaintiff

(1) had the same last name and the same or similar first name (Richard versus

Ricky) and (2) the same date of birth. In its willingness to use only two identifiers

to attribute public information to the subject of an investigation bearing a common

name, Defendant should have known that there would be occasions when a subject

would be wrongly tagged with another person’s criminal record, even if those

occasions might be relatively infrequent. In other words, Defendant should have

envisioned that, every now and then, there could be two people living in the same

state, with the same name and the same date of birth.

In mitigation, Defendant argues that its overall error rate between 2010 and

2013 was quite low, which is true: the rate nationally for all types of errors

identified through the dispute resolution process, not just the ones involved in this

case, was only 0.38%. But as Plaintiff points out, given the large number of

reports issued, even this low rate ensnared over 13,000 people during this time

period. Plaintiff, however, never showed how many of the erroneous reports

generated for these 13,000+ people arose from use of an inadequate common-name

procedure. So, it is impossible for us, on this record, to assess the extent of the

notice to Defendant that its practices were resulting in the dissemination of

incorrect reports.

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The second report issued in 2013 involved an additional and even less

forgivable lapse by Defendant. After issuing its first report in 2012, Defendant

was alerted that it had incorrectly identified Plaintiff Richard A. Williams as being

the “Ricky” Williams who had been charged with two counts of drug distribution

in 2009. One might reasonably assume that having been made aware of this error,

Defendant would take measures to prevent any future attribution of Ricky

Williams’ public records to Plaintiff Richard A. Williams. And indeed Defendant

did have mechanisms in place to prevent any further attribution of the 2009 drug

distribution charges to Plaintiff so that when the time came to issue a second report

in 2013, these 2009 charges never appeared on this 2013 report. But Defendant’s

automated system lacked the technical capability to ensure that other criminal

charges against Ricky Williams—existing then or in the future—that had not

appeared in the earlier report would be blocked from attribution to Plaintiff. And

that is what happened here: once again, utilizing only two identifiers, Defendant

deemed Ricky Williams to be the same person as Plaintiff and the former’s 2004

convictions for assault and battery—which were not blocked because they had not

been included in the 2012 background report—found their way into Plaintiff’s

2013 background report.20

20 After the subject of a background report successfully disputes Defendant’s inclusion on his report of another person’s criminal charge, Defendant’s blocking protocol will prevent that specific criminal charge from appearing on future reports prepared for the consumer. But other 61 Case: 17-11447 Date Filed: 01/09/2020 Page: 62 of 77

As for Defendant’s awareness of the inadequacy of its blocking procedure,

Plaintiff has failed to bore down into the numbers to disclose how many of the

misattributions by Defendant of another person’s criminal record involved a

second mistake, such as happened here. Given Plaintiff’s absence of proof, we

have no idea whether this kind of occurrence happened a lot or rarely. And a high

frequency of this type of occurrence is something that Plaintiff should have seized

on and proved at trial if he wanted to justify an award of extraordinarily high

punitive damages.21 Yet, Plaintiff failed to do so. Notably, Plaintiff referenced as

a basis for punitive damages both the common-name practice that led to the errors

in both reports and the blocking failure that contributed to the error in the second

report, but Plaintiff understandably relied on this second error as an aggravating

factor that warranted the award of substantially more damages for this second

report than for the first report.22 Plaintiff’s failure to provide some context for the

charges against the same person wrongly identified as the subject may show up on the latter’s future reports if, for example, (1) Defendant simply missed the other charges in preparing the earlier report, (2) the person sustains additional criminal charges after the earlier report was prepared, or (3) the prospective employer authorizing the second background investigation has requested that Defendant use broader time parameters when conducting its investigation. 21 Plaintiff’s counsel asked the jury to award between 1 million and 3.3 million dollars in punitive damages. The jury went high, with a 3.3 million dollar award. 22 In arguing for compensatory damages, Plaintiff’s counsel suggested that the jury should award Plaintiff $100,000 in non-economic compensatory damages for the first erroneous match in the 2012 report and $275,00 for the second mismatch in the 2013 report. In other words, Plaintiff deemed the errors leading to the second erroneous report as representing 73% of the damages Plaintiff was requesting. 62 Case: 17-11447 Date Filed: 01/09/2020 Page: 63 of 77

frequency of this second type of error, however, weakens his case for the

extremely high punitive damages he was awarded in this case.

