Shelley Pritchett v. State of New Jersey (084451) (Mercer County & Statewide)

• Court: Supreme Court of New Jersey
• Decided: August 12, 2021
• Docket: A-5-20
• Status: Published

Opinion

SYLLABUS

This syllabus is not part of the Court’s opinion. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Court. In the interest of brevity, portions of an opinion may not have been summarized.

Shelley Pritchett v. State (A-5-20) (084451)

Argued March 1, 2021 -- Decided August 12, 2021

LaVECCHIA, J., writing for a unanimous Court.

In this appeal, the Court considers the standards to be applied by a trial court when reviewing a jury award of punitive damages against a public entity.

Plaintiff Shelly Pritchett worked for the Juvenile Justice Center (JJC), which runs the state’s juvenile correctional facilities. She was diagnosed with multiple sclerosis. When her second request for unpaid leave was denied, her supervisor refused to explain the denial or put the denial in writing. On November 1, 2011, Pritchett learned that she would be subject to disciplinary proceedings -- which would result in her termination without a pension -- if she did not resign by the end of the week. Pritchett applied for retirement disability benefits on November 4. Weeks later, her union representative informed the JJC that Pritchett believed she was forced into retirement against her will. The JJC’s Equal Opportunity Office expressed its opinion that the JJC “failed to engage in the interactive process,” which “resulted in a violation of the State Anti-Discrimination Policy,” but opined that Pritchett’s “request for reinstatement [was] mooted by [her] approval for disability retirement.”

Pritchett filed a complaint alleging the State violated the New Jersey Law Against Discrimination (LAD). The jury awarded Pritchett compensatory damages in excess of $1.8 million and punitive damages of $10 million, and the State challenged the punitive damages award. The trial court determined that the punitive damages amount was high but that no miscarriage of justice occurred. The Appellate Division affirmed in large part but remanded for reconsideration of the punitive damages award, calling upon the trial court to consider the factors discussed in Baker v. National State Bank, 161 N.J. 220 (1999), and BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996).

The State petitioned for certification, arguing that the Appellate Division’s remand instructions were flawed in part because they failed to include direction to the trial court, consistent with this Court’s holding in Lockley v. Department of Corrections, 177 N.J. 413 (2003), to apply heightened scrutiny when reviewing awards of LAD punitive damages against public entities. The Court granted certification. 244 N.J. 154 (2020).

1 HELD: As the Appellate Division instructed, the trial court on remand must (1) substantially consider the factors advanced in BMW and incorporated into New Jersey law by Baker and (2) must “ensure that the measure of punishment is both reasonable and proportionate to the amount of harm to the plaintiff and to the general damages recovered,” in keeping with the guidance in State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408, 425-26 (2003). The Court modifies the Appellate Division’s instructions to add that the trial court -- and all trial courts reviewing a punitive damages award issued by a jury against a public entity defendant -- must also apply the heightened scrutiny called for in Lockley and underscored in the companion case of Green v. Jersey City Board of Education, 177 N.J. 434 (2003).

1. The Court reviews the history of punitive damages awards against public entities in LAD actions, from the establishment of requirements for punitive damages awards against private entities in LAD actions, see Lehmann v. Toys ‘R’ Us, Inc., 132 N.J. 587, 593, 624-25 (1993); to the Court’s initial three-three split over whether punitive damages may be recovered from a public entity for a claim against a public entity under the Conscientious Employee Protection Act, which split resulted in the affirmance in that matter of the Appellate Division’s allowance of such damages against the defendant, see Abbamont v. Piscataway Twp. Bd. of Educ., 138 N.J. 405, 417-19 (1994); to the first precedential holding by a majority of the Court that public entities are “liable for punitive damages under the [LAD],” see Cavuoti v. N.J. Transit Corp., 161 N.J. 107, 113-14 (1999). (pp. 16-23)

2. On the same day that Cavuoti issued, in another LAD action not involving a public entity, the Court, in Baker, assessed the effect of the Legislature’s adoption of the Punitive Damages Act (PDA), observing that the Act “requires that a court reviewing an award of punitive damages be satisfied that the award is ‘reasonable in its amount’ and is justified in the circumstances of the case ‘in light of the wrongful conduct.’” 161 N.J. at 229. Baker noted that “[a]lthough the PDA excludes LAD actions from its cap, its general requirements for procedural and substantive fairness are mandated”; the opinion also stressed that there are “substantive constitutional limits on the amount of punitive damages that a jury may award.” Ibid. Recognizing the three factors articulated in BMW for courts to consider when reviewing punitive damages awards -- “the degree of reprehensibility of the conduct that formed the basis of the civil suit; the disparity between the harm . . . suffered . . . and the plaintiff’s punitive damages award; and the difference between this remedy and the civil penalties . . . imposed,” see 517 U.S. at 575, -- the Baker Court instructed that courts “should apply both the requirements of the PDA (with the exception of the statutory cap) and the substantive standards of BMW v. Gore in order to ensure that any award of punitive damages bears ‘some reasonable relation’ to the injury inflicted.” Baker, 161 N.J. at 231. (pp. 23-26)

3. The Court singles out two matters of significance to this appeal: Lockley and Green. Lockley instructed “that the standards applied in private sector cases, with the exception 2 of those relating to the financial condition of the defendant, should be used” in assessing and reviewing punitive damages awards. Those standards include the PDA provisions for determining whether punitive damages are warranted in the first instance and for calculating the amount of such an award, as well as the Baker/BMW factors. 177 N.J. at 431-33. Importantly, Lockley cautioned trial courts that “the court’s responsibility to review awards of punitive damages for reasonableness is heightened when such damages are awarded against a public entity.” Id. at 433. In Green, which involved a CEPA claim against a public entity, the Court drew from Lockley and stressed that it “set rigorous standards for the calculation of punitive damages against a public entity, recognizing that ‘public monies are the source of the award.’” 177 N.J. at 444. (pp. 27-31)

4. There can be no doubt that punitive damages awards under the LAD are available against public defendants. The Court recognizes the continuing vitality of Lockley, as well as that of all the cases that led up to it and compelled its result. Interpreting the Legislature’s inaction following those decisions as acquiescence indicative of legislative intent to subject public entities to punitive damages under the LAD, the Court notes that further debate over that policy belongs in the legislative arena. (pp. 31-32)

5. The Court reviews the relevant mandates of the PDA and notes that, with respect to punitive damages assessed by a jury against a public entity defendant, the Court has imposed a unique and special duty. In addition to the PDA’s requirement that the amount calculated by the jury be reasonable, the court must adhere to Lockley’s instruction that the reasonableness assessment be subjected to heightened scrutiny. 177 N.J. at 433. The Court explains that the heightened scrutiny standard’s purpose is not simply to ensure that public entities are not treated worse than private entity defendants because certain PDA ability-to-pay factors are not presented to the jury, but rather because public funds are at stake. Further, the Court explains that the Baker and BMW factors are related to due process considerations and are not a substitute for Lockley’s direction for heightened trial-court review, which goes beyond keeping the award to the amount necessary to avoid transgressing due process and requires a more rigorous application of the factors to be considered when assessing the punitive damages award in the context of the factual circumstances of the wrong involved and the nature of the public entity defendant. Application of the Baker/BMW factors and those mentioned, and applicable, under the PDA are not independent assessments, but rather coalesce for a holistic assessment. See Lockley, 177 N.J. at 433. (pp. 32-36)

