Action Marine, Inc. v. Continental Carbon Inc.

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT
FILED
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 06-11311 March 21, 2007
THOMAS K. KAHN
CLERK
D. C. Docket No. 01-00994 CV-F-E

ACTION MARINE, INC.,
JOHN THARPE, et al.,

Plaintiffs-Appellees,

versus

CONTINENTAL CARBON INCORPORATED ,
CHINA SYNTHETIC RUBBER CORPORATION,

Defendants-Appellants.

Appeals from the United States District Court
for the Middle District of Alabama

(March 21, 2007)

Before DUBINA and WILSON, Circuit Judges, and CORRIGAN,* District Judge.

_____________________

*Honorable Timothy J. Corrigan, United States District Judge for the Middle District of
Florida, sitting by designation.
DUBINA, Circuit Judge:

Appellants, Continental Carbon Co., Inc. (“CCC”), and its parent company,

China Synthetic Rubber Corp. (“CSRC”) (collectively, “Continental”),1 defendants

in the underlying lawsuit, appeal the district court’s denial of their post-trial

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

alternative, an amendment of the final judgment (hereinafter “post-trial motion”).

Having reviewed the parties’ briefs and the evidence in the record, and with the

benefit of oral argument, we affirm the district court’s order and the judgment

entered on the jury’s verdict.

I. BACKGROUND

A. Facts

Continental owns and operates a manufacturing plant in Phenix City,

Alabama, that produces carbon black, a substance the company describes as

follows:

a highly engineered product manufactured by heating feedstock oil to
a high temperature in a low-oxygen reactor. The resulting product is
smoke that includes both carbon black and waste gases. The carbon
black is separated from the gases, processed, and formed into small

1
CSRC’s relationship with CCC was the subject of some dispute during this litigation,
including the trial; however, in this appeal, CSRC does not challenge the district court’s finding that
it is CCC’s parent corporation, and CSRC does not now deny making decisions that exposed it to
liability in the instant case. Nor do the defendants contend that information known by CCC’s
management should not be imputed to CSRC.

2
 pellets for ease of handling and shipment. [Continental] sells carbon
black for use in making tires, rubber and plastic items, inks, and other
. . . products.

[Appellants’ Br. at 3 (citations to the record omitted)].

According to trial testimony, the separating process occurs in stages using

filters located in what is known in the industry as bagfilter compartments.

Pressurized smoke carries carbon black through the compartments, where the

bagfilters capture the carbon black. In a closed system such as exists in the Phenix

City plant, if everything is working perfectly, no carbon black should escape, and

the remaining gasses are expelled through exhaust towers.

Originally, the Phenix City plant housed one production unit (“Unit 1").

Although Continental received complaints from neighboring property owners

regarding carbon black emissions from this unit, the damage giving rise to the

present lawsuit occurred in conjunction with Continental’s efforts to double the

plant’s production by commissioning a second unit in 1999 (“Unit 2"). Along

with the construction of Unit 2, Continental installed a thermal oxidizer for the

purpose of combusting any carbon black particles that escape either production

unit before the air emanating from the bagfilter compartments is expelled.

The appellees (collectively, “the property owners”), which include the City

of Columbus, Georgia (“the City”), own property located across the

3
Chattahoochee River and within approximately 1 ½ miles from Continental’s

Phenix City plant.2 The property owners, all of whom are Georgia citizens, also

include Action Marine, Inc. (“Action Marine”), which during the relevant time

operated a retail boat sales and maintenance business along the river; John Tharpe

(“Tharpe”), Action Marine’s sole shareholder and principal agent; and Owen

Ditchfield (“Ditchfield”), who owns a residence and rental home in the area.

According to the property owners, the Phenix City plant repeatedly emitted

carbon black into the air, which then carried the pollutant, known to be oily,

adhesive, and penetrating, onto their properties, thereby darkening them.

Specifically, the City contends that the carbon black damaged the Columbus Civic

Center both externally and internally via the facility’s air intake system. Other

City-owned properties allegedly damaged include recreational facilities located in

the City’s South Commons Sports and Entertainment Complex as well as Rigdon

Park. In pursuing this civil action, the City sought damages for cleanup and

monitoring costs. Ditchfield sought damages for cleanup costs, diminution of

property value, and emotional distress in connection with carbon black

contamination of both of his properties.

2
Some of the properties are only approximately a ½ mile from Continental’s Phenix City
plant.

4
 Action Marine alleges that the carbon black damaged its inventory of boats

to such an extent that the company was forced to sell those it could at a loss.

Creditors eventually repossessed Action Marine’s boat inventory, which Tharpe

had personally guaranteed, and the business shut down. Action Marine sought

damages to recover for the lost value of its business.

When Action Marine’s creditors failed to recoup all that was owed from the

company, they pursued deficiency judgments against Tharpe personally. To make

matters worse, unable to return customers’ boats in a clean condition and thought

by some to be selling used boats as new, Tharpe became the butt of jokes among

the fishermen who had formerly patronized his business. Tharpe therefore sought

damages for emotional distress and loss of reputation.

Importantly, the property owners accused Continental of intentionally

damaging their properties. They claimed that Continental chose to continue

operating its Phenix City plant despite knowing that the plant’s constant leaks

were polluting their properties. Rather than fix the leaks, the property owners

contend, Continental engaged in a strategy of denial, deception, and subterfuge.

Therefore, the property owners sought punitive damages.

B. Procedural History

5
 Alleging diversity jurisdiction pursuant to 28 U.S.C. § 1332 (2000), Action

Marine and Tharpe originally filed this lawsuit as a class action stating common

law tort claims of negligence, wanton conduct, breach of duty to warn, fraud,

misrepresentation, deceit, nuisance, trespass, and strict liability. In addition to

Continental, named defendants included Taiwan Cement Corp. (“Taiwan”) as well

as Charles Barry Nicks (“Nicks”) and Todd Miller (“Miller”), both individually

and in their representative capacity as agents of Continental.

Eventually, the City, Ditchfield, and Phillips Homes, Inc. (“Phillips”), were

added as plaintiff class representatives, but the district court subsequently denied

class certification. The district court then granted summary judgment in favor of

Taiwan and the individual defendants, Nicks and Miller, on all claims against

them. The court also granted summary judgment in favor of the remaining

defendants on the claims of fraud, misrepresentation, deceit, and strict liability as

well as the City’s and Action Marine’s claims for emotional distress. Phillips

stipulated to a dismissal of its claims without prejudice, and the remaining

plaintiffs acquiesced in the dismissal of the claim alleging a breach of a duty to

warn. Therefore, the lawsuit proceeded to trial on the property owners’ claims of

negligence, wanton conduct, nuisance, and trespass.

6
 After a 10-day trial, an Alabama jury returned a verdict in favor of the

property owners on all claims and determined that Continental’s actions warranted

punitive damages. The jury awarded compensatory damages in the amounts of

$45,000 to Ditchfield; $100,000 to Tharpe; $570,000 to the City; and $1.2 million

to Action Marine for a total of $1,915,000. The jury also awarded $1,294,000 in

attorney fees and assessed punitive damages at $17.5 million.

