Recent Trends in the Laws of Punitive Damages in the U.S.A.: A Wild Beast Being Tamed?

Punitive damages are damages, other than compensatory or nominal damages,awarded against a person to punish him for his outrageous conduct and to deterhim and others like him from similar conduct in the future. This doctrine, originallyunique to Anglo-American common law, was born in England, but proliferated inthe U.S.A. throughout the 20th century. This doctrine has undergone recent modifications,both legislative and judiciary, and the general trend witnessed for the past30 years has been to limit the scope of this traditional tort/quasi-criminal doctrine. Legislative attempts to reform this doctrine includes many state statutes now inplace requiring tightened procedure and prohibiting repeated awards of damages forthe same transaction or the same conduct by the defendant. Another notableattempt is the drafting of Model Act on Punitive Damages, which has been adoptedby more than 45 states so far. The Supreme Court also played a significant role in limiting the doctrine,thorough the trilogy on Punitive Damages – Gore, State Farm, and Exxon. Gorearticulated the three guideposts to determine the validity of a punitive damagesaward under constitutional due process. State Farm held that the reprehensibility ofthe defendant’s conduct is the most important factor among the guideposts, andalso articulated the single digit ratio rule. Exxon took one step further on the rationfactor and held that, at least in federal maritime law cases, the ratio of 1:1 is theonly acceptable outer limit when the amount of actual damages is significant. Assuch, the clear judicial tendency is to place a virtual cap on the possible amountof punitive damages award. Korea has also introduced the concept of punitive damages into its system. TheFair Transactions in Subcontracting Act (the “FTSA”), became effective as of November 29, 2013, and introduced a treble damages in order to protect subcontractors, who are supposedly the weaker contracting parties than the general contractors. Inaddition, the country has recently introduced a treble damages rule into the Act onthe Protection of Fixed Term and Part-Time Employees (the “APFTE”), effective asof March 18, 2014. It appears that these new measures need some procedural tightening-up,especially in terms of burden of proof. We should clarify who has the burden ofproof in these new laws, and we need to consider what kind of burden of proof– whether the clear and convincing evidence standard or the preponderance ofevidence standard – is appropriate for these new measures. To do that, the authorwould like to encourage the scholars and the practitioners in Korea to examine theAmerican case.