Punitive Damages

Problem

While punitive damages awards are infrequent, their frequency and size have grown greatly in recent years.  More importantly, they are routinely asked for today in civil lawsuits.  The difficulty of predicting whether punitive damages will be awarded by a jury in any particular case, and the marked trend toward astronomically large amounts when they are awarded, have seriously distorted settlement and litigation processes and have led to wildly inconsistent outcomes in similar cases.

ATRA's Position:

ATRA supports state legislation that: establishes a liability “trigger” that reflects the intentional tort origins and quasi‑criminal nature of punitive damages awards ‑ “actual malice;” requires “clear and convincing evidence” to establish punitive damages liability; and requires proportionality in punitive damages so that the punishment fits the offense.   ATRA supports federal legislation that addresses the special problem of multiple punitive damages awards.  Such legislation would protect against unfair overkill, guard against possible due process violations, and help preserve the ability of future claimants to recover basic out‑of‑pocket expenses and damages for their pain and suffering.

Opposition Opinion:

The personal injury bar’s argument against punitive damages reform – that a jury should have broad discretion to award punitive damages in order to punish and deter misconduct – fails to address the quasi-criminal nature of punitive damages necessitating such procedural safeguards for the award of punitive damages as a showing that the defendant acted with “actual malice.”

Punitive Damages Reform: SB 137 (1999)

Alabama|1999

Limits the award of punitive damages in most non-physical injury

[…]

Limits the award of punitive damages in most non-physical injury cases to the greater of three times the award of compensatory damages or $500,000.  Limits the award of punitive damages in non-physical injury cases against businesses with a net worth of less than $2 million to the greater of $50,000 or 10% of the business’s net worth up to $200,000.  Limits the award of punitive damages in physical injury cases to the greater of three times the award of compensatory damages or $1.5 million.  Prohibits application of the rule of joint and several liability in actions for punitive damages, except for wrongful death actions, actions for intentional infliction of physical injury, and class actions.  Provides that the limit on punitive damages will be adjusted on January 1, 2003 and increased at three‑year intervals in accordance with the Consumer Price Index.


[hide]

Challenged and Struck Down

The Alabama Supreme Court held the $250,000 limit on punitive damages unconstitutional in Craig Henderson v. Alabama Power Co., case No. 1901875, June 25, 1993.

Punitive Damages Reform: (1987): Ala. Code § 6-11-20.

Alabama|1987

Requires a plaintiff to show by “clear and convincing” evidence

[…]

Requires a plaintiff to show by “clear and convincing” evidence that a defendant acted with “wanton” conduct for the recovery of punitive damages.  Limits the award of punitive damages to $250,000.  The statute setting a $250,000 limit on punitive damages awards violated the right to jury trial under the State Constitution.  Henderson v. Alabama Power Co., 627 So. 2d 878 (Ala. 1993).  Requires trial and appellate judges to review all punitive damages awards and reduce those that are excessive based on the facts of the case.  The Alabama Supreme Court held the judicial review of all awards unconstitutional in Armstrong v. Roger’s Outdoor Sports, Inc., May 10, 1991.


[hide]