Punitive Damages Decisions: A Boon for Insurers  

When a lawyer asks for punitive damages against an insurer for bad faith conduct he or she will always ask the jury to "teach the insurer a lesson" to stop it from doing the same to others. The argument has been successful in thousands of bad faith suits brought from California to Florida and from Texas to Wyoming.

 

 

The United States Supreme Court weakened, if not destroyed, that argument in Philip Morris USA, v. Williams, Personal Representative of Estate of Williams, Deceased, on Certiorari to the Supreme Court of Oregon, 127 S.Ct. 1057, 75 USLW 4101, 07 Cal. Daily Op. Serv. 1754, 2007.SCT.0000022 (2007).

 

 

After years of abusive punitive damages awards and thousands of settlements to avoid the lottery-like nature of punitive damages awards the US Supreme Court has finally set a line in the sand that will prevent trial courts from assessing excessive and unreasonable punitive damages awards. Punitive damages should, if Campbell is applied with good faith, never exceed three or four times the compensatory award and when the compensatory award is large, as was the $1 million awarded the Campbells for 18 months of emotional distress, should not exceed one time the compensatory award. Defense lawyers now have a guide to explain to juries that their punishment of a defendant is limited. Plaintiff's lawyers can take heart that if the punitive award is reasonable and a single digit modifier will be able to collect their judgment without unnecessary appeals.

 

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