Rel: 08/29/2014




Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter. Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334)
229-0649), of any typographical or other errors, in order that corrections may be made
before the opinion is printed in Southern Reporter.




           SUPREME COURT OF ALABAMA
                               SPECIAL TERM, 2014

                         _________________________

                                  1091758
                         _________________________

            Target Media Partners Operating Company, LLC,
                            and Ed Leader

                                          v.

    Specialty Marketing Corporation d/b/a Truck Market News

                   Appeal from Calhoun Circuit Court
                             (CV-07-900201)

                             On Return to Remand

PER CURIAM.

       The defendants, Target Media Partners Operating Company,

LLC ("Target Media"), and Ed Leader, appealed from a judgment

entered       in   favor    of   the    plaintiff,        Specialty      Marketing
1091758

Corporation d/b/a Truck Market News ("Specialty Marketing").

Specialty Marketing had sued Target Media and Leader, alleging

breach-of-contract claims against Target Media and fraudulent-

misrepresentation and promissory-fraud claims against Target

Media and Leader.           Target Media had filed a counterclaim

alleging         breach-of-contract       claims    against      Specialty

Marketing.        A jury returned verdicts in favor of Specialty

Marketing        on   its      breach-of-contract      claim,     awarding

compensatory damages of $851,552; in favor of Target Media on

its breach-of-contract counterclaim, awarding compensatory

damages of $48,800; in favor of Specialty Marketing and

against Target Media on Specialty Marketing's promissory-fraud

claim, awarding compensatory damages of $210,000 and punitive

damages     of     $630,000;    in   favor   of    Leader   on   Specialty

Marketing's promissory-fraud claim; and in favor of Specialty

Marketing and against Target Media and Leader on Specialty

Marketing's        fraudulent-misrepresentation        claim,     awarding

compensatory damages of $167,800 and punitive damages of

$503,400. The trial court entered a judgment on that verdict.

This Court affirmed the judgment as to the compensatory-

damages awards but remanded the cause with instructions for


                                      2
1091758

the trial court to hold a hearing on the question whether the

punitive-damages awards are excessive.                See Target Media

Partners Operating Co. v. Specialty Marketing Corp., [Ms.

1091758, September 6, 2013] ___ So. 3d ___ (Ala. 2013) (Parker

and Wise, JJ., concurred; Moore, C.J., and Shaw and Bryan,

JJ., concurred in the result; Murdock, J., concurred in the

rationale in part and concurred in the result; and Stuart,

Bolin, and Main, JJ., concurred in part and dissented in

part).     Pursuant to our instructions, the trial court, on

January 17, 2014, held a hearing pursuant to Hammond v. City

of Gadsden, 493 So. 2d 1374 (Ala. 1986), and Green Oil Co. v.

Hornsby, 539 So. 2d 218 (Ala. 1989), at the conclusion of

which the trial court reaffirmed the punitive-damages awards.

The trial court made its return to this Court on March 24,

2014.     The only issue now before this Court is whether the

punitive-damages    awards   are,       as   Target   Media   and   Leader

contend, excessive.

    The trial court entered the following thorough and well

reasoned order on remand:

         "This matter comes before the court on remand
    from the Supreme Court of Alabama. Pursuant to the
    Court's   opinion   of   September  6,   2013,   a
    Hammond/Green Oil hearing was held on January 17,

                                    3
1091758

    2014, to review the punitive damages awarded by the
    jury in this cause and to consider the arguments
    made by defendant Target Media Partners Operating
    Company, LLC (hereinafter 'Target [Media]'), and
    defendant Ed Leader in their motions for remittitur.
    The punitive damages were returned by the jury on
    [Specialty   Marketing]'s   claims   of   fraudulent
    misrepresentation as to Target [Media] and Leader
    and on [Specialty Marketing]'s promissory-fraud
    claim as to defendant Target [Media]. Specifically,
    the jury returned a verdict against defendant Target
    [Media] on the claim for promissory fraud in the
    amount of $210,000 in compensatory damages and
    $630,000 in punitive damages. The jury returned a
    verdict against defendant Target [Media] and
    defendant Leader on the claim for fraud[ulent]
    misrepresentation in the amount of $167,800 in
    compensatory damages and $503,400 in punitive
    damages.

