Defendants No Longer Punished for Failure to Plead Statutory Cap on Punitive Damages
It’s been nearly two years to the day since we published an article regarding the South Carolina Court of Appeals’ decision to hold that the statute governing punitive damages caps was an affirmative defense, and failure to plead the same in a defendant’s Answer waived all rights to have punitive damages capped by the applicable provisions.
A brief revisit of the facts: Mother and daughter were visiting a Target retail store, when minor daughter picked up a syringe from the parking lot. Mother subsequently swatted the syringe from her daughter’s hand, and during this act, the syringe punctured mother’s palm. Mother sought preventative treatment and testing, was prescribed preventative medications, and suffered from dizziness and upset stomach from the medication. A jury awarded $100,000 in compensatory damages against Target and an astounding $4.5 million in punitive damages. Post-trial, Target moved for a Judgment Not Withstanding the Verdict as to punitive damages, arguing Section 15-32-530 of the South Carolina Code capped damages. The trial court agreed with Target, a decision later overturned by the Court of Appeals. The Court of Appeals held, in pertinent part, that the statutory cap must be pled as an affirmative defense. Because Target failed to plead the applicable statute within its Answer, Target waived its right to a cap on punitive damages.
The South Carolina Supreme Court granted cross-petitions for a writ of certiorari to review the Court of Appeals’ decision as it related to four separate holdings, to include whether “the statutory cap on punitive damages pursuant to section 15-32-530 of the South Carolina Code (Supp. 2020) is an affirmative defense ….” This week, the Supreme Court held that the statutory cap on punitive damages is not an affirmative defense that must be pled by a Defendant, ultimately reversing the Court of Appeals’ decision on this issue.
In its analysis, the Supreme Court laid out the specific language the legislature used in drafting section 15-32-530. Specifically, subsection (A) states “Except as provided in subsections (B) and (C), an award of punitive damages may not exceed the greater of three times the amount of compensatory damages awarded to each claimant entitled thereto or the sum of five hundred thousand dollars.” The Court held the language unambiguously reveals the legislature’s intent to require trial courts to reduce punitive damages awards in excess of “the greater of three times the amount of compensatory damages .. or the sum of five hundred thousand dollars,” unless except under subsection (B) or (C).”
In further explaining, Chief Justice Beatty stated the use of the term “except” indicates “that the statute applies to all cases not specifically excluded by those subsections.” Additionally, subsection (A) further provides “an award of punitive damages may notexceed” a particular sum of money, “and the legislature’s use of the phrase ‘may not’ is generally construed as mandatory.” Moreover, the statute reiterates the legislature’s mandatory directive for trial courts to limit punitive damages awards to the amount outlined in subsection (A) if it finds that items (1) and (2) are not applicable. (“[T]he trial court shall reduce the award and enter judgment for punitive damages in the maximum amount allowed by subsection (A)).
Most importantly, the Court stated: “We further find the statutory cap on punitive damages is neither an affirmative defense nor an avoidance because it does not affect liability or require new matter to be asserted, but instead limits the amount of damages a plaintiff can recover.” The Court emphasized that affirmative defenses bars liability for the cause of action; the statute capping punitive damages does not affect the proof at trial.
Finally, the Court held that affirmative defenses generally shift the burden of proof to the defendant; there is nothing in the language the legislature used in drafting the statute that the implies any intent by the legislature to shift the burden to Target to prove the applicability of the statutory cap on punitive damages.
The Court concluded that the legislature has directed trial courts to determine which level of the cap must be applied in a particular case to the extent a jury has rendered a verdict for punitive damages exceeding the amount outlined by subsection (A).
The Supreme Court ultimately remanded the case to the trial court to determine whether Plaintiff’s punitive damages award must be reduced.