Roots of New Jersey Punitive Damages Law
in Magna Carta
by James J. Ferrelli and Trevor H. Taniguchi
T
he purpose of punitive damages is to punish
were imposed frequently and abusively.6 To address this,
and deter wrongful conduct by imposing
Chapter 20 of Magna Carta prohibited amercements that were
monetary penalties.1 One of the fundamental
disproportionate to the wrong to deprive the defendant of his
principles inherent in the law of punitive
livelihood:
damages (also known as exemplary damages)
is that the monetary penalty imposed upon a
A Free-man shall not be amerced for a small fault, but after the
defendant for the wrongdoing should be proportional to the
manner of the fault; and for a great fault after the greatness
defendant and to the defendant’s wrongdoing. This principle,
thereof, saving to him as his contenement; and a Merchant
part of common law and now incorporated into New Jersey’s
likewise, saving to him his Merchandise; and any other’s villain
punitive damages statute, derives from Magna Carta. Remark-
than ours shall be likewise amerced, saving his wainage, if he
ably, though formulated in the agrarian society of medieval
fall into our mercy. And none of the said amerciaments shall be
England in response to the English system of justice that
assessed, but by the oath of honest and lawful men of the vic-
developed following the Norman conquest in 1066, this 800-
inage.7
year-old principle still has applicability in American law in
general and in New Jersey jurisprudence in particular.
Chapter 20 thus embodied three related concepts. First, the
amount of an amercement should bear a relationship to the
Amercements and Fines Prior and Subsequent
to Magna Carta
wrong for which it is assessed. In the words of Magna Carta, a
free man should be amerced for “great fault” according to the
As Justice Sandra Day O’Connor explained in Browning-Fer-
“greatness” of the fault. Second, the amercement or penalty
ris Industries of Vermont v. Kelco Disposal, Inc., in the early days
should not be so harsh so as to completely deprive the defen-
of English justice following the Norman conquest, a system of
dant of the means of pursuing a livelihood. Third, the amerce-
2
dispute resolution developed in which individuals who had
ment should not be assessed arbitrarily, but only upon the
engaged in conduct wrongful to others placed themselves “in
oath of the defendant’s “honest and lawful” peers.
the King’s mercy” to avoid all monetary claims for injuries
Following Magna Carta, the court initially set the amount
caused by their wrongdoing. In order to receive clemency,
of amercements in particular cases.8 Thereafter, a group of
these persons were required to pay an “amercement” to a rep-
peers of the defendant was assembled to adjust the amerce-
resentative of the king or a feudal lord.3 Although amerce-
ment according to the amerced party’s ability to pay.9
ments originated at a time when there was little distinction
Originating in the 13th century as voluntary sums paid to
between criminal and tort law, a number of commentators
the crown to avoid indefinite prison sentences, fines had sim-
have noted that amercements were civil punishments that
ilar functions as amercements, and by the 17th century had
were assessed for a wide variety of civil wrongs, including but
replaced amercements as the preferred penal sanction
not limited to trespass, improper or false pleading, economic
imposed by courts.10 By the time of the Glorious Revolution of
wrongs, torts, and crimes.
1688–89, and the drafting of the English Bill of Rights, the
4
Prior to Magna Carta, the amount of an amercement was
abuses of the courts imposing ruinous fines on wrongdoers
set arbitrarily, according to the determination made by the
and critics of the crown had reached the point that the
king’s representatives in each case.5 As a result, amercements
drafters of the English Bill of Rights incorporated the principle
36
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of proportional punishment from Chap-
damages. For instance, the Court in Fis-
ter 20 of Magna Carta into the docu-
cher v. Johns-Manville Corp. explained
soda. It included a warning that users
ment. The final draft of Article 10 of the
that punitive damages must bear a rea-
should avoid breathing vapors from the
English Bill of Rights provided that
sonable relationship to actual injury;
product and should use it with adequate
“excessive Baile ought not to be
the amount of punitive damages should
ventilation.21 The plaintiff developed
including sodium hydroxide, a caustic
required, nor excessive Fines imposed,
account for the profitability of the
“occupational asthma” as a result of
nor cruel and unusual Punishments
defendant’s marketing misconduct, the
workplace exposure to chemicals and
inflicted.”11 By the late 17th century, the
plaintiff’s litigation expenses, the pun-
filed a product liability action against
word “amercement” had dropped out of
ishment the defendant probably will
the defendants.22 At trial, the plaintiff
ordinary usage, and the word “fine” in
receive from other sources, the defen-
obtained an award of $410,000 in com-
Article 10 was a shorthand for all mone-
dant’s financial condition, and the
pensatory damages and $400,000 in
tary penalties in civil and criminal pro-
effect on its condition of a judgment for
punitive damages.23 On appeal, the
ceedings, whether imposed by judge or
the plaintiff.
