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Law Outlines Modern American Remedies 4th Ed. Laycock Outlines

Punitive Damages Outline

Updated Punitive Damages Notes

Modern American Remedies 4th Ed. Laycock Outlines

Modern American Remedies 4th Ed. Laycock

Approximately 64 pages

This is an outline for Remedies and the book "Modern American Remedies" 4th Edition by Douglas Laycock. I am at UVA Law and Laycock was my professor, this outline encompasses both his lectures and his book....

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Punitive Damages

Why are Punitive Damages Needed? Why Don’t Compensatories Provide Sufficient Deterrence?:

  • Because, sometimes the law systematically underestimates damages

    • Ex. emotional distress now generally compensable in intentional torts, but hard to measure, and outrageous conduct sometimes inflicts immeasurable harm:

      • Environmental harm in Exxon, because of economic loss rule or because it was not yet provable at trial

      • Cultural harm

      • Severe emotional distress

Size of Punitive Damage Awards:

  • Although PD awards have increased over time, median PD:CD ratio has remained less than 1:1 (spread is great though, and outlier cases subject defendants to punitives many times the compensatories

  • The large mean/median pun:comp ratios and standard deviations are with the SMALL verdicts, and nobody cares about the small verdicts. It makes sense that the multiplier would be larger when compensatories are <$1000.

Punitive Damages: Common Law & Statute

Punitive Damages: Measured neither by Plaintiff’s rightful position nor by Defendant’s – in fact, are not focused on Plaintiff at all. Punitive damages are aimed squarely at the defendant and used for DETERRENCE.

  • Rule: When are punitive damages appropriate?

    • No clear cut rule, but all of the rules usually accompany words like “fraud”; “malice”; “oppression”; “willful”; “wonton”; “outrageous”; “gross”

    • Maine Court uses “likely knew or ought to have known . . . that his conduct would naturally or probably result in injury, and that he continued such conduct in reckless disregard of the consequences from which malice could be inferred.”

  • Cost-benefit analysis that seems egregious will likely lead to punitive damages [Pinto Case]

    • Econ liability theorists would disagree, but the implicit standard seems to be something like feasibility: juries are allowed to impose punitive damages when defendants knowingly or reckless allow serious injuries to happen that could have been prevented at an affordable cost [regardless of if CB analysis would say the precaution was not “cost justified”

  • Punitive Damage wards thought to be justifiable when:

    • Wrong is hard to detect (increasing chances to get away with it)

    • Value of injury and corresponding compensatory award are small (providing otherwise low incentives to sue)

  • Things that could potentially influence the SIZE of punitive damage awards:

    • Defendant’s WEALTH (key if your goal is deterrence)

    • Physical injury worse than non-physical injury

    • More vulnerable victims

    • D COULD HAVE cause lots more damage

Common Law Review for Excessiveness (federal courts of appeals should review ONLY the trial judge’s ruling on the motion to set aside the verdict, and review that only for abuse of discretion)

Rule for assessing punitive damages under FEDERAL LAW [Exxon]: For cases of “this type, the maximum allowable punitive :compensatory ratio shall be 1:1

  • “This Type”: Reckless, not intentional or malicious. Obvious damage with obvious causation, certain to be detected. Large damages, so big liability even before punitives. Profitless to the tort feasor, NOT done for economic gain. Low end of the “blameworthiness” scale

    • Pretty clear that there are going to a be a lot of “types”, basically brings us back to a case-by-case review of punitive damage verdicts

  • This rule is NOT controlling under state law, but it is likely to be persuasive

Punitive Damages in Contract

Rule: General Rule is punitives cannot be awarded for a breach of contract (however, 5% of contract cases have punitives, only 1.5% of torts have punitives) [perhaps because commercial wrongs often look more deliberate] [DeLaney/Formosa]

  • UNLESS an independent tort is committed in a contractual setting, then punitive damages can be awarded for the tort [but remember, plaintiff lawyer still have to persuade jury P did something bad enough to warrant punitives] [Delaney/Formosa]

  • Fraud

    • Ex. “fraudulent inducement” in Formosa v. Presidio: entering into a contracy with no intent to perform (requires that D knew BEFORE the contract was signed that he was going to breach. If they decided two weeks into the K they did not want to perform as required anymore, that would just be a contract claim, NOT a tort) [i.e. selling shares in a “gold mine” in which you knew there was no gold

    • Fraudulent Misrepresentation: misrepresent what is being sold

  • Bad-Faith Breach: well established in insurance contracts but nowhere else (ex. bad faith refusal to settle)

  • Conversion: defendant takes or retains money belonging to the plaintiff. Texas Nat’l Bank v. Karenss.

  • Tortious Interference W/Contract or Business Relations: “a knowing and intentional breach of one’s direct contract may also be an act tortuously interfering with a third party’s contract, if it is done with a purpose and effect of preventing the third party from performing its contract with another [may require an INTENT to interfere]

  • Do there have to be tort damages to make it an independent tort?

    • Economic damages will suffice [Formosa]. The no economic damages rule does not apply here because this is an INTENTIONAL tort(Fraud)

      • Do the damages have to be independent from the damages from breach of contract, or can it be the same?

        • Formosa suggests they can be the same, they do NOT have to be independent. Although the Q will probably be litigated in every instance.

  • You DON’T get punitives for intentional or negligent breach of contract

  • **There is a goal of not letting plaintiffs easily turn contract claims into tort claims

Punitive Damages: Constitutional Challenges

State possesses discretion over the imposition of punitive damages, but there are procedural and substantive constitutional limitations on these awards

Two potential Constitutional Arguments against the imposition of EXCESSIVE Punitives: (makes Supreme Court review of the punitive damages cases...

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