Opening Brief for Appellant/Cross-Appellee - Appellate.net

United States Court of Appeals 

for the 

Third Circuit 

�� 

Nos. 05-3409, 05-3586 

CGB OCCUPATIONAL THERAPY, INC., d/b/a CGB REHAB, INC., 

– v. – 

Appellee/Cross-Appellant, 

RHA HEALTH SER INC.; SYMPHONY HEALTH SER; RHA PA NURSING HOMES, 

d/b/a PROSPECT PARK REHABILITATION CENTER d/b/a PROSPECT PARK 

NURSING CENTER d/b/a PROSPECT PARK HEALTH AND REHABILITATION 

RESIDENCE; RHA PENNSYLVANIA NURSING HOMES, INC., d/b/a PEMBROOKE 

NURSING AND REHABILITATION CENTER d/b/a PEMBROOKE NURSING 

AND REHABILITATION RESIDENCE f/k/a WEST CHESTER ARMS NURSING 

AND REHABILITATION CENTER; 

SUNRISE ASSISTED LIVING, INC.; SUNRISE ASSISTED LIVING 

MANAGEMENT, INC., 

Appellants/Cross-Appellees. 

–––––––––––––––––––––––––– 

APPEAL FROM AN ORDER OF THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF PENNSYLVANIA 

OPENING BRIEF FOR APPELLANTS/CROSS-APPELLEES 

ANDREW L. FREY 

LAUREN R. GOLDMAN 

MAYER, BROWN, ROWE & MAW LLP 

1675 Broadway 

New York, New York 10019 

(212) 506-2500 

EVAN M. TAGER 

MAYER, BROWN, ROWE & MAW LLP 

1909 K Street, N.W. 

Washington, DC 20006 

(202) 263-3240 

Attorneys for Appellants/Cross-Appellees Sunrise Assisted Living, Inc. 

and Sunrise Assisted Living Management, Inc.

CORPORATE DISCLOSURE STATEMENT 

Pursuant to Rule 26.1 and Third Circuit LAR 26.1, appellants/cross- 

appellees make the following disclosures: 

On May 30, 2003, the appellants/cross-appellees in this case, Sunrise 

Assisted Living, Inc. and Sunrise Assisted Living Management, Inc., changed their 

names to Sunrise Senior Living, Inc. and Sunrise Senior Living Management, Inc., 

respectively. 

1) For non-governmental corporate parties please 

list all parent corporations. Sunrise Senior Living, Inc., 

a public company traded on the New York Stock 

Exchange, owns 100 percent of the stock of Sunrise 

Senior Living Management, Inc. Sunrise Senior Living, 

Inc. has no parent corporations. 

2) For non-governmental corporate parties, please 

list all publicly held corporations that hold 10% or more 

of the party’s stock. Sunrise Senior Living, Inc., a public 

company traded on the New York Stock Exchange, owns 

100 percent of the stock of Sunrise Senior Living 

Management, Inc. 

3) If there is a publicly held corporation which is not 

a party to the proceeding before this Court but which has 

a financial interest in the outcome of the proceeding, 

please identify all such parties and specify the nature of 

the financial interest or interests. Not applicable. 

4) This is not a bankruptcy appeal 

Dated: March 21, 2006

TABLE OF CONTENTS 

ii 

Page 

CORPORATE DISCLOSURE STATEMENT ..........................................................i 

PRELIMINARY STATEMENT ...............................................................................1 

JURISDICTION.........................................................................................................2 

ISSUE PRESENTED.................................................................................................2 

RELATED CASES AND PROCEEDINGS..............................................................2 

STATEMENT OF THE CASE..................................................................................2 

STATEMENT OF FACTS ........................................................................................5 

Facts Giving Rise To The Litigation ...............................................................5 

The Retrial .....................................................................................................11 

SUMMARY OF THE ARGUMENT ......................................................................16 

STATEMENT OF THE STANDARD OF REVIEW .............................................16 

ARGUMENT ...........................................................................................................17 

A. Sunrise’s Conduct Barely Registers On The Reprehensibility 

Scale ....................................................................................................18 

1. Sunrise’s conduct was barely even tortious..............................21 

2. None of the BMW factors is present .........................................22 

a. The first two factors are undisputed ...............................22 

b. Sunrise did not target CGB at all, much less because it 

was financially vulnerable..............................................22 

c. Sunrise’s tort was an isolated incident ...........................24 

d. There was no evidence of intentional malice, trickery,

TABLE OF CONTENTS 

iii 

Page 

or deceit ..........................................................................27 

3. The record contains substantial mitigating evidence................29 

a. The tortious conduct took place in the context of 

a socially valuable task ...................................................29 

b. Sunrise had a good-faith belief that its conduct was 

permissible......................................................................30 

B. The Ratio Guidepost Confirms The Gross Excessiveness Of 

A $2 Million Punishment ....................................................................32 

1. The ratio of more than 18:1 is a clear indicator 

of excessiveness ........................................................................34 

2. The maximum permissible ratio in this case is 1:1...................38 

3. The denominator of the ratio is $109,000.................................47 

C. The Third BMW Guidepost Confirms The Excessiveness Of The 

Award ..................................................................................................51 

D. The Punishment Cannot Be Sustained On The Basis Of Sunrise’s 

Finances...............................................................................................52 

E. The Fact That The Jury Returned A Large Award Has No 

Bearing On The Excessiveness Analysis ............................................55 

CONCLUSION........................................................................................................57

Cases 

TABLE OF CITATIONS 

iv 

Page 

Albee Homes, Inc. v. Caddie Homes, Inc., 

207 A.2d 768 (Pa. 1965) ........................................................................................21 

Bach v. First Union Nat’l Bank, 

2005 WL 2009272 (6th Cir. Aug. 22, 2005) ...................................................25, 37 

Bains LLC v. ARCO Prods. Co., 

405 F.3d 764 (9th Cir. 2005) ...............................................................30, 36, 37, 53 

BMW of N. Am., Inc. v. Gore, 

517 U.S. 559 (1996)....................................................................................... passim 

Boerner v. Brown & Williamson Tobacco Co., 

394 F.3d 594 (8th Cir. 2005) .................................................................................42 

Cass v. Stephens, 

156 S.W.3d 38 (Tex. Ct. App. 2004).....................................................................46 

Ceimo v. General Am. Life Ins. Co., 

2005 WL 1523445 (9th Cir. June 29, 2005)..........................................................43 

CGB Occupational Therapy, Inc. v. RHA Health Servs., Inc., 

357 F.3d 375 (3d Cir. 2004)...................................................................4, 21, 39, 48 

Chuy v. Philadelphia Eagles Football Club, 

431 F. Supp. 254 (E.D. Pa. 1977), aff’d, 595 F.2d 1265 (3d Cir. 1979) ......... 50-51 

Collins Entm’t Corp. v. Coats & Coats Rental Amusement, 

584 S.E.2d 120 (S.C. Ct. App. 2003).....................................................................38 

Cooper Indus., Inc. v. Leatherman Tool Grp., Inc., 

532 U.S. 424 (2001).........................................................................................16, 17 

Czarnik v. Illumina, Inc., 

2004 WL 2757571 (Cal. Ct. App. Dec. 3, 2004)...................................................43


v 

Page 

Diamond Woodworks, Inc. v. Argonaut Ins. Co., 

135 Cal. Rptr. 2d 736 (Ct. App. 2003) ..................................................................46 

FDIC v. Hamilton, 

122 F.3d 854 (10th Cir. 1997) ...............................................................................52 

Fox v. Aced, 

317 P.2d 608 (Cal. 1957) .......................................................................................31 

Fresh v. Entertainment U.S.A. of Tennessee, Inc., 

340 F. Supp. 2d 851 (W.D. Tenn. 2003) ...............................................................45 

Groom v. Safeway, Inc., 

973 F. Supp. 987 (W.D. Wash. 1997)....................................................................52 

Henderson v. U. S. Fid. & Guar. Co., 

695 F.2d 109 (5th Cir. 1983) .................................................................................31 

Hollock v. Erie Ins. Exch., 

842 A.2d 409 (Pa. Super. 2004).............................................................................38 

In re Heghmann, 

316 B.R. 395 (B.A.P. 1st Cir. 2004)......................................................................31 

Jones v. Sheahan, 

2003 WL 22508171 (N.D. Ill. Nov. 4, 2003) ........................................................34 

Kemezy v. Peters, 

79 F.3d 33 (7th Cir. 1996) .....................................................................................54 

Kemp v. American Tel. & Tel. Co., 

393 F.3d 1354 (11th Cir. 2004) .............................................................................23 

Kluczyk v. Tropicana Prods., Inc., 

847 A.2d 23 (N.J. Super. Ct. App. Div. 2004) ......................................................31


vi 

Page 

Kuznik v. Bees Ferry Assocs., 

538 S.E.2d 15 (S.C. Ct. App. 2000).......................................................................31 

Landsberg v. Scrabble Crossword Game Players, Inc., 

802 F.2d 1193 (9th Cir. 1986) ...............................................................................55 

Life Ins. Co. of Ga. v. Johnson, 

701 So. 2d 524 (Ala. 1997)....................................................................................24 

Lopez v. Three Rivers Elec. Co–op., Inc., 

26 S.W.3d 151 (Mo. 2000) ....................................................................................31 

Martin v. Johns-Manville Corp., 

494 A.2d 1088 (1985) ............................................................................................20 

Mathias v. Accor Economy Lodging, Inc., 

347 F.3d 672 (7th Cir. 2003) ............................................................................34, 53 

Memphis Cmty. Sch. Dist. v. Stachura, 

477 U.S. 299 (1986)...............................................................................................44 

Munro v. Golden Rule Ins. Co., 

393 F.3d 720 (7th Cir. 2004) .................................................................................37 

Neibel v. Trans World Assurance Co., 

108 F.3d 1123 (9th Cir. 1997) ...............................................................................24 

Park v. Mobil Oil Guam, Inc., 

2004 WL 2595897 (Guam Nov. 16, 2004)......................................................25, 46 

Phelps v. Louisville Water Co., 

103 S.W.3d 46 (Ky. 2003).....................................................................................38 

Pierce v. Penman, 

515 A.2d 948 (Pa. Super. 1986).............................................................................31


vii 

Page 

Planned Parenthood of the Columbia/Willamette Inc. v. American 

Coalition of Life Activists, 

422 F.3d 949 (9th Cir. 2005) ........................................................................... 35-36 

Professional Real Estate Investors, Inc. v. Columbia Pictures, 

508 U.S. 49 (1993).................................................................................................29 

Roth v. Farner-Bocken Co., 

667 N.W.2d 651 (S.D. 2003) .....................................................................34, 41, 53 

San Diego Bldg. Trades Council v. Garmon, 

359 U.S. 236 (1959)...............................................................................................44 

Sheedy v. City of Philadelphia, 

2005 WL 375657 (E.D. Pa. Feb. 15, 2005) .....................................................50, 51 

Sheetz, Inc. v. Bowles Rice McDavid Graff & Love, PLLC, 

547 S.E.2d 256 (W. Va. 2001)...............................................................................31 

Shiner v. Moriarty, 

706 A.2d 1228 (Pa. Super. 1998)...........................................................................44 

Simon v. San Paolo U.S. Holding Co., 

113 P.3d 63 (Cal. 2005) ................................................................................. passim 

Southern Union Co. v. Southwest Gas Corp., 

415 F.3d 1001 (9th Cir. 2005) ...............................................................................36 

State Farm Mut. Auto. Ins. Co. v. Campbell, 

538 U.S. 408 (2003)....................................................................................... passim 

Stogsdill v. Healthmark Partners, L.L.C., 

377 F.3d 827 (8th Cir. 2004) .................................................................................46


viii 

Page 

Superior Fed. Bank v. Jones & Mackey Constr.Co., 

2005 WL 3307074 (Ark. Ct. App. Dec. 7, 2005) ..................................................38 

Taylor Woodrow Homes, Inc. v. Acceptance Ins. Cos., 

2003 WL 21224088 (Cal. Ct. App. May 28, 2003)...............................................46 

Textron Fin. Corp. v. National Union Fire Ins. Co., 

13 Cal. Rptr. 3d 586 (Ct. App. 2004) ....................................................................46 

United States v. Bailey, 

288 F. Supp. 2d 1261 (M.D. Fla. 2003), 

aff’d, 419 F.3d 1208 (11th Cir. 2005)....................................................................44 

