United States: How To Defend Effectively A Punitive Damages Claim

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)

A punitive damage award in a high profile case might describe a corporate defense attorney’s worst nightmare. Consider for a moment a $2.7 million punitive damages award against McDonald’s Corporation for burns a customer suffered from a coffee spill; a $7.1 million award given a secretary who prevailed in a sexual harassment case; a $101 million award assessed against General Motors in a design defect case; a $125 million award against a pharmaceutical company; and a $3 billion punitive damage award against Exxon Corporation related to the Exxon Valdez oil spill.¹ Although these awards are often reduced during subsequent trial/appellate court review,² the original punitive damages awards typically generate fierce debate and media hype, as well as injury to the defendant corporation’s reputation.

In today’s climate of intensified accountability and safety consciousness, juries expect manufacturers, professionals, and other providers of products and services to account for the safety of their respective endeavors. In any case where a plaintiff successfully proves liability against a highly visible defendant on the theory that the defendant failed to provide a safe product or service, the threat of a substantial punitive damages award must be taken seriously. In addition to actually paying punitive damages, the corporation can anticipate the cost of litigating the issue to final appeal and of dealing with media propaganda and possibly private activist groups.

In order to avoid a highly damaging punitive damages award, the defense attorney must focus on the punitive aspect of the case from the day the file is opened. All too often, the punitive damages claim is one of the last things the defense attorney’s considers, when it should be one of the first.

The purpose of this article is to address the risks associated with claims for punitive damages and the different methods which may be employed to protect a corporate defendant from such claims. Although this commentary is designed to provide a general overview, and may cite specific state law on occasion, it is important to remember that the laws affecting punitive damages claims vary from jurisdiction to jurisdiction and must always be carefully researched and analyzed by the defense attorney during the pendency of a punitive damages claim.

Punitive damages in civil actions have been defined as those damages which are awarded ". . . against a person to punish him for his outrageous conduct and to deter him and others like him from similar conduct in the future."³ A defendant who has an "evil motive" or "reckless indifference to the rights of others" is to be punished and that punishment is achieved through the imposition of punitive damages.⁴

The concept of punitive damages dates back over 2000 years before the birth of Christ  to the Code of Hammurabi. Under the Code of Hammurabi, a judge who altered a judgment previously rendered was required to pay a twelve-fold penalty. In 1400 B.C., Hittite law required the thief of a "great" bull or horse to repay the owner with 15 bulls or horses.⁵ In addition to the quote which begins this article, the Book of Exodus refers to exemplary damages for the commission of other egregious acts: "For all matter of trespass, whether it be for ox, for ass, for sheep, for raiment, or for any manner of loss thing, which another challengeth to be his, the cause of both parties shall come before the judges; and whom the judges shall condemn, he shall pay double unto his neighbor."⁶ These references in the Bible to exemplary damages were apparently the first indication that punitive damages should bear a multiple, albeit arguably reasonable, relationship to the compensatory award.⁷

The first recorded punitive damage award in a civil case was made in the 18^th Century in England, in the case of Huckle v. Money.⁸ In that case, Lord Camden found that the power to make punitive damage awards was inherent in the jury’s exercise of uncontrolled discretion in the awarding of damages.⁹ Interestingly enough, although Lord Camden found that the jury had the inherent power to make punitive damage awards, he also found that an award of punitive damages may warrant a new trial when that award is "outrageous," and "all mankind at first blush must think so."¹⁰

In the United States, punitive damages have existed in one form or another since the early days of the republic. In Coryell v. Colbaugh, the court held that punitive damages may appropriately be awarded "for example’s sake, to prevent such offenses in the future. . .[and] as would mark [the jury’s] disapprobation. . ."¹¹ Certainly, by 1851, the United States Supreme Court had noted that the doctrine of punitive damages was firmly entrenched in our legal system. In the case of Day v. Woodworth, Justice Grier, writing for a unanimous court, stated that a jury "may inflict what are called exemplary, punitive, or vindictive damages upon a defendant, having in view the enormity of his offense rather than the measure of compensation to the plaintiff."¹²

