Senate Bill No. 402

(By Senators Nohe, Hall, K. Facemyer, Barnes and Boley)

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[Introduced February 3, 2011; referred to the Committee on the Judiciary; and then to the Committee on Finance.]

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A BILL to amend the Code of West Virginia, 1931, as amended, by adding thereto a new article, designated §55-2B-1, §55-2B-2, §55-2B-3, §55-2B-4, §55-2B-5, §55-2B-6, §55-2B-7, §55-2B-8 and §55-2B-9, all relating to punitive damages in civil actions.

Be it enacted by the Legislature of West Virginia:

    That the Code of West Virginia, 1931, as amended, be amended by adding thereto a new article, designated §55-2B-1, §55-2B-2, §55-2B-3, §55-2B-4, §55-2B-5, §55-2B-6, §55-2B-7, §55-2B-8 and §55-2B-9, all to read as follows:

ARTICLE 2B. PUNITIVE DAMAGES IN CIVIL ACTIONS.

§55-2B-1. Punitive damages.

    (a) Punitive damages are permitted in a civil action against a defendant only if the plaintiff establishes by clear and convincing evidence that the damages suffered were the result of conduct that was carried out by the defendant with actual malice toward the plaintiff or with a conscious, reckless and outrageous indifference to the health, safety, and welfare of others.

    (b) Punitive damages may not be awarded in the following situations:

    (l) The underlying lawsuit is a breach of contract claim or an action other than a civil action seeking money for damages; or

    (2) No compensatory damages have been awarded against a defendant to the plaintiff for the same course of conduct of the defendant.

    (c) A defendant may not be held liable for punitive damages unless the trier of fact finds that plaintiff’s award of compensatory damages alone is insufficient to punish the defendant for the conduct and to deter the defendant from like conduct in the future.

§55-2B-2. Proportional awards.

    (a) The amount of punitive damages that may be awarded for a claim in a civil action may not exceed the greater of three times the amount of compensatory damages or $250,000 where the punitive damages are recoverable from large employers.

    (b) The amount of punitive damages that may be awarded for a claim in a civil action may not exceed the lesser of three times compensatory damages or $100,000 where punitive damages are recoverable from a defendant which is not a large employer.

    (c) The above provisions of this code section, paragraphs (a) and (b), must be applied by the trial court and may not be disclosed to the jury. If a jury returns a verdict for punitive damages against the defendant that exceeds these amounts, the trial court shall reduce the award so that it will not exceed the applicable amount set forth in this section.

    (d) As used in this code section, "large employer" means an employer who employs more than twenty-five persons on a full-time permanent basis, or its equivalent, or has annual revenues of more than five million dollars.

§55-2B-3. Multiple awards.

    (a) No punitive damages may be awarded against a defendant if:     (l) Prior punitive damages awards were obtained by the same or other plaintiffs in any state or federal court against the same defendant for the same course of conduct as alleged in the present civil action; and

    (2) Such punitive damages award exceeds the applicable amount set forth in section two of this article.

    (b) If the total amount of any such prior punitive damages awards is less than the applicable amount set forth in section two of this article, then the amount of any punitive damages awarded in the present case shall be reduced, if necessary, so that the combined total amount of punitive damages awarded in the present and all prior actions involving the same conduct and the same defendant do not exceed the applicable amount set forth in section two of this article.

    (c) The provisions of this code section must be applied by the trial court and may not be admissible as evidence before or otherwise offered for consideration by the jury.

§55-2B-4. Bifurcation.

    (a) In a civil action in which punitive damages are sought, the court shall bifurcate the trial of the action if requested by the defendant.

    (b) Where bifurcated proceedings are requested, the trial court must follow the following procedures:

    (1) First stage -- In the first stage of a bifurcated trial, the trier of fact shall determine liability for compensatory damages and the amount of compensatory damages. Evidence relevant only to the claim of punitive damages shall be inadmissible in the first stage of the trial. If the trier of fact determines during this first stage that a defendant is liable for compensatory damages, the court must determine whether the evidence was sufficient to permit the jury to consider punitive damages.