United States v. Jackson, 

390 U.S. 570 (1968)......................................................................................... 26-27 

Waddill v. Anchor Hocking, Inc., 

78 P.3d 570 (Or. Ct. App. 2003)............................................................................46 

Watson v. E.S. Sutton, Inc., 

2005 WL 2170659 (S.D.N.Y. Sept. 6, 2005).........................................................43 

Williams v. ConAgra Poultry Co., 

378 F.3d 790 (8th Cir. 2004) ...........................................................................42, 43 

Willow Inn, Inc. v. Pub. Serv. Mut. Ins. Co., 

399 F.3d 224 (3d Cir. 2004)...........................................................25, 26, 35, 49, 50 

Young v. DaimlerChrysler Corp., 

2004 WL 2538639 (S.D. Ind. Oct. 19, 2004) ........................................................45

Statutes 


ix 

Page 

28 U.S.C. § 1291........................................................................................................2 

28 U.S.C. § 1332........................................................................................................2 

Other Authorities 

Abraham & Jeffries, Punitive Damages and the Rule of Law: 

The Role of the Defendant’s Wealth, 18 J. LEGAL STUD. 415 (1989)....................54

PRELIMINARY STATEMENT 

This is an appeal from a retrial that was limited to the question of liability 

for and amount of punitive damages. Plaintiff’s only claim is that, in the course of 

a five-minute meeting, defendants tortiously interfered with the relationship 

between plaintiff and several independent contractors that it employed on an at- 

will basis. The first jury awarded $109,000 in compensatory damages, an amount 

that fully compensated the plaintiff for all losses associated with that tortious 

interference. The second jury, after hearing an enormous amount of irrelevant and 

inflammatory evidence, awarded $30 million in punitive damages. The district 

court reduced the award to $2 million – a sum nearly twenty times the amount of 

compensatory damages. 

Even as reduced, the award is grossly and unconstitutionally excessive. As 

this Court held when this case was last before it, the defendant’s conduct in this 

case was barely even tortious. It cannot support more than a very small award of 

punitive damages – and certainly does not justify an amount that the Supreme 

Court has characterized as “tantamount to a severe criminal penalty.” BMW of N. 

Am., Inc. v. Gore, 517 U.S. 559, 585 (1996). The judgment below must be vacated 

and the punitive award reduced to no more than the amount of compensatory 

damages.

JURISDICTION 

This is an appeal from a final judgment that disposes of all parties’ claims. 

This Court has jurisdiction pursuant to 28 U.S.C. § 1291. The district court had 

jurisdiction of this diversity action pursuant to 28 U.S.C. § 1332. Defendants’ 

post-trial motion was denied in part and granted in part on July 7, 2004. They filed 

a timely notice of appeal on July 12, 2005. 

ISSUE PRESENTED 

Whether a $2 million punitive damages award – which is more than 18 times 

the $109,000 award of compensatory damages – is unconstitutionally excessive 

punishment for defendants’ tortious interference with plaintiff’s at-will 

relationships with its employees. 

RELATED CASES AND PROCEEDINGS 

As discussed below (at pages 3-4), this case was before this Court in 2004. 

The Court’s opinion appears at 357 F.3d 375. Additionally, plaintiff has cross- 

appealed from the judgment below. The cross-appeal is docketed as No. 05-3586. 

STATEMENT OF THE CASE 

Plaintiff-appellee CGB Occupational Therapy, Inc. (“CGB”), which is 

owned and operated by Cindy Brillman, provided therapy services to two nursing 

home facilities in Pennsylvania that were owned by RHA Pennsylvania Nursing 

Homes (“RHA”). Both facilities were managed by Sunrise Assisted Living 

2

Management, Inc., a subsidiary of Sunrise Assisted Living, Inc. 1 (Both Sunrise 

entities will be referred to collectively as “Sunrise.”) In 1998, RHA terminated 

CGB’s contract. 

CGB filed suit in the U.S. District Court for the Eastern District of 

Pennsylvania against both RHA and Sunrise. CGB alleged that (inter alia) Sunrise 

had tortiously interfered with its contractual relationships with (i) RHA and 

(ii) several of the therapists at the Prospect Park facility. RHA, which had by then 

gone bankrupt, settled with CGB prior to trial; the claims against Sunrise went 

forward. In June 2002, a jury awarded CGB $685,000 in compensatory damages 

and $1.3 million in punitive damages – a ratio of less than 2:1. $576,000 of the 

compensatory award was attributed to the claim for tortious interference with the 

contract between RHA and CGB, and $109,000 was attributed to the claim for 

tortious interference with the at-will employment relationship between CGB and 

its therapists. The district court entered judgment on the jury’s verdicts, and 

Sunrise appealed. 

This Court reversed the verdict for tortious interference with the contract 

between CGB and RHA. CGB Occupational Therapy, Inc. v. RHA Health Servs., 

1 On May 30, 2003, Sunrise Assisted Living, Inc. and Sunrise Assisted Living 

Management, Inc. changed their names to Sunrise Senior Living, Inc. and Sunrise 

Senior Living Management, Inc., respectively, to reflect the increased scope of 

their operations. 

3

Inc., 357 F.3d 375 (3d Cir. 2004). It held that, as a matter of law, Sunrise could 

not have tortiously interfered with that contract, because it was acting as RHA’s 

agent, and an agent cannot interfere with a contract between its principal and a 

third party. Id. at 385-88. The Court affirmed the $109,000 compensatory award 

for tortious interference with the relationship between CGB and its therapists 

(which Sunrise has paid). Because it was impossible to tell what portion of the 

$1.3 million punitive award was attributable to the invalid claim, the Court 

remanded for a new trial limited to the issues of liability for and amount of 

punitive damages. At the second trial, the jury awarded CGB $30 million in 

punitive damages. 

On January 28, 2005, Sunrise timely moved for a new trial, contending 

among other things, that the jury’s finding of liability for punitive damages was 

against the weight of the evidence and that the verdict was the product of passion 

and prejudice. In the alternative, Sunrise asked the court to reduce the award to a 

constitutionally permissible amount. The district court denied Sunrise’s motion for 

a new trial but reduced the punitive damages from $30 million to $2 million. In 

the current appeal, Sunrise is challenging that $2 million judgment. The plaintiff 

has filed a cross-appeal, seeking reinstatement of the verdict or an enhancement of 

the existing $2 million figure. 

4

STATEMENT OF FACTS 

Facts Giving Rise To The Litigation 

RHA owned two nursing home facilities in Pennsylvania, one in West 

Chester (the “Pembrooke” facility) and the other in Prospect Park. During the 

relevant time period, both facilities were managed by Sunrise. Pursuant to its 

contracts with RHA, Sunrise was responsible for, inter alia, procuring and 

coordinating the therapy services that were provided to patients at the two 

facilities. JA320-322. 

On January 1, 1995, CGB entered into a contract with RHA to provide 

physical, occupational, and speech therapy services to the Pembrooke facility. The 

parties entered into a similar contract with regard to the Prospect Park facility on 

October 7, 1996. Under those contracts, RHA paid CGB an hourly billable rate for 

the therapists’ services, not a flat monthly fee. JA435-439; JA440-444; JA339. 

Each agreement also included a “no-raiding” clause, which barred RHA from 

recruiting CGB’s therapists for a twelve-month period after termination of the 

contract. JA435-439; JA440-444. The therapists were independent contractors 

who were employed by CGB on an at-will basis. 

RHA and Sunrise were very happy with the quality of CGB’s therapists, and 

the contractual relationship proceeded smoothly for several years. During that 

time, the therapists formed close personal relationships with RHA’s patients, many 

5

of whom were elderly and frail. Marjorie Tomes, Sunrise’s executive director for 

the Prospect Park facility, thought that the therapists “did an outstanding job” and 

were good for the facility. JA336. Michael Gasiewski, the head Prospect Park 

therapist, confirmed that “a close knit family-type environment existed between the 

patients and the [CGB] therapists.” 1/12/05 Tr. 100. 

In 1998, however, changes to the federal Medicare system altered RHA’s 

business dramatically. RHA’s CFO, John West, testified that under the old 

regulations, Medicare had simply reimbursed RHA for its costs. Under the new 

system, however, the government would “give us a flat rate for a specific type of 

service and what they deem [an appropriate] level of care at which point, whatever 

we spent on that level of service was our problem or our benefit. *** Based on 

our review of the PPS Regulations it appeared there was going to be a tighter 

payment schedule for overall nursing services including the therapy component.” 

JA340-342; see also JA207-208. RHA believed that CGB’s per-hour pricing 

structure was incompatible with the new regulations. Ibid. CGB, however, was 

unable or unwilling to modify its business practices or rates in light of the new 

regulations. JA210-211. Accordingly, on June 30, 1998, at RHA’s direction 

Sunrise notified CGB in writing that RHA had decided to terminate the Pembrooke 

and Prospect Park contracts effective September 30, 1998. JA446. The letter 

attributed the decision to “changes in the [Medicare reimbursement] system.” Id. 

6

On July 1, 1998, Sunrise executed an agreement on RHA’s behalf with Symphony 

Health Services, Inc. (“Symphony”), under which Symphony became the new 

therapy services provider at both the Pembrooke and Prospect Park facilities. 

John West instructed Tomes that she should make the transition to 

Symphony as smooth as possible for the patients and staff at Prospect Park, but 

that she should not recruit CGB staff members. JA209. In late July, Tomes 

learned from the Prospect Park director of nursing, Debbie Melella, that rumors 

were circulating among the therapists about the termination of CGB’s contract, and 

that those rumors were negatively affecting patient care: as Tomes explained it, 

the therapists “felt that they were not able to function effectively in caring for our 

residents because they may not be there tomorrow.” JA332; JA338. Tomes was 

concerned that these rumors would intensify over the following few weeks, 

because Symphony was preparing to take over therapy services and would soon 

begin making visits in order to “assess the facility for what equipment they needed 

to bring in.” JA330. Tomes was also worried that the patients would suffer stress 

and anxiety if they had to adjust to an entirely new set of therapists when 

Symphony took over. 1/12/05 Tr.101-102. 

Tomes testified that, with these concerns in mind, she sought legal and 

practical advice from Craig Knaup, RHA’s in-house counsel and Medicare expert, 

about exactly what she could tell the therapists. JA332-JA336. Knaup told her 

7

that she could not recruit the therapists, but that she could provide them with 

certain specific information about the termination of CGB’s contract. After 

speaking to Knaup, Tomes’ understanding was 

JA335. 

[t]hat I could inform the therapists that the contract had been canceled 

and the effective date. I could let them know that if they had an 

interest to be interviewed by Symphony, that they could sign a piece 

of paper with their name and phone number. And then, finally, that it 

was not at all to do with performance. It was absolutely an economic 

decision. 

Accordingly, on July 31, 1998, Tomes held a five-minute meeting with 

several of CGB’s therapists. The meeting took place in Tomes’ office, which had 

a glass door. She informed the therapists that CGB’s contracts with RHA were 

being terminated because RHA believed that CGB’s pricing structure was 

incompatible with new Medicare regulations, and that Symphony would be 

retained as the new therapy service provider both at Prospect Park and at the 

Pembrooke facility. Tomes then provided the therapists with a “sign-up sheet” on 

which they could leave their names and contact information if they wished to talk 

to Symphony. None of the therapists testified that Tomes attempted to persuade 

anyone to leave CGB. Rather, she simply relayed to them that (i) CGB’s contract 

had been terminated and (ii) employment opportunities might be available with 

Symphony. See JA457-JA460. Soon after the meeting, one of the therapists 

8

apparently informed Brillman, who called Tomes less than two hours later to 

complain. JA340-341. 

