Punitive Damages Cap Applies to Statutory Employment Cases, All the Luri(d) Details

In April 2005, Ohio enacted tort reform through Senate Bill 80, which substantially changed the landscape of personal injury law in Ohio as it provided a number of new provisions in an attempt to establish reasonable guidelines for awards of punitive damages. One of these changes was the imposition of statutory damages caps and with these changes came many questions, including whether employment cases would be defined as “torts” and be included in the reform provisions. Ohio employers have been particularly anxious as to the answer because it had the potential to dramatically impact verdicts in the state.

That dramatic impact was demonstrated last week when the Eighth District Court of Appeals remanded Luri v. Republic Services, et al. Case No. 94908, 2011-Ohio-2389 (Ohio Ct. App. May 19, 2011) to the Cuyahoga County Court of Common Pleas and ordered the trial court to impose “statutory punitive damages limits” and to dramatically slash a $43.1 million dollar punitive damage award to $7 million.

Most Ohio employers remember this landmark case when, almost two years ago, a Cuyahoga County jury awarded a single-plaintiff an award of $46.6 million, including $43.1 million in punitive damages. The alleged retaliation claim was brought under Ohio’s Civil Rights Statute codified at Ohio Revised Code (R.C.) Chapter 4112, by a former employee, Ronald Luri against Republic Services, Inc., Republic Services of Ohio Hauling LLC, Republic Services of Ohio I LLC, Jim Bowen and Ron Krall. Specifically, the jury awarded punitive damages as follows: $21,500,000 against Republic, $10,750,000 against Republic Ohio, $10,750,000 against Ohio Hauling, $83,394 against Krall, and $25,205 against Bowen. It was the largest retaliatory discharge verdict in the state’s history.

This decision is significant because now at least one Ohio court has found that Tort Reform, specifically R.C. §2315.21(D)(2), applies in employment cases – discrimination and retaliation. Since that time, it had been unclear whether Tort Reform applied to employment cases brought under R.C. §4112.02.

R.C. §2315.21(D)(2) provides that:

The court shall not enter judgment for punitive damages in excess of two times the amount of the compensatory damages awarded to plaintiff…

If the defendant is a “small employer” [defined as an employer who employs not more than 100 persons on a full-time permanent basis] or individual, the judgment for punitive damages shall be the lesser of two times the amount of compensatory damages, or 10% of the employer’s or individual’s net worth when the tort was committed, up to a maximum of $350,000.

R.C. §2315.21(D)(2) (emphasis supplied).

The court relied on Geiger v. Pfizer, Inc., a decision out of the Southern District of Ohio, that held that, “an action brought under Ohio Rev. Code 4112 is a ‘tort action’ as it is ‘a civil action for damages for injury or loss to person or property” to ultimately find that “this finding would include such actions within the umbra of Ohio’s Tort Reform provisions.” Luri, 2011-Ohio-2389, ¶ 14 (citing Geiger v. Pfizer, Case No. 2:06-CV-636, 2009 WL 1026479 (S.D. Ohio April 14, 2009) (quoting Ridley v. Fed. Express, Case No. 82904, 2004 WL 1119591, at *12 (Ohio Ct. App. May 20, 2004))). The court reviewed R.C. §2315.18 to determine what type of actions do not fall within Tort Reform provisions that included “tort actions in the Court of Claims or against political subdivisions under R.C. Chapter 2744,…actions for wrongful death, medical or dental malpractice, or breach of contract. R.C. 2315.18(A)(7) and (H)(1) through (3).” Id.  ¶ 15. Glaringly absent from this list, “actions based on statutory remedies including,…discrimination suits.” Id. Thus, Ohio Tort Reform provisions apply to discrimination actions – meaning that upon proper motion, the trial court was required to limit the punitive damages award to two times the amount of compensatory damages. Id. ¶ 31. At the trial level, defense counsel never requested that the statutory caps be imposed, and it was not until post-trial briefing that the issue was ever raised. Thankfully, the appeals court found that this error did not prevent the trial court from applying the provision. Id.

While other courts have applied the punitive damages cap to employment cases, this case is by far the biggest.

Given the amount of money at issue, it is likely that we have not heard the last of Luri as it is likely that the Ohio Supreme Court will be asked to weigh in. For now, Ohio employers can rest a little easier as they can better anticipate what type of monetary award they may be facing if found liable under R.C. Chapter 4112.

While all questions regarding tort reform are far from answered, in the employment law context it at least looks like we may be getting closer to a definitive answer, especially if the Ohio Supreme Court takes up this issue.

This still leaves at least one fly in the ointment. While this case seems to put statutory discrimination claims in the tort reform box (i.e., claims brought until R.C. Chapter 4112), it still leaves open the issue of whether wrongful termination in violation of public policy claims brought under Greeley v. Miami Valley Maintenance Contractors, Inc. 49 Ohio St.3d 228 (1990) and its progeny fit within this box as well. No doubt, the plaintiff’s bar will argue that Greeley claims fall outside tort reform and that punitive damages should not be capped, while management lawyers will argue that Luri and the court’s reasoning in Luri should be read broadly to apply to all types of employment termination cases, including wrongful termination in violation of public policy, with their focus being on the key phrase, “Ohio Tort Reform provisions apply to discrimination actions.” Luri , 2011-Ohio-2389, ¶ 31.