Last summer, my colleague C.J. Summers and I posted a report about Saccameno v. U.S. Bank National Association, a Seventh Circuit case in which we had filed an amicus brief on behalf of the Chamber of Commerce of the United States.

In late November 2019, the Seventh Circuit issued an opinion reducing the punitive damages to a 1:1 multiple of the compensatory damages, agreeing with both the bottom line and a good deal of the analysis in our brief. And in late January 2020, the court denied the plaintiff’s rehearing petition.

As discussed in our initial post about the case, Monette Saccameno defaulted on a mortgage loan before entering bankruptcy. Over several years, Saccameno satisfied all conditions of her bankruptcy, including by making mortgage payments to defendant Ocwen Loan Servicing, LLC.

After Saccameno received her discharge from bankruptcy, an Ocwen employee mistakenly coded her bankruptcy as “dismissed,” which meant that Saccameno’s loan was returned to the foreclosure department. Ocwen employees failed to fully remedy the error, and made a number of additional mistakes in handling the loan, over the next two years. Saccameno then brought suit for breach of contract and violation of several Illinois and federal consumer-protection statutes.

The jury awarded Saccameno $500,000 for her breach-of-contract and federal statutory claims. Those claims do not support an award of punitive damages. The jury also awarded Saccameno $82,000 in compensation and $3 million in punitive damages for violation of the Illinois Consumer Fraud Act (“ICFA”). In refusing to reduce the punitive award, the trial court compared the punitive damages with the entire $582,000 in compensatory damages awarded by the jury and concluded that the resulting ratio of approximately 5:1 was consistent with due process.

Ocwen appealed, challenging both the finding of liability for punitive damages and the amount of punitive damages. The Seventh Circuit held that the record supported the finding of punitive liability, but that the amount of punitive damages was unconstitutionally excessive.

The court concluded that while each of the three guideposts identified by the Supreme Court supported the imposition of some substantial amount of punitive damages, each also dictated that a punishment of $3 million was excessive. In so doing, the court significantly clarified the application of the guideposts for lower courts within the Seventh Circuit.


As is typical, the parties disagreed about each of the five factors that the Supreme Court has instructed lower courts to consider when assessing the degree of reprehensibility of a defendant’s conduct. The Seventh Circuit accordingly provided guidance on how each factor should be understood.

Whether the harm was physical or economic and whether the defendant evinced a reckless disregard for the health or safety of others

In financial cases in which a plaintiff recovers damages for emotional distress, the parties regularly join issue over whether the harm should be characterized as physical, which bears on both the first and second reprehensibility factors.  The courts are divided on that question.

The Seventh Circuit sided with the defense position, explaining:  “The first factor is intended to draw a line—however hard to police—between physical injuries and those that are essentially economic, even if those economic injuries cause distress.”  The court accordingly “agree[d] that Saccameno did not identify any evidence that she suffered physical symptoms or that Ocwen should have been aware of a risk to her health.”

Whether the target of the conduct was financially vulnerable

The debate regarding this factor is over whether the plaintiff must prove that the defendant was aware of her financial vulnerability and targeted her because of it or instead whether it is sufficient that the plaintiff was vulnerable, regardless of what the defendant knew or intended.  The Seventh Circuit settled on an intermediate position.

On the one hand, it indicated that in prior cases it “ha[d] not required intentional exploitation to find that this factor weighs in favor of punitive damages.”  On the other hand, it held that because “the evidence does not show that Ocwen mistreated Saccameno because she was in bankruptcy,” it “does not favor a massive award,” even while “support[ing] some award of punitive damages.”

Whether the conduct involved repeated actions or was an isolated incident

The dispute regarding this factor is over whether the plaintiff must show that the defendant committed the same or similar wrongful acts against other individuals or instead whether the plaintiff can point to several independent acts that are part of a course of wrongful conduct directed against her.

The Sixth Circuit and California Supreme Court (among others) have taken the former position.  But the Seventh Circuit observed that “[w]e have consistently found this factor met in cases involving repeated acts against the same person.”  Nevertheless, it again treated the inquiry as non-binary, explaining that “recidivism may often be more reprehensible than repeated acts against the same party, but that goes to the degree and not the relevance of the factor.”

Whether the harm was the result of malice, trickery, or deceit or instead mere accident

This factor is peculiar, since “mere accident” would not give rise to liability for punitive damages in the first place.  Perhaps recognizing that, the court again took a non-binary approach, explaining that “it would be worse if Ocwen had preyed on Saccameno intentionally but Ocwen does not need to be the worst to be subject to punitive damages.”

Conclusion on reprehensibility

Having analyzed the five factors individually, the court proceeded to attempt to place Ocwen’s conduct on the spectrum of reprehensibility, as my colleagues and I have long urged courts to do.  The court explained that “Ocwen’s conduct was reprehensible, but not to an extreme degree” and concluded that the reprehensibility factors point toward a substantial punitive damages award, but not one even approaching the $3,000,000 awarded here.”

Also as my colleagues and I have suggested over the years, the court compared Ocwen’s conduct to the conduct in another case in which the same amount of punitive damages was sustained.  Concluding that “Ocwen’s conduct was less reprehensible” than the conduct of the mortgage servicer in the comparator case, the court held that it therefore “warrants a smaller punishment.”


The Seventh Circuit provided much additional thoughtful guidance on the ratio guidepost.  The big dispute between the parties was over whether the punitive damages should be compared to the total compensatory damages—yielding a ratio of slightly more than 5:1—as the district court did, or solely to the compensatory damages awarded for the one claim as to which punitive damages could be imposed—which would yield a ratio of almost 37:1.