         "This was a well-tried case on behalf of all
    parties.   The court has carefully considered the
    briefs and arguments submitted by the parties as
    well as the evidence presented at the Hammond/Green
    Oil hearing held on January 17, 2014. This court
    has thoughtfully considered the testimony of each
    and every witness who testified during this almost
    two-week trial as well as the attentive jury who
    decided the case. With regard to [Target Media's
    and Leader's] motions for remittitur, the court has
    analyzed the Hammond/Green Oil factors, which the
    court is duty-bound to consider. The court, after
    careful consideration of all the Hammond/Green Oil
    factors, finds that there is no legal basis
    justifying remittitur of the punitive damages
    verdict returned by the jury in this case.      The
    court finds that there was substantial evidence
    justifying and supporting the verdict as to all of
    the named defendants.     There is no compelling
    justification for this court to remit the award in
    this case.    The jury's award in this case is
    consistent with, and in line with, judgments that

                             4
1091758

    have been affirmed by the Alabama Supreme Court in
    recent years.

         "In assessing the appropriateness of the amount
    of a punitive damages verdict and judgment, the
    Alabama Supreme Court and the United States Supreme
    Court have provided certain guidelines or factors
    for a trial court to consider.     In BMW of North
    America, Inc. v. Gore, 517 U.S. 559 (1996), and
    Green Oil Co. v. Hornsby, 539 So. 2d 218 (Ala.
    1989), most of these guidelines are set forth. The
    factors to be considered under Green Oil and the
    associated case of Hammond v. City of Gadsden, 493
    So. 2d 1374 (Ala. 1986), as stated in Green Oil, are
    as follows:

               "'(1) Punitive damages should bear a
          reasonable relationship to the harm that is
          likely to occur from the defendant's
          conduct as well as to the harm that
          actually has occurred. If the actual or
          likely harm is slight, the damages should
          be relatively small; if grievous, the
          damages should be much greater.

               "'(2) The degree of reprehensibility
          of the defendant's conduct should be
          considered. The duration of this conduct,
          the degree of the defendant's awareness of
          any hazard which his conduct has caused or
          is likely to cause, and any concealment or
          "cover-up"   of   that  hazard,  and   the
          existence and frequency of similar past
          conduct   should   all   be  relevant   in
          determining        this     degree      of
          reprehensibility.

               "'(3) If the wrongful conduct was
          profitable to the defendant, the punitive
          damages should remove the profit and should
          be in excess of the profit, so that the
          defendant recognizes a loss.

                              5
1091758

               "'(4) The financial position of the
          defendant would be relevant.

               "'(5) All the costs of litigation
          should be included, so as to encourage
          plaintiffs to bring wrongdoers to trial.

               "'(6) If criminal sanctions have been
          imposed on the defendant for his conduct,
          this should be taken into account in
          mitigation of the punitive damages award.

               "'(7) If there have been other civil
          actions against the same defendant, based
          on the same conduct, this should be taken
          into account in mitigation of the punitive
          damages award.'

    "Green Oil, 539 So. 2d at 223-24.

         "The three BMW 'guideposts' are here numbered as
    factors (8), (9), and (10):

    "(8) Reprehensibility. The U.S. Supreme Court
    majority stated that the most important factor in
    the analysis is 'the degree of reprehensibility of
    the defendant's conduct.' BMW, [517 U.S. at 575].

    "(9)   Ratio. The   second 'guidepost'      is   the
    relationship between compensatory and       punitive
    damages. Id. at [580].

    "(10) Legislative Penalties. The third 'guidepost'
    is a comparison to comparable legislative fines and
    penalties for comparable misconduct. Id. at [583-
    84].

         "At the hearing on January 17, 2014, [Target
    Media   and  Leader]   presented  evidence   almost
    exclusively in regard to their respective financial
    positions. However, in their brief, [Target Media
    and Leader] argued other factors which they felt

                              6
1091758

    were relevant. The court has given de novo review
    to each of the factors, and herein states the
    court's conclusions:

         "1. Punitive damages should bear a reasonable
    relationship to the harm that is likely to occur
    from the defendants' conduct as well as to the harm
    that actually has occurred. The evidence presented
    at trial made clear that [Specialty Marketing] was
    significantly injured as a result of [Target Media
    and Leader's] conduct.    As stated by the Supreme
    Court in its opinion, 'the jury heard ample evidence
    from which it could have found harm' to [Specialty
    Marketing] as a result of [Target Media and
    Leader's] conduct. Target Media Partners Operating
    Co. v. Specialty Marketing Corp., [Ms. 1091758,
    September 6, 2013] ___ So. 3d ___, ___ (Ala. 2013).
    The Court went on to say that the evidence before
    the jurors in this case was sufficient to find that
    [Specialty Marketing] 'lost business and profits.'
    Id. [at ___]. In addition to the $400,000 paid to
    Target   [Media],   the  evidence   indicated   that
    [Specialty Marketing]'s expenses were in excess of
    $1,500,000 in printing and shipping costs, much of
    which was lost due to [Target Media and Leader's]
    fraudulent conduct. This factor weighs in favor of
    [Specialty Marketing].

