Jury Awards Punitive Damages of $150 million
In July, 2017, a jury awarded Oregon resident Jesse Mitchell $150 million in punitive damages against a drug manufacturer. See, Reuters article.
Damages You can Recover if Injured in an Accident
When someone is injured in an accident, the damages that they may recover include "economic damages", "noneconomic damages" and, in some cases, punitive damages.
Economic and noneconomic damages are designed to compensate a person injured in an accident.
Economic damages are amounts an injured person incurred for medical expenses, damage to their vehicle, lost income and other things. See, Definition of Economic Damages.
Noneconomic damages are amounts an injured person may recover for their pain-and-suffering, emotional distress and other things. See, Definition of Noneconomic Damages.
Punitive Damages defined
Punitive damages are damages designed to punish the at fault party when their conduct is outrageous.
At Fault Party Must have acted Maliciously or Outrageously
To seek punitive damages in Oregon, the injured person must prove that there is evidence that the at fault party acted with malice or did something outrageous. See, Definition of Punitive Damages. For example, someone injured in a motor vehicle accident caused by someone driving under the influence can seek punitive damages.
Oregon law allows punitive damages when the at fault party “… has acted with malice or has shown a reckless and outrageous indifference to a highly unreasonable risk of harm and his acted with a conscious indifference to the health, safety and welfare of others.” See, ORS 31.730 (2015).
Why Seek Punitive Damages?
Many insurance policies do not provide insurance coverage for punitive damages. Thus, unless the at fault party has lots of money, it will be more difficult to get paid if punitive damages are awarded. So why seek them?
One reason to seek punitive damages is because juries often award more economic and noneconomic damages when the at fault party has acted outrageously and insurance companies know that. Moreover, insurance companies have a duty to settle claims against their insureds for a reasonable sum within the policy limits if they can. An injured party often can get a larger settlement from an insurance company when the insured might be liable for punitive damages.
Another reason to seek punitive damages is that it allows evidence of the at fault party’s net worth to be admitted in court.
Must Prove Right to Seek Punitive Damages
To be allowed to include punitive damages in a lawsuit, an injured party must prove to the court that there was some evidence that the at fault party acted maliciously or outrageously. See, ORS 30.725 (2015).
Clear and Convincing Evidence Required to Recover Punitive Damages
To recover economic and noneconomic damages, an injured party must prove that they incurred such damages by a “preponderance” of the evidence. A preponderance means more likely than not.
To recover punitive damages, an injured party must prove that there is “clear and convincing evidence” that they are entitled to those damages. See, ORS 31.730 (2015). That is more difficult to prove than a mere preponderance.
Amount of Punitive Damages Limited by Constitution
Oregon courts, and even the United States Supreme Court, have held large awards of punitive damages to be unconstitutional when the amount of punitive damages awarded greatly exceeds the amount of economic and noneconomic damages awarded.
The Oregon Court of Appeals held that a $22.5 million award of punitive damages was unconstitutional under the due process clause when the jury only awarded $500,000 in compensatory damages. See, Bocci v. Key-Pharmaceuticals, Inc., 189 Or App 349 (2003). The court held that an award of 7 times as many punitive damages as compensatory damages would be constitutional and reduced the verdict to $3.5 million in punitive damages and $500,000 in compensatory damages. Id.
However, in 2015 the Oregon Court of Appeals reduced an award of $125 million in punitive damages only to $25 million even though the jury had awarded only $168,514 in compensatory damages. See, Schwarz v. Philip-Morris-USA, Inc., 272 Or App 268 (2015). That’s a ratio of over 148 to 1! The court probably allowed a large punitive damage award because the conduct of Philip Morris was especially outrageous.
Unfortunately for Mr. Mitchell his $150 million punitive damage award against AbbVie discussed at the beginning of this blog will probably be held unconstitutional as the jury did not award any compensatory damages. See, Counsel Financial article. I will keep you posted.
Oregon Gets 70% of Punitive Damages Awarded Once Judgment Entered
One downside to recovering punitive damages is that 70% of the punitive damages awarded must be paid to the State of Oregon. See, ORS 31.735 (2015). This is because punitive damages are not awarded to compensate the injured party but rather to punish the at fault party.
However, some parties have avoided paying Oregon its share of punitive damage awards by settling after a jury returns a verdict but before a judgment is entered. See, Patton v. Target Corp., 349 Or 230 (2010). The state appealed the ruling that it was not entitled to be paid and the Oregon Supreme Court ruled that the state was not entitled to be paid because a judgment had not been entered before the settlement. Patton, 349 Or at pages 243 – 244.
The Oregon Supreme Court in 2011 again held that the State of Oregon could not prevent parties from settling after a verdict awarding punitive damages even if the settlement wiped out Oregon’s right to punitive damages.
The court held that, “[t]he parties remain free to settle the case as they see fit [after the verdict]. The state’s consent to the settlement is not required even if the settlement reduces or eliminates the punitive damages award that would be allocated to the state under ORS 31.735. However, once a court has entered judgment awarding punitive damages, and only then, does the state have the right of a judgment creditor to enforce the statutory allocation of part of the punitive damages award to the crime victims’ fund.” See, Williams v. R.J. Reynolds Tobacco Company, 351 Or 368 (2011).
The bottom line is that it may be worthwhile including punitive damages in your personal injury case as it will encourage the insurance company to offer more to settle the case and will make it more likely that you recover more at trial.
Gary R. Johnson is a Central Oregon attorney who has handled personal injury cases since 1994.