Aggregation and Divisibility of Damage (Tort and Insurance Law)

Insurance Act, R.S.O. 1990, c. I.8
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Michael D.

Textbooks & Teaching Materials

Green Bess and Walter Williams Professor of Law Michael Green is a nationally and internationally recognized torts teacher and scholar. Courses LAW Torts. LAW Professional Development. LAW Insurance Law. LAW Products Liability. LAW Toxic Torts. Products Liability: Cases and Materials 5th ed. West Tort Law and Alternatives: Cases and Materials Toxic and Environmental Torts Restatement Third of Torts: Apportionment of Liability Press Products Liability Problems with P. LeBel, D. Keeton, D. Owen, J. Products Liability and Safety with P. The historical development of the division between the criminal and civil laws must also be borne in mind.

In the early common law, the distinction between crime and tort was uncertain; it was only relatively late in the development of the law that a division between the two emerged with any clarity. Winfield, The Province of the Law of Tort , at p. Smith and Hogan, Criminal Law , 7th ed. J W C Turner, ed.

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See discussion in Casey, Constitutional Law in Ireland , 2nd ed. Regarding a possible definition of crime, Kingsmill-Moore J stated:. Thus the punitive nature of a penalty does not, in itself, necessitate its being characterised as criminal. He held that:. There are, of course, instances, such as that of defamation, when because of the circumstances of the injury, the law allows the reparation to be by such a sum as will be not only reparation but also a mark of disapproval or punishment It is not, however, a feature of civil proceedings that he plaintiff can have the defendant detained in jail before the proceedings commence and keep him there unless he can obtain bail The character of a criminal offence was further considered in the case of McLoughlin v Tuite, 22 which involved penalties under the Income Tax Act, , which were imposed in civil proceedings.

The Supreme Court held that the penalties were not criminal in nature. Finlay C J considered that the penalty under the Act constituted a deterrent or sanction, but that, in the context of the income tax code, this did not in itself bring it within the ambit of the criminal law:.

CHAPTER 2: ARGUMENTS FOR AND AGAINST EXEMPLARY DAMAGES

Pages Aggregation and Divisibility of Damage In the United States: Tort Law And Insurance. Michael D. Green, Brooks M. Hanner. Pages The country reports in this book are cited by country name while the three thematic reports are cited as follows: T. Thiede, Aggregation and Divisibility of Damage.

In many common law jurisdictions, including Ireland, a range of measures have been introduced which are aimed at expanding the role of the victim of crime in the criminal justice process. The making of a compensation order, in particular, as provided for by section 6 of the Criminal Justice Act, , gives a compensatory. The section provides that, on conviction, the court may make an order requiring the convicted person to pay compensation in respect of any personal injury or loss which has resulted to any person from the offence.

The compensation is to be assessed on the same basis as damages in a tort action: section 6 1 provides that the compensation:. The objections to exemplary damages on the basis of the lack of procedural safeguards in civil law may also be contested. In addition, many of the inadequacies they point to may be redressed by legislative intervention. The absence of strict procedural safeguards, as well as the lower burden of proof in civil cases where exemplary damages may be awarded can be justified on the basis of the differing consequences of a finding of responsibility in the civil as opposed to the criminal law.

Conviction of a criminal offence may result in the loss of liberty. The possibility of the imposition of this sanction warrants particular procedural safeguards, and a higher standard of proof. Where the liberty of the individual is not threatened, as in an action for exemplary damages, there is not the same necessity for these precautions. The plaintiff in a case in which exemplary damages are awarded against the defendant may benefit from a windfall.

In many ways, however, he is the most appropriate person to benefit. It is the plaintiff who has been the victim of the wrong. It is also the plaintiff who has brought the action against the defendant, probably at considerable financial risk to himself. One commentator wrote:. If it is considered that the enrichment of the plaintiff through the receipt of exemplary damages is unjust, there is an alternative: that the damages, or a.