         "2. The degree of reprehensibility of the
    defendants' conduct should be considered.       The
    relation of this conduct, the degree of the
    defendants' awareness of any such conduct and any
    concealment or cover-up, and the existence and
    frequency of similar past conduct should all be
    relevant    in    determining   this   degree    of
    reprehensibility.    The degree of reprehensibility
    here is extremely high in that the evidence
    established that [Target Media and Leader] entered
    into their relationship with [Specialty Marketing]
    and continued that relationship for over four (4)
    years--all the while knowing they never intended to
    perform the services which had been promised.

                             7
1091758

         "The most important factor the Court should
    consider in determining whether a remittitur is
    warranted is the relative degree of the defendants'
    culpability. 'Perhaps the most important indicium
    of the reasonableness of a punitive damages award is
    the degree of reprehensibility of the defendants'
    conduct.' BMW v. Gore, 517 U.S. at 575. Given the
    facts presented in this case, it is clear that the
    evidence supported a finding by the jury that
    [Target Media and Leader's] conduct was highly
    reprehensible.

          "In its opinion, the Supreme Court found:

          "'It cannot be disputed in this case that
          the jurors reasonably could have found that
          Target Media and its principals made
          fraudulent misrepresentations, that those
          misrepresentations involved material facts,
          and that those misrepresentations damaged
          Speciality Marketing.'

    "Target Media, [___ So. 3d at ___].

         "Mobile Infirmary Association v. Tyler, 981 So.
    2d   1077  (Ala.   2007),   makes   it  clear   that
    reprehensibility is not a mathematical formula based
    on a number of wrongful acts. However, the number
    of wrongful acts can aggravate the reprehensibility
    factor. The evidence here is that [Target Media]
    engaged in this same conduct prior to entering into
    the relationship with [Specialty Marketing] as well
    as at the time it was negotiating to distribute
    [Specialty Marketing]'s magazines.

         "The evidence shows that [Target Media] never
    intended to fulfill the promises that it made to
    [Specialty   Marketing].      The   evidence   here
    established that in addition to the $400,000 paid
    directly to [Target Media], [Specialty Marketing]
    paid approximately $900,000 in printing costs,
    approximately $200,000 of which the jury could have

                              8
1091758

    found was attributed solely to magazines that were
    thrown away in Oxford, Alabama, and that [Specialty
    Marketing] lost business and profits as a result of
    [Target Media and Leader's] conduct.     This court
    agrees with the statement made by [Specialty
    Marketing] in its brief that 'in the context of the
    relationship between [Specialty Marketing] and
    [Target Media] in this case, there can be no more
    reprehensible conduct than to lie and defraud the
    other party and to utterly fail--intentionally--to
    perform the duties promised.' The evidence here was
    clear and convincing that [Target Media and
    Leader's] conduct was consistent and continuous
    throughout the relationship between the parties.
    This factor weighs heavily in favor of [Specialty
    Marketing].

         "3. If the wrongful conduct is profitable to the
    defendant, the punitive damages should remove the
    profit and should be in excess of the profit so that
    the defendant recognizes a loss. Ex parte Vulcan
    Materials Co., 992 So. 2d 1252 (Ala. 2008). In this
    case, the total amount of punitive damages given by
    the jury was $1,133,400.      The evidence was that
    [Specialty Marketing] paid [Target Media] $400,000
    for services that were not performed. [Target Media
    and Leader] committed themselves to defrauding
    [Specialty Marketing] and coerced employees to
    ensure that the fraud was accomplished.           The
    evidence clearly established that [Target Media and
    Leader] did so to create a profit by placing Target
    [Media]'s    own    books   ahead    of    [Specialty
    Marketing]'s, by destroying [Specialty Marketing]'s
    books, and by pocketing $400,000 in contract
    proceeds without working for that money. Moreover,
    as noted by the Supreme Court, [Target Media and
    Leader] did this never intending to fulfill the
    promises made to [Specialty Marketing].