Although the "theoretical correctness" of the punitive damages doctrine was debated as late as the 1880’s and 1890’s, nearly all courts had accepted the concept by the turn of the century.¹³ In the last 30 years, thanks in large part to a spread of "consumerism" and extensive media attention directed to defective products, consumer goods and services, claims for punitive damages have become almost common place.¹⁴ According to a pair of recent commentators, ". . . the doctrine of punitive damages survives [to this day] because it continues to serve the useful purposes of expressing society’s disapproval of intolerable conduct and deterring such conduct where no other remedy would suffice."¹⁵

As stated earlier, the defense attorney should be aware of the fact that the laws pertaining to punitive damages differ considerably among jurisdictions. When the defense attorney is without particular knowledge of the punitive damages rules in a given jurisdiction, those rules must be carefully researched.

A. Examining Choice Of Law:

Because the law’s affecting punitive damages vary from jurisdiction to jurisdiction, the defense lawyer may need to spend considerable time analyzing choice of law issues, if appropriate, based on the facts of the case. Courts typically consider the following factors in determining choice of law for punitive damages: (1) the state of the plaintiff’s residence; (2) the state where the wrongful conduct occurred; and (3) competing states’ interests.¹⁶ Also worth noting is that in certain jurisdictions, the law applied to punitive damages may differ from the law applied to other issues in the same action.¹⁷

B. Looking To Punitive Damages Law:

It is important to note that there is no cause of action just for punitive damages. Nearly all jurisdictions require entitlement to compensatory damages before punitive damages may be awarded, although some permit them if injunctive relief is granted.¹⁸ In many jurisdictions, an award of even nominal damages is insufficient as a matter of law to support punitive damages, while in others nominal damages will support an award of punitive damages.¹⁹ What constitutes "nominal damages" is generally left to the trial court’s discretion.²⁰

Defense counsel should also be aware of the fact that punitive damages have been prohibited in certain types of cases, including wrongful death cases, property damage claims, and claims against public entities.²¹ In addition, in most jurisdictions, if the complaints sounds in contract, punitive damages are unavailable as a remedy.²²

Defense counsel must also be aware of the fact that jurisdictions differ in their descriptions of the type of conduct which warrants the imposition of punitive damages. Some courts require that the character of negligence necessary to sustain an award of punitive damages is the same as that required to sustain a conviction of manslaughter.²³ Other states require only a showing of gross negligence.²⁴ Still other states allow the imposition of punitive damages where a defendant has exhibited "reckless or flagrant indifference," or "willful," "wanton," or "malicious" disregard of the rights of others.²⁵ Yet other courts have allowed the imposition of punitive damages when the defendant has exhibited a "flagrant indifference to the public safety."²⁶ No matter what description of outrageous conduct is employed by the court, one thing is clear: punitive damages should never be awarded for mere inadvertence, mistake, or errors of judgment which constitute ordinary negligence.²⁷

It is generally recognized that an employer may be liable to third parties for the tortious acts of its employees. However, there appears to be a conflict of opinion as to when an employer can be held vicariously liable for punitive damages based on an employee’s conduct. According to the Restatement of the Law of Agency (Second) Section 217C and the Restatement (Second) of Torts Section 909, employers are vicariously liable for punitive damages when the employee’s act was ratified, approved, or authorized by the employer, where the employee was acting in a managerial capacity, or where the employee was unfit for duty.²⁸ California Civil Code Section 3294(b) states that an employer may be vicariously liable for punitive damages based on the actions of an employee where the employer ". . . had advanced knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others[,] or authorized or ratified the wrongful conduct for which the damages are awarded or was personally guilty of oppression, fraud or malice." One California case imposed vicarious liability for punitive damages without authorization or ratification of the actions of employees who had been placed in a managerial capacity.²⁹ Other jurisdictions impose punitive damages on an employer if those damages would have been charged to the employee (e.g., if the employee acted wantonly or willfully, or with a reckless indifference to the rights of others).³⁰ Yet other courts require some showing of an act or omission on the part of the employer before imposing liability, such that an "innocent employer" cannot be held vicariously liable for punitive damages.³¹ Still other states recognize specific instances where punitive damages cannot be imputed to an employer for an employee’s act, such as when the employee has been discharged from personal liability. Essentially, a favorable judgment for the employee relieves the employer of liability.³² Clearly, defense counsel must examine the applicable case law when a plaintiff is attempting to hold a corporate defendant vicariously liable for punitive damages.