Following entry of the final judgment on the jury’s verdict, Continental

timely filed its post-trial motion challenging the sufficiency of the evidence

presented in support of the tort claims as well as the amount and propriety of the

compensatory and punitive damages awarded. Prior to ruling on the motion, the

district court determined that the property owners were entitled to permanent

injunctive relief, to which the parties later consented. Approximately six months

after entry of final judgment on the claims for injunctive relief, the district court

denied Continental’s post-trial motion. Continental now appeals that decision.3

II. ISSUES

1. Whether the evidence was sufficient to reasonably infer that carbon

black was a cause-in-fact of the alleged discoloration.

3
Continental concomitantly appealed the award of injunctive relief; we have already
dismissed that aspect of the appeal as untimely.

7
 2. Whether the evidence was sufficient to reasonably infer that

Continental acted with the mental state required by Georgia law to

prove the property owners’ claims and lift Georgia’s statutory cap on

punitive damages awards.

3. Whether the compensatory damages awarded to Action Marine were

improper.

4. Whether Tharpe, as personal guarantor of Action Marine’s debt and

its principal agent, may pursue a claim against Continental for

emotional distress and/or loss of reputation.

5. Whether the punitive damages award was unconstitutionally

excessive.

III. STANDARDS OF REVIEW

We review the “denial of a motion for judgment as a matter of law de novo,

and will reverse only if ‘the facts and inferences point overwhelmingly in favor of

one party, such that reasonable people could not arrive at a contrary verdict.’”

Flury v. Daimler Chrysler Corp., 427 F.3d 939, 945 n.12 (11th Cir. 2005), cert.

denied, 126 S. Ct. 2967 (2006). De novo review is the proper standard also for

reviewing the district court’s denial of judgment as a matter of law with respect to

the claims for punitive damages. Boyd v. Homes of Legend, Inc., 188 F.3d 1294,

8
1298 n.9 (11th Cir. 1999) (noting that the issue “presents a pure question of law”);

see also Toole v. Baxter Healthcare Corp., 235 F.3d. 1307, 1317 (11th Cir. 2000).

The district court’s denial of a motion for a new trial is reviewed for an

abuse of discretion. Middlebrooks v. Hillcrest Foods, Inc., 256 F.3d 1241, 1247

(11th Cir. 2001). “Deference to the district court ‘is particularly appropriate where

a new trial is denied and the jury’s verdict is left undisturbed,’” as in this case. Id.

at 1247-48 (quoting Rosenfield v. Wellington Leisure Prods., Inc., 827 F.2d 1493,

1498 (11th Cir. 1987)).

Finally, the district court’s decision to sustain the amount of compensatory

and punitive damages awards pursuant to state law is reviewed for “clear abuse of

discretion.” Middlebrooks, 256 F.3d at 1249. Its decision that the punitive

damages award does not run afoul of the federal Constitution, however, is subject

to de novo review, though we “defer to the District Court’s findings of fact unless

they are clearly erroneous.” Cooper Indus., Inc. v. Leatherman Tool Group, Inc.,

532 U.S. 424, 436, 440 n.14, 121 S. Ct. 1678, 1685-86, 1688 n.14 (2001).

IV. DISCUSSION

A. Causation

Continental contends that the evidence at trial was insufficient to support an

award with respect to any of the property owners’ tort claims. Focusing solely on

9
the scientific evidence offered through the parties’ experts, Continental argues that

the property owners failed to prove that carbon black, as opposed to other

ostensibly dark substances, caused any of the damage alleged. Alternatively,

according to Continental, the scientific evidence similarly failed to demonstrate

that the damage attributable to carbon black was “substantial,” which Continental

argues is required to prove the trespass and nuisance claims.

1. In General

According to Continental, chemical analyses conducted by the parties’

experts failed to establish the presence of any carbon black on several of the City’s

properties at issue and, with respect to all but one of the remaining properties,

established a concentration of less than one percent of the total dark material on

the property. Consequently, Continental contends, the testing proved at most that

carbon black caused de minimis damage.

At oral argument, the property owners conceded that two of the properties

allegedly damaged, for which the jury awarded compensatory damages, tested

negative for carbon black but contended nonetheless that the location of these two

properties and the similarity between their discoloration and that of the

neighboring properties that tested positive for carbon black allow for an inference

10
that carbon black caused the damage alleged.4 The property owners rely on

circumstantial evidence as well to counter Continental’s claim that the positive test

results revealed only trace amounts of carbon black.

The scope of our inquiry is defined by the arguments raised in the parties’

briefs. Importantly, Continental does not dispute that all of the properties at issue

were discolored and does not contend that the discoloration itself was

insubstantial. Nor does Continental contend that the observable discoloration of

the properties differed materially from one property to another. Furthermore,

Continental does not attempt to convince us that the discoloration was not

suggestive of carbon black.5 Instead, Continental contends that no reasonable fact

finder could conclude that the discoloration was in fact caused by carbon black

4
The property owners focus on the issue of proximate cause. Continental’s relevant
arguments are limited to the issue of factual causation, however, and Continental actually
acknowledges that cases addressing the issue of proximate cause “are inapposite.” [Reply Br. at 7
n.6]. Therefore, we are concerned only with factual causation.
5
Continental denies the ability to accurately identify carbon black with the naked eye;
however, evidence in the record includes contradictory testimony from CCC employees. For
example, Ng-Leng Lee, a plant manager for CCC and at one time plant manager in Phenix City,
testified at his deposition that he believed CCC employee Greg Johnstone, who had reported a
complaint of carbon black fallout, was capable of recognizing carbon black pollution upon seeing
it. In addition, Nicks testified that he paid a car dealership with his own money to have cars cleaned
after inspecting the vehicles and satisfying himself (though not to a scientific certainty) that the cars
had been blanketed with carbon black from the Phenix City plant. Also, the property owners’
microscopist, Garth Freeman, Ph.D., who specializes in carbon analysis, testified that the effects of
carbon black deposits are visible without a microscope and "can form a comet appearance when it
lands on material, and so in some circumstances there are physical appearances of the way carbon
black might deposit that would strongly indicate that that was carbon black." [Trial Tr. at 862].

11
without a chemical analysis establishing the presence of carbon black in such

concentrations as to compel the conclusion that carbon black, and nothing else,

caused the alleged discoloration.

Our substantive legal analysis in this diversity case is governed by Georgia

law, which provides that “[a]s a general rule, issues of causation are for the jury to

resolve and should not be determined by a trial court as a matter of law except in

plain and undisputed cases.” Ogletree v. Navistar Int’l Transp. Corp., 535 S.E.2d

545, 548 (Ga. Ct. App. 2000).

