Punitive damages are an important part of the law but the business community has done a great job of “demonizing” punitive damages (except when a business has been harmed then it is “ok” to get punitive damages).
So what are punitive damages?
Punitive damages are awarded in rare circumstances where the defendant (the one sued) has caused injury intentionally or recklessly.
How are punitive damages different than compensatory damages?
Punitive damages are NOT to compensate the plaintiff for injuries. That’s the role of compensatory damages. Compensatory damages make the plaintiff “whole” in the eyes of the law by awarding enough money to make up for the injury or loss.
Punitive damages are to punish the wrongdoer and deter others from doing the same bad conduct.
How do punitive damages punish?
When a person or company does something intentionally (or recklessly) and this harms someone, there needs to be punishment. We are not talking accidental or negligent conduct — we are talking deliberate bad actions or driving drunk, etc.
The punitive damages let that person or company know its conduct was bad and it should not do it again.
Same as why we punish criminals — there is a price to be paid for illegal conduct.
How do punitive damages deter others from doing the same type of bad conduct?
If a company cheats consumers intentionally and that company is hit with a large punitive damage award, then other companies who are thinking of cheating customers will take a moment to think.
“Is it worth it to do the cheating?”
“What if we get popped with a large punitive damage award also?”
This is one of the biggest reasons punitive damages are needed — to deter others from doing the same wrongful conduct in the future.
Are punitive damages good or bad?
Like anything, punitive damages can be mis-used.
But when used properly, within the boundaries of the law, punitive damages are what keep the community safe. It keeps evil doers in line and those that still do wrong, it punishes them if the wrong was intentional.
I hope this post has been helpful — if you have more questions give us a call at 205-879-2447.
John Watts Birmingham, Alabama