In some personal injury cases, juries award considerable sums for compensation. This often occurs when the plaintiff suffers serious and painful injuries, and the jury decides to award a significant amount of non-economic injuries. If the defendant’s actions are deemed egregious or malicious, the jury may also award a large amount of punitive damages. Yet the juries’ monetary decisions do not always stand. Juries cannot always give any amount of compensation they want. Depending on the state, jury awards may be restricted by statutory caps and court intervention.

Some states have statutory personal injury recovery limits, known as “caps.” These caps dictate the maximum amount of compensation the jury may award. Caps may pertain to all compensatory damages or limit only non-economic damages. Or, caps may be directed toward certain types of claims, typically medical malpractice or product liability, and not general personal injury cases.

Many jurisdictions limit punitive damages either by a statutory cap or based on guidance by the U.S. Supreme Court in State Farm Mutual Automobile Insurance Co. v. Campbell (2003). In California and New York, in Torres v. B/E Aerospace, Inc. (2018), and Gomez v. Cabatic (2018), respectively, plaintiff’s punitive damages were significantly decreased from the amount originally awarded by the juries by the judges.

Both statutory caps and punitive damage limits may significantly decrease the compensation a plaintiff receives from a jury. However, statutory caps are continuously being challenged on the grounds that they are unconstitutional. Oregon’s cap most recently faced such a challenge, and it was deemed unconstitutional in Vasquez v. Double Press Mfg., Inc. (2017) and Rains v. Stayton Builders Mart, Inc.(2018).

Where Are Compensatory Damages Capped?

Not all plaintiffs encounter statutory caps. Thirty-nine states and the District of Columbia do not have statutory caps for general tort and personal injury cases: Alabama, Arizona, Arkansas, California, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Pennsylvania, Rhode Island, South Carolina, South Dakota, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.

Ten states have statutory caps for non-economic damages in general tort and personal injury cases: Alaska, Colorado, Hawaii, Idaho, Kansas, Maryland, Missouri, Ohio, Oklahoma, and Tennessee.

This ensures plaintiffs may pursue compensation for all of their economic losses, such as medical expenses and lost wages. However, plaintiffs cannot receive more than the cap for their non-economic injuries, including pain and suffering.

Twenty-four states cap plaintiff’s non-economic damages in medical malpractice lawsuits, six cap total compensation in medical malpractice cases, and ten cap non-economic damages in product liability claims.

When Are Punitive Damages Limited?

Another way in which plaintiff’s total compensation in a personal injury suit may be limited is in regard to punitive damages, which are intended to punish and deter the wrongdoer. In most jurisdictions, punitive damages are not available in cases involving ordinary negligence. Instead, plaintiffs must be injured in an accident caused by another person’s gross negligence or intentional misconduct to seek punitive damages.

Punitive damages are capped in 27 states, either by a particular amount or a punitive-to-compensatory damages ratio. Punitive damages are not inherently based on a plaintiff’s economic and non-economic damages. However, one of the most common means of calculating punitive damages is by using a multiplier of compensatory damages, which can be calculated using a ratio, such as 3:1. This would mean the punitive damages are three times the plaintiff’s compensatory damages.

Another way in which punitive damages may be capped is through judicial intervention. In 2018, California and New York appellate courts reduced punitive damages to a 1:1 or lower ratio based on the U.S. Supreme Court’s 2013 decision in State Farm.

The U.S. Supreme Court stated “…in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process.” The court went on to say, “an award of more than four times the amount of compensatory damages might be close to the line of constitutional impropriety.” Additionally, “When compensatory damages are substantial, then a lesser ratio, perhaps only equal to compensatory damages, can reach the outermost limit of the due process guarantee.”

In Torres, the plaintiff was awarded $75,000 in economic damages, $1.44 million in non-economic damages, and $7 million in punitive damages. The California trial court upheld the compensatory damages; However, it ordered a new trial unless the plaintiff accepted a remittitur to $1 million in punitive damages. Both the plaintiff and defendant appealed, and the California Court of Appeal affirmed the decision in May 2018. The court relied on reasoning by the California Supreme Court, which has stated punitive damages should rarely go beyond a single-digit multiplier, and the U.S. Supreme Court’s guidance.

