I am an American law student attending Syracuse University School of Law in Syracuse, New York. I have been working with the firm for the past several weeks as part of an externship. While working abroad, I have noticed many similarities between US and UK law, as US law is largely descended from British law, and also some differences, and the issue of punitive damages has intrigued me.
Punitive Damages Generally
The topic of punitive damages is one which always seems to foster conversation and debate. It is debated whether these awards are excessive, fair, unconstitutional, effective, outrageous, or any other adjective one may choose. In the United States, where punitive damages are more freely given, these damages contribute to the “litigation happy” civil suit culture perception. This is perhaps unfair, as studies have shown that under 2% of US civil cases result in an award of punitive damages, and the average award is thought to be in the range of $38,000 to $60,000 when the penalty is given. In the United Kingdom, punitive damages are even rarer and are given only in three situations. These 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.
Three Potential Benefits of Punitive Damages
Punitive damages may be useful in several ways. First, they could deter a company or an individual from gross negligence and from cutting corners. They provide an incentive for companies to make products which are safe for their consumers to use. The possibility of large monetary penalties can be useful in the attempt to ensure public safety against defective products and services.
Second, there is a punishment function to punitive damages. Companies and individuals who cause harm by way of intent or gross negligence should be punished to ensure that future incidents do not occur. Smaller awards may be able to be absorbed by companies and written off as though they are simply the cost of doing business. The possibility of larger awards eliminate this line of thought and ensure that companies who engage in this behaviour are punished accordingly.
Third, there is a compensatory function to punitive damages. Often an award of compensatory damages is not sufficient to make a person whole again. Punitive damages can serve to assist in compensating intangible harm.
Limiting Punitive Damages
Punitive awards are often excessive and is the primary reason why they are not more widely accepted by jurisdictions. A way in which this could be resolved is by means of statutes which limit the maximum range of punitive damages available for award by a judge or jury. For instance, in the United States, the Supreme Court has relatively recently ruled that a ratio of 4:1 of punitive damages to compensatory damages is generally the ceiling of a punitive award, and awards which exceed a 10:1 ratio are almost certainly in violation of the US Constitution. Only in cases where terrible harm is inflicted knowingly or with intent will punitive awards be allowed to exceed this. Not only could there be a general cap on the amount of the award, but there could be a rule in place which prevents the claimant from being unjustly enriched by these types of awards.
A rule which states that a claimant is not permitted to receive a total of more than twice his compensatory damages in punitive damages could prevent outrageous awards. Any excess money could be either donated to charity or to the general state fund. This could allow punitive awards while preventing unjust enrichment. Also, there could be an increased burden of proof over what is typically required when deciding whether to award punitive damages.
There may be a place in the justice system for punitive damages, but there must be careful thought put into the application of this type of award/punishment so that true justice may be achieved.
Submitted by Justin Van De Bos
