Reversing a $43 million punitive damage award in the largest retaliatory discharge award in Ohio history, the Eighth District Court of Appeals held that the statutory limits or caps on non-economic and punitive damages are applicable to a retaliatory discharge action brought under the Ohio Civil Rights Act. Although this is good news for employers, there are still substantial non-economic and punitive damages available to employees who successfully establish a discrimination claim under Ohio law.

In Luri v. Republic Services, Inc., et al., an employer and two of its supervisors asked a facility manager to prepare a plan to discharge three of the oldest employees at the facility. The manager told his superiors that one of the employees had strong performance evaluations and a medical condition. After informing his superiors that he had concerns that age and disability discrimination lawsuits could result if they were discharged, the manager refused to fire them. Less than six month later, the employer fired the manager after his superiors imposed some "Improvement Directives," which they claimed he failed to meet.

Thereafter, the manager filed a lawsuit in state court claiming his discharge was retaliatory. At trial, the manager presented evidence showing that one of his former superiors altered a piece of evidence in an effort to justify the manager's discharge, after he knew he was named party in the lawsuit. After a lengthy trial, the jury found in favor of the manager, awarding him $3.5 million in compensatory damages, and a total of $43 million in punitive damages, split among the five defendants.

The employer appealed and challenged the trial court's failure to reduce the jury's verdict as contemplated by various provisions of Ohio's Tort Reform Act. These provisions cap non-economic and punitive damages, provided counsel requests appropriate jury instructions. In a tort action, the provisions generally limit a single plaintiff's recovery for non-economic loss to the greater of $250,000, or three times the economic loss, and to a maximum of $350,000; and limit an award of punitive damages to two times the amount of the compensatory damages awarded to the plaintiff from that defendant.

The appeals court confirmed that an action brought under R.C. Chapter 4112 is a tort action and, consequently, these limits should be applied to claims brought under this statute. Consequently, it held that the trial court should have reduced the $43 million punitive damage award to $7 million -- which, of course is still a stiff penalty.

The manager argued that because there were multiple defendants, the amount of punitive damages should be calculated for each defendant. That is, he claimed the statute allowed him to recover twice the compensatory damage award from each defendant. The dissent agreed, which means that we may have not heard the end of this issue.

The employer also argued that the $43 million award violated its constitutional right to due process. The appeals court independently assessed whether the damages awarded were excessive, reviewing the reprehensibility of the conduct, the disparity between the harm suffered and the amount of the award, and the difference between the award and penalties awarded or authorized in comparable cases. The court pointed to the employer's fabrication of evidence and the plan to terminate the manager for engaging in what he believed to be discriminatory conduct.

The court considered the employer's refusal to waive the manager's non-compete agreement particularly reprehensible. It focused on the fact that the manager worked in a specialized, consolidated industry, which hampered his ability to support himself and his family. So, employers who discharge employees with non-compete agreements may want to carefully consider the impact of enforcement of such an agreement may have on the assessment of its conduct in a lawsuit.

Hat tip to Ohio Employer's Law Blog.