Damages as Compensation
In civil cases, damages are generally awarded to a plaintiff to make the plaintiff whole – i.e., to put the plaintiff in the same position she would have been in had she not suffered her injury. These can include economic damages, such as like lost business opportunities or the diminished value of the plaintiff’s assets. In a case involving physical injury or emotional harm, the plaintiff can recover for these non-economic damages too (these are often called “pain and suffering” or “emotional distress” damages). The purpose of both economic and non-economic damages is to compensate the plaintiff, not to punish the defendant. For breach of contract cases, damages meant to punish the defendant for bad conduct are prohibited. No matter how bad a defendant’s motive in breaching a contract, she will not be required to pay any more in damages than what is necessary to compensate the plaintiff for the harm caused by the defendant’s breach, according to the jury’s determination.
Damages as Punishment
But in cases involving torts (civil wrongs that are not based on claims a party breached a contract), juries can award the plaintiff punitive damages: money intended to punish the defendant’s bad conduct, over and above what is necessary to compensate the plaintiff. Tort cases encompass everything from straightforward personal injury cases to defamation to fraud or other unfair business practices. While the law differs from state to state, many jurisdictions allow a plaintiff to recover these excess damages when the plaintiff proves the defendant’s conduct was so egregiously bad, the defendant should be punished. This deterrence is meant to be both specific (to deter this same defendant from ever doing the same thing again) and general (to warn other potential defendants not to engage in the same sort of behavior).
Many people are familiar with the “McDonald’s Hot Coffee Case,” where a woman was awarded millions of dollars by a jury after spilling scalding coffee on her lap. The facts of the case have been significantly distorted in the popular media (the plaintiff’s injuries were severe, the coffee was served at near boiling temperature, and plaintiff put on evidence that it was McDonald’s official policy to serve coffee so hot that it was dangerous), and the punitive damages award was significantly reduced by the judge after the verdict. Nonetheless, the judge held that McDonald’s conduct was “willful, wanton, and reckless.”
The Impact on Litigation
In California, a plaintiff can seek punitive damages when they can show by “clear and convincing evidence,” (a significantly higher burden of proof than that used for most issues in civil cases) that the defendant acted with “fraud, malice, or oppression.” While this higher standard means punitive damages won’t be available in most cases, where there is a basis for seeking punitive damages, it can significantly affect the parties’ assessment of the risks of going to trial. How much a jury will award in punitive damages, if anything, is very difficult to assess before trial, and will depend on hard to quantify factors like the likeability (or lack thereof) of the parties, and the amount the jury believes is necessary to award to serve as a sufficient deterrent. Unlike in other aspects of civil litigation, the financial status of the defendant is relevant information and can be provided to the jury to help the jurors determine the level of punishment the defendant can absorb. The U.S. Supreme Court has limited punitive damage awards in the vast majority of cases to no more than nine times the amount of the actual damages suffered. But when the underlying dispute is sizable, the amount of potential punitive damages may be enormous.
Whether you are a plaintiff or a defendant, the potential for punitive damages significantly raises the stakes in your lawsuit. It takes experienced trial counsel who know how juries operate to properly assess the risks and rewards of going to trial when punitive damages are on the line. We have successfully defended against massive punitive damages claims. We have also secured substantial punitive damages awards for our plaintiff clients. Bring us your toughest case. We’ll get the job done.