Obviously, no cheers are due Defendant. Defendant should have done a

better job, and it must pay a price for its lapses. But when one is attempting to

monetize how much a defendant should be punished for its conduct, the extent to

which the Defendant has acted with the knowledge that its conduct will harm the

plaintiff—and thereby with the imputed intent to do so—is an important factor.

Indeed, the cases with similar ratios on which our Court has affirmed the punitive

damages award involved intentional conduct. Plaintiff failed to show that

Defendant’s conduct, while reckless, was so reckless as to imply an intent to create

this harm, or that the conduct demonstrated the same degree of intent found in

those cases whose punitive damages we have affirmed. And a defendant’s intent

plays an important role in gauging the extent of the reprehensibility.

In that vein, we contrast Defendant’s conduct with that of the defendant in

McGinnis, whose punitive damages award of $3 million was close in amount to the

$3.3 million award in this case. In McGinnis, the jury awarded the plaintiff

$506,000 in compensatory damages and $3 million in punitive damages, which

translates to a ratio of 5.9:1. See McGinnis, 901 F.3d at 1290. In affirming the

award of punitive damages, we noted the “high degree of reprehensibility” in the

defendant’s conduct: a degree of reprehensibility not present here. As noted

63 Case: 17-11447 Date Filed: 01/09/2020 Page: 64 of 77

above, the defendant in McGinnis tormented the plaintiff with unceasing,

unexplained, and unwarranted increases in monthly mortgage payments,

accompanied by a stubborn refusal to respond to the plaintiff’s repeated frantic

pleas and culminating in the defendant’s efforts to foreclose on her property. In

finding a high degree of reprehensibility, the McGinnis panel noted that the

plaintiff had demonstrated all five of the Gore factors used to gauge

reprehensibility and that the jury had found that the defendant acted with a specific

intent to harm the plaintiff. Id. at 1292–93. Nothing of that kind occurred in this

case. Here, while Defendant’s protocols were markedly lackluster, Defendant

quickly corrected both of its reports when Plaintiff informed Defendant of its error.

In short, considering all the above facts, a $3.3 million punitive damages

award, on top of $250,000 in compensatory damages,23 is a startling amount of

money. We cannot infer that Defendant would have been on notice that its

practices, slack though they were, would result in this level of punishment for a

single plaintiff’s injuries. That a $3 million punitive damages award, representing

a 5.9:1 ratio between punitive and compensatory damages, met constitutional

23 Indeed, as Plaintiff had only claimed that his economic damages were approximately $78,000, Defendant argues that a goodly portion of the remaining $172,000 could also be considered as intended to punish the defendant. See State Farm, 538 U.S. at 426 (holding that to the extent compensatory damages are based on the infliction of emotional distress, such “[c]ompensatory damages . . . already contain this punitive element,” and citing the Restatement of Torts for the proposition that “[i]n many cases in which compensatory damages include an amount for emotional distress . . . there is no clear line of demarcation between punishment and compensation . . . .”). 64 Case: 17-11447 Date Filed: 01/09/2020 Page: 65 of 77

muster in McGinnis does not suggest that the $3.3 million punitive award—

representing a 13:1 ratio—should likewise do so on the facts here. We conclude

that application of a 4:1 ratio, which would reduce the punitive damages from $3.3

million to $1 million and yield a total award of $1,250,000, does pass

constitutional muster. Such an award is sufficient to punish Defendant for its

conduct and to deter future such misconduct.

