Punitive damages, also known as exemplary damages, are the damages awarded separately from the actual damages from an event. Courts generally award punitive damages only when it is determined that the defendant has acted in a particularly harmful way.
The type of harmful behavior that would award punitive damages would be serious misconduct of the defendant that was grossly and wantonly negligent or reckless. If the court or the jury determines that there should be punitive damages, the court usually awards the punitive damages on top of the initial compensatory damages. Therefore, awarding of punitive damages serves as a deterrence measure against specific misconduct. Punitive damages indicate to the general public that the courts will not tolerate such misconduct.
Most jurisdictions allow plaintiffs to seek punitive damages with some limitations in civil lawsuits. However, the methods and regulations on how the plaintiff can seek punitive damages differ from jurisdiction to jurisdiction. For instance, some jurisdictions only allow the plaintiffs to seek punitive damages if the defendant clearly exhibited intent to harm the plaintiff.
Some jurisdictions allow the awarding of punitive damages in certain tort cases, including personal injury and medical malpractice cases. In most cases, the plaintiff has the burden of proof to show the intent to harm or the presence of wanton negligence or recklessness. The plaintiff must also show that the harm suffered by the plaintiff bears a reasonable relation to the defendant’s actions. Some jurisdictions have a punitive damages requirement where the plaintiff splits the awarded punitive damages amount with the state. The jurisdictions that implement the split requirement are called split-recovery states, and they generally demand 50% to 75% of the awarded amount to the state.
Compensatory damages are awarded by the court in a civil case. The amount of compensatory damages awarded equates to the personal injuries suffered by the plaintiff to make the plaintiff whole. There are two types of compensatory damages: special damages and general damages. Special compensatory damages make the plaintiff whole by compensating for the economic losses suffered by the plaintiff.
On the other hand, general compensatory damages make the plaintiff whole by compensating non-economic losses suffered by the plaintiff, such as the extreme emotional distress and disturbance of the plaintiff.
Statistics show that about 5% of all verdicts result in the awarding of punitive damages. Courts may also examine the possibility of mandatorily assigning a certain percentage of compensatory damages as punitive damages (p. 2082). However, the Supreme Court of the United States has not yet provided a test to determine when it is appropriate to award punitive damages. Nevertheless, the Court did indicate to the lower courts that they should look for reprehensibility and acceptable punitive-to-compensatory damages ratio in punitive damages consideration in State Farm v. Campbell, 538 U.S. 408 (2003). Another report from the U.S. Department of Justice indicates that of those trials where punitive damages were requested by plaintiff winners, only 30% actually received those damages.
Further Reading: For more on punitive damages, see this Yale Law Journal article and this Minnesota Law Review article.
[Last updated in January of 2024 by the Wex Definitions Team]