One possible solution to the problem of the lack of procedural safeguards in the civil law is to introduce a higher standard of proof where exemplary damages are to be awarded. See infra paras. The defendant may find himself, for example, ordered to pay exemplary damages and to pay a criminal fine, in reference to the same wrong.

White suggests that this problem could be resolved if the civil courts were to take into account in mitigation any criminal penalty which had already been imposed on the defendant in respect of the wrong for which he is being sued in damages. In Ireland, co-operation between the civil and criminal justice systems is already provided for in the Criminal Justice Act, , in relation to compensation orders made by a trial judge on conviction.

Section 9 of the Act provides that, where an award of damages is made in a civil case, and a compensation order has previously been made in respect of the same injury or loss, adjustments may be made to the amount of compensation awarded in the criminal case, so that it does not exceed the amount of damages.

Where the damages awarded exceed the amount of the compensation order, only the sum of the excess is to be paid in damages; and where the damages awarded are less than the sum awarded as compensation, then the court may order that the sum by which the compensation exceeds the damages be repaid to the convicted person. The section then provides that, upon the award of damages being made, the compensation order shall cease to have effect. In favour of the retention of exemplary damages, it may be argued that the criminal law is often inadequate to vindicate all the rights of the individual.

Some important interests may not be designated criminal wrongs. Other wrongs may be both criminal offenses and civil wrongs. Where a wrong does constitute a civil offence, the discretion to prosecute belongs, in many cases, entirely to the Director of Public Prosecutions.

Under the Criminal Justice Administration Act, , private prosecutions may only be brought under limited circumstances. An award of exemplary damages may vindicate interests which are of central importance to society but which are either not protected by the criminal law, or have not been subject to prosecution in that particular case. It also vindicates the strength of the law which has been violated. A further inadequacy of the criminal law relates to wrongs committed by corporations. A fine, which is likely to be the only available criminal sanction, may not be sufficient to punish or deter.

Exemplary damages may achieve this purpose more readily, providing a sanction appropriate to the defendant's economic strength, and to the gravity of the wrong. Exemplary damages play an especially important role in relation to intangible losses. The English Law Commission have placed particular emphasis on this, demonstrating the historically important part which exemplary damages have played in the protection of personality interests and the redress of intangible losses.

Indeed, it is argued in the English Law Commission's Consultation Paper that it is difficult to style any award of damages for injury to interests of personality as purely compensatory. Given the indeterminate nature of the interests involved,. Exemplary damages are therefore a more suitable remedy than compensatory damages, in certain cases. The English Law Commission Consultation Paper demonstrates that exemplary damages have been consistently awarded by the courts in cases of defamation, false imprisonment, assault and battery: torts which directly protect personality interests.

Exemplary damages are seen as having a special and distinct role in the protection of these interests, and of vindicating individual rights as they relate to them. According to the paper, in a country without a written constitution, the awarding of exemplary damages is an especially vital technique for the protection of civil liberties. It is interesting to compare the English Law Commission's approach with the situation in Ireland, where the Supreme Court has expressly related the awarding of exemplary damages to the vindication of rights enshrined in the Constitution, and has stated the importance of exemplary damages as a weapon with which the courts can defend the constitutional rights of the individual.

And, however carefully the judge might seek to protect them against it, it would not be surprising if an element, even a large one, in their award exceeded a due consideration for the plaintiff's feelings and trespassed into punishment of the defendant's conduct. It is interesting to speculate on how this position may be affected by the incorporation of the European Convention on Human Rights into English Law.

English Law Commission, Report No. Punitive damages were awarded in Babylonian law under the code of Hammurabi, the earliest known legal code. The origins and early development of exemplary damages in the English common law are obscure.

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The first recorded awards of exemplary damages in the English courts are not to be found until the eighteenth century. It is useful, however, to place exemplary damages in the context of the development of the early common law, and of the remedies and sanctions for which it provided. In early Anglo-Saxon law, the necessity to limit recourse to the blood-feud resulted in the development of a complex system of composition, of the.

