Mathias v. Accor Economy Lodging, Inc.

• Decision Date: 21 October 2003
• Docket Number: No. 03-1010.,No. 03-1078.,03-1010.,03-1078.
• Citation: 347 F.3d 672
• Parties: Burl MATHIAS and Desiree Matthias, Plaintiffs-Appellees/Cross-Appellants, v. ACCOR ECONOMY LODGING, INC. and Motel 6 Operating L.P., Defendants-Appellants/Cross-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 672

347 F.3d 672

Burl MATHIAS and Desiree Matthias, Plaintiffs-Appellees/Cross-Appellants, v. ACCOR ECONOMY LODGING, INC. and Motel 6 Operating L.P., Defendants-Appellants/Cross-Appellees.

No. 03-1010.

No. 03-1078.

United States Court of Appeals, Seventh Circuit.

Argued September 3, 2003.

Decided October 21, 2003.

Peter S. Stamatis (argued), Chicago, IL, for plaintiffs-Appellants.

Timothy J. Murphy (argued), MacCabe & McGuire, Chicago, IL, for defendants-appellants.

Before POSNER, KANNE, and EVANS, Circuit Judges.

POSNER, Circuit Judge.

The plaintiffs brought this diversity suit governed by Illinois law against affiliated entities (which the parties treat as a single entity, as shall we) that own and operate the "Motel 6" chain of hotels and motels. One of these hotels (now a "Red Roof Inn," though still owned by the defendant) is in downtown Chicago. The plaintiffs, a brother and sister, were guests there and were bitten by bedbugs, which are making a comeback in the U.S. as a consequence of more conservative use of pesticides. Kirsten Scharnberg, "You'll Be Itching to Read This: Bedbugs Are Making a Comeback: Blame World Travelers and a Ban on Certain Pesticides," Chi. Tribune, Sept. 28, 2003, p. 1; Mary Otto, "Bloodthirsty Pests Make Comeback: Bug Infestations Raising Welts, Ire," Wash. Post, Sept. 2 2003, p. B2. The plaintiffs claim that in allowing guests to be attacked by bedbugs in a motel that charges upwards of $100 a day for a room and would not like to be mistaken for a flophouse, the defendant was guilty of "willful and wanton conduct" and thus under Illinois law is liable for punitive as well as compensatory damages. Cirrincione v. Johnson, 184 Ill.2d 109, 234 Ill.Dec. 455, 703 N.E.2d 67, 70 (1998); Kelsay v. Motorola, Inc., 74 Ill.2d 172, 23 Ill.Dec. 559, 384 N.E.2d 353, 359 (1978); Barton v. Chicago & North Western Transportation Co., 325 Ill.App.3d 1005, 258 Ill.Dec. 844, 757 N.E.2d 533, 554 (2001). The jury agreed and awarded each plaintiff $186,000 in punitive damages though only $5,000 in compensatory damages. The defendant appeals, complaining primarily about the punitive-damages award. It also complains about some of the judge's evidentiary rulings, but these complaints are frivolous and require no discussion. The plaintiffs cross-appeal, complaining about the dismissal of a count of the complaint in which they alleged a violation of an Illinois consumer protection law. But they do not seek any additional damages, and so, provided we sustain the jury's verdict, we need not address the cross-appeal.

The defendant argues that at worst it is guilty of simple negligence, and if this is right the plaintiffs were not entitled by Illinois law to any award of punitive damages. It also complains that the award was excessive — indeed that any award in excess of $20,000 to each plaintiff would deprive the defendant of its property without due process of law. The first complaint has no possible merit, as the evidence of gross negligence, indeed of recklessness in the strong sense of an unjustifiable failure to avoid a known risk, see Ziarko v. Soo Line R.R., 161 Ill.2d 267, 204 Ill.Dec. 178, 641 N.E.2d 402, 405-09 (1994) (plurality opinion); Landers v. School Dist. No. 203, O'Fallon, 66 Ill. App.3d 78, 22 Ill.Dec. 837, 383 N.E.2d 645, 647-48 (1978); Vigortone AG Products, Inc. v. PM AG Products, Inc., 316 F.3d 641, 645 (7th Cir.2002) (Illinois law); Saba v. Compagnie Nationale Air France, 78 F.3d 664, 667-70 (D.C.Cir.1996), was amply shown. In 1998, EcoLab, the extermination service that the motel used, discovered bedbugs in several rooms in the motel and recommended that it be hired to spray every room, for which it would charge the motel only $500; the motel refused. The next year, bedbugs were again discovered in a room but EcoLab was asked to spray just that room. The motel tried to negotiate "a building sweep [by EcoLab] free of charge," but, not surprisingly, the negotiation failed. By the spring of 2000, the motel's manager "started noticing that there were refunds being given by my desk clerks and reports coming back from the guests that there were ticks in the rooms and bugs in the rooms that were biting." She looked in some of the rooms and discovered bedbugs. The defendant asks us to disregard her testimony as that of a disgruntled ex-employee, but of course her credibility was for the jury, not the defendant, to determine.

