Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Ill.: Jury verdict awarding $20 million in punitive damages and no compensatory damages could not stand, (Jul 19, 2013)

By Jody Coultas, J.D.

The federal district court in Chicago found that a new trial was warranted after a jury returned a verdict that was against the weight of the evidence and made an excessive award of punitive damages in an Illinois Consumer Fraud and Deceptive Business Practices Act (CFA) claim (Pileco, Inc. v. Slurry Systems, Inc., July 18, 2013, Keys, A.)

Pileco, Inc. sued Slurry Systems, seeking to recover money allegedly owed on a contract executed in connection with a reservoir project undertaken by the Army Corps of Engineers. Slurry Systems counterclaimed that it had subcontracted with Pileco and Bauer Maschinen GMBH to provide equipment necessary for the reservoir job, that the equipment never worked properly, and that Pileco and Bauer breached their agreement and violated the CFA.

A jury found for Slurry Systems on its CFA claim, awarding $20 million in punitive damages against Bauer, but no compensatory damages. Because the jury awarded no compensatory damages on the CFA claim, the punitive damages award could not stand.

After discussing the problems with the verdict, the court and the parties attempted to resolve the parties’ dispute, but were unsuccessful.

Federal Rule of Civil Procedure 59(d) allows a court, on its own motion, to order a new trial for any justifiable reason. A new trial is generally appropriate when the verdict was against the weight of the evidence or where the verdict was excessive or inadequate.

The punitive damages award for CFA violations was “monstrously” excessive, according to the court. Although punitive damages were available, and although the testimony at trial was enough to get the claim to the jury, the amount awarded was too high. Illinois courts have affirmed awards for violations of the CFA that included punitive damages that are in the range of four to seven times the compensatory damages. Without even considering the degree of the reprehensibility of the conduct at issue, the jury’s award was excessive and could not stand.

The jury’s breach of contract verdict was against the weight of the evidence, according to the court.

The case is No. 09 C 7459.

Attorneys: Steven J. Kadison (Kamenear, Kadison, Shapiro & Craig) for Pileco, Inc. Eric Neal Macey (Novack and Macey, LLP ) for Slurry Systems, Inc.

Companies: Pileco, Inc.; Slurry Systems, Inc.; Bauer Maschinen GMBH

Cases: StateUnfairTradePractices IllinoisNews