Punitive damages, sometimes known as “exemplary damages,” are intended to punish and thereby deter blameworthy conduct. They are an ancient remedy. (Note the Code of Hammurabi authorized a tenfold penalty for stealing the goat of a freed man) Their place in American jurisprudence dates to 1763, when the Court of Common Pleas noted the possibility of damages for more than the injury received. (Lord Chief Justice Pratt awarded £4,000 in exemplary damages to plaintiff John Wilkes after the Secretary of State caused his papers to be searched unlawfully). By 1837, they had reached Indiana, and as we said then:
The assessment of damages is a matter which must be, unavoidably, in a great measure left to the discretion of the jury. It is proper for them to take into consideration all the circumstances under which a trespass may have been committed; and wherever malice, insult, or deliberate oppression, has been an ingredient in the wrongful act, to award, in addition to the actual loss sustained, such exemplary damages as shall tend to prevent a repetition of the injury.
But for nearly as long as we have had punitive damages in Indiana, we have recognized their controversial nature: a principle that allows an individual to put the money assessed against another individual, as punishment or a warning example, into his private pocket when he is not entitled to it, whatever public advantages it may have, does not seem to be thoroughly sound. Our Court of Appeals has imposed a requirement that the amount of punitive damages awarded by a jury must bear some reasonable proportion to the amount of compensatory damages, and our federal brethren have suggested that a proportion of more than nine to one may offend due process.
In 1995, our own General Assembly passed a law imposing certain restrictions on the recovery of punitive damages in civil cases. In addition to modifying the burden of proof required to recover punitive damages, it provides that:
A punitive damage award may not be more than the greater of:
(1) three (3) times the amount of compensatory damages awarded in the action; or (2) fifty thousand dollars ($50,000).
This cap is accompanied by an allocation provision:
When a punitive damage award is paid, the party against whom the judgment was entered shall pay the punitive damage award to the clerk of the court where the action is pending. Upon receiving the payment described in subsection (b), the clerk of the court shall:
(1) pay the person to whom punitive damages were awarded twenty-five percent (25%) of the punitive damage award; and
(2) pay the remaining seventy-five percent (75%) of the punitive damage award to the treasurer of state, who shall deposit the funds into the violent crime victims compensation fund established by IC 5–2–6.1–40.
The statute specifies that juries may not be apprised of the cap or the allocation. If a jury awards punitive damages in excess of the cap, the statute requires the court to reduce the award to the statutory maximum. 987 N.E.2d 1066