United States: Tenth Circuit Reduces Punitive Award By More Than Ninety Percent In Carbon Monoxide Case

Last Updated: April 22 2016
Article by Evan M. Tager

Lately, we have had many occasions to criticize courts' analysis of punitive damages issues, so it is nice for a change to be able to report on the Tenth Circuit's insightful decision in Lompe v. Sunridge Partners.  Readers may recall that we published a post about our amicus brief for the Chamber of Commerce in this case about a year ago.  I am pleased to report that the court adopted virtually all of the argument and analysis set forth in the amicus brief.

To refresh your recollection, the case was brought by a tenant in a Wyoming apartment building who was overcome by carbon monoxide from a malfunctioning furnace. She alleged that the company hired to manage the building (Apartment Management Consultants or "AMC") negligently adopted a policy of repairing or replacing furnaces only as problems arose rather than engaging in regular preventative inspections and maintenance and that the owner of the building (Sunrise Partners) breached a non-delegable duty of care to her.

The plaintiff prevailed at trial and was awarded $3 million in compensatory damages (reduced to $2.7 million to account for the jury's finding that she bore 10% of the fault) and a total of $25.5 million in punitive damages—$3 million against Sunridge and $22.5 million against AMC.   The district court upheld the verdict in its entirety.  A divided panel of the Tenth Circuit eliminated the punitive award against Sunridge and reduced the punitive award against AMC to $1,950,000.

Punitive Liability

In an opinion by Obama-appointee Judge Carolyn McHugh, the majority held that there was insufficient evidence that Sunridge engaged in willful or wanton misconduct. The court explained that "[t]he trial evidence establishes [that] Sunridge purchased the property for investment purposes and hired a reputable property manager to take care of the day-to-day management of the apartments. Sunridge owner Mr. Ctvrtlik believed, based on his prior favorable experience, that he could rely on AMC to ensure safe conditions at Sunridge."  Although there was a prior incident of carbon monoxide poisoning, the majority concluded that there was no evidence in the record that Sunridge was aware of it.  Accordingly, the court held, "even if the evidence of Sunridge's minimal involvement in the operation of the apartments could support a finding of negligence, it is insufficient as a matter of law to establish the willful and wanton misconduct necessary to support an award of punitive damages in Wyoming."

The court held that, in contrast, there was sufficient evidence to support holding AMC liable for punitive damages, though the amount imposed by the jury was unconstitutionally excessive. In the course of holding that the punitive damages were excessive, the majority made several subsidiary rulings that should be helpful to defendants in future cases.

The Nature of the Excessiveness Inquiry

To begin with, adopting the analytical starting point advocated in our amicus brief, the majority recognized that the core responsibility of a reviewing court is to "decide whether the particular award is greater than reasonably necessary to punish and deter. The Supreme Court has instructed us to go 'no further' if a 'more modest punishment' for the 'reprehensible conduct' at issue 'could have satisfied the State's legitimate objectives' of punishing and deterring future misconduct." (Some internal quotation marks, alterations, and citations omitted.)  That conceptualization of the role of excessiveness review makes it far more likely that courts will rigorously police the size of punitive awards, as we believe that the Due Process Clause requires.

The Standard of Review

The majority also resisted the all-too-frequent tendency of courts to confuse excessiveness review with review of the sufficiency of the evidence supporting a liability finding. As we explained in a prior post, when conducting excessiveness review many courts reflexively view the evidence in the light most favorable to the plaintiff and, as a result, defer to "phantom" findings that the jury may well not have made.  The Tenth Circuit correctly explained that, although "we defer to the jury's and the district court's factual findings unless they are clearly erroneous," "a predicate to any obligation to defer is the existence of findings of fact made by the jury or the district court."

Because "the jury was not asked to answer special interrogatories," the court explained, there was nothing to defer to. The jury "rendered only two pronouncements with respect to punitive damages: (1) that AMC's conduct warranted an award of punitive damages under Wyoming law; and (2) the amount of punitive damages awarded against AMC should be $22.5 million."  Neither of those determinations warrant deference in the excessiveness analysis, the court held.  It explained that "the jury's verdict in the liability phase of trial does not inform our constitutional analysis further.  And the verdict after the second phase of trial setting the amount of the punitive damages is neither a factual finding nor entitled to deference."

The court continued that "[t]here is a similar dearth of factual findings by the district court"—"in large measure because the district court improperly applied a deferential standard of review to AMC's due process challenge." The majority explained that although "[t]he district court includes in its analysis a recitation of facts the jury could have found based on the evidence presented," "[t]hese statements are not findings of fact by the district court, and we do not treat them as such."

