SW Legal studies in Business

Courts Must Review Punitive Damages Awarded by Juries
Description Supreme Court held that courts have a constitutional duty to review punitive damage awards made by juries to ensure that the rule against excessive fines is not abused. This review is a de novo review by the courts applying specific factors to prevent abuse of due process.
Topic Constitutional Law
Key Words Due Process; Punitive Damages; Judicial Review
C A S E   S U M M A R Y
Facts Leatherman makes a multifunction tool that it considers to be an improved version of the classic Swiss army knife. When Cooper Industries used photographs of a modified version of Leatherman's tool in advertising materials introducing a competing tool, Leatherman sued for violations of the Lanham Act for trademark violation. A jury awarded Leatherman $50,000 in compensatory damages and $4.5 million in punitive damages. The trial judge and court of appeals held that the punitive damages were not excessive. Cooper appealed to the Supreme Court.
Decision Reversed. A jury's award of punitive damages is not a finding of "fact." Punitive damages, unlike compensatory damages, are private fines intended to punish the defendant-it is an expression of moral condemnation. As such, punitive damages are subject to constitutional constraints under the Due Process Clause that imposes substantive limits on the states' discretion by subjecting the states to the Eighth Amendment's prohibition on excessive fines. Such fines must be reviewed using three factors: 1) the degree of the defendant's reprehensibility or culpability; 2) the relationship between the penalty and the harm to the victim caused by the defendant's actions; and 3) the sanctions imposed in other cases for comparable misconduct. The courts have a responsibility to apply these factors to jury determinations of punitive damages in a de novo review of punitive damage awards. Application of these factors make it unlikely that the punitive damage award will be allowed to stand.
Citation Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 121 S.Ct. 1678 (Sup. Ct., 2001)

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