What Are Punitive Damages? Examples, Meaning and Purpose
If you’ve ever watched a courtroom drama, chances are you have heard some mention of the legal term “punitive damages.” The incorporation of punitive damages into compelling films and television shows might have one believe that they are a regular occurrence in civil proceedings. In fact, they are far less common than actual damages and are typically only awarded in extreme cases. Statistics indicate that about 5% of court cases result in the awarding of punitive damages, and out of those, only about 30% of plaintiffs actually receive their damages.
So, what are punitive damages? What qualifies for punitive damages in a civil lawsuit? What are some recent examples of real-life cases where punitive damages were awarded? What other types of damages are there, and why might it be helpful to understand the differences between them? This article will answer all of these questions.
If you have been wrongfully injured and are looking for a qualified lawyer to help you seek compensation for your injuries, keep reading to learn more about whether or not you may be owed punitive damages and how the right personal injury attorney can help you recover what you are owed.
What Are Punitive Damages?
Punitive damages, also referred to as exemplary damages, are a type of compensation that may be awarded to a plaintiff in a civil lawsuit. They are awarded separately from compensatory damages (aka actual damages) and are far more rare. While punitive damages are not prohibited in criminal cases, they are typically only awarded in civil cases falling under tort law. This would include cases involving personal injury, medical malpractice, or product liability.
The concept of punitive damages has been around for centuries. The first known use of the term “exemplary damages” was in England in 1763, in the case of Huckle v. Money. However, examples of punitive damages can be found as far back as Hammurabi’s Code in 2000 BCE.
The Purpose of Punitive Damages
In addition to supplementing inadequate compensatory damages, punitive damages are intended to both punish the guilty party for egregious actions and dissuade them from repeating harmful behavior in the future. They are also meant to set an example for the public, thus deterring them from committing similar actions, which is why they are sometimes referred to as exemplary damages.
Defendants in civil cases are not punished with jail time. The idea of punishing them for particularly reprehensible or negligent behavior by requiring them to pay more money to the person they have harmed is the driving force behind punitive damages. Ideally, having to pay more money on top of actual damages will also prevent them and others from any future misconduct in the same vein.
What Is Required Legally to Award Punitive Damages?
Juries award punitive damages. Each state has its own legal guidelines about what actions would qualify for punitive damages. However, typically, the following must be proven in order for them to be awarded:
There must be proof of actual injury or harm
There must be proof that the defendant's conduct was willful, malicious, fraudulent, oppressive, or grossly negligent.
Required standards of proof will vary from jurisdiction to jurisdiction, but generally speaking, plaintiffs will be required to provide one of the following:
Proof by clear and convincing evidence
Proof beyond a reasonable doubt
Proof by a preponderance of evidence
The amount of punitive damages awarded is at the discretion of the jury. When considering how much to award, factors such as the level and nature of the defendant’s misconduct, the severity of the plaintiff’s injuries, and the amount of money in relation to the defendant’s overall wealth that might reasonably deter them from repeating their misconduct might all be considered. It is important to note that a defendant’s level of wealth may not be taken into consideration when awarding basic compensatory damages but it should be taken into consideration when determining an appropriate level of punitive damages. As such, defendants with more money are likely to pay more in punitive damages than less wealthy defendants.
Legal Examples of Punitive Damages
There have been many real-life cases in which the question of punitive damages has been scrutinized. Here are a couple of examples.
BMW of North America v. Gore (1996)
In this case, the plaintiff, Dr. Ira Gore Jr., brought a lawsuit against BMW of North America, alleging that he had learned after purchasing his BMW that it had been repainted prior to its purchase and that BMW of North America had shipped it to the dealership without disclosing information about the paint job. He claimed that the fact that he was not made aware of the repainting prior to purchase was a suppression of material fact and that the repainting of his car had decreased its resale value. BMW acknowledged the repair work, citing a company policy of nondisclosure of pre-sale repairs valuing less than three percent of the total retail value of a vehicle.
Initially, Gore was awarded compensatory damages of $4,000 and punitive damages of $4 million. BMW of North America petitioned to set aside the punitive damages. This petition was denied by both the trial court and the appellate court. The appellate court did, however, lower the punitive damages award from $4 million to $2 million, stating that it had been inaccurately calculated. Later, the Supreme Court reversed and remanded the case, determining that BMW’s misconduct was not grossly reprehensible as only minor economic damage had been caused. They declared that the 500 to 1 ratio of punitive damages to compensatory damages was unreasonable and excessive.