The Twelve Tables made provision for multiple damages awards. The fourteenth and fifteenth centuries saw the emergence of a distinct civil law. In this it differed from the civil law of the time, which retained its basis in strict liability. Holdsworth quotes Hale, explaining the differing effects of incapacities such as madness, in the civil and criminal laws:. There might also be a wite payable to the king or other lord. This is the genesis of the public role in the sanctioning of an offence.

Pollock and Maitland, op. Pollock and Maitland op cit. Pollock and Maitland, op cit. Multiple awards appear in a number of statutes of Edward I. A statute of Gloucester of , 6 Edw. I, c 5, allowed for the award of treble damages for waste. The action for trespass, for example, for which some of the earliest awards of damages were made, was closely related to the criminal Appeal, and the records of the time aver to a conception of trespass as a punishable offence See Holdsworth, Vol.

III, p. Holdsworth, op cit. The first express awards of exemplary damages were made in judgements of the English courts of the eighteenth century. Awards of exemplary damages were made in two cases which arose out of the government's suppression of John Wilkes's The North Briton. In Wilkes v Wood , the plaintiff challenged the search of his home on foot of a general warrant, and was awarded large damages for trespass. Pratt L J held that. Lord Camden accepted that the plaintiff had not suffered any serious injury, but, notwithstanding this, refused to set aside the award as excessive.

He stated that the jury had been correct in awarding exemplary damages, since:. Although these cases are the first in which awards of exemplary damages are recorded, it is likely that the doctrine of exemplary damages had already developed to some extent in the English common law. Several theories have been put forward as to the possible evolution of a category of exemplary damages.

The doctrine of exemplary damages provided an additional. See Schleuter and Redden, op. Mary's L. A second explanation lies in the unavailability, under the early common law, of damages for mental anguish, embarrassment and other intangible loss.

Exemplary damages may have been used to fill this lacuna. In the early case of Tullidge v Wade , 20 Judge Bathurst stated:. Another possible reason for the development of a category of exemplary damages is the need to forestall revenge. Whatever the merits of these various explanations of the origins of exemplary damages, it appears that the development of the doctrine from the eighteenth century onwards was relatively unprincipled. Awards of exemplary, punitive or vindictive damages continued to be made by the English courts, but the judgements contain no explanation of the basis of the awards.

The present English law in relation to the award of exemplary damages is regarded by many as unsatisfactory and unprincipled. Holdsworth, a History of the English Law 4th ed. There are dicta approving exemplary damages in Benson v Frederick 3 Burr. Although the English Law Commission has pointed out that exemplary damages, while restricted at appellate level, continue to enjoy a healthy existence in the lower English courts.

The case of Rookes v Barnard. The appellant, an employee of BOAC, had resigned his membership of the union, following a disagreement with it. His fellow employees, including the respondents, all of whom were members of the union, threatened industrial action if the appellant was not dismissed from his post, and the appellant was duly dismissed by his employers, despite the absence of any breach of the employment contract on his part.

The appellant claimed damages against the respondents for using unlawful means to induce BOAC to terminate his contract of service, and for conspiracy. The jury found in favour of the appellant and awarded exemplary damages, on the basis that there had been a deliberate attempt to bring illegal pressure to bear on BOAC to dismiss the appellant.

In his House of Lords speech in the case, Lord Devlin made the important distinction between aggravated and exemplary damages, confirming the status of aggravated damages as compensatory. He viewed exemplary or punitive damages as an anomaly within the civil law, 34 but held that, given the long history of exemplary damages in English law, it was not within the power of the House of Lords to abolish them. Lord Devlin went on to set out considerations which should be taken into account in the assessment of any award of exemplary damages. The requirement that the plaintiff be a victim of punishable behaviour; Given the strictures of Lord Devlin's limitations on exemplary damages, compensatory, including aggravated, damages must be relied on to do much of the work which might previously have been done by exemplary damages.

