What are punitive damages?

Most people are familiar with punitive damages even if they don’t know what the term means. Punitive damages are the reason for the large dollar values in many of the jury verdicts people hear about on the news. What is not well publicized is that they are but very rarely awarded and often don’t hold up on appeal (i.e. the McDonald’s coffee case).

The purpose of punitive damages are to punish a Defendant for willfully acting in a negligent manner. Punitive damages may be awarded if a judge or jury determines that the injuries of the plaintiff were caused by a Defendant’s negligence AND that the Defendant showed a complete indifference or conscious disregard for the safety of others.“[A]n act or omission, though properly characterized as negligent, may manifest such reckless indifference to the rights of others that the law will imply that an injury resulting from it was intentionally inflicted.” (Hoover’s Dairy Inc. v. Mid-America Dairymen, 700 S.W.2d 426 at 435). “In this context, ‘reckless’ connotes an indifference to whether or not wrong or injury is done.” Oyler v. Hy-Vee, Inc., 539 S.W.3d 742, 746 (Mo. App. W.D. 2017).

According to RSMO 510.265, no award of punitive damages against any Defendant shall exceed the greater of 1.) five-hundred thousand dollars; or 2.) Five times the net amount of the judgment awarded to the plaintiff against the Defendant.

According to RSMO 537.675, the State of Missouri shall have a lien for half the punitive damages final judgment. The State is to use these funds to fund the Tort Victims’ Compensation Fund. The State’s lien can only be paid once attorney’s fees are deducted and only applies if the case is tried. The State of Missouri does not have a lien on any case where punitive damages are factored into any pre-trial settlement or through mediation.

All actions tried before a jury involving punitive damages shall be conducted in a bifurcated trial before the same jury if requested by either party. The first stage of the trial the jury will determine liability for compensatory damages, the amount, and the liability of a Defendant for punitive damages. Evidence of Defendant’s financial condition shall not be admissible in the first stage of trial unless admissible for a purpose other than punitive damages.

The jury will determine the amount of punitive damages to be awarded in the second stage of the trial. Evidence of a Defendant’s net worth shall be admissible during the second stage of the trial.

There are currently tort reform efforts in every state seeking to severely limit or eliminate punitive damages. Pro-tort reform advocates find it easy to get support from the public for these bills because the public usually only hears about large verdicts in the news. This lends to the perception that any overly litigious person can get a large settlement if they are only greedy enough.

The truth is that punitive damages play an important role in society by providing a civil remedy that can be used to punish bad actors, whether they are individuals or corporations, by forcing them to pay for socially unacceptable and dangerous behavior. If a car company knowingly makes unsafe cars that they know could be made safer by spending a little more money, the public would be outraged. The way to punish them for this is by assessing punitive damages that would prevent them from engaging in this type of behavior again.

The history of America is full of progress. While we do not live in a perfect world today, we do live in a much better one than existed when corporations first came into existence in the 1800s. Unchecked, corporations would take dangerous shortcuts in order to maximize profit that put many in danger. A good example of this is textile manufacturing, where overcrowding and factory designs meant to maximize profit often lead to fires that would kill all the workers inside. Tools in the civil justice system like punitive damages allowed the public to become safer by making it less expensive for companies to implement safety methods than to try and only maximize profits.  

Corporations in virtually every industry have been forced to spend additional many to make the products they sell and the people that work for them safer, even if this means they must cut into profits. If it weren’t for important checks on corporate power from civil remedies like punitive damages, this progress may have never occurred.

I think we should think twice about capping punitive damages. Our future generations will thank us.  

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