While this reduction will surely disappoint Plaintiff, the extent of the

reduction will also leave Defendant unhappy because Defendant contends that the

ratio here should be no more than 1:1. Defendant relies on the Supreme Court’s

advice that when substantial compensatory damages have been awarded, a punitive

award that exceeds that compensatory amount may sometimes be deemed

unconstitutionally excessive. The notion underlying that principle is an awareness

that a defendant may not much care how one characterizes the money it is required

to pay; it cares about how much money it is out. Thus, if a plaintiff has already

been awarded a substantial compensatory award, the defendant has already been

punished—and, correspondingly, deterred—and a higher amount of punitive

damages will be unnecessary to get the defendant’s attention.

Defendant strongly relies on the Seventh Circuit’s recent decision in

Saccameno v. U.S. Bank National Association in support of its position that the

punitive damages award here should be in line with a 1:1 ratio. In Saccameno,

65 Case: 17-11447 Date Filed: 01/09/2020 Page: 66 of 77

much like McGinnis, the plaintiff was plagued by a home mortgage servicer who

repeatedly claimed that the plaintiff was in default when she was actually current

with her payments, who was obstinate in its refusal to correct its records, and who

even began unwarranted foreclosure proceedings. Saccameno, 943 F.3d at 1078–

81. This bureaucratic nightmare lasted for months, with the plaintiff able to gain

the defendant’s attention only when she filed the lawsuit at issue. Id. at 1080. The

jury awarded the plaintiff $582,000 in compensatory damages and $3 million in

punitive damages, for a roughly 5:1 ratio. Id. at 1081.

On the facts of the case before it, the Seventh Circuit deemed the punitive

damages award too steep to pass constitutional muster. Id. at 1086. The court

noted the Supreme Court’s admonition that a “substantial” compensatory award

may merit a ratio closer to 1:1. Id. at 1090. And the court concluded that a

$582,000 compensatory award, based largely on emotional distress, was indeed a

“considerable” award for what was an “indifferent, not malicious, mistreatment of

a single $135,000 mortgage.” Id. With such a generous compensatory award, the

Seventh Circuit concluded that a ratio no higher than 1:1 was necessary to meet

constitutional muster. Id. Indeed, had the defendant’s conduct been “truly

egregious,” the court might have considered a 5:1 ratio to be warranted. See id. In

the case before it, however, the court considered a $582,000 compensatory award

“for the indifferent, not malicious,” misconduct to be “a considerable”

66 Case: 17-11447 Date Filed: 01/09/2020 Page: 67 of 77

compensatory award. Id. And citing the Supreme Court’s decision in State Farm,

the Seventh Circuit concluded that nearly all of the compensatory award in its case

“reflects emotional distress damages that already contain a punitive element.” Id.

(alteration accepted) (quotation marks omitted).

Given all the above, the Seventh Circuit determined that the ratio in the case

before it should not exceed 1:1, meaning the punitive damages award should not

have exceeded $582,000. Id. The court acknowledged that we had, in McGinnis,

“a factually similar case,” permitted a $3 million punitive award. Id. at 1088. But

it distinguished McGinnis, noting that the jury in that case had found a specific

intent to harm and that the McGinnis court had concluded that all five Gore factors

were present, whereas in its case, only three factors were present. Id.

Based on Saccameno, must we conclude here that only a 1:1 ratio, yielding

$250,000 in punitive damages, meets constitutional muster? We think not. First,

while the Saccameno decision is well reasoned, the Seventh Circuit does not

consider emotional distress to constitute proof of the first Gore factor; our Court

does.24 Second, the compensatory damages award deemed to be “significant” in

Saccameno was more than $500,000; the compensatory award here was $250,000.