Apart from that five-minute meeting, CGB alleged only two other acts of 

interference with its at-will relationship with the therapists: (i) Tomes’ provision 

of a conference room at the facility for Symphony to meet with the therapists when 

Symphony came to inspect the facility prior to the starting date of its contract, and 

(ii) Tomes’ statement to Symphony that one of the therapists, Michael Gasiewski, 

merited a higher salary than Symphony had offered him. JA47-48. 

On June 30, 1998, RHA’s in-house counsel Knaup sent a letter to CGB 

reiterating that RHA had decided to terminate the contracts as a result of the 

change in the Medicare regulations and that its decision was final. JA481-482. In 

response to Brillman’s complaint that Sunrise had been interfering with her 

employees, Knaup explained: 

[W]e did no such thing, but merely informed your 

employees when it was more than apparent that you had 

not – that your contract was canceled effective 

September 30, 1998. We did so only because our new 

provider of services was scheduled to inspect the facility 

and discuss arrangements with administration and staff of 

the provision of services scheduled to begin on October 

1st, 1998. 

We asked you to do so and inform your staff, realizing 

the new provider’s appearance would raise questions in 

your staff’s mind, and wanting only not to disrupt service 

to the residents. At no time did the facility expect to start 

9

their own therapy department, nor was any offer of 

employment ever extended. 

Id. 2 According to John West, the word “we” referred to RHA Pennsylvania and 

Sunrise, which “was acting as our agent.” JA403. Nevertheless, throughout 

August 1998 Brillman sent letters to and left telephone messages for various RHA 

and Sunrise employees. She complained about Tomes’ meeting with the 

therapists, sought more information about the reasons for termination, and 

requested its reversal. CGB’s counsel, moreover, sent a letter to Tomes stating that 

her meeting with the therapists appeared to have constituted tortious interference 

and a breach of the contract between RHA and CGB. JA461-462. 

Several of CGB’s therapists signed contracts with Symphony during 

September 1998 but continued working for CGB until the RHA contracts were 

terminated. Without the RHA contracts, CGB simply did not have work for its 

therapists. 1/12/05 Tr.104; JA394-395. Although Brillman testified that she 

would have placed a second mortgage on her home in order to continue paying the 

therapists, and that she would have provided them with clerical work or manual 

labor in order to keep them busy, she did not have work for them that would be 

appropriate for their skill levels. JA174-178. Significantly, the therapists who 

2 See also JA460 (statement of CGB therapist Robin Ferrara) (“The reason 

Marjorie [Tomes] gave for meeting us in the first place was so that if/when we saw 

strange people coming through rehab dep’t we knew who they were.”). 

10

worked at the Pembrooke facility – who were not “solicited” in any way by 

Sunrise – also left CGB for other employment. JA175-176. 

The Retrial 

Sunrise is not seeking a new trial on this appeal because the expense of a 

third trial is likely to exceed the amount that this Court determines to be the 

maximum constitutionally permissible punishment. Nevertheless, we briefly 

discuss a number of evidentiary, instructional, and other errors that took place 

during the proceedings below, because those errors help explain the jury’s decision 

to return a punitive damages award of $30 million in this case involving a 

relatively minor tort that caused, at most, $109,000 worth of purely economic 

harm. 

Pursuant to this Court’s order, the only tortious conduct properly at issue in 

the retrial was Sunrise’s interference with CGB’s contractual relationships with its 

therapists – specifically, Marjorie Tomes’ five-minute meeting with the therapists; 

her conversation with Symphony regarding Michael Gasiewski’s salary; and her 

decision to allow Symphony to interview therapists at the facility. Notably, 

however, most of the evidence that CGB put before the jury (over the objections of 

defense counsel) had nothing to do with that conduct. 

First, plaintiff’s counsel elicited a great deal of irrelevant and prejudicial 

testimony about the wealth of Sunrise and its officers – though, notably, not the 

11

less well-compensated Marjorie Tomes, who was the only Sunrise employee 

accused of soliciting CGB’s therapists. Plaintiff’s counsel questioned Sunrise’s 

senior officers at length about the exercise of their stock options and about the 

amount that Sunrise spent for executives’ personal use of a corporate jet. JA292- 

293; JA266-271. Plaintiff’s counsel introduced and emphasized Sunrise’s 

corporate financial data – particularly its gross revenues. In his summation, 

counsel wove all this irrelevant information into a rousing indictment of Sunrise 

for being a large and successful company: 

JA426-428. 

When you sit here deliberating for $40 and a sandwich 

and mileage, they are making $4.1 million [per day]. 

*** We’re talking about big numbers here because we 

think you have to get up in the stratosphere that [Sunrise 

officers] fl[y] around in and make [them] understand that 

this was wrong. You have to show the other corporate 

executives out there in billion dollar companies that you 

cannot just squash a little company like an ant and keep 

right on rolling. You have to send a message that will be 

heard on Wall Street. *** You have to consider the 

wealth of the defendants. You also have to consider 

compensatory damages, but the Judge will tell you that’s 

just one small subset. 

Plaintiff’s counsel also repeatedly complained to the jury about how long it 

had taken CGB to collect the $109,000 in compensatory damages. He blamed 

Sunrise for that delay, arguing that Sunrise had done something wrong by choosing 

to defend itself in court. In his opening argument, he told the jury to “look at the 

12

way Sunrise has treated CGB since 1998. 1998. It is here 2005. *** We have 

fought years of litigation with this company. *** It’s not easy to be a party in 

litigation. It’s not cheap.” JA44; JA51. Counsel repeated the tactic during 

summation. “What matters is how much time, how much anxiety, stress, money, it 

took Cindy Brillman to fight for what was right, to get that little bit of money.” 

JA425. 

This emphasis on litigation conduct dovetailed with plaintiff’s resurrection 

of veil-piercing issues that were litigated in the first trial but had no legitimate role 

in this proceeding. During the trial, plaintiff’s counsel elicited extensive testimony 

about Sunrise’s corporate structure and insinuated that the structure had not 

“compl[ied] with the federal securities laws” (JA234) and had been established in 

order to “maintain [a] façade,” to deceive investors, and to “lie to the public.” See, 

e.g., JA215-252. Sunrise’s corporate structure, which is typical of a large 

corporation and which has never been shown to be wrongful in any way, had 

nothing whatsoever to do with the tortious interference claim at issue. Yet 

plaintiff’s counsel relied heavily upon it, contending in his opening argument that 

“not only did CGB have to pierce the corporate veil and break through that to get 

to the truth, but anybody else would as well. That is very, very important. When 

we talk about telling the truth and taking responsibility, keep that in mind.” JA52. 

He closed his summation by asking: “How are they going to be held responsible 

13

for their actions when they are allowed to assert all this and drag a little company 

like CGB through the muck for two and a half years and have a determination that 

Sunrise is responsible for [the] actions of Sunrise [Management]? One is just the 

alter ego of the other. It took two and a half years to prove that.” JA429. 

Finally, plaintiff’s counsel complained bitterly about Sunrise’s treatment of 

CGB in connection with the termination of the contracts – conduct for which this 

Court specifically held that Sunrise could not be punished. He claimed that 

Sunrise had acted wrongfully by failing to apprise Cindy Brillman of the true 

reasons for the termination and by refusing to allow her to cure any problems: 

JA421-422. 

In considering the conduct of Sunrise relating to that 

termination, the reason for the determination given to 

CGB was incorrect. Marjorie Tomes knew it was 

incorrect and she had known because back in April, 

Cindy Brillman told her she could comply with Medicare 

and PPS and in June, immediately after the termination 

letters were sent out, Cindy Brillman called and said 

what is this all about? What is this the [sic] basis for the 

termination? This is not proper cause. *** What was 

the one thing that Cindy Brillman was never told in June 

of 1998? *** You think maybe Marjorie Tomes should 

have told Cindy Brillman she had already signed a 

contract with Symphony before the termination letter 

went out? 

To compound the problems created by counsel’s flagrantly improper 

argument, the district court refused to give the jury instructions that Sunrise 

requested, which were drawn directly from State Farm Mutual Automobile 

14

Insurance Co. v. Campbell, 538 U.S. 408 (2003). Instead, the court simply 

instructed the jury that in assessing punitive damages, it should consider (i) the 

“character of the defendant’s act”; (ii) the “nature and the extent of the harm to the 

plaintiff,” including “the plaintiff’s trouble and expense in seeking to protect its 

interests in legal proceedings and in this suit”; and (iii) “the wealth of the 

defendants insofar as it is relevant in fixing an amount that will punish it and others 

from [sic] like conduct in the future.” JA430; see also JA45 (“Should you decide 

to punish Sunrise, you will also need to think about its wealth.”). The court 

specifically downplayed the importance of the amount of compensatory damages: 

“So long as it is reasonable, the amount you assess as punitive damages, if any, 

need not bear any relationship to the amount of compensatory damages. As I 

have just said, this is one of the factors that you must consider, should you choose 

to award punitive damages. Again, there is not some magical multiplier or divider 

that you should employ.” JA430-431; see also JA46 (“[Y]ou must remember that 

your award of punitive damages, if any, does not need to bear a proportional 

relationship to the award of compensatory damages.”). 

After hearing all of this irrelevant, inflammatory evidence and argument, 

and after being instructed to base its punitive award on Sunrise’s financial 

resources and to discount the importance of the amount of compensatory damages, 

the jury awarded CGB $30 million in punitive damages. 

15

SUMMARY OF THE ARGUMENT 

The touchstone of the due process analysis is that “the measure of 

punishment [must be] both reasonable and proportionate to the amount of harm to 

the plaintiff and to the general damages recovered.” State Farm, 538 U.S. at 426. 

CGB’s compensatory damages for its injuries, which were entirely economic, were 

$109,000. Sunrise’s conduct was barely even tortious, and certainly cannot 

support more than a small amount of punitive damages. The award entered by the 

district court, however, is nearly 20 times the compensatory damages award. 

Under State Farm, in a case like this one – in which the compensatory damages are 

substantial and the defendant’s conduct was minimally reprehensible – the 

maximum constitutionally-permissible ratio of punitive to compensatory damages 

is no more than 1:1. 

STATEMENT OF THE STANDARD OF REVIEW 

This Court reviews the district court’s application of the BMW guideposts de 

novo. Cooper Indus., Inc. v. Leatherman Tool Grp., Inc., 532 U.S. 424 (2001). In 

so doing, the Court should review the evidence in an evenhanded manner and not 

take the evidence in the light most favorable to the plaintiff. In Cooper Industries, 

the Court observed that “the level of punitive damages is not really a ‘fact’ ‘tried’ 

by the jury,” but instead “is an expression of [the jury’s] moral condemnation.” 

532 U.S. at 432, 437 (internal quotation marks omitted). In the course of holding 

16

that appellate review of a trial court’s application of the BMW guideposts is de 

novo, the Court indicated that reviewing courts must accept “specific findings of 

fact” by the jury (id. at 439 n.12 (emphasis added)), thereby implying that, in the 

absence of such findings, reviewing courts must resolve for themselves factual 

issues bearing on the application of the three guideposts. As the California 

Supreme Court recently explained, when the jury has made “no *** express 

finding” on a particular issue bearing on application of the BMW guideposts, “to 

infer one from the size of the award would be inconsistent with de novo review, for 

the award’s size would thereby indirectly justify itself.” Simon v. San Paolo U.S. 

Holding Co., 113 P.3d 63, 70 (Cal. 2005). Accordingly, “[w]hile [courts must] 

defer to express jury findings supported by the evidence, in the absence of an 

express finding on the question [they] must independently decide” whether the fact 

at issue has been established. Id. at 72. There were no such findings in this case. 

ARGUMENT 

The Supreme Court has characterized a $2 million award as “tantamount to a 

severe criminal penalty” (BMW, 517 U.S. at 585), which can be warranted only in 

cases of “egregiously improper conduct” (id. at 580). This is not such a case. The 

conduct at issue here was, at worst, an isolated incident of non-iniquitous tortious 

interference with an at-will relationship that caused $109,000 in purely economic 

17

harm and that has no broader societal implications. Such conduct simply cannot 

support a $2 million punitive award. 

