COURT FINDS 61 TO 1 RATIO OF PUNITIVE TO COMPENSATORY DAMAGES IMPLAUSIBLE (Philadelphia Federal)

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Plaintiff sued his dental insurer in federal court for breach of contract, bad faith, and various other claims.  He moved for permission to proceed in forma pauperis, and while the court granted that motion, it dismissed the claims for lack of subject matter jurisdiction. Specifically, the complaint could not make out a claim in excess of $75,000.

The actual damages alleged were $1,200.  The court recognized the bad faith statute allowed for punitive damages, which could be considered toward establishing the $75,000 jurisdictional minimum amount in controversy.  Judge Marston found this to mean the insured was seeking at least $73,800 in punitive damages on his $1,200 compensatory damages claim, an approximate 61:1 ratio.

“But, as the Supreme Court has explained, ‘in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages will satisfy due process.’” In this case, even allowing a punitive damages award nine times compensatory damages “is a mere $10,800—far below the jurisdictional amount.”

Relying on the Third Circuit’s unpublished opinion in Kalick v. Northwest Airlines, Judge Marston found there was no plausible claim that could reach $75,000, and dismissed for lack of subject matter jurisdiction.

Date of Decision:  January 22, 2021

Berkery v. Metropolitan Life Ins. Co., U.S. District Court Eastern District of Pennsylvania No. CV 21-26-KSM, 2021 WL 229320 (E.D. Pa. Jan. 22, 2021) (Marston, J.)

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