Application of the BMW Guideposts

The court's application of the guideposts is replete with analysis and insights that should be useful in future punitive damages cases.


The case, of course, involved a physical injury, so there was no real dispute that the first reprehensibility factor identified in State Farm was present.

Skipping to the third factor, the court joined several other courts in recognizing that "the financial vulnerability" of the plaintiff "does not have particular relevance" in cases in which the harm "was physical rather than a reprehensible exploitation of financial vulnerability through fraud or other financial misconduct."

The court then addressed the second, fourth, and fifth factors together. It held that AMC's conduct reflected reckless indifference to safety and could be said to have involved "repeated failures to act" because there had been prior carbon monoxide leaks in the building and AMC therefore was "on notice that the furnaces needed regular substantive safety inspections to prevent future dangerous releases," but that AMC's passive failure to act "was not the result of intentional malice, trickery, or deceit."  (Internal quotation marks omitted.)

In other words, the court found that three of the five reprehensibility factors identified in State Farm were present.  Nevertheless, embracing a view that we have espoused in numerous briefs over the years, the court did not simply count factors, but instead looked at the conduct holistically and attempted to place it on a spectrum of reprehensibility, concluding that the evidence in the case "distances AMC's misconduct from the 'extreme reprehensibility' end of the constitutional reprehensibility spectrum."  (Emphasis omitted.)  The court emphasized that "AMC's wrongful conduct consisted of a failure to act rather than any intent to injure through affirmative conduct."  It concluded that "[a]lthough AMC's failures to act are deserving of punishment beyond the compensatory award, we are not convinced that its failures to act were so particularly reprehensible that due process would allow such a severe punishment as the $22,500,000 in punitive damages awarded here."

Importantly, the majority explained that the dissent's invocation of the jury's finding that AMC's conduct was wanton was misplaced. That finding was what warranted the imposition of punitive damages in the first place, but did not warrant a further inference that the jury had determined that the conduct was especially reprehensible.


The majority's discussion of the ratio guidepost includes several holdings that should be useful in future punitive damages litigation.

First, the court held that the district court erred by including in the denominator of the fraction the full amount of compensatory damages even though the jury had found the plaintiff to be 10% at fault.

Second, agreeing with decisions of the Sixth and Eighth Circuits, the court held that the district court erred in using the full amount of compensatory damages as the denominator for the punitive award of each defendant. It explained that "[b]ecause the Defendants were not jointly and severally liable, each would only be responsible for that portion of the compensatory damages award allocated to it."  Accordingly, the court ruled, the ratio for AMC was 11.5:1, not 7.5:1 as the district court had found.

This holding is important in all states that have abrogated joint and several liability. Because Wyoming is one such state, the court did not address whether the compensatory damages should be apportioned for ratio purposes when liability is joint and several.  We note, however, that there is no reason why a state's decisions regarding allocation of the burden of paying compensatory damages should matter when determining issues relating to punitive damages.  What matters for purposes of punitive damages is the relationship between each defendant's punishment and the harm caused by that defendant.

That means that if the verdict allocates fault among the defendants, that allocation should be used to determine the denominator of the ratio for each defendant. And as the Eighth Circuit held in Grabinski v. Blue Spring Ford Sales, Inc., if the verdict does not allocate fault, the compensatory damages should be apportioned among defendants in the same proportion as the punitive damages awards.  For example, if the punitive award against one defendant is twice the size of the punitive award against the other defendant, the first defendant should be allocated two-thirds of the compensatory damages and the second should be allocated one-third for purposes of determining the ratio.

Third, the court explained that "where compensatory damages are already substantial, a ratio of 1:1 may be the most the Constitution will permit." Turning to the meaning of "substantial," it concluded that compensatory awards in excess of $1 million, as this one was, are uniformly deemed "substantial," even while recognizing that "in many cases, compensatory damages less than $1,000,000 have also been considered substantial."

Importantly, the court added that the compensatory damages were substantial not just in absolute terms, but also in relation to the plaintiff's injury. It emphasized that "Ms. Lompe was discharged from the hospital the same day she was admitted, resumed living at the Sunridge Apartments, and her own expert was equivocal about whether she was disabled as a result of the exposure."  It added that "[a]t the time of trial, Ms. Lompe was working as a receptionist at wages comparable to those she earned before the incident" and "continued to referee and play basketball and to sing and travel with a choir."

For all of these reasons, the court concluded that the portion of the compensatory damages attributable to AMC—$1,950,000—was substantial and that "[t]herefore the 11.5:1 ratio between the punitive award against AMC and its portion of these substantial compensatory damages is constitutionally suspect."

