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Beard v. Wexford Health Sources, Inc.

United States Court of Appeals, Seventh Circuit

August 21, 2018

Donald E. Beard, Jr., Plaintiff-Appellant,
Wexford Health Sources, Inc., Defendant-Appellee.

          Argued October 30, 2017

          Appeal from the United States District Court for the Central District of Illinois. No. ll-CV-3360 - Colin Stirling Bruce, Judge.

          Before Wood, Chief Judge, and Bauer and Easterbrook, Circuit Judges.

          Easterbrook, Circuit Judge.

         Wexford Health Sources provides medical care to inmates in Illinois's prisons. Donald Beard, Jr., an inmate, experiences chronic ankle pain. In December 2010 he consulted with his prison's doctors about managing his condition. Beard wanted surgery, but the doctors ordered conservative treatment. When Beard's pain persisted, the doctors considered referring Beard for surgical evaluation, a step that requires Wexford's approval. It rejected the doctors' requests for surgical evaluation, though it authorized Beard to see a podiatrist in September 2012 and an orthopedist in January 2015.

         Beard filed a pro se complaint in September 2011. He alleged that members of the prison's medical staff and administrative team were deliberately indifferent to his serious medical need in violation of the Eighth Amendment (applied to the states through the Fourteenth), and he sought damages plus injunctive relief. The district court recruited counsel, who added Wexford as a defendant and stipulated to the dismissal of the individual defendants. Beard presented his case against Wexford to a jury, which awarded him $10, 000 in compensatory damages and $500, 000 in punitive damages.

         Wexford persuaded the judge that the punitive-damages award violates the Fourteenth Amendment's prohibition on excessive or arbitrary punishment. The judge reduced punitive damages to $50, 000. Initially he offered Beard a choice between retrying the issue of punitive damages and accepting the reduced award but later withdrew the option and entered a judgment that awarded only $50, 000 in punitive damages (plus the jury's compensatory award).

         Beard's first argument on appeal is that the district court improperly prevented him from presenting an additional theory of liability. Beard convinced the jury to find Wexford directly liable; he contends that he should have been allowed to argue that Wexford also is vicariously liable for its doctors' violations of his constitutional rights. Beard maintains that Islander v. Forest Park, 690 F.2d 126 (7th Cir. 1982), which stopped him from pursuing vicarious liability, should be overruled.

         Monell v. Department of Social Services, 436 U.S. 658 (1978), holds that a municipal corporation cannot be vicariously liable if its employees deprive others of their civil rights. Is-kander treats private corporations the same way, when their liability depends on performing governmental functions. Beard maintains that Monell should be limited to governmental litigants. But Beard has not explained how Iskander harmed him. We asked Beard's counsel what additional damages he would have sought if Wexford could be found vicariously liable. He did not point to any. So we need not decide whether Iskander should be overruled; anything we say about the subject would be advisory.

         Beard also contends that the district court erred in reducing the jury's award of punitive damages without offering him a new trial. Punitive damages punish blameworthy behavior and deter defendants from committing future bad acts-the more reprehensible a defendant's conduct and the more easily a defendant can conceal violations, the higher the punitive damages. See, e.g., Zazu Designs v. L'Oreal, S.A., 979 F.2d 499, 508 (7th Cir. 1992). But excessive punitive-damages awards violate the Due Process Clause. See, e.g., State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408 (2003); BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996). The Justices have instructed courts to review whether an award of punitive damages exceeds the Due Process Clause's bounds by considering the reprextensibility of the defendant's conduct, the ratio between punitive and compensatory damages, and any civil penalties that punish similar behavior. See, e.g., BMW of North America, 517 U.S. at 574-75. Applying these guideposts to the jury's verdict, the district court concluded that an award of punitive damages equal to fifty times compensatory damages violates the Due Process Clause and must be reduced. The district court's decision is consistent with the Supreme Court's caution that "few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process." State Farm, 538 U.S. at 425.

         So far, so good. But even taking the Court's caution about single-digit ratios as a rule, the district court had nine single digits (and an infinite number of fractions) from which to choose. From these options, the court selected: five. It concluded that, because a ratio of five to one "better matches the reprextensibility of Wexford's conduct, the actual harm suffered by [Beard], and the need for deterrence and punishment of Wexford", a punitive-damages award in excess of $50, 000 would offend the Due Process Clause. It also decided that the Seventh Amendment did not require it to offer Beard the option of a new trial before it entered judgment on the reduced award.

         The decision to limit punitive damages to five times compensatory damages was arbitrary-why the district court chose a multiplier of five, rather than seven, or three, or nine and one-half, it did not say. But because the Justices have declined to reduce the relation between compensatory and punitive damages to a formula, any ratio the district court chose would have been arbitrary, though doubtless influenced by an appreciation of the case's facts. See Mathias v. Accor Economy Lodging, Inc., 347 F.3d 672, 678 (7th Cir. 2003). See also State Farm, 538 U.S. at 424-25; BMW of North America, 517 U.S. at 582-83. So the prudent course when a district court reduces a punitive-damages award is to offer the plaintiff a choice between the reduced award and a new trial, for the jury rather than the judge has the principal responsibility for factual evaluations. If the plaintiff opts for a new trial, the jury plays its traditional role. And if the plaintiff accepts the reduced award-after all, there's no guarantee that a second jury will award any punitive damages- then the plaintiff has willingly forgone the jury option. Either way, the jury participates in the process of applying the law to the facts, cf. Pacific Mutual Life Insurance Co. v. Haslip, 499 U.S. 1, 15-18 (1991), and the court plays its part by policing the range of constitutionally acceptable awards. See Mathias, 347 F.3d at 678.

         Instead of following that course and offering Beard the option of a new trial, however, the district court entered an amended judgment awarding Beard exactly $50, 000 in punitive damages. Doing so was a procedural misstep, which calls for a procedural solution: the district court's judgment must be vacated and the case remanded for the court to offer Beard the option of a new trial on damages.

         In remanding for the district court to follow prudent procedure, we do not decide whether the Seventh Amendment prohibited the court from unilaterally reducing Beard's award on constitutional grounds. See, e.g., Ross v. Kansas City Power & Light Co.,293 F.3d 1041, 1049-50 (8th Cir. 2002); Johansen v. Combustion Engineering, Inc., 170 F.3d 1320, 1330-33 (11th Cir. 1999). But see, e.g., Thomas v. iStar Financial, Inc.,652 F.3d 141, 146-47 (2d Cir. 2011); Southern Union Co. v. Irvin,563 F.3d 788, 792-93 & n.4 (9th Cir. 2009). The Justices have not resolved that issue, and the district court should not have addressed it either. Neither party asked the district court to decide whether the Seventh Amendment allows a judge to reduce punitive damages without offering a new trial as an alternative. The district court created a constitutional issue by taking a step neither party requested: though Beard and Wexford disputed whether Beard should have the option of a new trial on both compensatory and punitive damages, Wexford never asked the district court to reduce Beard's award without offering him any choice at all. Courts must avoid unnecessary constitutional adjudication, see, e.g., Spector Motor Service, Inc. v. McLaughlin,323 U.S. 101, ...

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