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How are Punitive Damages Determined?

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Punitive damages are awarded in addition to actual damages in certain circumstances. Punitive damages are considered punishment and are typically awarded at the court’s discretion when the defendant’s behavior is found to be especially harmful.

Punitive damages are usually imposed to make an example of the negligent party to deter others from behaving in the same fashion or committing similar wrongful behavior. The intent and purposes of punitive damages imposed on a defendant is not designed to compensate the plaintiff, however, the plaintiff will receive the monetary award. If punitive damages are ordered by a court, they are essentially punishing the defendant, who must pay the amount of money designated and give it to the plaintiff.

What Are Punitive Damages?

Punitive damages, or exemplary damages, are damages assessed in order to punish the defendant for outrageous conduct and/or to reform or deter the defendant and others from engaging in conduct similar to that which formed the basis of the lawsuit. Although the purpose of punitive damages is not to compensate the plaintiff, the plaintiff will receive all or some of the punitive damages award.

Punitive damages are often awarded if compensatory damages are deemed an inadequate remedy. The court may impose them to prevent under compensation of plaintiffs and to allow redress for undetectable torts and taking some strain away from the criminal justice system. Punitive damages are most important for violations of the law that are hard to detect.

Because they are usually paid in excess of the plaintiff’s provable injuries, punitive damages are awarded only in special cases, usually under tort law, if the defendant’s conduct was egregiously insidious. Punitive damages cannot generally be awarded in contract disputes. The main exception is in insurance bad faith cases in the US if the insurer’s breach of contract is alleged to be so egregious as to amount to a breach of the “implied covenant of good faith and fair dealing”, and is therefore considered to be a tort cause of action eligible for punitive damages (in excess of the value of the insurance policy).

Here is an article to read more about punitive damages.

Types of Punitive Damages

Punitive damages are usually only awarded in cases brought under tort law, such as personal injury or medical malpractice cases. However, as previously mentioned, in some cases, punitive damages are awarded in insurance bad faith cases that arise under an insurance policy.

Punitive damages might also be appropriate in a premises liability case when an apartment complex knows that the gate to an otherwise unguarded swimming pool is broken and fails to fix it even though management is aware of numerous toddlers in the complex. Similarly, punitive damages might be appropriate when someone with three prior DUI convictions drives drunk on a suspended license and kills another person.

How Punitive Damages Work

Punitive damages are awarded in a small number of cases, but if they are awarded, they relate to personal injury cases. These usually involve cases where the plaintiff is injured or suffers losses due to the defendant’s extremely reckless or negligent behavior. They are also issued in cases involving intentional acts that injure the plaintiff, such as a civil battery case.

Punitive damages cannot be issued alone; instead, they are awarded in addition to compensatory damages (damages to compensate the victim, or to the injured party back into the position he or she was before the injury). Punitive damages are not a “given”.

In the movie Erin Brockovich, it was discovered that PG&E dumped poisonous chemicals into the town’s drinking water that made hundreds of residents of the town very ill. A jury found that PG&E should pay $333 million in compensatory and punitive damages to the people they made sick.

Here is an article for more information on how punitive damages work.

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Examples of Punitive Damages

Examples of conduct that usually result in punitive damages may include:

  • Extreme negligence in a medical malpractice case, such as performing the wrong surgery or leaving a surgical implement in the patient’s body.
  • Conduct that is extremely dangerous and exposes the public to a high degree or harm (such as taking out a weapon in a crowded place).
  • Conduct that displays an extreme disregard for laws and statutes (such as driving at speeds well above the limit in crowded areas.)

Punitive damages awards may be issued for injuries that are caused either intentionally, or that result from negligence. If a person acts negligently and should have known their acts would result in substantial harm, they can be liable for punitive damages. Personal injury lawsuits that commonly result in punitive damages include auto accidents, medical malpractice suites, assault/battery, drunk driving accidents and defamation.

Compensatory vs. Punitive Damages

Compensatory damages awarded to plaintiff’s are designed to give justice to them after being wronged. Punitive damages are designed to prevent others from being hurt by the same or similar actions.

Where punitive damages are involved, the defendant is usually a company or other large entity. Examples would be medical malpractice cases or product liability cases.

Compensatory damages are designed to compensate plaintiffs for the actual losses they’ve experienced. This type of award can be to reimburse them for medical treatments, medical bills, or any future expenses they may have due to an injury they sustained due to the negligence of another person or entity. These are typically referred to as actual damages.

When a court orders compensatory damages to a plaintiff, there are two different types awards that can be given:

Special Damages

Special damages are awards that are tangible and easy to calculate because they are based on actual expenses the victim has incurred due to an injury caused by an incident, including but not limited to car and truck accidents. In addition to medical expenses, victims can receive compensation for lost wages, property damages, or out-of-pocket court and litigation costs relating to the negligence.

The amount awarded to a plaintiff is pretty cut and dry because these losses can be easily proven and are backed up by physical evidence.

General Damages

General damages are harder to calculate because they are subjective. In personal injury cases, the immediate losses can be apparent, but the long-term effects are often not visible. There is emotional distress, pain and suffering, PTSD, disfigurement, shortened life expectancy, and any long-term medical care and treatments for injuries that time to emerge (i.e. concussions or traumatic brain injuries). Even an injury such as defamation can be considered as qualifying for general damages.

Punitive damages are not fixed by law. The judge or jury may award at its discretion whatever sum is believed necessary to redress the wrong or deter like conduct in the future. Litigation lawyers can help you seek punitive damages if the situation warrants it.

If awarded by the courts, the plaintiff in a case is supposed to receive the punitive damages. However, punitive damages are meant to serve as a punishment to the defendant, rather than an award to the plaintiff.

To determine the amount of punitive damages to award, the Book of Approved Jury Instructions (BAJI) states that the jury should consider: (1) The reprehensibility of the conduct of the defendant. (2) The defendant’s financial condition and (3) the relationship to actual damages.


ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.


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