PUNITIVE DAMAGES ARE RARE, REASONABLE, AND EFFECTIVE

Center for Justice & Democracy 

 

“Punitive damages are awarded when the defendant’s conduct is determined to have been so ‘willful, malicious, or fraudulent’ that it exceeds the legal criteria for mere or gross negligence.?1 They serve to both punish defendants for these harmful acts and deter such conduct in the future.

Contrary to popular myth, juries rarely award punitive damages.2

* Punitive damages were awarded in less than one percent of all civil actions commenced during the periods of 1991-1992, 1996, and 2001.3
* In 2001, punitive damages were awarded in only 5.3 percent of tort cases; for contract cases (usually businesses suing businesses), it was 5.8 percent.4
* A review of combined data from nine major empirical studies of punitive damages reaching back to 1960 covering most of the United States concludes that punitive damages are rarely awarded.5 Additional studies confirm that conclusion.6
* Medical Malpractice: In medical malpractice cases in 2001, the most recent year studied by the U.S. Department of Justice, punitive damages were awarded in only 4.9 percent of cases.7
* Product Liability: Punitive damages were awarded in only 2 percent of typical product liability cases in 2001.8

Punitive damages have not increased in frequency.9

In 2001, the most recent year studied by the U.S. Department of Justice, winning plaintiffs won punitive damages 5.6 percent of the time, as compared to 6.1 percent in 1992.10

Most punitive damage awards are modest in amount.11

In 2001, the most recent year studied by the U.S. Department of Justice, the median inflation-adjusted punitive damage award was $50,000 (compared with $63,000 in 1992). For tort cases, (personal injury) cases, it was only $25,000. In comparison, for contract cases (mostly businesses suing businesses), it was $83,000.12

Juries and judges (in bench trials) use similar reasoning in punitive damage decisions, and award similar amounts when accounting for differences in case type.13

In 2001, the most recent year studied by the U.S. Department of Justice, juries awarded punitive damages in 5.7 percent of cases with winning plaintiffs; for judge awards, it was 4.4 percent. Notably, in tort trials, juries awarded punitive damages in 4.5 percent of cases, as compared to judges in 10.7 percent of cases.14

Punitive damage awards are often reduced or abandoned altogether.15

* In 2001, post-trial relief was granted to 28 percent of defendants in civil trials with punitive damages, and the award was modified in about half of those cases.16
* In 2001, in tort trials, 30.5 percent of requesting defendants received such relief and the award was modified in 55.4% of those cases.17
* According to a National Law Journal analysis of 29 jury-decided punitive damages verdicts of $1 million or more in 1994, 10 were reversed and 10 were severely reduced.18
* Between 1965 and 1990 only one quarter of the punitive awards were affirmed by appellate courts, with nearly one-third ultimately being reversed or reduced on appeal. Thirty-seven percent of punitive damages winning plaintiffs received nothing. The data also showed that the median punitive award received was 77 percent lower than the original award at trial and the largest punitive damages awards were most likely to be reduced or eliminated in the post-trial period. 19
* Medical Malpractice: After looking at punitive damages in medical malpractice cases nationwide for the years 1963-1993, professors Koenig and Rustad found that judges changed 42 percent of punitive verdicts after trial. Nearly ten percent (26 out of 270) of cases involving punitive damages were reversed by appellate courts.20 Moreover, the “vast majority of punitive dollars were uncollectible due to post-trial reversals, settlements, and defendant insolvency.?21

Punitive damages are awarded in substantial cases.

