Simon v. San Paolo U.S. Holding Co., Inc

In Simon v. San Paolo U.S. Holding Co., Inc. (2005) 35 Cal.4th 1159, the judgment awarded plaintiff $ 5,000 in compensatory damages and $ 1.7 million in punitive damages. The California Supreme Court concluded that the punitive damages award "exceeds the federal due process limitations outlined in recent United States Supreme Court decisions." (Simon v. San Paolo U.S. Holding Co., Inc., supra, 35 Cal.4th at p. 1166.) It reduced the award to "the maximum award constitutionally permissible in the circumstances of this case": $ 50,000. (Ibid.) The Simon court noted that its "decision . . . addresses only the federal constitutional question, not any issue of excessiveness under California law." (Simon v. San Paolo U.S. Holding Co., Inc., supra, 35 Cal.4th at p. 1167.) In Simon v. San Paolo U.S. Holding Co., Inc. (2005) the California Supreme Court interpreted these statements as establishing a type of presumption: "Ratios between the punitive damages award and the plaintiff's actual or potential compensatory damages significantly greater than 9 or 10 to 1 are suspect and, absent special justification (by, for example, extreme reprehensibility or unusually small, hard-to-detect or hard-to-measure compensatory damages), cannot survive appellate scrutiny under the due process clause." ( Simon, supra, 35 Cal.4th at p. 1182.) At the same time, "multipliers less than nine or 10 are not . . . presumptively valid under State Farm. Especially when the compensatory damages are substantial or already contain a punitive element, lesser ratios 'can reach the outermost limit of the due process guarantee.'" (Simon, supra, at p. 1182.) The court, however, refused to adopt a test establishing a ratio of four to one as the outer constitutional limit. (Id. at pp. 1182-1183.)