CHAPTER 9 PUNITIVE DAMAGES IN EACH STATE

• Jurisdiction: United States
• Publication year: 2018

Punitive damages are authorized in almost every state. The following are how each state, Guam, and the U.S. Virgin Islands deal with punitive damages.

Alaska

Alaska authorizes the award of punitive damages and, by statute, gives 50% of the punitive damages to the state. Plaintiffs argued to the Alaska Supreme Court, unsuccessfully, that giving 50% of the punitive damages to the state was an unlawful taking of the plaintiff's property.¹ Reust v. Alaska Petroleum Contractors, Inc., 127 P.3d 807 (Alaska 2005), held that "although a plaintiff may have enough evidence to support the underlying cause of action by a preponderance of the evidence, the plaintiff is required to further establish outrageous conduct on the part of the defendant by clear and convincing evidence before punitive damages are justified."²

Punitive damages against the State may not be awarded unless there is express and specific statutory authorization.³

Alabama

Section 6-11-21, Ala. Code 1975, before it was rewritten by Act No. 99-358, Ala. Acts 1999, provided that "[a]n award of punitive damages shall not exceed $250,000, unless it is based upon . . . [a] pattern or practice of intentional wrongful conduct, even though the damage or injury was inflicted only on the plaintiff." In Henderson v. Alabama Power Co., 627 So. 2d 878 (Ala. 1993), the Alabama Supreme Court held that the $250,000 cap on punitive damages in § 6-11-21 was unconstitutional. Limitations on punitive damages are based, in Alabama, on the decisions of the U.S. Supreme Court.⁴

Arkansas

Punitive damages are justified in Arkansas, according to the Supreme Court of Arkansas:

[o]nly where the evidence indicates that the defendant acted wantonly in causing the injury or with such a conscious indifference to the consequences that malice may be inferred. In other words, in order to support this element of damages by way of punishment, it must appear that the negligent party knew, or had reason to believe, that his act of negligence was about to inflict injury, and that he continued in his course with a conscious indifference to the consequences, from which malice may be inferred. In order to warrant a submission of the question of punitive damages, there must be an element of willfulness or such reckless conduct on the part of the defendant as is equivalent thereto. ⁵

Arizona

In Arizona, to recover punitive damages, a plaintiff must prove by clear and convincing evidence that a "defendant's wrongful conduct was guided by evil motives or willful or wanton disregard of the interests of others."⁶ Punitive damages serve to punish wrongdoers and deter others from engaging in similar conduct.⁷ However, a lawsuit for punitive damages may not proceed once the cause of action for actual damages has been extinguished. Actual damages are necessary to support punitive damages.⁸

The Arizona Supreme Court found that even election of an equitable remedy—rescission—does not prevent a plaintiff from recovering punitive damages.⁹ The critical inquiry faced by the Arizona Supreme Court is whether such an award is appropriate to penalize a party for "outwardly aggravated, outrageous, malicious, or fraudulent conduct" that is coupled with an "evil mind." If it is, punitive damages should be available to allow the imposition of a remedy appropriate to punish the wrongful act and to remedy the injury caused.

California

The right to punitive damages in California is statutory. California Civil Code § 3294(a) authorizes an award of punitive damages "[in] an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, . . . for the sake of example and by way of punishing the defendant."

The court in [ Simon v. San Paolo U.S. Holding Co., Inc ., 35 Cal. 4th 1159 (2005)] explained that "while wealth cannot substitute for the high court's guideposts in limiting awards, and cannot alone justify a high award, the guideposts were not intended ‘to prevent juries from levying awards that serve important state interests and provide a meaningful deterrent against corporate misconduct.'" ¹⁰

The court found that an award of punitive damages 3.1 times compensatory damages was within due process guidelines and based on the reprehensibility of the defendant's conduct and its wealth.

