SAN FRANCISCO—The California Supreme Court cited McKesson Corp.'s “low degree of reprehensibility” in a workplace harassment case for its decision to slash a jury's punitive damages award from $15 million to $1.9 million.

The Monday ruling in Charlene J. Roby vs. McKesson Corp. et al. involved a customer services worker who received favorable performance reviews during 25 years with the pharmaceutical distributor.

But in 1997, she began suffering panic attacks that made her miss work. Medication caused her to develop body odor, while the attacks caused a nervous disorder that led to open sores. As a result, a supervisor labeled Ms. Roby “disgusting” and openly ostracized her, according to the ruling.

McKesson terminated Ms. Roby in 2001, citing her absences. She then sued McKesson and her supervisor for failure to accommodate her medical condition, harassment and wrongful termination, among other things.

A jury found she was wrongfully discharged based on her medical condition and disability, and that she had been illegally harassed and discriminated against. The jury awarded $3.5 million in compensatory damages and $15 million in punitive damages against McKesson.

In addition, the jury awarded $500,000 in compensatory damages and $3,000 in punitive damages against a supervisor responsible for the harassment.

However, a California appeals court found there was insufficient evidence for a harassment verdict against McKesson, reducing punitive damages to $2 million and compensatory damages to $1.41 million.

On appeal, the California Supreme Court disagreed and said there was sufficient evidence to support the harassment verdict.

However, the state high court also cited a U.S. Supreme Court ruling in limiting punitive damages to a one-to-one ratio with compensatory damages because of McKesson’s “low degree of reprehensibility” and the “substantial compensatory damages verdict, which included a substantial award of noneconomic damages.”

It remanded the case to reinstate a single $500,000 harassment award against the employer and supervisor, reinstate the jury’s $3,000 punitive damages award against the supervisor and modify punitive damages award against McKesson to $1.91 million, making McKesson responsible for approximately $3.8 million in total damages.