Punitive Damages in Federal Court

Punitive Damage in Federal Court

Punitive damages are not available in every case. For example, punitive damages are not available against municipalities, counties, or other governmental entities unless expressly authorized by statute. City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 259-71 (1981).  Punitive damages may, however, be available against governmental employees acting in their individual capacities. See Monell v. New York City Dept. of Soc. Services, 436 U.S. 658 (1978); City of Newport, 453 U.S. at 254. In diversity cases, look to state law for an appropriate instruction.

Similarly, punitive damages claims arising under state law are subject to state law standards for recovery. See, e.g., Coughlin v. Tailhook Ass’n, 112 F.3d 1052, 1056 (9th Cir. 1997).

Whether punitive damages need to be proved by a preponderance of the evidence or clear and convincing evidence also depends on the standards applicable to the underlying claim for relief. For example, some states require proof by clear and convincing evidence before punitive damages are awarded on a state law claim. On the other hand, a preponderance of the evidence standard has been upheld for punitive damages in certain federal claims. See, e.g., In re Exxon Valdez, 270 F.3d 1215, 1232 (9th Cir.2001) (preponderance standard applies to punitive damages claim in maritime case, citing Pac. Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 23 n.11 (1991)).

Regarding degree of reprehensibility and punitive damages generally, see Philip Morris USA v.Williams 127 S. Ct. 1057, 1063 (2007;, BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (1996), Pac. Mut. Life Ins. Co. v. Haslip, 499 U.S. 1 (1991); see also Morgan v. Woessner, 997 F.2d 1244,1256 (9th Cir.1993) (“Haslip said that instructions should be fashioned to describe the proper purposes of punitive damages so that the jury understands that punitive damages are not to compensate the plaintiff, but to punish the defendant and to deter the defendant and others from such conduct in the future.”). See also White v. Ford Motor Co., 500 F.3d 963, 972 (9th Cir. 2007) (trial court’s failure to give a “harm to nonparties” instruction violated due process and was reversible error after Williams). Bracketed language in the fourth paragraph of the instruction addresses this requirement when evidence concerning harm to nonparties is admitted on the issue of degree of reprehensibility.

The Ninth Circuit noted in White v. Ford Motor Co. that the inquiry of the relationship of any award of punitive damages to compensatory damages “is markedly different from the jury’s determination of a specific amount of punitive damages; its purpose is to aid in ascertaining the constitutional ceiling. Unlike the initial damage calculation, determining the constitutional ceiling on a punitive damage award is a question of law, properly reserved for the court.” 500 F. 3d at 974 (emphasis original). The court also observed that, although “states are certainly free to incorporate the reasonable relationship concept into jury instructions, . . . it is also constitutionally permissible for a district court to delay the reasonable relationship inquiry until the judge’s post-verdict review.” Id. at 974. Because Nevada chose the latter course, it was not error inWhite for the district court to decline a “relationship inquiry” instruction. Id.

Regarding the constitutional, due process issues involved in the “relationship inquiry,” see State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 425 (2003), referring to Gore and Haslip and stating that “[s]ingle-digit multipliers are more likely to comport with due process, while still achieving the State’s goals of deterrence and retribution, than awards with ratios in range of 500 to 1, or, in this case, of 145 to 1.”. In State Farm, the Court went on to say that “because there are no rigid benchmarks that a punitive damages award may not surpass, ratios greater than those we have previously upheld may comport with due process where ‘a particularly egregious act has resulted in only a small amount of economic damages.'” Id. (quoting Gore, 517 U.S. at 582.) For an application of the State Farm ratio principles in the context of a 42 U.S.C. § 1981 case, see Bains LLC v. Arco Prods. Co., 405 F.3d 764, 774-77 (9th Cir. 2005). But see, Exxon Shipping Co. v. Baker, __ U.S.___, 128 S. Ct. 2605 (2008)(applying federal maritime common law to conclude punitive damages could not exceed 1:1 ratio in maritime cases).



Source:  Ninth Circuit Manual of Model Jury Instructions (Civil)



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