Can the ‘Long-Ago’ Nature of Conduct Bar Punitive Damages — Even for Recent Injuries?

February 14, 2017

Does the statute of limitations bar a claim for punitive damages if the conduct occurred outside the limitations period, but the plaintiff’s injuries occurred within it?  An Illinois federal judge recently confronted this question in an environmental contamination suit arising from the defendants’ manufacture of gas “more than six decades ago.” City of Evanston v. N. Ill. Gas Co., No. 16 C 5692, 2017 WL 168477, at *10 (N.D. Ill. Jan. 17, 2017).

Finding that the “complaint plausibly suggests that [contaminants] may have migrated onto Plaintiff’s property within the past five years,” the court rejected the defendants’ argument that the plaintiff’s punitive damages claim was untimely because it was based on “long-ago conduct associated with [a] now-closed facility.” Nevertheless, the case raises the issue of whether, statutes of limitations aside, the “long-ago” nature of a defendant’s alleged misconduct may in some cases provide a bar to, or at least mitigate against, an award of punitive damages.

Unlike compensatory damages, the purpose of which is to make a plaintiff “whole for his injuries,” punitive damages “should only be awarded if the defendant’s culpability, after having paid compensatory damages, is so reprehensible as to warrant the imposition of further sanctions to achieve punishment or deterrence.” State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 419 (2003). Punitive damages may be imposed only where they “further a State’s legitimate interests in punishing unlawful conduct and deterring its repetition,” BMW of N. Am. v. Gore, 517 U.S. 559, 568 (1996) (emphasis added), and run afoul of the Due Process Clause of the Fourteenth Amendment when they amount to an “arbitrary punishment[] on a tortfeasor.” Campbell, 538 U.S. at 416.

With these principles in mind, it is easy to imagine a circumstance where the defendant’s harm-causing conduct is so disconnected from the present reality that the state arguably can no longer claim any legitimate interest in punishing and deterring it.  Take, for example, an “ancient” environmental contamination case of the kind at issue in City of Evanston.  If the evidence establishes that, not only has the defendant’s facility long since closed, but also that essentially everything about the company — from its management, to its employees, to its shareholders, to its operations — has long since fundamentally changed, what legitimate penal or deterrence interest remains?  The persons to be punished are long since gone, and the conduct to be deterred has long since changed.  And if a punitive damages award reflects something other “than a rational concern for deterrence and retribution, the Constitution has been violated, no matter what the absolute or relative size of the award.” TXO Prod. Corp. v. Alliance Res. Corp., 509 U.S. 443, 467 (1993) (Kennedy, J., concurring).

Even if the long-ago nature of a defendant’s conduct does not pose a federal constitutional bar to punitive damages, it may still potentially negate punitive liability under the applicable statutory or common-law standard.  Many states recognize that evidence of “some” or “slight” care negates punitive damages.  Evidence that certain dangers were unknown or less known decades ago, but that a defendant has since adapted as knowledge became available, may show that the defendant exercised at least some care. 

Similarly, such evidence may be useful in arguing that the amount of any punitive damages — if allowed — should be minimal. The key factor in determining the reasonableness of a punitive damages award is the reprehensibility of the defendant’s conduct. See Gore, 517 U.S. at 575. Evidence that a defendant acted based on what was known 60 years ago — as opposed to today — may show that the conduct was not, or only minimally, reprehensible.   

In sum, although the defendants’ statute-of-limitations defense in City of Evanston did not succeed at the motion-to-dismiss stage, litigants should remain mindful of the varied ways in which to use the long-ago nature of conduct as a defense or mitigating factor with respect to punitive damages.