02 April 2008

Punitive Damages In California

A study of punitive damages in California from 1991-2000, a decade, located 489 punitive damages awards in state and federal courts combined. A general description of the cases shows that (citations omitted):

In slightly over half of the cases, the punitive award is equal to or less than the compensatory award. However, in the remaining cases, the punitive award is substantially larger than the compensatory award, and in a small number of cases, the punitive award is extremely large compared to the compensatory award.

There is a distinctive set of “high punitive damage cases” (“HPDCs”) where the average punitive awards and the ratio between the punitive and compensatory awards are substantially greater than in non-HPDC cases. The set of HPDCs is limited to four causes of action: product liability, insurance bad faith, unfair competition and trespass/nuisance.

Pain and suffering awards are considered compensatory and not punitive in this context.

The data set was dominanted by about 90 actions of the four "high punitive damages cases types." Given their relative populations, these are the kinds of cases that would be expected to arise in Colorado about once per year on average. They don't, however, because Colorado law disallows large punitive damage awards in most cases of this type.

By type, the ratio of punitive damages to compensatory damages was:

---------------------Median Mean
Product Liability-----0.40 31.04 (n=11)
Insurance Bad Faith---6.60 7.53 (n=53)
Unfair Competition----0.62 4.14 (n=17)
Trespass / Nuisance---1.89 3.54 (n=9)
Wrongful Termination--0.76 3.36 (n=79)
Fraud-----------------0.98 2.89 (n=104)
Malicious Prosecution-0.89 1.19 (n=15)
Other-----------------0.67 1.09 (n=145)1
Landlord/Tenant-------0.35 0.87 (n=16)
Intentional Torts-----0.37 0.90 (n=19)
Civil Rights----------0.34 0.11 (n=21)

The results were very similar even with high and low outlier cases removed from consideration.

About 69% of the punitive damages awarded in the entire decade of 1991-2000 in state and federal courts combined came in just 11 product liability lawsuits, and the large disparity between the median and the mean in that category suggest that a mere five product liability suits produced the lion's share of liability.

The vast majority of civil jury trials in California during that time period, of course, either resulted in a defense verdict or an award for the Plaintiff that included no punitive damages.

1 The “other” category includes the following types of cases: medical and professional malpractice, vehicle negligence, premises liability, breach of fiduciary duty, employee solicitation, arson, foreclosure, wrongful death, breach of contract, construction defect, false arrest, false imprisonment, dog bite, defamation, invasion of privacy, conversion, negligence, partnership dissolution, intellectual property, elder abuse neglect, trade secret misappropriation, maritime, and intentional infliction of emotional distress.

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