Punitive damages is a category of damages that can be demanded in a personal injury case under certain circumstances. They are not part of the compensatory damages that a plaintiff can receive if the defendant’s actions were a substantial cause of the accident that harmed the plaintiff2.
Compensatory damages include economic losses such as medical expenses, lost earnings, lost earning capacity, and property damage. They also include non-economic losses such as pain and suffering, emotional trauma and diminished quality of life. On the other hand, punitive damages are designed to punish the defendant and are based on the defendant’s wealth as well as the egregiousness of the defendant’s conduct and the extent of the resulting harm or injury.
Punitive damages are also called exemplary damages as they are supposed to make an example of the defendant’s conduct so as to dissuade it from similar conduct in the future3. It can also have the effect of warning other parties if they also engage in similarly outrageous and despicable conduct.
Punitive damages can be sought when the defendant’s actions must be more than mere negligence but evince a particularly serious disregard or indifference to the safety or rights of others. Also, a plaintiff must first have been awarded actual or compensatory damages before punitive damages may be considered.
Malice is usually used in a criminal context to show malevolent intent by an offender, such as in homicide cases where “malice aforethought” or premeditated murder is a basis for a first degree murder charge under penal code 187 and conviction. Malice for personal injury cases requires that:
- The defendant engaged in despicable conduct that shows that he/she had a conscious disregard of the rights or safety of others, OR,
- The defendant engaged in conduct to intentionally harm the plaintiff
The latter definition can include murder or assault or any other criminal action that could result in the defendant’s arrest. But the defendant need not have committed a criminal act, though such despicable conduct could certainly be construed as such. For instance, you know that driving while intoxicated is illegal as well as dangerous.
You should also be aware that it substantially increases the risk that you will cause an accident and injure someone since it seriously impairs coordination, judgment and the ability to drive safely. Despite this, if you become intoxicated and drive, then your actions may be malevolent since you are consciously and intentionally putting others in harm’s way4.
Malice does not require actual intent but is sufficient if you can show that the defendant demonstrated a conscious disregard for the safety of others and was aware of the probable dangerous consequences of his actions and failed to disregard them5.
Oppression also describes despicable conduct that subjects a person to cruelty or unjust hardship. For instance, a home health care worker or nursing home attendant may have deliberately restrained a patient, did not bathe or feed her, or assaulted her. The worker has a duty of care to the patient and not only breached or violated that duty by his conduct but his actions went far beyond it to inflict physical and emotional harm that is outside what may be ordinarily expected.
Despicable conduct is behavior that is so vile, base or contemptible that it would be looked down on and despised by reasonable people. This type of outrageous conduct is required before punitive damages may be permitted to be awarded6.
Under Civil Code § 3294, fraud is “an intentional misrepresentation, deceit or concealment of a material fact known to the defendant with the intention on the part of the defendant of depriving a person of property or legal rights or otherwise causing injury.”
In a personal injury action, a defendant commits fraud if he deliberately misled or concealed a material fact, such as a defect in a product or vehicle, that is a substantial factor in causing harm to the plaintiff. A drug or medical device company that concealed results of testing that indicated a substantial risk to consumers who use their product may have committed fraud that can be the basis for asserting punitive damages in addition to compensatory damages.
Not all personal injury cases are ripe or appropriate for requesting punitive damages. As indicated, the conduct of the defendant must one involving malice, oppression, or fraud. Further, the act must be particularly outrageous or despicable.
Examples are injuries caused by robbery, kidnapping, sexual assault, or concealing an unreasonably hazardous or dangerous defect or condition from the plaintiff, or by an intoxicated driver causing a vehicle accident with injury.
As plaintiff, you may include a request for compensatory and punitive damages in the complaint so long as you allege a basis for exemplary damages. A jury or judge acting as the trier-of-fact determines the defendant’s liability, and actual damages during the trial and may also consider, punitive damages in the same proceeding.
In other cases, the process may be bifurcated so that once liability is imposed and compensatory damages awarded, the jury then determines the issue of punitive damages in a subsequent hearing.
