Full text of the Court's opinion

On July 9, 2008, in a 4-3 decision, the Ohio Supreme Court in Barnes v. Univ. Hosps. Of Cleveland set aside a $3 million jury verdict, holding that the lower court, in reviewing the award for excessiveness, failed to analyze the award according to certain specific federal standards intended to ensure the reasonableness and proportionality of damages awards.

At trial, the plaintiff was awarded $3 million in punitive damages on a wrongful death claim stemming from the death of a mentally handicapped and epileptic patient left unattended during dialysis. The defendant filed motions with the trial court seeking elimination or reduction of the punitive damage award. The judge who presided over the case denied the motions without conducting an evidentiary hearing, holding that the jury's punitive damage award was not "grossly excessive" under the standard applied in State Farm Mutual Automobile Ins. Co. v. Campbell, 538 U.S. 408 (2003).

On appeal to the Eighth District Court of Appeals, the defendant asserted that the judge failed to review the punitive damage award according to the standards set forth in BMW of North America Inc. v. Gore, 517 U.S. 559 (1996). The court of appeals upheld the trial judge's ruling that the punitive damage award was not excessive, without discussing or applying the standards enunciated in Gore. The Ohio Supreme Court accepted the appeal, in part, to decide whether the lower court erred in failing to apply the three Gore criteria.

The Supreme Court reversed the Eighth District's ruling and remanded the case for an analysis of the punitive damage award under the specific Gore criteria. In the majority opinion, Justice Lanzinger instructed lower courts that in reviewing punitive damage awards alleged to be unconstitutionally excessive, the following three Gore factors must be used to evaluate whether a lack of notice renders a punitive damage award grossly excessive: (1) the degree of reprehensibility of the defendant's misconduct; (2) the disparity between the harm or potential harm suffered by the plaintiff and the punitive damages awarded; and (3) the difference between the award and the civil penalties authorized or imposed in comparable cases. Although the Supreme Court has applied the Gore guideposts in the past, the Barnes decision is the first case in which the Supreme Court has explicitly held that a lower court must consider and analyze these three guideposts.

Justice Pfeifer dissented from the portion of the Court's decision requiring analysis under Gore. He argued that because the appellants in the court of appeals extensively briefed the Gore guideposts, and the Court of Appeals stated in its opinion that it made "a thorough review of the record, the briefs, and the arguments of all parties," that it had implicitly considered the three factors. Justice O'Donnell also entered a dissent, joined by Justice Stratton, indicating that he would vacate the entire trial court decision and verdict and remand the case for retrial on other grounds.

The majority opinion, authored by Justice Lanzinger, was joined in its entirety by Chief Justice Moyer, Justice O'Connor and Justice Cupp.

This decision adds an additional layer of protection to corporate defendants who face the specter of a large punitive damages award. By mandating an additional level of scrutiny to the process undertaken by reviewing courts, this decision further ensures that defendants are provided fair notice of the penalties they may face, and are not subjected to unreasonable or unconstitutionally excessive awards.

From a practical standpoint, corporate defendants should consider these federal guideposts at the onset of litigation when developing a discovery plan. Defendants faced with the possibility of punitive damages should take additional steps in discovery to develop facts that both mitigate the reprehensibility of the alleged misconduct, and if possible, mitigate the actual harm or potential harm suffered by the plaintiff.