Due to the highly publicized, seemingly “outrageous” cases involving punitive damages, many in America think “Punitive” damages, also called “exemplary damages,” are the normal part of almost every lawsuit. For example, many have heard about the woman who spilled coffee in her lap and received “outrageously” high punitive damages as part of her case. What they don’t know are the background details of why the court initially awarded punitive damages (note: the punitive damages were decreased significantly on appeal). That fast-food chain had been heating their coffee many degrees above the safety level and had multiple prior suits and notices of the dangers of such hot coffee. In the highly publicized case, the elderly lady was burned so bad she spent significant time in the hospital with operations to replace third-degree burned skin with skin grafts. Initially, she solely asked the food chain to cover her medical costs, but that was refused. Because the jury found this business had continued to put customers in danger after notice, the award did involve punitive damages. That is not the norm for most suits. Let me explain punitive damages.
First, Punitive damages are distinct from compensatory damages in tort law. The purpose of tort law (civil litigation over one party liable for damages to another) is to make the damaged party whole. Whole being as close to the same state as before being damaged by a liable party. Damages are calculated by the direct costs (including pain and suffering) caused by liability. This limits damages to what can be proven by evidence to be “proximately caused” by the liable party (Defendant in a suit). Punitive damages are different in that they are intended to “punish” the liable party with an intention similar to criminal law punishments in both deterrence and justice. Punitive damages are brought by the Plaintiff who was damaged by liability, but the punitive award is not meant to make him whole but as punishment for the liable party due to particularly egregious conduct.
Because punitive damages are unique, the legal standard for the award of punitive damages is higher than damage amounts meant to make the Plaintiff whole. A party bringing punitive damages must prove the Defendant was “willful, wanton, and reckless” for the award of punitive damages. “If” the jury believes the Plaintiff proved Willful, wanton, and reckless behavior to justify punitive damages, the amount awarded can be well beyond the non-punitive damages. Unlike with non-punitive damages, which must be as precise as possible to the damages proximately caused by liability, juries are not directly limited with punitive damages. Juries are advised that the punitive damages should be commensurate with the level of the willful, wanton, and reckless actions of the Defendant and with the intention of bringing justice and deterring future such actions. In the case of this international, multi-national food chain receiving punitive damages, the level of punitives will generally be higher because “punishment” and deterrence requires a high amount. Part of the intention of the Punitives was to finally stop the food chain from heating coffee to dangerous temperatures.
Punitive damages are controversial and are reduced on appeal in many cases. By case law, outrageous punitive damages have been viewed as violating the Constitutional prohibition of the Eighth Amendment (no cruel and unusual punishment). Normally, punitive damages are held up on appeal if they aren’t beyond around four to six multiples of the total of compensatory damages. Regardless, juries are given wide latitude and discretion as the punitive award is going to involve subjectivity.
It is rare to have punitive damages awarded, but important to know about them and when they apply.
