Legal Definitions - exemplary damages

Exemplary damages, also commonly known as punitive damages, are a special type of financial award given by a court in addition to the compensation a plaintiff receives for their actual losses.

Unlike compensatory damages, which are intended to reimburse a plaintiff for specific harms like medical bills, lost wages, or property damage, exemplary damages are not meant to cover a loss. Instead, their primary purpose is twofold: to punish a defendant for particularly outrageous, reckless, or malicious behavior, and to deter both the defendant and others from engaging in similar misconduct in the future.

Courts typically award exemplary damages only when the defendant's actions demonstrate a willful disregard for the rights or safety of others, intentional wrongdoing, or gross negligence that goes beyond mere carelessness. They are most often seen in cases involving civil wrongs (torts) rather than simple breaches of contract.

• Automobile Manufacturer Concealing a Known Defect

  Imagine a major car manufacturer discovers a critical flaw in its braking system during pre-release testing, which could cause vehicles to lose braking power unexpectedly. Despite this knowledge, the company decides to proceed with the vehicle's launch without fixing the defect or issuing a warning, to avoid costly delays and recalls. After several serious accidents and injuries are reported due to the faulty brakes, victims sue the manufacturer.

  In this scenario, a court might award exemplary damages because the manufacturer's deliberate decision to prioritize profit over public safety, knowing the severe risks, constitutes a wanton and willful disregard for human life. The damages would punish the company for its egregious conduct and deter other manufacturers from similar dangerous practices.

• Landlord Intentionally Neglecting Hazardous Conditions

  Consider a landlord who owns an apartment building where tenants repeatedly report severe issues like widespread mold, exposed electrical wiring, and a collapsing staircase. Despite numerous complaints, official warnings from city inspectors, and clear evidence of danger, the landlord intentionally ignores these hazards for months, refusing to make repairs to save money. Eventually, a tenant suffers chronic respiratory illness from the mold, and another is injured when the staircase collapses.

  A court could award exemplary damages here because the landlord's persistent and intentional neglect of known, life-threatening conditions, despite being fully aware of the risks to tenants' health and safety, demonstrates extreme recklessness. These damages would punish the landlord for their deliberate indifference and discourage other property owners from similar predatory behavior.

• Pharmaceutical Company Misrepresenting Drug Safety

  Suppose a pharmaceutical company develops a new medication and, despite internal studies showing a significant risk of severe side effects and addiction, aggressively markets it to doctors and the public by downplaying these dangers and exaggerating its benefits. The company intentionally suppresses negative research findings to maximize sales, leading to widespread addiction and serious health complications among patients.

  Exemplary damages would be appropriate in this case because the company's deliberate deception and reckless marketing, prioritizing financial gain over patient well-being and knowingly exposing individuals to harm, represent a profound breach of ethical conduct. The award would serve to penalize the company for its unethical practices and deter other pharmaceutical firms from similar deceptive and dangerous strategies.