What Are Punitive Damages and When Are You Entitled to Them?

Damages are an essential element of any personal injury lawsuit. Most personal injury cases focus on compensatory damages, which are designed to compensate the plaintiff for the injuries that the defendant caused. But occasionally, a personal injury plaintiff may be able to pursue both compensatory damages and what are known as punitive damages. Punitive damages are awarded in certain cases to punish the defendant for particularly egregious behavior and to deter similar conduct in the future. Keep reading to learn more.

What Are Punitive Damages Designed to Do?

Punitive damages are a distinct type of damages that are available only in a few specified circumstances. Punitive damages serve two important functions:

• Punish behavior. Punitive damages are meant to punish particularly egregious behavior by the defendant.  For example, in cases of intentional harm or gross negligence, the court may award punitive damages to send a strong message. See “When are punitive damages available” for more details on what kind of behavior qualifies.

• Set an example. Punitive damages are sometimes referred to as “exemplary” damages, because they also serve as an example to dissuade the defendant from behaving that way in the future, and to deter others from engaging in similar conduct.

Punish Behavior

What are punitive damages meant to do? Punitive damages are meant to punish particularly egregious behavior by the defendant. For example, if a company knowingly sold a dangerous product despite knowing its risks, punitive damages may be awarded to punish the company for its willful disregard of safety. One of the most painful things is financial loss. Put simply, the more money someone loses, the less likely they are to repeat their offense. See “When Are Punitive Damages Available?” damages available” for more details on what kind of behavior qualifies.

Exemplary Damages

Punitive damages are sometimes referred to as “exemplary” damages because they also serve as an example to dissuade the defendant from behaving that way in the future, but more so to deter others from engaging in similar conduct. For example, high-profile cases like tobacco litigation have served as examples to other companies in the industry to prioritize consumer safety.

Financial loss is an effective means to prevent repeat offenses from the defendant, but unless they are of exemplary scales others won’t really take notice. This is why punitive damages can be ten times as much as the initial damages awarded.

Early Examples of Punitive Damages

Believe it or not, punitive damages were actually rather common even in the earliest of legal systems. The first mention of punitive damages in religious law can be found in the Book of Exodus.

Punitive damages were also present in Babylonian law almost four millennia ago. It was even in the Code of Hammurabi. It also features in the Hittite Laws, Hebrew Covenant Code of Mosaic Law, and Hindu Code of Manu. As you can see, punitive damages are nearly as old as law itself predating the Pyramids of Giza by millenia.

Numbers by the Ages

While the 14th amendment provides proof that punitive damages were present in American law since the 19th century, the size actually remained rather small until the last half-century. What are punitive damages in terms of sizes awarded? The largest punitive damage awarded in the 1800s was a measly $4,500. Even in 1998 dollars that only comes up to $72,000.

The largest modern punitive damage award in California was $75,000 — a record that stood until 1955. Punitive damages remained relatively minor until Harmsen v. Smith — a securities fraud class action — in which a San Diego federal jury awarded $14,750,000 in punitive damages — the largest award to that day.

Do Punitive Damages Go to the Plaintiff?

While the purpose of punitive damages is to punish the defendant — and set an example — rather than compensate the plaintiff, the plaintiff will still receive all or some of the damages awarded. Due to this, some have speculated that certain law firms are needlessly insistent on their clients pursuing punitive damages so that they can maximize their profits.

That being said, we have some data further into this article showing that the frequency of punitive damage requests are exaggerated by most. All in all, punitive damages reduce the likelihood of bad behavior repeating itself and puts victims in a financial position superior to the one that they were in prior to the incident in question.

Jury Guidelines

If you’re on jury duty for a case that involves punitive damages, here’s your guide to determining the proper amount to award. These are, of course, based on the Book of Approved Jury Instructions — or BAJI, for short.

Severity of Reprehensible Conduct

Seeing as the primary purpose of punitive damages is to punish and deter bad behavior, the first thing you should look at is just how bad the defendant has been behaving. Are their actions egregious enough to justify the awarding of punitive damages at all?

Proportionate to the Defendant’s Wealth

Punitive damages seek to punish the defendant for improper conduct. As such, it’s important that the amount awarded is proportionate to their level of wealth — ergo richer defendants should have to pay more so that they learn their lesson and refrain from similar behavior in the future. As stated in the case Neal v. Farmers, “the function of deterrence will not be served if the wealth of the defendant allows him to absorb the award with little or no discomfort.”

Level of Harm

Punitive damages need to be based at least partly on the level of injury, harm, or damage that the plaintiff incurred due to the actions of the defendant. The defendant should not be punished as severely for a minor injury to the plaintiff as he would in the case of disregard for life and limb leading to the loss of either or both.

Most personal injury lawsuits are based on the claim that the defendant acted negligently, which is inconsistent with a claim that the defendant acted fraudulently or intentionally. However, in some cases, a defendant’s negligence may rise to the level of “willful and wanton” behavior, in which a defendant intentionally harms others with “conscious disregard.”

When Are Punitive Damages Available?

