In recent years, some of the awards for punitive damages have spiraled into the multi-millions.  Some defendants have begun to attack the constitutionality of these huge awards.  Currently, there are some restrictions in place to limit punitive damages.

What Is A Grossly Excessive Punitive Damage Award?

One way to cut down on punitive damages is to prove that they are grossly excessive.  This defense is rarely successful because it has to be shown that the damage is so beyond the scope of the lawsuit that the defendant has lost their right to due process in court.  If they lost their right to due process, their constitutional freedoms would be infringed upon

Do Courts Use Ratios To Determine Fair Punitive Damages?

Many courts now examine the ratio of the punitive damages to the actual damages.  The Supreme Court has said that most awards should not exceed a single digit ratio between punitive and compensatory damages.  For example, if Insure Co refuses to settle a case in Utah against Bob, the policy holder, for the policy limits, even though there was a “near-certain probability that by taking the case to trial, a judgment in excess of the policy limits would be awarded.”  Bob suffered emotional distress from facing a judgment of $136,000 in excess of the policy limit.  The court awarded Bob $1 million dollars in actual damages and $145 million in punitive damages.  The Supreme Court found that a punitive damages award of $145 million on compensatory damages of $1 million dollars violated the defendants due process rights (since it was a 145 to 1 ratio). (This example mirrors State Farm Mut. Automobile Insur. Co. v Campbell)

The Court also looked at the history of the wrongdoing by the insurance company in the award.  However, the Supreme Court said that even if the insurance company had done wrong in the past, the amount of punitive damages “had nothing to do with” the actual lawsuit itself (the refusal to settle).

What do you think?  Should a jury be able to award any amount of punitive damages?