With respect to factual causation . . .[, while] a reasonable inference
sufficient to create a trial issue of fact cannot be based on mere
possibility, conjecture, or speculation . . .[, t]he plaintiff [need only] .
. . introduce evidence which affords a reasonable basis for the
conclusion that it is more likely than not that the conduct of the
defendant was a cause in fact of the result.

Id. (citations & quotations omitted) (emphasis added).

Viewed in the plaintiffs’ favor, the evidence at trial, which included

numerous documents and photographs as well as testimony from Ditchfield,

Tharpe, the Mayor of Columbus, employees (past and present) of CCC, and

experts in microscopy, air quality, and wind direction modeling, tended to show

that (1) Continental’s Phenix City plant emitted carbon black on numerous,

perhaps innumerable, occasions during the relevant time period; (2) wind carrying

12
carbon black from the Phenix City plant frequently blew toward the property

owners’ properties; (3) the properties were in close proximity to the plant; (4) the

properties all were similarly discolored; and (5) the dark substance on the

properties was at least reasonably suggestive of carbon black. Furthermore, most

of the samples the property owners’ expert obtained from the properties tested

positive for carbon black, and the properties that tested negative were located

immediately adjacent to properties with positive test results.

Surely a fact finder would welcome a chemical analysis establishing to a

scientific certainty the presence and precise concentration of the pollutant on the

properties allegedly damaged. In the instant case, the jury was free to hold the

property owners accountable for failing to provide such certainty, but Continental

has failed to cite any Georgia case that requires the property owners to establish

scientific certainty.6 We conclude that such precision is not necessary in this case.

The evidence in the record provides a reasonable basis for concluding that

6
Satterfield v. J.M. Huber Corp., 888 F. Supp. 1567, 1570-71 (N.D. Ga. 1995), the case on
which Continental primarily relies, is inapposite because the Satterfield court relied on a lack of
evidence, generally, and specifically noted the lack of any expert testimony whatsoever regarding
the issue of causation.

13
Continental’s carbon black caused the discoloration alleged.7 Georgia law

requires nothing more.

2. Substantial Damage

Continental contends that the property owners cannot succeed on their

trespass and nuisance claims unless they can prove that the damage caused by

carbon black was “substantial.” [Appellant’s Br. at 20]. We do not need to decide

whether Continental’s view of Georgia law is correct.

As already noted, Continental does not contend that the discoloration

alleged by the property owners was insubstantial. Relying again on the results of

the microscopic analyses conducted by the parties’ experts, Continental merely

contends that the property owners failed to demonstrate that carbon black was the

cause of this damage. Because we have already determined that the property

owners’ circumstantial evidence was sufficient to prove that carbon black caused

the discoloration, it follows that the evidence also was sufficient to prove that

carbon black caused substantial damage to all of the properties. Holman v. Athens

Empire Laundry Co., 100 S.E. 207, 210 (Ga. 1919) (holding that for smoke to

7
We note that the only other circuit to address a similar argument in a case factually on point
is in agreement. Bradley v. Armstrong Rubber Co., 130 F.3d 168, 173-74 (5th Cir. 1997)
(concluding that scientific testing was not required for a jury to infer the presence of carbon black).

14
constitute a nuisance “it must be such as to produce a visible, tangible, and

appreciable injury to property”).

B. Continental’s Culpability

Continental contends that the evidence was insufficient to satisfy the

scienter requirements of the property owners’ wanton conduct, trespass, and

punitive damages claims as well as that which is necessary to overcome Georgia’s

cap on punitive damages. The latter standard requires a showing of “specific

intent to cause harm” and thus erects the highest scienter obstacle the property

owners needed to overcome.8 O.C.G.A. § 51-12-5.1(f), (g) (2000). A showing of

specific intent to cause harm necessarily would satisfy the other scienter

requirements; therefore, we begin our analysis with Continental’s argument that

8
“[W]anton conduct is that which is ‘so reckless or so charged with indifference to the
consequences . . . as to justify the jury in finding a wantonness equivalent in spirit to actual intent.’”
Hendon v. DeKalb County, 417 S.E.2d 705, 712 (Ga. Ct. App. 1992) (quoting Truelove v. Wilson,
285 S.E.2d 556, 559 (Ga. Ct. App. 1981)), quoted in Chrysler Corp. v. Batten, 450 S.E.2d 208, 212
(Ga. 1994). Trespass to personal property requires a showing of willful damage, O.C.G.A. § 51-10-
6(a) (2000), which equates to an “actual intention to do harm or inflict injury.” Hendon, 417 S.E.2d
at 712. A showing of either willfulness or wantonness is sufficient to satisfy the standard for
awarding punitive damages. O.C.G.A. § 51-12-5.1(b) (2000). We note also that the property owners
must prove their entitlement to punitive damages with clear and convincing evidence. O.C.G.A. §
51-12-5.1(b).

Continental has waived its argument on appeal that, under Georgia law, the tort of wanton
conduct applies only in conjunction with a risk to “human life.” [Appellant’s Br. 12]. Continental
failed to object to the district court’s relevant jury instruction or raise this argument before the
district court in its post-trial motion. See Access Now, Inc. v. Sw. Airlines Co., 385 F.3d 1324, 1331-
35 (11th Cir. 2004) (discussing this circuit’s frequently applied rule that we will not consider “an
issue . . . raised for the first time in an appeal”).

15
Georgia’s statutory cap limiting punitive damages requires us at least to grant a

remittitur. Because we conclude from the record that the evidence was sufficient

to prove that Continental acted with specific intent to cause harm, it is unnecessary

to discuss Continental’s arguments concerning the other scienter requirements.

Preliminarily, we recognize that an appellant challenging a jury finding

regarding an actor’s state of mind faces a formidable hurdle. We long ago

cautioned courts in granting judgment as a matter of law “when resolution of the

dispositive issue requires a determination of state of mind. Much depends on the

credibility of the witnesses testifying as to their own states of mind.” Croley v.

Matson Navigation Co., 434 F.2d 73, 77 (5th Cir. 1970).9 Accordingly, we afford

great deference to the jury’s relevant conclusions as well as those of the district

judge first asked to overturn the jury’s finding.

1. The Meaning of Specific Intent to Cause Harm

By statute, Georgia caps punitive damages at $250,000 per plaintiff unless

“it is found that the defendant acted, or failed to act, with the specific intent to

cause harm.” § 51-12-5.1(f), (g); see also Bagley v. Shortt, 410 S.E.2d 738, 739

(Ga. 1991) (holding that the cap establishes a limit on the amount that can be

9
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), we adopted
as binding precedent all decisions of the former Fifth Circuit handed down prior to close of business
on September 30, 1981.

16
awarded “any one plaintiff”). Reading into the term “specific intent” a

requirement that the property owners demonstrate that Continental acted for the

sole nefarious purpose of injuring them, both Continental and the U.S. Chamber of

Commerce (“Chamber”), as amicus curiae, contend that the property owners fell

short. Continental has waived a key aspect of this argument, however.