Personal injury lawsuits only rarely involve awards of punitive damages. In fact, the law restricts the availability of punitive damages to cases in which the defendant acted:

• Fraudulently;
• Intentionally; or
• Willfully and wantonly.

Most personal injury lawsuits are based on the claim that the defendant acted negligently, which is inconsistent with a claim that the defendant acted fraudulently or intentionally. However, in some cases, a defendant’s negligence may rise to the level of “willful and wanton” behavior, in which a defendant “intentionally inflicts a highly unreasonable risk of harm upon others in conscious disregard of it.”

As an example of this kind of behavior, consider the following cases.

PUNITIVE DAMAGES EXAMPLES

LeSanche v. Troy: Punitive damages in an Illinois personal injury lawsuit

In December 2017, the First District Appellate Court of Illinois issued an opinion in the case LeSanche v. Troy, in which it confirmed an award of punitive damages in a personal injury lawsuit involving a multi-vehicle accident.

In LeSanche, the defendant, Troy, was driving a van at about 60 miles per hour in a 45-mile-per-hour zone along I-294. Troy rear-ended a vehicle driven by Swenson, which was stopped in a traffic jam. As a result of that collision, Swenson rear-ended the truck being driven by LeSanche with such tremendous force that LeSanche’s head broke through the rear window of his truck and then slammed into the steering wheel.

After the accident, witnesses saw Troy throw something over the guardrail. Police later discovered three bottles containing marijuana in the area. A urine sample revealed three classes of drugs in Troy’s system 14 hours after the accident, each of which posed a risk of impairment while driving. Troy refused to answer any questions asking whether he was under the influence of drugs or alcohol at the time of the accident, but he was charged with driving under the influence.

At trial, the jury found that LeSanche had suffered substantial damages, awarding him $2.3 million for the past and future cost of medical care, $4 million for the loss of a normal life, $3 million for pain and suffering, $1 million for emotional distress, and $2 million for past and future lost earnings.

In addition, the jury found that Troy had acted willfully and wantonly, which enabled it to award punitive damages against him. It awarded a relatively modest $100,000 in punitive damages.

As we noted above, most personal injury cases don’t raise issues of punitive damages, but as LeSanche shows, they most certainly can in appropriate circumstances.

McDonald’s Coffee Case

The famous case of Liebeck v. McDonald’s is a prime example of puntive damages in modern law. The case started in 1994 when then-79-year-old Stella Liebeck accidentally spilled hot McDonald’s coffee on her lap — leading to an eight-day hospitalization, skin grafting, and over two whole years of further treatment to get back to a healthy, normal state. She also lost nearly a fifth of her total body weight.

Normally, there wouldn’t be a case here since it was Stella Liebeck who spilled the coffee on herself. That being said, the coffee served at McDonald’s was hotter than coffee served at any other major establishment at the time. Liebeck’s attorneys made the case that the unusual and excessive temperature of 180-190 degrees fahrenheit increased the risk of customers being injured upon purchasing it.

Liebeck only ended up receiving $640,000, but the initial punitive damages awarded were far larger. In fact, McDonald’s faced karma in the form of $2.7 million in punitive damages. The two parties eventually settled for a confidential amount, but this is a prime example of punitive damages and how they can persuade large corporations to do the right thing.

Some claim that the law suit was nothing more than someone trying to exploit a successful business for personal gain, but situations where someone is injured due to the negligence of others is the best time to rely on civil law.

In fact, such accusations against Liebeck are unfair seeing as she tried to settle for $20,000 right after the incident. A few other pre-trial settlement attempts — ranging from $90,000 to $300,000 — were rejected by McDonald’s who refused to raise their offer beyond $800 which wouldn’t be nearly enough to cover even the medical bills alone.

Following the trial, Liebeck’s condition deteriorated and all the money awarded to her was used to cover the costs of a live-in nurse. She passed away at the age of 91 in August 5, 2004.

Requirements

Other Damages already Fulfilled

Punitive damages cannot be awarded on their own. They must be awarded in conjuction with other types of damages. Furthermore, all other damages must be awarded first with punitive damages coming last. These include compensatory, nominal, or restitution damages.

Malicious Intent

A defendant who acted in negligence isn’t enough to justify the awarding of punitive damages. For punitive damages to be awarded, the defendant needs to have acted in a way that is either malicious, purposeful, or a combination of the two. That being the case, many instances where an accident took place don’t qualify for punitive damages.

Direct Harm

With a few caveats, punitive damages are generally only awarded if the plaintiff was directly injured. If an act directly harmed the plaintiff then punitive damages may be awarded, but anything short of that will make it hard to justify.

How Much Can Punitive Damages Be?

Punitive damages are awarded in a size that is proportional to the realistic damages that the plaintiff incurred. If punitive damages are awarded in excessive amounts then most people in the legal community would find it to be unconstitutional. In fact, there’s a specific line that one cannot cross when awarding punitive damages.

Anything that exceeds a 10:1 ratio is considered unconstitutional. That means that if the initial award was $100,000 then the punitive damage award cannot exceed $1,000,000. In fact, due to some plaintiffs claiming impractical amounts for punitive damages, many states have set a cap on the amount of punitive damages that can be awarded within their jurisdiction.