In BMW, the Supreme Court identified three “guideposts” for determining 

whether a punitive award is unconstitutionally excessive: (i) the degree of 

reprehensibility of the conduct; (ii) the ratio of punitive to compensatory damages; 

and (iii) the legislatively established fines for comparable conduct. In State Farm 

the Court refined and amplified the “guidepost” analysis. In this case, application 

of the guideposts confirms that a $2 million punishment is unconstitutionally 

excessive and that the maximum permissible punitive award is no more than the 

amount of the compensatory damages – $109,000. 

A. Sunrise’s Conduct Barely Registers On The Reprehensibility 

Scale. 

In gauging reprehensibility, it is necessary to limit the focus to the conduct 

that is legitimately at issue here – Sunrise’s interference with CGB’s at-will 

relationship with its therapists. Plaintiff’s counsel succeeded in convincing both 

the jury and the district court to impose punishment based on a host of irrelevant 

and improper factors: Sunrise’s finances; the circumstances surrounding the 

termination of CGB’s contracts with RHA (for which, this Court held, Sunrise is 

not liable at all, much less subject to punishment); Sunrise’s alleged refusal to 

respond to Cindy Brillman’s requests for information after the contracts had been 

terminated; and the discovery disputes that took place prior to the first trial. Those 

18

matters had nothing to do with the tortious conduct giving rise to punitive liability, 

and they therefore cannot form the basis for punishment. “The reprehensibility 

guidepost does not permit courts to expand the scope of the case so that a 

defendant may be punished for any malfeasance.” State Farm, 538 U.S. at 424. 

Rather, evidence is pertinent to the “reprehensibility” of the tort only when it bears 

a specific nexus to the conduct underlying the plaintiff’s claim. See id. at 422-23 

(“A defendant’s dissimilar acts, independent from the acts upon which liability was 

premised, may not serve as the basis for punitive damages. A defendant should be 

punished for the conduct that harmed the plaintiff, not for being an unsavory 

individual or business.”). 

The conduct that is properly at issue here is at most marginally 

reprehensible, and therefore cannot support a large award of punitive damages. As 

the Supreme Court has explained, “[t]hat conduct is sufficiently reprehensible to 

give rise to tort liability, and even a modest award of exemplary damages does not 

establish the high degree of culpability that warrants a substantial punitive 

damages award.” BMW, 517 U.S. at 580; see also State Farm, 538 U.S. at 419 

(“The most important indicium of the reasonableness of a punitive damages award 

is the degree of reprehensibility of the defendant’s conduct.”) (internal quotation 

marks and alterations omitted). Thus, the reprehensibility inquiry examines how 

far in excess of the threshold for punitive damages the defendant’s conduct is. 

19

In State Farm, the Supreme Court identified five non-exclusive factors that 

bear on the degree of reprehensibility of a defendant’s conduct: whether (i) “the 

harm caused was physical as opposed to economic”; (ii) “the tortious conduct 

evinced an indifference to or reckless disregard of the health or safety of others”; 

(iii) “the target of the conduct had financial vulnerability”; (iv) “the conduct 

involved repeated action or was an isolated incident”; and (v) “the harm was the 

result of intentional malice, trickery, or deceit, or mere accident.” 538 U.S. at 419. 

Importantly, the Court added, “[t]he existence of any one of these factors weighing 

in favor of a plaintiff may not be sufficient to sustain a punitive damages award; 

and the absence of all of them renders any award suspect.” Id. 

Here, not a single one of the five reprehensibility factors is present. And 

there is much mitigating evidence on the other side of the ledger. Under 

Pennsylvania law, punitive damages are available only for conduct that was 

“outrageous, because of the defendant’s evil motive or his reckless indifference to 

the rights of others.” Martin v. Johns-Manville Corp., 494 A.2d 1088, 1096 

(1985). To the extent that Sunrise’s conduct crossed that threshold at all, it surely 

did so only by the thinnest of margins, and hence falls on the far low end of the 

reprehensibility spectrum. 

20

1. Sunrise’s conduct was barely even tortious. 

In the prior appeal in this case, this Court recognized that the facts alleged 

by CGB were barely sufficient to support a claim that Sunrise had tortiously 

interfered with the contracts between CGB and its therapists. Interference by a 

third party (here, Sunrise) in the relationship between an employer and its at-will 

employees is ordinarily not actionable unless “the purpose of such enticement is to 

cripple and destroy an integral part of a competitive business organization rather 

than to obtain the services of particularly gifted or skilled employees” or to have 

“the employees commit wrongs, such as disclosing their former employer’s trade 

secrets or enticing away his customers.” 357 F.3d at 388 (quoting Albee Homes, 

Inc. v. Caddie Homes, Inc., 207 A.2d 768, 771 (Pa. 1965)). CGB proved none of 

those things. This Court reasoned, however, that the claim could stand because by 

soliciting CGB’s therapists Sunrise breached its fiduciary duty to RHA. 357 F.3d 

at 388-89. As the Court saw it, because the breach of fiduciary duty to RHA made 

Sunrise’s solicitation of the therapists independently wrongful, it could support tort 

liability under Section 768 of the Restatement (Second) of Torts. 

But the breach of fiduciary duty itself was not egregious; if it had been, 

surely RHA would have sought redress from Sunrise. And, contrary to the district 

court’s suggestion that Sunrise acted wrongfully by “exhibiting virtually total 

disregard for the instructions of its principal” (JA12), Sunrise cannot be punished 

21

for that breach in this litigation. See State Farm, 538 U.S. at 423 (“[d]ue process 

does not permit courts, in the calculation of punitive damages, to adjudicate the 

merits of other parties’ hypothetical claims against a defendant under the guise of 

the reprehensibility analysis”). CGB could not and did not show that Sunrise’s 

conduct toward it was highly reprehensible. 

2. None of the BMW factors is present. 

None of the BMW reprehensibility factors is present in this case. As the 

Supreme Court observed in State Farm, the “absence of all of them renders any 

award” – and certainly an award that is nearly 20 times the substantial 

compensatory damages award – “suspect.” Id. at 419. 

a. The first two factors are undisputed. 

As the district court recognized, there can be no denying that Sunrise did not 

inflict physical injury on plaintiff (a corporation). See JA12. There similarly is no 

basis for finding that the defendant disregarded a risk to health or safety. Id. 

Indeed, the evidence demonstrated that Sunrise acted out of concern for the health 

and safety of its patients. 

b. Sunrise did not target CGB at all, much less because it 

was financially vulnerable. 

The district court’s determination that “[p]laintiff here was financially 

vulnerable” (JA12) is belied by the record: According to plaintiff, CGB was a 

successful, if small, company. JA142; JA424. And Brillman herself is an 

22

educated and sophisticated businessperson who was represented by competent 

legal counsel at all relevant times. See JA461-462. CGB clearly was not among 

“the weakest of the herd – the elderly, the poor, and other consumers who are least 

knowledgeable about their rights and thus most vulnerable to trickery or deceit.” 

State Farm, 538 U.S. at 433 (Ginsburg, J., dissenting) (internal quotation marks 

omitted). 

Even if the district court had been correct that CGB was financially 

vulnerable, that circumstance would not tip this factor in plaintiff’s favor. The 

important inquiry for purposes of this factor is whether Sunrise intentionally 

targeted CGB because it was financially vulnerable. See BMW, 517 U.S. at 576 

(“infliction of economic injury, especially when *** the target is financially 

vulnerable, can warrant a substantial penalty”) (emphasis added). Unlike in other 

cases in which this factor has been invoked as a justification for a substantial 

punitive award, there is no evidence that Sunrise was motivated by CGB’s lack of 

resources. Cf. Kemp v. American Tel. & Tel. Co., 393 F.3d 1354, 1363 (11th Cir. 

2004) (“We think the trial court was also justified in finding that AT&T intended 

to target financially vulnerable individuals given the jury’s finding of fraud. 

AT&T’s efforts to misleadingly represent gambling debts, which were illegal 

under Georgia law, as legitimate charges for long distance calls could be deemed 

by a jury to be designed to exploit customers who were unsophisticated and 

23

economically vulnerable.”) (emphasis added); Neibel v. Trans World Assurance 

Co., 108 F.3d 1123, 1126 (9th Cir. 1997) (finding scheme to prey on “Joe Lunch 

Buckets” sufficiently reprehensible to justify a $500,000 punitive award); Life Ins. 

Co. of Ga. v. Johnson, 701 So. 2d 524, 526-29 (Ala. 1997) (reducing what 

originally was a $15 million punishment to $3 million where defendant engaged in 

a pattern of selling worthless Medicare supplement policies to “elderly, 

uneducated, single black women”). 

c. Sunrise’s tort was an isolated incident. 

CGB presented no evidence of “repeated misconduct of the sort that injured 

[the plaintiff].” State Farm, 538 U.S. at 423. Nor could it. This was an isolated 

incident of tortious interference, which did not even extend to the other RHA 

facility that Sunrise was operating; there is not a shred of evidence that Sunrise has 

engaged in such conduct at any other time. 

The district court asserted that Sunrise was a recidivist because it allegedly 

“refused to be held responsible for its actions, ignoring and rebuffing Plaintiff and 

presenting countless obstacles to rapid resolution of Plaintiff’s claims.” JA9; see 

also JA7 (“There was also testimony on Defendant’s treatment of Plaintiff 

throughout the course of their relationship – and this testimony certainly was not 

favorable to Defendant.”); JA12 (“the evidence tells a tale of repeated stalling and 

dishonesty, starting from the initial interference with Plaintiff’s relationships with 

24

her therapists and extending to the eve of the first trial”). That analysis, however, 

misperceives what the BMW Court meant by “repeated misconduct.” As this Court 

recently explained, “[t]he ‘repeated conduct’ cited in [BMW] involved not merely a 

pattern of contemptible conduct within one extended transaction (i.e., the sale of 

one automobile to Dr. Gore), but rather specific instances of similar conduct by the 

defendant in relation to other parties.” Willow Inn, Inc. v. Pub. Serv. Mut. Ins. 

Co., 399 F.3d 224, 232 (3d Cir. 2004) (emphasis added); see also Bach v. First 

Union Nat’l Bank, 2005 WL 2009272, at *9 (6th Cir. Aug. 22, 2005) (“It appears 

that the Supreme Court has interpreted this factor to require that the similar 

reprehensible conduct be committed against various different parties rather than 

repeated reprehensible acts within the single transaction with the plaintiff.”); Park 

v. Mobil Oil Guam, Inc., 2004 WL 2595897, at *12-*16 (Guam Nov. 16, 2004) 

(“T]he Supreme Court cases refer to the frequency of past similar conduct of the 

defendant in question, similar to a repeat offender status in a criminal case.”); 

Simon v. San Paolo U.S. Holding Co., 113 P.3d 63, 76 (Cal. 2005) (repeated- 

misconduct factor was not present because, even though “the evidence showed 

deceptive conduct *** spanning many weeks,” the tortious act was based on “a 

single false promise [with] no evidence [that the defendant] had acted similarly 

toward other potential buyers”). 

25

This case does not even involve the pattern of stonewalling that the Willow 

Inn Court viewed as “relevant, but with less force.” See 399 F.3d at 231. Willow 

Inn was a bad-faith insurance coverage action. The defendant insurer owed the 

plaintiff policyholder a fiduciary duty, and its refusal to respond to repeated 

demands for reimbursement constituted a breach of the insurance contract, a 

violation of Pennsylvania’s bad faith insurance statute, and a tort. Id. at 233. By 

contrast, there is nothing in the least bit wrongful about Sunrise’s refusal to 

respond to inquiries from CGB, a business with which it was engaged in an arm’s- 

length relationship. Sunrise owed no duty to CGB, and certainly had no obligation 

to discuss matters as to which CGB had already explicitly threatened litigation. 

See JA461-462 (August 3, 1998 letter from CGB’s counsel to Tomes, suggesting 

that the dispute would “go into litigation as, for example, a suit against you 

personally and Sunrise, your employer, for tortious interference with contract”). 