Further incidents of guests being bitten by insects and demanding and receiving refunds led the manager to recommend to her superior in the company that the motel be closed while every room was sprayed, but this was refused. This superior, a district manager, was a management-level employee of the defendant, and his knowledge of the risk and failure to take effective steps either to eliminate it or to warn the motel's guests are imputed to his employer for purposes of determining whether the employer should be liable for punitive damages. Mattyasovszky v. West Towns Bus Co., 61 Ill.2d 31, 330 N.E.2d 509, 512 (1975); Barton v. Chicago & North Western Transportation Co., supra, 258 Ill.Dec. 844, 757 N.E.2d at 556 n. 11; Kennan v. Checker Taxi Co., 250 Ill. App.3d 155, 189 Ill.Dec. 891, 620 N.E.2d 1208, 1212-14 (1993); Restatement (Second) of Torts § 909 (1979); Restatement (Second) of Agency § 217C (1958). The employer's liability for compensatory damages is of course automatic on the basis of the principle of respondeat superior, since the district manager was acting within the scope of his employment.

The infestation continued and began to reach farcical proportions, as when a guest, after complaining of having been bitten repeatedly by insects while asleep in his room in the hotel, was moved to another room only to discover insects there; and within 18 minutes of being moved to a third room he discovered insects in that room as well and had to be moved still again. (Odd that at that point he didn't flee the motel.) By July, the motel's management was acknowledging to EcoLab that there was a "major problem with bed bugs" and that all that was being done about it was "chasing them from room to room." Desk clerks were instructed to call the "bedbugs" "ticks," apparently on the theory that customers would be less alarmed, though in fact ticks are more dangerous than bedbugs because they spread Lyme Disease and Rocky Mountain Spotted Fever. Rooms that the motel had placed on "Do not rent, bugs in room" status nevertheless were rented.

It was in November that the plaintiffs checked into the motel. They were given Room 504, even though the motel had classified the room as "DO NOT RENT UNTIL TREATED," and it had not been treated. Indeed, that night 190 of the hotel's 191 rooms were occupied, even though a number of them had been placed on the same don't-rent status as Room 504. One of the defendant's motions in limine that the judge denied was to exclude evidence concerning all other rooms — a good example of the frivolous character of the motions and of the defendant's pertinacious defense of them on appeal.

Although bedbug bites are not as serious as the bites of some other insects, they are painful and unsightly. Motel 6 could not have rented any rooms at the prices it charged had it informed guests that the risk of being bitten by bedbugs was appreciable. Its failure either to warn guests or to take effective measures to eliminate the bedbugs amounted to fraud and probably to battery as well (compare Campbell v. A.C. Equipment Services Corp., 242 Ill.App.3d 707, 182 Ill.Dec. 876, 610 N.E.2d 745, 748-49 (1993); see Restatement (Second) of Torts, supra, § 18, comment c and e), as in the famous case of Garratt v. Dailey, 46 Wash.2d 197, 279 P.2d 1091, 1093-94 (1955), appeal after remand, 49 Wash.2d 499, 304 P.2d 681 (1956), which held that the defendant would be guilty of battery if he knew with substantial certainty that when he moved a chair the plaintiff would try to sit down where the chair had been and would land on the floor instead. See also Commonwealth v. Stratton, 114 Mass. 303, 1873 WL 12016 (1873). There was, in short, sufficient evidence of "willful and wanton conduct" within the meaning that the Illinois courts assign to the term to permit an award of punitive damages in this case.

But in what amount? In arguing that $20,000 was the maximum amount of punitive damages that a jury could constitutionally have awarded each plaintiff, the defendant points to the U.S. Supreme Court's recent statement that "few awards [of punitive damages] exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process." State Farm Mutual Automobile Ins. Co. v. Campbell, 538 U.S. 408, 123 S.Ct. 1513, 1524, 155 L.Ed.2d 585 (2003). The Court went on to suggest that "four times the amount of compensatory damages might be close to the line of constitutional impropriety." Id., citing Pacific Mutual Life Ins. Co. v. Haslip, 499 U.S. 1, 23-24, 111 S.Ct. 1032, 113 L.Ed.2d 1 (1991), and BMW of North America, Inc. v. Gore, 517 U.S. 559, 581, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996). Hence the defendant's proposed ceiling in this case of $20,000, four times the compensatory damages awarded to each plaintiff. The ratio of punitive to compensatory damages determined by the jury was, in contrast, 37.2 to 1.

The Supreme Court did not, however, lay down a 4-to-1 or single-digit-ratio rule — it said merely that "there is a presumption against an award that has a 145-to-1 ratio," State Farm Mutual Automobile Ins. Co. v. Campbell, supra, 123 S.Ct. at 1524 — and it would be unreasonable to do so. We must consider why punitive damages are awarded and why the Court has decided that due process requires that such awards be limited. The second question is easier to answer than the first. The term "punitive damages" implies punishment, and a standard principle of penal theory is that "the punishment should fit the crime" in the...