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: HB 58 (1997).

Alaska|1997

Limits the award of punitive damages in most cases to

[…]

Limits the award of punitive damages in most cases to the greater of three times the award of compensatory damages or $500,000.  Limits the award of punitive damages to the greater of four times compensatory damages, four times the aggregate amount of financial gain, or $7,000,000, when the defendant’s action is motivated by financial gain.  Limits punitive damages in unlawful employment practices lawsuits to: $200,000, when the employer has less than 100 employees in the state; $300,000, when the employer has more than 100, but less than 200 employees in the state; $400,000, when the employer has more than 200, but less than 500 employees in the state; and $500,000, when the employer has more than 500 employees in the state.  Requires a plaintiff to show by “clear and convincing” evidence that a defendant acted with “reckless indifference” or was engaged in “outrageous” conduct.  Requires the determination of awards for punitive damages to be made in a separate proceeding.  Requires that 50% of punitive damages awards be paid to the state treasury.


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Challenged and Upheld

The reform did not violate the right to a jury trial, the right to equal protection, or the right to substantive due process in the State or Federal Constitutions, the separation of powers doctrine, or the right of access to the courts or ban on “special legislation” in the State Constitution).  Evans v. State, 2002 WL 1998141 (Alaska Aug. 30, 2002).