Thus, to the extent that the district court was referring to Sunrise’s alleged refusal 

to return Brillman’s calls, its reliance on that conduct as a basis for punishment 

was misplaced. Even if that refusal was impolite, it was not legally wrongful. 

Nor can Sunrise be punished for refusing to settle this case, as the district 

court implied (and as plaintiff’s counsel improperly argued to the jury). A party’s 

decision to defend itself in court cannot be characterized as “stonewalling,” and 

cannot form the basis for punishment. Cf. United States v. Jackson, 390 U.S. 570, 

26

583 (1968) (holding that it is unconstitutional to enhance punishment based on the 

defendant’s invocation of the right to trial by jury). Enhancing punishment 

because the defendant invoked its due process right to defend itself is particularly 

unjust when, as here, the defendant ultimately prevails as to the major part of the 

plaintiff’s claim. Sunrise was largely successful in its defense and appeal, 

knocking out one of two claims and reducing the compensatory damages to 

$109,000 – less than one-tenth of the amount alleged in the complaint. It was 

CGB’s dogged insistence on pursuing a disproportionate punitive award in a retrial 

that has accounted for the remaining delay. 

d. There was no evidence of intentional malice, trickery, 

or deceit. 

There was no evidence that Sunrise’s actions in dealing with CGB or its 

therapists were characterized by “intentional malice, trickery, or deceit.” State 

Farm, 538 U.S. at 419. CGB’s theory as to motive involved no allegation of 

malice; its theory was that “Sunrise had a financial incentive to keep those 

therapists on.” JA423. According to CGB, Tomes believed that the CGB 

therapists were so talented that their continued employment was crucial to the 

financial health of the facility that she managed. JA49-50. Tomes, by contrast, 

testified that she was motivated by concern for RHA’s patients: she wanted to 

ensure continuity of care by the therapists on whom they had come to rely. See, 

27

e.g., JA323; JA324. But whether her motive was financial or altruistic, it is 

undisputed Tomes did not act out of ill will toward CGB. 

Nor did CGB present any evidence that Sunrise engaged in intentional 

trickery or deceit. Marjorie Tomes met with the therapists openly, as a group, in a 

room with a glass door. There is no allegation that she attempted to mislead them 

in any way. To the contrary, Tomes told the therapists only what, after speaking 

with RHA’s counsel, she believed she was permitted to tell them. She stuck to her 

script – a fact that is confirmed by the essentially identical recitations from all of 

the therapists as to what transpired at the five-minute meeting. See JA457-460. 

Nor was there any effort to conceal the meeting after the fact. RHA’s Knaup 

specifically told Brillman that Sunrise had “informed your employees, when it was 

more than apparent that you had not, that your contract was cancelled effective 

September 30, 1998.” JA481-482. 

It is unclear what the district court meant when it made a passing reference 

to “repeated stalling and dishonesty.” See JA12. As noted, punitive damages 

cannot be imposed for Sunrise’s refusal to discuss the termination of the contract 

with Brillman in the summer and fall of 1998. To the extent that the court was 

referring to the discovery disputes that took place prior to “the eve of the first trial” 

(id.), its reliance is likewise misplaced, for at least two reasons. First, even if those 

disputes somehow prejudiced plaintiff in connection with the first trial, they 

28

certainly had no bearing on the retrial; by the time the case was remanded, all 

discovery issues had long been sorted out. Second, and more importantly, both 

State Farm’s nexus requirement and the First Amendment preclude the use of 

punitive damages to punish litigation conduct. See State Farm, 538 U.S. at 422- 

23; Professional Real Estate Investors, Inc. v. Columbia Pictures, 508 U.S. 49, 62- 

63 (1993) (holding that antitrust liability cannot be based upon a reasonable 

litigation position, regardless of the litigant’s subjective beliefs or motives, and 

observing that a common-law claim for wrongful civil proceedings is barred by 

litigant’s “reasonable belief that there [was] a chance that a claim [might] be held 

valid upon adjudication”). 

3. The record contains substantial mitigating evidence. 

Sunrise presented a great deal of mitigating evidence – all of which the 

district court ignored. 

a. The tortious conduct took place in the context of a 

socially valuable task. 

Sunrise is a model corporate citizen that takes indisputably excellent care of 

the elderly patients who are entrusted to it. While we accept for purposes of this 

appeal that Sunrise’s employee Marjorie Tomes committed a tortious interference 

when she facilitated contact between Symphony and the therapists, there is no 

suggestion that she did so in order to hurt CGB. Tomes testified that she was 

trying to protect RHA’s patients. JA323; JA324. Even if, as CGB claims, her 

29

concern for continuity of therapy services arose instead from a desire to maintain 

the financial health of a facility responsible for the care of elderly and ill residents, 

that objective itself is one that militates against the imposition of a large punitive 

award. The Ninth Circuit has recognized that tortious conduct that takes place in 

the context of a “socially valuable task” is inherently less reprehensible than 

conduct that serves no defensible purpose at all, such as “intentional, repeated 

ethnic harassment.” Bains LLC v. ARCO Prods. Co., 405 F.3d 764, 775 (9th Cir. 

2005). That sensible observation fits this case like a glove. 

b. Sunrise had a good-faith belief that its conduct was 

permissible. 

As discussed above (at pages 7-9), the evidence at trial showed that Tomes 

specifically tried to avoid violating CGB’s contractual rights. Tomes was aware of 

the no-raiding clause in the contract between CGB and RHA; accordingly, she 

sought the advice of RHA’s lawyer prior to speaking with the therapists. When 

she met with them, she stayed on message and told them only what she had been 

advised was permissible; accordingly, she did not believe that she had done 

anything wrong. JA340; JA349. Nor did Tomes believe that she was doing 

anything wrong by allowing Symphony to use a Prospect Park conference room for 

interviews, or by telling Symphony that, in her view, one of the CGB therapists 

was “well worth” his high salary. JA345-347; JA350-351. Tomes believed that 

there was a specific line that she had to walk in order to smooth the transition from 

30

CGB to Symphony and simultaneously comply with the contract between CGB 

and RHA, and she walked it. Plaintiff offered no evidence to rebut Tomes’ 

testimony about her contemporaneous understanding of what she could do to 

achieve continuity of care without interfering with CGB’s rights. Nor did it 

adduce any evidence to suggest that she might have deliberately disregarded the 

instructions that she had received from RHA’s lawyer. 

Numerous courts have held that good-faith reliance on the advice of counsel 

is a complete defense to, or at least a mitigating factor in the assessment of, 

punitive damages. 3 Even though Knaup was not Sunrise’s lawyer at the time, it is 

clear that Tomes’ reliance on his advice, and her undisputed belief that her conduct 

was permissible, are factors that militate strongly against a finding of high 

reprehensibility. 

*** 

By any measure, if Sunrise’s conduct crossed the threshold of 

reprehensibility necessary for the imposition of punitive damages, it did so only by 

3 See, e.g., Pierce v. Penman, 515 A.2d 948, 955 (Pa. Super. 1986); In re 

Heghmann, 316 B.R. 395, 406 (B.A.P. 1st Cir. 2004); Henderson v. U. S. Fid. & 

Guar. Co., 695 F.2d 109, 113 (5th Cir. 1983); Fox v. Aced, 317 P.2d 608, 610–611 

(Cal. 1957); Lopez v. Three Rivers Elec. Co–op., Inc., 26 S.W.3d 151, 160 (Mo. 

2000); Kuznik v. Bees Ferry Assocs., 538 S.E.2d 15, 32 (S.C. Ct. App. 2000); cf. 

Sheetz, Inc. v. Bowles Rice McDavid Graff & Love, PLLC, 547 S.E.2d 256 (W. Va. 

2001); Kluczyk v. Tropicana Prods., Inc., 847 A.2d 23, 32 (N.J. Super. Ct. App. 

Div. 2004). 

31

a whisker. There is therefore no doubt that the conduct does not warrant the 

imposition of $2 million in punitive damages – the very amount the Supreme Court 

analogized to a “severe criminal penalty” in BMW. 

B. The Ratio Guidepost Confirms The Gross Excessiveness Of A $2 

Million Punishment. 

In State Farm, the Supreme Court undertook to provide lower courts with 

more detailed guidance regarding the ratio guidepost than it had supplied in 

previous cases. Specifically, the Court stated that “few awards exceeding a single- 

digit ratio between punitive and compensatory damages, to a significant degree, 

will satisfy due process”; reiterated its prior statement that a punitive award of four 

times compensatory damages was likely to “be close to the line of constitutional 

impropriety”; indicated that, though “not binding,” the 700-year-long history of 

double, treble, and quadruple damages remedies (i.e., ratios of 1:1 to 3:1) is 

“instructive”; and, most importantly for present purposes, explained that, although 

a higher ratio may be permissible when “a particularly egregious act has resulted in 

only a small amount of economic damages,” “[w]hen compensatory damages are 

substantial, then a lesser ratio, perhaps only equal to compensatory damages, can 

reach the outermost limit of the due process guarantee.” 538 U.S. at 425. 

Applying these guidelines to the facts of the case before it, the Court observed that, 

even though State Farm’s conduct was “reprehensible” and “merit[ed] no praise” 

32

(id. at 419-20), “a punitive damages award at or near the amount of compensatory 

damages” – i.e., a 1:1 ratio – was likely the constitutional maximum. Id. at 429. 

To be sure, State Farm did not impose a simple mathematical formula for 

the imposition of punitive damages. But the fact that there is no one-size-fits-all 

ratio does not mean that the Supreme Court intended the second BMW guidepost to 

be effectively a nullity. To the contrary, the State Farm opinion and the dozens of 

lower court decisions applying it clearly demonstrate that the maximum 

permissible ratio will vary from case to case based principally on two variables: the 

degree of reprehensibility of the conduct and the magnitude of the harm caused by 

the conduct (here, as in most cases, the amount of the compensatory damages). 4 

The maximum permissible ratio is directly related to the former and inversely 

related to the latter. In other words, for any particular degree of reprehensibility, as 

the compensatory damages increase, the maximum permissible ratio decreases. 

And for any particular amount of compensatory damages, the lower on the 

reprehensibility spectrum the conduct falls, the lower the constitutionally 

permissible ratio. 

4 In some cases, a third variable – the likelihood of avoiding detection – may 

also be relevant. See State Farm, 538 U.S. at 425. Here, Sunrise’s conduct was 

open and obvious; accordingly, that variable cannot justify any enhancement of 

punishment. 

33

Application of these commonsense principles compels the conclusion not 

only that the 18:1 ratio of punitive to compensatory damages allowed by the 

district court is indicative of an unconstitutional punishment, but also that a 1:1 

ratio, or certainly no more than a 4:1 ratio, is the constitutional maximum under the 

specific circumstances of this case. 

1. The ratio of more than 18:1 is a clear indicator of 

excessiveness. 

To begin with, as indicated above, the State Farm Court expressly stated that 

“few awards” exceeding a single-digit ratio will satisfy due process. 538 U.S. at 

425. Such ratios generally will be permissible only if the defendant’s conduct is 

“particularly egregious” and the compensatory damages are “small.” 5 Id. 

5 Although the precise meaning of “small” is an open question, there can be 

little doubt that $109,000 is not “small.” It is most likely that by “small” the Court 

meant awards below $10,000. See BMW, 517 U.S. at 582-83 (discussing exception 

for cases in which “a particularly egregious act has resulted in only a small amount 

of economic damages,” while giving no indication that $4,000 compensatory 

award in case before it qualified for that exception); Bains, 405 F.3d at 776 (“[t]his 

is not a ‘small amount’ case because the economic damages were substantial – 

$50,000”); Roth v. Farner-Bocken Co., 667 N.W.2d 651, 669-70 (S.D. 2003) 

($25,000 award was not “small”), Jones v. Sheahan, 2003 WL 22508171, at *16 

(N.D. Ill. Nov. 4, 2003) (same); cf. Mathias v. Accor Economy Lodging, Inc. 347 

F.3d 672, 677 (7th Cir. 2003) (upholding 37:1 ratio in case in which two plaintiffs 

received $5,000 awards because the conduct “was outrageous but the compensable 

harm done was slight and at the same time difficult to quantify because a large 

element of it was emotional”); Simon, 113 P.3d at 75-78 (invoking State Farm 

exception where compensatory award was $5,000). 

