The Tenth Circuit Court of Appeals issued its decision in Jones v. United Parcel Service, Inc., on March 5, 2012.
Plaintiff Keith Jones (Jones), a United Parcel Service (UPS) package car driver, suffered work-related injuries, filed workers’ compensation claims, and received benefits. Jones’s physician and the UPS physician disagreed about whether Jones was able to return to work without restrictions. Under their collective bargaining agreement, if the UPS doctor and the employee’s doctor disagreed, the parties had to select a third doctor “whose decision [would] be final and binding.” The third doctor, whose review was limited by UPS, concluded Jones could not perform the essential functions of his job. UPS therefore terminated Jones.
Jones filed a state law retaliatory discharge claim and UPS removed the case to federal court. A jury awarded Jones over $2.5 million in actual and punitive damages. UPS appealed. On appeal, UPS alleged that:
(1) It was entitled to judgment as a matter of law on Jones’s retaliation claim. Upon de novo review, the Court found the evidence presented supported a reasonable inference in support of Jones’s retaliation claim. Affirmed.
(2) The district court erred in giving two improper jury instructions. The Court concluded that, although not a model of clarity, the jury instructions were not improper. Affirmed.
(3) It was entitled to judgment as a matter of law on Jones’s claim for punitive damages. Based on the evidence presented, UPS is not entitled to judgment as a matter of law on Jones’s claim for punitive damages because enough evidence was presented to establish ratification of UPS’s conduct “by a person expressly empowered to do so on behalf of the . . . employer.” Kan. Stat. Ann. § 60-3702(d)(1). Affirmed.
(4) The district court erred in allowing the jury to decide the amount of punitive damages. The Court concluded that the district court did not err in instructing the jury to determine the amount of punitive damages, relying on Federal Rule of Civil Procedure 38 rather than Kansas law. A federal district court sitting in diversity applies federal procedural law and state substantive law. Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415, 427, 428 n.7 (1996). Affirmed.
(5) The jury’s award of $2 million in punitive damages violated its federal due process rights. “[T]he Due Process Clause of the Fourteenth Amendment prohibits the imposition of grossly excessive or arbitrary punishments on a tortfeasor.” Hardman v. City of Albuquerque, 377 F.3d 1106, 1121 (10th Cir. 2004). Whether an award is grossly excessive or arbitrary is based on “(1) the degree of reprehensibility of the defendant’s action; (2) the disparity between the actual harm suffered by the plaintiff and the punitive damage award; and (3) the difference between the punitive damage award and the civil penalties authorized or imposed in comparable cases.” Id. The Court concluded that the jury’s $2 million punitive damage award was excessive and violated UPS’s federal due process rights. Reversed and remanded on this limited issue for the district court to enter a punitive damage award equal to the compensatory damage award.