24 In McGinnis, relying on earlier case authority, we found that the plaintiff had shown the existence of the first Gore reprehensibility factor, which looked to whether the harm caused was physical as opposed to economic, to be satisfied by the plaintiff’s emotional distress. The Seventh Circuit does not consider “mental deterioration,” such as depression, anxiety, and panic disorders to constitute a physical injury for purposes of the first factor. Id. at 1086. 67 Case: 17-11447 Date Filed: 01/09/2020 Page: 68 of 77

Although $250,000 is certainly a great deal of money, it is below the level that

several out-of-circuit decisions have identified as a substantial award for purposes

of the 1:1 ratio inquiry, albeit “[w]hat counts as substantial depends on the facts of

the case.” Id. at 1090 (collecting cases that have indicated a particular amount of

compensatory damages to be substantial and thereby warranting a 1:1 ratio).

Third, the Seventh Circuit focused largely on the harm the mortgage company

visited on this one debtor-plaintiff by its indifferent and careless treatment of the

plaintiff’s account. Here, although Plaintiff failed to develop the statistical

information enough to fully illuminate the extent to which Defendant’s protocols

led to the erroneous attribution of criminal records to background report subjects,

Defendant itself was aware that its actual practices could lead, and had led, to

inaccurate results, as these practices were at odds with its own formal

acknowledgment that three identifiers should be used for subjects with common

names. Further, it does not require a great deal of imagination for a consumer

reporting agency to predict that if it has once mismatched an individual with a

criminal record not his own, the same mistake could repeat itself in the future,

absent some effective mechanism used by the agency to prevent that reoccurrence.

A punitive damages award must be sufficient to not only punish Defendant,

but also to deter it from continuing to apply slipshod protocols in pursuing its

background investigations. We cannot be confident that a punitive damages award

68 Case: 17-11447 Date Filed: 01/09/2020 Page: 69 of 77

of only $250,000 would be strong enough medicine to fully gain Defendant’s

attention. Finally, we are mindful that it is only those punitive damages awards

that are grossly excessive that are unconstitutional. That being so, we think it

prudent to err on the side of endorsing an amount that might seem a bit

excessive—and indeed might be more than what we would have imposed had we

been jurors—so long as it is not a grossly excessive amount.

“Although there is no algorithm that yields a precise figure,” Kemp, 393

F.3d at 1365, we conclude that, under the facts of the case, $1 million—which is

four times the compensatory damages—reaches the upper limit of the due process

guarantee. Any more than this “would prove an unconstitutional windfall.” Id.

CONCLUSION

The district court did not err in denying Defendant’s motion for judgment as

a matter of law, or, in the alternative, motion for a new trial or remittitur, to the

extent Defendant challenged the sufficiency of the evidence regarding reputational

harm and willfulness. We conclude, however, that the punitive damages award in

this case violated due process and we remand the case with instructions that the

district court reduce the award to $1 million. 25

25 In Gore and State Farm, the Supreme Court remanded the cases for “further proceedings not inconsistent with [the] opinion[s].” State Farm, 538 U.S. at 429; Gore, 517 U.S. at 586. Because the record is fully developed in this case, however, we conclude that it is appropriate to remand with instructions for the district court to remit the award to a specific amount, which we have determined is the highest amount that would comply with due process.

69 Case: 17-11447 Date Filed: 01/09/2020 Page: 70 of 77

AFFIRMED IN PART; REVERSED IN PART; REMANDED.

70 Case: 17-11447 Date Filed: 01/09/2020 Page: 71 of 77

MARTIN, Circuit Judge, concurring:

I read the Majority opinion to be within the bounds of Supreme Court

precedent governing punitive damages. I admire the Majority’s thorough

investigation into precedent governing punitive damages and its candor in

recognizing that what it ultimately does is “eyeball the punitive damages award,”

weigh the misconduct that resulted in the punitive damages award against the harm

caused, and then decide whether we, as judges, think the award is “grossly

excessive.” Maj. Op. at 57. If left to me, I would not say that the jury’s award of