The Seventh Circuit thought this dispute largely beside the point, reasoning that “the choice between available denominators—and their resulting ratios—reflecting the same underlying conduct and harm should not unduly influence whether a given award is constitutional.”  The court explained that “[n]o matter which denominator we use here …, the actual [punitive damages] award of $3,000,000 remains the same,” and “[m]ore importantly, so does Ocwen’s conduct and the harm it caused.”

Echoing a point that my colleagues and I have been making since State Farm was decided nearly 17 years ago, the court stated that, “given the same conduct, an increased compensatory award leads to a decreased permissible ratio, and vice-versa.”  Accordingly, it explained, “[t]he court must calculate the ratio to frame its analysis, but the ratio itself does not decide whether the award is permissible.”

“The answer to [whether a punitive award is permissible] might be yes, despite a high ratio, if the probability of detection is low, the harms are primarily dignitary, or … there is a risk that limiting recovery to barely more than compensatory damages would allow a defendant to act with impunity.”  And “[i]t might be no, even with a low ratio, if the acts are not that reprehensible and the damage is easily or already accounted for.”

Having set forth this framework, the Seventh Circuit admonished that “[r]ather than simply move numbers around on a verdict form to reach a single-digit ratio, courts should assess the purpose of punitive damages and the conduct at issue in order to evaluate the award.”

Using the case before it to illustrate this point, the court explained that “Ocwen’s conduct, which overlaps all four claims, would be no more or less reprehensible or harmful if the jury had shifted $50,000 from the compensatory award on the other claims to the ICFA claim or if the verdict form had provided only one line for compensatory damages for all four claims.”

Turning to the task at hand, the Seventh Circuit explained that “the $3,000,000 [punitive exaction] here is not a modest award, and the $82,000 in compensatory damages for the ICFA claim are substantial enough that a large multiplier was not needed to reflect harm that was ‘slight and at the same time difficult to quantify’” (quoting Mathias v. Accor Economy Lodging, 347 F.3d 672, 677 (7th Cir. 2003)).  It concluded therefore that “[a] single-digit punitive damages ratio relative to the $82,000 [ICFA compensatory award] reflects an appropriate punishment on these facts.”

Even more significant for the run of cases, the court continued that “[t]he district court should have hesitated just as much before upholding a 5:1 ratio relative to the $582,000 compensatory award on all four claims.”  It observed that the Supreme Court in State Farm “instruct[ed] that a substantial [compensatory] award merits a ratio closer to 1:1” (internal quotation marks omitted).  And it further noted that “courts have found awards of roughly this magnitude substantial under [State Farm] and imposed a 1:1 ratio” (internal quotation marks omitted).

While acknowledging that although “an award of this size (or larger) might not mandate a 1:1 ratio on another set of facts,” it observed that in this case “$582,000 is a considerable compensatory award for the indifferent, not malicious, mistreatment of a single $135,000 mortgage” and that “nearly all of this award reflects emotional distress damages that already contain a punitive element” (internal quotation marks and brackets omitted).

The court concluded, accordingly, that “[a] ratio relative to this denominator, then, should not exceed 1:1.”

Civil Penalties

The Seventh Circuit also undertook a more rigorous analysis of the third guidepost—civil penalties authorized or imposed for comparable conduct—than have most courts.

First, comparing the punitive award to ICFA’s $50,000 maximum penalty for intentional frauds, the court explained that, because there is “no evidence that Ocwen’s actions in this case were either intentional or fraudulent,” “Ocwen’s actions are not so reprehensible that they might justify an award equal to the maximum penalty for 60 violations.”

Second, the court considered the possibility that Ocwen could lose its license to service mortgages.  Although the court agreed that it is permissible to consider this penalty in the analysis, it cautioned that “[t]his does not mean … that any punitive award that is less than the value of Ocwen’s business license is per se constitutional—far from it.”  That is because “Illinois is not likely to take away Ocwen’s business license for deceptively saying [that] one customer owes a few thousand dollars on a $135,000 mortgage, no matter how unjustified the error.”

Accepting that “this weapon in Illinois’s arsenal has bearing on the seriousness with which a State views the wrongful action” (internal quotation marks omitted), the court concluded that “[t]his seriousness would be exaggerated by comparing the award here with the loss of Ocwen’s license but would be unduly minimized by limiting an award to only the $50,000 civil penalty.”


Having thoroughly evaluated the three guideposts, the Seventh Circuit held that “the maximum permissible punitive damages award is $582,000,” which “reflects a 1:1 ratio relative to the large total compensatory award and a roughly 7:1 ratio relative to the $82,000 awarded on the ICFA claim alone, both of which are consistent with the Supreme Court’s guidance in [State Farm].”  The court deemed an award of this size sufficient to “punish[] Ocwen’s atrocious recordkeeping and service of Saccameno’s loan without equating its indifference to intentional malice.”

Finally, the Seventh Circuit “agree[d] with every circuit to address this question that the constitutional limit of a punitive damage award is a question of law not within the province of the jury” and that a court therefore “is empowered to decide the maximum permissible amount without offering a new trial.”  The court accordingly “remand[ed] to the district court to amend its judgment and reduce the punitive damages award to $582,000.”


In my view, along with the Tenth Circuit’s decision in Lompe v. Sunridge Partners, LLC, discussed here, the Second Circuit’s decision in Turley v. ISG Lackawanna, Inc., discussed here, and the California Supreme Court’s decision in Simon v. San Paolo U.S. Holding Co., Saccameno represents one of the most thorough and thoughtful efforts to implement the Supreme Court’s guidance in BMW and State Farm.  Though I do not fully agree with everything said in the opinion, it makes a valuable contribution to the body of post-BMW/post-State Farm case law.  I expect that it will become a useful precedent in future cases.