Most Kentucky businesses will find themselves embroiled in more than one bitter lawsuit during their existence. One of the most favored ploys in both corporate and personal lawsuits is the threat to request that the court award punitive damages to the prevailing party. A knowledge of the rules for awarding punitive damages can be very useful in mapping a litigation strategy.
The basic rule
A jury cannot award punitive damages unless it first awards one party monetary damages. Once a jury reaches the decision to award monetary damages in any amount, it can then begin an inquiry into a potential award of punitive damages. The threatening aspect of punitive damages is the lack of any rules or guidelines that might limit the jury’s award.
The Kentucky jury instructions state that the awarding of punitive damages is exclusively within the jury’s discretion. Even if a jury were to award a minimum amount of actual damages, say for example $100, it could then decide to make a much larger award of punitive damages – perhaps more than $100,000.
The standards for punitive damages
The Kentucky jury instructions spell out four factors, one of which must be “satisfied by clear and convincing evidence,” before the jury can award punitive damages to a plaintiff. The four factors are “fraud,” “oppression,” “malice” or “gross negligence.”
Punitive damages are allowed to punish the losing party for its actions and to deter it from acting in a similar fashion in the future.
A jury in awarding punitive damages must consider the likelihood that serious harm might arise from the defendant’s conduct; whether and to what extent the defendant is aware of that likelihood, the profitability to the defendant as the result of its misconduct, the duration of the conduct and any concealment of it by the defendant, and whether the defendant took any action to ameliorate the effect of its conduct.
Finally, the jury in awarding punitive damages must act with calm discretion and sound reason and avoid any sympathy, bias or prejudice toward any party in the case.