What exactly are punitive damages?

We’ve all heard of them before, but what exactly are “punitive damages”? According to the Cornell Law School Legal Information Institute, punitive damages are “awarded in addition to actual damages in certain circumstances.” As the name suggests, punitive damages are considered a punishment on top of actual (“provable”) damages. Punitive damages are typically awarded when a defendant’s conduct is found to be particularly harmful.

Punitive damages serve to punish defendants for inflicting harms that cannot be easily quantified – harms caused by outrageous, willful, or wanton conduct on the part of a defendant. A judge or a jury typically will determine the need for and amount of punitive damages in a given case.

In addition to punishing a defendant, punitive damages are intended to serve a cautionary purpose in society. They send a message about the kinds of conduct that will not be tolerated by society, as expressed by a court of law or by a finder of fact. In this sense, an award of punitive damages is grounded in the theory that the interests of society and the interests of a harmed individual can both be satisfied by requiring a defendant to provide restitution.

The McDonald’s Case

But punitive damages can be controversial. Faced with the requirement to pay punitive damages, defendants often claim that the damages are excessive, unfair, harmful to their business, or taxing on their insurance policies. Whenever punitive damages are discussed, the famous McDonalds hot coffee case is likely to be a feature of the discussion. In that case, 79-year-old Stella Liebeck was burned by coffee served by McDonald’s at a temperature so hot that she suffered third-degree burns over 16 percent of her body. Ms. Liebeck’s injuries were caused in three seconds.

Most restaurant coffee is kept at 160 degrees. At this temperature, third-degree burns will be caused in 20 seconds, giving consumers time to react before a burn develops. McDonald’s coffee was kept at 190 degrees. Nor was Ms. Liebeck the first McDonalds consumer to be scalded by McDonald’s coffee. Approximately 700 other people were injured in similar incidents before Ms. Liebeck was burned.

Ms. Liebeck made an offer to settle her claim for $20,000.00. McDonald’s gave her a counteroffer of a mere $800.00. The case proceeded to trial, and Ms. Liebeck was awarded $200,000.00 in actual damages for her pain, suffering, and medical expenses. That figure was reduced to $160,000.00, due to Ms. Liebeck’s slight liability in the coffee burn incident. Ms. Liebeck was also awarded $2.7 million in punitive damages. This figure, too, was reduced – the judge in the case reduced the punitive damages award to $480,000.00.

The McDonalds coffee case is a prime example of the controversy over punitive damages. Those who believe the punitive damages award was excessive paint McDonalds, rather than Ms. Liebeck, as the ultimate victim of the case. Whether or not this is accurate, the very notoriety of the case has imposed a check on the system of punitive damages generally. Following the firestorm over the punitive damages award in the McDonalds case, mindful jurors in other cases will likely think carefully about the impact of the figures they choose deciding to award punitive damages.

Yet the McDonalds coffee case also serves to illustrate the importance of punitive damages. Ms. Liebeck’s injuries and her ensuing case were the manifestations of a problem that had long gone unaddressed – she was one of 700 burn victims; her cup of coffee was one of innumerable cups served by McDonald’s at a dangerous temperature. The award of punitive damages was perhaps intended to encourage quicker resolution of such issues in the future and deter restaurants from adopting harmful preparation practices. While such damages impose a cost, and while they are not always perfectly calibrated, they are intended to serve the population at large and help society address and navigate away from dangerous practices.

 

 

 

 

 

 

 

Tagged with: , , ,

Posted in: Litigation & Disputes