North Carolina Supreme Court Upholds the Cap on Punitive Damages

In 1995 the North Carolina General Assembly placed a cap on the amount of punitive damages that can be recovered in a civil lawsuit in North Carolina: $250,000 or three times the compensatory damages, whichever is greater. The North Carolina Supreme Court recently ruled that this statutory cap on punitive damages is constitutional.(1)

Tort reform advocates have praised this decision. The limit on punitive damages reduces excessive punitive damages awards, adds a degree of predictability to potential liability, and promotes economic growth. Plaintiffs’ attorneys are criticizing the Supreme Court decision, arguing that a limit on punitive damages undercuts the purpose of punitive damages, which is to punish a defendant. This philosophical debate may continue, but the law is clear: punitive damages awards are limited in North Carolina.

(1) Rhyne v. K-Mart Corporation, ____N.C., ____ 2004 WL 691160 (N.C. April 2, 2004).