Finally, defense counsel must recognize that the burden of proof for punitive damages claims differs between jurisdictions. For example, the Indiana Supreme Court has held that the standard in that state for recovery of punitive damages is proof of the misconduct by "clear and convincing evidence."³³ In Maine, Idaho, Arizona, and California, punitive damages may be awarded only when the plaintiff proves by clear and convincing evidence that the defendant acted with malice or engaged in wanton, gross or outrageous conduct.³⁴ In Colorado, punitive damages may only be recovered based on "proof beyond a reasonable doubt."³⁵ Clearly, the general rule regarding punitive damages and a plaintiff’s burden of proof is that there is no general rule and, as such, defense attorneys must carefully research the plaintiff’s burden of proof when a punitive damages claim is made.

After determining the applicable law, defense counsel should carefully examine and dissect the punitive damages claim in the pleadings. A major task in defending any such claim is defining and limiting the plaintiff’s underlying theory and facts. To the extent the defense allows, the plaintiff’s attorney will naturally resist disclosure of the specifics of his punitive damages case. Sometimes this is strategic, and other times it is because the plaintiff’s attorney himself has not formulated a coherent basis for the punitive damages claim. Whatever the case, defense counsel must compel disclosure of the theory and the evidence supporting the punitive damages claim as early in the case as possible.

A. Attack The Plaintiff’s Theory:

The first step in identifying and limiting the plaintiff’s punitive damages theory is to compel plaintiff to clearly articulate the theory in the complaint. Once the complaint has been served, defense counsel should consider moving for dismissal of the punitive damages claim under applicable state law, Federal Rule of Civil Procedure 12, or, in an appropriate case, Federal Rule of Civil Procedure 56. Defense counsel should promptly move to strike those allegations which do not comport with the governing procedural and substantive laws, and where permissible, should demand particulars as to the factual basis for the punitive damages claim. Defense counsel should also be aware of the fact that in several jurisdictions, plaintiffs are prohibited from pleading punitive damages in their original complaint. Moreover, before a plaintiff may amend the original complaint to include a prayer for punitive relief, an evidentiary hearing must be held.³⁶

Finally, defense counsel must keep in mind that the punitive damages claims can be eliminated even though plaintiff has alleged enough to support liability on the underlying compensatory damages claim. Even if the defense is unsuccessful in striking the punitive damages allegations (e.g. for lack of particularity or failure to state a claim), these efforts will educate the court and defense counsel as to the nature of the punitive damages claim and will set the stage for future efforts to defeat the punitive aspects of the case before trial.

B. Utilize Affirmative Defenses:

In the event that defense counsel’s motion to dismiss is denied, and an answer to the complaint must be prepared, defense counsel must negate the facts alleged in the complaint regarding punitive damages and must be sure to include all arguable affirmative defenses. Exemplary affirmative defenses include the following:

1. Statute Of Limitations:

Since a punitive damages claim is not in and of itself a cause of action, the statute of limitations that governs the underlying action is most often applied as well to the exemplary claim.³⁷ Obviously, if a plaintiff’s underlying action is not brought within the time prescribed by the applicable statute of limitations, the defendant should assert a defense based on that statute. A trial court’s disposition of the issue will eliminate any punitive damages claim.³⁸

2. Statutory Limitations On Punitive Damages:

Certain statutes, including the Federal Tort Claims Act and Federal Employer’s Liability Act, explicitly prohibit the recovery of punitive damages.³⁹ Accordingly, in any action to which these statutes apply, the defense should plead as an affirmative defense these statutory prohibitions against punitive damages.

