[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
December 27, 2004
No. 03-15189
THOMAS K. KAHN
______________________ CLERK
D. C. Docket No. 92-00147-CV-6
FELIX KEMP, individually and on behalf of
all other persons similarly situated,
Plaintiff-Appellee,
versus
AMERICAN TELEPHONE & TELEGRAPH COMPANY,
Defendant-Cross-Claimant-
Appellant,
_____________________
Appeal from the United States District Court
for the Southern District of Georgia
_________________________
(December 27, 2004)
Before BIRCH, BARKETT and COX, Circuit Judges.
BARKETT, Circuit Judge:
AT&T appeals the district court’s denials of its motion for judgment as a
matter of law seeking to set aside a jury verdict in favor of Felix Kemp and its
motion to reduce the jury’s punitive damages award. The jury determined that
AT&T was guilty of fraudulent billing practices and the collection of illegal
gambling debts in violation of the federal and Georgia RICO statutes. These
gambling debts were incurred after Kemp’s grandson called a 900-number named
“Let’s Make a Deal,” which offered callers a chance to win various prizes in
exchange for a fee. AT&T attempted to collect these debts by including them in
Kemp’s phone bill as though they were long distance charges. The jury awarded
Kemp $115.05 in actual damages, the costs of playing the game, which were then
trebled under the RICO statutes, and also awarded Kemp punitive damages of one
million dollars. For the reasons given below, we affirm the denial of AT&T’s
motion for judgment as a matter of law. However, we conclude that the trial court
erred by letting the jury’s punitive award stand and therefore reduce the award.
I. BACKGROUND
The “Let’s Make a Deal” game (“LMAD”) was created by Teleline, Inc.,
based on the famous television show of the same name. The game ran from early
2
1990 until December 1992.1 When participants called the 900 line, they were
asked to pick a number using their touchtone phones that corresponded to a
figurative “door” that concealed a prize. If callers guessed correctly, they could
either keep the prize or instead proceed to the next “level.” Upon successfully
completing all six levels of the game, callers were entitled to a cash prize of $2000.
The odds of winning this prize were approximately 1 in 2700. The cost of playing
the game was $3.88 per minute, and there was no set time for how long any
particular call would last.
AT&T carried calls to LMAD’s 900 numbers over its long distance network
and played the prerecorded messages that callers heard when they called the line.
Individuals who called LMAD were not charged for the price of a phone call, but
instead paid only for the “content” provided by Teleline, namely, the ability to
gamble using their phones. It was Teleline who paid AT&T for the cost of each
phone call to LMAD.2 Notwithstanding that the charges incurred in playing the
game were owed exclusively to Teleline and were not debts for long distance calls,
AT&T listed these charges in its long distance phone bill, interspersed with
1
In December 1992, an injunction was entered barring the operation of the game.
2
The fee Teleline paid to AT&T was based on a standard tariff rate. As a telephone
common carrier, AT&T files tariffs with the FCC that define the terms and conditions of its long
distance services. 47 U.S.C. § 203.
3
charges for long distance calls. AT&T billed individuals who called LMAD from
Georgia $360,252.40 and collected $287,360.59. This disparity is due in part to
AT&T’s policy of erasing LMAD fees for customers who complained sufficiently
about the charges. In exchange for its billing services, AT&T received a
commission of six percent of the fees it collected on behalf of Teleline.
Kemp was a long distance customer of AT&T who received a bill containing
multiple charges for playing the LMAD game intermingled among charges for
long distance phone calls. The LMAD charges appeared on pages marked with
AT&T’s name and logo. The remainder of the bill contained charges for local
phone service owed to BellSouth, in which only BellSouth’s name and logo
appeared. Despite the separate sections for local and long distance charges, the
entire portion of the bill was to be paid to BellSouth, which purchased AT&T’s
accounts receivable.
Upon noticing the LMAD charges, Kemp called the number for BellSouth
listed in his phone bill, seeking information about these debts. After a BellSouth
representative told Kemp that he owed the entire amount of the bill and would lose
phone service if he refused to pay, Kemp paid for the charges and later brought
4
suit.3 At trial, the jury agreed with Kemp that AT&T’s billing practices were
fraudulent and constituted a pattern of racketeering activity within the meaning of
the federal and Georgia RICO statutes. In addition, the jury determined that
AT&T’s actions amounted to illegal gambling under state law and that the
collection of these unlawful debts also violated RICO. The jury awarded Kemp
both compensatory damages and the aforementioned one million dollars in
punitive damages. AT&T moved for judgment as a matter of law and for a
reduction of the punitive damages award. The district court denied both motions
and this appeal followed.
