Within the past 15 years or so, the U.S. Supreme Court has issued several opinions setting out restrictions on punitive damages. Because punitive damages can be viewed as a taking of property, they implicate the Due Process Clause of the U. S. Constitution. The first of these cases, and perhaps the most interesting, was BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996). Dr. Ira Gore purchased what he thought was a brand new BMW, only to find out months later that the vehicle had been damaged slightly when being transported, and had been repaired and repainted prior to its delivery to him. He was not told about the repairs, and only learned the vehicle had been repainted months after the transaction. BMW had an internal policy of selling those vehicles as new without informing the dealer or purchaser, when the cost to repair was less than 3% of the value of the vehicle. The paint job on the Gore vehicle cost less than $1,000. Nonetheless, an Alabama jury found that BMW had engaged in fraud and awarded Dr. Gore $4,000 in compensatory damages, and $4,000,000 in punitive damages. Though the Alabama Supreme Court later reduced the amount to $2,000,000, even that number was a bit too breathtaking for the U. S. Supreme Court. In sending the case back to the Alabama courts, the Supreme Court issued several guidelines for all states to follow on the issue of punitive damages. The court held that such an award must bear a relationship to the nature of the conduct, must bear some reasonable ratio to the amount of compensatory damages (here the ratio was 1,000:1!), and take into account existing state civil and criminal penalties for similar conduct. In subsequent cases, the Supreme Court has held that only in extraordinary cases will punitive damages exceeding double digit ratios to compensatory damages be considered appropriate. More…

Periodically, a client will ask about punitive damages. The topic often arises in situations where the other party’s negligence had the potential to create much greater harm than actually occurred. Example:  A company’s defectively designed product which could have caused death or serious injury did not, but only due to sheer luck. The client learns that they are not entitled to recover for an injury that could have occurred, only for what did occur. Most clients accept this, but are genuinely concerned that something worse does not happen to someone else. This sometimes leads to questions about punitive damages.

Punitive damages are distinct from compensatory damages, which are awarded to compensate the injured party for his/ her losses. Punitive damages cannot be awarded without some recovery for compensatory damages. They are assessed in addition to compensatory damages as an expression of a jury’s outrage over the conduct of the defendant. However, ordinary negligence, even gross negligence, will not result in recovery of punitive damages. More…

New York Public Health Law §2801-d provides a statutory remedy to nursing home patients for injuries suffered as a result of the deprivation of certain rights or benefits granted by contract, or by applicable federal and state law. The statute mandates an award of compensatory damages of no less than twenty-five percent of the nursing facility’s daily rate for each day the patient’s injury exists. In addition, it provides for punitive damages and attorneys’ fees in appropriate circumstances.

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