Punitives Unavailable? Try Applying Depecage

A potential client comes to you with a good punitive damages case; however, punitive damages are not available under your state's law. Do not reject the case until you have evaluated whether you may be able to recover punitives under your state's "choice of law" principles and through application of the legal theory of depecage. For example, several years ago in a product liability case venued in federal court in New Orleans, the plaintiff had been rendered a C-5/6 quadriplegic in an accident involving an all-terrain vehicle. The accident occurred in Mississippi. The plaintiff lived in Louisiana. Louisiana law at that time provided prejudgment interest at the rate of 12 percent per annum; however, it did not allow punitive damages. Mississippi law did not provide prejudgment interest; however, punitive damages were available. The plaintiffs attorney pleaded punitive damages.

The defendant did not move for summary judgment on the punitive damages claim. Instead, it filed a motion in limine to preclude the plaintiff from introducinq evidence on his punitive damages claim, evidently believing the plaintiff would have to elect between the benefits of Mississippi or Louisiana law. But the plaintiff opposed the motion in limine, arguing that Louisiana law governed compensatory damages and California law, the state of residence and all pertinent business operations the defendant corporation, applied to punitive damages under York was set in Powell and it quoted from the opinion:

To establish that the punitive damages law of another state should apply to a defendant manufacturer's conduct, a plaintiff will have to establish under certain factors that the other state has a greater interest in having its law apply. The first factor, the place of injury, has no significant relationship to the issue of punitive damages, since accidents and injuries occur by chance. Restatement Sec. 145, comment e states: "Situations do arise, however, where the place of injury will not play an important role in the selection of the state of the applicable law. This will be so, for example, when the place of injury can be said to be fortuitous or when for other reasons it bears little relation to the occurrence and the parties with respect to the particular issue."

Another factor to be considered is the place where the relationship, if any, between the parties is centered. Comment e states: "When there is a relationship between the plaintiff and the defendant and when the injury was caused by an act done in the course of the relationship, the place where the relationship is centered is another contact to considered." In most product liability cases, no relationship between parties exists as it relates to the punitive damages issue. Thus, the situs of the relationship has no bearing on the applicable law.

The factors that do have bearing are the domicile or place of business of the parties involved and the place where the conduct causing the injury occurred. It can reasonably be argued that a corporate defendant elected to have its conduct governed by the of the state where it is incoporated and does business. The defendant may argue the significance of plaintiff's domicile.

Regarding the place where the conduct causing the injury occurred, a plaintiff's claim is usually derived from the defendant's negligence in the design, testing, marketing and sale of a product. When these activities significantly occur in defendant's state of domicile, the argument for application of the punitive damages law of that state is strengthened.

Although depecage is little used in product liability litigation, it is a viable theory with which punitive damages can be sought in situations where they are usually not available. Depecage can strengthen plaintiff's strategic position as well as provide additional grounds for recovery. Thus, its application should be considered in all situations in which punitive damages are otherwise not available.