II. DISCUSSION
A. AT&T’s Motion for Judgment as a Matter of Law
A motion for judgment as a matter of law should be granted only if a court
finds that “there can be but one reasonable conclusion as to the proper judgment.”
See Bryan v. James E. Holmes Reg’l Med. Ctr., 33 F.3d 1318, 1333 (11th Cir.
1994) (internal quotation marks omitted). AT&T argues that it was entitled to
judgment as a matter of law because the jury’s findings were unreasonable given
the evidence presented at trial. Specifically, AT&T claims that Kemp failed to
3
Kemp also sued Teleline and USA Networks, which broadcast commercials for the
LMAD line. Both companies were dismissed from the lawsuit.
5
offer sufficient evidence for the jury to reasonably conclude that (1) AT&T’s
actions violated the mail or wire fraud statutes and Georgia’s theft by deception
statute; (2) AT&T’s billing practices amounted to the collection of unlawful debts
in violation of state and federal RICO; and (3) Kemp’s payments were made
involuntarily within the meaning of state law. We address each contention in turn.
1. RICO Violations For Racketeering Activity Involving Mail and Wire
Fraud and Theft by Deception
In reviewing AT&T’s motion for judgment as a matter of law on this issue,
we consider whether there was a reasonable evidentiary basis for the jury to
conclude that AT&T’s actions constituted federal mail or wire fraud, under 18
U.S.C. §§ 1341 and 1343, respectively, and theft by deception under state law, Ga.
Code Ann. § 16-8-3, which were the predicate crimes triggering RICO liability.
See Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §
1961 et seq., and the Georgia RICO Act, Ga. Code Ann. § 16-14-1 et seq. Given
the materially equivalent elements for establishing a claim of mail or wire fraud
and theft by deception, the district court only required that Kemp prove that AT&T
committed mail and wire fraud. Since neither party challenges the correctness of
this decision on appeal, we consider only whether Kemp established sufficient
facts in order to prove mail or wire fraud. And because the elements of the mail
6
and wire fraud statutes are the same, we consider these claims together. See
Pelletier v. Zweifel, 921 F.2d 1465, 1498 (11th Cir. 1991).
In order to bring a RICO claim where mail or wire fraud serves as the
predicate activity, it is necessary to show that (1) the defendant intentionally
participated in a scheme to defraud another of money or property, (2) the defendant
used the mails or wires in furtherance of that scheme, and (3) the plaintiff relied to
his detriment on the defendant’s misrepresentations. Id. at 1498-99. Only intent
and reliance are at issue in this appeal, since AT&T obviously used the mails when
it sent Kemp his phone bill.
AT&T argues that Kemp failed to provide sufficient evidence that it
intended to deceive him because none of the statements in its long distance phone
bill were false. As this court has explained, however, it is not necessary for a
plaintiff to point to affirmative misstatements in order to establish the requisite
fraudulent intent of a defendant under the mail and wire fraud statutes. Langford v.
Rite Aid of Ala., Inc., 231 F.3d 1308, 1312 (11th Cir. 2000) (“Intent to defraud
need not be shown through active misrepresentation – material omissions can be
fraudulent if they are intended to create a false impression.”). The nondisclosure
of material information, even in the absence of any patently false statements, can
also constitute a violation of the mail and wire fraud statutes where a defendant has
7
a duty to disclose. See Ayres v. Gen. Motors Corp., 234 F.3d 514, 521 (11th Cir.
2000). Such a duty can be judicially created where there is a special relationship of
trust between the parties, or may be based on other circumstances. See Langford,
231 F.3d at 1312-13 (“Determinations as to whether a duty to disclose information
exists must be made on a case by case basis, with appropriate attention given to the
nature of the transaction and the relationship between the parties.”).
In this case, once AT&T included the LMAD charges in the section of its
bill for long distance calls, it had the duty to correct the mistaken impression it had
fostered that the LMAD debts were for long distance charges. See United States v.
