Punitive Damages: When is it Necessary?

In May 9, 2010, a Southern California jury awarded a staggering $200 million in punitive damages to the surviving spouse of a mesothelioma victim in what could become the largest award in California legal history.

If allowed to stand on appeal, it could surpass the current largest award which is the $55 million awarded to 2004 SUV rollover crash victims Benetta Buell-Wilson and her husband in a San Diego County case against Ford Motor Co.

Generally, punitive damages, also known as exemplary damages, are awarded to punish the offender and deter others from committing similar acts in the future. To be awarded punitive damages, the law requires that victims must present “clear and convincing evidence” of the offender’s bad conduct. The amount in punitive damages is often determined by preponderance of evidence and the extent of damage or injury caused by an act.

Aside from its deterrent function, other benefits may also be derived from punitive damages:

1. It discourages wrongdoers and set an example to others
2. It provides retribution to the victim
3. Punitive damages also serve to compensate the victim not only for actual losses but also intangible harm which are sometimes not compensable under the rules of compensatory damage liability.
4. Punitive damages serve to encourage law enforcers and promote the rule of law.

When are Punitive Damages Awarded?

Punitive damages are not available in all kinds of lawsuits and cases; it may be awarded only under the following circumstances:

• If the offender’s conduct was malicious, which means the act was accompanied by ill will, or spite and done with the intention of harming another person
• If the conduct was done in reckless disregard of the victim’s safety and rights
If the conduct was egregious or outrageous This type of damages is often available in tort and personal injury cases such as product liability and medical negligence, and some employment cases. It is also common in cases involving defective and unsafe products.

The Amount of Punitive Damages

The award of punitive damages is often based on the discretion of the “trier”of fact (judge or jury). The awarding of punitive damages varies depending on state law. In some states, compensatory damages must be awarded first before punitive damages are allowed.

The amount of punitive damages is often determined by the extent of damage and the nature of the offense itself. The US Supreme Court has, in fact, developed guidelines to assess punitive damages (BMW v Gore, 517 U.S. 519, 116 S. Ct. 1589, 134 L. Ed. 2d 809 (1996).

According to the High Court the reasonableness of punitive damages must be measured based on the following factors:

• The reprehensibility of defendant’s misconduct
• Whether the misconduct was the result of intentional malice, trickery or deceit
• The disparity between the actual and potential harm suffered by plaintiff and the punitive damages
• The difference between the punitive damages awarded and the civil penalties imposed or authorized