In cases that do not involve personal injuries and involve only economic damages, the Oregon Supreme Court in Goddard holds that a punitive damages award is unconstitutionally excessive if it exceeds four times the amount of compensatory damages. The Court applies the guidelines from U.S. Supreme Court decisions BMW of North America v. Gore and State Farm Mut. Ins. Co. v. Campbell to conclude that a $20,000,000 punitive damages award was unconstitutional where the compensatory damages award was $1.2 million. This commentary, written by Nicholas L. Dazer, discusses the import and practical considerations of this significant decision.

In explaining the basis and rationale for the court’s decision, the author writes: “The court holds that the ratio guidepost is the most helpful in making that determination, and notes that the US Supreme Court has occasionally opined that a four-to-one ratio between compensatory damages and punitive damages is at the outer boundary of constitutionality. The court also notes that the US Supreme Court has indicated that cases involving only economic loss do not warrant punitive damages as substantial as cases involving physical harm. Applying these and other considerations, the court holds that the maximum permissible punitive damages award is four times the compensatory award.”

The commentary also provides several practice tips. The author writes: "The practitioner should be aware that, under Oregon law, the prevailing party receives 40% of any award for punitive damages, and 60% is paid to the Criminal Injuries Compensation Account of the Department of Justice Crime Victims’ Assistance Section, pursuant to ORS 31.735.”

The author also cautions practitioners that “While the Oregon Supreme Court has not yet established a firm limit on punitive damages in cases involving physical harm, the Oregon Court of Appeals has found a seven to one compensatory to punitive damages ratio constitutionally permissible in a case brought by an injured patient against a physician who prescribed theophylline-based medication and the drug’s manufacturer in Bocci v. Key Pharmaceuticals, Inc."

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