Last week we looked at Indiana’s anti-texting statute, the unlikelihood of criminal enforcement, and asked whether punitive damages could provide an additional deterrent. We noted the first obstacle to punitive damages is Indiana’s incentive-reducing statute that takes 75% of any uninsured, punitive judgment and requires this to be paid to the State of Indiana.
The second obstacle to punitive damages is that federal law prohibits “grossly excessive” punishment of wrongdoers as unconstitutional for violating an individual’s substantive due process rights. Recognizing that there are many different degrees of wrongful conduct, the U.S. Supreme Court placed no arbitrary limit on punitive damages in the case of BMW of North America, Inc. v. Gore, but reversed an award of 1000x compensatory damages. Later, in State Farm v. Campbell, the Court noted that “few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process.” Luckily for State Farm, this meant the reversal of an award of $145 million in punitive damages where compensatory damages had been $1 million.
Indiana law provides wrongdoers in Indiana with even more protection than that provided by the U.S. Supreme Court. Indiana places an arbitrary cap on any punitive damages award of the greater of $50,000 or three times the compensatory damages awarded. Thus, even though Indiana victims of wrongful conduct would be helping victims of violent crime and sexual assault by maintaining a claim for punitive damages, Indiana believes three is the magic number when compensatory damages exceed $50,000.