Federal Judge rules punitive damages limited to 9 times actual damages
This week a Federal Judge ruled that a jury verdict of $500,000.00 in punitive damages against a credit reporting agency must be reduced, despite the agency's repeated violations of law and multiple warnings. Since a 1997 judgment against it, the defendant, TransUnion, has been on notice of its duty to investigate information independently and to avoid simply passing on third-party content. The Federal Judge held that despite the "reprehensibility" of TransUnion's conduct, the punitive damages awarded should be limited to 9 times the compensatory damages awarded an injured party.
Punitive damages are not a substantial issue in Michigan, as in Michigan they are rarely recoverable, regardless of the outrageousness of a defendant's fault. In jurisdictions where they are allowed, punitive damages are awarded to discourage inappropriate or reckless conduct. Many people recall the McDonalds' coffee case in a Southwestern state: in that little understood but highly criticized decision, jurors awarded an older woman substantial punitive damages to discourage McDonalds from serving its coffee at a dangerous temperature, after it failed to respond to hundreds of burn claims.