Autuori, 212 F.3d 105, 119 (2nd Cir. 2000) (“A duty to disclose can also arise in a
situation where a defendant makes partial or ambiguous statements that require
further disclosure in order to avoid being misleading.”); United States v. Townley,
665 F.2d 579, 585 (5th Cir. 1982) (noting that “under the mail fraud statute, it is
just as unlawful to speak ‘half truths’ or to omit to state facts necessary to make the
statements made, in light of the circumstances under which they were made, not
misleading”). The LMAD gambling charges appeared under the heading “direct
dialed calls” in Kemp’s phone bill and were interspersed among charges for regular
long distance calls. AT&T’s name and logo were displayed on all the pages
containing the LMAD charges. It was clearly foreseeable that this formatting
8
would cause some customers to think that the LMAD charges were for a long
distance phone call owed to AT&T and that the charges had to be paid in order to
maintain phone service.4 In fact, however, the LMAD charges were not long
distance charges but were gambling debts owed only to Teleline, and as AT&T
acknowledged at trial, individuals could not lose phone service for failing to pay
these debts. Moreover, as we explain below, the LMAD fees constituted illegal
gambling debts that could not be collected lawfully under Georgia law.
In light of the circumstances here, and most specifically the way the charges
were placed on the bill, we are satisfied that sufficient evidence supports the jury’s
conclusion that AT&T intended to mislead customers into believing that they had
to pay the LMAD debts in order to maintain uninterrupted phone service. As a
result, AT&T had a duty to place adequate information on its bill that would have
disclosed the true nature of the LMAD charges and corrected the misconception it
4
The possibility that individuals would be misled by AT&T’s billing practices motivated
a group of state attorneys general to petition the company to segregate 900-numbers from regular
long distance charges. The group also asked AT&T to identify the name and address of the
creditor to whom the charge was owed, and to inform consumers that they could dispute the 900-
number charges and that their telephone service could not be disconnected for failing to pay
these debts. AT&T declined, explaining that such changes would “likely encourage unjustified
non-payment and generate great increases in uncollectible amounts.” Therefore, AT&T was
clearly aware that its customers would be far less likely to pay the LMAD charges if they were
informed about the true nature of the debts.
9
had intentionally created.5 See Autuori, 212 F.3d at 119.
Because AT&T was under a duty to make this disclosure, the company
cannot argue that Kemp failed to rely on AT&T’s omissions. Although it was a
BellSouth representative who erroneously stated that Kemp’s service would be
terminated if he did not pay for the LMAD charges, had AT&T’s long distance bill
contained the necessary disclosures, Kemp need not have called BellSouth for an
explanation. AT&T’s material omissions were thus an essential part of Kemp’s
decision to pay these gambling debts. The district court did not err in denying
AT&T’s motion for judgment as a matter of law with respect to the jury’s finding
of fraud. See EEOC v. W&O, Inc., 213 F.3d 600, 610 (11th Cir. 2000) (judgment
as a matter of law should be denied unless the evidence “is so one-sided that one
party must prevail as a matter of law”).
2. Illegal Gambling and Collection of an Unlawful Debt
AT&T argues that the district court erred when it concluded that the LMAD
5
Although no such statutory duty existed at the time the calls in this case were made,
under current federal law, AT&T must explain to its customers that the failure to pay 900-
number charges will not result in the loss of long distance service. According to federal
regulations, a common carrier, such as AT&T, must provide directly, or “through contract with
any local exchange carrier providing billing and collection services,” a disclosure statement
indicating that a common carrier does not have the right to “disconnect or interrupt in any
manner, or order the disconnection or interruption of, a telephone subscriber’s local exchange or
long distance telephone service as a result of that subscriber’s failure to pay” a 900-number
charge. See 47 C.F.R. §§ 64.1507(a) and 64.1509(b)(2).
10
game violated Georgia’s prohibition on illegal gambling. As a result, the company
maintains that the jury’s finding that it collected unlawful debts in violation of the
federal and Georgia RICO statutes should be reversed, since both RICO claims are
founded on a violation of Georgia’s ban on gambling. See 18 U.S.C. § 1961(6)
(“unlawful debt” under federal RICO statute includes debts incurred in activities
that violate state gambling laws) and Ga. Code Ann. § 16-14-3(9)(A)(xvii)
(racketeering activity under Georgia RICO includes violations of state prohibition
on commercial gambling).
Under state law, the LMAD game was an illegal lottery if it was a “scheme
or procedure whereby one or more prizes are distributed by chance among persons
who have paid or promised consideration for a chance to win such prize.” Ga.
Code Ann. § 16-12-20(4). This definition incorporates three key elements:
consideration, prize and chance. See Tierce v. State, 122 Ga. App. 845, 846 (Ga.
