Vail Daily column: Punitive and exemplary damages
February 5, 2013
You’ve likely heard the term “punitive damages” before, likely spoken with a certain angry froth about the lips. But what, exactly, does it mean? And under what circumstances might a punitive damages award apply?
First, let’s deconstruct.
For our purposes, presume there are two main areas of law: criminal and civil, although, admittedly, “civil” law ain’t always civil.
The nut of criminal law is that it deals with crimes and, if one is convicted (or pleads guilty to a crime), the state exacts its retribution. While crimes may be (and, in fact, almost always are, intensely personal), their prosecution is not; the state, and not the person against whom the crime was perpetrated, prosecutes the case. If and when a “perp” is convicted, the reckoning for one’s misdeeds is in the form of time in the pokey and/or the payment of fines.
“Civil law” is otherwise and deals with disputes between people (although “people” is broadly defined in the law as human beings and/or “people-like” entities such as corporations). You cross me and I sue you. Plain as that. Unlike the case in criminal law, it is the individuals themselves (and not the state versus the accused) who are the disputants and most times what is being sought as a “remedy” is money (or, as lawyers like dress it up in its Sunday finery, “money damages”). Simply, you win and you get dough.
A “remedy”? Precisely what is that!?
It makes me think of Grandma’s cure for whatever ails ya (or, if Grandma is a tippler, perhaps for whatever ales ya). And, in fact, a “remedy” is a “cure” of sorts. It is the law’s way of making you “all better”.
As a basic precept of civil law, if you are injured by someone, you are entitled to be “made whole.” In other words, you are entitled to get what you should have gotten in the first place – or its money equivalent – or to be restored to your prior position. Thus, your remedy “cures” the wrong committed against you and gets you back to where you should have been had you not been wronged.
Two quick examples. Say I am minding my own biz while motoring down our scenic byways and an inattentive driver ploughs into my back end. I suffer a wicked whiplash and my ride ends up in the shop. I sue you for my damages: Restoration of my car, medical bills, pain and suffering, loss of income, etc. The theory under which I proceed is that I (and my damaged ride) are entitled to be restored to my and its prior condition; I should not have to suffered a loss because of your inattention and, like Humpty Dumpty, I’m entitled to be put back together again.
In a second example, say you and I enter into an agreement of one sort or another. You, without cause, decide not to honor the agreement and, instead, you breach it. I sue. What I will be seeking is the “benefit of the bargain,” that is what I would have been entitled to had you not thumbed your nose at your obligations to me. What I am seeking is what I bargained for; what I shoulda/woulda gotten (or its money equivalent) had you owed up to your side of the deal.
So what then of punitive and exemplary damages?
“Punitive” damages, not surprisingly, based on the common origin of the word, are meant to punish. Similarly, “exemplary” damages are meant to make an example out of you – generally to encourage you or others similarly situated not to be a bad actor in the future.
Punitive damages are sort of the hermaphrodites of the law – not quite one and not quite the other; not quite criminal and not quite civil. They provide punishment in a civil setting beyond being made whole in the case of particularly nasty or egregious conduct.
Exemplary damages hold up the malfeasor (that is, the bad actor) as a example and punish him for exceeding the normal bounds. They are damages on an increase scale, awarded to a claimant over and above what will compensate him for his property loss where the wrong visited upon him was aggravated by circumstances of violence, oppression, malice, fraud or wanton and wicked conduct. In addition to punishing the bad guy for his evil behavior, and making an example of him, they are intended to solace the claimant for mental anguish, laceration of his feelings, shame, degradation or other aggravation of the original wrong. Unlike compensatory damages (that is, “actual” damages), punitive and exemplary damages are based on entirely different public policy considerations.
So when may punitive and/or exemplary damages be available? Simply in cases where it is proved that the party against whom they are sought acted willfully, maliciously or fraudulently and in so doing, caused the claimant harm.
One other thing of note; since exemplary damages are meant to punish what may be awarded against you or me as compared to a multi-national corporation may be wholly different things. In our personal lives being “dinged” for $100,000 would likely sting but the same punitive award against a giant like BP in the Gulf oil spill case would amount to little more than a gnat on Goliath’s nose. Accordingly, the punishment exacted is often “scaled” to fit the pocketbook of the party against whom it is intended.
At the end of the day “punies” are justice too – just of a different flavor, meant to fulfill another policy and purpose.
Rohn K. Robbins is an attorney licensed before the bars of Colorado and California who practices in the Vail Valley with the law firm of Stevens, Littman, Biddision, Tharp and Weinberg LLC. His practice areas include business and commercial transactions, real estate and development, family law, custody, divorce and civil litigation. He may be heard on Wednesdays at 7 p.m. on KZYR radio (97.7 FM) and seen on ECOTV 18 as host of “Community Focus.” Robbins may be reached at 970-926-4461 or at either of his e-mail addresses, firstname.lastname@example.org or email@example.com.