Lord Devlin stated that, in making an award of exemplary damages, the jury must be directed to have regard to the sum of compensatory damages awarded. There has been much criticism of Lord Devlin's three categories of situations in which exemplary damages may be awarded. Concerning the second category, critics have pointed out that it is illogical to penalise conduct motivated by the desire for profit, while leaving unpunished conduct motivated by spite or malice. This limitation allows that the damages should be assessed only in so far as his wrong has injured the plaintiff.

Although Lord Devlin's remarks as to the possible punitive affect of an award of compensatory damages were made in regard to the assessment of quantum, in a case where exemplary damages had already been found to be legitimate ie in a case which came within one of Lord Devlin's three categories the dicta show an acceptance that compensatory damages may have a punitive effect, and indicate that such an effect is more acceptable and less anomalous where it is not expressed or intended to be punitive.

This view was not shared by the House of Lords, which, on appeal, 43 reinstated the doctrine of Rookes v Barnard. They did attempt to mitigate its strictures, however, by adopting a broad interpretation of Lord Devlin's categories. In regard to the first category, Lord Hailsham interpreted it as applying, not just to servants of the government in the strict sense of the word, but also to the police, local officials, and:.

It embraced all persons purporting to exercise powers of government, central or local, conferred on them by statute or at common law by virtue of the official status or employment which they held. A similar approach was taken by the House of Lords in relation to Lord Devlin's second category.

It was only necessary to show, generally, that the defendant had acted with knowledge that he would more than likely profit from the tortious action:. Thus, although the categorisation imposed by Rookes v Barnard was affirmed, it was indicated that the House of Lords would tolerate some flexibility in the application of the categories. In the case of at least one of the speeches, that of Lord Wilberforce, this flexibility was grounded in an express ambivalence as to the compensatory or punitive nature of exemplary damages. The scope of application of exemplary damages was further diminished by the decision by the Court of Appeal in in the case of AB v South West Water Services.

The case raised the question of whether the plaintiffs could recover exemplary damages for the tort of public nuisance. Its express purpose was to restrict, not to expand, the anomaly of exemplary damages. The effect of the decision in AB v South West Water Services is that further development of the English law of exemplary damages is largely forestalled. On an examination of the caselaw, it is not entirely clear what this range of torts may be. There are conflicting authorities, for example, on whether deceit is included within the range of torts for which exemplary damages are recoverable.

In Bradford Metropolitan City Council v Arora , 58 it was held that exemplary damages could be recovered for racial and sexual discrimination under the Race Relations Act In the recent case of Thompson v Commissioner of Police , 60 the Court of Appeal set limits to the amount of exemplary damages that could be awarded by a jury, and laid down guidelines for the directions to be given to a jury assessing damages. This was, the Court held, a figure:. See Alan Reed, op cit. The Court of Appeal held that, where exemplary damages were appropriate, it should be explained to the jury that such an award was exceptional, and that such damages should only be awarded where the compensatory and aggravated damages awarded would not have the effect of adequately punishing the defendant.

It would provide a useful check on exemplary damages, the Court held, if it were accepted that the total sum of damages, including exemplary damages, should not exceed three times the basic compensatory damages awarded. In response to a submission that the disciplinary proceedings available against the officers concerned should be taken into account in the calculation of damages, the Court held that this would be permissable only where there was good evidence that the proceedings were likely to take place, and there was a reasonable chance that they would succeed.

In that case, Lord Devlin stressed that aggravated damages were compensatory in nature, and that they could be awarded in cases in which:. The award of aggravated damages looks to both the injury to the feelings of the plaintiff, and to the conduct of the defendant in injuring him. Furthermore, the plaintiff in the case must be aware of the malice or exceptional conduct of the defendant, so that it may be shown that he has been affected by it. It is likely that aggravated damages cannot be awarded in favour of a plaintiff corporation, since such a plaintiff is incapable of mental suffering: Columbia Pictures Industries Inc.