6. The Court finds the Appellate Division’s discussion of the Baker/BMW factors to be substantially correct. The Due Process Clause imposes outer limits on the allowable size of an award of punitive damages, and the Appellate Division appropriately instructed the trial court, on remand, to substantially consider the factors advanced in BMW and incorporated into New Jersey law by Baker. The first BMW consideration -- the reprehensibility of the conduct -- is “[p]erhaps the most important,” and the mental state or track record of the defendants speaks to the reprehensibility of the conduct. See 3 BMW, 517 U.S. at 575-77. The Appellate Division also correctly highlighted State Farm’s point that this analysis entails more than the rote application of bright-line ratios, a point that accords with the Legislature’s exemption of the LAD from the PDA’s cap on punitive damages. In sum, the Court affirms the Appellate Division’s instructions, as modified to correct the omission of the required heightened scrutiny by the trial court necessary in the case of a public sector defendant. (pp. 37-40)

AFFIRMED AS MODIFIED.

CHIEF JUSTICE RABNER and JUSTICES ALBIN, PATTERSON, FERNANDEZ- VINA, SOLOMON, and PIERRE-LOUIS join in JUSTICE LaVECCHIA’s opinion.

4 SUPREME COURT OF NEW JERSEY A-5 September Term 2020 084451

Shelley Pritchett,

Plaintiff-Respondent,

v.

State of New Jersey,

Defendant-Appellant.

On certification to the Superior Court, Appellate Division.

Argued Decided March 1, 2021 August 12, 2021

Peter G. Verniero argued the cause for appellant (Sills Cummis & Gross, attorneys; Peter G. Verniero, on the briefs).

Deborah L. Mains argued the cause for respondent (Costello & Mains, attorneys; Deborah L. Mains, on the brief).

Robert F. Renaud argued the cause for amici curiae New Jersey State League of Municipalities and New Jersey Institute of Local Government Attorneys (Renaud DeAppolonio, attorneys; Robert F. Renaud, on the brief).

Nancy Erika Smith argued the cause for amicus curiae New Jersey Association for Justice (Smith Mullin, attorneys; Nancy Erika Smith and Zachary Silverman, of counsel and on the brief).

1 Thaddeus P. Mikulski, Jr. submitted a brief on behalf of amicus curiae National Employment Lawyers Association of New Jersey (Thaddeus P. Mikulski, Jr., on the brief).

JUSTICE LaVECCHIA delivered the opinion of the Court.

Following a trial, a jury awarded plaintiff Shelley Pritchett more than

$1.8 million in compensatory damages for her employer’s violations of the

New Jersey Law Against Discrimination (LAD), N.J.S.A. 10:5-1 to -49, as

well as $10 million in punitive damages. The defendant State of New Jersey

appealed, and the Appellate Division affirmed in large part but remanded the

matter for the trial court to reconsider the punitive damages award, calling

upon the court to substantially consider the factors discussed by this Court in

Baker v. National State Bank, 161 N.J. 220 (1999), and the United States

Supreme Court in BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996).

The State argues that the Appellate Division’s remand instructions were

flawed because, among other reasons, they failed to include direction to the

trial court, consistent with this Court’s holding in Lockley v. Department of

Corrections, 177 N.J. 413 (2003), to apply heightened scrutiny when reviewing

awards of LAD punitive damages against public entities. Pritchett responds

2 that the remand instructions were adequate and that Lockley did not alter the

Baker/BMW analysis. Several amici also appeared before the Court.

We agree with the State that the Appellate Division’s remand

instructions require modification. In reviewing the punitive damages award,

the trial court failed to apply the heightened scrutiny called for in Lockley and

underscored in the companion case of Green v. Jersey City Board of

Education, 177 N.J. 434 (2003). The Appellate Division’s instructions did not

correct that inadequacy. While we commend the Appellate Division for

instructing the trial court to consider the Baker/BMW factors more fully, the

Appellate Division’s remand instructions should have also alerted the trial

court to the principles of Lockley and Green that apply in this matter.

We thus affirm the Appellate Division’s judgment with modification to

the remand instructions that must guide this trial court, and others, in the

review of a punitive damages award against a public entity.

I.

A.

The following facts were presented at the trial in this matter.

Pritchett was hired by the Juvenile Justice Center (JJC) in 2006. The

JJC runs the state’s juvenile correctional facilities and has approximately 400

employees at any given time. Pritchett worked as a corrections officer in a JJC

3 facility, and, by 2011, she held the title of Senior Corrections Officer. Her

duties included the responsibility to intervene when violence broke out among

inmates.

On June 8, 2011, Pritchett broke up a fight between two inmates. As a

result, she suffered injuries to her back, knee, and neck, went on Workers’

Compensation leave, and sought medical assistance.

In the fall of that year, Pritchett’s physician noticed that an MRI of

Pritchett’s spine revealed abnormalities unrelated to her workplace injuries.

Because of those abnormalities and Pritchett’s physical complaints, her

physician suspected that Pritchett was suffering from the early stages of

multiple sclerosis (MS). In a note dated September 17, 2011, her physician

wrote that Pritchett had recovered from her workplace injuries and could

return to work with no restrictions on their account, but the doctor

recommended that Pritchett ask for additional leave time to seek a diagnosis

and treatment for her underlying health issues and referred her to a neurologist .

Consistent with the physician’s recommendation, Pritchett submitted a

request for unpaid leave from her JJC position. Two days later, human

resources (HR) officers forwarded the request to the Acting Director of the

JJC, Captain Kelly Gibson, and to Pritchett’s direct supervisor, Lisa Quinto.

An internal email to Gibson indicates that HR had planned to approve the

4 request; however, Captain Gibson was against it. HR then turned for support

to Quinto, who, on September 27, emailed Gibson, telling him that Pritchett’s

“diagnosis is rather serious.” She went on, “[y]ou may wish to consider

approving this leave through November 1, 2011. This way we can write to her

now and advise her no further leave will be approved beyond November 1 and

if she is not medically cleared to return to work, she must resign.” Quinto

explained to Captain Gibson,

If you determine she must return to work now, based on the medical, there will be no way she can return and we really have not given her warning that management will not approve further leave beyond a request to extend. If she cannot return in November and does not resign, you will have a stronger case to take steps to remove her and be more readily able to defend the removal in an appeal setting. Since [it’s] only one plus month, we can give her fair warning she must return and then if she does not, you stand a much better chance of winning an appeal.

