In Wilkes v. Wood, Lofft 1, 98 Eng. Rep. 489 (C. P. 1763), The Lord Chief Justice validating exemplary damages as compensation, punishment, and deterrence. Among the first reported American cases are Genay v. Norris, 1 Bay 6 (S. C. 1784), and Coryell v. Colbaugh, 1 N. J. L. 77 (1791).
Under the traditional common-law approach, the amount of the punitive award is initially determined by a jury instructed to consider the gravity of the wrong and the need to deter similar wrongful conduct. The jury's determination is then reviewed by trial and appellate courts to ensure that it is reasonable.
The following considerations can be used when a jury awards punitive damages:
- (a) whether there is a reasonable relationship between the punitive damages award and the harm likely to result from the defendant's conduct as well as the harm that actually has occurred;
- (b) the degree of reprehensibility of the defendant's conduct, the duration of that conduct, the defendant's awareness, any concealment, and the existence and frequency of similar past conduct;
- (c) the profitability to the defendant of the wrongful conduct and the desirability of removing that profit and of having the defendant also sustain a loss;
- (d) the "financial position" of the defendant;
- (e) all the costs of litigation;
- (f) the imposition of criminal sanctions on the defendant for its conduct, these to be taken in mitigation; and
- (g) the existence of other civil awards against the defendant for the same conduct, these also to be taken in mitigation.
The U.S. Supreme Court eventually held, after many decisions addressing this issue, that the Due Process Clause limits the size of a punitive damage award. See BMW of North America, Inc. v. Gore (1996) and, applying this rule, Cooper Indus. v. Leatherman Tool Group, 532 U.S. 424 (2001).
- ↑ Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 255 (1984).
- ↑ 3 W. Blackstone, Commentaries *137-*138.
- ↑ For informative historical comment, see Owen, Punitive Damages in Products Liability Litigation, 74 Mich. L. Rev. 1257, 1262-1264, and nn. 17-23 (1976).