August 6, 2010

Applying Punitive Damages Jurisprudence to Compensatory Damages Awards

Should courts rely on the BMW v. Gore line of authority, which limits excessive punitive damages as a matter of federal due process, as a basis for reducing excessive compensatory damages? According to one federal district court judge, the answer is "yes."

Ben Sheffner of the NBC Universal legal department reports in this Washington Legal Foundation Legal Backgrounder about a recent decision in which a federal judge relied on BMW to reduce a compensatory damages award as excessive in a copyright infringement case.

In cases where the "compensatory" damages award is more in the nature of a penalty (e.g., cases involving pre-set statutory fines for certain misconduct), it isn't much of a stretch to say that the penalty should be subject to the same Due Process Clause concerns identified in BMW. But defense counsel will have a more difficult time extending that sort of reasoning to cases involving garden-variety compensatory damages awards that are designed to reimburse the plaintiff for actual out-of-pocket losses.

Hat tip: WLF Legal Pulse