{"id":7734,"date":"2016-10-05T21:12:47","date_gmt":"2016-10-05T21:12:47","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/masterybusiness2xngcxmasterspring2016\/?post_type=chapter&p=7734"},"modified":"2021-08-06T23:02:09","modified_gmt":"2021-08-06T23:02:09","slug":"videos-punitive-and-compensatory-damages","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/chapter\/videos-punitive-and-compensatory-damages\/","title":{"raw":"Reading: Compensatory and Punitive Damages","rendered":"Reading: Compensatory and Punitive Damages"},"content":{"raw":"When someone\u00a0pursues a claim under a tort, the goal (or legal remedy) is\u00a0usually the award of damages. Damages in tort are generally awarded to restore\u00a0the plaintiff\u00a0to the position he or she was in had the tort not occurred.\r\n\r\nIn law, damages<\/b> are an award, typically of money, to be paid to a person as compensation for loss or injury.\u00a0<\/span>Damages are classified\u00a0as\u00a0compensatory<\/b> (or actual<\/b>) damages<\/b>\u00a0and punitive<\/strong> damages<\/strong>.\u00a0Compensatory damages are further categorized into special damages<\/strong>, which are economic losses such as loss of earnings, property damage, and medical expenses, and general damages<\/strong>, which are noneconomic damages such as pain and suffering and emotional distress.\r\n\r\nGenerally, punitive damages\u00a0are not awarded in order to compensate the plaintiff but to reform or deter the defendant and similar persons from pursuing a course of action such as that which damaged the plaintiff. Punitive damages are awarded only in special cases where a defendant\u00a0acted in a blatantly negligent, malicious, or grossly reckless manner.\r\n\r\n\"Cup<\/a>\r\n\r\nIn the case of Liebeck v. McDonald's Restaurants<\/i> (1994), for example, 79-year-old Stella Liebeck spilled McDonald's coffee in her lap, which resulted in second- and third-degree burns on her thighs, buttocks, groin, and genitals. The burns were severe enough to require skin grafts. Liebeck attempted to have McDonald's pay her $20,000 medical bills as indemnity for the incident. McDonald's refused, and Liebeck sued. During the case's discovery process, internal documents from McDonald's revealed that the company had received hundreds of similar complaints from customers claiming that McDonald's coffee caused severe burns. At trial, this led the jury to find that McDonald's knew their product was dangerous and injuring their customers and that the company had done nothing to correct the problem. The jury decided on $200,000 in compensatory damages<\/em>, but attributed 20 percent of the fault to Liebeck, reducing her compensation to $160,000. The jury also awarded Liebeck $2.7 million in punitive damages<\/em>, which, at the time, represented two days' of McDonald's coffee sales revenue. The judge later reduced the punitive damages to $480,000. The case is often criticized for the very high amount of damages the jury awarded.\r\n\r\nThe following videos also explain compensatory and punitive damages.<\/span>\r\n\r\nhttps:\/\/youtu.be\/_y7Yr9BHa9Y\r\n\r\nhttps:\/\/www.youtube.com\/watch?v=L5SLS58OBjA\r\n\r\n \r\n\r\n ","rendered":"

When someone\u00a0pursues a claim under a tort, the goal (or legal remedy) is\u00a0usually the award of damages. Damages in tort are generally awarded to restore\u00a0the plaintiff\u00a0to the position he or she was in had the tort not occurred.<\/p>\n

In law, damages<\/b> are an award, typically of money, to be paid to a person as compensation for loss or injury.\u00a0<\/span>Damages are classified\u00a0as\u00a0compensatory<\/b> (or actual<\/b>) damages<\/b>\u00a0and punitive<\/strong> damages<\/strong>.\u00a0Compensatory damages are further categorized into special damages<\/strong>, which are economic losses such as loss of earnings, property damage, and medical expenses, and general damages<\/strong>, which are noneconomic damages such as pain and suffering and emotional distress.<\/p>\n

Generally, punitive damages\u00a0are not awarded in order to compensate the plaintiff but to reform or deter the defendant and similar persons from pursuing a course of action such as that which damaged the plaintiff. Punitive damages are awarded only in special cases where a defendant\u00a0acted in a blatantly negligent, malicious, or grossly reckless manner.<\/p>\n

\"Cup<\/a><\/p>\n

In the case of Liebeck v. McDonald’s Restaurants<\/i> (1994), for example, 79-year-old Stella Liebeck spilled McDonald’s coffee in her lap, which resulted in second- and third-degree burns on her thighs, buttocks, groin, and genitals. The burns were severe enough to require skin grafts. Liebeck attempted to have McDonald’s pay her $20,000 medical bills as indemnity for the incident. McDonald’s refused, and Liebeck sued. During the case’s discovery process, internal documents from McDonald’s revealed that the company had received hundreds of similar complaints from customers claiming that McDonald’s coffee caused severe burns. At trial, this led the jury to find that McDonald’s knew their product was dangerous and injuring their customers and that the company had done nothing to correct the problem. The jury decided on $200,000 in compensatory damages<\/em>, but attributed 20 percent of the fault to Liebeck, reducing her compensation to $160,000. The jury also awarded Liebeck $2.7 million in punitive damages<\/em>, which, at the time, represented two days’ of McDonald’s coffee sales revenue. The judge later reduced the punitive damages to $480,000. The case is often criticized for the very high amount of damages the jury awarded.<\/p>\n

The following videos also explain compensatory and punitive damages.<\/span><\/p>\n