3. Status Of Parties:

Defense counsel should examine the status of the parties joined to the punitive damages claim. Sometimes certain parties may be exempt from punitive damages by law (i.e., governmental entities, a decedent through his or her estate, heirs or representatives, and a defendant who is an infant under applicable statutes).³⁰ In addition, exemplary damages may also not be recoverable from governmental entities which act in a receivership role.⁴¹ Moreover, the joinder of one party exempt from punitive damages may preclude the plaintiff from recovering punitive damages against the other parties to the suit.

4. Compliance With State Or Federal Statutes/Regulations:

Although compliance with governmental standards may not be a complete defense to a compensatory damage claim, in some jurisdictions it may be treated as a complete defense to a punitive damages claim. Some states, for example, have statutes which provide that a product is presumed safe if it complies with the required standards.⁴² In those jurisdictions in which compliance with governmental standards acts as a complete defense to a punitive damages claim, said compliance should be included in an affirmative defense to the plaintiff’s complaint at law.

5. Common Law Privileges:

When the plaintiff’s underlying cause of action is based upon an alleged intentional tort, defense counsel should consider pleading one or more of the common law privileges to intentional torts.⁴³ If the defendant’s conduct is later found to have been privileged, the plaintiff’s underlying action will be defeated, along with the claim for punitive damages. Moreover, to the extent that a privilege must be proved as an affirmative defense, alleging it will allow the defense to "present its own case" and not merely rely on cross examination of the plaintiff’s witnesses.⁴⁴

6. Provocation:

During the pleading stage, if the facts warrant it, defense counsel should consider arguing that the plaintiff’s actions "provoked" the defendant’s conduct, and as such, mitigate the plaintiff’s possible exemplary recovery. At least two courts have held that "[p]rovocation, while not a justification or a defense in an action for compensatory damages for an assault, may be considered in mitigation of exemplary damages."⁴⁵

7. Acting On Advice Of Counsel:

Another possible defense to the imposition of a punitive damage award may be the fact that the defendant acted on the advice of counsel. The fact that a party procures and acts upon the advice of an attorney is relevant to proving intent or knowledge which, in turn, tends to rebut allegations of malice and bad faith.⁴⁶ Acting on the advice of counsel, however, will not always preclude an award of punitive damages. To invoke this defense, the defendant must plead and prove full disclosure of the situation and good faith reliance on the advice procured.⁴⁷

8. Constitutional Challenges:

If defense counsel intends to attack the constitutionality of punitive damages at a later stage in the proceeding, the attack should specifically be preserved through the use of affirmative defenses.

One of the major constitutional arguments against punitive damages is based on the Fourteenth Amendment’s Due Process Clause, which requires that legal proceedings be consistent with fundamental fairness, ordinary notions of fair play and settled rules of law, and not offend the community’s sense of decency. Defense counsel should be aware of the fact that several recent United States Supreme Court opinions discuss whether or not punitive damages awards violate the due process clause of the U.S. Constitution.

In Pacific Mutual Life Ins. Co. v. Haslip,⁴⁸ the Supreme Court upheld the Alabama standard of review for punitive damages awards against a due process challenge. The Court affirmed a two-part test articulated by Justice Blackmun for determining whether the procedures employed in Alabama satisfied common law and procedural requirements: (1) the state must provide the jury with "adequate guidance" as to the nature and intent of punitive damages; and (2) the post-verdict judicial review, both by the trial court and appellate courts, must ensure that the award of punitive damages is reasonable.

In June of 1993, the Supreme Court issued an opinion in TXO Production Corp. v. Alliance Resources Corp.,⁴⁹ and appeared to retreat from its more definitive Haslip decision in a confusing plurality decision outlined in four separate opinions. In TXO, it was argued that the award of punitive damages violated both procedural and substantive due process. The award for punitive damages was ultimately upheld by the Supreme Court through a wide variety of legal reasoning.

In addition to being a confusing opinion, TXO offers little guidance for defense counsel regarding the limits that are to be placed on punitive damage awards. According to the Supreme Court, punitive damage awards are to be measured under a "grossly excessive standard." The Supreme Court articulated a similar stance a year later in the case of Honda Motor Co. v. Oberg,⁵⁰ where it refused to create a standard for determining the excessiveness of a punitive damage award.