34

The courts – including this Court – have with few exceptions adhered to the 

single-digit limit, particularly in cases involving compensatory awards in the range 

at issue here. See, e.g., Willow Inn, 399 F.3d at 233-34 (observing that State Farm 

generally sets single-digit limit on ratio of punitive to compensatory damages). 

The Ninth Circuit has patrolled this limit in a trilogy of recent decisions. 

In Planned Parenthood of the Columbia/Willamette Inc. v. American 

Coalition of Life Activists, 422 F.3d 949 (9th Cir. 2005), for example, a jury found 

that anti-abortion activists had made “true threats of violence” against abortion 

providers with the intent to intimidate them, and awarded $526,336 in 

compensatory damages and $108,500,000 in punitive damages. After reviewing 

BMW, State Farm, and the Ninth Circuit’s post-State Farm cases, the court 

explained: 

In cases where there are significant economic damages 

and punitive damages are warranted but behavior is not 

particularly egregious, a ratio of up to 4 to 1 serves as a 

good proxy for the limits of constitutionality. In cases 

with significant economic damages and more egregious 

behavior, a single-digit ratio greater than 4 to 1 might be 

constitutional. And in cases where there are insignificant 

economic damages but the behavior was particularly 

egregious, the single-digit ratio may not be a good proxy 

for constitutionality. 

Id. at 962 (citations omitted). Agreeing with the district court that the defendants’ 

conduct was “particularly reprehensible,” but observing that “[m]ost of the 

35

compensatory awards are substantial,” the court limited each punitive award to a 

9:1 ratio to the corresponding compensatory damages. Id. at 963. 

In Southern Union Co. v. Southwest Gas Corp., 415 F.3d 1001, 1010 (9th 

Cir. 2005), a case involving a public official’s flagrant abuse of his office, the 

district court upheld a punitive damages award of $60 million, which represented a 

ratio of 153:1 to the compensatory damages award of $390,072. That decision was 

reversed by the Ninth Circuit, which agreed that the defendant’s conduct was 

highly reprehensible but held that “the ratio [of punitive to] actual damages is too 

high” and remanded for further consideration of a more appropriate ratio. 415 F.3d 

at 1011. In so holding, the court stated: 

[W]e have been reminded that, under established 

principles, few awards exceeding a single digit ratio to a 

significant degree will satisfy due process. Even an 

award more than four times the amount of compensatory 

damages might be close to the line of constitutional 

impropriety. History points to double, triple, or 

quadruple punitives; these ratios are instructive.” 

Id. (citations and quotation marks omitted). 6 

Finally, in Bains, the defendant had engaged in racial discrimination and 

harassment that the court characterized as highly reprehensible: “the conduct was 

not an isolated incident but repeated, the target was highly vulnerable financially, 

6 In its brief opposing Sunrise’s post-trial motions, CGB relied heavily on the 

district court’s opinion in Southern Union. The reversal of that decision renders 

the district court’s opinion in this case even more of an outlier. 

36

and the harm resulted from intentional malicious conduct.” 405 F.3d at 775. 

Nonetheless, the court held that a ratio of between 6:1 and 9:1 was the 

constitutional maximum. Id. at 777. In explaining why a pre-State Farm case 

upholding a 28:1 ratio was no longer good law, the court stated: “State Farm 

emphasizes and supplements the BMW limitation by holding that when 

compensatory damages are substantial, then a lesser ratio, perhaps only equal to 

compensatory damages, can reach the outermost limit of the due process 

guarantee.” Bains, 405 F.3d at 776 (citations and internal quotation marks 

omitted). 

Other federal and state appellate courts have recognized the same limiting 

principles. See, e.g., Bach, 2005 WL 2009272, at *10 (noting that Supreme Court 

“has stated that awards exceeding a single-digit ratio will rarely be upheld against a 

constitutional challenge” and that a 1:1 ratio may be the limit when “the amount of 

compensatory damages is high,” and concluding that 6.6:1 ratio was “alarming” 

where compensatory damages were $400,000); Munro v. Golden Rule Ins. Co., 

393 F.3d 720, 721-22 (7th Cir. 2004) (State Farm “set constitutional limits on the 

punitive damages multiplier in simple economic-loss cases” and created a 

“presumption against punitive damages that are a double-digit multiple of the 

compensatory injury”); Simon, 113 P.3d at 77 (reading State Farm as having 

established a “presumption [that] ratios *** significantly greater than nine or 10 to 

37

one are suspect and, absent special justification *** cannot survive appellate 

scrutiny”). 7 

Nothing about this case that warrants deviating from the overwhelming 

consensus that ratios in excess of single digits are reserved for truly exceptional 

cases in which the conduct is highly reprehensible and the compensatory damages 

are small. Accordingly, at a minimum, the conclusion is inescapable that the 

existing 18:1 ratio is indicative of a grossly excessive punishment. 

2. The maximum permissible ratio in this case is 1:1. 

What, then, is the constitutional maximum in this case? We submit that the 

answer to that question again is supplied by State Farm. The Court there indicated 

7 In an appendix to our post-trial brief in the district court, we showed that of 

the 37 decisions handed down between April 2003 (when State Farm was decided) 

and February 2005 (when we filed the brief) in which the actual or potential harm 

was between $100,000 and $300,000, only three cases upheld a ratio that exceeded 

single digits. In all of the other 34 cases, the award (after judicial review) was less 

than ten times the compensatory damages – in most cases far less. See Appendix 

A. And even the three outlier cases had post-review ratios of 10:1, 10:1 and 11:1, 

respectively. See Hollock v. Erie Ins. Exch., 842 A.2d 409 (Pa. Super. 2004); 

Collins Entm’t Corp. v. Coats & Coats Rental Amusement, 584 S.E.2d 120 (S.C. 

Ct. App. 2003); Phelps v. Louisville Water Co., 103 S.W.3d 46 (Ky. 2003). The 

Pennsylvania Supreme Court granted review in Hollock (878 A.2d 864 (Pa. June 

28, 2005)); the case was argued in December 2005. 

As of today, there have been 43 such decisions (excluding this case). And 

there has been only one additional case (for a total of four) upholding a ratio of 

greater than single digits. See Superior Fed. Bank v. Jones & Mackey Constr.Co., 

2005 WL 3307074 (Ark. Ct. App. Dec. 7, 2005) (upholding ratio of 18:1 in case 

involving compensatory damages of $175,000). 

38

that punitive damages should not be awarded at all unless “the defendant’s 

culpability, after having paid compensatory damages, is so reprehensible as to 

warrant the imposition of further sanctions to achieve punishment or deterrence” 

(538 U.S. at 419), that “[t]he existence of any one of [the reprehensibility] 

factors *** may not be sufficient to sustain a punitive damages award” (id.), that 

“the absence of all of them renders any award suspect” (id. (emphasis added)), and 

that, even in cases of reprehensible misconduct (like State Farm itself), “[w]hen 

compensatory damages are substantial,” a 1:1 ratio “can reach the outermost limit 

of the due process guarantee” (id. at 425). 

Here, none of the reprehensibility factors was present (see Point A.2, supra), 

making “any [punitive] award suspect.” Moreover, the $109,000 compensatory 

award was “substantial” and constituted more than “complete compensation” for 

the injury arising from Sunrise’s tort. State Farm, 538 U.S. at 425, 426. Brillman 

herself admitted that she valued the loss of the six therapists in question at 

$109,000: one week before the therapists went to work for Symphony, she offered 

to waive her contractual rights to their services in exchange for a lump sum 

“buyout” of 25 percent of their salaries – or $109,000. See JA449-451. 

Indeed, most of that $109,000 loss was caused not by Sunrise’s tort, but 

rather by the termination of CGB’s contracts with RHA – a harm for which Sunrise 

cannot legitimately be punished. See CGB Occupational Therapy, 357 F.3d at 390 

39

(“Sunrise could not have interfered with the contracts between CGB and 

RHA/Pennsylvania.”). Both of the CGB therapists who testified at trial stated that, 

once CGB lost the RHA contracts at Prospect and Pembrooke, their departure was 

a foregone conclusion. Gasiewski, the head therapist, explained: 

Q: After you found out that she had lost the contract, you went to 

Miss Brillman and you asked her whether she had work for you as an 

occupational therapist, didn’t you? 

A: Yes. 

Q: She told you she didn’t, right? 

A: Right. 

*** 

Q: So in your view, sir, you had a choice of either going to work 

for Symphony or, if you wanted to work as an [occupational 

therapist], working for someone other than CGB, isn’t that a fact? 

A: Yes. 

Q: Either way, no matter what happened, you were going to have 

to leave CGB once they lost that therapy provider contract, isn’t that 

true? 

A: I felt I was forced to leave CGB. 

Q: Because of the loss of the contract? 

A: Yes. 

1/12/05 Tr. 105; JA89-90. Because the therapists would have left CGB even in the 

absence of Tomes’ actions, the $109,000 compensatory award far exceeds any 

40

minimal losses that CGB may have suffered as a result of Sunrise’s solicitation of 

the therapists, as distinguished from losses relating to termination of the contracts. 8 

In view of the ample size of the compensatory award, and the absence of any 

indicia of reprehensibility, a punitive award equal to the compensatory damages is 

the constitutional maximum – if indeed anything other than a nominal award is 

permissible. In Roth v. Farner-Bocken Co., 667 N.W.2d 651 (S.D. 2003), an 

employment case in which the defendant was found to have invaded the plaintiff’s 

privacy, the jury awarded $25,000 in compensatory damages and $500,000 in 

punitive damages − a ratio of 20:1. The Supreme Court of South Dakota 

determined that only one of the BMW factors was present and that the 

compensatory award fully redressed the harm. Accordingly, it held that the 20:1 

ratio was indicative of a grossly excessive award, explaining: 

[T]he harm caused to Roth was economic as opposed to 

physical. Farner put no one’s health or safety at risk and 

the evidence indicates Farner’s conduct was limited to 

two isolated incidents. Although Farner’s fraudulent 

concealment indicates it engaged in conduct of trickery 

and deceit, Roth was fully compensated for the damages 

he suffered ***. *** [W]e find that in this case, the 

combination of the “shocking disparity” between 

compensatory and punitive damages awarded, combined 

with the lack of potential and actual harm and the low 

8 Although Brillman testified at trial that CGB’s true damages far exceeded 

the $109,000 award, every element of additional harm that she identified was 

either abandoned by her counsel during closing argument at the first trial or found 

to be non-compensable by this Court. See pages 47-48 infra. 

41

degree of reprehensibility of the defendant’s conduct, 

counsel against a substantial punitive award. 

Id. at 667-69 (citations and internal quotation marks omitted). The court 

concluded that “‘a punitive damages award at or near the amount of compensatory 

damages’ is justified” and remanded for a new trial on punitive damages. Id. at 

671 (quoting State Farm, 538 U.S. at 429). 

The Eighth Circuit reached a similar conclusion in a case involving conduct 

materially more egregious than that at issue here – racial harassment in the 

workplace. See Williams v. ConAgra Poultry Co., 378 F.3d 790 (8th Cir. 2004). It 

held that a $6,063,750 punitive award that was just over ten times the plaintiff’s 

$600,000 compensatory award was unconstitutionally excessive and ordered a 

remittitur to the amount of compensatory damages, explaining: 

Mr. Williams’s large compensatory award *** militates against 

departing from the heartland of permissible exemplary damages. The 

Supreme Court has stated that “[w]hen compensatory damages are 

substantial, then a lesser ratio, perhaps only equal to compensatory 

damages, can reach the outermost limit of the due process guarantee.” 

Mr. Williams received $600,000 to compensate him for his 

harassment. Six hundred thousand dollars is a lot of money. 

Accordingly, we find that due process requires that the punitive 

damages award on Mr. Williams’s harassment claim be remitted to 

$600,000. 