After a jury determines that the plaintiff has proven that the defendant’s actions were despicable and amounted to malice, oppression or fraud, then it can calculate punitive damages. Any punitive damages award must bear a reasonable relation to the injury and not be unreasonably excessive.
However, the wealth of the defendant does play a part so that the wealthier the defendant, the higher the punitive damages may be. After all, the purpose of punitive damages is not only to punish the defendant for its outrageously harmful conduct, but to deter it from similar future conduct. A small award will not act as a deterrence.
Any punitive damages award is subject to the jury’s determination and discretion7. A jury considering punitive damages is instructed to examine:
- The reprehensibility of the defendant’s conduct
- The amount of punitive damages will deter the defendant in light of its financial condition
Also, a jury can be asked to consider that the damages awarded bear a reasonable relation to the injury or harm suffered by the plaintiff.
Of course, the defendant’s financial condition plays a part and the defendant’s wealth is an essential part of what a jury should consider8. However, the California courts are generally reluctant to affirm awards that are more than 10% of the defendant’s net worth9.
Though some courts may approve an award that is slightly higher, it will do so long as the award is not likely to bankrupt the defendant or cause undue hardship “so as to render his punishment disproportionate to his ability to pay”10.
Evidence of the defendant’s net worth is not an essential factor in a court’s decision on whether to uphold a punitive damages award11. Net worth is not necessarily a true measure of one’s financial condition and is not the only measure of a defendant’s wealth for purposes of awarding punitive damages.
A plaintiff considering punitive damages from a wealthy defendant should be wary of the defendant manipulating financial statements or other documents that seek to hide or minimize assets that are subject to judgment.
A punitive damages award cannot be unreasonably excessive or vastly out of proportion to the actual damages suffered by the plaintiff and must bear a reasonable relation to those damages12. So, the amount to be awarded by the jury must not only consider the defendant’s financial condition but also the amount of actual damages or the harm that occurred.
California courts have used different ratios that in some cases appear excessive or are more than the 10% threshold used when considering the defendant’s financial condition. In one case, the court affirmed an award that was 74 times the actual damages13.
However, if the net worth of the defendant is very low, then an award that imposes an undue hardship, even one that is only a few times the value of the plaintiff’s actual damages, may likely not be upheld14.
Punitive damages in personal injury cases are the exception and not the norm. The defendant’s conduct must be especially outrageous or despicable and fit within one of the categories of malice, oppression, or fraud.
If the individual is not wealthy or lacks substantial personal assets, then an award of punitive damages is probably more of a symbolic victory since no insurance company will cover such damages and collection of the award from the defendant can be difficult, expensive and take years if pursued. It is in cases where there is a corporate defendant, a celebrity, or other high net worth individual where such awards are more likely to be collectable.
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- Civil Code § 3294(c). [↩]
- Dyna-Med, Inc. v. FEHC (1987) 43 Cal. App. 3d 1379, 1387 [↩]
- Kaye v. Mount La Jolla Homeowners Ass’n (1988) 204 Cal. App. 3d 1476, 1493 [↩]
- Taylor v. Superior Court of Los Angeles (1979) 24 Cal. App.3d 890 [↩]
- Pfeifer v. John Crane, Inc. (2013) 220 Cal.App.4th 1270, 1299 [↩]
- College Hospital, Inc. v. Superior Court (1994) 8 Cal App.4th 704, 725 [↩]
- McAllister v. South Coast Air Quality Management Dist. (1986) 183 Cal.App.3d 653, 659 [↩]
- Las Palmas Assocs. V. Las Palmas Center Assocs (1991) 235 Cal. App.3d 1220, 1243 [↩]
- Storage Servs v. Oosterbaan (1989) 214 Cal.App.3d 498, 515 [↩]
- Weeks v. Baker & McKenzie (1998) 63 Cal App.4th 1128. 1167 [↩]
- Cummings Med. Corp. v. Occupational Med. Corp. (1992) 10 Cal. App.4th 1291, 1298 [↩]
- BMW, Inc. v. Gore (1996) 517 US 559 [↩]
- Neal v. Farmers Ins. Exchange (1978) 21 Cal.App.3d 910, 929 [↩]
- Storage Servs, supra, 214 Cal.App.3d at 514 [↩]