Reduction in Damages
On March 31, a federal judge threw out a $12M punitive damages award to billionaire William Koch in his lawsuit involving fake Bordeaux. US District Judge J. Paul Oetken agreed with the defendant, Eric Greenberg, that the jury’s April 2013 award was “exorbitant,” inasmuch as it was more than 33x the $355,811 awarded in compensatory damages.
"The jury found that (Greenberg) had shamelessly defrauded customers with 'garbage,'" Oetken wrote. "Yet his conduct did not cause a particularly egregious harm: he was dealing in luxury goods marketed to a sophisticated and wealthy subset of the population. The harm was strictly economic, and the victims were far from vulnerable consumers. These facts merit a relatively low award of punitive damages."
Oetken denied Koch's requests to recoup $7.9 million of attorney's fees, and restrict Greenberg's future wine sales. The judge said if Koch does not accept the reduced punitive damages award, then a new trial on those damages will be held.
The Hypocrisy of Tort Reform
The Koch family lobbying group, American Legislative Exchange Council
(“ALEC”) has spent millions of dollars throughout the country lobbying for tort reform laws that would make it harder for the average American to receive compensation for their injuries.
Interestingly, ALEC’s “Tort Reform Boot Camp
” address the topic of punitive damages, the very damages Koch received. Among ALEC’s talking points:
Punitive damages can be rationalized by fitting them within a ratio of compensatory damages (economic and non-economic combined). For example, the Supreme Court has recognized a 9 to 1 ratio of punitive to compensatory, and in some cases smaller ratios. ALEC’s Constitutional Guidelines for Punitive Damages Act suggests maximum ratios to reflect the guidance of the U.S. Supreme Court: 15 to 1 for small claims, 9 to 1 generally, and 1 to 1 for verdicts over $10 million. The model bill also allows for the review of punitive damage awards as a fundamental right, providing an important protection against excessive awards.
Clearly, Koch's verdict exceeded the U.S. Supreme Court guidelines regarding punitive damages. Where was the outcry from Koch? Where was the outcry from ALEC? It seems as though these "talking points" suddenly became silent. Rather, leaving the courtroom in U.S. District Court in Manhattan, Koch described his feelings as, "Out of sight! Over the moon!" He continued, "We weren't even expecting any damages and we got $12 million. Unbelievable!"
Little did Koch know that something miraculous would happen. Judge Oetken reduced his damages. The system worked! This happened with no outcry from Koch, no advertisements from ALEC, and no arbitrary caps on damages from the legislature. With the proper safeguards already in place, the American civil justice system came to the correct result.
The Robin Hood of Wine Collectors
"Collectors and individual sellers don't want anyone to know they have fake wine," Koch told Wine Spectator
just before the trial began. "They want to dump it on others. I'm the only guy who's blowing the whistle on it."
“I got conned, got cheated,” Koch continued to the New York Times
. “No one likes to be conned or cheated.”
Tort Reform For You, Not Me
It seems as though Koch takes a “do as I say, not as a do” approach to the American civil justice system. In 2012, the median wealth per adult
was $38,786. When adjusted for wealth, Koch’s lawsuit (net worth
: $4 billion to $355,811 in compensatory damages) is equivalent to the average American filing suit over $3.45. $3.45 won't buy you too much Bordeaux.
Koch’s position is clear: when Bill Koch is harmed, he files suit as a hero who is teaching a lesson and correcting wrongs; when the average American is harmed, filing suit makes them a frivolous leech on society.
William E. Johnson is a preeminent trial lawyer with an established practice in West Palm Beach to serve clients in the areas of personal injury and wrongful death. With offices based at CityPlace in the heart of West Palm Beach, Mr. Johnson serves those whose lives have been affected by personal injury or wrongful death throughout the state of Florida.