Recently, the Court handed down its opinion in the case of BMW of North America v. Gore.⁵¹ In the BMW case, the plaintiff brought an action against BMW for allegedly selling a $41,000 BMW Sedan with an undisclosed retouched paint job. Following a trial of the matter, an Alabama jury awarded the plaintiff $4,000 in compensatory damages and $4 million in punitive damages. The Alabama Supreme Court later reduced that award to $2 million because the jury improperly multiplied the plaintiff’s compensatory damages by the number of automobiles sold in all 50 states, not just Alabama.

In an opinion authored by Justice Stevens, the Supreme Court held that the $2 million punitive damages award was grossly excessive and therefore exceeded constitutional limits. According to the court, when an award can be categorized as "grossly excessive" in relation to the state’s interest in punishment and deterrence, it enters a "zone of arbitrariness that violates the Due Process Clause of the Fourteenth Amendment." The Court determined that Alabama exceeded the scope of its legitimate interest based on the application of the following three "guideposts":

1. the degree of reprehensibility;
2. the ratio of the punitive damage award to the actual harm inflicted on the plaintiff; and
3. the state’s sanctions for comparable misconduct.

Defense counsel should carefully review the criteria set forth from the BMW opinion and, where appropriate, fashion these criteria into a constitutional affirmative defense designed to guard the defendant’s due process rights.

Yet another issue that arises in regard to the constitutionality of punitive damages claims is what constitutional limitations apply in those cases in which a defendant has been subject to multiple or successive punitive damage awards? Defense counsel should note that a federal district court in New Jersey has held that due process considerations prohibit the imposition of multiple or successive punitive damage awards against the defendant for the same course of conduct.⁵² When dealing with a defendant who has been subject to multiple punitive damage awards, defense counsel should plead a violation of the defendant’s due process rights as an affirmative defense.

Another constitutional challenge that can be made is that punitive damage awards violate the Eighth Amendment’s prohibition against excessive fines. It should be noted that the United States Supreme Court, in the case of Browning-Ferris Industries v. Kelco Disposal, Inc.,⁵³ held that an excessive fine argument was not available under the Eighth Amendment of the United States Constitution when the suit is between two private parties. It has yet to be determined whether governmental involvement will bring the same results.

Three states (Utah, Florida and Georgia) have recently enacted statutes which allow the state to recover a portion of the punitive damages award in a range of civil actions.⁵⁴ These statutes reflect an intent for punitive damages to punish the wrongdoer, rather than to compensate an injured party. Any defense attorney working under a statute in which the state shares in or affirmatively seeks punitive damages should be wary of potential abuse and should seek constitutional protection pursuant to the excessive fines clause of the Eighth Amendment.

Yet another argument that can be made in an affirmative defense to a claim for punitive damages is that such an award would violate the separation of powers doctrine, since the court and jury would be usurping the exclusive power of the legislature to define crimes and establish punishments. In those relatively few jurisdictions where courts allow a plaintiff to recover punitive damages on a contract claim, defense counsel may wish to argue that an award of punitive damages would violate the contract clause contained in Article I, Section 10 of the United States Constitution. In addition, counsel may wish to file an affirmative defense than an award of punitive damages would violate the defendant’s constitutional right to not be placed twice in jeopardy for the same conduct.⁵⁵

Affirmative defenses raising constitutional challenges to the imposition of punitive damages may not be successful at the trial level, but including such affirmative defenses in the answer to the complaint will most certainly preserve those constitutional challenges for review. For that reason alone, defense counsel is well advised to carefully consider incorporating constitutional affirmative defenses into the defendant’s answer to the plaintiff’s complaint.

The defense of a punitive damages claim involves a race for the facts. Defense counsel should realize that he or she starts this race at a tremendous disadvantage. Not only does the plaintiff’s attorney have a substantial lead in the investigation of the particular events which give rise to the claim for punitive damages, but in most cases, he will also be drawing upon the experience of the entire plaintiff’s bar in similar cases. With this in mind, it cannot be stressed enough that defense counsel must investigate the claim for punitive damages at the earliest possible stage.

