Punitive Damages Act, Model Summary

Addressing the need for consistency in the area of punitive damages, the National Conference of Commissioners on Uniform State Laws (NCCUSL) recently promulgated a model law for states to consider when formulating their own law. The Model Punitive Damages Act, approved by NCCUSL in July 1996, tightens up the procedures by which punitive damages are awarded and reviewed, while at the same time leaving juries broad discretion to punish wrongdoers.

The term "damages" in the act refers to the award made by a court to a person because of a legal wrong done by another. "Punitive damages" are damages on an increased scale, awarded to the plaintiff over and above normal compensatory damages, where the wrong done was aggravated by circumstances of violence, fraud, or the like.

This model act comes at a time when Congress and many state legislatures are wrestling with how to limit excessive or inappropriate punitive damage awards while still providing punitive damages when justified. This act, while providing a variety of controls on damage awards, stops short of providing caps on punitive damages. As such, the act addresses the problem of multiple punitive damage awards for the same act or course of conduct. The defendant is entitled to a hearing and may have the award amount reduced by the amount that the damages are "unfairly duplicative" of previous awards.

More specifically, the act:

* Allows the trier of fact to award punitive damages only if there is clear and convincing evidence that the defendant maliciously intended to cause the injury or exhibited a conscious and flagrant disregard of others in causing the injury.

* Provides nine factors to be considered in determining a punitive award, such as the defendant’s financial condition and any adverse effect of the award on innocent persons.

* Requires a party seeking appellate review of a punitive damage award to first request review by the trial court.

* Requires a court, upon request, to hold separate trials on punitive damages if evidence, such as the financial condition of a party, would be admissible only to assess the amount of the punitive award.

The Model Punitive Damages Act is designed to serve as a guide to the state for developing its own punitive damages act, rather than serve as a uniform act, which is designed to promote uniformity of law between the states in a subject area of the law.