         "This Court believes that the jury provided
    punitive damages in excess of the profits gained by
    [Target Media and Leader] so that [Target Media and

                             9
1091758

    Leader have] recognized a loss which is reasonable
    in the context of [their] conduct.

         "[Target Media and Leader argue] that there is
    no evidence that defendant Leader profited from the
    conduct underlying the punitive damages in this
    case.    Evidence at the hearing established that
    Leader earned between $100,000 and $150,000 each of
    the years of the contractual relationship between
    Target [Media] and [Specialty Marketing].       This
    would total between $400,000 and $600,000 during the
    time frame that [Specialty Marketing] was actively
    being defrauded. The Court finds that profit gained
    by Target [Media] should be imputed, at least in
    part, to defendant Leader, an officer of the
    company.    This is true not only with regard to
    moneys paid by [Specialty Marketing] directly to
    [Target Media], but also by distributing and
    displaying [Target Media]'s books in place of
    [Specialty Marketing]'s books. This is especially
    true since Leader was established to be one of the
    point men in accomplishing the fraud. This factor
    weighs against remittitur.

         "4. The financial position of the defendant
    would be relevant. This is the factor argued most
    vehemently by [Target Media and Leader].         The
    evidence presented at the Hammond/Green Oil hearing
    was almost exclusively with regard to this factor.
    [Target Media] presented financial statements/audits
    showing that Target Media lost tens of millions of
    dollars between the years 2008 and 2012, and that
    Target Media currently has a negative net worth of
    millions of dollars. Similarly, [Target Media and
    Leader] offered evidence at the hearing that Ed
    Leader has made between $100,000 and $150,000 per
    year in his employment with Target [Media] since
    2001; that Leader is 'underwater' in his home and
    has a 'modest retirement plan.' The evidence at the
    hearing was that his retirement plan has a few
    hundred thousand dollars in it.


                            10
1091758

         "[Target Media and Leader] argued that the
    imposition of $1,133,400 against Target [Media] 'may
    very well destroy it.' [Target Media and Leader]
    further argued that the imposition of any punitive
    damages against Leader will have the effect of
    destroying him.

         "The Alabama Supreme Court has stated that
    'punitive damages should sting, but should not
    destroy a defendant.'    Green Oil [539 So. 2d] at
    222.    The court has performed its own de novo
    examination of the amount of the verdict, and the
    court can find no valid basis for any remittitur.
    A review of [Target Media's] financial statements
    reveals that the financial health of Target Media is
    not likely to depend or be largely affected by the
    relatively small punitive damages award from this
    case.    The company continues to generate several
    million dollars in revenue each year. In fact, the
    only witness who testified on behalf of Target Media
    at the Hammond/Green Oil hearing was the individual
    defendant and officer of the corporation, Ed Leader.
    When asked directly whether this punitive damages
    award would cripple or destroy Target Media, Leader
    testified that he had no information that that would
    be true, and further testified that he doubted the
    size of this verdict would have much of an effect in
    the context of the company's current financial
    condition. From the evidence before this court, it
    is evident that the jury award, while inflicting a
    sting on Target Media, is not significant in terms
    of that company's size and operations.

         "[Target Media and Leader's] argument with
    regard to Leader is effectively that the punitive
    damages award against him should be reduced to
    'zero.' This position shocks the conscience of the
    court. All of the evidence regarding the deceptive
    and fraudulent conduct of [Target Media] as it
    relates to the fraud/misrepresentation claim is also
    applicable to Ed Leader. While the evidence showed
    that the conduct was carried out by many of [Target

                            11
1091758

    Media's] employees, that conduct was ordered and
    overseen by Ed Leader.     The court finds that a
    remittitur (especially to zero) would fail to do
    justice and would fail to serve the law's twin aims
    of specific and general deterrence.     Contrary to
    [Target Media and Leader's] argument, a judgment
    lien, no matter how large, is not a financial death
    penalty. Present Alabama law limits the percentage
    of wage garnishment and limits the effective range
    of a judgment to a maximum of 20 years.

         "With regard to both Target Media and Leader,
    the court notes that collectibility of this judgment
    is not the sole issue in a punitive damages case.
    The fact that this judgment may be difficult to
    collect is not the sole interest or relevant factor.
    An equally central purpose of punitive damages is
    general deterrence--the amount of the verdict is
    intended as a warning to all potential corporate and
    individual defendants not to engage in intentional,
    fraudulent behavior.    A remittitur in this case
    would mitigate the efficacy of this verdict's value
    to general deterrence.     A remittitur would also
    disrespect this jury's work.     This factor weighs
    against remittitur.

