New Jersey Supreme Court Limits the Use of Punitive Damages

Across the country, there is an expanding trend of state supreme courts limits the use of class actions, punitive damages, and industry-wide liability theories. This week brought another major such ruling out of New Jersey. In Tarr v. Bob Ciasulli’s Mack Auto Mall, the court ruled that punitive damages can only be used to punish a defendant and not simply to deter others. For sexual harassment plaintiff Carol Tarr, it means a remand on the issue.

Carol Tarr alleged that she was forced from her juob as a finance and insurance manager due to sexual harassment. The jury agreed and awarded her $85,000 in punitive damages, on top of $25,000 in compensatory damages and $165,230 in legal fees against Bob Ciasulli’s Mack Auto Mall.

The justices held that the jurors must consider the defendant’s financial status at the time of the verdict and not just at the time of the incident. Here the business was defunct. IInterpreting the state law, the Court held that:

In sum, notwithstanding that the fortune of the
wrongdoing corporate defendant has dissipated, plaintiff
may proceed with a retrial on the setting of a punitive
damages amount in this matter. We hold that 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. Such direction will assure that
the dual purposes of punitive damages — deterrence and
punishment — are fulfilled, while at the same time
ensuring the award’s reasonableness.

For a copy of the opinion, click here.’s%20Mack%20Auto%20Mall.pdf

For the full story, click here

10 thoughts on “New Jersey Supreme Court Limits the Use of Punitive Damages”

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  3. Hey Susan,

    It’s like a tree hugger (aka, dirty hippy) applied to technology, in this case, the collider. Move over Julia Butterfly. It’s time for Julia or James Strange Quark!

    (I was just making another crack on JR on behalf of the father-in-law!)

    P.S. I’m not proud of this, but I don’t know how to use emoticans. I will learn. You all are good with them.


  4. Okay, Jill, I’ll bite; what’s a “collider hugger?” I have to admit that’s a new one for me. 🙂

  5. Mespo and Susan,

    I’m sorry I wasn’t clear in my post. I told you there was a wheat ball with my name on it! I agree with you both. As long as a company can figure out its liability, that’s what they’ll do–who cares about human health or life. Punitive damages aren’t readily calculated and thus serve as an important deterrent (at least sometimes!). And… You both need to stop supporting that collider hugger, JR!


  6. As you said, Mespo, there are a lot of corporations that are all about making profits. They couldn’t care less about the people who are at risk of being seriously harmed or even killed by the dangerous widgets, be they cars or anything else. Then these same corporations demonize the people who can hold them accountable in the one way possible; separating them from some of their money.

    It reminds me of that movie CLASS ACTION with Gene Hackman, which was about a civil case; a man suing a giant car manufacturer for one car’s deadly defect. While the movie had a happy ending (the “little guy” won big, and deservedly so), many real-life stories like it do not.

  7. Jill:

    That’s always been the rationale but we seem to forget everything we learn about human and corporate behavior. If I can sell 5 billion dollars worth of dangerous widgets and limit my exposure to 1 billion in liability risk without the threat of punitive damages what save, my morality, would stop me. Delete “my morality” and you know how many businesses operate.

  8. There was an article in the New Yorker many years ago about the importance of punitive damages (in this case concerning asbestos). The author pointed out that without the threat of punitive damages, businesses would just calculate their liability and roll it into the price of their products. It was only when they weren’t able to precalculate claims and actually had to pay P.D. for negligent behavior/products that there was a hope to stopping the behavior.

  9. JT:

    I am always amazed by the dichotomy in thinking by the “law and order” crowd. If it’s a criminal charge against some indigent defendant, accountability is key, and punishment is the raison d’etre. If it’s a civil tort against business, it’s protect your buddy time with little or no accountability. And any suggestion of punishment or deterrence by payment of money for quasi-criminal conduct makes one recoil in horror. I guess it’s all whose ox is gored.

  10. Punitive damages seldom cure a problem. But they do enrich attorneys and drive up the cost of goods in the USA. This puts us at an extreme disadvantage in the global markets. The next common sense step is to limit attorney fees to a set % of any award and initiate a loser pays system.

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