In December, a California jury awarded $150 million punitive damages in an employment discrimination/ retaliation case brought by an individual plaintiff. Another California jury found Tesla liable for $137 million in punitive damages after a worker was subjected to racial harassment. In both cases, the attorneys for the plaintiffs received millions of dollars awarded in attorneys' fees.
The term "nuclear punitives" is now being applied to cases where the plaintiff's verdicts vastly exceed any losses to the plaintiff. It is an outgrowth of the term "nuclear verdicts," which was often used to describe massive plaintiff verdicts in certain personal injury accidents.
Some call a punitive damages ratio of 4-1 to actual damages "close to the line of Constitutional propriety," referring to the due process clause of the Fourteenth Amendment, which prohibits grossly excessive or arbitrary punishments. Many of these cases deal with very bad fact patterns creating a desire by jurors to punish the employer.
The existence of such "nuclear punitive" cases with runaway juries are one of the reasons why so many employers require individual employment agreements with mandatory arbitration clauses prohibiting court litigation and class actions. In some ways, potential plaintiffs are benefitted in the sense that arbitration is much cheaper and quicker than other forms of litigation.
This is part of our April 2022 Newsletter.
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