A. Meeting With The Defendant And Interviewing The Defendant’s Employees:

While the applicable law is being determined, and the pleadings are being put in order, the very first thing that defense counsel should do is to meet with corporate representatives who will explain and justify the conduct giving rise to the punitive damages claim. In these early stages, counsel can begin to "circle the corporate wagons." This involves informing the corporation of the nature of the punitive damage claim, as well as the seriousness of the claim, even if the plaintiff’s theory has not yet been delineated in the pleadings. At this point, counsel can begin building a working rapport with corporate officers who may well serve as witnesses at the trial and can invariably aid counsel in the investigation of the claim.

It is critical at this juncture that defense counsel stress to the corporate defendant the importance of presenting a unified front from this point on through the conclusion of the litigation. In fortifying the unified front, defense counsel must stress to personnel from management on down the corporate ladder that there will be no passing of the buck, pointing fingers at other employees, or any other discussion outside of the corporate environment of matters pertaining to the case.

Finally, counsel should work hand-in-hand with corporate management at the earliest stages of preparation in order to create an impression of corporate harmony and to avoid damaging statements from all levels of the corporation. Counsel should also be sure to discuss with the defendant the cost involved in defending the punitive damages claim. Though the cost of an aggressive defense may be substantial, defense dollars are well spent on early and thorough efforts to undermine punitive damages claims.

B. Building A Rapport With The Defendant’s Employees:

Defense counsel must learn which employees were involved in the incidents or actions which gave rise to the claim for punitive damages and build a rapport with them as well. For example, in the product liability context, defense counsel should meet the key people affiliated with the corporation who were responsible for the research, testing, design and construction of the product. These employees will explain and justify how the product was developed and manufactured, and will be the most important witnesses at the trial of the case. In addition, that group of employees will also provide invaluable assistance in directing the course of future investigation and discovery.

Once the key employees have been identified and interviewed, defense counsel should extend the investigation to former employees and outside consultants or contractors who helped develop the product. These potential witnesses, because of the lack of direct interest, may be among the defendant’s most effective witnesses at trial. These are also the individuals in whom the plaintiff and his investigators will be particularly interested.

The prosecution of most punitive damages claims proceeds according to one or more proven formulas or themes. One very popular formula with corporate defendants is for the plaintiff to develop his case through the cooperation and contribution of disgruntle former employees of the defendant company. Thus, where the plaintiff seeks punishment in addition to compensation, the defense must be on the lookout for the "rotten egg." Through early investigation and meetings with the corporate defendant, defense counsel can learn the identities of problem witnesses before the plaintiff’s discovery requests are ever filed. Defense counsel must then spend time with these potential witnesses, not only to learn what they know, but to encourage their cooperation with the defendant. This step cannot be emphasized enough, since meetings with these individuals will allow counsel to learn more about the witnesses he will be working with during the course of the litigation and will also allow counsel to win those individuals over before their identity must be disclosed to the plaintiff during the course of discovery.

On a final note, defense counsel should be careful to maintain the attorney-client privilege with all of these witnesses. Defense counsel should explain the privilege to all of the witnesses and encourage them to speak freely. In addition, because defense counsel should always review any documentation that he or she is able to uncover, defense counsel must consider the privilege ramifications of these documents as well. To protect and maintain this attorney-client privilege, defense counsel is wise to keep all documentation that is uncovered within the control of a specified, defined control group.

Discovery efforts on the punitive damages aspect of a case must exceed that normally devoted to the liability and compensatory damages aspects of the case. A passive role in discovery when punitive damages are sought is a recipe for disaster.

