PUNITIVE DAMAGES IN FLORIDA ARBITRATIONS

Often litigants in an arbitration forum believe that informal procedures always apply.  While that is normally true, there are times that special requirements are imposed by applicable statutes.  In Florida, there are unique procedures when a claimant seeks punitive damages for a state claim.  Failure to follow them will render any arbitration award providing for punitive damages subject to attack in court.

Section 768.737, Florida Statutes provides that the following limits apply to punitive damages awards in arbitration cases for Florida causes of action.  “When an award of punitive damages is made in an arbitration proceeding, the arbitrator who renders the award must issue a written opinion setting forth the conduct which gave rise to the award and how the arbitrator applied the standards in s. 768.72 to such conduct.”  F.S. § 768.737.

Punitive damages are appropriate only when the actions of the defendant are “fraudulent, malicious, deliberately violent or oppressive, or committed with such gross negligence as to indicate a wanton disregard for the rights of others.”  W.R. Grace & Company v. Waters, 638 So.2d 502, 503 (Fla.1994).

Section 768.72, Florida Statutes provides that “[i]n any civil action, no claim for punitive damages shall be permitted unless there is a reasonable showing by evidence in the record or proffered by the claimant which would provide a reasonable basis for recovery of such damages.”  In other words, permission of the court is required before the claim can be made.  Although arbitrators normally do not impose the same pleading requirements on parties that courts do, in this circumstance arbitrators are required to follow this procedure by the express terms of the statute.  F.S. § 768.737  (“Where punitive damages are available as a remedy in an arbitration proceeding, ss. 768.72, 768.725, and 768.73 apply.”).

Entitlement to punitive damages must be proven by clear and convincing evidence.  F.S. §  768.725.

Section 768.73, Florida Statutes establishes three standards for determining the limit or the absence of a limit on an award of punitive damages, depending on how egregious the defendant’s conduct is.

The general rule is that punitive damages shall not exceed three times the amount of compensatory damages for each claimant or the sum of $500,000.00, whichever is greater. Section 768.73(1)(b) sets the limit at four times the compensatory damages or $2,000,000.00, whichever is greater, if the fact finder determines that the wrongful conduct was motivated solely by unreasonable financial gain, and that the unreasonably dangerous conduct, together with the likelihood of injury, were “actually known” by the defendant or certain agents of the defendant. Section 768.73(1)(c) provides that there shall be no limit on an award of punitive damages if the fact finder determines that the defendant had a specific intent to harm the claimant and that the defendant’s conduct actually did harm the claimant.