At trial and without objection, the district court instructed the jury that

“[s]pecific intent to cause harm is where the actor desires to cause the

consequences of his act or where the actor believes that the consequences of his

act are substantially certain to result from [it].” [Trial Tr. 2,027]. This language

reflects, verbatim, the definition adopted by the Georgia Court of Appeals, which

equates specific intent in the punitive damages context to intent as defined in the

Restatement (Second) of Torts. See J.B. Hunt Transport, Inc. v. Bentley, 427

S.E.2d 499, 504 (Ga. Ct. App. 1992); Viau v. Fred Dean, Inc., 418 S.E.2d 604,

608 (Ga. Ct. App. 1992); Restatement (Second) of Torts § 8A (1965); see also

Council of Superior Court Judges, Georgia Suggested Pattern Jury Instructions,

Vol. I: Civil Cases, § 66.711 (4th ed. 2004) (suggesting the same definition that

the district court utilized in this case and the Georgia Court of Appeals utilized in

Bentley and Viau).

17
 Continental now contends that specific intent requires something more. In

essence, Continental and the Chamber contend that the consequences of

Continental’s actions or inaction must have been not only substantially certain to

result but also the end purposely sought. Thus, to avoid the cap, according to

Continental and the Chamber, the property owners must demonstrate that

Continental continued to operate its leaky facility in order to pollute the property

owners’ properties rather than, for example, to make or save money.

At trial, Continental failed to object to the relevant jury instruction and later

failed to raise this same argument in its post-trial motion. Indeed, Continental’s

brief in support of its post-trial motion unequivocally adopted the district court’s

definition after noting Georgia’s reliance on the Restatement. [Br. in Supp. of

Defs.’ Post-Trial Mot. at 20]. Not only has Continental failed to acknowledge its

lack of objection to the jury instructions, but it has also failed to argue for the

application of one of the exceptions to our rule regarding a party’s waiver of an

issue raised for the first time on appeal. See, e.g., Access Now, Inc., 385 F.3d at

1331-35; see also supra note 8. Moreover, in its brief on appeal, Continental

neither expressly challenges the district court’s jury instruction nor requests a

18
review of the instruction for plain error. See Fed. R. Civ. P. 51(c) & (d).

Consequently, Continental has waived this argument.10

We therefore decline to consider whether Continental’s proffered definition

of “specific intent,” to the extent it diverges from the definition provided by the

district court, is correct. Instead, we review the evidence in the record to

determine whether it allows for an inference that Continental at least believed that

the contamination was “substantially certain” to result from its actions or inaction.

We conclude that the evidence was sufficient to support such a finding.11

2. Sufficiency of the Evidence

The evidence at trial demonstrated that by the late 1990s, if not sooner,

Continental was aware that Unit 1 had fallen into a state of disrepair, a condition

Nicks, the Phenix City plant manager from 1999 to 2004, agreed was

10
We disagree with Continental’s contention that we must entertain its argument anyway and
find that the cases upon which Continental relies have no bearing in this case. See Boyle v. United
Techs. Corp., 487 U.S. 500, 513-14, 108 S. Ct. 2510, 2519-20 (1988) (concluding only that it was
not impermissible for the Fourth Circuit Court of Appeals to issue a ruling based on a legal standard
different from the standard provided in the district court’s jury instructions); City of St. Louis v.
Praprotnik, 485 U.S. 112, 120, 108 S. Ct. 915, 922 (1988) (holding that the defendant’s failure to
object to a jury instruction would not foreclose review of the relevant legal issue raised on appeal
when the defendant’s “legal position in the District Court . . . was consistent with the legal standard
it” advocated on appeal, and the Court of Appeals had “very clearly considered, and decided,” the
issue on appeal).
11
Continental similarly waived its current arguments that it lacked notice of the possibility
that the district court would interpret the specific intent requirement as it did and that the Rule of
Lenity compels an alternate interpretation.

19
“deplorable.” [Trial Tr. at 389]. In 1998, Ken Wilder, at the time the Phenix City

plant manager, along with Todd Miller, then CCC’s Corporate Director of Safety,

Health, and Environmental Affairs, attended a citizens meeting at the Columbus

City Manager’s office. [Pls.’ Ex. 2]. According to Wilder’s notes, which he

submitted in a memorandum to Nicks, the purpose of the meeting was to discuss

complaints of pollution that the citizens apparently believed was carbon black.

The citizens provided detailed descriptions of the fallout on their property, and

Ditchfield discussed problems he had been having since 1982. Notably, Wilder’s

memorandum acknowledged that “[i]n 1982 the plant had a problem resulting in

carbon black on residents[’ homes] in the Oakland Park area. Continental Carbon

paid to have the homes of residents cleaned.” [Pls.’ Ex. 2-1]. Nevertheless,

pointing to chemical analyses conducted by McCrone Associates, Inc., and

referring to the “elemental composition” of the samples tested, Wilder assured the

attendees that the pollution was not carbon black despite knowing that at least one

of McCrone’s previous analyses suggested that it was.12

12
Approximately one year before the meeting with the Columbus citizens, CCC had
submitted a sample of dark material from Action Marine to McCrone for an analysis. McCrone
shared the results with Gary Shafer, then the Phenix City plant’s Director of Safety, Health, and
Environmental Affairs. According to McCrone’s report, the carbon black reference sample provided
by CCC contained primarily carbon and a trace of sulfur. The Action Marine sample contained, inter
alia, carbon and sulfur, which McCrone somewhat dismissively concluded “may indicate a trace of
your carbon black.” [Pls.’ Ex. 80-1].

20
 Apparently dissatisfied with Continental’s explanation, the complaints

continued, and Nicks, after becoming plant manager, grew increasingly disgusted

with the condition of the facility. Around that same time, two separate teams of

CCC employees, one of which included Nicks, evaluated Unit 1 and recommended

destructing and rebuilding the system almost entirely. CSRC then sent a team of

its own, which arrived at a different conclusion and recommended not rebuilding

Unit 1.13 Continental scrapped the project and did not resume meaningful efforts

to resuscitate the rebuilding plan until 2004. Even then, internal company e-mails

revealed, Continental planned to extend completion of the project to at least 2006.

In 1999, Continental constructed Unit 2 and installed the thermal oxidizer.

When developing plans for Unit 2, Continental made an economic decision to

limit the number of bagfilter compartments, thereby rendering Unit 2 incapable of

At trial, Nicks testified regarding this analysis and described McCrone as an “independent
laboratory.” [Trial Tr. at 287]. The jury was free to conclude otherwise. In a facsimile transmission
to Tharpe informing him of the test results, McCrone described the elemental composition of the
sample, including the existence of carbon and sulfur. Despite having already conveyed to CCC the
possibility that the sample contained carbon black, McCrone’s note to Tharpe concluded,
“Therefore, although the black particulate on the wipe looks like the carbon black both visually and
with the microscope, the elemental data show the two to be different.” [Pls.’ Ex. 80-2] (emphasis
added). At trial, Nicks acknowledged that the information provided by McCrone to Tharpe was
inconsistent with the information McCrone provided to CCC and agreed that one possible
explanation was that McCrone had lied for CCC. [Trial Tr. at 292].
13
Continental anticipated that rebuilding Unit 1 would cost in excess of $4 million. All
expenditures exceeding $200,000 required the approval of CSRC president Peter Wu, Ph.D., who
also served as CCC’s chief executive officer and vice-chairman of its board.