A. Discovery Addressed To The Plaintiff:

As soon as possible after the filing of the answer, aggressive discovery against the plaintiff should commence. Specific interrogatories designed to elicit information regarding the plaintiff’s punitive damages theory, the facts in support of the punitive damages claim, any documents held by the plaintiff which would support the claim and any experts who are expected to testify against the defendant about the claim should be filed and served. If the plaintiff’s answers to these interrogatories set forth factual material that enables the defense attorney to outline the claim, counsel is in a position to alert the defendant and the defendant’s witnesses of the expected theory and the plaintiff’s approach to the same.⁵⁶

In addition to interrogatories, defense counsel should serve a request for production of documents on the plaintiff’s attorney. Defense counsel should be mindful of the fact that plaintiff’s counsel may have a complete library of defense documents obtained from the plaintiff’s network of attorneys that handle similar cases. Therefore, he will undoubtedly scrutinize whether all relevant documents have been produced by the defendant in response to his own request to produce. To insure possession of all a client’s documents, and to blunt any effort by the plaintiff to imply guilt on the basis of failure to produce documents, defense counsel should request that plaintiff’s counsel produce any and all of the defendant’s documents in the plaintiff’s possession.

Oftentimes, the plaintiff’s attorney will respond to defense interrogatories in a general way, indicating that specific answers cannot be provided due to the fact that discovery has not yet been completed. These typically vague, non-responsive answers should be challenged with motions to compel, motions for a more definite statement, or other similar motions, in an attempt to make the plaintiff commit to paper the theories on which his punitive damages claim rests.⁵⁷

Motions to compel more complete responses to discovery serve at least two purposes. To begin with, even assuming that the plaintiff’s attorney has undertaken no discovery in the case, he obviously did not file the lawsuit in a vacuum -- he has some theory or theories which underlie his claim for punitive damages. Accordingly, the plaintiff’s attorney should be required to set forth those theories as soon as practically possible. A second reasons for filing a motion to compel is to attempt to determine whether the plaintiff’s claim for punitive damages is frivolous. When a complaint has been filed without supporting facts, having the plaintiff admit as much educates the judge to the possibility that the plaintiff has simply embarked on a fishing expedition. In light of this information, some judges will severely limit discovery or cause other problems for the plaintiff’s attorney.⁵⁸

B. Discovery Addressed To The Defendant

Many successful punitive damages cases are based on incriminating information contained in answers to interrogatories or incriminating documents produced by the defendant. Defense counsel should work closely with the appropriate corporate representatives to insure that the plaintiff’s interrogatories addressed to the defendant are answered as accurately and carefully as possible. Special care should be taken to not volunteer information that has not been specifically requested in the interrogatories and every effort must be made to object to those interrogatories which are vague, ambiguous, overbroad, or unduly burdensome.

It cannot be stressed enough how important it is to carefully and methodically respond to a plaintiff’s request for production of documents. Defense counsel must review all of the relevant documents in the defendant’s possession in order to acquaint herself with all of the pertinent information contained within those documents and in order to familiarize herself with those documents that may cause potential problems. Every effort should be made to resist broad discovery requests which seek an all-inclusive or exhaustive production of all of the documents in the defendant’s possession. Possible objections to such requests include that the documents requested contained trade secrets, are protected by the attorney-client privilege, or are irrelevant. When required to produce voluminous documents, defense counsel should make every effort to obtain a protective order from the court to prohibit the dissemination of the documents produced to parties outside the lawsuit.

It is of particular importance in a punitive damages case for defense counsel to ensure that relevant documents are not destroyed or withheld and that production to the plaintiff is complete. The destruction or withholding of key documents can destroy a defendant at trial. If the jury believes the defendant has deliberately destroyed or withheld material documents, the likelihood of a very big hit -- a runaway compensatory and punitive damages award -- will be greatly enhanced.

Extreme care should be exercised to prevent the inadvertent destruction of potentially relevant documents. Defense counsel should promptly advise the client that documents must not be destroyed after the commencement of the litigation or first-hand knowledge of the claim. As to materials already disposed of before the beginning of the case, defense counsel must be prepared to demonstrate that their disposal was pursuant to a pre-established corporate document retention and disposal policy.⁵⁹

Given that the philosophy of punitive damages is to punish the defendant, the plaintiff’s attorney will undoubtedly argue that the jury is entitled to know the extent of the defendant’s wealth so that the jury can decide what punitive damages amount is substantial enough to punish the defendant for its bad deeds. To that end, the plaintiff’s attorney will undoubtedly serve interrogatories or requests for production of documents designed to discover the defendant’s financial worth.