Id. at 799 (citation omitted); see also Boerner v. Brown & Williamson Tobacco 

Co., 394 F.3d 594, 602-603 (8th Cir. 2005) (holding that “a ratio of approximately 

1:1 would comport with the requirements of due process” in case in which 

42

compensatory damages were “substantial” and conduct was deemed to be “highly 

reprehensible”); Ceimo v. General Am. Life Ins. Co., 2005 WL 1523445 (9th Cir. 

June 29, 2005) (unpublished) (affirming district court’s remittitur of punitive 

award to a 1:1 ratio); Watson v. E.S. Sutton, Inc., 2005 WL 2170659, at *19 

(S.D.N.Y. Sept. 6, 2005) (reducing punitive damages from $2.5 million to 

$717,000 in employment discrimination case where compensatory damages were 

$1.5 million because “the Court does not believe this is a case with the most 

culpable conduct possible”); Czarnik v. Illumina, Inc., 2004 WL 2757571, at *11 

(Cal. Ct. App. Dec. 3, 2004) (unpublished) (reducing $5 million punitive award to 

$2.2 million and explaining that “the $2.2 million compensatory damage award 

was without question ‘substantial’ and, in light of the fact that [the defendant’s] 

conduct was not highly reprehensible *** we conclude that a 1:1 ratio of punitive 

to compensatory damages is the maximum award that is sustainable against a due 

process challenge”). 

Here, as in Williams, the compensatory award “is a lot of money.” That is 

especially so because the $109,000 in compensatory damages that Sunrise had to 

pay did not represent the return of ill-gotten gain, but instead, from Sunrise’s 

standpoint, was entirely an out-of-pocket loss. In State Farm, the Supreme Court 

recognized that compensatory damages have a deterrent effect in their own right, 

admonishing that “punitive damages should only be awarded if the defendant’s 

43

culpability, after having paid compensatory damages, is so reprehensible as to 

warrant the imposition of further sanctions to achieve punishment or deterrence.” 

538 U.S. at 419 (emphasis added). 9 We respectfully submit that this case does not 

fall in the category thus described, making even a 1:1 ratio constitutionally 

questionable. 10 

Even for cases of higher reprehensibility, both the Supreme Court and most 

lower courts have regarded a 4:1 ratio as marking “the line of constitutional 

impropriety” (State Farm, 538 U.S. at 425) when the compensatory damages have 

exceeded $100,000. For example, one court reduced a punitive award of $2 

9 Prior and subsequent cases have made the same point. See, e.g., Memphis 

Cmty. Sch. Dist. v. Stachura, 477 U.S. 299, 307 (1986) (“[d]eterrence *** operates 

through the mechanism of damages that are compensatory”) (emphasis in original); 

San Diego Bldg. Trades Council v. Garmon, 359 U.S. 236, 247 (1959) (“The 

obligation to pay compensation can be, indeed is designed to be, a potent method 

of governing conduct and controlling policy.”); United States v. Bailey, 288 F. 

Supp. 2d 1261, 1281 (M.D. Fla. 2003) (setting aside $3,000,000 punitive award “in 

its entirety” because, among other things, the compensatory damages exceeded the 

gain to the defendant, making “the imposition of further sanctions to achieve 

punishment or deterrence” unnecessary), aff’d, 419 F.3d 1208 (11th Cir. 2005). 

Because the award of compensatory damages already has rendered Sunrise’s 

tortious interference with CGB’s relationship with its at-will employees completely 

unprofitable, those damages are themselves fully sufficient to deter any repetition 

of that conduct, making it unnecessary to allow a punitive/compensatory ratio in 

excess of 1:1. 

10 The same result is required as a matter of Pennsylvania law, which holds 

that the “size of a punitive damages award must be reasonably related to the State’s 

interest in punishing and deterring the particular behavior of the defendant and not 

the product of arbitrariness or unfettered discretion.” Shiner v. Moriarty, 706 A.2d 

1228, 1241 (Pa. Super. 1998). 

44

million to $717,610, in a case in which the plaintiff had received $179,402 in 

compensatory damages and medical expenses incurred as a result of an assault 

committed by the defendant’s employees. Fresh v. Entertainment U.S.A. of 

Tennessee, Inc., 340 F. Supp. 2d 851 (W.D. Tenn. 2003). Heeding State Farm’s 

discussion of the ratio guidepost, the court found “[t]he award in this case [to be] 

excessive when viewed as either a deterrent or punitive measure” (id.) at 860) and 

concluded that, given “the substantial amount of compensatory damages and 

medical expenses awarded in this case, a single-digit multiplier of four (4) 

appropriately complies with the constitutional limitations most recently set forth in 

Campbell ***.” Id. In a case involving discrimination against a disabled worker, 

another court reduced a punitive award of $4.5 million to $300,000. Young v. 

DaimlerChrysler Corp., 2004 WL 2538639, at *4 (S.D. Ind. Oct. 19, 2004). The 

compensatory damages were $100,000, and the court concluded that, despite the 

relatively high reprehensibility of the defendant’s conduct, a 3:1 ratio was the 

constitutional maximum. 11 

Most notably, the Eighth Circuit held that a 4:1 ratio was the “due process 

maximum” in a wrongful death case against the operators of a nursing home whose 

employees “failed to treat [the decedent’s] lengthy constipation and ignored their 

11 As a result of a $300,000 statutory cap on total damages, the plaintiff in 

Young ultimately received only $200,000 in punitive damages. 

45

duty to contact her treating physician despite numerous requests that they do so” 

and who were engaged in “a practice of careless and at times fraudulent charting of 

residents’ condition[s].” Stogsdill v. Healthmark Partners, L.L.C., 377 F.3d 827, 

832 (8th Cir. 2004) (ordering remittitur of $5 million punitive award to $2 million). 

Needless to say, if a 4:1 ratio (and $2 million punishment) is the limit in a case in 

which a nursing home’s conduct caused the death of a patient, nothing close to that 

is warranted when a similar business’s conduct injured another company, but 

affirmatively benefited the patients. 12 

12 Many state courts have likewise viewed 4:1 as the maximum permissible 

ratio when the compensatory damages are in the six-figure range, even where the 

reprehensibility of the defendant’s conduct is greater than it is in this case. See, 

e.g., Cass v. Stephens, 156 S.W.3d 38, 77 (Tex. Ct. App. 2004) (holding, in fraud 

and malicious conversion case involving $200,082 in compensatory damages, that 

“because there were sizable economic damages” and discovery sanctions against 

the defendant, “the circumstances and context of this case do not merit a ratio that 

exceeds four to one”); Diamond Woodworks, Inc. v. Argonaut Insurance Co. 135 

Cal. Rptr. 2d 736 (Ct. App. 2003) (reducing a punitive award that was 33 times the 

$258,570 in compensatory damages to slightly less than four times those damages 

even while determining that the defendant’s conduct exhibited four of the five 

indicia of reprehensibility identified in State Farm); Textron Fin. Corp. v. National 

Union Fire Ins. Co., 13 Cal. Rptr. 3d 586 (Ct. App. 2004) (ratio of 4:1 was 

constitutional maximum in case involving compensatory award of $90,000); 

Taylor Woodrow Homes, Inc. v. Acceptance Ins. Cos., 2003 WL 21224088, at *4 

(Cal. Ct. App. May 28, 2003) (unpublished) (reducing $5 million punitive award to 

$1 million, where compensatory damages were $293,000); Waddill v. Anchor 

Hocking, Inc., 78 P.3d 570, 576 (Or. Ct. App. 2003) (holding in product liability 

action that, because “there is no evidence that [the defendant] acted with 

intentional malice or engage[d] in trickery or deceit[,] *** the maximum 

constitutionally permissible [punitive] award in this case is four times the 

[$100,854 in] compensatory damages for which defendant is responsible”); Park, 

2004 WL 2595897, at *12-*16 (upholding reduction of 56:1 ratio to 3:1 where 

46

In sum, if, contrary to our arguments above, the Court concludes that the 

reprehensibility of Sunrise’s tort significantly exceeds the threshold between 

punishable and merely tortious conduct, a ratio of 4:1 would mark the outer limit 

of permissible punishment. If, on the other hand, the Court agrees with us that few 

if any of the reprehensibility factors are present here, a 1:1 ratio would “reach the 

outermost limit of the due process guarantee” (State Farm, 538 U.S. at 425). 

3. The denominator of the ratio is $109,000 

In attempting to justify setting the punitive damages at more than 18 times 

the compensatory damages, the district court asserted, with no concrete reference 

to the record, that “the $109,000 was not the only conduct that both Juries were 

allowed to punish. *** [G]iven the hardships Defendant imposed on Plaintiff in its 

treatment of Plaintiff after the interference took place, and given defendant’s antics 

leading up to the first trial, the true ratio, could the harm by Defendant be 

expressed as a simple dollar value, would be closer to three to one.” JA13-14. 

That conclusion finds no support in the record or in the law; it is contradicted both 

by the history of this case and by Circuit precedent. 

The procedural history of this case compels the conclusion that $109,000 is 

the only appropriate denominator for the punitive/compensatory ratio. The jury in 

compensatory damages were $50,000 and defendant’s “conduct was not ‘a 

particularly egregious act’”) (quoting State Farm, 538 U.S. at 425). 

47

the first trial found that the loss of the six therapists harmed CGB by exactly 

$109,000, and this Court held that that injury was the only claim for which CGB 

can recover punitive damages. CGB, 357 F.3d at 387-88. All of the other 

economic losses that CGB asserted in its briefs below were either rejected by the 

jury at the first trial or attributable to the claim on which Sunrise prevailed. For 

example, CGB claimed that it lost revenue arising from its inability to assign its 

therapists to other facilities after the RHA contracts were terminated – but in the 

first trial it did not request compensation for such lost revenues (which is 

unsurprising because it had no work for the therapists after it lost RHA’s business 

(see JA174-178)). Similarly, CGB argued that the $109,000 did not compensate it 

for the costs associated with training new therapists. The first jury, however, was 

authorized to award damages for all such losses that CGB proved; if it did not 

include costs associated with training replacements, it was because CGB did not 

prove any such losses. JA433-434. CGB further claimed that it had not been 

compensated for losses arising from Sunrise’s alleged use of its proprietary 

treatment techniques, but this Court specifically held that there was no evidence to 

support such a claim. CGB, 357 F.3d at 388-90. In sum, none of these unproven 

losses can be included in the denominator of the ratio. See, e.g., Simon, 113 P.3d 

at 74 (rejecting plaintiff’s attempt to inflate the denominator by “characteriz[ing] 

48

damages he might have obtained on another cause of action, one on which he did 

not prevail, as potential damages for the cause of action on which he did prevail”). 

Willow Inn, which the district court cited but apparently misread, in no way 

stands for the proposition that district courts are free to tinker with the denominator 

of the ratio. To the contrary, this Court focused almost entirely on the dollar 

amount that, pursuant to the Pennsylvania bad-faith statute, the defendant was 

required to pay to the plaintiff as a result of its tortious conduct. As the Court 

explained it: 

[B]ecause the $2,000 award on the contract claim was 

only incidental to the bad faith thrust of this litigation, we 

conclude that the attorney fees and costs awarded as part 

of the § 8371 claim is the proper term to compare to the 

punitive damages award for ratio purposes. These 

awards totaled $135,000, resulting in approximately a 1:1 

ratio, which is indicative of constitutionality under Gore 

and Campbell. 

399 F.3d at 235. By any measure, the defendant in Willow Inn behaved far more 

reprehensibly than Sunrise: it intentionally took advantage of a vulnerable 

policyholder to whom it owed a heightened duty of care. And the harm to Willow 

Inn, as measured by the applicable Pennsylvania statute, was comparable to that at 

issue here – $137,000 in Willow Inn, as compared with $109,000 in this case. 

Under those circumstances, this Court twice stated that a 1:1 ratio approached the 

limit of constitutionality. See id. at 230 (“[W]e consider the $150,000 punitive 

damages to approach but not cross the constitutional line.”); id. at 235 (“[W]e 

49

elieve the $150,000 punitive damages award approaches the constitutional limit 

given the reprehensibility of PSM’s conduct.”). If a 1:1 ratio was the constitutional 

limit in Willow Inn, it perforce exceeds the constitutional limit in this case, in 

which the defendant’s conduct implicated none of the five BMW reprehensibility 

factors. 

