A recent New York Times article provides an interesting look at punitive damage awards. Noting that punitive damages are a peculiar aspect of American law, many courts around the world have refused to allow plaintiffs to collect on American court judgments awarding punitive damages.
But international criticism seems to be waning due to both changes in the United States and punitive damages gaining wider acceptance on an international level.
In part, this is due to many states having moved to limit punitive awards and alter the distribution of such large awards. Ohio’s tort reform legislation passed in 2004 limits punitive damages to the lesser of twice the amount of compensatory damages or, where the defendant is a small employer or individual, ten percent of the defendant’s net worth, up to $350,000. See R.C. 2315.21.
Criticisms that punitive damages represent a windfall for plaintiffs have been allayed by “alternative distribution” – requiring part of the punitive award to be turned over to the state. Some states, including Ohio, allow for such “alternative distribution.” See Dardinger v. Anthem Blue Cross & Blue Shield, 98 Ohio St.3d 77, 781 N.E.2d 121, 2002-Ohio-7113 (2002).
The United States Supreme Court has also moved over the past decade to impose stricter limits on punitive damage awards. For instance in State Farm v. Campbell, 538 U.S. 408 (2003), the U.S. Supreme Court, applying its earlier pronouncement on punitive damages, the BMW “guideposts,” said the ratio of compensatory damages to punitives must generally be in the single digits to be constitutional. See BMW v. Gore, 517 U.S. 559 (1996).
Additionally, punitive damages seem to be catching on in some countries. Courts in Spain, Canada, and Australia have enforced punitive damage awards from American judgments. This is a dramatic departure from prevailing attitudes toward such damage awards. Additionally, in Germany, where an attempt to collect a punitive damages award in the 1990’s was flatly denied, change is underway. A few recent damage awards have seemingly been steep enough to be meant as punishment and not just compensation.
Read the full article here.
