Punitive Damages

This chapter explains how important court cases in the U.S. have clarified the economic issues related to quantifying damages, examining the basic issues arising in a punitive damages action. Constitutional limits exist for punitive damages awards, in particular the due process clause of the Fourteenth Amendment, which prohibits the imposition of grossly excessive or arbitrary punishments. The Supreme Court has become increasingly concerned about arbitrary punitive damages awards and has set down more precise ground rules that courts in the United States have followed in varying degrees. Although financial experts generally do not opine on the issue of a defendant's liability for punitive damages, the financial expert can provide objective information valuable to a trier of fact in assessing the amount of punitive damages to award once the plaintiff establishes liability. A financial expert should present information that will help a trier of fact show the defendant's financial position, the effects of possible punitive awards, and other information deemed relevant to the choice of an appropriate award to help a jury.