Punitive Damages Awards in Product Liability Suits
Punitive damages are damages in excess of damages awarded to compensate a tort victim for injuries sustained. Also called exemplary damages, punitive damages are awarded to punish a tortfeasor for wanton or malicious conduct. Punitive damages have often been assessed in product liability actions.
The United States Supreme Court has indicated that punitive damages awards in product liability cases may violate the due process clause of the Constitution if they exceed a single digit ratio to the amount of compensatory damages awarded. Nevertheless, the Oregon Supreme Court reinstated a $79.5 million verdict against a cigarette manufacturer in an action by the family of a smoker who died of lung cancer. The compensatory damages awarded in the case amounted to $800,000. The Oregon court reasoned that the punitive damage award was justified by the “reprehensible misconduct” of the manufacturer.
A number of states have passed legislation imposing limits on punitive damage awards. For example, in Colorado, punitive damage awards cannot exceed the amount of compensatory damages awarded. In Alabama and Montana, the amount of punitive damages recoverable varies, depending on the net worth of the defendant. In Indiana, the plaintiff receives only 25 percent of any punitive damages award, with the remaining 75 percent going into a victim’s injury fund. Other states have laws specifically regulating punitive damage awards in product liability cases. For example, North Carolina law precludes punitive damages awards against product manufacturers and sellers unless it is proven that they knowingly failed to comply with government product approval requirements or that they paid government officials to secure such approval.
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