Ct. App. 1970). Kemp maintains that all three elements were satisfied by showing
that his grandson called a number that offered a chance to win a prize in exchange
for a fee. AT&T responds that because non-callers could also participate in the
game through the mail, the element of consideration was negated.
As the Georgia Court of Appeals has explained, in order for a game to
amount to illegal gambling, it is only necessary that “among those persons who
11
receive a chance to win a prize there must be some who have paid a consideration.”
Id. at 847; see also Barker v. State, 193 S.E. 605, 607 (Ga. Ct. App. 1937) (“The
test is not whether it was possible to win without paying. . . . The test is whether
that group who did pay . . . were paying in part for the chance of a prize.”) (internal
quotation marks omitted). Clearly, the element of consideration was present for
those callers who called the line, since they were charged $3.88 per minute to play
and have the chance of winning a prize. Therefore, LMAD was an illegal lottery
under Georgia law and the district court did not err in rejecting AT&T’s motion for
judgment as a matter of law.6
3. Whether Georgia’s Voluntary Payment Statute Bars Kemp’s Recovery
Georgia’s voluntary payment statute, which AT&T claims bars Kemp’s
recovery, provides that:
Payments of claims made through ignorance of the law or where all
the facts are known and there is no misplaced confidence and no
artifice, deception, or fraudulent practice used by the other party are
6
On appeal, AT&T also argues that even if it violated Georgia’s ban on gambling, Kemp
cannot recover because state law bars the enforcement of an illegal gambling contract. Under
Georgia law, illegal gambling contracts are not enforced, but are instead rescinded. This means
that although an individual cannot sue to collect his winnings, he can sue to get his money back.
See Roney v. Crawford, 68 S.E. 701, 702 (Ga. 1910). Kemp obviously is suing to recover losses
he suffered, not to collect any prize offered by LMAD. Georgia law does not bar his receipt of
damages. We also disagree with AT&T’s position that it was not in the business of gambling
within the meaning of the federal RICO statute. See 18 U.S.C. § 1961(6)(B). During its
relationship with Teleline, AT&T collected $287,360.59 from Georgia residents who called
LMAD. Clearly, billing for LMAD calls was a regular part of AT&T’s business operations.
12
deemed voluntary and cannot be recovered unless made under an
urgent and immediate necessity therefor or to release person or
property from detention or to prevent an immediate seizure of person
or property. Filing a protest at the time of payment does not change
the rule prescribed in this Code section.
Ga. Code Ann. § 13-1-13 (emphasis added).
Under section 13-1-13, a payment will not be deemed voluntary if it was the
product of fraud. See Decatur Fed. Sav. & Loan v. Gibson, 268 Ga. 362, 363 (Ga.
1997). Therefore, in light of the jury’s finding of fraud, we conclude that Kemp’s
payment was not made voluntarily under Georgia law.
B. AT&T’s Motion for Remittitur of the Punitive Damages Award
Given the jury’s findings that AT&T acted fraudulently and knowingly
collected gambling debts, there was sufficient evidence to justify an imposition of
some amount of exemplary damages under state law.7 However, the fact that some
amount of exemplary damages was warranted in this case does not end our inquiry.
The Due Process Clause of the Fourteenth Amendment prohibits the imposition of
grossly excessive or arbitrary punishments on a defendant and creates substantive
limits on the amount of punitive damages a state may impose. State Farm Mut.
Auto. Ins. Co. v. Campbell, 538 U.S. 408, 416 (2003). In determining whether the
7
Under Ga. Code Ann. § 51-12-5.1(b), “punitive damages may be awarded only in such
tort actions in which it is proven by clear and convincing evidence that the defendant's actions
showed willful misconduct, malice, fraud, wantonness, oppression, or that entire want of care
which would raise the presumption of conscious indifference to consequences.”
13
jury’s award crosses this substantive line and is constitutionally excessive, we are
required by the Supreme Court to consider three guideposts: (1) the degree of
reprehensibility of the defendant’s conduct; (2) the disparity between the actual or
potential harm suffered by the plaintiff and the punitive damages award; and (3)
the difference between the punitive damages awarded by the jury and the civil
penalties authorized or imposed in comparable cases. Id. at 418.
We review the constitutionality of the jury’s punitive damages award de
novo. Cooper Indus., Inc., v. Leatherman Tool Group, Inc., 532 U.S. 424, 436
(2001).
