Oral Argument Preview: The Punitive Damages Cap Meets Joint and Several Liability. Ronald Luri v.Republic Services, Inc. et al.

Read an anlysis of the Court’s summary disposition of this case here.

Read the analysis of the oral argument in this case here.

 On April 25, 2012, the Supreme Court of Ohio will hear oral argument in the case of Ronald Luri v. Republic Services, Inc., et al., 2011-1120. The issue in this case is whether Ohio’s punitive damages cap statute, R.C. 2315.21 requires a reviewing court to apply the cap separately to  each defendant’s punitive damages award or whether the cap must be applied after combining all separate awards into one.  

Ronald Luri was the general manager of Ohio Hauling’s Cleveland division. He reported to James Bowen, an employee of Republic Ohio, and to Bowen’s supervisor, Ronald Krall, employed by Republic. In 2006, Bowen approached Luri and instructed him to fire three employees, who happened to be Luri’s three oldest employees. Luri told Bowen that firing those employees could result in age and disability discrimination lawsuits, and Luri refused to fire them. Afterwards, Luri’s performance evaluations declined, and his supervisors gave him new performance objectives to meet. According to the supervisors, those objectives were not met, and Luri was terminated in 2007.

 Luri sued both Bowen and Krall, as well as Ohio Hauling, Republic, and Republic Ohio, alleging retaliatory discharge. The defendants moved to bifurcate the trial pursuant to R.C. 2315.21 (B) and Civ.R. 42(B). The court denied these motions. The jury rendered a verdict against all the defendants and awarded Luri $3.5 million in compensatory damages, finding the defendants jointly and severally liable for that amount, and punitive damages against Republic ($21.5 million), Republic Ohio ($10.75 million), Ohio Hauling ($10.75 million),  Krall ($83,394), and Bowen ($25,205) . After judgment was entered, the defendants moved to invoke the punitive damage caps, which limit punitive damages to twice the compensatory damages awarded.

 The defendants’ first appeal was dismissed as being premature. On second appeal, the defendants argued that the trial court erred by denying their motions to bifurcate, allowing the jury to hear inflammatory evidence as to the companies’ net worth. They also argued that the punitive damages were excessive. The Eighth District Court of Appeals held that the defendants were not prejudiced by the introduction of net worth evidence, but also held that the punitive damages were excessive. Applying the punitive damage cap in R.C. 2315, the majority reduced the damages to a single $7 million award. The dissent argued that the cap should have been separately applied to each individual corporate defendant, so that Luri could have recovered  $7 million from each corporate defendant. 

Both parties appealed. Luri argues that the defendants’ punitive damages awards must be reviewed independently for application of the damage caps. The defendants argued in a cross appeal and conflict certification  that R.C. 2315.21(B), the mandatory bifurcation provsion, is constitutional and required bifurcation in this case. The Supreme Court ordered the cross-appeal and certified conflict held until it issued its  decision in Havel v. Villa St. Joseph, which it released on February 15, 2012, upholding the mandatory bifurcation provision of 2315.21 (B). Read my post analyzing the Havel decision here.

The Court of Appeals majority combined Luri’s punitive damage award from all three corporate defendants into a single  award because  Luri had  advanced a single-employer theory of liability to impute wrongdoing to multiple business entities. Luri argues that combining defendants and then imposing the cap  is an untenable reading of the statute.  Just because joint and several liability limits a plaintiff to a single compensatory award does not limit a plaintiff to a single punitive damage award.  The plain language of the R.C. 2151 (D)(2)(a) entitles a plaintiff to collect “two times the amount of the compensatory damages awarded to the plaintiff from that defendant.” Because the three corporate defendants participated in the unlawful retaliation, acted with actual malice, and moved for individualized punitive damage awards, the punitive damage awards should not have been combined into one award for the purpose of applying the punitive damages cap.

In response, the defendants point out that Luri based his suit on the single-employer theory, which makes an affiliated corporation jointly responsible for the discriminatory acts of the direct employer where two nominally separated enterprises are actually part of a single integrated enterprise. Because of this, the doctrine of judicial estoppel prevents him from multiplying the punitive damages award. In other words, because he argued that all three corporate defendants were one single employer, he should not be allowed to “switch horses in midstream” and recover individual awards from each of the three defendants. The defendants also argue that the punitive damages cap should be interpreted to limit the punitive damages to twice the compensatory damages for which related defendants are jointly and severally liable, to prevent plaintiffs from obtaining multiple punitive awards simply by suing multiple members of the same corporate family. Finally, the defendants argue that should the Court uphold Luri’s interpretation of the statute, it must remand to the Court of Appeals for a determination of whether the $7 million rewards against each of the three defendants violate due process. (The Court declined jurisdiction over Republic’s proposition of law regarding the Due Process Clause)

Significantly, the defendants also argue that should the Court uphold the mandatory bifurcation provision of 2315.21(B) (which it now has) a new trial is required in this case, because the original one wasn’t bifurcated. Even if the Court does that, the issue raised in the plaintiff’s appeal is one likely to recur.

This case will be argued  at the Marion  County Court House, as part of the Court’s off-site  Court program.

Student Contributor: Greg Kendall

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