Wilson Elser Punitive Damages Review
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WILSON ELSER PUNITIVE DAMAGES REVIEW 50-STATE SURVEY 2014 Edition 50-STATE SURVEY Punitive Damages Review 2014 Edition Wilson Elser makes this material available for general informational purposes only. The material is not intended to and does not constitute legal advice. Moreover, the material is not intended to and does not constitute a solicitation for the formation of an attorney-client relationship and you should not act upon it without first seeking legal counsel. This material is based on case law as of August 2013. Wilson Elser reserves the right to correct, change or update this material at any time without prior notice. Unsolicited emails and information sent to Wilson Elser do not create an attorney-client relationship with Wilson Elser, will not be considered confidential and may be disclosed to others pursuant to our Privacy Policy. Wilson Elser accepts clients only after completion of certain formal procedures. 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Contents STATE-BY-STATE PUNITIVE DAMAGES ANALYSIS 2 PUNITIVE DAMAGES OVERVIEW 3 MONTANA 62 ALABAMA 8 NEBRASKA 64 ALASKA 10 NEVADA 65 ARIZONA 12 NEW HAMPSHIRE 68 ARKANSAS 14 NEW JERSEY 70 CALIFORNIA 16 NEW MEXICO 72 COLORADO 19 NEW YORK 74 CONNECTICUT 21 NORTH CAROLINA 77 DELAWARE 24 NORTH DAKOTA 79 DISTRICT OF COLUMBIA 26 OHIO 81 FLORIDA 28 OKLAHOMA 83 GEORGIA 31 OREGON 85 HAWAII 33 PENNSYLVANIA 87 IDAHO 34 PUERTO RICO 90 ILLINOIS 36 RHODE ISLAND 90 INDIANA 38 SOUTH CAROLINA 92 IOWA 40 SOUTH DAKOTA 95 KANSAS 42 TENNESSEE 97 KENTUCKY 44 TEXAS 99 LOUISIANA 46 UTAH 102 MAINE 48 VERMONT 103 MARYLAND 50 VIRGINIA 105 MASSACHUSETTS 52 WASHINGTON 107 MICHIGAN 55 WEST VIRGINIA 108 MINNESOTA 56 WISCONSIN 109 MISSISSIPPI 58 WYOMING 111 MISSOURI 61 OFFICE & AFFILIATES 114 50-STATE SURVEY STATE BY STATE PUNITIVE DAMAGES ANALYSIS May Punitive Damages Are Punitive Damages State Standard Of Proof Be Awarded? Generally Insurable? Alabama Yes Yes Clear and convincing Alaska Yes Yes Clear and convincing Arizona Yes Yes Clear and convincing Arkansas Yes Yes Clear and convincing California Yes No Clear and convincing Colorado Yes No Beyond a reasonable doubt Connecticut Yes No Preponderance of evidence Delaware Yes Yes Clear and convincing District of Columbia Yes Undecided Clear and convincing Florida Yes No Clear and convincing Georgia Yes Yes Clear and convincing Hawaii Yes Yes Clear and convincing Idaho Yes Yes Clear and convincing Illinois Yes No Preponderance of evidence Indiana Yes Probably no Clear and convincing Iowa Yes Yes Clear and convincing Kansas Yes No Clear and convincing Kentucky Yes Yes Clear and convincing Louisiana Yes, but only by statute Yes Preponderance of evidence Maine Yes No Clear and convincing Maryland Yes Yes Clear and convincing Massachusetts Yes No Preponderance of evidence Michigan No Not applicable Not applicable Minnesota Yes No Clear and convincing Mississippi Yes Yes Clear and convincing Missouri Yes No Clear and convincing Montana Yes Yes Clear and convincing Nebraska No Not applicable Not applicable Nevada Yes Yes Clear and convincing New Hampshire Yes, but only by statute Yes Undetermined New Jersey Yes No Clear and convincing New Mexico Yes Yes Preponderance of evidence New York Yes No No clear standard North Carolina Yes Yes Clear and convincing North Dakota Yes Undetermined Clear and convincing Ohio Yes No Clear and convincing Oklahoma Yes No Clear and convincing Oregon Yes Yes Clear and convincing Pennsylvania Yes No Clear and convincing Puerto Rico No Not applicable Not applicable Rhode Island Yes No Clear and convincing South Carolina Yes Yes Clear and convincing South Dakota Yes, but only by statute Probably no Clear and convincing Tennessee Yes Yes Clear and convincing Texas Yes Possibly Clear and convincing Utah Yes No Clear and convincing Vermont Yes Yes Preponderance of evidence Virginia Yes Yes Preponderance of evidence Washington No Not applicable Not applicable West Virginia Yes Yes Preponderance of evidence Wisconsin Yes Yes Clear and convincing Wyoming Yes Yes No clear standard 2 PUNITIVE DAMAGES OVERVIEW Punitive Damages Overview The imposition of punitive damages continues to Some insurers will specifically exclude coverage for punitive be a hotly debated topic in the United States as to damages. Also, such damage awards may not be insured due whether and to the extent that punitive damages to various other policy provisions. A majority of the states (26) should be allowed and, should such recoveries be permit punitive damages to be insured. allowed, whether insurance can be purchased to protect exposure to a punitive damages award. With A minority of the states, however, do not permit punitive the exception of Michigan, Nebraska, Puerto Rico and damages to be insured. Notably, several