These principles derive
defendant’s counsel and insurer asserted
jury.
from Chapter 20 of Magna Carta.
12
The Principle of Proportional
Punishment in New Jersey Punitive
Damages Law
17
there was insufficient evidence of the
One issue that remained unsettled in
defendant’s financial condition to per-
New Jersey punitive damages law, how-
mit the appropriate imposition of puni-
ever, was the extent to which the jury’s
tive damages.24 After the Appellate Divi-
punitive damages determination was
sion reversed, the Supreme Court
New Jersey law on punitive damages
required to consider the defendant’s
reinstated the trial court judgment
embodies the principle of proportional
financial condition as a relevant factor.
based upon its disagreement with the
punishment: The law prohibits an
As Magna Carta prescribed, a merchant
Appellate Division’s view of the proof
unbridled imposition of punitive dam-
could be amerced, but not to such an
offered at trial.25
ages by the jury without “any definitive
extent as to remove all his merchandise.
standard or criterion to guide the trier of
A villain—or general laborer—was only
Supreme Court’s holding on the law, the
fact
proper
to be amerced in such an amount saving
Appellate Division explained at length
amount.”13 As the Appellate Division
his wainage—or chattels on which the
the importance of the wealth and finan-
explains in Cabakov v. Thatcher, the law
laborer depended for his livelihood. This
cial condition of the defendant as a per-
of punitive damages imports criminal
issue was addressed squarely by the New
tinent consideration in assessing puni-
law principles of punishment into tort
Jersey Supreme Court in Herman v. Sun-
tive
law as “a sort of hybrid between a dis-
shine Chemical Specialties, Inc.
defendant’s wealth is relevant to the
in
determining
the
18
Consistent with the New Jersey
damages.
Evidence
of
the
play of ethical indignation and the
Herman was a product liability action
question of the amount “which will ade-
The
filed by an independent contractor
quately punish the defendant for the
New Jersey Supreme Court further notes
hired to demonstrate and sell the defen-
conduct,”26 and is important because
imposition of a criminal fine.”
14
punitive damages “are awarded upon a
dant’s products, including an all-pur-
“the degree of punishment or deterrence
theory of punishment to the offender
pose cleaner called Sun-Clean Concen-
is to some extent proportionate to the
for aggravated misconduct and to deter
trate. The facts are disturbing. The
means of the wrongdoer.”27 Therefore,
Indeed,
Sun-Clean label stated that it conformed
evidence of the defendant’s financial sit-
the United States Supreme Court in
with Occupational Safety and Health
uation is important so the jury may
Pacific Mutual Ins. Co. v. Haslip explained
Administration (OSHA) requirements;
determine the amount of punitive dam-
that “unlimited jury discretion—or
contained no acids, caustic ammonia or
ages that will be sufficient to punish the
unlimited judicial discretion for that
solvents; and “is safe to use.”19 However,
defendant and deter similar conduct in
matter—in the fixing of punitive dam-
the defendant did not manufacture Sun-
the future.
ages” could trigger constitutional due
Clean, but instead purchased it from a
The Appellate Division in Herman
process concerns.
chemical company in bulk quantities it
cited a California Supreme Court case,
transferred into one- and five-gallon
Adams v. Murakami, in support of its
tive Damages Act, the New Jersey
containers bearing the Sun-Clean label.
20
decision, noting that the Adams Court
Supreme Court identified factors rele-
Contrary to the Sun-Clean label, the
had pointed out “the ancient roots
such conduct in the future.”
