Punitive Damages

Question 1

Exxon

Answer 1

Restatement Second) – The prevailing rule in American courts also limits punitive damages to cases…where a defendant’s conduct is “outrageous.”
 Gross negligence, willful, wanton, and reckless indifference for the rights of others, or behavior even more deplorable.

Facts - oil spill drinking. Ratio situation. 1:1 punitive w compensatory

Question 2

o Punitive

Answer 2

punish & deter

Question 3

State Farm

Answer 3

Awards of punitive damages by state courts that exceed a single-digit ratio between punitive damages and compensatory damages are usually “grossly excessive” and violate the Due Process Clause of the Fourteenth Amendment.
*BMW Guideposts:
 (1) degree of reprehensibility of defendant’s conduct
* Most important.
* Factors to determine reprehensibility:
o Harm caused physical as opposed to economic
o The tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others
o The target of the conduct had financial vulnerability
o The conduct involved repeated actions or was an isolated incident
o The harm was the result of intentional malice, trickery, or deceit, or mere accident.
 (2) the ratio between the punitive damages award and the harm likely to result from the defendant’s conduct as well as the harm that actually has occurred
* Can exceed 9:1 ratio when?
o Exception: Egregious act (bed bug case…)
 There are no rigid benchmarks
 *The Supreme Court has declined to impose a bright line ratio.
* Injury is hard to detect
* Nonmonetary value of noneconomic harm is hard to determine.
 (3) The civil or criminal penalties that could be imposed for comparable misconduct. (look to civil sanctions…)
 +??? (Case specific factors)

Question 4

• Philip Morris

Answer 4

o Takeaway: harm must occur to plaintiff to assess punitives. Can consider harm inflicted on others for determining reprehensibility.
 Punishing Defendant directly is forbidden.

Question 5

• Formosa (significant in terms of numbers):

Answer 5

o Basic rule about recovering punitive damages for breach of contract – don’t get them….
 Exceptions (resulted in more punitives in contract cases than tort cases)
 When does Formosa permit recovery of punitives in contract?
* If an independent tort is committed in a contractual setting, punitive damages can be awarded for the tort.
o Not related to a duty IN the contract.

Question 6

BMW guideposts

Answer 6

(1) degree of reprehensibility (most improtant)
(2) ratio (Can exceed 9:1 when injury hard to detect & eggregious act.
(3) civil…look to civil sanctions

Question 7

What did Phillip Morris add to guideposts?

Answer 7

Harm must occur to plaintiff to asses punitives.

Question 8

Can you consider the harm inflicted on others for determining reprehensibility?

Answer 8

Yes