Nonetheless, Captain Gibson remained committed to denying Pritchett’s

request. HR then sought out the JJC’s Deputy Executive Director for

Operations, Felix Mickens, forwarding him Quinto’s exchange with Gibson

and adding that

[t]o deny leave at this point will surely result in a removal (she has a very serious diagnosis) which will be appealed and not upheld. She will not be able to return to work (she incurred a work-related injury which resulted in the discovery of an unrelated personal 5 medical condition) and we have not advised her management will not approve further leave. With removals we have established a winning defense. . . .

November is right around the corner -- management should approve leave through this date as the medical states -- we will write to her and say no further leave -- if she does not, or cannot return, she can resign [or] we can initiate removal for failure to return from an approved leave of absence.

Pritchett’s request was ultimately approved on October 11, granting her

unpaid leave through November 1, 2011, but the approval came with the

caveat that no further requests would be granted. She was informed that if she

did not return to work on November 2, she would be expected to resign.

On October 19, Pritchett was diagnosed with MS. She requested

additional leave time through February 29, 2012, with an expected return-to-

work date of March 1. Gibson and Quinto both denied the request in internal

emails. Upon receiving word of the denial, Pritchett telephoned Quinto, who

would not provide an explanation as to why the JJC denied Pritchett’s request.

Instead, she told Pritchett that the JJC was not obligated to give her a reason,

and then declined to put the denial in writing.

When November 1 came, Pritchett wrote to the JJC’s HR manager,

stating that she was not able to return to work, but that she did not want to

resign. Mickens answered the letter through Pritchett’s union representative,

telling her that Pritchett would be subject to disciplinary proceedings -- which 6 would result in her termination without a pension -- if she did not resign by the

end of the week. Pritchett submitted an application for retirement disability

benefits on November 4.

Thereafter, on November 21, Pritchett’s union representative contacted

the JJC’s Americans with Disabilities Act (ADA) coordinator, informing the

coordinator that Pritchett believed she was forced into retirement against her

will. The coordinator answered that since Pritchett had already resigned, it

was too late to engage in the ADA’s interactive process and advised Pritchett

to contact the JJC’s Equal Opportunity Office. When it responded to

Pritchett’s request for reinstatement, that Office expressed its opinion that the

JJC “failed to engage in the interactive process . . . . This failure to engage in

the interactive process resulted in a violation of the State Anti -Discrimination

Policy.” However, the Office agreed with the ADA coordinator that Pritchett’s

“request for reinstatement [was] mooted by [her] approval for disability

retirement.”

B.

1.

In October, 2013, Pritchett filed a complaint against the State of New

Jersey and unnamed John Does, alleging that the State violated the LAD by

failing to accommodate her disability and discriminating based on the

7 perception of disability. Following the State’s unsuccessful attempts to end

the matter through motion practice, the trial court conducted a jury trial in June

2017.

The trial resulted in the jury’s return of a liability verdict in favor of

Pritchett. The jury awarded compensatory damages totaling $1,824,911, which

consisted of $575,000 for emotional distress; $343,789 in back pay; $472,639

in front pay; and $433,483 in future pension benefits.

The next day, the court reconvened the jury for a proceeding on punitive

damages, during which the parties presented no new evidence. The jury’s

deliberations were brief, lasting from shortly after 2:00 p.m. until about 3:00

p.m.

The jury awarded Pritchett $10 million in punitive damages. All totaled,

the trial court entered a judgment of $12,015,384.44 for Pritchett. That

amount encompassed $78,367.65 in pre-judgment interest; $22,235.79 in costs;

$11,824,911 in compensatory and punitive damages; and $89,870 in attorneys’

fees.

2.

On September 29, 2017, the trial court heard argument from the parties

once more on the punitive damages awarded by the jury.

8 The State urged the court not to approve the jury’s punitive damage

award, contending that the JJC’s conduct “was not especially egregious,” that

the State was entitled to certain protections under the Punitive Damages Act

(PDA or the Act), N.J.S.A. 2A:15-5.9 to -5.17, including the PDA’s cap on

punitive damages, and that jurisprudence from the United States Supreme

Court addressing a constitutionally acceptable ratio of compensatory-to-

punitive damages cautioned against the trial court’s approval of the jury’s

punitive damages award.

Pritchett countered each of the State’s arguments and urged the court to

enter judgment approving the punitive damages awarded by the jury.

In an oral decision, the trial court granted that, “looking at the BMW

factors,” the amount of punitive damages was high but concluded that no

miscarriage of justice occurred due to the size of the jury’s award. The court

emphatically stated

that the eight jurors that sat on this case, the Court got no indication that they were confused, impassioned, prejudiced, biased, inflamed. Rather, what the Court observed was a jury that was intelligent, was one that asked lots of questions, one that took notes, one that was deliberative, one that was impartial and dispassionate and weighed through the evidence here and it’s not now for this Court to make the decision, they made the decision and their decision was clearly within the realm of what I would consider to be reasonable given their conclusion as to the way the defendant’s conduct was, the way the plaintiff was 9 treated, and also the way this case was defended. . . . It was completely reasonable for the jury to come to the conclusions that they made.

C.

The State appealed and, in an unpublished opinion, the Appellate

Division affirmed the finding of liability and the compensatory damages

awarded by the jury, “but remand[ed] for further proceedings . . . on the

amount of punitive damages.”

The Appellate Division, quoting its earlier decision in Kluczyk v.

Tropicana Products, Inc., explained that “while the amount of punitive

damages does not depend on the award of a specific amount of compensatory

damages or injury to the plaintiff, ‘the award must bear some reasonable

relation to the injury inflicted and the cause of the injury.’” (quoting 368 N.J.

Super. 479, 497 (App. Div. 2004) (quoting, in turn, Smith v. Whitaker, 160

N.J. 221, 242-43 (1999))). To ensure that requisite relationship, the Appellate

Division stated courts are to apply the factors that were articulated by the

United States Supreme Court in BMW and imported into our state’s

jurisprudence by Baker. In its words, the Appellate Division “remand[ed] for

substantial consideration of the Baker/BMW factors.”

Further, the Appellate Division offered additional guidance. It observed

that the United States Supreme Court has “decline[d] . . . to impose a bright-

10 line ratio which a punitive damages award cannot exceed,” quoting State Farm

Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 425 (2003), but nonetheless

cautioned that double-digit multipliers are unlikely to comport with due

process. By the Appellate Division’s calculations, the ratio of punitive-to-

compensatory damages in Pritchett’s case was below 7:1, a figure viewed as

likely not constitutionally suspect. The Appellate Division also commented

that although courts should take heed of the PDA’s normative ratio of 5:1

when considering awards of punitive damages for successful LAD claims, the

legislative exemption of LAD claims from the PDA cap suggests that “at least

in some cases, a higher ratio would be appropriate.” And, noting that the

maximum civil penalty for LAD violations is limited to $50,000, the court

inferred from the Legislature’s exemption of LAD actions from the PDA’s cap

on damages “that the Legislature did not consider civil penalties under the

LAD to be related to the appropriate recovery by an aggrieved individual. ”

The State petitioned for certification, alleging that the Appellate

Division’s remand instructions were flawed and provided inadequate guidance

given that a punitive damages award against a public entity is at issue. We

granted the petition, 244 N.J. 154 (2020), and allowed to participate as amici

curiae the New Jersey State League of Municipalities, the New Jersey Institute

of Local Government Attorneys, the National Employment Lawyers

11 Association of New Jersey (NELA), and the New Jersey Association for

Justice (NJAJ).