15
16
Prior to the imposition of the Puni-
vant to the determination of the plain-
supplier had provided a safety data sheet
behind
tiff’s entitlement to punitive damages
to defendant Sunshine that outlined the
wealth.”28 Specifically, the Appellate
and of the appropriate amount of such
hazardous ingredients of the product,
Division quoted a portion of the Adams
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examining
the
defendant’s
NEW JERSEY LAWYER | June 2015
37
opinion
in
which
the
California
Supreme Court explained that the limi-
lowing...[t]he financial condition of
damages, on top of $25,000 in compen-
the defendant.
satory damages, and in excess of
35
tations on punitive damages derived in
$165,000 in legal fees, based on its
part from the limitations on amerce-
The trier of fact’s consideration of the
determination the defendant was liable
ments established in Chapter 20 of
defendant’s financial condition under
on the plaintiff’s hostile work environ-
Magna Carta. As the Adams Court stated:
this provision of the New Jersey Punitive
ment claim under the LAD. The Appel-
Damages Act is a direct descendant of
late Division reversed the punitive dam-
Absent evidence of a defendant’s
the proportional punishment principle
ages award, holding that the jury may
financial condition, a punitive dam-
established in Chapter 20 of Magna
only consider the punitive damages
ages award can financially annihilate
Carta. The act recognizes, as did New
award’s deterrent effect on the specific
him. We see no reason why a modern-
Jersey common law, that a financial
defendants involved in the litigation,
day civil defendant should be entitled
penalty imposed upon a defendant that
not other parties who were not before
to less consideration than one was
has no relationship to the defendant’s
the court.37
given 800 years ago.29
financial condition is fundamentally
The Appellate Division recognized
unfair, and does not serve the purpose of
there was a difference between general
punishing
deterrence inherent in a punitive dam-
Rejecting the arguments that considering a defendant’s wealth is an optional
and
deterring
egregious
wrongful conduct by the defendant.
ages award against a defendant in a par-
factor for the jury in accessing punitive
In interpreting the Punitive Damages
ticular case and “permitting the jury to
damages, the Appellate Division in Her-
Act, New Jersey courts have taken the
enhance general deterrence by increas-
man held that evidence of a defendant’s
proportional punishment principle a
ing the award beyond the amount
financial condition is a necessary pre-
step further, holding that the purpose of
required to specifically deter the defen-
requisite to a punitive damages award,
a punitive damages award is not “gener-
dant.”38 A punitive damages award
and it is the plaintiff’s burden to intro-
al deterrence” of wrongdoing by parties
enhanced by the jury to deter parties
This evidence is
other than the defendant in the case,
who could be completely unconnected
necessary in light of the purposes of
even though this purpose is consistent
with the plaintiff or the defendant’s
punitive damages, punishment and
with the language of the act. In Tarr v.
wrongdoing, the court explained, “can
deterrence, because without such evi-
Bob Ciasulli’s Mack Auto Mall, Inc., the
be viewed as a windfall for plaintiff and
dence of financial condition, it is impos-
New Jersey Supreme Court held that an
excessively punitive toward defen-
sible for the court to determine if a puni-
award of punitive damages against an
dant.”39 Thus, the Punitive Damages Act
tive damages award “exceeds the level
employer under the New Jersey Law
prohibited plaintiff’s counsel from urg-
necessary to properly punish and
Against Discrimination (LAD) should
ing the jury to increase a punitive dam-
duce such evidence.
30
deter.” Without evidence of the defen-
not take into account the general deter-
ages award for general deterrence pur-
dant’s financial condition both the jury
rence effect the punitive damages award
poses to “send a message” to other
and an appellate court will be forced to
might have on other employers, but
potential
speculate on the amount of punitive
could only consider the punishment
Appellate Division explained, “the jury
damages that would appropriately serve
and deterrence of the defendant before
must focus on an amount reasonably
to punish or deter the defendant.32
the court.36 This holding is a direct
sufficient to ‘punish the defendant and
31
wrongdoers.
Rather,
the
The proportional punishment princi-
descendant of Chapter 20 of Magna
to deter that defendant from repeating
ple from Chapter 20 of Magna Carta also
Carta, which prohibited the imposition
such conduct.’”40
is embodied in the New Jersey Punitive
of punishment for civil wrongs that
Damages Act.33 Specifically, under the
would financially ruin the defendant.
