August 19, 2005

As Jim noted earlier, the jury in Ernst v. Merck issued $229 million in punitive damages, on top of compensatory damages of approximately $24.4 million.

Press accounts so far have not distinguished between the plaintiff's economic and non-economic damages, but that distinction will be important when the court applies Texas' statutory cap on punitive damages to the award.

The Texas statute provides:

LIMITATION ON AMOUNT OF RECOVERY. (a) In an action in which a claimant seeks recovery of damages, the trier of fact shall determine the amount of economic damages separately from the amount of other compensatory damages. (b) Exemplary damages awarded against a defendant may not exceed an amount equal to the greater of:(1)(A) two times the amount of economic damages; plus (B) an amount equal to any noneconomic damages found by the jury, not to exceed $750,000; or (2) $200,000. (Texas Civil Practice & Remedies Code § 41.008)

So, for example, if the economic damages were $1 million and the non-economic damages were $23.4 million, the punitive damages should be capped at $2.75 million (i.e. two times economic damages plus non-economic damages up to $750,000).

On the other extreme, if the economic damages were $23.4 million and the non-economic damages were only $1 million, the punitive damages should be capped at $47,550,000.