II.

Before this Court, the State advances five main points. First, the State

emphasizes that, in Lockley, this Court required trial courts, as part of their

gatekeeping function, to use great care in scrutinizing awards of punitive

damages against public entities. The State asserts that the trial court failed to

do that, and the Appellate Division’s remand instructions are silent on that

essential point. Second, the State argues that because in any punitive damages

case there is a significant chance that the jury has been inflamed, it is

important that courts not rely exclusively on the application of the

Baker/BMW factors to ensure that there is a reasonable relation between the

actual harm suffered and the damages awarded. Third, the State asserts that

the Appellate Division’s view on the relevance of LAD statutory penalties is

inconsistent with Lockley. Fourth, the State argues that Baker and Lockley

meant to impose limiting standards and the Appellate Division’s interpretative

directions are inconsistent with those opinions in that they essentially provide

trial courts and litigants with guidance on how to circumvent those cases’

guardrails. Specifically, the State urges this Court to view the absence of any

12 legislative action following the Lockley decision “to mean that lawmakers

were satisfied with all parts of that decision, including the heightened standard

of review in public entity cases, coupled with the requirement for

proportionality.” Finally, the State argues that the Appellate Division

“diminished” this Court’s instruction that even though the 5:1 bright -line ratio

of punitive to compensatory damages does not apply in LAD cases, it still

serves as a normative measure.

The New Jersey State League of Municipalities and New Jersey Institute

of Local Government Attorneys ask the Court to reconsider the decades-old

determination that punitive damages are available against public entities. They

echo the State in emphasizing that it is the taxpayer who pays every such

award and reason that such damages fail to deter misconduct by defendants

who themselves do not bear the brunt of the punishment. Exacting punitive

damages from public-sector defendants is also problematic, in their view,

because not all such defendants are of comparable means, meaning that the

small municipality is comparatively more severely punished than the

metropolitan government by what is, on paper, the same amount of damages.

The cornerstone of Pritchett’s position is that “Lockley did not alter the

Baker/BMW factors.” According to Pritchett, Lockley was ultimately about

13 the proportionality of compensatory and punitive damages, and, to the extent

that Lockley and Baker/BMW overlap, it is because Lockley is part of the

Baker/BMW inquiry. All that Lockley did, according to Pritchett, was to hold,

first, that a public-entity defendant’s ability to pay a damages award was not a

relevant consideration in the review of an award, and second, that public-

sector defendants are not to be treated any worse than their private-sector

counterparts. “Thus, when the Appellate Division remanded the question of

the amount of punitive damages to the trial court for ‘substantial consideration

of the Baker/BMW factors’ it did not deviate from any decision by this Court.”

NELA points out that the Legislature has not corrected this Court’s prior

holdings that punitive damages are recoverable in LAD actions against public

entities. Further, NELA maintains that Lockley did not impose a heightened

standard of review for such awards, and the Appellate Division’s remand

instructions captured the essence of the applicable law, insofar as they require

the trial court to engage in a holistic analysis when reviewing and approving

the jury’s punitive damages award in a LAD action. During argument, NELA

asserted that there have been no runaway awards of punitive damages against

public entities.

14 The NJAJ similarly maintains that Lockley did not impose a heightened

standard, and emphasizes that the lack of legislative action in this area should

be interpreted as allowing for the uncapped recovery of punitive damages.

III.

This appeal concerns the standards to be applied by a trial court when

reviewing a jury award of punitive damages against a public-sector defendant.

The State does not ask this Court to reconsider and overturn our precedent

holding that punitive damages are available in LAD actions filed against

public entities. To the extent that some amici advance that argument, we

decline the invitation, for several reasons.

First, amici “must accept the case before the court as presented by the

parties and cannot raise issues not raised by the parties.” State v. Lazo, 209

N.J. 9, 25 (2012) (quoting Bethlehem Twp. Bd. of Educ. v. Bethlehem Twp.

Educ. Ass’n, 91 N.J. 38, 48-49 (1982)). More fundamentally, the ship has

sailed on the question of the availability of punitive damages awards in LAD

actions against public entities. 1 A review of the history of the issue amply

1 We address in this case an LAD action but the law’s development in this area has advanced in tandem for punitive damages awards against public entities in CEPA actions. 15 demonstrates that it is time to accept that such change can only come from the

Legislature.

The lead up to the present matter begins with Lehmann v. Toys ‘R’ Us,

Inc., in which a female employee brought an LAD action against the

defendants for fostering a hostile work environment. 132 N.J. 587, 593

(1993). When the matter reached this Court, because the LAD expressly

provides for punitive damages but includes no guide on their amount, we took

the opportunity to announce “standards to apply to assess employer liability

not only for equitable remedies but also for compensatory damages and

punitive damages.” Id. at 616. The Court held that a punitive damages award

requires “a greater threshold than mere negligence,” id. at 624; that such

damages are appropriate “when the wrongdoer’s conduct is especially

egregious,” ibid. (quoting Leimgruber v. Claridge Assocs., 73 N.J. 450, 454

(1977)); and that “the employer should be liable for punitive damages only in

the event of actual participation by upper management or willful indifference ,”

id. at 625 (collecting cases).

The question of whether such punitive damages were available against a

public entity defendant, however, was not before the Court. That setting posed

additional issues, including whether the common law view of the deterrent

16 policy advanced by punitive damages was furthered by awards against public

entities.

Those questions remained unresolved for a period of time, and they

arose first in a separate, but related, statutory claim setting, not in an LAD

matter. Abbamont v. Piscataway Township Board of Education initially

addressed the availability of punitive damages against a public entity in an

action brought under the Conscientious Employee Protection Act (CEPA),

N.J.S.A. 34:19-1 to -8. 138 N.J. 405, 410 (1994). In that case, the plaintiff, a

public-school employee had, for several years, “expressed concern about the

poor health and safety conditions of the metal shop.” Id. at 410-12.

Eventually, he was not rehired, and he filed a CEPA action claiming retaliation

and seeking, among other remedies, punitive damages. Id. at 413. A jury

rendered a verdict in his favor, but the trial court granted the defendant’s

“motion to dismiss the complaint, upon which it had previously reserved

decision.” Ibid. The Appellate Division reinstated the complaint and the

verdict, but could not agree on whether punitive damages under CEPA are

available against a public sector entity -- two judges ruling in favor of the

plaintiff and one in favor of the defendant. Ibid.