Affirming the Appellate Division
based upon the majority opinion, the
act once the trier of fact has determined
In Tarr, the plaintiff filed a sexual
Supreme Court held that “in fixing the
the defendant’s conduct was sufficiently
harassment claim against her employer
amount of a punitive damages award, a
egregious to warrant the imposition of
under the LAD. The trial court ruled that
jury may only aim for deterrence of the
punitive damages:34
the jury may consider general deter-
specific defendant.”41 The Supreme
rence in calculating the punitive dam-
Court agreed that the language and leg-
the trier of fact shall then determine
ages award so employers other than the
islative history of the Punitive Damages
the amount of those damages...[and]
defendant would be deterred from vio-
Act prohibited a jury from considering
shall consider all relevant evidence,
lating the LAD. At trial, the jury award-
the “general deterrence of others” in
including, but not limited to, the fol-
ed the plaintiff $85,000 in punitive
determining the amount of a punitive
38
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damages award.
the offender and others from repeating
it.”); Baker v. Nat’l State Bank, 161 N.J.
220, 226-27 (1999) (stating “New Jersey
courts have consistently adhered to the
principle that punitive damages are
meant to punish a wrongdoer’s egregious conduct and to deter that wrongdoer and others from engaging in such
conduct in the future.”).
sider defendant’s financial condition at
The Supreme Court also examined
the time of the wrongdoing and, fur-
the extent to which the Punitive Dam-
ther, that it may consider subsequent
ages Act contemplates the jury’s consid-
events concerning the corporation’s
eration of the defendant’s financial con-
financial condition, including its worth
dition at the time of the wrongful
at the time of judgment.”45 Accordingly,
conduct and the time of the judgment
this direction “will assure that the dual
when assessing punitive damages. The
purposes of punitive damages—deter-
defendant contended the jury should
rence and punishment—are fulfilled,
consider the defendant’s financial con-
while at the same time ensuring the
dition at the time of the judgment, and
award’s reasonableness.”46
2.
Browning-Ferris Industries of Vermont v.
Kelco Disposal, Inc., 492 U.S. 257, 287
(1989).
3.
Id.
4.
Id. at 288.
5.
Id.
6.
Id.
7.
Id. at 288-89 (quoting Chapter 20 of
Magna Carta, 9 Hen. III, ch. 14 (1225)).
Magna Carta was written in Latin, and
reissued several times after the original
signing in 1215. Subsequently there are
various translations of the text of Magna
Carta. For alternative translations into
English see U.S. National Archives,
Magna Carta Translation, archives.gov/
exhibits/featured_documents/magna_ca
rta/translation.html; British Library, English translation of Magna Carta, bl.uk/
magna-carta/articles/magna-carta-english-translation; A new translation from
the Latin of the Magna Carta of England,
1215 (Xavier Hildegarde trans.),
magnacartaplus.org/magnacarta/index.
htm. “Contenement” refers to the holdings or property of a free man necessary
for the maintenance of his livelihood. A
“villain” refers to a peasant occupier or
cultivator of lands subject to a lord or
attached to a manor; a peasant country
laborer. “Wainage” refers to the chattels
on which the villain depended for his
livelihood, such as farm implements,
seed corn and stock. See Xavier Hildegarde, Glossary for the Magna Carta, 1215
(Jan. 24, 2015), magnacartaplus.org/
magnacarta/definitions.htm.
member and past chair of the New Jersey
8.
Id. at 289.
the jury to consider the ‘profitability of
Lawyer Magazine Editorial Board, a past
9.
Id.
the misconduct to the defendant’ when
trustee of the New Jersey State Bar Associa-
assessing punitive damages.”43 This
tion, and a past president of the Burlington
requires the jury to consider “the defen-
County Bar Association. Trevor
dant’s financial condition after, and at
Taniguchi is an associate at Duane Mor-
12. Id.
the time of, the wrongful conduct to
ris in the trial practice group of the firm in
ensure that any compensatory damages
Cherry Hill. He practices in the area of liti-
13. Leimgruber v. Claridge Assoc., Ltd., 73 N.J.
450, 456-57 (1977).
award for the wrongdoing does not
gation.
because the defendant corporation was
no longer a viable entity (although not
Conclusion
dissolved), there was no basis for deter-
A fundamental precept inherent in
rence at the time of the judgment and
the modern notion of punitive damages
an award of punitive damages should
is that the monetary penalty must be
not be allowed.
proportional to the defendant’s wrong-
The Supreme Court rejected “the
doing. While there may be a compul-
either-or timing choice that defendant’s
sion to think of this restraint as a purely
argument posits in respect to the deter-
modern development, remarkably it has
mination of its financial condition for
much more ancient roots, traceable back
purposes of the ability-to-pay assess-
800 years to Magna Carta. The same
ment.”42 Rather than a bright-line rule
principle described in Chapter 20 of
stating the jury may only consider the
Magna Carta has been carved into com-
defendant’s financial condition at the
mon law and codified into modern
time of the wrongful conduct or at the
statutes like the New Jersey Punitive
time of the judgment, the Supreme
Damages Act.
