Did you know that punitive damages are not available in every action and that in the relatively few actions in which they are awarded to any significant degree, the trial judge or appeals court will often vacate the award or greatly reduce it? While a large award is commonly reported in the press as front page news, the later reduction or elimination of the award is usually not reported or is placed in the obscure interior pages of the newspaper because (it is not sensational enough).
The fact is, punitive damages are available in limited types of cases and only for certain type of bad conduct--they are the exception not the norm.
The law also imposes a much greater showing by the person suing: the bad conduct shown by "clear and convincing evidence" which is much higher than the "preponderance of the evidence" or "more likely than not" standards normally applicable to civil cases.
Recently a spate of decisions by courts of appeal and the State and Federal Supreme Courts has rapidly been placing greater and greater restrictions on the ability to win, and keep punitive damages awards. Moreover, executive and legislative actions have also placed other constraints on the recovery of punitive damages.
The right to recover punitive damages is sought to be eliminated altogether by powerful corporations who see safety and human rights as an impediment to profits (these companies refer to "tort reform" and create misleading names for their groups like "citizens for corporate responsibility" or citizens against lawsuit abuse when in reality there are no "citizens" or common people, just companies paying people to create propaganda).
California Civil Code section 3294 provides the framework for recovery of punitive damages. In the employment context, punitive damages based on the conduct of an employee may be awarded in a number of situations, such as where the employer: 1) had "advance knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others"; 2) authorized or ratified the bad conduct; or 3) commits one or more acts of oppression, commits fraud, such as a "cover up" or lying about events, or engages in one or more "malicious" acts.
If the employer is a corporation, then a claim seeking to establish "conscious disregard" by the employer must show that the required advance knowledge was on the part of "an officer, director, or "managing agent" of the corporation. A "managing agent" refers to someone within the company who has considerable discretion in making decisions which ultimately determine corporate policy.
It is difficult to know whether a particular claim will justify punitive damages against an employer, even though the law is clear that sexual harassment, in and of itself, warrants such damages against the harasser. As always, whether punitive damages are to be awarded is an issue for the judge, jury or arbitrator. Potential claims involving the possibility of punitive damages should be closely evaluated by an attorney prior to being made because determining whether sufficient proof exists involves a great deal of investigation.
Supreme Court to review Exxon Valdez damages - October 29, 2007
17 years later, Exxon still has not paid puntive damages award - March 17, 2006