* In 2001, punitive damages in tort cases were most likely to be awarded in slander/libel (58 percent), intentional tort like assault (36 percent), and false arrest/imprisonment (26 percent cases), as opposed to only 4.9 percent of medical malpractice cases.22
* Financial injury cases (i.e., primarily business versus business cases) accounted for 49.6 percent of the nearly 1,300 cases in which punitives were awarded.23
* Professor Valerie Hans’ extensive studies of decades of jury behavior found that large awards were the result of jurors “follow[ing] the court’s instruction that punitive damages should be large enough to hurt the defendant company.?24
* Product liability. After looking at 25-years’ worth of cases, Professors Rustad and Koenig found that “[p]unitive awards in products liability are overwhelmingly the result of ‘(1) fraudulent-type of misconduct; (2) knowing violations of safety standards; (3) inadequate testing and manufacturing procedures; (4) failure to warn of known dangers before marketing; and (5) post-marketing failure to remedy known dangers.’?25 Moreover, “[p]unitive damages were generally awarded where there was some ‘smoking gun’ showing that a firm concealed, suppressed, or recklessly failed to take remedial action to correct a dangerous product defect.?26
* Medical Malpractice. After examining punitive damages in medical malpractice cases covering a thirty-year period, professors Koenig and Rustad found that punitive damages were only levied in instances of outrageous behavior.27

Punitive damages correlate with compensatory damages (awarded for actual harm).28

* In medical malpractice cases between 1963 and 1993, punitive verdicts were largely proportional to compensatory awards, with the median ratio of punitive damages to compensatory damages awarded at trial 1.21 to 1.29
* In products liability cases from 1965 to 1990, the overall median punitive damages award was 1.67 times the median compensatory award.30

Although rare, punitive damages have critical social and financial importance lying not in their frequency, but in the “signals? they send.

* The industry-backed Rand Institute for Civil Justice has said, “Punitive damages are designed to punish a defendant for grossly inappropriate actions and, in so doing, to deter future such actions by signaling that their consequences can be severe.?31
* There are many examples where the imposition or threat of punitive damages has resulted in dangerous products and services being taken off the market; in cases where criminal laws are violated, the potential for punitive damages can be a more effective deterrent than criminal sanctions.32 For example,
* On October 27, 1995, a 42-year-old Texas oil worker’s scalp was torn off, causing hearing loss and brain damage, after a piece of equipment exploded from a gas well. When the victim offered to exchange the $30 million punitive damages award for safety changes, the company agreed to work with a safety engineer to institute new rules at the company.33
* In July 1998, Aryan Nation guards chased, shot at and assaulted a woman and her teenage son after their car backfired while driving past the group’s Idaho compound. Trial testimony revealed that the organization not only failed to train and investigate security personnel but also tried to hide the absence of safety checks after the lawsuit was filed. After the jury awarded $6 million in punitive damages, the group was barred from using the name “Aryan Nations? and agreed to transfer the compound to the victims.34
* The Dalkon Shield IUD, first put on the market in 1971, caused pelvic infections, septic abortions, infertility and death in thousands of women. Despite receiving reports of injuries in IUD users, the manufacturer continued to defend the device, only pulling the product from the U.S. market in June 1974 after FDA intervention. After 11 punitive damages awards over a number of years, totaling in excess of $24.8 million, the company finally agreed to urge doctors and women to remove the Dalkon Shield and offered to pay for the removal.35

Media coverage has helped misinform the public about the nature and frequency of punitive damages.

* Data collected from the New York Times, Wall Street Journal, Washington Post, Los Angeles Times and Christian Science Monitor from 1980 to 1999 reveal that 88 percent of reported punitive jury awards mentioned in news articles exceeded the typical punitive award in the country.36
* After examining newspaper reporting of product liability verdicts decided from 1985 to 1996 against auto manufacturers, Professor Steven Garber found coverage was more likely if punitive damages were part of the award.37 Although punitive damages were awarded in only 4.6 percent of the verdicts, they appeared in 21.3 percent of all reports of verdicts.38 According to Garber, “an award of roughly $ 2 million that includes a punitive component is as likely to receive newspaper coverage as a $25 million award that is entirely compensatory. Holding total damages constant … the probability of a newspaper article is 3.5 to 5.5 times higher if a component of the damages is punitive.?39 After looking at three different TV news databases, Garber also discovered that despite very little television coverage of tort verdicts, “virtually all of the television coverage we found was triggered by verdicts that included unusually large punitive damages awards.?

 

Comments are closed.