1. Reprehensibility Analysis
The reprehensibility of a defendant’s conduct is “[p]erhaps the most
important indicium of the reasonableness of a punitive damages award.” BMW of
N. Am., Inc., v. Gore, 517 U.S. 559, 575 (1996). In conducting this
reprehensibility analysis, the Supreme Court has articulated several factors for a
court to consider. These factors include: (1) whether the injury caused physical
harm; (2) whether the tortious conduct demonstrated an indifference to, or a
reckless disregard of, the health or safety of others; (3) whether the target was
financially vulnerable; (4) whether the conduct involved repeated actions; and (5)
whether the harm was the result of intentional malice, trickery, or deceit.
14
Campbell, 538 U.S. at 419.
The district court found that the first two factors did not apply in this case,
while the remaining three were met. We agree with the district court that AT&T’s
conduct was deceitful and involved repeated actions. We think the trial court was
also justified in finding that AT&T intended to target financially vulnerable
individuals given the jury’s finding of fraud. AT&T’s efforts to misleadingly
represent gambling debts, which were illegal under Georgia law, as legitimate
charges for long distance calls could be deemed by a jury to be designed to exploit
customers who were unsophisticated and economically vulnerable.
Furthermore, like the trial court, we find little evidence that AT&T made a
genuine attempt to shutdown the LMAD line before the events in this case
transpired. It was not until AT&T was sued that it revised its 900-number
guidelines in April 1992 to prohibit gambling lines for which it provided collection
services from advertising or operating in Georgia. Despite the guidelines, Teleline
continued to advertise and operate the LMAD game in Georgia for another five
months. It was not until September 1992 – after the calls at issue in this case had
been made – that Teleline sought to block calls from Georgia residents to LMAD.
However, as the district court noted in its order, at the time AT&T instructed
Teleline to stop accepting calls from Georgia, Teleline lacked the necessary
15
technology to block calls on AT&T’s network. Furthermore, although AT&T told
LMAD to stop advertising in Georgia, the company knew that Teleline relied on
national advertisements on television that were broadcast within Georgia.
Based on the above, we find sufficient evidence for the district court’s legal
characterization of AT&T’s conduct. AT&T collected $287,360.59 in illegal
gambling debts for calls placed to the LMAD line. This sort of large-scale
corporate malfeasance clearly merited a substantial penalty.
2. Ratio Between Compensatory and Punitive Damages
Although the Supreme Court has resisted establishing a specific ratio
beyond which a damage award will violate the Constitution, in practice “few
awards exceeding a single-digit ratio between punitive and compensatory damages,
to a significant degree, will satisfy due process.” Id. at 425. Obviously, this
single-digit multiplier was exceeded in this case to a considerable extent.
However, as the Supreme Court has explained, in some situations a higher ratio
may be appropriate where a “particularly egregious act has resulted in only a small
amount of economic damages.” Id. (internal quotation marks omitted). Given the
small amount of economic damages in this case, the district court believed that
AT&T’s conduct fell within this exception, since the company’s conduct was
deceitful, involved repeated illegal acts, and targeted the financially vulnerable.
16
We agree with the district court that a mechanical application of the
Supreme Court’s single-digit multiplier formula would not adequately take account
of the seriousness of AT&T’s misconduct. In Johansen v. Combustion
Engineering, Inc., 170 F.3d 1320 (11th Cir. 1999), we upheld a punitive award of
$4.35 million dollars, which was around 100 times the amount of actual damages
awarded by the jury, because this amount was “justified by the need to deter this
and other large organizations from a ‘pollute and pay’ environmental policy.” 170
F.3d at 1339.8 We noted that the defendant in Johansen was “a large and extremely
wealthy international corporation” and that sometimes a “bigger award is needed to
attract the . . . attention of a large corporation” in order to promote deterrence
effectively. Id. at 1338 (internal quotation marks omitted). We later explained that
the result in Johansen was motivated by the recognition that “the combination of a
small damages award and a strong state interest in deterrence of a particular
wrongful act may justify ‘ratios higher than might otherwise be acceptable.’”
W&O, Inc., 213 F.3d at 616 (quoting Johansen, 170 F.3d at 1338)).
Like the state interest at issue in Johansen, Georgia’s interest in deterring
fraud and illegal gambling also justifies a ratio “higher than might otherwise be
8
The aggregate amount of compensatory damages awarded in Johansen was $47,000.
170 F.3d at 1326. Obviously, the actual damages in this care are far lower, indicating that a ratio
greater than 100-to-1 may be appropriate.
