Law Review Article Addresses Punitive Damages Ratio Calculations

Public Policy Group attorneys Mark Behrens, Cary Silverman and Christopher Appel have published an article in the Wake Forest Law Review examining the issue of whether awards of attorney fees, prejudgment interest, and other costs to a plaintiff may be included in the ratio calculation for determining a punitive damage award. A growing number of courts have been asked by plaintiffs’ counsel to include these extra-compensatory damages in order to significantly increase the maximum amount of punitive damages that may be awarded in a case, while still adhering to the Supreme Court’s constitutional limitations on punitive damage awards. The article analyzes the existing case law on this issue and concludes that the practice would offend the Supreme Court’s due process framework and adversely impact the general dynamics of litigation.

Extracompensatory damages are primarily intended to achieve a social, moral, or other purpose, and represent the transaction costs of the civil justice system. They do not compensate the plaintiff for actual or potential harm and are not determined by the jury. The availability of such awards, and their amounts, are decided as a matter of law by the judge after a jury’s assessment of the defendant’s conduct and the plaintiff’s actual harm. A few courts, however, have treated such extracompensatory damages as legally equivalent to damages meant to compensate for the harm itself, mixing apples and oranges into a purée to support otherwise disproportionate punitive damages ratios.