Punitive damages aren't communicative unless the cost has a real impact on the defendant. Otherwise they just disappear in the rounding error of a wealthy defendant's expenses.
In this case the defendant, Oberlin College, is a much larger business than the plaintiff, so the punitive damages should be much larger than the actual damages, if punitive damages are justified at all.
They're communicative in intent. All I'm trying to say is that they're explicitly not tied to the economic damage of the tort. And that, constitutionally, there's a cap on punitive damages: due process prevents courts from just making up ruinous sums on the fly.
You're right, of course. Punitive damages are limited. One unfortunate effect of that is that the very wealthy rarely face meaningful consequences.
But the comment at the beginning of this thread asked why a defamation lawsuit needs to be that much, and I would answer: to deter acts like Oberlin's ruinous defamation of the bakery.
If the intent is to communicate, the court has to speak loud enough to be heard.
In this case the defendant, Oberlin College, is a much larger business than the plaintiff, so the punitive damages should be much larger than the actual damages, if punitive damages are justified at all.