A six-member composition of this Court could not agree on the issue

either, splitting three-three on that question. Id. at 426, 435-36.

17 The Court was unanimous, however, in agreeing “that the analysis and

principles of Lehmann” construing the LAD should guide consideration of the

elements of a CEPA claim as well as CEPA’s liability standards. Id. at 417.

Further, in the contexts of both the LAD and CEPA, “employers are best

situated to avoid or eliminate impermissible vindictive employment practices,

to implement corrective measures, and to adopt and enforce employment

policies that will serve to achieve the salutary purposes of the respective

legislative mandates.” Id. at 418.

The Court also cited Lehmann to support the conclusion that “a strict[]

standard for imposing liability for punitive damages is appropriate in CEPA

actions.” Id. at 419. Therefore, as in LAD actions, “the employer should be

liable for punitive damages [under CEPA] only in the event of actual

participation by upper management or willful indifference.” Ibid. (quoting

Lehmann, 132 N.J. at 625). And the complained-of conduct must be especially

egregious. Ibid.

Addressing the issue that split the Appellate Division -- whether a party

may recover punitive damages from a public entity for a violation of CEPA

-- Justice Handler wrote,

A sensible and unconstrained reading of the language of CEPA, a consideration of the provisions of CEPA in light of the Tort Claims Act (TCA), N.J.S.A. 59:1-1 to 59:13-5, a review of CEPA’s legislative history, an 18 understanding of the underlying policy concerns in awarding punitive damages against public entities, and an examination of CEPA’s remedial purpose persuade us that CEPA does allow the award of punitive damages against public entities. [Id. at 426.]

That portion of Justice Handler’s opinion read the plain language of

CEPA as indicating that the Legislature intended to make punitive damages

available against such defendants, highlighting CEPA’s definition in N.J.S.A.

34:19-2(a) of “employer,” under which the board neatly fit, and N.J.S.A.

34:19-5, which authorized an award of punitive damages to prevailing

plaintiffs. Ibid. The Court noted that, in contrast to the Tort Claims Act, “no

specific CEPA provision exists that precludes the awarding of punitive

damages against public employers.” Ibid.

Although the three members who agreed with the Appellate Division on

this issue “acknowledge[d] the strength of the considerations militating against

punitive damages visited upon governmental bodies,” id. at 428-29, they

inferred that the Legislature had those considerations in mind when it did not

exempt governmental bodies from liability for punitive damages in CEPA

actions, stating that “[w]hen the interest transgressed is significant, punitive

damages may be appropriate even when the underlying wrongful conduct is

that of the government.” Id. at 429. In concluding, Justice Handler wrote that

19 the Court “thus defer[red] to the Legislature in including punitive damages in

the remedial arsenal available against public as well as private employers for

especially virulent retaliatory conduct.” Id. at 429-30.

Writing on behalf of himself and two others, Justice Pollock dissented

from the part of the Court’s opinion that concluded that the Legislature

intended to allow awards of punitive damages to be entered against public

entities. Id. at 435 (Pollock, J., concurring in part and dissenting in part).

Justice Pollock was concerned that “[u]ltimately, the cost of any punitive-

damage award will be borne by the taxpayers of Piscataway Township.” Ibid.

The dissenters “doubt[ed] that the Legislature, when enacting CEPA, thought

that it was overcoming the [TCA’s ban] on awarding punitive damages against

public entities” and, in light of that ban, did not read the portions of CEPA that

make available to prevailing plaintiffs “‘[a]ll remedies available in common

law tort actions’” to encompass punitive damages against public entities. Id. at

435-36 (quoting N.J.S.A. 34:19-5) (third alteration in original). Further, the

dissent described CEPA’s legislative history as “sparse” and “enigmatic,” and

“believe[d] that not permitting punitive-damage awards against public

employers is more consistent with the legislative intent.” Id. at 436. “The best

solution,” in the dissent’s view, “would be for the Legislature to revisit the

issue and resolve it definitively.” Ibid.

20 After the Abbamont decision involving CEPA, a precedential holding

issued from this Court in 1999, when a majority of the Court squarely held that

public entities are also “liable for punitive damages under the [LAD]” relying

explicitly on “the basis of the reasoning of the three-member affirmance in

Abbamont.” Cavuoti v. N.J. Transit Corp., 161 N.J. 107, 113-14 (1999).

The plaintiff in Cavuoti brought an LAD age discrimination case against

his public employer, New Jersey Transit Corporation (NJT), and won a jury

verdict that awarded him $222,323 in compensatory damages and $1 million in

punitive damages. Id. at 115. The Appellate Division affirmed in all respects

except the punitive damages award, determining “that the trial court had not

instructed the jury” as to the predicate role that upper management must play

to make such awards available. Ibid.

The case thus provided a second opportunity to consider the punitive

damages issue concerning public sector defendants, but this time in the LAD

setting. The Court’s analysis covered numerous points, beginning with

N.J.S.A. 10:5-13, which makes all common law tort remedies “available to

prevailing plaintiffs.” Id. at 116 (quoting N.J.S.A. 10:5-13). The Court

further noted the legislative direction to give the LAD liberal construction to

combat discrimination and Lehmann’s holding that punitive damages are

available under the LAD. See id. at 116-17. Importantly, the Cavuoti Court

21 also recounted the extensive analysis of the issue in Abbamont, including

Abbamont’s acknowledgement of “the strength of the considerations militating

against punitive damages against governmental bodies.” Id. at 132.

In the end, the Court adopted the reasoning in and conclusions of Justice

Handler’s opinion in Abbamont, which recognized the availability of a

punitive damages award against public entity defendants and imported it to

LAD claims. Ibid. In doing so, the Court explained how Abbamont “reflected

our understanding of the LAD,” and had relied on an LAD case, Fuchilla v.

Layman, 109 N.J. 319 (1988), to explain how the LAD and TCA serve

different purposes, such that the LAD is not, in several notable ways,

constrained by the TCA. Id. at 132-33.

The Court added that it had “observed that the policy concerns regarding

the imposition of punitive damages against public entities for LAD violations

were addressed, in some measure, by the heightened standard that we adopted

in Lehmann for imposing punitive damages.” Id. at 133. Therefore,

a sensible and unconstrained reading of the language of the LAD, a consideration of the provisions of the LAD in light of the TCA, a review of the LAD’s legislative history, an understanding of the underlying policy concerns in awarding punitive damages and an examination of LAD’s remedial purposes persuade us that the LAD allows the award of punitive damages against public entities. [Ibid.]

22 Importantly, the Court found its conclusion to be reinforced by the fact

that the Legislature had acquiesced in the ruling for, at that point, five years.

Id. at 133-34.