In Sutcliffe v Presdram Ltd , 64 Nourse J in the Court of Appeal listed the factors which, in a libel case, might ground an award of aggravated damages, as including:. Lord Devlin, in his speech in Rookes v Barnard , saw aggravated damages as making exemplary damages unnecessary in many cases.

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Thus, since the courts refer both to the conduct of the defendant and the effect on the plaintiff, there has been some ambiguity as to whether the function of the award of aggravated damages is compensatory or punitive, or an amalgam of both. But that is because the injury to the plaintiff is actually greater and, as the result of the conduct exciting the indignation, demands a more adequate solution.

The requirement that, in order for aggravated damages to be awarded, there must be exceptional conduct on the part of the defendant, characterised by malice, insolence or arrogance, leaves the award of aggravated damages in negligence cases open to question. The English courts have held that aggravated damages may not be awarded in negligence cases or in cases of breach of contract. In Kralj v McGrath , 68 the Court implied that it was the punitive nature of aggravated damages which made them unsuitable to be awarded in negligence cases.

Woolf J stated:. If the principle is right, a higher award of. Such an approach seems to me to be wholly inconsistent with the general approach to damages in this area, which is to compensate the plaintiff for the loss she has suffered The exclusion of aggravated damages in negligence and breach of contract cases was reaffirmed by the Court of Appeal in AB v South West Water Services.

Since the decision of the House of Lords in Rookes v Barnard , 1 the courts of other common law countries have been concerned to prevent or limit the impact of that decision in their own law. It now seems clear that Rookes v Barnard is not a potent force outside England, and that awards of exemplary damages are acceptable in the majority of common law countries.

Having given a wider sphere of application to exemplary damages, the courts of Canada, Australia and New Zealand have developed jurisprudence on the principles on which awards of exemplary damages are to be based, and in particular, on the standard of culpability which gives rise to liability for exemplary damages. The Canadian courts award both aggravated and exemplary damages.

A clear distinction is made between the two types of awards, and aggravated awards are regarded as compensatory. Although the Court confirmed that exemplary damages could be awarded under Canadian law, it stated that such awards should be confined to cases of extreme conduct deserving of condemnation and punishment. The conduct would have to be harsh, vindictive, reprehensible or exhibit a malicious motive, in order for exemplary damages to be awarded. Collis, Tort and Punishment , A. The law of the province of Quebec is considered separately in Chapter 6. In Robitaille v Vancouver Hockey Club , 6 the British Columbia Court of Appeal upheld an award of exemplary damages for negligence and explained its decision as follows:.

In the case on appeal, the negligence of the defendant flowed from, and was directly linked with, the arrogant and high-handed conduct of the officers and servants of the defendant. In Dhalla v Jodrey , 8 Jones JA, giving judgement in the Supreme Court of Nova Scotia, stated obiter that exemplary damages could be awarded in addition to general damages in a negligence case.

He relied on a passage from Waddams, The Law of Damages :. Exemplary damages were distinguished from aggravated damages on the basis that the state of mind of the defendant was relevant in exemplary damages cases but not relevant to an award of aggravated damages. Therefore, it would not be necessary to establish malice to ground an award of aggravated damages, and aggravated damages could be awarded in cases of negligence.

It detected a social purpose in the English conception of exemplary damages:. See Collis, op cit. In the past decade, the Australian courts have moved towards an acceptance of awards of exemplary damages in negligence cases. The foundations were laid in Lamb v Cotongo , 13 in which it was held that:. In contrast to the liberal approach of the Australian courts towards awards of exemplary damages, there have been a number of legislative restrictions on such awards. In New South Wales, the legislature has abolished exemplary damages in cases of motor accident injuries, industrial injuries, and defamation claims.

