February 6, 2008

Interesting North Carolina Punitive Damages Decision on the Standard of Review

Yesterday, in Scarborough v. Dillard's Inc., the North Carolina Court of Appeals reinstated a $77,000 punitive damages award in a malicious prosecution case, addressing a procedural issue that has split California courts.

The trial court had found insufficient evidence supported the award. The majority opinion disagreed, taking the position that the punitive damages should be reinstated if a scintilla of evidence existed to support the award. A dissenting opinion argued that the majority failed to take into account the requirement, under North Carolina law, that punitive damages are available only if the plaintiff proves the prerequisites for punitive damages by clear and convincing evidence. Given that higher burden of proof, the dissent would have affirmed the trial court's order granting JNOV.

From a California lawyer's perspective, this opinion is interesting because California's appellate courts have split on the same issue. California law also requires proof by clear and convincing evidence for punitive damages issues. Some appellate courts have held that the clear and convincing evidence standard must be taken into account on appeal, but others have disagreed. The California Supreme Court has issued conflicting opinions on this issue. Eventually the Supreme Court will need to revisit the issue and sort out this mess.

Hat tip to Sean Andrussier at North Carolina Appellate Blog.

UPDATE (By Jeremy Rosen on 2/6/2008 at 11:37 am): North Carolina is one of the many states which by statute have set limits on punitive damages. North Carolina law limits punitive damages to three times compensatory damages or $250,000, whichever is greater. (Exception is for harm caused by driving while impaired.)