17
acceptable.” Johansen, 170 F.3d at 1338. Reducing the jury’s award to an amount
not significantly larger than nine times the actual damages awarded in this case
would mean that AT&T would receive a sanction of little more than a thousand
dollars. Such an amount, levied against a company as large as AT&T, would
utterly fail to serve the traditional purposes underlying an award of punitive
damages, which are to punish and deter. See Gore, 517 U.S. at 568 (“Punitive
damages may properly be imposed to further a State’s legitimate interests in
punishing unlawful conduct and deterring its repetition.”). Therefore, we agree
with the district court that this case falls within the exception articulated in Gore.
3. Civil and Criminal Sanctions for Similar Conduct
The third factor, which is accorded less weight in the reasonableness
analysis than the first two guideposts, involves a comparison between “the punitive
damages award and the ‘civil penalties authorized or imposed in comparable
cases.’” Campbell, 538 U.S. at 428.
The district court did not compare the jury’s award to any civil judgments
for violations of RICO where unlawful gambling has served as the predicate act. It
stated that “[n]o civil cases involving punitive damages, analyzed under the Gore
framework could be located for comparison.” Dist. Ct. Order at *43. Given this
lacuna, the trial court relied entirely on comparisons between the jury award and
18
criminal sanctions for violating RICO. In Campbell, the Supreme Court stated that
while it is true that “[t]he existence of a criminal penalty does have bearing on the
seriousness with which a State views the wrongful action,” when comparisons to
criminal penalties are “used to determine the dollar amount of the award, however,
the criminal penalty has less utility.” 538 U.S. at 428. The Campbell Court noted
that “[g]reat care must be taken to avoid use of the civil process to assess criminal
penalties that can be imposed only after the heightened protections of a criminal
trial have been observed.” Id. Therefore, we are careful to avoid placing too much
reliance on the size of criminal penalties in assessing the reasonableness of the
jury’s award.
4. Conclusion
We believe the facts of this case clearly support a very significant award.
AT&T engaged in what amounted to an illegal gambling scheme in the state of
Georgia. Without AT&T’s decision to participate, the operation could never have
succeeded. This fact was forcefully expressed by the president of Teleline, Mr.
Lorsch, who testified that:
[I]f you couldn’t bill or you couldn’t collect, there would be no reason
to operate the program or have the program. It was – the fact that
AT&T would offer billing and collection [that] was the inducement to
be in the business. I mean you had the biggest company in the world
putting their name on a piece of paper that says, “This is a good
19
program, pay for it.”
Given AT&T’s critical role in the operation of the LMAD line, the company
deserved to pay a serious penalty for its misconduct. In addition, the punitive
award needed to be large enough to deter AT&T’s misconduct. See W&O, Inc.,
213 F.3d at 616-17 (noting that “wealth and size of the defendant” could be
considered in determining whether the punitive damages award was reasonable)
(internal quotation marks and citation omitted).9 A punitive award that was not
much larger than nine times the amount of actual damages, or approximately a
thousand dollars, would not effectively punish AT&T for its conduct or serve any
deterrent value whatsoever. Clearly, the Supreme Court, in erecting a “guidepost”
that requires considering the ratio of punitive to actual damages, did not intend to
prevent juries from levying awards that serve important state interests and provide
a meaningful deterrent against corporate misconduct. At the same time, we
recognize that one million dollars, in relationship to the amount of harm that
occurred in this case, is constitutionally excessive. Although there is no algorithm
that yields a precise figure, we are persuaded that an award that was less than
9
This does not mean, however, that the wealth of a defendant can justify an otherwise
unconstitutional punitive damages award. See Campbell, 538 U.S. at 427. For example, while
the wealth of a defendant is a legitimate consideration in determining the reasonableness of the
jury’s award, it cannot be the sole basis for a large punitive award in the absence of any of the
“guideposts” articulated by the Supreme Court, such as the reprehensibility of a defendant’s
conduct. See Gore, 517 U.S. at 591 (Breyer, J., concurring).
20
$250,000 would not serve a meaningful deterrent to a corporation like AT&T. An
award greater than this amount, however, would prove an unconstitutional
windfall.
We therefore affirm the district court’s denial of AT&T’s motion for
judgment as a matter of law, but reverse the trial court’s denial of AT&T’s motion
to reduce the punitive award, remanding with directions to the trial court to reduce
the punitive damages award to $250,000.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
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