A federal appeals court on Friday slashed the punitive damage award imposed against former state utility regulator Jim Irvin after he was found guilty of using his position to thwart one company's bid for Southwest Gas.
The 9th U.S. Circuit Court of Appeals said the punitive damages Irvin is required to pay should be $1.18 million. The court concluded that is fair, being three times the nearly $400,000 that Southern Union Co. incurred in actual damages from Irvin's actions as a member of the Arizona Corporation Commission.
This is the second time Irvin's liability has been cut.
The jurors who heard the evidence against Irvin concluded that his actions were outrageous enough to merit a $60 million penalty. When the appellate judges concluded that was improper, U.S. District Judge Roslyn Silver reduced it to just $4 million.
Attorneys for Southern Union accepted the revised figure; Irvin did not.
In their unanimous decision Friday, the appellate judges said the evidence shows that Irvin "abused and misused his power" and financially harmed Southern Union. "But he has not inflicted egregious physical or economic harm upon the weak, and we cannot even say on the basis of the evidence that he sold his office for financial gain," wrote Judge Ferdinand Fernandez.
And, the judge noted, there is that nearly $400,000 in compensatory damages.
"Undoubtedly, Irvin's behavior outraged the jurors and the district judge, all of whom listened to and saw him in the close quarters of a courtroom setting," Fernandez said.
"Still, wrong and wrong-headed though he is, we do not see constitutional justification for calling down the wrath of Apollyon upon him and his finances," the judge continued, making a reference to the angel of the bottomless pit in the biblical Book of Revelation.
The appellate judges, in reducing the punitive award, said Southern Union can accept or reject it. If the company takes the latter course it is entitled to an entirely new trial.
Southern Union attorney Tom Ferguson said the ruling is still being studied. Calls to Irvin's attorney were not returned.
Southern Union alleged - and jurors agreed - that Irvin used his position to undermine the Texas-based company's 1999 bid to acquire Southwest Gas. The company said that, based on Irvin's actions, the Southwest board instead accepted a bid for about $100 million less from Tulsa-based Oneok, although that deal never went through.
Irvin, while filing an appeal, eventually resigned from the commission amid a probe by a special counsel appointed by then-House Speaker Jake Flake to see if he should be impeached and whether he broke any laws.
Punitive damages are awarded when a jury decides a defendant's conduct is so outrageous that it merits punishment beyond a victim's actual out-of-pocket losses.