But the conclusion was not unanimous. Writing again on his own

behalf, and joined by two other members of the Court, Justice Pollock

dissented from that holding. Id. at 135 (Pollock, J., concurring in part and

dissenting in part). Justice Pollock pointed to the TCA’s blanket prohibition of

such damages and emphasized that “[n]othing in the LAD expressly or

impliedly repeals” the TCA’s prohibition. Ibid. In Justice Pollock’s opinion,

the putative statutory authorization for punitive damages in CEPA actions is

clearer than in the LAD, but the Justice doubted the Legislature meant in either

setting “to saddle taxpayers” with “paying punitive damage awards” exacted

from public entities, which can often “be substantial.” Ibid. The dissenters

renewed the call for the Legislature to resolve the question. Id. at 136.

In Baker, another LAD action involving an award of punitive damages

and released the same day as Cavuoti, the Court elaborated on the trial court’s

role in reviewing a jury’s award of punitive damages. In doing so, the Court

focused not so much on the availability of those damages as such under the

statutory and common law of our state, but primarily upon then-recent United

States Supreme Court case law exploring and explaining the due -process 23 implications of awards of punitive damages, in those cases, against private

Baker involved an action filed by two plaintiffs against their former

employer for age and gender discrimination. 161 N.J. at 223-24. The jury

awarded plaintiffs compensatory damages of $135,740 and $102,241,

respectively, and the two shared a punitive damages award of $4 million. Id.

at 225.

Those verdicts were affirmed by the Appellate Division. Ibid. This

Court’s opinion in the matter assessed the effect of the Legislature’s adoption

of the Punitive Damages Act. The Court observed that the Act “requires that a

court reviewing an award of punitive damages be satisfied that the award is

‘reasonable in its amount’ and is justified in the circumstances of the case ‘in

light of the wrongful conduct.’” Id. at 229 (emphasis omitted) (quoting L.

1995, c. 142).

Pertinent for our purposes, Baker notes that “[a]lthough the PDA

excludes LAD actions from its cap, its general requirements for procedural and

substantive fairness are mandated.” Ibid. “In addition,” the Court observed,

“there are substantive constitutional limits on the amount of punitive damages

that a jury may award.” Ibid. Those limits are imposed by the Due Process

Clause of the Fourteenth Amendment and serve “to ensure that punitive

24 damages awards are made through a fair process that includes judicial review

of awards.” Ibid.

The Baker Court focused its analysis on BMW, summarizing its holding

to require “that courts must examine the substantive basis of the punitive

damages award to determine whether it is so excessive as to violate due

process.” Id. at 230. Baker recognized that the United States Supreme Court

had not promulgated a bright-line rule, but instead articulated three factors for

courts to consider when conducting such review:

the degree of reprehensibility of the conduct that formed the basis of the civil suit; the disparity between the harm or potential harm suffered by the injured party who was the plaintiff in the civil case and the plaintiff’s punitive damages award; and the difference between this remedy and the civil penalties authorized or imposed in comparable cases. [Ibid. (quoting BMW, 517 U.S. at 575).]

The Baker opinion noted that BMW was consistent with Justice

Pollock’s observation in Herman v. Sunshine Chemical Specialties, Inc., that

there is “a volatile dilemma” “at the core of punitive damages” -- that the same

conduct that justifies an award of such damages “can readily inflame an

otherwise-dispassionate jury.” Ibid. (quoting 133 N.J. 329, 337-38 (1993)).

To guard against potential injustice, then, this Court in Baker warned that “the

award of punitive damages must bear some reasonable relation to the injury

25 inflicted and the cause of the injury.” Ibid. (internal quotation marks omitted)

(quoting Herman, 133 N.J. at 338). Accordingly, the Court’s instructions were

as follows:

In future LAD cases, courts reviewing punitive damages awards should apply both the requirements of the PDA (with the exception of the statutory cap) and the substantive standards of BMW v. Gore in order to ensure that any award of punitive damages bears “some reasonable relation” to the injury inflicted. [Id. at 231.]

Because the trial court had not addressed BMW’s substantive standards,

the Court remanded the matter, saying that it was incumbent on the trial court

to consider the BMW factors and determine whether, thus considered, the

punitive damages award was sustainable “or whether the award reflects

prejudice, passion, or mistake warranting a new trial on the amount of punitive

damages.” Ibid. We advised that the trial “court may consider, but is not

bound by, the Legislature’s judgment of five times compensatory damages as a

normative measure of the limits of proportion.” Ibid. But “[b]ecause some

acts of discrimination cause unquantifiable harm, the assessment of proportion

to harm may take into account whether there has been an outrageous affront to

human dignity that warrants departure from a normative punishment. ” Ibid.

26 C.

Since those decisions, the Court has addressed punitive damages awards

involving public entity defendants in two matters of significance to this appeal:

Lockley and Green, both issued on the same day.

Lockley involved an LAD claim by a male prison guard against the

Department of Corrections that resulted in a jury verdict that included a $3

million award for punitive damages. 177 N.J. at 416-20. The Appellate

Division reversed the award, holding that the trial court’s jury instructions

were “fatally flawed,” in part because the State does not have the same kind of

bottom-line considerations as private parties. Id. at 421-23 (quoting Lockley

v. Turner, 344 N.J. Super. 1, 18-19 (App. Div. 2001), aff’d as modified, 177

N.J. 413).

We agreed with the Appellate Division and held “that in an assessment

of punitive damages against a public entity the financial condition of the

defendant is not useful.” Id. at 430. In recognition that “public entities do not

create their own wealth and are not driven by a profit motive,” the Court

reasoned that “consideration of the State’s ability to pay does not further the

goal of deterrence as it does in the private sector.” Id. at 431. The Court

concluded that “[t]he State cannot be deterred by an award based on its

‘bottom line’ because it does not have one in the private sector sense.” Ibid.

27 Accordingly, Lockley instructed “that the standards applied in private

sector cases, with the exception of those relating to the financial condition of

the defendant, should be used to guide the jury in its computation and to assist

the court in its review of a punitive damages award.” Id. at 431-32. That

includes “those provisions of the PDA, N.J.S.A. 2A:15-5.12(b), that set forth

the standards to be used in determining whether punitive damages are

warranted in the first instance”; “those standards that govern the calculation of

the amount of such an award, N.J.S.A. 2A:15-5.12(c)”; and the Baker/BMW

factors. Id. at 432-33.

Lockley is significant for cautioning trial courts that

the court’s responsibility to review awards of punitive damages for reasonableness is heightened when such damages are awarded against a public entity. The judge in the ordinary case acts as a check on the jury’s calculation of punitive damages; in the case of a governmental entity, when public monies are the source of the award, the judge must scrutinize with great care the amount of the award to determine whether it is proportionate to the harm suffered by the plaintiff. [Id. at 433 (emphasis added).]

28 Equally importantly, in Lockley, there was no question that the entire

Court recognized the judicial debate on the availability of punitive damages

against public entity defendants under the LAD to be over. 2

The companion case to Lockley -- the other decision of note for

purposes of this appeal -- concluded similarly. In Green, the Court closed the

book on the question of punitive damages against public entities in CEPA

cases. See 177 N.J. at 437.

