This unpublished opinion analyzes whether a $4 million punitive damages award is excessive when compared to a $1 million compensatory damages award, and concludes that the award is not excessive because of the defendant’s wealth.

The plaintiff in this case is a doctor who is an expert in neurology. He claimed that the defendant, Impact Biomedicines, used his preliminary consulting work in submissions to the FDA without his knowledge or consent.

A jury awarded him $1 million in compensatory damages and $4 million in punitive damages on his claim for fraudulent concealment. On appeal, the Fourth Appellate District, Division One, considered whether the 4 to 1 ratio of punitive damages was constitutionally excessive, in light of statements by the U.S. Supreme Court that awards exceeding a 1 to 1 ratio may be excessive in cases where the compensatory damages are substantial.

Many cases have held that compensatory damages of $1 million or more are substantial for purposes of applying the Supreme Court’s test. But the Court of Appeal here concluded that the award was not substantial when compared to the defendant’s net worth of $325 million.

Nothing in the U.S. Supreme Court caselaw indicates that the defendant’s wealth should have a bearing on whether a compensatory damages award is considered substantial. To the contrary, the Supreme Court held in State Farm that courts cannot use a defendant’s wealth as a justification to uphold an otherwise unconstitutional award.

But that’s exactly what the Court of Appeal did here. It upheld an award that would have been considered excessive if the defendant were not wealthy.

We have seen this before. Back in 2011 in Bullock v. Philip Morris, the Second Appellate District upheld a punitive damages award against a tobacco company using the same reasoning—that a compensatory damages award is not substantial if the defendant is very wealthy.

A major difference between this case and Bullock is that the Court of Appeal in Bullock found the defendant’s conduct to be highly reprehensible, and cited that high degree of reprehensibility as an additional basis for upholding the award. But here, the Court of Appeal found that the defendant’s conduct was not highly reprehensible. Thus, the defendant’s wealth was the only justification for departing from the usual 1 to 1 ratio limit. That’s something we haven’t seen before.