In Neuros Co. v. KTurbo, Inc., 698 F.3d 514 (7th Cir. 2012) (No. 11-2260), the parties were competing manufacturers that bid on a contract to provide equipment to a waste water treatment plant in Utah. After Neuros won, KTurbo posted slides on its website and made presentations to engineering firms in the industry that (erroneously) accused Neuros of fraudulently representing that its products could achieve performance that was unattainable. Neuros sued KTurbo for, among other things, defamation. Following a bench trial, Neuros obtained a judgment for $10,000 in general damages and $50,000 in punitive damages. On appeal, KTurbo argued that a punitive damages award of 5 times the amount of general damages was improper. In rejecting that argument, the Seventh Circuit found that the punitive damages award was “too small,” and in light of KTurbo’s “reprehensible” conduct, it should have been ordered to pay “substantial punitive damages” rather than the “slap-on-the-wrist award” the district court ordered. The court dismissed concerns over the 5-1 ratio, stating that where “compensatory damages are slight, a single-digit ratio is likely to be insufficient.” The court concluded that KTurbo “should consider itself fortunate that Neuros hasn’t challenged the adequacy of the punitive-damages award.”
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Court affirms 5-to-1 punitive damages award, calls it “too small.”
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