Significant Decision on Punitive Damages
In the case of Motorola Credit Corp v. Uzan, the Second Circuit Court of Appeals held that the state law was not violated when a billion dollar punitive damage award was granted by a Federal trial court in a case in which the defendant refused to provide economic information.
The decision in Motorola resulted when the Second Circuit applied three factors under Illinois law in the granting of punitive damages: (1) the nature and enormity of the wrong, (2) the financial status of defendant and (3) the potential liability of defendant.
In order to respond to the second element, namely the financial status of the defendant, the defendant is obligated to provide financial information. When the defendant, through what might be considered reprehensible conduct, failed to provide such information, the court concluded that punitive damages in such an amount were appropriate.
