People often file lawsuits to be compensated for the damages they incurred because of someone else’s wrongdoing. For example, car accidents victims want the driver who was at fault to be held accountable for their medical bills and lost wages. But courts and juries sometimes award another type of compensation – punitive damages.

What are punitive damages?

They are an additional award intended to compensate plaintiffs above and beyond their actual damages. Also known as exemplary damages, punitive damages are also a form of punishment.

Compensatory damages attempt to make the plaintiff as whole as possible. Financial compensation covers current and future medical care, lost wages, lost earning capacity, and more. Punitive damages have a different purpose.

In fact, they are designed to punish the defendant for gross negligence or intentional harm.

Simply put, compensatory is compensation. Punitive is punishment.

For example, Dan filed a personal injury lawsuit after being injured in a car accident. The other driver, Taylor, was driving recklessly after engaging in a heated argument with his girlfriend. He was also under the influence of alcohol and drugs. Witnesses stated that Taylor deliberately drove his car into Dan’s lane because he wanted to hurt himself. Instead, Taylor caused serious injuries and a major loss of income for Dan. The court awarded Dan compensatory and punitive damages. Everyone hoped that the large punitive damage award would deter other people from driving while intoxicated and emotionally unstable.

How will the court decide whether to award punitives?

First, the plaintiff must win the case. Punitive damages will not be awarded if the plaintiff loses.

Next, the court considers the facts of the case, then:

• Determines whether the defendant’s actions were intentional, grossly negligent, or malicious.
• Reviews similar cases to see if the plaintiffs received punitive damages.

But we still have to consider whether such punishment will have any effect on the defendant.

Will a large punitive damages award deter a defendant’s future conduct?

Possibly.

Liebeck vs. McDonald’s is the infamous case where the plaintiff, Stella Liebeck, bought coffee through a McDonald’s drive-through. When she spilled the coffee on her lap, it was so hot she was seriously injured. She asked McDonald’s to pay $20,000 to cover her eight-day hospital stay, but they refused. During the course of her lawsuit, she learned that people had been complaining that McDonald’s coffee was too hot for years.

At trial, the jury awarded Ms. Liebeck $200,000 in compensatory damages. Because the jury felt that McDonald’s was aware its coffee was dangerous, it awarded $2.7 million in punitive damages. The punitive damages were reduced on appeal.

However, McDonald’s lowered the temperature of its coffee to prevent future injuries.

This case may seem extreme. However, when a defendant has engaged in extreme behavior, it seems natural to let the punishment fit the crime.