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Recent Trends in Punitive Damages Awards
The Supreme Court's decision in State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408 (2003), addressing punitive damage awards was a culminating moment in a decade of high court jurisprudence reigning in multimillion dollar runaway awards. Following the decision, there was a flurry of activity by the Supreme Court itself, and in many lower courts, to remand, conform, and examine current cases in light of the Court's new guidance. With several exceptions where the compensatory damages are nominal or the conduct is particularly reprehensible, court after court is quoting the high court's language regarding ratios and remanding or reducing awards with double-digit ratios. The reasons vary, but include factors such as whether the plaintiff suffered physical or economic injury, the degree of the defendant's determined reprehensibility, wealth, and the ratio of punitive to compensatory damages. In general, the most successful strategies used by defendants to reduce punitive awards are: 1) under the reprehensibility guidepost, to exclude collateral evidence based on an insufficient nexus between the alleged bad conduct and the injury suffered by the plaintiff; and 2) to focus on the ratio between compensatory and punitive damages when it exceeds a single-digit ratio.
Reprehensibility of the Defendant's Conduct
The State Farm Court cautioned against using a single case as a “platform to expose, and punish, the perceived deficiencies” of a defendant's operations throughout the country. It reiterated that a “state cannot punish a defendant for conduct that may have been lawful where it occurred.” The Court rejected the idea that State Farm could be “condemned for its nationwide policies rather than for the conduct direct[ed] toward the Campbells.” Evidence of State Farm's unrelated national policies should therefore have been excluded because “dissimilar acts, independent from the acts upon which liability was premised, may not serve as the basis for punitive damages. A defendant should be punished for the conduct that harmed the plaintiff, not for being an unsavory individual or business.” Id. at 422-3.
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