21
sustaining the flow of air needed to maintain acceptable production levels. Rather

than reduce production, however, Continental overloaded Unit 2, and the

bagfilters, which the manufacturer designed to last one year, began splitting and

leaking in half that time. Indeed, some evidence suggested that the bagfilters

failed after only three or four months.

Emissions and complaints continued despite the operation of the thermal

oxidizer, the supposed catchall. In April 2001, in response to complaints from

Tharpe, an investigator with the U.S. Environmental Protection Agency sat across

the river from the Phenix City plant and documented a carbon black emission from

two exhaust stacks that CCC had not even received a permit to operate. Nicks

later became aware that samples taken from Action Marine following the emission

tested positive for carbon black. Approximately six months later, with no steps

having been taken to correct the problems with Unit 2, Nicks sent an e-mail,

copied to Juan D. Rodriguez, at the time CCC’s senior vice-president of

operations, describing Unit 2 as “constantly operating with some small leak up to

a[n] intolerable leak.” [Pls.’ Ex. 5]. Nevertheless, Continental did not finally

approve the addition of two bagfilter compartments until July 2002, approximately

ten months later.

22
 Continental’s attitude regarding carbon black emissions was further

evidenced by its failure to attempt to accurately monitor the carbon black being

released into the environment. Nicks testified that he had no means of

determining how much carbon black his facility released into the air. According

to Nicks, the plant relied solely on employees’ visual observation to determine

whether any black smoke drifted from the facility. Nobody was assigned to

monitor the emissions on a full-time basis, however, and testimony confirmed that

visually monitoring black emissions at night from the plant was virtually

impossible.

The plant did utilize an alarm system designed to detect solid and liquid

particles in the exhaust plumes; however, according to Randy Wangle, a former

maintenance superintendent at the Phenix City plant, Continental had a policy of

simply cleaning and resetting the alarm without addressing leaks unless the alarm

sounded several times within an hour.

We have closely reviewed the massive record in this case, and, as the

foregoing discussion demonstrates, we conclude that the evidence, which was

clear and convincing, was more than sufficient to demonstrate that Continental

operated the Phenix City plant and failed to correct the problems plaguing it with

23
the “specific intent to cause harm” to the property owners, as that term is defined

by the jury instructions which govern this case. 14

C. Compensatory Damages

1. The Proper Measure of Action Marine’s Damages

The purpose of compensatory damages is “to place an injured party in the

same position as it would have been in had there been no injury . . ., that is, to

compensate for the injury actually sustained.” Home Ins. Co. v. N. River Ins. Co.,

385 S.E.2d 736, 742 (Ga. Ct. App. 1989). Continental contends that the damages

awarded to Action Marine improperly include a windfall of approximately

$800,000 in debt incurred in the ordinary course of business. This argument does

not take into account the evidence that Continental’s actions led to Action

Marine’s demise and thus its inability to generate revenue and repay its debts.15

Although the parties fail to cite relevant Georgia law, the Georgia Supreme Court

14
The cases upon which Continental primarily relies do not compel a different outcome. See
Wal-Mart Stores, Inc. v. Johnson, 547 S.E.2d 320, 322-25 (Ga. Ct. App. 2001) (concluding that the
evidence was sufficient to find that the defendant, Wal-Mart, acted with specific intent to harm the
plaintiff despite evidence that would allow a fact finder to conclude that the plaintiff was the victim
of poor communication and confusing circumstances); Bentley, 427 S.E.2d at 505 (finding that the
cap applied in a case involving injuries caused by an exhausted truck driver); Viau, 418 S.E.2d at
608 (finding that the cap applied in a case involving injuries caused by an intoxicated driver).
15
Continental does not challenge the sufficiency of the evidence linking its carbon black to
Action Marine’s closing beyond what has already been discussed. Therefore, we assume without
deciding that Action Marine proved that the discoloration of its boats proximately caused its
insolvency.

24
rejected an argument similar to Continental’s in circumstances sufficiently similar

to the instant case for this court to do the same. See Bennett v. Smith, 267 S.E.2d

19, 19-20 (Ga. 1980).16

Without objection from Continental, at trial Action Marine presented as an

expert Edward Sauls, who was at the time a certified public accountant, certified

valuation analyst with an accreditation in business valuation, and a certified

financial forensic analyst. In great detail, Sauls explained to the jury the basis for

his conclusion that an award of $1.2 million was necessary to “place [Action

Marine and its owner, Tharpe] in the position financially that they otherwise

would have been had it not been for the actions of the Defendant.” [Trial Tr. at

1097]. In other words, he testified as to “what . . . Action Marine [would] be

worth today had they not lost . . . profits.” [Trial Tr. at 1110].

He further explained the three common “approaches to valuation” and led

the jury through his application of the “asset-based” approach. Essentially, based

on what Sauls concluded Action Marine would be worth but for Continental’s

16
Not entirely analogous, Bennett is nonetheless instructive. The plaintiffs in Bennett
operated an egg farm and contended that the defendants had sold them contaminated feed, which
“caused the plaintiffs’ hens to stop laying eggs.” Id. at 19. After distinguishing the case from more
typical breach of contract cases involving incomplete transactions, the Georgia Supreme Court
concluded that the plaintiffs could recover “lost revenues as damages without deducting production
expenses therefrom, since the plaintiffs’ evidence showed that they incurred the same expenses they
would have incurred had the hens continued to lay eggs.” Id. at 20 (emphasis added).

25
conduct, he determined that a purchaser as of the trial date would assume Action

Marine’s liabilities of $795,243 and pay an additional $653,166 for a total of

$1,448,409. He further reduced the total to account for variables that are not

important here and concluded that $1.2 million would be necessary to compensate

Action Marine for the pollution damage. [Trial Tr. at 1117-18].

On cross-examination, Continental did not challenge Sauls’s valuations and

focused solely on the basis for his conclusion that Action Marine’s losses were

attributable to the carbon black contamination. Moreover, Continental neither

offered an alternative methodology nor presented an expert of its own to provide a

different quantum of damages. Continental now contends that Sauls’s application

of the asset-based approach was incorrect. We disagree. See Dunn v. Comm’r of

Internal Revenue, 301 F.3d 339, 352-53 (5th Cir. 2002) (approaching asset-based

valuation from the perspective of a “willing buyer”); Okerlund v. United States, 53

Fed. Cl. 341, 347 n.4 (Fed. Cl. 2002) (“Under the asset based approach, the value

of a business is equal to the cost that would be incurred in acquiring a group of

assets of similar utility”). Even if Sauls was mistaken in his calculations,

Continental had every opportunity to highlight his error for the jury.

