On South Carolina Tort Reform (Or How the Tortoise Finishes the Race)

As you may have heard, our own state of South Carolina finally passed a long awaited (or long dreaded depending on your side of the fence) tort reform act.  They call it . . . . . The South Carolina Fairness in Civil Justice Act of 2011, and the new law contains a punitive damages cap. Although it is most certainly a step in a direction, this blogger is still unsure which direction that is.

Here’s what the Punitive Damages section of the Act says with regard to caps:

Punitive damages will be capped at 3 times compensatory damages OR $500,000, whichever is greater.

UNLESS

1. The wrongful conduct was motivated by “unreasonable financial gain” and the person in charge knew of or approved the “unreasonably dangerous” nature of the conduct that was highly likely to result in injury;  (Ummmm.  What?)

OR

2.  The wrongful conduct COULD subject the Defendant to a felony conviction;

THEN

Punitive damage will be capped at 4 times compensatory damages OR $2 Million, whichever is greater.

UNLESS

1.  The Defendant  intended to harm;

OR

2.  The Defendant pled guilty to or was convicted of a felony arising out of the same act;

OR

3. The Defendant acted while under the influence of alcohol, drugs, glue, aerosol, or other toxic vapor;

THEN

No cap.  (Glue huffers be damned.)

So, when exactly are the punitive damages capped at at three times compensatory damages or $500,000? When exactly does the motive for financial gain become unreasonable?  When it motivates a tortious act?  We expect to see many a law dog sparring over what is reasonable or unreasonable financial gain. Ah, more issues to be heavily litigated.

Also interesting is the requirement, in the 4 times compensatory/$2 million category, that the person in charge knew OR approved “the unreasonably dangerous nature of the conduct,” which had (has?) a “high likelihood of (causing) injury.”  So, could he approve it but not know that it was unreasonably dangerous with a high likelihood of causing harm?

The new Act takes effect in January of 2012.  We’ll be certain to keep you posted.