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Punitive damages may be imposed under the common law or specific statutory provisions when a defendant is found to have caused harm by its reckless, wanton or willful conduct. The idea behind Connecticut punitive damage law is that when people or corporations engage in outrageous civil misconduct, they should be required to pay not only the actual damages their conduct causes, but an additional penalty as punishment and deterrence to them and others.
Punitive damages also often serve to correct the imbalance between the parties, acknowledge the worth of the victim, promote public health and safety, and allow juries to be the voice of the community.
Sometimes punitive damages need to be large to be effective; for instance, where the defendant is a large corporation with assets and revenue such that an award of even hundreds of thousands of dollars would be insignificant. This is where Connecticut's punitive damages laws fall short, and are in need of change.
Under Connecticut punitive damage and common law, punitive damages are frequently limited to litigation costs and attorney fees. This derives from an antiquated (and misguided) conception in Connecticut's case law that Connecticut punitive damages serve a limited compensatory purpose. This is at odds with the majority of the jurisprudence on punitive damages, which holds that the functions are punishment and deterrence. The notion that they are compensatory nonetheless remains alive here, and leaves Connecticut residents unnecessarily exposed.
Connecticut punitive damages cap makes our law significantly more restrictive than those in much of the rest of the country. Twenty-two states have no limits on punitive damages. Another 22 states have some limit (i.e., a multiple of compensatory damages, or an amount indexed to the defendant's net worth). Only three states-Michigan, Maine and Oklahoma-have laws that are nearly as restrictive as Connecticut's, which state Supreme Court Justice Peter Zarella has described as "indisputably one of the most conservative in the nation."
The problem appears to date to 1906 to Hanna v. Sweeney, 78 Conn. 492, where the court said it was closing the door on the type of punitive damages that existed at common law. In fact, Hanna recognized that in certain tort cases, the jury could award damages not only as compensation, but also as "a punishment to the guilty, to deter from any such proceeding for the future, and as proof of the detestation of the jury to the action itself."
Hanna also cited Dalton v. Beers, 38 Conn. 529 (Conn. 1871) , which had noted the availability of exemplary damages in tort cases for injuries inflicted maliciously. Hanna also cited a U.S. Supreme Court case that "clearly recognized" the availability of "damages by way of punishing the guilty, and as an example to deter others." Lake Shore & Michigan Southern Ry. v. Prentice, 147 U.S. 101, 107 (1893).
Yet, with no clear explanation, Hanna declared the death of punitive damages designed to punish and deter: "In this state, the common-law doctrine of punitive damages as above outlined, if it ever did prevail, prevails no longer. In certain actions of tort the jury here may award what are called punitive damages, because nominally not compensatory; but in fact and effect they are compensatory and their amount cannot exceed the amount of the plaintiff's expenses of litigation in the suit, less his taxable costs."
Much later, the Connecticut Supreme Court supplied a flawed rationale for the Hanna rule: it strikes a balance by providing for payment of a victim's costs, while establishing a reference to guide the jury in determining the amount, and avoiding potential injustice "which may result from the unfettered discretion by a jury." Waterbury Petroleum Products v. Canaan Oil & Fuel, 193 Conn. 208, 236 (1983).
The suggestion that the jury needs a guidepost for determining punitive damages is misguided, however. Juries effectively determine noneconomic damages (a more abstract concept) frequently with little more guidance than "fair, just, and reasonable." The cap, which in practice often renders punitive damages here ineffective, creates potential injustice (not the absence of such a limitation). The concern over a jury's "unfettered discretion" ignores the powers a judge has for any damages verdict, including the ability to set it aside, or to order remittitur.
Nonetheless, the judicial edict of Hanna has continued to hold sway over Connecticut's punitive damages jurisprudence for more than 100 years. The time for change has come.
In addition to common-law claims, Connecticut punitive damages are provided for under a number of Connecticut statutes. Some state the measure of such damages, such as double or treble compensatory damages. Others, such as the product liability act, are essentially silent.
