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What Are Punitive Damages?

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In most civil lawsuits for personal injury, the injured person’s damages are limited to economic damages (lost wages and medical expenses) and general damages (pain and suffering). The jury is usually not allowed to award punitive damages.

Punitive damages are damages designed to punish the wrongdoer for extreme conduct. Punitive damages are also designed to deter similar conduct in the future. Punitive damages are not designed to compensate the injured person.

So when is an injured person entitled to ask the jury to consider punitive damages? Punitive damages may be awarded when the defendant’s conduct that harmed the plaintiff is found by clear and convincing evidence to be malicious, oppressive or fraudulent. “Malice” means the defendant intended to cause injury. “Oppression” means that the defendant’s conduct was so despicable and subjected the plaintiff to cruel and unjust hardship in knowing disregard of the plaintiff’s rights. “Despicable conduct” is conduct that is so vile, base, or contemptible that it would be looked down on and despised by reasonable people. (California Civil Jury Instructions 3948)

Cleary, what constitutes conduct that would subject a defendant to punitive damages is left up to the jury. This raises significant risk to a defendant when the plaintiff pleads punitive damages in his or her complaint. Much of this risk has to do with the fact that punitive damages are not covered by insurance. So, even if the defendant has insurance coverage for negligent conduct, if the just finds that the conduct warrants a finding of punitive damages, he or she will be liable for those damages out of his own pocket.

This conflict often places the insurance company and the defendant in a conflict. The defendant’s interests are best served by his insurance company settling the case before trial. However, the insurance company may not want to pay the demand, or may think the plaintiff’s case is without merit. Many times defendants facing punitive damages will hire private counsel to advise them and put pressure on the insurance company to settle the case.

Good personal injury lawyers will know how to leverage this conflict to obtain the best possible result for the client.

How much can the jury award for punitive damages? It depends. Three factors are typically considered. First, the nature of the plaintiff’s harm must be considered. Second, the financial condition of the defendant is assessed. Finally, the jury looks at the nature of the defendant’s conduct. The greater the harm, and the more despicable the conduct, the higher the punitive damages award is likely to be.

But, there are limits on the amount that can be awarded. First, the financial condition of the defendant must be considered. These sorts of damages are meant to punish and deter conduct. If an individual defendant with limited assets is assessed punitive damages in the amount of $100,000, it is likely to be a painful punishment and a real deterrent. On the other hand, if a large multi-national corporation was assessed punitive damages of $100,000, there would be no adverse effect at all.

Also, there must be a reasonable relationship between the harm and the amount of damages. If the plaintiff’s damages are only $10,000, a punitive damages award of $1,000,000 is not likely to be upheld by the judge. Case law on this subject has evolved over time, but typically lawyers use a baseline of 10 times the compensatory damages amount for punitive damages.

There are other statutory claims that carry punitive damages, such as the Drug Dealer Liability Act.

It is always best to consult with an experienced lawyer if you believe you or a loved one has been injured by the extreme conduct of a third party. At Ernst Law Group, we have decades of litigation experience, including assessment of punitive damages. If you have been injured in San Luis Obispo due to someone else’s actions or negligence, call us at (805) 541-0300 for a free, no-obligation consultation.

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