Eighth District Applies (Some of) Tort Reform To Employment Discrimination Claims

On May 19, 2011, the Eighth District Court of Appeals held that Ohio’s Tort Reform punitive damage caps apply to employment discrimination claims.  The cap limits punitive damage awards to an amount no greater than twice the amount of compensatory damages.  In Ronald Luri v. Republic Services, Inc., et al., the jury awarded $3.5 million in compensatory damages and $43 million in punitive damages to a plaintiff based on his claim of wrongful discharge in retaliation for engaging in activity protected under Ohio’s age discrimination laws.  The Eighth District found that the trial court should have capped the amount of punitive damages at $7 million (two times compensatory damages), rather than allow the jury to award punitive damages more than twelve times the compensatory amount.

Although the Eighth District applied the punitive damages cap of Tort Reform to the jury’s verdict, it simultaneously held that the trial court did not err when it refused apply Tort Reform’s mandatory bifurcation provision.  Tort Reform requires trial courts to essentially hold two trials: the first on liability and compensatory damages (e.g., back pay, front pay, emotional distress), and the second on punitive damages.  This is significant because evidence to support a finding of punitive damages (an individual defendant’s finances, for example), would not be allowed in until the second trial.   Evidence of a defendant’s financial resources is admissible as the jury determines whether to award punitive damages.  The theory behind bifurcation is that once a jury has this information, the potential exists for the jury to consider the defendant’s resources in determining liability and compensatory damages which might inflame the passion and prejudice of the jury and may influence a finding of liability and/or determination of compensatory damages.

The Eighth District held that the mandatory bifurcation provision of Tort Reform (the statue uses the word “shall”) is unconstitutional because conflicts with Rule 42(B) of the Ohio Rules of Civil Procedure which vests the trial court with discretion to bifurcate.   According to the Eighth District, the Rules of Civil Procedure trump statutes when there is an inconsistency.  Ohio’s Appellate Courts are split on this issue, as the Tenth District has enforced the bifurcation provision of Tort Reform as mandatory and constitutional.  Accordingly, on June 7, 2011, the Eighth District certified a conflict to the Ohio Supreme Court, which is now required to resolve the conflict.  In addition to determining this issue, it is likely that the plaintiff will appeal the application of the punitive damage caps, which in effect reduced his recovery from near $50 million to $10 million.  While the Eighth District’s decision is a mixed bag for employers, the saga of Luri v. Republic Services and its July 2008 landmark jury verdict will be eventually decided by the Ohio Supreme Court.  Stay tuned.

For more information, please contact Patrick Peters at ppeters@beneschlaw.com or (216) 363-4434.

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