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NJ's top court undermines punitive damages awards

By Legal News Line | Apr 3, 2008

Justice Jaynee LaVecchia

TRENTON -- Punitive damage awards should take financial health into account and should not be increased as a "general deterrent," the New Jersey Supreme Court ruled last week. In Tarr v. Bob Ciasulli's Mack Auto Mall (docket# A-19-07) the SC ordered a remanded trial of an $85,000 punitive damages award on top of $25,000 in compensatory damages and $165,230 in legal fees over a sexual harassment lawsuit. The Auto Mall business was defunct at the time of the award. The high court remanded the verdict in agreement with the Court of Appeals, which itself reversed the jury's punitive damages award. At issue was whether to consider timely issues concerning the defendant's solvency. "Upon retrial, the court should direct the jury that it may consider defendant's financial condition at the time of the wrongdoing and, further, that it may consider subsequent events concerning the corporation's financial condition, including its worth at the time of judgment," wrote Justice Jaynee LaVecchia for the unanimous ruling. "While general deterrence remains inherent in the nature of exemplary damages, the Act does not permit counsel to urge the jury to increase a punitive damage award in order to enhance the general deterrence of others," he added. One legal commentator said the ruling reflects a general trend among state Supreme Courts towards clamping down on expanding punitive damages awards.

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New Jersey Supreme Court