We conclude that the district court did not err in denying Continental’s

motion for remittitur or a new trial on damages. Action Marine’s proffered

26
measure of damages did not impermissibly include damages not attributable to

Continental’s carbon black, and the expert testimony was sufficient to support the

compensatory damages awarded.

2. Tharpe’s Ability to Recover Damages

Continental contends that Tharpe may not recover damages because his

injuries, as sole shareholder of Action Marine, are derivative of his company’s

injuries. Again, we disagree. In Georgia, a sole shareholder’s status as personal

guarantor of his corporation’s debt gives rise to an independent, legally

compensable injury when tortious acts directed at the corporation injure the

shareholder in that capacity. William Goldberg & Co., Inc. v. Cohen, 466 S.E.2d

872, 881-82 (Ga. Ct. App. 1995). Continental offers no reason to believe that a

similar rationale would not apply with respect to the independent injuries inflicted

upon Tharpe’s business reputation, which was so intertwined with that of his

corporation as to be virtually inseparable. See O.C.G.A. § 41-1-1 (1997) ("A

nuisance is anything that causes hurt, inconvenience, or damage to another . . ..");

Anderson v. Fussell, 44 S.E.2d 694, 696 (Ga. Ct. App. 1947) ("The body,

reputation, and property of the citizens are not to be invaded without responsibility

in damages to the sufferer."); cf. Curl v. First Fed. Sav. & Loan Ass’n of

Gainesville, 257 S.E.2d 264, 265-66 (Ga. 1979) (upholding a jury verdict in favor

27
of a plaintiff in a wrongful foreclosure suit seeking damages for, inter alia, injury

to her reputation in the community). Therefore, we conclude that the district court

did not err in allowing Tharpe’s claims to go to the jury.

D. Constitutionality of the Punitive Damages Award

“Punitive damages may properly be imposed to further a State’s legitimate

interests in punishing unlawful conduct and deterring its repetition.” B.M.W. of N.

Am., Inc. v. Gore, 517 U.S. 559, 568, 116 S. Ct. 1589, 1595 (1996).17 “It should

be presumed a plaintiff has been made whole for his injuries by compensatory

damages, so punitive damages should only be awarded if the defendant’s

culpability, after having paid compensatory damages, is so reprehensible as to

warrant the imposition of further sanctions to achieve punishment or deterrence.”

State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 419, 123 S. Ct. 1513,

1521 (2003).

The United States “Constitution imposes a substantive limit on the size of

punitive damages awards[,]” however. Honda Motor Co., Ltd. v. Oberg, 512 U.S.

415, 420, 114 S. Ct. 2331, 2335 (1994). “A decision to punish a tortfeasor by

means of an exaction of exemplary damages is an exercise of state power that must

17
Georgia law allows punitive damage awards in cases involving “aggravating circumstances
in order to penalize, punish, or deter a defendant.” O.C.G.A. § 51-12-5.1(a) (2000).

28
comply with the Due Process Clause of the Fourteenth Amendment.” Id. at 434-

35, 114 S. Ct. at 2342. We are therefore charged with reviewing the jury’s award

to determine whether it “can fairly be categorized as ‘grossly excessive’ in relation

to” the state’s legitimate interests, Gore, 517 U.S. at 568, 116 S. Ct. at 1595, and

to “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.”

Campbell, 538 U.S. at 426, 123 S. Ct. at 1524.

When determining whether a punitive damages award is unconstitutionally

excessive, we are guided by “(1) the degree of reprehensibility of the defendant’s

misconduct; (2) the disparity between the actual or potential harm suffered by the

plaintiff and 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.”18 Id. at 418, 123 S. Ct. at 1520. We do not view these

“guideposts” as an “analytical straitjacket,” Zimmerman v. Direct Fed. Credit

Union, 262 F.3d 70, 81 (1st Cir. 2001), and we maintain as our overarching aim

eliminating the risk that a defendant is punished arbitrarily or without fair notice

of the possible consequences of its actions. Gore, 517 U.S. at 574, 116 S. Ct. at

18
Defendants do not challenge the amount of the punitive damages award as excessive under
Georgia law other than as already discussed.

29
1598 (noting that due process requires a person to have “fair notice not only of the

conduct that will subject him to punishment, but also of the severity of the penalty

that a State may impose”).

1. Reprehensibility

Of the three guideposts, the reprehensibility of a defendant’s conduct is the

most relevant; punitive “damages imposed on a defendant should reflect ‘the

enormity of his offense.’” Gore, 517 U.S. at 575, 116 S. Ct. at 1599. In evaluating

reprehensibility, we consider

whether: the harm caused was physical as opposed to
economic; the tortious conduct evinced an indifference
to or a reckless disregard of the health or safety of
others; the target of the conduct had financial
vulnerability; the conduct involved repeated actions or
was an isolated incident; and the harm was the result of
intentional malice, trickery, or deceit, or mere accident.
The existence of any one of these factors weighing in
favor of a plaintiff may not be sufficient to sustain a
punitive damages award; and the absence of all of them
renders any award suspect.

Campbell, 538 U.S. at 419, 123 S. Ct. at 1521 (citations omitted).

The reprehensibility determination “must begin with the identification of the

state’s interest and an assessment of the strength of that interest,” which are

questions of law. Johansen v. Combustion Eng’g, Inc., 170 F.3d 1320, 1334 (11th

Cir. 1999). We assume from the parties’ arguments that the relevant interest

30
served in this case is Georgia’s “strong interest in deterring environmental

pollution.” Id. at 1335.19

We note that the district court found that the evidence had “established a

pattern of intentional misconduct . . . leading to repeated damage to Plaintiffs’

properties.” The district court also described Continental’s approach to dealing

with the public and the property owners as “less than honest.”

In addition, the district court referred to evidence regarding the potential

health hazards associated with inhalation or ingestion of carbon black, including a

finding documented in Continental’s Material Safety Data Sheet that carbon black

is a possible cause of cancer in humans. The district court, therefore, did not

clearly err when concluding that Continental’s actions reflected an indifference to

or a reckless disregard of the health or safety of others.20

We conclude that the district court’s findings are supported by the record,

and we agree with the district court that these facts support a finding that

19
Although Johansen concerned water pollution, our rationale (i.e. Georgia’s legislative
enactments addressing pollution) applies equally in this case. See O.C.G.A. § 12-9-23 (2006)
(establishing civil penalty of up to $25,000 per day for violations of the Georgia Air Quality Act, §§
12-9-1 to 12-9-25).
20
The evidence does not conclusively establish that carbon black is carcinogenic in humans.
Continental suggests that lack of certainty renders its conduct less reprehensible. On the contrary,
the risk of releasing a possible carcinogen into the environment, even when, or perhaps especially
when, the possibility is not well defined, counsels for the adoption of extraordinary precautions and
justifies extraordinary penalties when available precautions are consciously ignored.