Court explained the case law and appropriate policy dictates the jury should
James J. Ferrelli, a partner in the trial
engage in a “nuanced” factual analysis
department of Duane Morris LLP, is resident
in order to fashion a punitive damages
in its Cherry Hill office and concentrates his
award that best comports with the dual
practice primarily in the areas of complex
purposes of punitive damages: to punish
business and commercial litigation, prod-
and to deter the defendant.
ucts liability and class actions. He is a
The Punitive Damages Act “directs
H.
become a cost of business for the defendant.”44 Thus, the fact that the punitive
ENDNOTES
damages award might not be recover-
1.
able following judgment was not a bar
to punitive damages. The New Jersey
Supreme Court held that the trial court
“should direct the jury that it may conNJSBA.COM
See Tarr v. Ciasulli, 390 N.J. Super. 557,
565-67 (App. Div. 2007), aff’d, 194 N.J.
212, 224 (2008); Nappe v. Anschelewitz,
Barr, Anseil & Bonello, 97 N.J. 37, 48-49
(1984) ([p]unitive damages serve a
twofold purpose: first, to punish egregious misconduct, and second, to deter
10. Id.
11. Id. at 291 (quoting 1 Wn. & Mary, 2d
Sess., ch. 2, 3 Stat at Large 440, 441
(1689)).
14. Cabakov v. Thatcher, 37 N.J. Super. 249,
259 (App. Div. 1955) (quotation omitted); see Prosser & Keeton on Torts § 2, at
9 (5th ed. 1984)
15. Leimgruber, 73 N.J. at 454; see also 49
Prospect Street Tenants Ass’n v. Sheva Gardens, 227 N.J. Super. 449, 479 (App. Div.
1988).
16. Pacific Mutual Ins. Co. v. Haslip, 499 U.S.
1 (1991).
17. Fischer v. Johns-Manville Corp., 103 N.J.
NEW JERSEY LAWYER | June 2015
39
643, 672-73 (1986)
18. Herman v. Sunshine Chemical Specialties,
Inc., 133 N.J. 329 (1993).
19. Id. at 333.
20. Id. at 334.
21. Id.
22. Id. at 335.
23. 257 N.J. Super. 533, 537 (App. Div.
1992), rev’d on other gds, 133 N.J. 329
(1993).
24. Id. at 548.
25. Herman, 133 N.J. at 342-46.
26. Herman, 257 N.J. Super. at 544.
27. Id.
28. Id. at 545.
29. Id. (quoting Adams v. Murakami, 813 P.2d
1348 at 1352-53 (Cal. 1991)).
30. Id. at 547 (quoting Adams, 813, P.2d at
1351).
31. Id. (quoting Adams, 813 P.2d at 1350).
32. Id.
33. N.J.S.A. 2A:15-5.9 through 5.17.
34. The Punitive Damages Act allows punitive damages to be awarded “only if the
plaintiff proves, by clear and convincing
evidence, that the harm suffered was the
result of the defendant’s acts or omissions, and such acts or omissions were
actuated by actual malice or accompanied by a wanton and wilful disregard of
persons who foreseeably might be
harmed by those acts or omissions. This
burden of proof may not be satisfied by
proof of any degree of negligence
including gross negligence.” N.J.S.A.
2A:15-5.12(4.a.).
35. 2A:15-5.12(4)(c)(4).
36. Tarr v. Ciasulli’s Mack Auto Mall, Inc., 194
N.J. 212 (2008).
37. Tarr v. Ciasulli’s Mack Auto Mall, Inc., 390
N.J. Super. 557 (App. Div. 2007), aff’d,
194 N.J. 212 (2008).
38. Id. at 568.
39. Id. at 569.
40. Tarr, 390 N.J. Super. at 570 (quoting
N.J.S.A. 2A:15-5.14(a) (emphasis added)).
41. Tarr, 194 N.J. at 215.
42. Id. at 216.
43. Id. at 217 (quoting N.J.S.A. 2A:15-5.12(c)
(2)).
44. Id. at 221.
45. Id. at 222.
46. Id.
40
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