In a leading California Supreme Court decision on punitive damages the court, upholding the right to such damages, found in a manner that seemed to see into the future decisions of the U.S. Supreme Court, said:

[w]e observe first that the award of punitive damages is more than 40 times larger than the not-insubstantial assessment of $123,600 in compensatory damages against Mutual. In addition, the punitive damage figure herein represents two and one-half months of Mutual's entire net income in 1973, and more than seven months of such income in 1974. Viewing the record as a whole and in the light most favorable to the judgments, we conclude that in these circumstances the punitive damage award against Mutual must be deemed the result of passion and prejudice on the part of the jurors and excessive as a matter of law. ¹¹

Contrary to the number of punitive damages cases tried and the number brought up on appeal, it appears that the California Supreme Court's comment that "the law does not favor punitive damages, granting them only in the most outrageous cases"¹² is wrong.

Colorado

Punitive damages, and even treble punitive damages, are available in tort and contract actions under some circumstances by statute that provides:

(1)(a) In all civil actions in which damages are assessed by a jury for a wrong done to the person or to personal or real property, and the injury complained of is attended by circumstances of fraud, malice, or willful and wanton conduct, the jury, in addition to the actual damages sustained by such party, may award him reasonable exemplary damages. The amount of such reasonable exemplary damages shall not exceed an amount which is equal to the amount of the actual damages awarded to the injured party. . . (3) Notwithstanding the provisions of subsection (1) of this section, the court may increase any award of exemplary damages, to a sum not to exceed three times the amount of actual damages, if it is shown that: . . . (b) The defendant has acted in a willful and wanton manner during the pendency of the action in a manner which has further aggravated the damages of the plaintiff when the defendant knew or should have known such action would produce aggravation. ¹³

Bad faith breach of an insurance contract is such an action.¹⁴ In Coors v. Security Life of Denver Ins. Co., the Colorado Supreme Court found that a punitive damage award of one times the compensatory award was permissible.

In Hensley v. Tri-QSI Denver Corp., 98 P.3d 965 (Colo. App. 2004), the Court of Appeals reversed a finding of punitive damages because a Colorado statute also provides:

Under § 13-21-102(2) and (3), C.R.S. 2003, the trial court has discretion . . . [and] "may increase any award of exemplary damages, to a sum not to exceed three times the amount of actual damages. . . ."

Connecticut

To furnish a basis for recovery of punitive damages in Connecticut, the pleadings must allege and the evidence must establish that the defendant acted wantonly or the defendant's conduct was willful and malicious misconduct.¹⁵ Punitive damages are "a remedy awarded only when the evidence shows reckless, intentional or wanton violation of the rights of others." Wrongful conduct that is not malicious is not an appropriate basis for an award of punitive damages.¹⁶

There is no vicarious liability for punitive damages.¹⁷ The owner of a motor vehicle, therefore, is not vicariously liable for punitive damages resulting from the driver's reckless operation of the vehicle.¹⁸

Punitive damages awarded by a private arbitrator are not bound by due process concerns or statutory limitations.¹⁹

Connecticut does not have a well-defined public policy against the award of excessive punitive damages and that, "because an arbitration award does not constitute state action and is not converted into state action by the trial court's confirmation of that award, an arbitration panel's award of punitive damages does not implicate the due process clause, regardless of how excessive the award may be." Thus, we determined, the [BMW of N. Am., Inc. v. Gore, 517 U. S. 559 (1996)] analysis was inapplicable to the punitive damages award. ²⁰

District of Columbia

Punitive damages are allowed but must comport with the findings of the U.S. Supreme Court in cases like State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003). The District of Columbia Courts recognize that the U.S. Supreme Court has failed "to identify concrete constitutional limits on the ratio between harm, or potential harm, to the plaintiff and the punitive damages award." In Daka, Inc. v. McCrae, 839 A.2d 682 (D.C. 2003), the D.C. Court of Appeals applied the U.S. Supreme Court decisions and reversed as excessive a punitive damages award of $4,812,500 with a finding of only $187,500 in compensatory damages.

There has been some uncertainty in District of Columbia decisions over the years as to whether any award of compensatory damages is required before punitive damages may be imposed. Setting to rest the uncertainty, the court stated: "[T]he principle we derive [from our past decisions] is that, before punitive damages may be awarded, there must be a basis in the record for an award of actual damages, even if nominal."²¹

Delaware

[Delaware] case law recognizes that punitive damages can be awarded both to punish the defendant and to deter others for similar conduct. Because punitive damages traditionally served as civil penalties to substitute for criminal prosecution, [a jury in Delaware is] permitted to consider the amount of punishment the defendant has already received in the

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