Punitive Damages

Punitive damages are unique among damage awards. Unlike compensatory damages that attempt to reimburse the plaintiff or make the plaintiff whole again following an accident, punitive damages are awarded to punish the defendant for the defendant’s actions. To receive punitive damages in a personal injury case in New Mexico, the defendant’s actions must be reckless or intentional. This very high standard makes punitive damage awards fairly rare.

On the other hand, when punitive damages are proper, there is the risk that a jury will award unreasonable levels of punitive damages. Very high punitive damage awards often serve as a basis for appeal. Juries on occasion will award extraordinary punitive damages that seem to bear no relation to the compensatory damages. These awards may be challenged on due process grounds. In New Mexico, these due process challenges have often met with defeat.

New Mexico has made clear that there is no hard and fast ratio that is acceptable. In Jolley v. Energen, the New Mexico Court of Appeals stated, ““The United States Supreme Court has indicated that the degree of reprehensibility of a defendant’s conduct is „[t]he most important indicium of the reasonableness of a punitive damages award.-€Ÿ”

In evaluating the reprehensibility of the defendant’s conduct, New Mexico Supreme Court in Jolley v. Energen set forth the following factors for consideration:

“the harm caused was physical as opposed to economic; the tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others; the target of the conduct had financial vulnerability; the conduct involved repeated actions or was an isolated incident; and the harm was the result of intentional malice, trickery, or deceit, or mere accident.”

The Court further stated that U.S. Supreme Court declined a “bright line test” that would set a specific multiplier adjudged to comport with due process. However, the Court further stated that single digit multipliers are more likely to be approved thereby suggesting a double digit multiplier might raise the level of court scrutiny over the award.

The court concluded by stating that the punitive damage awards should not be so unrelated to compensatory damages “as to plainly manifest passion and prejudice rather than reason or justice.” In short, there must be a relationship between punitive damages and compensatory damages which will be entirely dependent upon the circumstances of the case.

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