Defense counsel should be aware that some states have passed statutes which govern the scope of discovery in punitive damages cases. For example, in some jurisdictions a plaintiff may not seek discovery on the issue of a defendant’s assets unless and until he has made a prima facie showing that the defendant may be liable for punitive damages.⁶⁰ In other jurisdictions, evidence of a defendant’s pecuniary circumstances is not admissible, even though the jury is authorized to award punitive damages.⁶¹ When possible, defense counsel should take advantage of these statutes to limit or defeat the plaintiff’s request for financial information.

Depending on the law of the particular jurisdiction, the defense attorney should resist discovery of financial information either by obtaining a protective order that the discovery not be had because a prima facie case does not exist or deferring the discovery until a case for punitive damages is actually proved. At the very least, the defense attorney should ask for a protective order to put the information regarding the defendant’s assets under seal until the appropriate time.⁶²

Defense counsel should also not lose sight of the fact that usually the plaintiff can only discover information regarding the defendant’s net worth, and not the gross earnings. The rationale for this rule is simple: net worth more accurately establishes the defendant’s true financial status and the defendant may be unduly prejudice by proof of high gross earnings which do not correctly reflect the defendant’s actual financial condition. In addition, defense counsel should keep in mind that many courts limit how far back the financial discovery may go, often restricting such discovery to two or three years before the incident being litigated.⁶³

In some limited circumstances, evidence of the defendant’s financial status may work to the defendant’s advantage. A dire financial condition implies an inability to pay a large punitive damage award. In that situation, the defendant should consider presenting such evidence at trial in order to successfully contend on appeal that the amount of the punitive damages awarded at trial constitute a undue financial burden on the defendant.⁶⁴

One final thing should be mentioned regarding the disclosure of financial information. The defense attorney should always be very careful, when the judge has allowed discovery on this particular issue, to make certain that the corporation is completely honest in all of the financial figures provided to the plaintiff. If the jury thinks that the defendant has "fudged the numbers", nothing good can happen at trial.⁶⁵

C. Depositions Of Defense Witnesses:

The importance of the deposition of company representatives cannot be overstated. Mistakes and inaccuracies made at the time of the discovery deposition are unlikely to be overcome, are unlikely to be meaningless, usually cannot be explained away, and will not become less important with time. In addition, conflicts between witnesses that seem largely irrelevant may, in the eyes and ears of the jury, be extremely significant.⁶⁶

For all of these reasons, it is essential that defense counsel take the time to meet with the defense witnesses days in advance of their depositions testimony. Defense counsel must go over their versions of events so that each has a familiarity with the others’ expected testimony and each has some sense of history and perspective regarding the events which have allegedly given rise to the claim for punitive damages. Spending many hours with the defense witnesses has the added advantage of providing defense counsel with a clear understanding of how all of the witnesses interrelate with each other. In addition, proper preparation of the defense witnesses will, in all probability, highlight that testimony which may cause difficulties during cross-examination at trial.⁶⁷

After all of the discovery has been completed, and the plaintiff has been pinned down to a certain version of events, defenses counsel may want to seriously consider filing a motion for summary judgment. If the plaintiff’s attorney has resisted particularization of the punitive damages claim in the pleadings and discovery, his refusal to set forth the basis for the claim may be advantageously turned against him. Although in most jurisdictions the courts are usually reluctant to grant summary judgment, they are often willing to grant summary adjudication on the issue of punitive damages since, traditionally, such damages are not favored by the law.⁶⁸ This is especially true in those cases where the plaintiff has not articulated a viable theory for recovering punitive damages. Moreover, trial courts are not blind to the fact that oftentimes the plaintiff’s compensatory damage claim will survive and, for that reason, trial courts will sometimes enter partial summary judgment for the defendant on the issue of punitive damages.

It is important for defense counsel to keep in mind that even if defense counsel is not successful on a motion for summary judgment, the process itself may be beneficial. If nothing else, filing a motion for summary judgment, and forcing the plaintiff’s attorney to respond to the same, forces the plaintiff’s attorney to articulate a cogent theory regarding his punitive damages claim right before trial.