In Victoria, exemplary damages have been abolished in relation to motor accident cases and industrial injury claims. The decision in Lamb v Cotongo 16 is also interesting on the issue of insurance cover for an award of exemplary damages. In the case, the Australian High Court approved an exemplary damages award where the plaintiff was indemnified against the award. The Court reasoned that the object of the award was not alone to deter the defendant, but also to deter other persons of like mind and, generally, to deter conduct of the same reprehensible kind.

Another issue which has been explored by the Australian courts is that of the award of exemplary damages in cases of joint tortfeasers. In XL Petroleum. NSW Pty. Ltd , 17 the High Court of Australia held that there was no objection in principle to the making of an exemplary award against one of multiple defendants, and confining the award to compensation in respect of the others.

The situation in New Zealand differs from that in the other jurisdictions so far discussed in that the New Zealand law of damages has been shaped by the Accident Compensation Act, , which established a comprehensive no-fault compensation scheme for personal injury as a result of accident. Under the Act, compensatory and aggravated damages cannot be awarded for such injuries, but the Act is silent on the question of exemplary damages.

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In arriving at this ruling, the Court had to circumvent the objection that exemplary damages are parasitic on compensatory damages: since they arise indirectly out of the injury, it is argued, they cannot be awarded in cases where no award of compensatory damages is made. This position is inferred from Lord Devlin's dictum that, in order for exemplary damages to be awarded, the plaintiff must be the victim of punishable behaviour. This approach creates difficulties in cases to which the Accident Compensation Act applies, as the Act's exclusion of compensatory damages would seem to exclude by implication any award of exemplary damages.

Cooke J, giving judgement in the Court of Appeal, considered that the Accident Compensation Act did not intend to preclude awards of exemplary damages in the cases to which it applied. He therefore saw no obstacle to awarding exemplary damages in the case before him. Cooke J admitted that the award of exemplary damages without a compensatory award created difficulties in the assessment of quantum; 21 but he found that any such difficulties were overridden by considerations of social policy, which made it essential to allow for the award of exemplary damages as effective sanctions against certain wrongs.

At a time of change in New Zealand society the law must not withhold:. See generally, Todd ed. Rooks v Barnard, op cit. The absence of compensatory damages in personal injuries cases arising from accidents has led to difficulties in the assessment of exemplary damages, as they cannot be assessed in proportion to the sum of compensatory damages. In a judgment handed down on the same day as that in Donselaar , the Court of Appeal, in Taylor v Beere , 23 followed Australian Consolidated Press v Uren , 24 in holding that the restrictions imposed in Rookes v Barnard 25 were not binding on the New Zealand courts.

The court envisaged a wide scope for exemplary damages. The Court in the Donselaar 27 case held that since, under the Accident Compensation Act , compensatory or aggravated damages could no longer be awarded, purely punitive or exemplary damages would have to be made to do some of the work previously done by aggravated damages. Thus, the distinction between aggravated and exemplary damages is no longer very clear in New Zealand law. The South African law of tort, known more commonly as the law of delict, has its basis in Roman-Dutch law.

It appears that, in general, exemplary damages may not be recovered. In a recent case dealing with the award of punitive damages for breach of constitutional right, Ntandazeli Fose v Minister of Safety and Security , 29 the Constitutional Court refused to award punitive damages for breach of the plaintiff's constitutional rights.

He expressed serious reservations, however, about the award of exemplary damages, both in general and in particular against the State for breach of constitutional rights. I can see no reason at all for perpetuating an historical anomaly which fails to observe the distinctive functions of the civil and the criminal law and which sanctions the imposition of a penalty without any of the safeguards afforded in a criminal prosecution. Central to the rejection of punitive damages by the Court was the public policy consideration that such awards made against the state would place an unjustifiable burden on public resources.

