Punitive damages, or exemplary damages, are awarded to a plaintiff in addition to compensatory damages as a way to punish the defendant for a purposeful or especially negligent action. They are the legal system's method of discouraging future bad behavior by making it financially harmful to the defendant.
What Are Punitive Damages?
When a plaintiff wins a civil lawsuit, the court essentially says they have been wronged by the defendant and are entitled to financial compensation for that wrong. In most cases this compensation comes from actual damages, also called compensatory damages, encountered by the plaintiff, like damaged property, medical bills, and lost wages.
If the harm inflicted by the defendant is difficult to estimate financially, or the defendant's actions were particularly reckless, the court can also award punitive damages as a way to punish the defendant and discourage similar behavior. Sometimes punitive damages are also awarded when compensatory damages seem insufficient to make up for the defendant's behavior.
Punitive damages are awarded at the discretion of the court, though they are limited by some laws and judicial precedents.
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Punitive Damages Limits
Punitive damages do not usually apply in breach of contract cases, and they are limited by state laws and federal judicial precedents. Every lawsuit has its own set of nuanced special circumstances, especially those involving personal injury, making it difficult for anyone but an experienced lawyer to determine which limits apply to any single case.
Constitutional Limits on Punitive Damages
In State Farm Mutual Automobile Insurance Company v. Campbell (2003) 538 U.S. 408, 425 (State Farm), the U.S. Supreme Court ruled that disproportionately large punitive damage awards violate the due process clause of the United States Constitution. The Supreme Court analyzed the punitive damages on three criteria:
- The egregiousness of the defendant's conduct
- The difference between the actual or potential harm suffered by the plaintiff and the punitive damages award
- The difference between the punitive damages and applicable civil penalties applied in similar cases
The court also used five factors to evaluate the egregiousness of the defendant's behavior.
U.S. Supreme Court's Reprehensibility Factors
Criteria used to determine if a defendant's behavior is reprehensible enough to justify punitive damages:
- Was the harm physical or economic?
- Did the behavior indicate indifference or reckless disregard for the health or safety of others?
- Was the plaintiff financially vulnerable?
- Is the behavior part of a pattern or just an isolated incident?
- Was the harm caused by intentional ill will, trickery, or deceit, or was it just an accident?
Based upon this analysis, the Supreme Court overturned the punitive damages award in State Farm and established general limits on punitive damages awards. According to the court, "Few awards exceeding a single-digit ratio between punitive and compensatory damages... will satisfy due process." Therefore, most courts will assess a maximum punitive award of four times the compensatory damages, unless the defendant's behavior was exceptionally reckless.
In the case of exceptional recklessness, or very modest compensatory awards, most courts will mandate a maximum punitive award of nine times the amount of compensatory damages, but there have been some exceptions to that rule.
State Limits on Punitive Damages
As with many things, each state addresses punitive damages in their own way. Some states allow an unlimited amount of punitive damages, while others have strict limitations on both the size of the award and the burden of persuasion necessary to merit such an award. For example, Connecticut state law says that punitive damages awards are limited to the actual cost of litigation, including attorney's fees, while other states have placed no formal limitations on them.
Punitive Damages Examples
Even though it may seem like punitive damage awards happen in every lawsuit that makes headlines, courts only assess punitive damages in about 5% of verdicts. Between that and the numerous state and federal statutes governing damages, it can be difficult to understand when and why punitive damages apply in the real world. To help clear that up, we've pulled a few examples from the lawsuits we cover.
Engelman vs. Ethicon - $17.5 Million Punitive Damages Award
Medical device manufacturer Ethicon faced a verdict of $2.5 million in compensatory damages and $17.5 million in punitive damages in a 2017 hernia mesh lawsuit. Margaret Engelman had received an Ethicon mesh implant to treat her stress urinary incontinence. Not only did it fail to treat her condition, but the mesh also broke apart and eroded into several different parts of her abdomen. Three separate surgeries failed to retrieve all of the pieces of the mesh, leaving Engelman with chronic pelvic pain, urinary dysfunction and scarring.
The Engelman lawsuit claimed Ethicon knew the mesh deformed, caused immune reactions and encouraged scar tissue growth but chose to sell the product anyway without warning consumers of those risks. The jury agreed, leading to their 7 to 1 assessment of punitive to compensatory damages.
Sherr-Una Booker v. C.R. Bard, Inc - $1.6 Million Punitive Damages Award
Sherr-Una Booker received an inferior vena cava (IVC) filter in 2007, but it broke apart within two years, lodging fragments in her heart and spine. She endured invasive, dangerous surgeries as a result and was left with a portion of the device still lodged in her inferior vena cava.
A jury awarded her $2 million in compensatory damages and $1.6 million in punitive damages in her IVC filter lawsuit. On appeal, Judge David Campbell affirmed the awards, noting that Bard knew their IVC filters "placed patients at greater risk of harm" but "chose not to warn physicians and instead downplayed the risk," underscoring the egregiousness of their behavior and the harm it caused.
Dewayne Johnson v. Monsanto - $39.25 Million Punitive Damages Award
In a highly publicized lawsuit over Monsanto's globally used Roundup weedkiller, a jury initially awarded Dewayne Johnson $39.25 million in compensatory damages and $289 million in punitive damages. According to his Roundup lawsuit, Johnson developed non-Hodgkin's lymphoma as a result of exposure to the popular weedkiller, and a jury verdict agreed.
In an October 2018 appeals court decision, a judge decreased the punitive damages award to $39.25 million, citing due process. Johnson's case serves as an example of what can happen when punitive awards exceed the limitations described by the U.S. Supreme Court.
Deborah Giannechini v. Johnson & Johnson - $67.5 Million Punitive Damages Award
Deborah Giannechini was diagnosed with ovarian cancer after 40 years of daily exposure to Johnson & Johnson's Shower-to-Shower Body Powder, which likely contained asbestos. Her talcum powder lawsuit alleged J&J deliberately chose to market a product they knew was dangerous, eventually causing her to develop a terminal illness.
In 2017, a jury agreed with Ms. Giannechini, awarding her $2.5 million in compensatory damages and a whopping $67.5 million in punitive damages. According to one juror, J&J seemed indifferent to the possible health consequences of what they knew to be a dangerous product, and that impression was reflected in the hefty punitive damages award.
How Are Punitive Damages Different from Compensatory Damages?
All forms of damages exist as part of tort law and are designed to financially compensate a victim for losses they sustain due to another person's bad behavior. Compensatory damages are directly tied to the plaintiff's injury or injuries, like property damage, medical expenses or lost wages.
On the other hand, punitive damage awards are directly tied to the nature of the defendant's behavior. Courts assess punitive damages awards only when they feel the defendant should be punished and discouraged from engaging in similar conduct in the future, making them a bit subjective.
In a nutshell, compensatory damages restore the plaintiff's losses, and punitive damages discipline the defendant for their behavior.
Punitive Damages Terminology
Mentioned in both the Fifth Amendment and the Fourteenth Amendment of the U.S. Constitution, requires the use of "fair procedures" prior to depriving a citizen of life, liberty or property; used to prevent unreasonably high punitive damages awards
Synonym for punitive damages
Portion of the justice system devoted to providing reparations to individuals harmed by others, assigning liability to the party who inflicted the harm and discouraging others from committing harmful acts