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.
Plaintiff hotel guests sued defendant motel chain owner, claiming willful and wanton conduct under Illinois law in allowing hotel guests to be attacked by bedbugs. A jury in the United States District Court for the Northern District of Illinois, Eastern Division, found in favor of the guests, awarding each compensatory and punitive damages. The owner appealed, complaining primarily about the punitive damages award. The owner argued that at worst it was guilty of simple negligence and as a result, the guests were not entitled to an award of punitive damages. The evidence was sufficient to show willful and wanton conduct given that bedbugs had been discovered in the hotel two years prior to the incident that gave rise to the guests' complaint. Moreover, the hotel's failure to either warn guests or take effective measures to eliminate the bedbugs amounted to fraud and perhaps battery. The award was affirmed.
Were plaintiffs entitled to an award of punitive damages?
The court rejected the owner's 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 the owner's 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 the owner to sanctions under Illinois and Chicago law that in the aggregate were comparable in severity to that of the punitive damages award.