October 7, 2015

Punitive damages awards in favor of corporations and wealthy individuals

Many folks think of punitive damages as a tool for leveling the playing field between corporations and the little guy.  Under that narrative, punitive damages make it possible for the average person on the street to strike back at the wealthy and the powerful.

One problem with that narrative is that it overlooks the fact that punitive damages are often awarded in favor of the wealthy and the powerful.   For example, Sears, Roebuck & Co. won an appeal last week that permits it to seek punitive damages against its landlord in a constructive eviction case.   (Read more about that decision here.)  And billionaire Bill Koch recently won an appeal upholding a punitive damages award he collected from a wine dealer.

These are just a couple of examples.  I have personally been involved in a number appeals challenging punitive damages awarded in favor of a corporation or a wealthy individual (like this one, this one, and this one), or awarded against an individual of modest means (like this one).

Of course, there are also plenty of punitive damages awards that fit the popular narrative, i.e., awards in favor of an individual against a wealthy defendant.  But when discussing the public policy implications of punitive damages (and the limitations on punitive damages), we should all be aware that many cases don't fit that mold, and that punitive damages often permit the transfer of wealth in the other direction as well.