A similar decision occurred in the New York Appellate Division in January 2018. In Gomez, the jury awarded the plaintiff $500,000 in compensatory damages and $7.5 million in punitive damages. The trial court ordered a remittitur of the punitive damages to $1.2 million. The appellate court reduced the punitive damages even further to $500,000, a 1:1 ratio, citing the Supreme Court’s State Farm decision.

While the U.S. Supreme Court specifically did not want to provide a rigid mathematical formula for punitive damages, it did create a precedent for setting punitive damages between a 1:1 and 4:1 ratio.

These recent decisions demonstrate that courts are taking the Court’s guidance seriously. Plaintiffs involved in a case in which the defendant’s actions were reckless, egregious, or malicious should be aware that they can seek considerable punitive damages, however they may be limited or reduced by the court.

Statutory Caps Face Legal Challenges

Compensation caps are unconstitutional in some states. Arizona, Arkansas, Kentucky, Pennsylvania, and Wyoming have constitutional provisions prohibiting caps for general tort claims. In other states, caps have been challenged in court, which has led courts in Florida, Illinois, New Hampshire, Washington, and Oregon to find that damage caps are unconstitutional. In Alabama, Georgia, and North Dakota medical malpractice compensation caps have also been found unconstitutional.

Oregon is one of the most recent states to face challenges over its damage cap. Oregon had a statutory provision limiting non-economic damages. Oregon’s statute provides for a $500,000 limit on non-economic damages for most tort claims.

In February 2018, the Oregon Court of Appeals in Vasquez and Rains ruled caps on non-economic damages are unconstitutional.

In Vasquez, the plaintiff was crushed and severely injured by a machine the plaintiff’s employer had purchased from the defendant. Following a trial, the plaintiff received a judgement of $1,339,090.20 in economic damages and $4,860,000 in noneconomic damages, and the trial court did not reduce the verdict.

In Rains, the plaintiff fell a significant distance when a defective board broke while he was working. He sued a number of parties, including the board’s manufacturer, and his wife sued for loss of consortium. Following a trial, the plaintiff received a judgment of $3,928,275 in economic damages and $2,343,750 in noneconomic damages. His wife received $739,375 in noneconomic damages. The trial court did not reduce any of the amounts.

In both cases, the defendant’s appealed the jury awards arguing the non-economic damages should be capped under Oregon law. The plaintiffs responded that the non-economic damages cap violates the remedy clause within the Oregon Constitution. Article I, Section 10 states “No court shall be secret, but justice shall be administered, openly and without purchase, completely and without delay, and every man shall have remedy by due course of law for injury done him in his person, property, or reputation.”

The court found both times that reducing the amount based on the cap would leave the plaintiffs with a “paltry fraction” of the amount granted them, which amounted to a constitutionally unacceptable remedy.

Oregon and seven other states are proof that there may be a basis for challenging a compensation cap that impacts a plaintiff’s lawsuit and recovery. If a damage cap is applied to a judgment in a personal injury case, or the defendant appeals the amount of a verdict, plaintiffs should speak with their attorneys about challenging the statutory cap.

Jared Staver, of Staver Law Group, is a personal injury lawyer in Chicago, IL with nearly 20 years of experience within the Illinois legal system. Jared focuses primarily on injuries caused by car accidents, truck accidents, and many other personal injury cases.

Suggested citation: Jared Staver, Statutory Caps and Recent Judicial Intervention May Bring Sky High Verdicts Back to the Ground, JURIST – Professional Commentary, Aug. 12, 2018, http://jurist.org/hotline/2018/08/jared-staver-statutory-caps/.

This article was prepared for publication by Kelly Cullen, the JURIST Managing Editor. Please direct any questions or comments to him at commentary@jurist.org