Situations where Punitive Damages May be Awarded

Malpractice

It’s worth noting that, in medical malpractice cases, extreme negligence is needed to justify the awarding of punitive damages. There is no set criteria as to what qualifies as extreme negligence and the defintion is open to interpretation — and may even vary from court to court.

That said, there are certain situations in which the level of negligence is clearly high enough to justify the punitive damages awarded. This includes performing the wrong surgery or leaving a surgical instrument within the patient’s body — leading to harm on the plaintiff’s part.

Dangerous conduct

Anything that exposes the public to a high potential of harm could qualify as dangerous conduct. Some examples would be drawing a firearm in a crowded area or making bomb jokes at a concert.

Disregard for law

If the defendant displayed a disregard for law through their negligent actions — such as driving at a speed significantly over the limit — then punitive damages may be awarded to the plaintiff. There can still be some variation on a case to case basis though depending on the severity of the defendant’s actions.

Ignoring Jiminy Cricket

Okay, that may be a rather creative way to put it, but it does capture the essence of our point. If the defendant knows — or has reason to know — that the actions they are about to perform may lead to someone getting injured but follows through anyway then that could be a qualifying feature for punitive damages.

Can Punitive Damages be Awarded in Small Claims Cases?

In general, it’s very rare for punitive damages to be awarded in small claims cases. This isn’t due to any regulation prohibiting it, but rather, the fact that most small claims simply don’t meet the necessary criteria. Of course, what is law if not a wild jungle filled with exceptions.

There are still some situations in which a small claims case may be eligible for punitive damages. This includes employers who failed to pay wages to an employee. Punitive damages may be awarded both as an example to other employers and as a lesson to ensure that the defendant does not repeat their wrong and outrageous actions towards staff.

Can Auto Insurance Cover Punitive Damages?

You might think that having auto insurance protects you from any threat between Earth and Pluto, but that isn’t necessarily the case. If you’re talking on your phone and get into a car accident then your auto insurance won’t be of any help.

This — in addition to self-preservation — marks another reason why you should practice safe driving. Want to learn more about car accidents, safe driving, and lawyers who can help in the event of a crash? Check out our car accident page here.

What the Data Says

Frequency

According to Theodore Eisenberg, punitive damages were requested in about 10% of completed trials. This goes against the popular belief that most plaintiffs request punitive damages with financial interest being the primary motivator.

Some have even speculated that law firms secretly advise their clients to request such damages with the intent of amplifying the scale of their victory and attracting more prospects to their firm. This data conclusively proves that punitive damages are actually relatively rare.

Growth

In the past four decades, there was no clear growth in the frequency of requests nor the amount of punitive damages awarded. If any growth was indeed present it was too minor to show up on any studies or statistics. This is reassuring in a way as it tells us two things: 1. The system is in a state of equilibrium and 2. Some constants still remain in an otherwise chaotic world.

Amount Correlation

Many have argued that the amount of punitive damages awarded are mostly random. The data proves the contrary as it found a very significant correlation between the amount of the initial damages awarded and the amount of the punitive damages awarded.

Are there Limits on Punitive Damages?

Once a jury has determined that a defendant is liable for punitive damages, it must set the amount of punitive damages. To do so, it considers several factors, including:

• How reprehensible the defendant’s conduct was in light of:
  • The plaintiff’s vulnerability;
  • The duration and frequency of the defendant’s conduct;
  • The type of harm posed by the defendant’s conduct (e.g., economic or physical);

As well as:

• What actual harm the defendant’s conduct caused, and what potential harm it could have caused; and
• The amount of money necessary to punish the defendant and serve as an example for the defendant and others. On this final factor, the jury can consider the defendant’s net worth to decide how much would be necessary to deter the defendant from repeating the behavior.

However, the jury does not have unlimited discretion in setting the amount of punitive damages. The U.S. Supreme Court interprets the 14^th Amendment’s Due Process Clause as imposing limits on punitive damage awards. Those limits are not absolute dollar amounts, but require a flexible factor analysis that mirrors some of the factors a jury considers, including:

• The reprehensibility of the defendant’s conduct;
• The ratio of punitive damages to compensatory damages; and
• How the punitive damage award compares to criminal penalties for similar conduct.

Regarding the second factor, the Supreme Court has stated that, “in practice, few awards exceeding a single-digit ratio . . . will satisfy due process,” and that punitive damages greater than four times the amount of compensatory damages “might be close to the line of constitutional impropriety.”
Punitive damages serve important functions in the law, but are rarely available to personal injury plaintiffs. When they are available, they are subject to constitutional limits. If you are interested in learning more about your scenario, or possible examples of punitive damages, contact us. To make sure that you receive all the damages you’re entitled to in a personal injury lawsuit, contact the Illinois personal injury attorneys at Costa Ivone today.

Do I Need to Hire a Lawyer if I Need Help with Punitive Damages?

Any personal injury case is complicated enough, but once you get into punitive damage territory the complexity goes through the roof. The limits and calculation methods will vary drastically from one state to the next which is why you need a legal professional at your side to help you through the process. They will also help determine whether or not the necessary criteria is even met for the awarding of punitive damages.