MBE Rules · Remedies
Punitive Damages Ratio
State Farm v. Campbell
The rule
Due process limits punitive awards under three guideposts: reprehensibility, ratio to compensatory damages (single digits presumptively, near 1:1 for substantial compensatories), and comparable civil penalties.
In plain English
Punitive damages are meant to punish the wrongdoer and deter future misconduct. The amount awarded must be reasonable and is typically limited by considering how reprehensible the defendant's conduct was, the ratio of punitive damages to compensatory damages, and how it compares to similar civil penalties.
Worked example
In a case where a company knowingly sold a defective product that caused serious harm to a consumer, the jury awarded $1 million in compensatory damages and $10 million in punitive damages. Given the high level of reprehensibility and the 10:1 ratio, the court found the punitive damages excessive and reduced them to $3 million to align with due process standards.
Memory hook
Punitive damages should sting, but not too much—think single digits!
The trap
Students often confuse the limits on punitive damages with the overall amount of damages that can be awarded, leading to incorrect calculations. They might also misinterpret the significance of the reprehensibility factor.
How examiners test it
Questions often present a scenario with varying degrees of misconduct and ask about the appropriateness of punitive damages, requiring candidates to analyze the ratio and the factors influencing the award.
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