A Video Explaining the History and Application of Punitive Damages Unlisted Video

A Video Explaining the History and Application of Punitive DamagesShow more

The award of punitive-type damages was common in early legal systems, and was mentioned in religious law as early as the Book of Exodus. Punitive-type damages were provided for in Babylonian law nearly 4000 years ago in the Code of Hammurabi, in the Hittite Laws of about 1400 B.C., in the Hebrew Covenant Code of Mosaic Law of about 1200 B.C., and in the Hindu Code of Manu of about 200 B.C. [Owen, Punitive Damages in Product Liability Litigation, 74 Mich L Rev 1257, 1262 n17 (1976).]

The book of Exodus in the Old Testament provides:

If a man steals an ox or a sheep, and kills it or sells it, he shall pay five oxen for an ox, and four sheep for a sheep. He shall make restitution; if he has nothing, then he shall be sold for his theft. If the stolen beast is found alive in his possession, whether it is an ox or an ass or a sheep, he shall pay double. [EXODUS, 22:1]

The punitive damages remedy has a long history. It was first articulated in England in a case of illegal entry. The jury was held justified in going beyond “the small injury done to the plaintiff” because of the desirability of taking account of “a most daring public attack made upon the liberty of the subject” through entry and imprisonment pursuant to “a nameless warrant.” [ Huckle v. Money, 2 Will.K.B. 206, 95 Eng.Rep. 768 (1763) and Wilkes v. Wood, Lofft 1, 18, 19, 98 Eng.Rep. 489, 498-99 (C.P.1763)}

By the mid-1800s, as punitive damages increasingly became an established part of American tort law, American courts emphasized the punishment purpose of punitive damages. For example, in Hawk v Ridgway (1864) 33 Ill 473, 476, the court stated, "[w]here the wrong is wanton, or it is willful, the jury is authorized to give an amount of damages beyond the actual injury sustained as a punishment, and to preserve the public tranquility." Justice Scalia of the United States Supreme Court noted in a concurring opinion that, "In 1868, therefore, when the Fourteenth Amendment was adopted, punitive damages were undoubtedly an established part of American common law of torts." [Pacific Mut. Life Ins. Co. v Haslip (1991) 499 US 1, 26, 113 L Ed 2d 1, 25, 111 S Ct 1032.]

Application of Punitive Damages

In 2003 the US Supreme Court put limited punitive damages in the United States when in State Farm Mutual Automobile Insurance Co. v. Campbell. 123 S.Ct. 1513, 538 U.S. 408, 155 L.Ed.2d 585 (U.S. 04/07/2003) by a 6-3 vote, overturned a $145 million verdict against an insurer. The Supreme Court concluded that a punitive damages award of $145 million, where full compensatory damages were $1 million, is excessive and violates the Due Process Clause of the Fourteenth Amendment.

Justice Kennedy, writing for the majority limited the ability of state and federal courts to award huge punitive damages awards and concluded that it was improbable that a punitive damage award more than a single digit multiplier of the compensatory damages award would seldom, if ever, pass the due process test. The Supreme Court, in BMW of North America, Inc. v. Gore, supra, set forth specific tests that must be met before punitive damages could fulfill the requirements of due process.

© 2021 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

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