As we all know, one of the “guideposts” for evaluating the constitutionality of a punitive damages award is “the disparity between the punitive damages award and the ‘civil penalties authorized or imposed in comparable cases.’” (State Farm Mut. Auto. Ins. Co. v. Campbell (2003) 538 U.S. 408, 428.) “[A] reviewing court engaged in determining whether an award of punitive damages is excessive should ‘accord “substantial deference” to legislative judgments concerning appropriate sanctions for the conduct at issue.’” (BMW of North America, Inc. v. Gore (1996) 517 U.S. 559, 583.)
A Cal Law article, Marvell Slapped: $10 Million Fine for Backdating, is potentially relevant to this sometimes overlooked “comparable fines” guidepost. The piece describes a $10 million SEC fine against the Marvell Technology Group as “unusually pricey” in a case involving charges that the company ” regularly backdated options from 2001 to 2004″ and the CEO “picked the dates in hindsight and signed faked meeting minutes to cover her tracks.” The article further notes that other companies with similar backdating problems paid much less than Marvell, and “[o]nly two other companies, Mercury Interactive and Broadcom Corp., have paid higher fines: $28 million and $12 million, respectively.”
When that’s the kind of penalty you get for the kind of conscious, corporate-wide policies of dishonesty at the highest levels of a company, one would think that some of the transgressions made in one-shot transactions or sporadically committed at lower levels of management shouldn’t readily garner the eight-figure punitive awards that juries so commonly return.