    (2) Second stage -- If the court determines the evidence to be sufficient for the jury to consider punitive damages, the same trier of fact should then determine whether defendant is liable for punitive damages and, if applicable, the amount of punitive damages.

§55-2B-5. Sharing of punitive damage awards.

    (a) Since the purpose of punitive damages awards is to punish the defendant for certain conduct and to deter the defendant and others from engaging in such conduct in the future, the entire award should not be a windfall to the plaintiff and his or her attorney but should be shared by the public.

    (b) The public’s share of each such award shall be payable to the State of West Virginia to be distributed in equal shares to the crime victims’ compensation fund established by the provisions of article two-a, chapter fourteen of this code, the Fire Protection Fund described in section thirty-three, article three, chapter thirty-three of this code, for the benefit of volunteer and part volunteer fire departments established by the provisions of article fifteen, chapter eight of this code, the senior center and other senior programs and senior care services recognized or established by the provisions of article five-p, chapter sixteen of this code, the Breast and Cervical Cancer Diagnostic and Treatment Fund established by the provisions of section seven, article thirty-three, chapter sixteen of this code, family protection shelters and other domestic violence and child abuse programs and funds established by the provisions of article two-c, chapter forty-eight of this code, and the Drunk Driver Prevention Fund established by the provisions of section sixteen, article fifteen, chapter eleven of this code.

    (c) The public's share of each punitive damages award as described in subsection (b) shall be seventy-five percent thereof after the deduction of reasonable expenses, other than attorney's fees, that are directly related to the obtaining of the punitive damages award.

    (d) The state shall have no interest in or right to intervene at any stage of any judicial proceeding involving a claim for punitive damages.

    (e) In the event the full amount of punitive damages awarded cannot be collected, the public, the plaintiff, and the plaintiff's attorneys if sharing therein, shall be entitled to a proportional share of the punitive damages collected.

    (f) The fact that a share of punitive damages award is to be paid to the state for the public is not admissible as evidence at trial or otherwise be offered for consideration by the trier of fact in determining the amount of punitive damages award.

    (g) The plaintiff's attorney's share of a punitive damages award shall be no more than five percent of the plaintiff’s share of a punitive damage award as approved by the court after the deduction of reasonable expenses, other than attorney's fees, that are directly related to the obtaining of the punitive damages award.

§55-2B-6. Complicity rule.

    (a) A principal or employer who is a natural person may be liable for punitive damages as a result of conduct of his or her agent or employee only when the plaintiff proves by clear and convincing evidence that the damages suffered were the result of conduct that was carried out by such principal or employer with actual malice toward the plaintiff or with a conscious reckless and outrageous indifference to the health, safety, and welfare of others.

    (b) A principal or employer that is other than a natural person may be liable for punitive damages as a result of the conduct of its agent or employee only when the plaintiff proves by clear and convincing evidence that the damages suffered were the result of conduct that was carried out by a senior manager of such principal or employer with actual malice toward the plaintiff or with conscious, reckless and outrageous indifference to the health, safety, and welfare of others.

    (c) An association, limited liability company, or partnership may be liable for punitive damages as a result of the conduct of its member or partner only if plaintiff proves by clear and convincing evidence that the damages suffered were the result of conduct that was carried out by a senior manager of such association, limited liability company or partnership with actual malice toward the plaintiff or with conscious, reckless and outrageous indifference to the health, safety, and welfare of others.

§55-2B-7. Conflicting laws repealed.

    This article supersedes, invalidates, and repeals all other state laws that conflict with its provisions.

§55-2B-8. Applicability.

    This article applies to all causes of action arising on or after the effective date of its enactment.

§55-2B-9. Severability clause.

    The provisions of this article and all sections and subparagraphs thereof shall be severable from the provisions of each other subparagraph, paragraph, subdivision, subsection, section, article, or chapter of this code so that if any provision of this article be held void, the remaining provisions of this article and this code shall remain valid.

    NOTE: The purpose of this bill is to limit the recovery of punitive damages in civil actions and to provide that some of the proceeds would go to benefit certain public programs.

    This article is new; therefore, strike-throughs and underscoring have been omitted.