Courts in Connecticut product liability cases have applied the common-law limitation. This leaves Connecticut citizens who have been harmed by defective products and malicious conduct at a significant disadvantage when defendants capitalize on this shortcoming in settlement negotiations and cost-benefit assessments concerning trial.
Although undecided at the appellate level, two aspects of Connecticut statutory law, neither of which derives from the common law, do appear to provide for more effective punitive damages: the Connecticut Unfair Trade Practices Act and the Patients' Bill of Rights, applicable to nursing home facilities.
No formula exists for calculating punitive damages in CUTPA cases, but courts have recognized that punishment and deterrence are the focus of a punitive damages assessment, and accordingly, that the financial standing of the defendant is relevant and material. In Ulrich v. Groth, 310 Conn. 375, 381 (2013), the court stated that Connecticut punitive damages considerations should include the degree of reprehensibility of the misconduct. This is the most important factor.
In Bristol Technology v. Microsoft, 114 F. Supp. 2d 59, 80 (D. Conn. 2000), the plaintiff claimed CUTPA violations from Microsoft Corp.'s "bait-and-switch" in enticing reliance on its technology by representing that it would continue to be made available, but then restricting access. The jury found that Microsoft had committed a deceptive practice, but awarded $1 in compensatory damages. After the trial, the plaintiff sought punitive damages and a permanent injunction. The court found that the egregiously deceptive conduct rose to the level of reckless indifference to the harm it caused, and that Microsoft had repeatedly engaged in misconduct. The court imposed punitive damages of $1 million, designed to act as a deterrent, granted partial injunctive relief, and, in a separate order, awarded the plaintiff approximately $2.9 million in attorney fees and $750,000 in costs.
The parties settled on appeal, as a condition to which the plaintiff agreed not to oppose Microsoft's continued efforts to have the order imposing punitive damages vacated. In a per curiam decision, the U.S. Court of Appeals for the Second Circuit granted the motion to vacate, finding that it was unclear whether the district court had the power to reach the issue of punitive damages based on the jury's findings. The Second Circuit also expressed concern that the amount of appropriate punitive damages was a fact issue implicating the right to a jury trial (notwithstanding the statute's provision that the "court may, in its discretion, award punitive damages"). Bristol Technology is nevertheless instructive as to its emphasis on the deterrent effect of punitive damages and the need to take into account the defendant's financial status.
Many courts have followed the lead of the district court in Bailey Employment System v. Hahn, 545 F. Supp. 62, 73 (D. Conn. 1982), affirmed, 723 F.2d 895 (2d Cir. 1983), in doubling the amount of compensatory damages for CUTPA punitive damages. In Bridgeport Harbour Place I v. Ganim, 131 Conn. App. 99, 169 (2011), the appellate court affirmed punitive damages of six times compensatory damages, although still limited to attorney fees and costs.
In United Technologies v. American Home Assurance, 118 F. Supp. 2d 174, 180 (D. Conn. 2000), the court imposed $16 million in punitive damages against an insurer that had engaged in an "intentional scheme" of deliberately stalling the processing of large claims nationwide. Compensatory damages were $21 million.
Like CUTPA, the Patients' Bill of Rights applicable to nursing homes is a purely statutory creation. It provides that "punitive damages may be assessed" where the deprivation of rights is found to have been in reckless disregard of the rights of the patient. Conn. Gen. Stat. ยง19a-550(e). Although the issue has not been decided at the appellate level, punitive damages under the nursing home Patients' Bill of Rights should be determined as they have been under CUTPA. Accordingly, these are the only two contexts (nursing home and CUTPA cases) where a Connecticut plaintiff may potentially have the recourse of meaningful punitive damages for egregious and harmful conduct by a wealthy defendant.
The trial court in Bristol Technology noted that other courts have observed that, to have any deterrent effect, a punitive damage award must be substantial enough that a defendant may not write it off as just a "cost of doing business."
