MISSISSIPPI LEGISLATURE

2000 Regular Session

To: Judiciary A

By: Representative Formby

AN ACT TO LIMIT PUNITIVE DAMAGE AWARDS IN FINANCIAL INJURY ACTIONS; TO PROVIDE EXCEPTIONS TO SUCH LIMITATIONS; TO AMEND SECTION 11-1-65, MISSISSIPPI CODE OF 1972, TO CONFORM TO THE PROVISIONS OF THIS ACT; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. As used in this act, the term "financial injury action" refers to any civil action in which:

(a) There is no claim for compensation made on account of personal injury;

(b) There is no claim for compensation on account of personal injury which is submitted to the trier of fact; or

(c) The trier of fact determines that there is no liability for compensation on account of any personal injury.

SECTION 2. In any financial injury action:

(a) No award of punitive damages shall exceed the greater of two (2) time the amount of total compensatory damages awarded to the plaintiff in the action or Two Hundred Fifty Thousand Dollars ($250,000.00).

(b) Evidence of a defendant's financial condition or net worth shall not be admissible in the portion of the proceeding relating to the award of punitive damages.

(c) If the trier of fact determines that punitive damages are to be awarded, the judge shall determine the amount of the punitive damages award.

(d) Except as otherwise provided in paragraph (e) of this section, punitive damages shall not be awarded against a defendant for any activity which is subject to regulation by any agency of the United States or the State of Mississippi, if the regulated activity was in compliance with applicable regulations of the United States and this state.

(e) The prohibition against awarding punitive damages in the circumstances described in paragraph (d) of this section shall not apply when the plaintiff proves by clear and convincing evidence that the defendant:

(i) Knowingly and in violation of applicable state or federal agency regulations withheld or misrepresented information required to be submitted to the agency, which information was material and relevant to the harm in question; or

(ii) Made an illegal payment to an official of the federal or state agency for the purpose of securing approval of the activity.

SECTION 3. Section 11-1-65, Mississippi Code of 1972, is amended as follows:

11-1-65. (1) In any action in which punitive damages are sought:

(a) Punitive damages may not be awarded if the claimant does not prove by clear and convincing evidence that the defendant against whom punitive damages are sought acted with actual malice, gross negligence which evidences a willful, wanton or reckless disregard for the safety of others, or committed actual fraud.

(b) In any action in which the claimant seeks an award of punitive damages, the trier of fact shall first determine whether compensatory damages are to be awarded and in what amount, before addressing any issues related to punitive damages.

(c) If, but only if, an award of compensatory damages has been made against a party, the court shall promptly commence an evidentiary hearing before the same trier of fact to determine whether punitive damages may be considered.

(d) The court shall determine whether the issue of punitive damages may be submitted to the trier of fact; and, if so, the trier of fact shall determine whether to award punitive damages and in what amount.

(e) In all cases involving an award of punitive damages, the fact finder, in determining the amount of punitive damages, shall consider, to the extent relevant, the following: the defendant's financial condition and net worth; the nature and reprehensibility of the defendant's wrongdoing, for example, the impact of the defendant's conduct on the plaintiff, or the relationship of the defendant to the plaintiff; the defendant's awareness of the amount of harm being caused and the defendant's motivation in causing such harm; the duration of the defendant's misconduct and whether the defendant attempted to conceal such misconduct; and any other circumstances shown by the evidence that bear on determining a proper amount of punitive damages. The trier of fact shall be instructed that the primary purpose of punitive damages is to punish the wrongdoer and deter similar misconduct in the future by the defendant and others while the purpose of compensatory damages is to make the plaintiff whole.

(f) (i) Before entering judgment for an award of punitive damages the trial court shall ascertain that the award is reasonable in its amount and rationally related to the purpose to punish what occurred giving rise to the award and to deter its repetition by the defendant and others.

(ii) In determining whether the award is excessive, the court shall take into consideration the following factors:

1. Whether there is a reasonable relationship between the punitive damage award and the harm likely to result from the defendant's conduct as well as the harm that actually occurred;

2. The degree of reprehensibility of the defendant's conduct, the duration of that conduct, the defendant's awareness, any concealment, and the existence and frequency of similar past conduct;

3. The financial condition and net worth of the defendant; and

4. In mitigation, the imposition of criminal sanctions on the defendant for its conduct and the existence of other civil awards against the defendant for the same conduct.

(g) The seller of a product other than the manufacturer shall not be liable for punitive damages unless the seller exercised substantial control over that aspect of the design, testing, manufacture, packaging or labeling of the product that caused the harm for which recovery of damages is sought; the seller altered or modified the product, and the alteration or modification was a substantial factor in causing the harm for which recovery of damages is sought; the seller had actual knowledge of the defective condition of the product at the time he supplied same; or the seller made an express factual representation about the aspect of the product which caused the harm for which recovery of damages is sought.

(2) The provisions of Section 11-1-65 shall not apply to:

(a) Contracts;

(b) Libel and slander; or

(c) Causes of action for persons and property arising out of asbestos.

(3) Punitive damages for a financial injury action shall be governed by Sections 1 and 2 of House Bill No. , 2000 Regular Session.

SECTION 4. This act shall take effect and be in force from and after July 1, 2000.