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Mathias v. Accor Econ. Lodging, Inc. - 347 F.3d 672 (7th Cir. 2003)

Rule:

Punitive damages should be admeasured by standards or rules rather than in a completely ad hoc manner, and this does not tell the court what the maximum ratio of punitive to compensatory damages should be in a particular case. To determine that, the court must consider why punitive damages are awarded in the first place.

Facts:

Plaintiffs Burl Mathias and Desiree Mathias, a brother and sister, were guests at a motel owned and operated by defendants Accor Economy Lodging, Inc. and Motel 6 Operating L.P. While guests they were bitten by bedbugs. Plaintiffs filed a diversity action in federal district court against defendants claiming that in allowing guests to be attacked by bedbugs in a motel that charged upwards of $ 100 a day for a room and would not like to be mistaken for a flophouse, defendants were guilty of "willful and wanton conduct," and thus under Illinois law were liable for punitive as well as compensatory damages. The jury agreed and awarded each plaintiff $ 186,000 in punitive damages though only $ 5,000 in compensatory damages. Defendants appealed, complaining primarily about the punitive-damages award arguing that punitive damages were subject to a single-digit ratio.

Issue:

Was the award for punitive damages proper?

Answer:

Yes.

Conclusion:

The appellate court affirmed the award of punitive damages. It held that the evidence was sufficient to show willful and wanton conduct given that bedbugs had been discovered in the motel two years prior to the incident that gave rise to plaintiffs' complaint. Moreover, the motel's failure to either warn guests or take effective measures to eliminate the bedbugs amounted to fraud and perhaps battery. The court rejected defendants' contention that the punitive damages were subject to a single-digit ratio when compared to compensatory damages because the test was whether the punitive damages were proportional to the wrongfulness of defendants' actions. In this case, the punitive damages award was not excessive because even though the precise number chosen by the jury was arbitrary, the court took judicial notice that deliberate exposure of hotel guests to health risks created by insect infestation exposed defendants to sanctions under Illinois and Chicago law that in the aggregate were comparable in severity to that of the punitive damages award.

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