Punitive Damages

Problem

While punitive damages awards are infrequent, their frequency and size have grown greatly in recent years.  More importantly, they are routinely asked for today in civil lawsuits.  The difficulty of predicting whether punitive damages will be awarded by a jury in any particular case, and the marked trend toward astronomically large amounts when they are awarded, have seriously distorted settlement and litigation processes and have led to wildly inconsistent outcomes in similar cases.

ATRA's Position:

ATRA supports state legislation that: establishes a liability “trigger” that reflects the intentional tort origins and quasi‑criminal nature of punitive damages awards ‑ “actual malice;” requires “clear and convincing evidence” to establish punitive damages liability; and requires proportionality in punitive damages so that the punishment fits the offense.   ATRA supports federal legislation that addresses the special problem of multiple punitive damages awards.  Such legislation would protect against unfair overkill, guard against possible due process violations, and help preserve the ability of future claimants to recover basic out‑of‑pocket expenses and damages for their pain and suffering.

Opposition Opinion:

The personal injury bar’s argument against punitive damages reform – that a jury should have broad discretion to award punitive damages in order to punish and deter misconduct – fails to address the quasi-criminal nature of punitive damages necessitating such procedural safeguards for the award of punitive damages as a showing that the defendant acted with “actual malice.”

Punitive Damages Reform: H. 3775 (2011).

South Carolina|2011

Establishes procedure to claim punitive damages: (1) plaintiff must specifically

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Establishes procedure to claim punitive damages: (1) plaintiff must specifically plead for punitive damages in the complaint but may not specify an amount; and (2) bifurcated process to determine punitive damages.  Punitive damages are only awarded if plaintiff proves by clear and convincing evidence that harm was the result of defendant’s willful, wanton, or reckless conduct.  In second state of the bifurcated trial, jury determines if defendant liable for punitive damages, and amount, if applicable.  The factors for jury to consider in determining the amount of punitive damages: •       Defendant’s degree of culpability; •       Severity of the harm caused by the defendant; •       Extent to which the plaintiffs own conduct contributed to harm; •       Duration of the conduct, the defendant’s awareness, and any concealment; •       Similar past conduct; •       Profitability of the conduct to the defendant; •       Defendant’s ability to pay; •       Likelihood the award will deter the defendant or others from like conduct; •       Awards of punitive damages against the defendant for same act or course of conduct; •       Criminal penalties against defendant for same act or course of conduct; •       Civil fines against defendant for same act or course of conduct. Award must be specific to each defendant, and each defendant is liable only for the amount made against him or her.  With respect to limitations, these limitations cannot be disclosed to the jury.  If the jury returns a verdict that exceeds these limits, the court shall enter judgment for the maximum amount allowed for under this statute. First Limitation: punitive damages award may not exceed the greater of three times the amount of compensatory damages or $500,000. Second Limitations: punitive damages must not exceed the greater of four times the amount of compensatory damages or $2 million dollars if: (1) the wrongful conduct proven under this section was motivated primarily by unreasonable financial gain and determines that the unreasonably dangerous nature of the conduct, together with the high likelihood of injury resulting from the conduct, was known or approved by the managing agent, director, officer, or the person responsible for making policy decisions on behalf of the defendant; or (2) the defendant’s actions could subject the defendant to conviction of a felony and that act or course of conduct is a proximate cause of the plaintiffs damages Limitations on punitive damages are not applied if: (1) at the time of injury the defendant had an intent to harm and determines that the defendant’s conduct did in fact harm the claimant; or (2) the defendant has pled guilty to or been convicted of a felony arising out of the same act or course of conduct complained of by the plaintiff and that act or course of conduct is a proximate cause of the plaintiffs damages; or (3) the defendant acted or failed to act while under the influence of alcohol, drugs, other than lawfully prescribed drugs administered in accordance with a prescription, or any intentionally consumed glue, aerosol, or other toxic vapor to the degree that the defendant’s judgment is substantially impaired. The consumer price index is to be applied to the amount recoverable for punitive damages.


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