On 5/14/01, the Supreme Court agreed with the NAM's 12/4/00 amicus brief and ruled 8-1 that the constitutionality of a punitive damage award must be reviewed under a de novo standard, not an "abuse of discretion" standard. This decision has important implications for all businesses in this era of increasingly large, even crippling, punitive damages awards. Manufacturers faced with unreasonably high punitive damage awards in product liability litigation are more likely to get a fair result under a de novo standard of review.The Court ruled that reviewing punitive damages requires an analysis whether they are grossly excessive, a fluid concept that depends on the context. It found that appellate courts must use de novo review to maintain control of, and to clarify, the legal principles through case-by-case application at the appellate level. Allowing appellate courts this power helps to unify precedent and "stabilize the law."
The NAM is relieved that the Supreme Court has approved more rigorous appellate court control of the difficult process of determining when and in what amounts to impose punitive damages for wrongful conduct. This will help prevent excessive awards.