         "5. All the costs of litigation should be
    included, so as to encourage plaintiffs to bring
    wrongdoers to trial.    This factor has not been
    argued by the parties herein, so the court finds
    that this is a neutral factor in this case.

         "6. If criminal sanctions had been imposed on
    [Target Media or Leader] for [their] conduct, this
    should be taken into account in litigation of the
    punitive damages award.      This factor is not
    applicable.

         "7. If there had been other civil actions
    against the same defendants, based on the same
    conduct, this should be taken into account in
    litigation of the punitive damages award. There is

                            12
1091758

    no evidence before this court of any actions based
    on the same conduct. ... This factor weighs in favor
    of [Specialty Marketing].

         "8. Reprehensibility.    This United States
    Supreme Court BMW 'guidepost' is already discussed
    in No. 2 above.

         "9. Ratio. The second BMW 'guidepost' is the
    relationship between compensatory and punitive
    damages. In this case, the jury returned a verdict
    for compensatory damages in the amount of $377,800
    in the fraud and promissory-fraud claims.      The
    punitive damages given were in the amount of
    $1,133,400. The ratio of punitive to compensatory
    damages here is 3:1.

         "The Alabama Supreme Court has approved a 3:1
    ratio 'benchmark.' The 3:1 'benchmark' approved by
    the Alabama Supreme Court has been held to be
    'presumptively reasonable.'      Prudential Ballard
    Realty Co. v. Weatherly, 792 So. 2d 1045 (Ala.
    2000). The Supreme Court has further held that a
    ratio of 3:1 weighs against a remittitur, without
    some special justification.      'Only in the most
    extraordinary situations would the award be deemed
    excessive when the [punitive damages award] is at or
    below the benchmark.'     Weatherly [792 So. 2d] at
    1053; see also Southern Pine Electric Cooperative v.
    Burch, 878 So. 2d 1120 (Ala. 2003). The Court finds
    that   this   case   does   not   present   a  'most
    extraordinary' situation that would dictate reducing
    the punitive damages in this case.       This factor
    weighs heavily in favor of [Specialty Marketing].

         "10. Legislative penalties. The third BMW
    'guidepost'   is   a   comparison    to   comparable
    legislative fines and penalties for comparable
    misconduct.    Here, the jurors awarded punitive
    damages that do not exceed three times the amount of
    the compensatory damages awarded.     These punitive
    damages are no more than the monetary penalties

                            13
1091758

    [Target Media and Leader] could suffer under the
    Alabama Deceptive Trade Practices Act, Ala. Code
    1975 § 8-19-1 et seq.     That act prescribes (1)
    fines, (2) treble compensatory damages, and (3) an
    award of costs and attorney fees. The comparable
    legislative penalty is virtually equivalent to the
    jury's verdict in this case. This factor weighs in
    [Specialty   Marketing]'s    favor   and   against
    remittitur.

         "Therefore, for all these reasons, the request
    for remittitur by defendant Target Media Partners
    Operating Company, LLC, and defendant Ed Leader is
    denied. The court finds that the jury's punitive
    damages verdict against Target Media Partners
    Operating Company, LLC, in the amount of $630,000 on
    [Specialty Marketing]'s claim of promissory fraud
    and the jury's verdict for punitive damages against
    defendant Target Media Partners Operating Company,
    LLC, and defendant Ed Leader on [Specialty
    Marketing]'s claim of fraud[ulent misrepresentation]
    in the amount of $503,400 [were] fair, reasonable
    and justified."

    We    need   add    nothing   to      the   trial   court's   detailed

analysis of the BMW of North America, Inc. v. Gore, 517 U.S.

559 (1996), and Hammond/Green Oil factors in this case. After

reviewing that analysis, we agree that, based on the level of

reprehensibility of the misconduct evidenced in this case, a

$630,000 punitive-damages award against Target Media on the

promissory-fraud claim and a $503,400 punitive-damages award

against    Target      Media   and     Leader     on    the   fraudulent-

misrepresentation claim are sufficient to punish Target Media


                                     14
1091758

and Leader and to deter them from further misconduct, without

compromising their due-process rights.   The judgment entered

on the punitive-damages awards of $630,000 and $503,400 is

hereby affirmed.

    AFFIRMED.

    Moore, C.J., and Parker, Murdock, Shaw, Wise, and Bryan,

JJ., concur.

    Stuart, Bolin, and Main, JJ., dissent.




                             15
