Raedle v. Credit Agricole Indosuez, a decision out of the Federal Court for the Southern District of New York that was rendered on April 14, is no different.

In this case, the Court felt obliged to dismiss the jury’s award of punitive damages that arose out of the defendants’ tortious interference with the plaintiff’s prospective employment with another company. In so doing, the Court articulated the basis for its decision dismissing the punitive damages aspect of the case as follows:

“The purpose of punitive damages is, as the word indicates, to punish. The purpose of punitive damages is to punish a defendant for shocking conduct and to set an example in order to deter him and others from committing similar acts in the future. In order to award punitive damages, you must find circumstances of aggravation or outrage, such as spite or malice or other evil motive on the part of the defendant, and a conscious and deliberate disregard of the plaintiff’s interests so that the conduct could be called willful or wanton. These are strong words, but that’s what is necessary to be shown in order to obtain an award of punitive damages.”

Two instances where New York’s courts have allowed punitive damages are in the tort (i.e., personal injury) context, and the tortious interference context. But, as the Court made clear, the standard for a punitive damages award differs greatly from that required to prove the underlying tort or tortious interference claim: unlike the tortious interference claim, which is proved by evidence that but for the defendant’s intentional and wrongful interference, the plaintiff would likely have entered into a contract with a third party, a punitive damages claim must also be supported by proof that the defendants’ actions have “the character of outrage frequently associated with crime.” Prozeralik v. Capital Cities Comm’ns, Inc., 82 N.Y.2d 466, 479 (1993).

In addition, and importantly, where the punitive damages are sought against a company based upon the actions of that company’s officer, the plaintiff must prove that a “’superior officer’ … employed in a managerial capacity participated in, authorized, consented to, or ratified the misconduct.  …  such that “his participation in the wrongdoing renders the employer blameworthy, and arouses the institutional conscience for corrective action.”

In other words, the employee’s wrongful actions have to carry the implicit blessing of the employer. That is certainly not an easy standard to meet.

Post Footer automatically generated by Add Post Footer Plugin for wordpress.

And the plaintiff considered himself lucky when all this transpired, because, after all, he had purchased Allstate’s Deluxe Plus Homeowner’s policy, and figured that his losses would be covered. How wrong he was.

Allstate didn’t even have the decency to formally deny his claim; and, since his insurance policy (like all other Deluxe Plus policy holders) required him to protect Allstate’s interests in recovering compensation for the property damage that may have been caused through the fault of a third party (in this case the Village), he independently hired an attorney, and paid him out of his own pocket, to prosecute the claim in order to assure that the statute of limitations against the Village did not expire.

Reading between the lines of this decision, it is fairly clear to me that the Appellate court, like the trial court before it, found Allstate’s conduct rather troubling, as they both ruled that a jury should be free to consider whether Allstate deliberately withheld its determination on this claim so that the plaintiff (rather than Allstate) would have to bear the cost of hiring an attorney (which otherwise would and/or should have been Allstate’s obligation). If a jury sides with plaintiff on this issue, and finds that Allstate engaged in deceptive business practices (this law is codified at sections 349 and 350 of the General Business Law), Allstate faces the specter of not only compensatory damages for their alleged breach of contract, but also treble and punitive damages as well.

This should prove interesting.

Post Footer automatically generated by Add Post Footer Plugin for wordpress.