Lompe v. Sunridge Partners, LLC (Tenth Circuit)

This case was brought by a tenant in an apartment building who was injured when she was overcome by carbon monoxide from a malfunctioning furnace. She was awarded $3 million in compensatory damages (reduced to $2.7 million to account for her comparative fault) and a total of $25.5 million in punitive damages against the owner of the apartment building and its management company. The district court refused to disturb the punitive awards against the two defendants—$3 million and $22.5 million respectively. On behalf of the Chamber of Commerce of the United States, we filed an amicus brief identifying several errors in the district court’s excessiveness analysis. First, the court failed to engage in the exacting review required by the Due Process Clause and improperly deferred to “phantom” factual findings not actually made by the jury. Second, the court failed to heed the Supreme Court’s admonition that the excessiveness inquiry requires courts to determine whether the punitive damages are greater than reasonably necessary to achieve the state’s interests in retribution and deterrence. Third, in analyzing the ratio guidepost, the court both failed to reduce the $3 million compensatory damages to reflect the plaintiff’s negligence and compared the punitive award against each defendant to the full amount of compensatory damages. Finally, the court deviated from the modern trend by refusing to reduce the punitive damages to the amount of compensatory damages or lower. The Tenth Circuit agreed with each of the arguments made in our amicus brief. After overturning the punitive award against the building owner in its entirety on sufficiency-of-the-evidence grounds, the Tenth Circuit reduced the punitive damages against the management company to $1,950,000—representing a 1:1 ratio to that defendant’s share of the compensatory damages (as reduced to account for the plaintiff’s comparative fault).