Academic journal article Defense Counsel Journal

How to Defend Punitive Damages Claims Effectively-And Maybe Successfully

Academic journal article Defense Counsel Journal

How to Defend Punitive Damages Claims Effectively-And Maybe Successfully

Article excerpt

Punitive damages cases present difficult challenges to defense counsel, but attention to a lot of details may produce success

If a man steals an ox or a sheep, and kills it or sells it, he shall pay five oxen for an ox, and four sheep for a sheep. He shall make restitution; if he has nothing, then he shall be sold for his theft. If the stolen beast is found alive in his possession, whether it is an ox or an ass or a sheep, he shall pay double.

--Exodus 22:1

A PUNITIVE damage award in a high-profile case is a corporate defense counsel's worst nightmare. Consider, as examples,

* $2.7 million punitive damages against McDonald's Corp. for burns a customer suffered from a coffee spill;

* $7.1 million for a secretary who prevailed in a sexual harassment case;

* $101 million against General Motors in a design defect case;

* $125 million against a pharmaceutical company; and

* $3 billion against Exxon Corp. related to the Exxon Valdez oil spill.

Although punitive damages often are reduced by the trial court or on appellate review, the original awards usually generate fierce debate and media hype, as well as injury to the defendant corporation's reputation.

In today's climate of intensified accountability and safety consciousness, juries expect manufacturers, professionals and other providers of products and services to account for the safety of their respective endeavors. When a plaintiff successfully proves liability against a highly visible defendant on the theory that the defendant failed to provide a safe product or service, the threat of a substantial punitive damages award must be taken seriously. In addition to the award itself, the corporation can anticipate the cost of litigating the issue to final appeal and of dealing with hostile media exposure and private activist groups.

In order to avoid this catastrophe, defense counsel must focus on the punitive aspect of the case from the day the file is opened. All too often, the punitive damages claim is one of the last things considered, when it should be one of the first.

There are risks associated with claims for punitive damages, and there are different methods that may be employed to protect a corporate defendant from those claims. It is important to remember that the law of punitive damages claims varies from jurisdiction to jurisdiction and must always be carefully researched and analyzed.

A LITTLE HISTORY

Punitive damages in civil actions are defined in Section 908 of the Restatement (Second) of Torts as those damages awarded "against a person to punish him for his outrageous conduct and to deter him and others like him from similar conduct in the future." They have been characterized as "exemplary," because they make an example of a defendant; "punitive," because they punish a defendant; "vindictive," because they exact revenge on a defendant; and "smart money," because they make a defendant smart with pain, not intelligence.(1)

The concept of punitive damages dates back more 2,000 years before the birth of Christ to the Code of Hammurabi, under which a judge who altered a judgment previously rendered was required to pay a twelve-fold penalty. In 1400 B.C., Hittite law, according to Exodus 22:9, required the thief of a "great" bull or horse to repay the owner with 15 bulls or horses. Exodus also refers to exemplary damages for the commission of other egregious acts. These biblical references to exemplary damages appear to be the first indication that punitive damages should bear a multiple, albeit arguably reasonable, relationship to the compensatory award.(2)

The first recorded punitive damage award in a civil case appears in an 18th century case in England, Huckle v. Money.(3) Lord Camden found that the authority for punitive damages awards is inherent in the jury's exercise of uncontrolled discretion in arriving at damages. …

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