Punitive damages
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Punitive damages (termed exemplary damages in the United Kingdom) are damages
not awarded in order to compensate the plaintiff, but in order to reform or deter the
defendant and similar persons from pursuing a course of action such as that which
damaged the plaintiff.
Punitive damages are often awarded where compensatory damages are deemed an
inadequate remedy. They may be rationalized as preventing under-compensation of
plaintiffs, allowing redress for undetectable torts and taking some strain away from the
criminal justice system.[1]
Because they usually compensate the plaintiff in excess of the plaintiff's provable
injuries, punitive damages are awarded only in special cases, usually under tort law,
where the defendant's conduct was egregiously invidious. Punitive damages cannot
generally be awarded in contract disputes.
Contents
[hide]
• 1 National applications
o 1.1 United Kingdom and Commonwealth
o 1.2 United States
o 1.3 Japan
• 2 See also
• 3 References
[edit] National applications
[edit] United Kingdom and Commonwealth
In England and Wales, exemplary damages are limited to the circumstances set out by
Lord Patrick Devlin in the leading case of Rookes v Barnard.[2] They are:
1. Oppressive, arbitrary or unconstitutional actions by the servants of government.
2. Where the defendant's conduct was 'calculated' to make a profit for himself.
3. Where a statute expressly authorises the same.
Rookes v Barnard has been much criticised and has not been followed in Canada or
Australia or by the Privy Council.[3]
Another case, that could arguably be seen as an example of punitive damages, was that
of Attorney-General v Blake[4] in which the defendant profited from publishing a book
detailing his work for MI5. The details were very old and therefore did not cause loss to
the state. The publishing was however in breach of the contract of employment (and
incidently criminally in breach of the Official Secrets Act 1911). He was required to
give an account of his profits gained from writing the book.
The courts have been very reluctant to follow this approach,[5] emphasising the
materiality of the criminal element required for these damages to be considered.
[edit] United States
Punitive damages are a settled principle of common law in the United States.[6] They are
a matter of state law, and thus differ in application from state to state. In many states,
including California and Texas, punitive damages are determined based on statute;
elsewhere, they may be determined solely based on case law. Many state statutes are the
result of insurance industry lobbying to impose "caps" on punitive damages; however,
several state courts have struck down these statutory caps as unconstitutional.[7]
Punitive damages are a focal point of the "tort reform" debate in the United States,
where numerous highly-publicized multi-million dollar verdicts have led to a fairly
common perception that punitive damage awards tend to be excessive. However,
statistical studies by law professors and the Department of Justice have found that
punitive damages are only awarded in two percent of civil cases which go to trial, and
that the median punitive damage award is between $38,000 and $50,000.[7]
In response to judges and juries which award high punitive damages verdicts, the
Supreme Court of the United States has made several decisions which limit awards of
punitive damages through the due process of law clauses of the Fifth and Fourteenth
Amendments to the United States Constitution. In a number of cases, the Court has
indicated that a 4:1 ratio between punitive and compensatory damages is broad enough
to lead to a finding of constitutional impropriety, and that any ratio of 10:1 or higher is
almost certainly unconstitutional.
In BMW of North America, Inc. v. Gore (1996), the Court ruled that punitive damages
must be reasonable, as determined based on the degree of reprehensibility of the
conduct, the ratio of punitive damages to compensatory damages, and any criminal or
civil penalties applicable to the conduct. In State Farm Auto. Ins. v. Campbell (2003),
the Court held that punitive damages may only be based on the acts of the defendants
which harmed the plaintiffs.
Most recently, in Philip Morris USA v. Williams (2007), the Court ruled that punitive
damage awards must be limited to the harm caused to the individual plaintiffs involved
in the litigation at hand, although harm to others may be a criterion in determining the
reprehensibility of the defendants' conduct.
[edit] Japan
Japanese courts do not award punitive damages as a matter of public policy, and
Japanese law prohibits the enforcement of punitive damage awards obtained overseas.[8]
[edit] See also
• Non-economic damages caps
[edit] References
1. ^ See Kemezy v. Peters, 79 F.3d 33 (7th Cir. 1996) (Posner, J.)
2. ^ [1964] AC 1129, [1964] 1 All ER 367.
3. ^ See Australian Consolidated Press Ltd v Uren (1967) 117 CLR 221, where the
Privy Council upheld the Australian rejection of Rookes v Barnard
4. ^ [2001] 1 AC 268
5. ^ see, for example Experience Hendrix LLC v PPX Enterprises Inc [2003]
EWCA Civ 323.
6. ^ See Grimshaw v. Ford Motor Co. (Ford Pinto Case), 174 Cal. Rptr. 348 (Cal.
Ct. App. 1981) (Tamura, J.), subhead VI.
7. ^ a b Douglas Laycock, Modern American Remedies (Aspen, 2002), p. 732-736.
8. ^ General Act Related to the Application of Laws (法の適用に関する通則法)
§ 22(2) (2006) ("Should a tort be governed by the law of a foreign state, even if
the facts to which the law of such foreign state apply constitute a violation of the
laws of such foreign state and of the laws of Japan, the victim may not claim any
compensation or other disposition other than that recognized under the laws of
Japan."). This was predated by the judgment of the Supreme Court of July 11,
1997, 51-6 Minshu 2573, and other precedents.
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