In this matter, arising out of a failure to accommodate and discrimination action under the New Jersey Law Against Discrimination (LAD), N.J.S.A. 10:5-1 to -50, a jury returned a verdict for plaintiff awarding her compensatory damages and $10 million in punitive damages. On appeal, the court affirmed the finding of liability and the compensatory damage award but remanded for further proceedings on the amount of punitive damages, and specifically, for substantial consideration of the factors discussed by our Supreme Court in Baker v. National State Bank, 161 N.J. 220 (1999), and the United States Supreme Court in BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996).
The Supreme Court granted defendant's petition for certification and modified this court's remand instructions. The Court held that when reviewing a punitive damages award against a public entity, a trial court must not only consider the Baker/BMW factors, but also needs to apply heightened scrutiny as required under Lockley v. State, Department of Corrections, 177 N.J. 413 (2003).
On remand, the trial court concluded the punitive damages award was "reasonable" and "comport[ed] with due process."
In the present appeal, the court established a hybrid standard of review when considering an award of punitive damages against a public entity. The court should accord a deferential standard of review to a judge's determination of whether the jury's punitive damages award is "reasonable" and "justified in the circumstances of the case" under N.J.S.A. 2A:15-5.14(a). However, when a party challenges the punitive damages award on constitutional due process grounds, the court should review the trial court's decision as to the amount of the punitive damage award de novo.
After considering the Baker/BMW factors using the heightened scrutiny required under Lockley, we concluded the punitive damages award was not unreasonable or disproportionate to the harm caused by defendant's upper management representatives in their disregard of the LAD. Although mindful the source of the damages award is public funds, the court concluded the award was necessary to deter future unlawful conduct and to encourage high-level officials to conform their behavior.