Editing Punitive damages (section)

===United States===
Punitive damages are a settled principle of [[common law]] in the [[United States]].<ref>''Grimshaw v. Ford Motor Co.'' ([[Ford Pinto]] Case), 174 Cal. Rptr. 348 (Cal. Ct. App. 1981) (Tamura, J.), subhead VI.</ref> They are generally a matter of state law (although they can also be awarded under federal maritime law), and thus differ in application from state to state. In many states, including [[California]] and [[Texas]], punitive damages are determined based on [[statute]];<ref>{{Cite web |date=2025-02-15 |title=What Are Punitive Damages? |url=https://thetexaslawdog.com/faqs/what-are-punitive-damages/ |access-date=2025-05-17 |website=thetexaslawdog.com |language=en}}</ref> elsewhere, they may be determined solely based on case law. Many state statutes are the result of [[insurance]] industry [[lobbying]] to impose "caps" on punitive damages; however, several state courts have struck down these statutory caps as unconstitutional.<ref name=laycock>{{cite book |first=Douglas |last=Laycock |title=Modern American Remedies |publisher=Aspen |date=2002 |pages=732–736}}</ref> They are rare, occurring in only 6% of civil cases that result in a monetary award.<ref name="Conklin">{{cite journal |last=Conklin |first=Michael |date=2020 |title=Factors Affecting Punitive Damage Awards |url=https://papers.ssrn.com/abstract=3615013 |journal=papers.ssrn.com |language=en |location=Rochester, NY |ssrn=3615013}}</ref> Punitive damages are entirely unavailable under any circumstances in a few jurisdictions, including Nebraska, Puerto Rico, and Washington.

The general rule is that punitive damages cannot be awarded for breach of contract, but if an independent tort is committed in a contractual setting, punitive damages can be awarded for the tort.<ref>''Formosa Plastics Corp. USA v. Presidio Engineers & Contractors, Inc.'' 960 S.W.2d 41 (Tex. 1998)</ref> Although state laws vary, punitive damages are usually allowed only when the defendant has displayed actual ''intent'' to cause harm (such as purposefully rear-ending someone else's car), rather than in cases of mere [[negligence]], or causes an injury through action taken in [[Recklessness (law)|reckless]] disregard for the lives and safety of others.<ref>{{cite journal |last1=McMichael |first1=Benjamin J. |last2=Viscusi |first2=W. Kip |title=The Punitive Damages Calculus: The Differential Incidence of State Punitive Damages Reforms |journal=Southern Economic Journal |date=July 2017 |volume=84 |issue=1 |pages=82–97 |doi=10.1002/soej.12217 |url=https://scholarship.law.ua.edu/cgi/viewcontent.cgi?article=1147&context=fac_working_papers}}</ref>

Punitive damages are a focal point of the [[tort reform]] debate in the United States, where numerous highly publicized multimillion-dollar verdicts have led to a fairly common perception that punitive damage awards tend to be excessive. However, statistical studies by law professors and the Department of Justice have found that punitive damages are only awarded in two percent of civil cases which go to trial, and that the median punitive damage award is between $38,000 and $50,000.<ref name=laycock />

There is no maximum dollar amount of punitive damages that a defendant can be ordered to pay. In response to judges and juries which award high punitive damages verdicts, the [[Supreme Court of the United States]] has made several decisions which limit awards of punitive damages through the [[due process of law]] clauses of the [[Fifth Amendment to the United States Constitution|Fifth]] and [[Fourteenth Amendment to the United States Constitution|Fourteenth Amendments]] to the [[United States Constitution]]. In a number of cases, the Court has indicated that a 4:1 ratio between punitive and compensatory damages is high enough to lead to a finding of constitutional impropriety and that any ratio of 10:1 or higher is almost certainly unconstitutional. However, the Supreme Court carved out a notable exception to this rule of proportionality in the case of ''[[TXO Production Corp. v. Alliance Resources Corp.]]'', where it affirmed an award of $10 million in punitive damages, despite the compensatory damages being only $19,000, a punitive-to-compensatory ratio of more than 526-to-1. In this case, the Supreme Court affirmed that disproportionate punitive damages were allowed for especially egregious conduct.<ref>{{cite web |title=TXO Production Corp. v. Alliance Resources Corp., 509 US 443 (1993) |url=https://scholar.google.com/scholar_case?q=TXO+Prod.+Corp.+v+Alliance+Resources&hl=en&as_sdt=2,4&case=7146703882576865947&scilh=0}}</ref>

