KLLM Transport Services, LLC v. JBS Carriers, Inc., 3:12-cv-00116

Background

KLLM (trucking company) and JBS (sister carrier to Pilgrim’s Pride Corp.) previously litigated after JBS allegedly poached KLLM’s employees and customers; they executed a December 1, 2010 settlement in which JBS agreed PPC would honor the KLLM–PPC dedicated hauling contract and JBS would not circumvent the agreement.
About 11 months later PPC terminated the dedicated hauling contract; KLLM sued JBS for breach of the settlement (case filed 2012, tried 2015) and sought compensatory and punitive damages.
A jury awarded KLLM $36,950 in compensatory damages and $900,000 in punitive damages following findings that JBS acted with malice and breached the settlement.
JBS moved post-trial to remit punitive damages to $0 under Mississippi law limiting punitive awards by defendant net worth (Miss. Code § 11-1-65); JBS submitted a balance sheet showing negative net worth and minimal cash-on-hand.
KLLM contested JBS’s balance sheet as noncompliant with GAAP (arguing a negative accounts receivable should have been classified as equity/liability), presented expert testimony, and alternatively argued the punitive award was reasonable under Due Process precedents.
The district court found JBS’s financial statement nonconforming to GAAP, concluded the punitive award was not grossly excessive under Gore/Campbell factors (considering reprehensibility, ratio, and comparable cases), and denied remittitur.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether court must remit punitive damages to $0 under Miss. Code § 11-1-65 based on defendant net worth	KLLM argued JBS’s balance sheet was GAAP-noncompliant; court should not apply JBS’s asserted negative net worth and may consider counter-evidence post-trial	JBS argued statutory cap (2% rule) and its disclosed negative net worth require remittitur to zero; KLLM waived challenge by not disputing at trial	Court: Denied remittitur — JBS’s balance sheet not GAAP-compliant; KLLM may introduce post-trial evidence opposing remittitur and court may determine net worth before entering judgment
Whether attorney fees should be included in compensatory damages for ratio analysis	KLLM urged attorney fees (claimed ~ $1M) be counted, producing ~1:1 ratio	JBS argued attorney fees are not compensatory damages for ratio calculation	Court: Attorney fees are not automatically compensatory; will not include them in compensatory amount for punitive-ratio review
Whether $900,000 punitive award violates Due Process (grossly excessive)	KLLM argued JBS’s repeated breach, malice, and deceptive litigation conduct justified award; high reprehensibility supports multiple-digit ratio	JBS asserted $900,000 is grossly excessive compared to $36,950 compensatory award (≈24:1) and Due Process requires reduction	Court: Denied remittitur — applying Gore/Campbell factors court found high reprehensibility, acceptable multi-digit ratios in analogous jurisprudence, and the award was not grossly excessive
Whether parties were required to present net-worth evidence at trial or could raise it post-trial	KLLM argued post-trial remittitur consideration and evidentiary challenge to JBS’s GAAP compliance permitted	JBS relied on Smith/Coleman to argue net-worth evidence must be presented at trial or challenged waived	Court: Allowed post-trial consideration — Coleman permits post-trial net-worth proof on remittitur; Smith does not bar post-trial challenge where statute requires court determination under GAAP

Key Cases Cited

Erie v. Tompkins, 304 U.S. 64 (recognition that federal courts in diversity apply state substantive law)
BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (Due Process guideposts for punitive damages review)
State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (three-factor framework for punitive-damages excessiveness review)
Watson v. Johnson Mobile Homes, 284 F.3d 568 (5th Cir. decision discussing acceptable punitive/compensatory ratios)
Coleman & Coleman Enter., Inc. v. Waller Funeral Home, 106 So.3d 309 (Miss. 2012) (post-trial presentation of net-worth evidence and remittitur analysis)
C & C Trucking Co. v. Smith, 612 So.2d 1092 (Miss. 1992) (discussion of preserving net-worth issues for appeal when not presented at trial)
Paracelsus Health Care Corp. v. Willard, 754 So.2d 437 (Miss. 1999) (Mississippi application of Gore factors in economic-damages context)
Cook Timber Co. v. Georgia-Pacific Corp., 194 So.3d 118 (Miss. 2016) (Mississippi Supreme Court upholding large punitive/compensatory ratios under Gore)