Long v. Kropke (2023)
The defendants in this case, James and Rose Kropke, originally filed a negligence complaint against the defendant, Judith Long, for a car accident in which the Kropkes were pedestrians, and Mrs. Long was the driver. They were later permitted to amend their original complaint to include a plea for punitive damages, stating that the defendant was guilty of gross negligence due to repeat instances of speeding and disregard for the safety of their community. An appellate court determined that the plaintiffs were wrongfully permitted to amend their initial complaint and that punitive damages were not merited in this case, as insufficient evidence had been submitted to back up their claims of gross negligence. Ultimately, the order was reversed and remanded, finding that the defendant was merely guilty of ordinary negligence.
The Impact of Punitive Damages on Legal Claims
As punitive damages are awarded in addition to actual damages, they will naturally increase the amount of compensation a plaintiff in a civil lawsuit receives.
Each state has its own set of guidelines surrounding how much can be awarded in punitive damages. Some states place caps on punitive damages in the amount of a whole number. In Georgia, for example, punitive damage awards cannot exceed $250,000. Other states place caps based on a percentage of the defendant’s income, such as in California, where punitive damage awards may not exceed 10% of a defendant’s net worth. Still, in other states, guidelines for awarding punitive damages are based on compensatory damages. They may say, for example, that the total punitive damages awarded may not be more than three or four times the compensatory damages received. While there is no overarching federal rule placing a cap on punitive damages, the US Supreme Court has suggested that a single-digit ratio (no more than 9:1) of punitive to compensatory damages is appropriate.
Though punitive damages are typically only awarded in rare or extreme cases, there has been a trend in recent years toward more plaintiffs requesting punitive damages as compensation for their injuries. One result of this is that some defendants who settle out of court are offering more in compensatory damages from the get-go in the hopes of avoiding having to pay punitive damages or having to pay excessively high punitive damages.
In class action lawsuits, punitive damages can play a complicated but important role, as the idea of holding corporations publicly accountable for acting in bad faith is directly tied to these types of awards.
Criticisms and Controversies Regarding Punitive Damages
The idea of awarding punitive damages has come under a lot of fire in recent years, with many claiming that it is an outdated and inconsistent practice. One of the biggest complaints about awarding punitive damages is that the amounts awarded are both excessive and arbitrary. Some feel that punitive damages should only be awarded in extreme and obvious cases of actual malicious intent. Proponents for allowing punitive damages maintain that it is necessary to hold both individuals and corporations accountable for egregious actions and to deter them from continuing to act this way.
The impacts of punitive damages on businesses can have far-reaching consequences if awards are too excessive. One example of where these awards can significantly impact businesses, local economies, and even standards of living is in cases of medical liability. The trickle-down effect of doctors and hospitals consistently facing the risk of having to pay excessive punitive damages is that their liability costs go up and their insurance coverage goes down. Additionally, they may be so deterred by the possibility of having to pay punitive damages if something goes wrong that they stop offering to perform higher-risk procedures, thus limiting access to important and necessary healthcare for some patients. The American College of Surgeons advocates for healthcare reform that still enables injured parties to recover damages, just not excessively.
The American Tort Reform Association (ATRA) has said that it supports punitive damages where there is evidence of actual malice, supported by clear and convincing evidence, and where the punishment legitimately fits the crime. It also supports federal legislation addressing the problems of multiple punitive damage awards, as well as excessive or unfair punitive damage awards.
Whether for or against allowing punitive damages, most agree that, at the very least, clear caps are needed.
How To Seek Punitive Damages
If you have been injured as a result of the malicious intent or negligence of another party and believe you are entitled to punitive damages in addition to compensatory damages, it is crucial that you seek the counsel of an experienced and qualified attorney.
Consulting with a lawyer before committing to them is standard. Some lawyers offer free consultations for new clients, but this is not a guarantee. Ask in advance if they have a consultation fee. Once you have selected the attorney who feels best suited to your needs, you will enter into a formal contract with them. Make sure you understand how your lawyer plans to bill you and what, if anything, you will need to pay upfront.
In order to receive any type of damages for your injury, you’ll need to be able to provide clear and convincing evidence beyond a reasonable doubt that another party was responsible for your injury. Work with your attorney to form an outline of exactly what happened. Were there witnesses to your injury? If so, you’ll want them to submit written testimonies, called affidavits, of what they saw, heard, or participated in. You’ll also want to gather any related medical records and bills. Gather and document as much evidence as you can to support your case. Your attorney can help guide you in this process.
In addition to helping you gather and document your evidence, a good attorney will help you prepare and file all court documents, construct and deliver written notices, and handle any other administrative tasks related to your case. An experienced lawyer is invaluable in this situation. If you need an outstanding attorney, check out Expertise.com’s concierge service today!
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