Most injury damages are meant to make you whole. Punitive damages are different. They're meant to punish conduct so outrageous that ordinary compensation isn't enough, and to deter others. New Jersey allows them, but only under strict rules set by the Punitive Damages Act, N.J.S.A. 2A:15-5.9 to -5.17.

What you have to prove

Under N.J.S.A. 2A:15-5.12, punitive damages can be awarded only if the plaintiff proves, by clear and convincing evidence, that the harm resulted from the defendant's acts or omissions and that the conduct was either:

  • Actuated by actual malice, meaning intentional wrongdoing in the sense of an evil-minded act, or
  • Accompanied by a wanton and willful disregard of people who foreseeably might be harmed, meaning a deliberate act or omission with knowledge of a high degree of probability of harm and reckless indifference to the consequences

The statute is clear that ordinary negligence, and even gross negligence, isn't enough. "Clear and convincing" is a higher standard than the "more likely than not" standard for regular damages.

Compensatory damages come first

Punitive damages can only be awarded if the jury first awards compensatory damages, and nominal damages don't count (N.J.S.A. 2A:15-5.13). New Jersey trials are often split into two phases: first liability and compensatory damages, then punitive damages if the jury finds the threshold was met.

What the jury considers

In deciding whether to award punitive damages and how much, the jury considers factors including:

  • The likelihood, at the relevant time, that serious harm would result
  • The defendant's awareness or reckless disregard of that likelihood
  • The conduct after learning its conduct would likely cause harm
  • How long the conduct lasted and whether it was concealed
  • The profitability of the misconduct to the defendant, and its financial condition

The cap

Punitive damages are generally capped at five times the compensatory damages or $350,000, whichever is greater (N.J.S.A. 2A:15-5.14(b)). The cap does not apply to certain cases, including injury caused by a drunk driver, discrimination claims under the Law Against Discrimination, AIDS testing disclosure, and sexual abuse cases (N.J.S.A. 2A:15-5.14(c)). Read about drunk driving claims.

Who can't be made to pay punitive damages

  • Public entities. The Tort Claims Act bars punitive damages against public entities (N.J.S.A. 59:9-2(c)). Claims against public entities.
  • Employers, for an employee's conduct, without more. An employer is generally liable for punitive damages only if upper management actually participated in or was willfully indifferent to the wrongful conduct.

Products liability cases involving drugs or devices approved by the FDA have their own limits as well.

Where punitive damages come up

  • Drunk or drugged driving
  • Trucking companies that knowingly let drivers exceed hours-of-service limits or ignore known safety defects
  • Companies that hide a known product danger
  • Intentional assaults

Insurance and taxes

In New Jersey, auto insurance policies may cover punitive damages in some cases, but coverage can be disputed, and recovering punitive damages may depend on the defendant's own assets. Punitive damages are also generally taxable, unlike compensation for physical injuries. How settlement taxes work.

Should you seek them?

A punitive damages claim has to be pleaded specifically in the complaint, and it opens discovery into the defendant's conduct and finances. In the right case, it changes how seriously the defense takes the case. In the wrong case, it can be a distraction. It's a strategic decision to make with your lawyer.