Penalties for Comparable Conduct

The court acknowledged that in this case the third guidepost "has not produced particularly robust comparisons," but concluded that "on the whole it reinforces our assessment that the $22,500,000 punitive damages award here was excessive because AMC was not on fair notice that it could be" subjected to a punishment of that magnitude. Among other things, the court considered that "Wyoming law does not regulate the inspection or replacement of furnaces, nor does it require property owners to provide CO detectors."

While recognizing that Wyoming law does require owners of residential rental property to protect the health and safety of the renter, it pointed out that renters cannot recover even for mental anguish under that law, much less "civil penalties that would have put AMC on notice that failure to maintain furnaces could subject it to punitive damages of the magnitude awarded by the jury here."

The court also noted that several other states within the Tenth Circuit require maintenance of residential heating systems, but none impose civil fines or criminal liability for breaching that duty.

Finally, the court indicated that it had not located any decisions in Wyoming or elsewhere in the Tenth Circuit in which a large punitive award was imposed in a case involving carbon monoxide poisoning. And it noted that punitive awards in states outside the Tenth Circuit in cases involving carbon monoxide poisoning are nowhere near $22.5 million.

The Constitutionally Maximum Permissible Amount of Punitive Damages

Having concluded that all three guideposts indicate that the punitive award against AMC was unconstitutionally excessive, the court proceeded to determine the maximum permissible amount of punitive damages. Citing cases from the Third, Sixth, Eighth, and Ninth Circuits, the court observed that "since the Supreme Court's decision in State Farm, many federal appellate courts have imposed a 1:1 ratio where, as here, the compensatory damages exceed $1 million."  It continued that "[w]hen courts have deviated upwards from a 1:1 ratio, the defendant has either intended to cause the substantial compensatory damages or engaged in particularly egregious behavior."  The court also explained that another panel of the Tenth Circuit had reduced a $2 million punitive award to the amount of compensatory damages—$630,307—after concluding that "the compensatory damages award was substantial in light of the plaintiff's injuries."

The court concluded that here "application of the Gore factors also calls for a 1:1 ratio of punitive damages to compensatory damages."  It explained that "[a] ratio of 1:1 under the present facts ensures that the punishment imposed on AMC is reasonable and proportionate to the harm Ms. Lompe suffered, in light of the general damages she recovered.  And a higher amount of punitive damages, under the circumstances of this case, would be greater than reasonably necessary to punish and deter.  Because a 1:1 ratio of punitive damages to compensatory damages here satisfies the State's legitimate objectives of punishing and deterring future misconduct, we may go no further."  (Internal quotation marks and citations omitted.)

The court accordingly reduced the punitive award against AMC to $1,950,000.

The Dissent

Judge Bacharach—like Judge McHugh, an Obama appointee—dissented both with respect to the determination that there was insufficient evidence to establish that Sunridge acted with the mental state necessary for the imposition of punitive damages and with respect to the determination that the maximum permissible amount of punitive damages against AMC is $1,950,000. Though agreeing that the $22.5 million punitive exaction against AMC was excessive and that the proper amount of the denominator is the amount of compensatory damages  attributable to AMC, Judge Bacharach expressed the view that the conduct was reprehensible enough to support a punitive award of four times the compensatory damages—i.e., $7.8 million.

The Rehearing Petition

On April 15, 2016, the plaintiff filed a petition for rehearing and request for rehearing en banc. The petition attacks both the holding that there was insufficient evidence to impose punitive damages against Sunridge and certain aspects of the holding that the punitive damages against AMC were unconstitutionally excessive.  The following business day, the court ordered the defendants to file a response to the petition by April 28.  On April 19, the defendants filed an unopposed motion to extend the time for filing the response to May 5, which the panel granted on April 20.

My view is that the petition is not particularly compelling. The argument regarding Sunridge is a case-specific quibble about the sufficiency of the evidence that fails to account for the rigorous substantive standard for imposition of punitive damages in Wyoming and alleges a "conflict" with a case that the majority repeatedly cited.  The balance of the petition attacks the majority's holding that no deference is owed to findings that neither the jury nor the district court actually made, takes issue with the majority's determination that AMC's conduct was not sufficiently reprehensible to warrant the amount of punitive damages imposed (based almost entirely on the unremarkable fact that AMC's conduct was found to have involved reckless disregard for safety), criticizes the majority's observation that the very generous award of non-economic damages may have a punitive and deterrent effect that duplicates that of the punitive damages, and insists that the court went too far in adopting the 1:1 ratio that so many other courts have settled on when the conduct at issue was not malicious and the compensatory damages were "substantial."

I expect that the Tenth Circuit will rule on the rehearing petition by early June and will report on the outcome as soon as I receive the order.

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2016. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.