After some initial uncertainty, the Nigerian courts have now rejected the doctrine of Rookes v Barnard , and have accepted that exemplary damages can. The approach of the South African Supreme Court in the case contrasts with the approach of the Irish Supreme Court, which has viewed punitive damages as a necessary means to vindicate constitutional rights: see infra Chapter 7.

Fose v Minister of Safety and Security, op cit. It was also stressed by the Court that, in a case such as the instant one, the deterrent effect of a punitive damages award would be likely to be slight, since a large monetary award against the State would be unlikely to deter potential torturers per Didcott J at p. Dicta of the Court of Appeal, in Shugaba Abdul Rahman v Minister of Internal Affairs 38 suggested that Rookes v Barnard might be binding on the Nigerian courts, but the Supreme Court found otherwise in Eliochin v Mbadiwe , 39 finally issuing a decisive rejection of Lord Devlin's restrictions, and awarding exemplary damages.

The caselaw which has been discussed in this Chapter demonstrates that the courts of commonwealth countries have considered exemplary damages carefully and on a principled basis. The English law has for the most part not been considered persuasive. Whilst the trend in the majority of common law jurisdictions appears to be towards a wide availability of exemplary damages, limited by a high standard of culpability, it would seem that South Africa is an exception to this. A striking feature of some of the leading commonwealth cases has been the emphasis placed by the courts on the social function and practical effect of exemplary damages, and on the need to consider them in the wider social context.

This may serve either to broaden the scope of their recovery as in New Zealand or to limit it as in South Africa. The law of the commonwealth jurisdictions demonstrates the wide scope which exists for the development of exemplary damages within the common law, and in doing so suggests that there remains much possibility for the development, both judicial and legislative, of the Irish law. In the US, more so than in other common law jurisdictions, the availability of punitive damages in tort actions is well established.

US punitive damages law is also of particular interest from an Irish perspective, since it has developed against the background of a written Constitution, which has at times been an influence, and at times a constraint, on the development of the law. Awards of punitive damages in the US courts have been subjected to constitutional challenge on a number of grounds, including due process, equal protection, excessive fines and double jeopardy.

Although the courts have been dismissive of arguments that punitive damages are in themselves unconstitutional, 4 particular awards may be struck down in certain circumstances. There has been considerable concern in the US that awards of punitive damages may be unreasonably high. Since the s, when punitive damages first began to be awarded for bad-faith breach of insurance contracts and in products liability cases, punitive awards have been high and frequent.

There has been criticism of the lack of control over the quantum of punitive damages, and the. The category of punitive damages in US law is clearly distinct from that of compensatory damages. A number of cases have emphasised that the purpose of punitive damages is purely punitive: Gertz v Robert Welch Inc. Aggravated damages are unknown to US law, and their function is largely performed by punitive damages. Several states prohibit the award of punitive damages, including: Massachusetts; Nebraska; Washington; and New Hampshire.

In Indiana, punitive damages may not be recovered if the defendant is also subjected to criminal action for the same act. Prosser and Keeton, The Law of Torts , 5th ed. In Day v Woodworth 54 U. This has been subsequently relied on by the Supreme Court as authority for the constitutionality of punitive damages, but Schlueter and Redden, Punitive Damages 3rd ed. The most significant constitutional difficulties with punitive damages have arisen in relation to due process, both substantive and procedural. The Supreme Court held that the imposition of punitive damages on the employer did not violate the guarantee of substantive due process.

It must be assumed that if the imposition of such an award is justifiable in these circumstances, the compatibility of the majority of punitive damages awards with substantive due process is assured. Further difficulties have arisen regarding the procedural protections in punitive damages cases, and the mechanisms of assessment of punitive damages. In particular, where very large punitive damages awards are made, procedural due process may be violated.

Gertz v Robert Welch Inc. Consequently, juries assess punitive damages in wholly unpredictable amounts bearing no necessary relation to the actual harm caused. Procedural due process focuses on procedural protections and is governed by the principal that the individual must be treated fairly by the government.

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