In the case of ''[[Liebeck v. McDonald's Restaurants]]'' (1994), 79-year-old Stella Liebeck spilled [[McDonald's]] coffee in her lap which resulted in second and third-degree burns on her thighs, buttocks, groin and genitals. The burns were severe enough to require skin grafts. Liebeck attempted to have McDonald's pay her $20,000 medical bills as indemnity for the incident. McDonald's refused, and Liebeck sued. During the case's [[discovery (law)|discovery]] process, internal documents from McDonald's revealed the company had received hundreds of similar complaints from customers claiming McDonald's coffee caused severe burns. At trial, this led the jury to find McDonald's knew their product was dangerous and injuring their customers, and that the company had done nothing to correct the problem. The jury decided on $200,000 in compensatory damages, but attributed 20 percent of the fault to Liebeck, reducing her compensation to $160,000. The jury also awarded Liebeck $2.7 million in punitive damages, which was at the time two days of McDonald's coffee sales revenue. The judge later reduced the punitive damages to $480,000. The case is often criticized for the very high amount of damages the jury awarded.  Nevertheless, many legal scholars and documentary film makers like ''[[Hot Coffee (film)|Hot Coffee]]'' argued that corporate lobbyists seized the opportunity to create public misinformation and distrust of the legal system by leaving out important facts in their television advertisements, such as, that the verdict was roughly equivalent to two days of coffee sales for McDonald's, that Liebeck received permanent [[Liebeck v. McDonald's Restaurants#Burn incident|injury]] to her genitals and groin requiring surgery, and that McDonald's had already received numerous complaints about the temperature of the coffee.<ref>{{cite news |url=http://www.businessinsider.com/the-story-behind-the-caution-contents-hot-label-2016-10 | title=Here's the story behind the 'Caution: Contents Hot' label on your coffee |work=[[Business Insider]] |first=Dene |last=Dryden |date=October 5, 2016}}</ref>

In ''[[BMW of North America, Inc. v. Gore]]'' (1996), the Supreme Court ruled that an excessive punitive award can amount to an arbitrary deprivation of property in violation of due process. The court held that punitive damages must be reasonable, as determined by the degree of reprehensibility of the conduct that caused the plaintiff's injury, the ratio of punitive damages to compensatory damages, and any comparable criminal or civil penalties applicable to the conduct. In ''[[State Farm Auto. Ins. v. Campbell]]'' (2003), the Supreme Court held that punitive damages might only be based on the acts of the defendants which harmed the plaintiffs. The court also elaborated on the factors courts must apply when reviewing a punitive award under due process principles.

Most recently, in ''[[Philip Morris USA v. Williams]]'' (2007), the Supreme Court ruled that punitive damage awards cannot be imposed for the direct harm that the misconduct caused others, but may consider harm to others as a function of determining how reprehensible it was. More reprehensible misconduct justifies a larger punitive damage award, just as a repeat offender in criminal law may be punished with a tougher sentence. Dissenting in the ''Williams'' case, Justice [[John Paul Stevens]] found that the "nuance eludes me", suggesting that the majority had resolved the case on a distinction that makes no difference.

Punitive damages are subjective by their very nature. Since their purpose is to punish—as opposed to compensate—opinions on how to accomplish this will vary widely among jurors. Regardless, research into punitive damages has revealed some common principles. Wealth of the defendant is positively correlated with large punitive damage awards, jurors either downplay or ignore jury instructions regarding punitive damages determinations, and jurors tend to punish defendants who have conducted a cost-benefit analysis.<ref name=Conklin />

==== Important cases ====
* ''[[Pac. Mut. Life Ins. Co. v. Haslip]]'', {{ussc|499|1|1991}}
* ''[[TXO Production Corp. v. Alliance Resources Corp.]]'', {{ussc|509|443|1993}}
* ''[[Honda Motor Co. v. Oberg]]'', {{ussc|512|415|1994}}
* ''[[BMW of North America, Inc. v. Gore]]'', {{ussc|517|559|1996}}
* ''[[Cooper Industries, Inc. v. Leatherman Tool Group, Inc.]]'', {{ussc|532|424|2001}}
* ''[[State Farm Mutual Automobile Insurance Co. v. Campbell]]'', {{ussc|538|408|2003}}
* ''[[Philip Morris USA Inc. v. Williams]]'', {{ussc|549|346|2007}}
* ''[[Exxon Shipping Co. v. Baker]]'', {{ussc|554|471|2008}}