Understanding Texas’ Punitive Damage Cap
A lot has been in the news about the recent verdict in the Alex Jones/Sandy Hook trial. Much of the reporting discusses whether Jones will have to pay the full amount awarded by the jury, or whether Texas’ cap on punitive damages will limit the plaintiffs’ recovery. While the judge in this case hasn’t issued a final judgment, let’s get a refresher on punitive damages in Texas law.
First, there is a difference between compensatory damages—which cover both economic (loss of a job or income) and non-economic damages (impact on a plaintiff’s health or reputation, for example)—and punitive damages. Compensatory damages are meant to make a plaintiff whole.
Punitive damages, on the other hand, are meant to punish the defendant or act as a deterrent for future behavior. These are the damages at issue in this case.
Texas capped punitive damages in 1987. The cap was set at “four times the amount of actual damages or $200,000, whichever is greater.” “Actual damages” was not defined in the statutes, creating ambiguity.
The Texas Legislature revisited the punitive damages cap in 1995, making a number of changes, including resetting the cap to:
“an amount equal to the greater of:
(1)(A) two times the amount of economic damages; plus
(B) an amount equal to any noneconomic damages found by the jury, not to exceed $750,000; or
This is the statute that is in place today and governs the plaintiffs’ recovery in the Alex Jones case.
In 2003, the Legislature added a requirement that a jury be unanimous in awarding punitive damages (HB 4), but the Legislature did not change the cap calculation.
It’s important to note that these reforms were bipartisan, passed under Democratic majorities in 1987 and 1995 and Republican majorities in 2003. And all three times, the bills were supported by House and Senate leadership from both parties.
But why did Texas cap punitive damages in 1987 in the first place? Because the incumbent system was plainly inequitable. A jury in Lubbock might assess a fraction of the punitive damages assessed by a jury in Beaumont for the same event. Even two juries in the same town hearing cases arising out of the same event might assess vastly different punitive damages. This can be a result of factors such as the location of the injury and the relative skills of the courtroom lawyers.
Additionally, all forms of punishment are capped. If a person is tried for assault, a jury is not allowed to impose any penalty it sees fit to impose. The penalty range is set by statute.
Finally, the U.S. Supreme Court has held that punitive damage awards that are vastly larger than compensatory damage awards are unconstitutional under the Due Process clause.
Because of these considerations and others, many states cap punitive damage awards. Some states do not allow recovery of punitive damages at all.
As the Alex Jones case continues to receive media attention, it’s likely Texas’ punitive damage cap will remain in the spotlight. TLR stands ready to provide clarification and resources on this and any other lawsuit reforms passed in the Lone Star State.