The Court began in Green by recounting the substantive reasons for

concluding that punitive damages were available under CEPA against public

entity defendants. See id. at 441. The decision also relied on the doctrine of

legislative acquiescence. The Court emphasized that earlier opinions had

invited the Legislature’s correction if the Court was mistaken in allowing

awards of punitive damages against public entities in CEPA actions. Id. at

444-45. Calculating that nine years had passed from Abbamont to Green --

and stressing the repeated “request[s] that the Legislature take up the issue” if

2 Lockley drew a concurrence from three members of the Court, but in light of Lockley and its companion decision, Green, the concurrence recognized that “[t]he judicial debate over . . . the availability of punitive damages against public entities has come to an end,” and left to the Legislature any prospect of changing course. Id. at 434 (Verniero, J., concurring).

29 correction was needed -- the Court inferred from the Legislature’s “silence that

it intended to subject public entities to punitive damages under CEPA.” Ibid.

Green has significance for this appeal for a second reason. Although

Green involved CEPA, and this appeal involves the LAD, the Court’s

discussion in Green addressed a common concern: the care to be taken by the

court when punitive damages are awarded against public entities.

The Court in Green drew from Lockley to emphasize “the importance of

[the Lehmann] standard when considering whether an award of punitive

damages is warranted in the first instance.” Id. at 444. In Green’s words, the

Court “set rigorous standards for the calculation of punitive damages against a

public entity, recognizing that ‘public monies are the source of the award.’”

Ibid. (quoting Lockley, 177 N.J. at 432-33). That said, the Court reposed its

trust in the trial courts, which must review punitive damages awarded by juries

before approving them, and exhorted the courts to “be vigilant in their review

of such awards.” Ibid.

The concurring Justices in Lockley dissented in Green. The dissent

asserted that the PDA did not provide adequate safeguards because “the

Legislature did not contemplate the use of the PDA for punitive damage

awards against public entities.” Id. at 449-50 (Verniero, J., dissenting). The

dissent voiced concern that “taking away an additional limitation on the size of

30 punitive damage awards [to wit, the State’s ability to pay,] places public

entities at risk of being treated more harshly than private sector entities, or

even individuals.” Id. at 450. That “absence . . . may lead a jury naturally to

assume that a public entity has the wherewithal through its power of taxation

to pay almost any award.” Ibid.

In the dissent’s view, “[t]he problem with punitive damages against

public entities is that it is unworkable”; because the upper management of the

defendant do not themselves pay the award, the dissent reasoned, upper

management is “unlikely to be deterred by the threat of a punitive damages

award.” Ibid. However, the dissent concluded with the observation that the

Legislature’s “silence or action” on the availability of punitive damages “will

be conclusive on the issue.” Id. at 451. 3

D.

There can be no doubt that punitive damages awards under the LAD are

available against public sector defendants. Cavuoti so held and Lockley

elaborated on that point, giving direction on fine points of implementation, in

3 See 177 N.J. at 449 (Verniero, J., dissenting) (commenting nonetheless that “allowing punitive damages against a public entity is so far contrary to the interests of the public, we would have expected the Legislature to speak clearly and unambiguously if it intended such a declaration against the people’s self-interest,” reiterating what Justice Pollock first said in his separate opinion in Abbamont). 31 recognition that “public monies are the source of the award.” 177 N.J. at 432-

33. Green added to the Court’s emphasis that the debate was over, at least in

judicial forums.

We recognize the continuing vitality of Lockley and its formulation of

the law to the present day, as well as that of all the cases that led up to it and

compelled its result. Lockley has stood for almost twenty years, and the

Legislature has not seen fit to overturn, or fine tune, its holding and guidance.

And, almost twenty-two years have now passed since Cavuoti first resolved the

punitive damages issue in an LAD case.

The Legislature’s inaction bespeaks acquiescence and provides a

continuing message of legislative intent to subject public entities to punitive

damages under the LAD. Further debate over that policy belongs in the

legislative arena.

IV.

The chief complaint by the State to the Appellate Division’s remand

instructions goes to the appellate court’s lack of attention to the heightened

standard of scrutiny imposed by Lockley on trial courts reviewing a jury’s

punitive damages award. Pritchett and the amici supportive of her position

assert that there is no heightened standard and that the Court’s discussion in

Lockley was meant to require courts to ensure that public entity defendants are

32 not worse off because the ability-to-pay considerations identified in the PDA

were held not to apply to public sector defendants. The State has the better of

the argument.

Although the PDA does not establish the right to punitive damages,

N.J.S.A. 2A:15-5.15, the Act, generally, governs how punitive damages may

be awarded, id. at -5.12; sets a generally applicable cap on the size of the

award, id. at -5.14(b); and carves out exceptions to the cap, including “causes

of action brought pursuant to” the LAD, id. at -5.14(c). 4

The PDA envisions an active role for the trial court in reviewing the

jury’s determinations, calling upon the court, “[b]efore entering judgment for

an award of punitive damages,” to “ascertain that the award is reasonable in its

amount and justified in the circumstances of the case, in light of the purpose to

punish the defendant and to deter that defendant from repeating such conduct.”

Id. at -5.14(a). The same subsection further empowers the court to exercise the

power of remittitur or to “eliminate the award of punitive damages” if the

court determines that either is “necessary to satisfy the requirements of this

section.” Ibid.

4 See also Tarr v. Bob Ciasulli’s Mack Auto Mall, Inc., 390 N.J. Super. 557, 567 (App. Div. 2007) (“The Legislature’s purpose in enacting the Act was to establish more restrictive standards with regard to the awarding of punitive damages.” (quoting Pavlova v. Mint Mgmt. Corp., 375 N.J. Super. 397, 403 (App. Div. 2005))), aff’d, 194 N.J. 212 (2008). 33 With respect to punitive damages assessed by a jury against a public

entity defendant, this Court imposed a unique and special duty. In addition to

the PDA’s requirement that the trial court be satisfied that the amount

calculated by the jury is reasonable, the court must adhere to Lockley’s

instruction that the reasonableness assessment be subjected to heightened

scrutiny when punitive damages are awarded against a public entity. Lockley,

177 N.J. at 433; see also Green, 177 N.J. at 444. Indeed, in Lockley, we

emphasized the heightened standard’s role when considering whether a

punitive award is warranted in the first instance.

The Court saw a need for that role due to its holding that certain PDA

factors, which ordinarily would inform the jury about a defendant’s ability to

pay a punitive damages award, and might have a constraining effect on the

amount of the award imposed by the jury, would not be presented in the case

of a public entity defendant. See Lockley, 177 N.J. at 430-33. But the

heightened standard’s role is not, as amici contend, only to ensure that public

entities are not treated worse than private entity defendants -- that is a crabbed

interpretation of the Court’s discussion about the direction for heightened

scrutiny. The context in which the Court made that statement was its

recognition that public funds were at stake, and the Court imposed a special

responsibility on the trial court to review for reasonableness an award of

34 publicly funded monies for punitive purposes. Id. at 433. Green’s discussion

reinforces that message contained in Lockley. Green, 177 N.J. at 444. The

majority opinions in Lockley and Green were responsive to concerns of the

separately writing Justices; and, with due knowledge that certain PDA factors

were being eliminated, the Court insisted that the trial judge perform a

heightened review role.