The district court’s reliance on Sheedy v. City of Philadelphia, 2005 WL 

375657 (E.D. Pa. Feb. 15, 2005), is similarly misplaced. First, the compensatory 

damages in Sheedy were $3,075. Cases involving small compensatory awards are 

simply not relevant for purposes of ratio analysis in this case, in which the 

compensatory award was orders of magnitude greater. The State Farm Court 

specifically noted that its single-digit-ratio presumption is inapplicable when “a 

particularly egregious act has resulted in only a small amount of economic 

damages.” 538 U.S. 408 at 425. Intentionally and maliciously causing one’s 

former spouse to be arrested and thrown into jail for a crime that she did not 

commit is, of course, “particularly egregious” misconduct, and $3,075 is a “small 

amount of economic damages.” Second, in reviewing the award in Sheedy, Judge 

Fullam plainly erred in assuming that “the jury’s $500,000 punitive award actually 

included a substantial amount of compensatory damages,” an amount that he 

estimated to be $100,000. 2005 WL 375657, at *5. Courts have no power to 

speculate in this way. See Chuy v. Philadelphia Eagles Football Club, 431 F. 

50

Supp. 254, 270 n.27 (E.D. Pa. 1977) (courts should not engage in “speculation on 

[the jury’s] method of computing punitive damages”), aff’d, 595 F.2d 1265 (3d 

Cir. 1979). Even accepting that it was appropriate for Judge Fullam to assume that 

the jury smuggled compensatory damages into its punitive award, however, a 

similar approach is impermissible in this case. It is clear from the record that the 

jury awarded the highest amount of compensatory damages that CGB possibly 

could have suffered from the tortious interference with its relationship with the 

therapists. See pages 48-49, supra. And third, after estimating the true 

compensatory award to be $100,000, Judge Fullam reduced the punitive award to 

$200,000. Ultimately, then, Sheedy stands for the proposition that, when the 

defendant’s conduct is highly reprehensible and the compensatory damages are 

$100,000, the appropriate ratio of punitive damages to compensable harm is 2:1. 

The conduct of the defendant in Sheedy was, of course, substantially more 

reprehensible than the tortious interference attributed to Sunrise in this case. 

Accordingly, Sheedy strongly supports our argument that, if any award of punitive 

damages is appropriate here, the maximum permissible ratio of punitive to 

compensatory damages is 1:1. 

C. The Third BMW Guidepost Confirms The Excessiveness Of The 

Award. 

The third BMW guidepost requires a comparison between “the punitive 

damages award and the civil or criminal penalties that could be imposed for 

51

comparable misconduct.” BMW, 517 U.S. at 583. There is no legislatively 

established penalty for the conduct at issue here – i.e., a third party’s decision to 

inject itself into the relationship between an employer and its at-will employees. 

The absence of any penal provisions covering the conduct is itself a clear 

indication that a punitive award “tantamount to a severe criminal penalty” (BMW, 

517 U.S. at 575) is excessive. See, e.g., FDIC v. Hamilton, 122 F.3d 854, 862 

(10th Cir. 1997) (holding that the fact that the conduct is not subject to criminal or 

civil fines suggests that defendant was not on notice that its conduct could give rise 

to substantial punitive damages, and reducing $1.2 million punitive award to 

$264,000 – six times the $44,000 compensatory award); Groom v. Safeway, Inc., 

973 F. Supp. 987, 995 (W.D. Wash. 1997) (“the fact that apparently there is no law 

imposing civil or criminal penalties for comparable conduct strongly suggests that 

an enormous punitive damages award is not warranted here”; reducing $750,000 

punitive award to $50,000 – 10 times the $5,000 compensatory award). 

D. The Punishment Cannot Be Sustained On The Basis Of Sunrise’s 

Finances. 

A defendant’s wealth “bear[s] no relationship to the [punitive] award’s 

reasonableness or proportionality to the harm,” and for that reason “[t]he wealth of 

a defendant cannot justify an otherwise unconstitutional punitive damages award.” 

State Farm, 538 U.S. at 427. Indeed, reliance on corporate financial condition to 

uphold a high punitive award constitutes “a departure from well-established 

52

constraints on punitive damages.” Id.; see also Bains, 405 F.3d at 777 (“A 

punitive damages award is supposed to sting so as to deter a defendant’s 

reprehensible conduct ***. But there are limits,” and evidence of wealth cannot 

“cannot make up for the failure of other factors, such as reprehensibility, to 

constrain significantly an award that purports to punish a defendant’s conduct.”) 

(citations and internal quotation marks omitted); Roth, 667 N.W.2d at 670 (where 

“the reprehensibility and harm guideposts counsel in favor of a lower punitive 

damages award,” court “need not address the wrongdoer’s financial condition and 

the effect of the punitive damages award on” the defendant). Thus, the district 

court clearly erred in suggesting repeatedly that “the tremendous wealth of 

Defendant” supports a larger award in this case. JA9; see also JA10. 

That is because, contrary to the district court’s belief, corporate financial 

condition sheds no light on either of the legitimate purposes of punitive damages: 

retribution and deterrence. As to the former, “the core of the Aristotelian notion of 

corrective justice, and more broadly of the principle of the rule of law, is that 

sanctions should be based on the wrong done rather than the status of the 

defendant; a person is punished for what he does, not who he is, even if the who is 

a huge corporation.” Mathias, 347 F.3d at 676 (7th Cir. 2003). Put another way, 

retributive principles are not advanced by punishing Wal-Mart more heavily than 

53

Target for the same conduct merely because Wal-Mart has greater financial 

resources. 

Wealth is equally irrelevant to Pennsylvania’s interest in deterrence. True, 

the wealth of an individual charged with committing a non-economically- 

motivated tort − e.g., assault, defamation, or vandalism − is relevant to the amount 

of punishment necessary to impart deterrence. See Kemezy v. Peters, 79 F.3d 33, 

35 (7th Cir. 1996) (“To a very rich person, the pain of having to pay a heavy award 

of damages may be a mere pinprick and so not deter him (or people like him) from 

continuing to engage in the same type of wrongdoing.”); Abraham & Jeffries, 

Punitive Damages and the Rule of Law: The Role of the Defendant’s Wealth, 18 J. 

LEGAL STUD. 415, 418 (1989) (wealth of individual may be relevant to setting 

punitive damages sufficient to “sting” individuals “who cause harm out of spite or 

malice”). 

But “[t]his point *** does not apply to institutions as distinct from natural 

persons.” Kemezy, 79 F.3d at 35. The reason is that “[a] potentially liable 

[organizational] defendant will compare the benefits it will derive from an action 

that risks tort liability against the discounted present expected value of the liability 

that will be imposed if the risk occurs. Whether a[n organizational] defendant is 

wealthy or poor, this cost-benefit calculation is the same.” Abraham & Jeffries, 

supra, at 417. 

54

In sum, because Sunrise’s financial resources bear no relationship to 

Pennsylvania’s interest in punishment or deterrence, this Court should not consider 

that evidence in determining the maximum constitutionally-permissible award of 

punitive damages. 

E. The Fact That The Jury Returned A Large Award Has No 

Bearing On The Excessiveness Analysis. 

The district court’s determination that a “very substantial punitive award” 

(JA9-10) is appropriate here was based in part on the size of the jury’s verdict. 

“Both juries decided that Plaintiff’s evidence called for a substantial award, and 

this Court will not blindly discard both Juries’ conclusions.” Id. That analysis was 

wrong in several respects. 

First of all, the first jury awarded $1.3 million in punitive damages for both 

torts, and the ratio of punitive to compensatory damages was approximately 2:1. 

Moreover, the compensatory damages attributable to the valid cause of action − 

$109,000 – were only 16 percent of the first jury’s total compensatory award. 

Accordingly, it is plain that, by imposing a $2 million award for that single cause 

of action, the district court did “blindly discard” the first jury’s conclusion. 13 

13 Moreover, even putting aside State Farm’s limitations on ratios in excess of 

single digits, to allow a punishment of more than the $1.3 million awarded by the 

first jury as punishment for both torts found by it effectively punishes Sunrise for 

successfully appealing, in violation of its due process rights. See Landsberg v. 

Scrabble Crossword Game Players, Inc., 802 F.2d 1193, 1199 (9th Cir. 1986) 

(finding that trial court, on remand, “imposed a chilling impediment to the right to 

55

Moreover, the second jury’s award does not – despite its enormous size – 

provide a basis to infer that the jury made a factual finding of high reprehensibility. 

As discussed above (at pages 11-15), plaintiff’s counsel engaged in a systematic 

effort to inflame the jury and distract it from its narrow task of setting punishment 

for the limited tort of interfering with CGB’s relationships with its staff. He 

particularly focused on Sunrise’s substantial financial resources, telling the jury 

that it would take a very large number to get Sunrise’s attention. The jury was then 

instructed by the court that it must consider Sunrise’s wealth in setting punishment, 

and that it should not feel constrained by the size of the compensatory award – 

exactly the reverse of the teaching of State Farm. The fact that it returned a $30 

million verdict demonstrates only that plaintiff’s counsel succeeded in influencing 

the jury with his inflammatory tactics and his emphasis on wealth. It indicates 

absolutely nothing about the jury’s views regarding the reprehensibility of 

Marjorie Tomes’ five-minute meeting with CGB’s therapists. As the California 

Supreme Court recently explained, when the jury has made “no *** express 

finding” on a particular issue bearing on application of the BMW guideposts, “to 

infer one from the size of the award would be inconsistent with de novo review, for 

appeal by increasing its initial punitive damage award merely because defendants 

successfully appealed” one of two claims against them). 

56

the award’s size would thereby indirectly justify itself.” Simon, 113 P.3d at 70. 

The district court’s contrary assumption was profoundly misguided. 

CONCLUSION 

For all of the foregoing reasons, the $2 million punitive award entered by the 

district court is grossly and unconstitutionally excessive. This Court should reduce 

the award to an amount no greater than the compensatory damages – $109,000. 

Respectfully submitted. 

/s/ Lauren R. Goldman 

Evan M. Tager 

Mayer, Brown, Rowe & Maw LLP 

1909 K Street N.W. 

Washington, D.C. 20006 

(202) 263-3240 

Andrew L. Frey 

Lauren R. Goldman 


1675 Broadway 

New York, NY 10019 

(212) 506-2500 

Richard G. Mann, Jr. 

C. William Groscup 

Watt, Tieder, Hoffar & Fitzgerald, L.L.P. 

8405 Greensboro Dr., Suite 100 

McLean, VA 

(703) 749-1000 

Counsel to Sunrise Senior Living, Inc. and 

Sunrise Senior Living Management, Inc. 

57

CERTIFICATE OF COMPLIANCE 

Pursuant to Fed. R. App. P. 32(a)(7)(C), I hereby certify that this brief was 

produced in Times New Roman (a proportionally-spaced typeface), 14-point type 

and contains 13,844 words (based on the Microsoft Word word processing system 

word count function). 

I further certify that the electronic copy of this brief filed with the Court is 

identical in all respects except the signature to the hard copy filed with the Court, 

and that a virus check was performed on the electronic version using the Norton 

Anti-Virus software program. 

58 




Counsel to Sunrise Senior Living, Inc. 

and Sunrise Senior Living 

Management, Inc.

CERTIFICATE OF SERVICE 

I hereby certify that on this 21st day of March, 2006, I served the foregoing 

document by causing a true and correct copy thereof to be delivered via electronic 

and U.S. mail to the following: 

David G. Concannon 

Law Offices of David G. Concannon, LLC 

Strafford Building One, Suite 112 

150 Strafford Avenue 

Wayne, Pennsylvania 19087 

59 






Management, Inc.

CERTIFICATE OF BAR MEMBERSHIP 

I hereby certify pursuant to LAR 46.1 that I was admitted to the Bar of the 

United States Court of Appeals for the Third Circuit on January 14, 2005 and 

remain a member in good standing of the Bar of this Court. 

Dated: March 21, 2006 

60 






Management, Inc.

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