31
Continental’s actions were “so reprehensible as to warrant the imposition of

further sanctions.” Campbell, 538 U.S. at 419, 123 S. Ct. at 1521. We go further,

however, to note briefly those aspects of the facts in this case that justify the

punitive damages actually awarded.

With respect to the pattern and duration of Continental’s intentional

misconduct, the events at issue spanned more than five years, and Continental

continued its course of action and inaction undeterred by both the prospect and

reality of litigation. In addition, the harm inflicted cannot adequately be

characterized as solely economic. Continental’s actions resulted in the destruction

of a once successful business and interfered with the use and enjoyment of

municipal property. Moreover, according to the evidence, the City, which is

accountable to all of its citizens, was compelled to approve special funding for and

devote extraordinary labor resources to the cleaning of its damaged properties.

The evidence also demonstrated Continental’s willingness to elude

accountability. An employee of the Alabama Department of Environmental

Management (“ADEM”) apparently offered the Phenix City plant management

advanced warning of impending, supposedly surprise, government inspections.

Furthermore, the properties at issue are located in a state whose government could

offer the property owners no regulatory protection. Indeed, Nicks testified that

32
when representatives from the Georgia Department of Natural Resources surprised

him with an unannounced visit to inspect the plant, he denied them entry.

Finally, we note that Continental’s actions likely harmed a great number of

people and businesses who are not parties to this litigation. While punitive

damages may not be awarded to punish for harm inflicted on nonparties, we may

consider the risk of harm to others as part of the reprehensibility analysis. Philip

Morris U.S.A. v. Williams, 549 U.S. _____, 127 S. Ct. 1057, 1063-64 (2007).

We conclude, therefore, that Continental’s actions and inaction were

exceedingly reprehensible.21 We decline Continental’s invitation to compare its

actions with those of other defendants in dissimilar contexts and base our

conclusion on the facts before us in this case alone. Cf. TXO Prod. Corp. v.

Alliance Res. Corp., 509 U.S. 443, 458, 113 S. Ct. 2711, 2720 (1993) (plurality)

(“[W]hile we do not rule out the possibility that the fact that an award is

significantly larger than those in similar circumstances might, in a given case, be

one of many relevant considerations, we are not prepared to enshrine petitioner’s

comparative approach in a ‘test’ for assessing the constitutionality of punitive

21
The fact that Alabama permitted CCC to release carbon black into the atmosphere is of no
consequence and, in any case, does not negate the reprehensibility of Continental’s actions. As
Continental acknowledged at trial, its permit did not empower the company to damage property.
Further, the Supreme Court has noted that “[l]awful out-of-state conduct may be probative when it
demonstrates the deliberateness and culpability of the defendant’s action in the State where it is
tortious.” Campbell, 538 U.S. at 422, 123 S. Ct. at 1522.

33
damages awards.” (emphasis added)). A substantial penalty beyond the

compensatory damages awarded was fully warranted. See In re Exxon Valdez, 472

F.3d 600, 625 (9th Cir. 2006) (reducing punitive damages award to $2.5 billion

despite actual damages, including those paid to settle numerous claims, of $504.1

million); Bogle v. McClure, 332 F.3d 1347, 1362 (11th Cir. 2003) (upholding a

punitive damages award of $13.3 million imposed on the board of trustees for a

public library system and the board’s director despite a compensatory damages

award exceeding $3 million when the defendants’ wrongful actions were

intentional and evidenced efforts to cover up their wrongful intent); cf. Johansen,

170 F.3d at 1339 (upholding a punitive damages award of $4.35 million, which

represented nearly 100 times the compensatory award, in a pollution case

involving conduct deemed “not very reprehensible, with no aggravating factors

present”), cert. denied sub nom Combustion Eng’g, Inc. v. McGill, 528 U.S. 931,

120 S. Ct. 329 (1999).

2. The Difference Between Actual or Likely Damages and the Punitive

Damages Award

We next ask “‘whether there is a reasonable relationship between the

punitive damages award and the harm likely to result from the defendant’s conduct

as well as the harm that actually has occurred.’” TXO Prod. Corp., 509 U.S. at

34
460, 113 S. Ct. at 2721 (quoting with added emphasis Pac. Mut. Life Ins. Co. v.

Haslip, 499 U.S. 1, 21, 111 S. Ct. 1032, 1045 (1991)), quoted in Gore, 517 U.S. at

581, 116 S. Ct. at 1602. This determination has not yet been reduced to a “simple

mathematical formula.” Gore, 517 U.S. at 582, 116 S. Ct. at 1602. Instead, the

Supreme Court has endorsed the view that “ratios greater than those [the Court

has] previously upheld may comport with due process where ‘a particularly

egregious act has resulted in only a small amount of economic damages.’”

Campbell, 538 U.S. at 425, 123 S. Ct. at 1524 (quoting Gore, 517 U.S. at 582,

116 S. Ct. at 1602). Conversely, “[w]hen compensatory damages are substantial,

then a lesser ratio, perhaps only equal to compensatory damages, can reach the

outermost limit of the due process guarantee. The precise award in any case, of

course, must be based on the facts and circumstances of the defendant’s conduct

and the harm to the plaintiff.” Id.

Continental contends that a punitive to compensatory damage ratio of 9:1 is

unconstitutional in light of the substantial compensatory award and the Supreme

Court’s relevant directives. We need not address this question directly, however,

because the relevant ratio is actually 5:1.

35
 In Georgia, awards of attorney fees in tort cases involving bad faith are

compensatory in nature. See O.C.G.A. § 13-6-11 (2006 Supp.);22 City of Warner

Robins v. Holt, 470 S.E.2d 238, 240 (Ga. Ct. App. 1996) (holding that the purpose

of an award of attorney fees and litigation expenses “is to compensate an injured

party, in order that such parties are not further injured by the cost incurred as a

result of the necessity of seeking legal redress for their legitimate grievances”);

Ross v. Hagler, 433 S.E.2d 124, 127 (Ga. Ct. App. 1993) (noting that an award of

attorney fees under section 13-6-11 is not punitive in nature); Privitera v. Addison,

378 S.E.2d 312, 317 (Ga. Ct. App. 1989) (describing fees awardable under section

13-6-11 as an element of “actual damages”). The attorney fees in this case were

premised on a finding of bad faith pursuant to section 13-6-11. Consequently, we

include the attorney fees as part of the measure of actual damages for the

necessary comparison. See Willow Inn, Inc. v. Pub. Svc. Mut. Ins. Co., 399 F.3d

224, 234-37 (3d Cir. 2005) (relying on state law to define the character of an

22
When first adopted, the statute referred specifically to “bad faith in making [a] contract”
and was codified in the section of the Georgia Code governing contracts. O.C.G.A. § 13-6-11
(1982). In 1984, the statute was amended to remove the language limiting its applicability to
contract cases, and it has since been applied in cases involving tort claims. See, e.g., St. Paul Fire
& Marine Ins. Co. v. Clark, 566 S.E.2d 2, 11 (Ga. Ct. App. 2002).

