Yesterday the Arizona Supreme Court issued a death knell to the pending legal challenge to Prop. 206. As you will recall from our blog post, last November our citizenry passed a referendum that raised the minimum wage and imposed mandatory paid leave on employers. The minimum wage hike took effect in January, while the paid leave provision becomes effective in July. The ensuing legal challenge to Prop. 206 found no traction, and met its demise yesterday when the Court unanimously rejected the appeal. Given the exigencies of the situation, the Court issued its ruling without a supporting opinion, but promised to publish an actual opinion when ready to do so. It appears that Prop. 206 is the law of the State, and only constitutional/political solutions remain. In the meantime, hello minimum wage hikes and paid leave.
The Ninth Circuit Court of Appeals just struck down a trial court’s award of $300,000 in punitive damages in a sexual harassment case yesterday. State of Arizona and Angela Aguilar v. ASARCO. This was a sexual harassment lawsuit brought on behalf of former ASARCO employee, Angela Aguilar. The case went to trial and the jury found ASARCO liable for sexual harassment. However, the jury did not find that Aguilar suffered any compensatory damages, so it awarded Aguilar $1 in nominal damages. But, the jury then awarded Aguilar $868,750 in punitive damages. The trial court reduced this award to $300,000 because of the applicable Title VII damages cap. The real problem here remained—how can a punitive damages award be 300,000 times more than the actual award? That would seem to be a violation of the employer’s constitutional right to due process. This is so because the United Supreme Court has previously advised that punitive damages awards generally should not exceed a ration of 10 to 1 in comparison to the actual damages awarded.
The Ninth Circuit agreed that the $300,000 damages award was constitutionally excessive. But the court instead concluded that a ratio of 125,000 to 1 would be constitutionally acceptable. So, the trial court was instructed to reduce the damages award to $125,000 and if the plaintiff did not accept the reduced amount, the case will have to be retried. When one considers the Supreme Court’s admonition for ratios smaller than 10 to 1 in comparison to this court’s approval of a ratio of 125,000 to 1, one must wonder who’s using the “new math” and who’s using the “old math.”