The Appellate Division’s instructions, which were thoughtfully

considered and largely correct, were mistaken in this specific respect. The

court did not mention the heightened review role to be played by the trial court

and referred only to the Baker and BMW considerations. That significant

omission requires correction because the Baker and BMW factors are related

to due process considerations, Baker, 161 N.J. at 229-30, and are not a

substitute for Lockley’s direction for heightened trial-court review when

public entities are on the giving end of a punitive damages award by a jury.

Lockley instructs that the trial court’s review is not merely to ensure that

a punitive damages award comports with due process. See 177 N.J. at 432-33.

There is an extra review role, one beyond keeping the award to the amount

necessary to avoid transgressing due process. By that, we do not mean

additional steps to the existing analytic framework, but rather a more rigorous

application of what is already in place as factors to be considered when

35 assessing the punitive damages award in the context of the factual

circumstances of the wrong involved and the nature of the public entity

defendant. 5 To the extent that the Baker/BMW factors assist in that

assessment and add to those mentioned, and applicable, under the PDA, we

agree with counsel for the State that the factors overlap. These are not

independent assessments; rather, they coalesce for a holistic assessment. See

Lockley, 177 N.J. at 433.

In sum, we instruct the trial court on remand, and all trial courts

reviewing a punitive damages award issued by a jury against a public entity

defendant, to review the award under the heightened scrutiny required in

Lockley and explicated in Green.

5 We do not suggest that the judge’s review should entail additional information beyond that which is presented to the jury, with its restrictions against inclusion of information about the public entity’s finances. See Lockley, 177 N.J. at 430-32. We do not retreat from the judgment expressed in Lockley that presentation of the financial picture of a public entity is fraught with difficulty and should not be presented to the jury or through any expansion of information presented to the trial court reviewing a jury’s punitive damages award. Ibid. That said, although the State did not appeal the jury instructions used in this matter, at argument the prospect of review of the model jury charge on the award of punitive damages against a public entity defendant was raised. We invite that review, if only for the purpose of adding a sentence that simply but explicitly states that the jury should not forget that an award of punitive damages comes from public funds.

36 We turn next to review the remand instructions, which were criticized by

the State as inconsistent with our jurisprudence in this area.

We begin with the observation that, in large part, we find the Appellate

Division’s discussion of the Baker/BMW factors to be substantially correct.

As those cases explain, the Due Process Clause of the Fourteenth

Amendment imposes outer limits on the allowable size of an award of punitive

damages. Baker, 161 N.J. at 229-30 (quoting and discussing BMW). We

commend the Appellate Division for instructing the trial court, on remand, to

substantially consider the factors advanced in BMW and incorporated into

New Jersey law by Baker. The Appellate Division correctly highlighted BMW

and State Farm as twin guiding lights lit by the United States Supreme Cou rt in

this otherwise hazy area, where courts are tasked with reviewing a punitive

damages award.

We commend the Appellate Division’s identification of the three factors

explicated in BMW: “the degree of reprehensibility of the [underlying tort];

the disparity between the harm or potential harm suffered by [Pritchett] and

[her] punitive damages award; and the difference between this remedy and the

civil penalties authorized or imposed in comparable cases.” 517 U.S. at 575.

In doing so, we emphasize that the first consideration is “[p]erhaps the most

37 important” and that the mental state or track record of the defendants speaks to

the reprehensibility of the conduct, id. at 575-77.

Although the United States Supreme Court in BMW introduced the

consideration of ratios between compensatory and punitive damages in the

discussion of the second factor, see id. at 580-82, the Court cautioned in that

case and in State Farm that mathematical formulae alone cannot encapsulate

the multiple facets of the Due Process Clause or address all of its concerns,

BMW 517 U.S. at 582 (“[W]e have consistently rejected the notion that the

constitutional line is marked by a simple mathematical formula, even one that

compares actual and potential damages to the punitive award.” (emphasis

omitted)); State Farm, 538 U.S. at 424 (“[W]e have been reluctant to identify

concrete constitutional limits on the ratio between harm, or potential harm, to

the plaintiff and the punitive damages award.”); accord Exxon Shipping Co. v.

Baker, 554 U.S. 471, 501 (2008) (restating the principle in dicta).

Thus, “because there are no rigid benchmarks that a punitive damages

award may not surpass,” “courts must ensure that the measure of punishment is

both reasonable and proportionate to the amount of harm to the plaintiff and to

the general damages recovered.” State Farm, 538 U.S. at 425-26. Indeed, the

Supreme Court has intimated that there might be awards that “exceed[] a

38 single-digit ratio between punitive and compensatory damages, to a signi ficant

degree, [that] will [still] satisfy due process.” Id. at 425.

We therefore further approve of how the Appellate Division highlighted

State Farm’s point that this analysis entails more than the rote application of

bright-line ratios. Although mathematical expressions can give useful

perspective, simple resort to a calculator cannot and must not supplant the

well-considered judgment of our trial courts. Ibid. (“While these ratios are not

binding, they are instructive.”).

Finally, we point out that the Legislature, in the LAD setting, is

similarly reluctant to rely solely on bright-line ratios, exempting the LAD in

N.J.S.A. 2A:15-5.14(c) from the PDA’s cap on punitive damages provided

in -5.14(b). Those authorities, then, serve to convince that sole reliance on

such ratios and caps is impermissible and that a holistic assessment of the

Baker/BMW factors is always required. See Baker, 161 N.J. at 231. 6

In sum, we find no error in the guidance that the Appellate Division

provided to the trial court when remanding this matter, other than the omission

6 That is not to say, however, that there are no numerical examples to guide the trial court’s review. BMW’s third factor instructs courts to consider “the civil penalties authorized or imposed in comparable cases.” 517 U.S. at 575. Lockley instructed trial courts to look to the LAD’s schedule of civil penalties as further grounding, but not controlling, the court’s analysis. 177 N.J. at 432 (citing N.J.S.A. 10:5-14.1a). 39 of heightened scrutiny previously addressed. That omission compels our

modification of the appellate judgment. See supra Section IV. The heightened

scrutiny that this Court decreed in the review of a jury’s award of punitive

damages against a public sector defendant is essential to our direction on how

to assess the availability of punitive damages against such defendants.

VI.

The judgment of the Appellate Division is affirmed as modified.

CHIEF JUSTICE RABNER and JUSTICES ALBIN, PATTERSON, FERNANDEZ-VINA, SOLOMON, and PIERRE-LOUIS join in JUSTICE LaVECCHIA’s opinion.