Strategies to Attack Punitive Damages Claims

Regardless of the reason for the claim, you should have a clearly articulated strategy with defense counsel for addressing the punitive claim.

By Jim Pattillo

When it hits the papers, it’s always big. It’s the verdict that plaintiff’s lawyers frame and hang on the wall, the one that is painted in the media as a victory for the little guy. It’s the one that makes those lawyers working for a contingency fee want to retire early. And the number people always pay attention to is the punitive damages award. It makes sense that punitive damages are pled in just about every complaint where there is some legal justification, even if the facts don’t support it.

Punitive or exemplary damages are monetary awards in civil cases with the purpose of deterring future conduct from a defendant and from others. Generally, punitive damages are available only in tort cases, particularly when the defendant’s conduct is proven to be “wanton.” Wantonness is generally defined as a reckless disregard for the safety of others. “Willfulness” will also support a punitive damage award. Although breach of contract usually does not support a punitive damage award, there are exceptions. For example, bad-faith breach of an insurance contact will support a punitive award.

It is most often the case that a claim in a complaint calling for punitive damages has no real merit in the facts of the case. However, they are routinely included for many reasons. Preserving the statute of limitations is an obvious reason. A perceived leverage in settlement negotiations is another reason. In addition, plaintiff’s lawyers are hopeful they can articulate facts supporting a punitive award as discovery progresses. Regardless of the reason for the claim, you should have a clearly articulated strategy with defense counsel for addressing the punitive claim.

Is a motion to dismiss appropriate? If there is no legal basis for a punitive damage claim in the complaint regardless of the facts involved, then a motion to dismiss may be appropriate. Generally, while reviewing a motion to dismiss, the court will take as true all the allegations in the complaint. If the plaintiff states facts that, if proven, would support a punitive claim (regardless of whether they actually can prove them), then a punitive claim will likely survive a motion to dismiss.

If the claim survives a motion to dismiss, then discovery begins. Craft a plan with defense counsel for addressing the punitive claim in discovery. Have a clear understanding of what the plaintiff needs to prove. In a claim of wantonness, the plaintiff will have to prove some egregious and reckless conduct by the defendant that the defendant knew was likely to cause harm or damage. The precise requirements vary by state, and they also can vary by the type of claim involved. In products cases, prior knowledge of a defect with prior similar instances can support a damage claim. A conscious decision to choose profits over safety also is a common theme that can support punitive damages.

The goal of a discovery plan addressing punitive damages should be to dispose of the claim via motion for summary judgment. At this stage, you will need to show that there are no facts the plaintiff can prove at trial to support the claim. The goal is to prevent the jury from even hearing about the existence of a punitive claim. In order to overcome a motion for summary judgment, the plaintiff will need to provide some minimum level of evidence to support the claim. It does not have to be enough to win at trial; it just has to be enough to show the court that it has some factual support for the claim. The particular jurisdiction will define the amount of evidence required to overcome the motion.

At trial, the burden for proving a claim’s supporting damages is often heightened. In a typical tort case involving ordinary negligence, the plaintiff has to prove a claim by a preponderance of evidence. In other words, the plaintiff’s evidence simply has to be more convincing or compelling than the defendant’s. However, most claims calling for punitive damages have a heightened burden of proof, oftentimes requiring evidence that is clear and convincing.

If the judge allows the claim to go to trial, the plaintiff will be able to put on evidence that supports a punitive award. If at the close of the plaintiff’s case the evidence is insufficient to support a verdict, then the court can dismiss the claim. At this point, the cat is out of the bag, and your opponent gets to talk about all the “egregious” things done by you or your insured. In addition, the plaintiff can put on evidence of what an appropriate punitive award will be based on, including the assets or worth of the defendant. That is why it is crucial to prevent a punitive claim from going to trial whenever possible.

In some instances, a claim demanding punitive damages truly has no merit from the outset. If the case is a low-risk venture, you may simply let the claim go to the jury and argue the overreaching nature of the plaintiff’s claims, including the punitive claim. The times I’ve taken this strategy at trial and alluded in opening statement to the spurious nature of a punitive claim, the plaintiff always voluntarily dismisses it before the start of evidence. While this tactic involves a little risk, it often helps the jury see the true motive behind the most overreaching cases.

Jim Pattillo is a partner at Christian & Small LLP. He can be reached at jlpattillo@csattorneys.com.

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