$3.3 million to Mr. Williams is “grossly excessive.” Neither would I say, as a

matter of law, that the 13-1 ratio of punitive damages to compensatory damages

awarded to Mr. Williams “violates th[e] benchmarks” established by the Supreme

Court for evaluating punitive damage awards. Id. at 58. After all, the Supreme

Court has repeatedly declined to impose a bright-line ratio which a punitive

damages award cannot exceed. See State Farm Mut. Auto. Ins. Co. v. Campbell,

538 U.S. 408, 425, 123 S. Ct. 1513, 1524 (2003); Pac. Mut. Life Ins. Co. v. Haslip,

499 U.S. 1, 18, 111 S. Ct. 1032, 1043 (1991) (“[We] need not, and indeed we

cannot, draw a mathematical bright line between the constitutionally acceptable

and the constitutionally unacceptable that would fit in every case.”). But our court

decides these cases by panels of three. And just as it is true that I would not say a

13-1 ratio of punitive to compensatory damages “violates th[e] benchmarks” set by

71 Case: 17-11447 Date Filed: 01/09/2020 Page: 72 of 77

the Supreme Court for determining whether a punitive damages award is

unconstitutionally excessive, neither can I say that the result reached by the

Majority violates those benchmarks. For that reason, I concur in the result reached

by the Majority.

72 Case: 17-11447 Date Filed: 01/09/2020 Page: 73 of 77

O’SCANNLAIN, Circuit Judge, concurring:

While I concur in Judge Carnes’s opinion remitting the punitive award to 1

million dollars, I write separately to explain why punitive damages even above

$500,000 might well be “grossly excessive.” State Farm Mut. Auto. Ins. Co. v.

Campbell, 538 U.S. 408, 416 (2003). From time to time, each member of a three-

judge panel will form a conclusion that differs from the two others. The only way

to resolve such a disagreement is to meet in the middle—as we have done.

I

We limit punitive awards because “[e]lementary notions of fairness

enshrined in our constitutional jurisprudence dictate that a person receive fair

notice not only of the conduct that will subject him to punishment, but also of the

severity of the penalty that a State may impose.” BMW of N. Am., Inc. v. Gore,

517 U.S. 559, 574 (1996). When courts are faced with a constitutional challenge

to the amount of punitive damages, the essential question is what constitutes the

most severe penalty for which the defendant received fair notice. Without a

comparable civil penalty, a defendant can reasonably expect that punitive damages

will approximate those awarded in similar cases.

II

I agree with Judge Carnes that the “3.3 million dollar award was

unconstitutionally excessive.” Yet, the precedents collected by Judge Carnes Case: 17-11447 Date Filed: 01/09/2020 Page: 74 of 77

suggest that First Advantage would only have fair notice of exposure to punitive

damages of up to about $500,000, two times the $250,000 compensatory damages.

She cites fifteen challenges to a punitive award where the compensatory award was

between $200,000 and $300,000. In seven of the nine cases in which the punitive

award was affirmed, the ratio of punitive-to-compensatory damages was 2:1 or

less.1

Furthermore, the six cases in which the circuit court vacated the punitive

damages award offer even stronger support for a $500,000 limit in this case. In

four such cases, the punitive award was remitted to $500,000 or less. See

Mercado-Berrios v. Cancel-Alegría, 611 F.3d 18, 30 (1st Cir. 2010) (remitting to

$500,000); Clark v. Chrysler Corp., 436 F.3d 594, 612 (6th Cir. 2006)

($471,258.26); Mathie v. Fries, 121 F.3d 808, 817 (2d Cir. 1997) ($200,000);

DiSorbo v. Hoy, 343 F.3d 172, 189 (2d Cir. 2003) ($75,000). The two such cases

with larger punitive damages dealt with conduct that was significantly more

reprehensible than that at issue here. See Cont’l Trend Res., Inc. v. OXY USA Inc.,

101 F.3d 634, 638, 643 (10th Cir. 1996); Watkins v. Lundell, 169 F.3d 540, 546–47

(8th Cir. 1999).