36
attorney fee award and including the fee award in its calculation of actual

damages).23

The question we must ask then is whether a punitive damages award of

$17.5 million is proportionally related to the compensatory damage award of

approximately $3.2 million. Under the circumstances of this case, we think it is.

We have not overlooked the Supreme Court’s guidance, described by the

Court as “not binding” but “instructive,” Campbell, 538 U.S. at 425, 123 S. Ct. at

1524, that ratios in excess of 1:1 and/or 4:1 may only rarely satisfy due process

requirements.24 The facts before us, we believe, compel application of what the

Court may someday unequivocally endorse as the rare exception. See In re Exxon

Valdez, 472 F.3d at 624 (concluding that a ratio of approximately 5:1

($2.5billion:$504 million) was constitutionally sound despite finding that the

conduct at issue was neither intentional nor malicious and that previous efforts to

23
The district court’s reliance on the 9:1 ratio constitutes a legal determination involving the
definition of compensatory damages, which we review de novo. Thus, we do not mean to suggest
that the district court’s calculations were factually clearly erroneous.
24
See Campbell, 538 U.S. at 425, 123 S. Ct. at 1524 (endorsing a 1:1 ratio as the general rule
when substantial compensatory damages have been awarded and noting the Court’s historical view
that “an award of more than four times the amount of compensatory damages might be close to the
line of constitutional impropriety”). But see TXO Prod. Corp., 509 U.S. at 462, 113 S. Ct. at 2722
(upholding a punitive damages award in excess of 526 times the actual damages awarded); Haslip,
499 U.S. at 23, 111 S. Ct. at 1046 (upholding a punitive damages award “more than 4 times the
amount of compensatory damages, . . . more than 200 times the out-of-pocket expenses of [the
plaintiff], . . . and . . . much in excess of the fine that could be imposed for insurance fraud”).

37
correct the damage mitigated reprehensibility); Planned Parenthood of

Columbia/Willamette, Inc. v. Am. Coalition of Life Activists, 422 F.3d 949, 962

(9th Cir. 2005) (developing, based on the relevant Supreme Court precedents, a

general guideline allowing for a single-digit ratio greater than 4:1 in cases

involving “significant economic damages and more egregious behavior”), cert.

denied, 126 S. Ct. 1912 (2006). As we have already concluded, the evidence

supporting the district court’s finding of reprehensibility alone justifies the

punitive damages award.25

3. Comparable Civil and Criminal Penalties for Similar Conduct

Lastly, we must consider “the available civil and criminal penalties the state

provides for” Continental’s misconduct to determine whether Continental had

notice that it could be ordered to pay the amount awarded. Johansen, 170 F.3d at

1337. “[A] reviewing court engaged in determining whether an award of punitive

damages is excessive should ‘accord “substantial deference” to legislative

judgments concerning appropriate sanctions for the conduct at issue.’” Gore, 517

U.S. at 583, 116 S. Ct. at 1603 (quoting Browning-Ferris Indus. of Vt., Inc. v.

25
We reach this conclusion without considering the likely harm that would have resulted had
Continental been permitted to continue polluting the property owners’ property. Obviously, this
factor would only strengthen our conclusion.

38
Kelco Disposal, Inc., 492 U.S. 257, 301, 109 S. Ct. 2909, 2934 (1989) (O’Connor,

J., and Stevens, J., concurring in part and dissenting in part)). This factor,

however, “is accorded less weight in the reasonableness analysis than the first two

guideposts.” Kemp v. Am. Tel. & Tel. Co., 393 F.3d 1354, 1364 (11th Cir. 2004).

We must first decide whether to look to the law of Georgia, which has the

greater interest in deterring Continental’s conduct in this case, or the law of

Alabama, which has regulatory authority over Continental. We assume from the

parties’ arguments that Alabama law is the appropriate guide.

Relying on provisions in the Alabama Environmental Management Act

(“AEMA”), Continental contends that the potential penalty in Alabama could not

exceed $250,000 and therefore could not provide notice of a potential civil penalty

of $17.5 million. See Ala. Code § 22-22A-5(18)c (2006 Repl. Vol.). While it is

true that the relevant provision of the AEMA limits “the total penalty assessed in

an order issued” (emphasis added) by the regulating agency, the statute does not

limit the number of such orders the agency may issue. Id. In other words, ADEM

is empowered to assess a penalty of up to $25,000 per violation up to a total of

$250,000 per order. Id. That does not mean that after issuing such an order,

ADEM cannot again assess penalties against a polluter who was the subject of a

$250,000 fine. To so interpret the statute would lead to absurd results and defeat

39
the Act’s stated intent “to improve the ability of the state to respond in an efficient,

comprehensive and coordinated manner to environmental problems, and thereby

assure for all citizens of the state a safe, healthful and productive environment.” §

22-22A-2.26

Conceivably, then, Alabama could fine Continental $250,000 for every ten

violations. As we stated in Johansen, however, “[i]f a statute provides for a range

of penalties depending on the severity of the violation, . . . it cannot be presumed

that the defendant had notice that the state’s interest in the specific conduct at

issue in the case is represented by the maximum fine provided by the statute.” 170

F.3d at 1337. Thus, we cannot simply presume that Alabama would have fined

Continental an incalculable number of times or would have assessed the maximum

amount each time. Nor are we capable of guessing as to the frequency of

Continental’s violations, though evidence in the record indicates that it did indeed

violate conditions of its permit and thus the AEMA. See generally § 22-22A-

5(18).

We do not find ourselves utterly without guidance, however, for “the extent

of the defendant’s statutory notice is related to the degree of reprehensibility of his

26
We do not intend to suggest that the penalties assessable pursuant to the AEMA provide
the “most relevant ‘other sanction.’” Johansen, 170 F.3d at 1337. Continental focuses solely on the
AEMA, as did the district court, apparently. The property owners offer no alternative.

40
conduct.” Johansen, 170 F.3d at 1337. Considering the reprehensibility of

Continental’s conduct, we can surmise that if Alabama citizens had found

themselves the victims of Continental’s malfeasance, ADEM would have

vigorously enforced the relevant statutes and fined Continental closer to the

maximum amount allowed, perhaps several times if necessary. Continental

consequently was on notice that its actions could result in civil penalties that far

exceed the per-order cap limiting ADEM’s discretion, and we do not believe it

implausible that vigorous enforcement would have led to an accrual of fines

totaling several million dollars. We are thus satisfied that the award was not

grossly disproportionate to the penalties Continental faced for its actions.

Moreover, we conclude that the punitive damages award was not

unconstitutionally excessive.

V. CONCLUSION

In sum, the evidence and the relevant law supported the jury’s verdict, the

final judgment, and the district court’s decision to deny Continental’s post-trial

motion. Accordingly, we affirm the district court’s order and the judgment entered

on the jury’s verdict.

AFFIRMED.

41