Oregon Supreme Court Allows Greater Punitive Damage Award in Some Employment Cases

The Oregon Supreme Court has recognized an exception to limits on punitive damage awards in certain employment cases where the compensatory damages are low.  In Hamlin v. Hampton Lumber Mills, Inc., the Oregon Supreme Court considered the case of a plaintiff who was injured on the job and whose employer failed to reinstate him as required by ORS 659A.043.  That statute requires employers to reinstate injured workers on request within three years of the injury, unless other exceptions apply.  A jury found the employer had violated ORS 659A.043 and awarded the plaintiff $6,000 in lost wages and $175,000 in punitive damages.

As the Court noted, the Due Process Clause in the Fourteenth Amendment of the United States Constitution imposes limitations on punitive damages awards.  The exact limitations are based on factors including the ratio of compensatory to punitive damages and the reprehensibility of the act, among other things.  Courts have held that in the ordinary case, the ratio of punitive damages to compensatory damages should be limited  to single digits (for example, 4:1).  In this case, the ratio was 22:1.  The Oregon Court of Appeals held that the punitive damages award was unconstitutional and ordered it reduced to $24,000 – or a 4:1 ratio.

The Oregon Supreme Court reversed, upholding the 22:1 ratio because it determined that the compensatory damages were “relatively small” and that a violation of ORS 659A.043  was particularly reprehensible.  The Court noted that “the harm that offending employers inflict may be more than monetary and . . . a plaintiff who is not reinstated and who is, therefore, unemployed, is in a more vulnerable position than is a person who is employed when he or she suffers monetary loss.  A person who suffers a loss of employment is without the present ability to earn money to recover economic loss and to avoid further consequential loss.” 

The ruling leaves a number of perplexing loose ends.  First, as the dissenting justices noted, the opinion creates the possibility that a plaintiff who receives a larger compensatory damage award could actually be limited to a smaller punitive damages award.   For example, a plaintiff who received $25,000 in lost wages could be limited to a ratio of 4:1, allowing only $100,000 in punitive damages – less than those awarded in this case.  Second, the ruling leaves unclear whether ORS 659A.043 is the only statute that the Court will consider it particularly reprehensible to violate, or whether the Court’s holding applies to any unlawful employment practice that leaves the plaintiff employee without a job.  The matter may end with the United States Supreme Court.  In an unusual move, the dissenting justices specifically requested further clarification from that Court.