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Recent cases highlight strategies to defeat punitive damages even when compensatory liability may be difficult to avoid

In many product liability, mass tort, and consumer cases the gravest—and probably least predictable—risk is a runaway punitive damages award.  Unlike compensatory damages, which are tied to the plaintiff’s actual injuries, punitive damages are intended to punish and deter bad conduct, and juries are given broad discretion in determining their amount.

The upside, if there is one, is that punitive damages generally require considerably “worse” conduct than negligence or strict liability.  In addition, in many jurisdictions, liability for punitive damages must be proven by “clear and convincing evidence,” which is a higher burden of proof than the “preponderance of the evidence” standard generally applicable to compensatory liability.  This means that even when a defendant is unable to avoid compensatory liability (before, at, or after trial), it may nevertheless be able to defeat punitive damages, thereby significantly reducing the value of the case and the potential size of any verdict.

That is what happened recently in Incardone v. Royal Caribbean Cruises, Ltd., Case No. 16-20924-CIV (S.D. Fla.), a case brought by a group of special-needs children and their families for alleged injuries they sustained when their cruise encountered a winter storm with hurricane-force winds.  Although the court denied the defendant’s request for summary judgment on the plaintiffs’ negligence claims, it agreed with the defendant’s separate argument as to punitive damages, emphasizing the “exceptional circumstances” required under maritime law to justify their imposition.[1]  The court reasoned, “Though the record evidence indicates genuine issues of material fact as to whether Defendant was negligent in misinterpreting or underestimating the storm’s severity,” such “underestimations by their nature—whether negligent or not” do not rise to the level of culpability required for punitive damages.[2]

Incardone is an example of a case whose primary value may have rested in the possibility of a large punitive damages award.  The plaintiffs were for the most part physically unharmed, and “acknowledge[d] that they [were] seek[ing] damages primarily for the emotional distress suffered as a result of Defendant’s decision to sail through the storm.”[3]  The defendant’s successful elimination of punitive damages (and the risk and uncertainty that accompanied them) may well have transformed a potentially dangerous case into a more easily resolvable one.

Summary judgment is, of course, not the only opportunity to challenge punitive damages.  Claims that survive summary judgment are still subject to attack at trial via motions for directed verdict at the close of the plaintiff’s case, and after all evidence has been received.

In addition, juries have shown that they can be persuaded not to award substantial or any punitive damages even when they find against a defendant on compensatory liability, including for intentional torts like fraud.  This has happened many times in the so-called Engle progeny tobacco trials in Florida.

Due to the res judicata effect of certain findings in the original Engle class trial, the plaintiffs—current or former smokers or their representatives—in every progeny case essentially begin with a directed verdict in their favor on most issues, including strict liability, fraud by concealment, and civil conspiracy.  Nevertheless, as analyzed in greater detail here, the Engle defendants have escaped punitive damages in many cases in which they have lost on compensatory liability.

Just last month, for example, a jury awarded $2.5 million to the estate of a deceased 41-year-old longtime smoker, but declined to impose punitive damages against the defendant.  See Cuddihee v. Philip Morris, Case No. 2008CA000398 (4th Jud. Cir. Ct., Fla).  According to press reports, in the punitive damages phase of the bifurcated trial, the defendant argued that it was a different company with different management than the company that had been found to have conspired to defraud the public years ago.[4]  Thus, the defendant argued, punitive damages were not necessary to deter it from doing “things that will not and cannot happen again, are not happening today, will not happen again in the future.”[5]

Another strategy to defeat or mitigate punitive damages when compensatory liability is found is to show that the defendant has remedied whatever caused the plaintiff’s harm and/or that the defendant has already been punished for its conduct.  While defendants typically seek to exclude as prejudicial evidence of so-called “subsequent remedial measures” in the compensatory liability phase of a trial, such evidence may have a conversely mitigating effect after liability is found.

An example of this strategy can be found in a trial scheduled to begin this week involving plaintiffs who opted out of class action settlements arising from a German automaker’s use of emissions “defeat devices” in its vehicles.  See In re: Volkswagen “Clean Diesel Marketing, Sales Practices, & Products Liab. Litig., Case No. 3:15-md-02672-CRB (N.D. Cal.).  The defendants have proposed to present in any punitive damages phase of the trial “evidence of [their] substantial remedial efforts, including “environmental remediation,” “extensive corporate and other reforms,” “agreements entered into with various governmental agencies,” “two class-action settlements with consumers,” “as well as evidence of the more than $5 billion in fines and penalties paid by Defendants to various governmental entities.”[6]  Notably, the trial court denied the plaintiffs’ motion to exclude this evidence, providing a ruling that may prove useful to defendants elsewhere seeking to introduce such mitigating evidence.[7]

As the foregoing cases illustrate, punitive damages warrant particularized attention at each step of litigation.  Even when compensatory liability cannot be avoided, motions and arguments specific to punitive damages may nonetheless prevail, including when the issue is left to the jury.

[1] Case No. 16-20924-CIV, ECF No. 467 at 12.

[2] Id. at 13.

[3] Id. at 3.

[4] See (last visited Feb. 20, 2020); see also (last visited Feb. 20, 2020).

[5] See id.

[6] See Case No. 3:15-md-02672-CRB, ECF No. 7097 at 13.

[7] See id. at ECF Nos. 7023, 7068, 7090, 7106 (order).