Punitives Unavailable?
Try Applying Depecage
By John C. Cabaniss
A potential client comes to you with a good punitive damages case; however, punitive
damages are not available under your state's law. Do not reject the case until
you have evaluated whether you may be able to recover punitives under your state's
"choice of law" principles and through application of the legal theory of depecage.
For example, several years ago in a product liability case venued in federal court
in New Orleans, the plaintiff had been rendered a C-5/6 quadriplegic in an accident
involving an all-terrain vehicle. The accident occurred in Mississippi. The plaintiff
lived in Louisiana. Louisiana law at that time provided prejudgment interest at
the rate of 12 percent per annum; however, it did not allow punitive damages.
Mississippi law did not provide prejudgment interest; however, punitive damages
were available. The plaintiffs attorney pleaded punitive damages.
The defendant did not move for summary judgment on the punitive damages claim.
Instead, it filed a motion in limine to preclude the plaintiff from introducinq
evidence on his punitive damages claim, evidently believing the plaintiff would
have to elect between the benefits of Mississippi or Louisiana law. But the plaintiff
opposed the motion in limine, arguing that Louisiana law governed compensatory
damages and California law, the state of residence and all pertinent business
operations the defendant corporation, applied to punitive damages under York was
set in Powell and it quoted from the opinion:
"Although it is
clear that the measurement of compensatory damages is determined by the same
law under which the cause of action arises, this is not necessarily true with
regard to exemplary damages.. .An award of punitive damages, on the other hand,
depends upon the object or purpose of the wrongdoing and on this issue we should
look to the 'law of the jurisdiction with the strongest interest in the resolution
of the particular issue presented.'
"Sec. 145 of the Restatement (Second) of Conflict of Laws provides guidelines
for applying the interest analysis in tort cases. These factors include:
(a) the place
where the injury occurred;
(b) the place where the contact causing the injury occurred;
(c) the domicile, residence, nationality, place of incorporation and place
of business of the parties;
(d) the place where the relationship, if any, between the parties is centered.
"These contacts
are to be evaluated according to the relative importance with respect to the
particular issue." (Emphasis added.)
To establish that the punitive damages law of another state should apply to a
defendant manufacturer's conduct, a plaintiff will have to establish under certain
factors that the other state has a greater interest in having its law apply. The
first factor, the place of injury, has no significant relationship to the issue
of punitive damages, since accidents and injuries occur by chance. Restatement
Sec. 145, comment e states: "Situations do arise, however, where the place of
injury will not play an important role in the selection of the state of the applicable
law. This will be so, for example, when the place of injury can be said to be
fortuitous or when for other reasons it bears little relation to the occurrence
and the parties with respect to the particular issue."
Another factor to be considered is the place where the relationship, if any, between
the parties is centered. Comment e states: "When there is a relationship between
the plaintiff and the defendant and when the injury was caused by an act done
in the course of the relationship, the place where the relationship is centered
is another contact to considered." In most product liability cases, no relationship
between parties exists as it relates to the punitive damages issue. Thus, the
situs of the relationship has no bearing on the applicable law.
The factors that do have bearing are the domicile or place of business of the
parties involved and the place where the conduct causing the injury occurred.
It can reasonably be argued that a corporate defendant elected to have its conduct
governed by the of the state where it is incoporated and does business. The defendant
may argue the significance of plaintiff's domicile.
Regarding the place where the conduct causing the injury occurred, a plaintiff's
claim is usually derived from the defendant's negligence in the design, testing,
marketing and sale of a product. When these activities significantly occur in
defendant's state of domicile, the argument for application of the punitive damages
law of that state is strengthened.
Although depecage is little used in product liability litigation, it is a viable
theory with which punitive damages can be sought in situations where they are
usually not available. Depecage can strengthen plaintiff's strategic position
as well as provide additional grounds for recovery. Thus, its application should
be considered in all situations in which punitive damages are otherwise not available.
[Leader's Product Liability Law and Strategy; July 1991]