Izzarelli v. R.J. Reynolds Tobacco, 767 F. Supp. 2d 324 (D. Conn. 2010), provides a perfect illustration of the need for the availability of punitive damage awards sufficiently large to punish and deter. The defendant was the second-largest tobacco company in the U.S. The plaintiff established that the defendant had manufactured Salem cigarettes to specifications intended to get nonsmokers nicotine-addicted, and to get addicted smokers to smoke more cigarettes without satiating their addiction, in order to increase profits.
The jury found liability under the product liability act, and that for law in Connecticut punitive damages were warranted. Total litigation costs and attorney fees were less than one-half of the compensatory damages. The plaintiff argued that the court could consider a multitude of factors in determining the punitive damages, subject to the statutory cap of twice the compensatory damages. The court disagreed and applied the "long-standing" common-law limitation (litigation costs less taxable costs).
The General Motors Co. debacle that has recently come to light is another example of the need for punitive damages large enough to make a difference. As has been widely reported, GM has recalled millions of vehicles as a result of defective ignitions that the company actively hid for years.
GM documents reveal that the company's engineers have known about the ignition defect since 2001. In 2005, as complaints of stalling and reports of accidents accumulated, GM engineers proposed changing the design to prevent movement of the key (a partial solution, but it would have prevented some accidents), but executives decided the 57 cent per vehicle cost was too high to be an "acceptable business case." Instead, GM issued a bulletin advising dealers to provide a key insert to customers who complained, but a small fraction of eligible customers received the insert. GM then changed the ignition switch in 2006 but instructed the manufacturer to use the same part number to conceal the change.
GM has acknowledged 13 deaths and 31 injuries, but reports have estimated that hundreds more may have died because of the defect. When it comes to punitive damages, there is no good reason the family of a Connecticut resident killed as a result of GM's decisions should not be on equal footing with the residents of most other states.
In Connecticut punitive damages are awarded only when the defendant's conduct is particularly egregious, limiting punitive damages offers the greatest reward to the worst actors. There is no reason why the defendants who act most egregiously should receive the greatest shelter from liability. A study detailed in the October 1992 Iowa Law Review revealed that businesses generally ignored continued complaints regarding product safety until they were forced to pay large punitive damage awards. However, after being assessed punitive damage, 80 percent of manufacturers took remedial measures to increase product safety.
The deterrent effect of punitive damages is a critical function of our civil justice system, especially where history has shown that the agencies charged with protecting the public are often incapable of doing so (because of resources, conflicts of interest or otherwise). Since corporations are making cost-benefit decisions and at times prioritize profits over people, the threat of meaningful punitive damages can be an effective deterrent to conduct that jeopardizes public safety.
However, Connecticut's common-law limitation essentially abolishes the deterrent and punishment function of punitive damages. This problem needs to be addressed by judges, legislators and lawyers alike because Connecticut citizens deserve an effective punitive damage scheme at least in line with the majority of jurisdictions across the country.
At Maya Murphy, P.C., our personal injury attorneys are dedicated to achieving the best results for individuals and their family members and loved ones whose daily lives have been disrupted by injury, whether caused by a motor vehicle or pedestrian accident, a slip and fall, medical malpractice, a defective product, or otherwise. Our attorneys are not afraid to aggressively pursue and litigate cases and have extensive experience litigating personal injury matters in both state and federal courts, and always with regard to the unique circumstances of our client and the injury he or she has sustained. Please contact Joseph C. Maya, Esq., at 203-221-3100, or at JMaya@mayalaw.com, to schedule a free consultation.
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Source: Brendan Faulkner, Michael A. D'Amico, Personal Injury Litigation: Conn. Punitive Damages Laws Outdated, Ineffective; Larger awards are required to deter well-heeled defendants, Conn. Law Trib., (Sept. 12, 2014)
