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The Reduction of Punitive Damage Awards | Arizona

Nathan D. Meyer | 1449 Views | 03/19/2015

Hi, my name is Nathan Meyer. I’m a partner at Jaburg Wilk. My practice areas include insurance coverage, insurance bad faith, insurance UM and UIM litigation, as well as commercial litigation, professional liability litigation, and general liability litigation. There’s actually been some very favorable rulings for insurance companies regarding punitive damages. It started with a United States Supreme Court case in 2003 in Campbell. There is also recently been some Court of Appeals cases that has significantly reduced punitive damages award amounts to much more reasonable amounts in Arizona.

Reducing Punitive Damage Awards

In the United States Supreme court case “Campbell”, the court actually reduced a $145 million punitive damages award all the way down to a million dollars, or at least they said – they told the Utah Supreme Court, “We’re sending this back to you, and you need to reduce this award to something around a million dollars.”

In a recent Arizona Court of Appeals case, there was a $54 million punitive damages award. And the Court of Appeals initially reduced that from $54 million down to $620,000. Then the Arizona Supreme Court actually reduced it from $620,000 all the way down to $155,000. So it’s a substantial reduction.

Also you have another recent case called “Orellana the Prime Life Insurance Company”, and they reduced a punitive damage award from about $1.3 million all the way down to $320,000. So courts are really reducing some of these egregious punitive damages awards amounts down to something much more reasonable.

3 Factors Courts Consider When Reducing Punitive Damage Awards

In “Campbell V. State Farm”, that 2003 United States Supreme Court case, the court established three guide post a court should look at when they’re reviewing these large punitive damages awards.

One is reprehensibility, the degree of reprehensibility of the defendant’s conduct. Two is the disparity, and that’s where you get the ratio of the punitive damages to the compensatory damages. And the third is comparability to civil authorized fines, and those are usually fines authorized by statutes.

For example, in Arizona there is a maximum $50,000 fine per six month period when you violate the unfair claim settlement practices act. So those are the three things that courts look at when considering whether to reduce punitive damages.

By: Nathan D. Meyer

The Reduction of Punitive Damage Awards | Arizona

Hi, my name is Nathan Meyer. I’m a partner at Jaburg Wilk. My practice areas include insurance coverage, insurance bad faith, insurance UM and UIM litigation, as well as commercial litigation, professional liability litigation, and general liability litigation. There’s actually been some very favorable rulings for insurance companies regarding punitive damages. It started with a United States Supreme Court case in 2003 in Campbell. There is also recently been some Court of Appeals cases that has significantly reduced punitive damages award amounts to much more reasonable amounts in Arizona.

Reducing Punitive Damage Awards

In the United States Supreme court case “Campbell”, the court actually reduced a $145 million punitive damages award all the way down to a million dollars, or at least they said – they told the Utah Supreme Court, “We’re sending this back to you, and you need to reduce this award to something around a million dollars.”

In a recent Arizona Court of Appeals case, there was a $54 million punitive damages award. And the Court of Appeals initially reduced that from $54 million down to $620,000. Then the Arizona Supreme Court actually reduced it from $620,000 all the way down to $155,000. So it’s a substantial reduction.

Also you have another recent case called “Orellana the Prime Life Insurance Company”, and they reduced a punitive damage award from about $1.3 million all the way down to $320,000. So courts are really reducing some of these egregious punitive damages awards amounts down to something much more reasonable.

3 Factors Courts Consider When Reducing Punitive Damage Awards

In “Campbell V. State Farm”, that 2003 United States Supreme Court case, the court established three guide post a court should look at when they’re reviewing these large punitive damages awards.

One is reprehensibility, the degree of reprehensibility of the defendant’s conduct. Two is the disparity, and that’s where you get the ratio of the punitive damages to the compensatory damages. And the third is comparability to civil authorized fines, and those are usually fines authorized by statutes.

For example, in Arizona there is a maximum $50,000 fine per six month period when you violate the unfair claim settlement practices act. So those are the three things that courts look at when considering whether to reduce punitive damages.

By: Nathan D. Meyer