1 The other two cases are distinguishable. In one case, an 8:1 ratio was affirmed because the conduct was “particularly egregious.” Craig Outdoor Advert. v. Viacom Outdoor, Inc., 528 F.3d 1001, 1020 (8th Cir. 2008). In the other case, a 7:1 ratio was affirmed because the defendant failed to challenge the district court’s reprehensibility findings. In re C.R. Bard, Inc., 810 F.3d 913, 931 (4th Cir. 2016). 74 Case: 17-11447 Date Filed: 01/09/2020 Page: 75 of 77

Indeed, the range of levels down to which the circuit courts remitted the

punitive damages can be accounted for by the varying degrees of reprehensibility

of each defendant’s conduct, a factor that is the “most important” consideration in

determining the limit on punitive damages. Gore, 517 U.S. at 575; see also Bogle

v. McClure, 332 F.3d 1347, 1360 (11th Cir. 2003). As Judge Carnes discusses, and

I agree, First Advantage’s behavior was neither malicious nor indifferent to health

and safety, and there is insufficient evidence that the wrongful conduct at issue in

this case has been frequently repeated. Instead, the degree of reprehensibility in

this case depends on two factors: Richard Williams’s financial vulnerability and

the fact that he suffered physical symptoms of emotional distress, such as

diminished appetite or insomnia. Judge Carnes compares this case to Watkins, in

which the court remitted the punitive award to $940,000 for a 4:1 ratio. 2 Watkins,

169 F.3d at 547. Yet, as Judge Carnes concedes, the district court found that the

Watkins defendant “engaged in a pattern, practice or scheme characterized by fraud

or deceit,” several degrees more reprehensible than First Advantage’s conduct. Id.

2 Judge Carnes regards such a 4:1 ratio as a “default” constitutional limit on punitive damages. The Supreme Court has not called a 4:1 ratio a default, but the Supreme Court has acknowledged the long English tradition of statutes that sanctioned conduct with double, treble, or—at most— quadruple damages. See Gore, 517 U.S. at 581; State Farm, 538 U.S. at 425. Such a tradition could give a potential defendant notice that punitive damages may rise as high as four times actual damages, at least insofar as the sanctioned conduct is analogous to conduct sanctioned by such quadruple-damages statutes. Yet, traditional statutes are only one source among many for the severity of sanction First Advantage could have expected. The recent practice of the federal courts faced with comparable conduct might well offer stronger evidence. 75 Case: 17-11447 Date Filed: 01/09/2020 Page: 76 of 77

(quotation marks omitted). At worst, First Advantage’s conduct is comparable to

that at issue in Clark, in which the defendant’s conduct caused the death of the

plaintiff even though it was neither malicious nor indifferent to health and safety.

Clark, 436 F.3d at 601–05. I suggest that the roughly $500,000 in punitive

damages awarded in Clark is the most that First Advantage could reasonably

expect to have been punished.

Additional considerations counsel against permitting a punitive award above

$500,000. First, if we set aside the question of the punitive-to-compensatory ratio

and simply examine the punitive award, this court has already held that punitive

damages greater than $250,000 “would prove an unconstitutional windfall,”

despite the fact that the defendant in that case was at once more reprehensible and

less likely to be deterred by a $250,000 punishment than is First Advantage. Kemp

v. AT&T, 393 F.3d 1354, 1365 (11th Cir. 2004). Second, only $78,272 of the

$250,000 compensatory award in this case could have been for economic damages;

the bulk of the compensatory award was noneconomic damages for emotional

distress or reputational harm. The Supreme Court has instructed us that such

noneconomic damages “already contain [a] punitive element.” State Farm, 538

U.S. at 426. Thus, even if punitive damages were remitted to $500,000, damages

containing a “punitive element” ($671,728) would still equal 8.6 times the

maximum economic damages ($78,272). Such considerations, I suggest,

76 Case: 17-11447 Date Filed: 01/09/2020 Page: 77 of 77

strengthen the conclusion that $500,000 in punitive damages might well constitute

the “outermost limit of the due process guarantee.” Id. at 425.

III

Notwithstanding such observations, I am pleased to concur in Judge

Carnes’s opinion.