large states housing Washington, most U.S. jurisdictions allow the imposition major U.S. business centers, such as California, New York, Illinois of punitive damages. A number of states, either and Pennsylvania, fall within this minority category. Some of these through statute or case law, place limitations on the jurisdictions will allow insurance for punitive damages due to ability to obtain such awards and/or the amounts that vicarious liability. For example, in Illinois and Florida, an employer are permitted to be awarded. The U.S. Supreme Court would be able to insure against vicarious liability of a punitive has further limited the amount of punitive damages that award assessed in consequence of an employee’s wrongful that can be awarded, finding that excessive punitive conduct. Further, some states that would not otherwise allow damages awards violate the Constitution’s Fifth and punitive damages to be insured have narrow exceptions allowing Fourteenth Amendments, which prohibit the taking of certain risks to be insured for punitive damages. For example, property without due process. in Pennsylvania, an insurer is permitted to provide punitive damages coverage to operators of downhill skiing areas, unless Punitive damages in the United States developed through the such punitive damages are awarded due to the intentional tort of common law as a means of punishing a defendant bad actor in the operator. cases where the civil award was deemed insufficient to punish the defendant. This extra level of punishment is generally reserved Many jurisdictions have found that insuring against punitive for situations when a defendant’s tortuous conduct is found to be damages is against the state’s public policy. Allowing punitive malicious, wanton, intentional, outrageous or reckless. damages to be insured arguably frustrates the purpose of an award meant to punish the wrongdoer for its bad conduct and Punitive damages are not to compensate for plaintiffs’ losses. In deter such conduct by that entity in the future. The “punishment” many jurisdictions, the level of punitive damages is considered may not be felt if an insurer is paying rather than the wrongdoer only after a jury has awarded the plaintiffs their compensatory or if the only consequence is paying higher insurance premiums damages. As such, punitive damages are a means of securing an in the future. award beyond plaintiffs’ compensatory losses. Insured entities increasingly have turned to the non-admitted As punitive damages awards are not considered to compensate and offshore markets to secure punitive damages coverage. a plaintiff for their losses, some states will share in plaintiffs’ These policies often will specifically insure punitive damages or, recovery of punitive damages through taxation of the punitive potentially, provide stand-alone punitive damages coverage. award and/or by statute requiring a percentage of the award These policies may specifically apply a favorable jurisdiction’s law be paid directly to a state agency. For example, in Georgia to the interpretation of the punitive damage coverage, regardless 75 percent of any punitive award is to be paid to the Georgia of the jurisdiction where the punitive award was rendered. State Treasury. When such coverage is sought, care must be taken to assure compliance with various states’ regulations impacting insurance Insurability of Punitive Damages coverage for punitive damages. Plaintiffs may threaten a punitive damages claim to force a greater settlement as the possible exposure is enhanced, especially in those cases where the compensatory damages are limited and the defendant’s conduct is questionable. An insured may be pressured to resolve a matter in situations where a punitive award is not insurable, rather than risk a potentially outsized uncovered award. 3 PUNITIVE DAMAGES OVERVIEW Insured entities that operate in multiple jurisdictions may be 1. Whether the harm was physical as opposed to economic presented with a punitive award in a jurisdiction that does not permit punitive damages to be insured and an insurance policy 2. Whether the defendant’s conduct evinced an indifference to that provides such coverage. In these situations, both the insurer or reckless disregard of the health or safety of others and insured may be concerned as to how the policy should 3. Whether the plaintiff was financially vulnerable be applied. Generally, the insured will want the coverage, but the insurer may be concerned with paying proceeds that are 4. Whether the conduct involved repeated actions or was an prohibited by law. isolated incident The availability of punitive damages in each state as well as 5. Whether the harm was the result of intentional malice, each state’s determination of the insurability of punitive damage trickery or deceit, or was a mere accident.