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Practice Tip: Pleading Punitive Damages After Supreme Court's State Farm Decision
Recently, the U.S. Supreme Court ruled that any award of punitive damages designed to punish out-of-state conduct would not be permitted because it violated the Due Process Clause of the 14th Amendment. State Farm Mutual Automobile Insurance Co. v. Campbell, __US__, 2003 WL 1791206 (decided April 7, 2003). This decision will effect broad changes in current product liability law with respect to punitive damages; however, the most important immediate change to practitioners will be in pleading.
In product liability cases, the allegation that the plaintiff is entitled to punitive damages must usually be contained in another cause of action, eg, negligence, fraud, or breach of warranty. Punitive damages are recoverable for tortious conduct that involves malice, oppression, or acts that are wanton or reckless. Often, plaintiffs will try to establish evil intent by showing that there was a 'public wrong,' ie, the defendant undertook a wide-scale course of conduct that affected not only the plaintiff in the lawsuit but others as well. Where those 'others' are persons outside the plaintiff's state, State Farm probably requires proof that such conduct was tortious.
In addition, if the egregious conduct is perpetrated on individuals other than the plaintiffs, the plaintiffs may not recover for that conduct. With the Supreme Court ruling that this conduct, especially out of state, is inadmissible, attorneys must reconsider how to plead a punitive damages clause in a product case.
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