CACI No. 3940 series: punitive damages in California

Punitive damages are not compensation. CACI No. 3940 tells jurors they exist to punish the defendant for what it did to the plaintiff and to deter the same behavior in the future. Civil Code section 3294 allows them in actions for breach of an obligation not arising from contract, which covers tort claims (Civ. Code § 3294; CACI Nos. 3940 to 3949).

The threshold: clear and convincing evidence

Most civil facts are decided by a preponderance of the evidence. Punitive damages require more. Malice, oppression or fraud has to be shown by clear and convincing evidence. CACI No. 201 explains that standard as proof that a fact is highly probable.

The definitions jurors apply

CACI No. 3940 defines each term in words that follow the statute:

• Malice covers two things: an intent to injure, or despicable conduct carried out while willfully and knowingly ignoring other people's rights or safety. Knowing disregard means the person saw the likely dangerous results and deliberately chose not to avoid them.
• Oppression is despicable conduct that knowingly ignores the plaintiff's rights and puts the plaintiff through cruel and unjust hardship.
• Despicable conduct is behavior so vile or contemptible that reasonable people would hold it in contempt.
• Fraud is a deliberate misstatement or hiding of a material fact, done to harm the plaintiff.

These definitions set a high bar. Carelessness alone does not meet them. The conduct has to involve intent to injure, or a deliberate choice to ignore a known danger or the plaintiff's rights.

Setting the amount

The instruction says there is no fixed formula and jurors are not required to award anything. If they do, they must consider three questions:

1. How reprehensible was the conduct? Jurors may consider whether it caused physical harm, disregarded the health or safety of others, took advantage of a plaintiff the defendant knew was financially weak or vulnerable, involved a pattern or practice, or used trickery or deceit.
2. Is there a reasonable relationship between the punitive award and the plaintiff's harm? A bracketed phrase lets the jury also consider potential harm the defendant knew was likely.
3. Given the defendant's finances, how much is needed to punish and to deter further misconduct? The award may not be increased beyond an otherwise fitting amount just because the defendant has large financial resources, and a bracketed sentence adds that it may not exceed the defendant's ability to pay.

Another optional sentence tells jurors not to punish the defendant for the effect of its conduct on people other than the plaintiff. The Directions for Use connect that sentence to the United States Supreme Court's decision in Philip Morris USA v. Williams (2007), and note that harm to others may still bear on reprehensibility, under State Farm v. Campbell (2003).

Bifurcated trials and financial evidence

Civil Code section 3295(d) protects defendants from early disclosure of their finances. On a defendant's request, evidence of its profits or financial condition stays out until the jury has returned a verdict awarding actual damages and found malice, oppression or fraud. For that reason the trial can be split into phases. In the first phase, CACI No. 3941 asks the jury only whether the plaintiff proved malice, oppression or fraud. The amount is decided later, based on the financial evidence, and the Sources and Authority say an award cannot be made without evidence of the defendant's finances.

Companies and other entities: CACI No. 3945

A company acts through people, so the instructions add a requirement. Under CACI No. 3945, the clear and convincing proof has to tie the conduct to the company's leadership or policymakers: an officer, director or managing agent carried it out on the company's behalf, authorized it, or learned of it and approved it afterward. A managing agent is an employee with enough independent authority over company decisions that those decisions end up setting company policy.

The rule comes from section 3294(b). An employer is not liable for punitive damages based on an employee's acts unless the employer knew in advance the employee was unfit and employed the person with conscious disregard of others' rights or safety, authorized or ratified the conduct, or was itself guilty of malice, oppression or fraud. For a corporation, that knowledge or approval must come from an officer, director or managing agent. Ordinary respondeat superior, covered in our CACI 3700 series explainer, is not enough.

Questions to sort a punitive damages claim

• Is the claim a tort? Section 3294 does not cover obligations arising from contract.
• What did the defendant know? Punitive damages need intent or a deliberate choice, not mere carelessness.
• Who made the decision? For a company, trace it to an officer, director or managing agent.
• Is the evidence strong enough? The clear and convincing standard is higher than for other facts.
• Is it a wrongful death case? Punitive damages are generally barred there unless the death was a homicide that led to a felony conviction.

This page explains California's official jury instructions for general readers and is legal information, not legal advice. Consult a lawyer licensed in California about a specific case.