Punitive Damages and Discovery of a Defendant's Financial Condition

Allegations of punitive damages can cast a heavy shadow on any litigation, and defendants in product liabilty cases are no strangers to tremendous punitive awards. That said, it is not difficult to understand why most defendants, at least early on, do not want to think about the potential for ' or size of ' a punitive damages award. Plaintiffs, on the other hand, are very tuned in to the economic side of their punitive damages allegations. Therefore, often plaintiffs serve discovery requests, seeking information regarding a defendant's wealth and financial condition concurrently, with discovery related to the underlying substantive allegations. Such early discovery of a defendant's financial condition, based upon nothing more than an allegation that punitive damages should be awarded, typically is deferred as premature. The basis for deferring discovery until after the liability phase of the case is completed is that this highly sensitive information is irrelevant and, therefore, unnecessary unless and until plaintiffs prove entitlement to the extreme remedy of punitive damages. Not all courts agree with this approach, however, leaving very much alive the question of what a defendant must do to prepare for economic pre-trial discovery.