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Punishment: Make 'Em Pay

October 15, 2013

 

People frequently ask me about punitive damages, usually when they're trying to figure out how much their case might be worth. I usually tell them I don't consider punitive damages when estimating a case's value, except in very rare circumstances. Here's why.

Juries allow punitive damages when the defendant's actions are so reprehensible that they must be punished. Punitive damages are meant to punish and deter future conduct. Just like in criminal law, there are two types of deterrence in civil law:

  • Specific deterrence: aimed at preventing this same defendant from doing the same bad act again

  • General deterrence: aimed at sending a message to others that they shouldn't do this bad act either

There are two requirements for a plaintiff (the person suing) to be allowed punitive damages:

1. The conduct the plaintiff is suing for must be so bad that the jury believes it must be punished or deterred; and

2. The person who did the conduct must be so highly placed in the organization that the organization itself deserves to be punished and deterred.

Those are pretty stiff requirements. In most employment cases, the conduct either (a) won't be bad enough, or (b) the person taking the action won't be high enough in the organization.

California has some important decisions that make it easier to meet the second requirement. For example, cases have held that even very low-level employees can meet the requirements for punitive damages if they are given complete discretion about handling or investigating complaints, and their conclusions aren't reviewed by anyone higher. California has also held that employees who completely ignore their company's procedures for investigating complaints can expose the company to punitive damages.

Essentially, California has decided that if employers abdicate their responsibilities to investigate workplace complaints of illegal activity, and their low level employees become de facto decisionmakers, the company may expose itself to punitive damages.

Once a bad act has been taken, there are other ways to bring high-level decisionmakers into the mix, and to give the plaintiff access to punitives. But as you can see, it is the rare case when the possibility of punitive damages become a real factor in determining how much a case is worth.
 

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