Punitive Damages: Only Specific, Not General, Deterrence for Punitive Damages Plus Defendant’s Financial Condition at the Time of the Injury Not Just the Trial Can be Considered

March 28, 2008.

In Tarr v Bob Ciasulli, Mack Auto Mall the New Jersey Supreme Court ruled that a jury cannot consider general deterrence, deterrence against those other than the defendant, and can only craft an award based upon specific deterrence which focuses only the defendant. This is not consistent with deterrence in many other jurisdictions including the federal courts.

The Tarr case involved allegations of sexual harassment. The trial court awarded compensatory damages of $25,000 plus punitive damages of $80,000. The NJ Supreme Court reversed the punitive award and remanded it for retrial on that issue alone.

The court also noted that when considering the financial condition of the defendant, a jury may take into account the defendant’s financial condition at the time of the wrongful acts not just at the time of trial. This became relevant in the Tarr case as the defendant’s financial condition changed significantly having filed for bankruptcy and was without meaningful assets. The court said the jury could consider the financial condition at these different times while it determined the deterrence and punishment effects of a punitive award.