Why Criminal-Law Statute-Of-Limitations Principles Should Apply To Claims For Punitive Damages

There are not many true affirmative defenses to punitive damages, much less ones that can be established on the face of the complaint. One potential basis for dismissing a claim for punitive damages, which could be particularly useful in environmental cases alleging that conduct occurring in the distant past caused injuries that manifested only recently, involves the statute of limitations.

Although only a few courts have addressed the topic, there is a compelling conceptual argument that the statute of limitations for punitive damages should run from the date of the conduct for which punishment is sought, not the date of injury or discovery of injury, as would be the case for the underlying compensatory or remedial claims. The basic idea is that the penal nature of punitive damages makes it appropriate to apply criminal-law limitations principles, under which the statute of limitations normally runs from commission of the wrongful act.

The Supreme Court explained in Cooper Industries v. Leatherman Tool Group that "compensatory damages and punitive damages . . . serve distinct purposes" and that while "[t]he former are intended to redress the concrete loss that the plaintiff has suffered by reason of the defendant's wrongful conduct, . . . [t]he latter, which have been described as 'quasi-criminal,' operate as 'private fines' intended to punish the defendant and to deter future wrongdoing." Indeed, as the Court put it more bluntly in State Farm, "[punitive] awards serve the same purposes as criminal penalties." That being so, statute-of-limitations accrual principles developed for purposes of ensuring injured parties fair access to compensation do not extend to claims for punitive damages, as courts and litigants seem all too often reflexively to have assumed.

Put another way, while it is sensible to allow victims of ancient conduct to recover fully for injuries they do not sustain until many years after the conduct took place (though even then statutes of repose may constrain the ability to bring suit), it is quite another to punish a company for that ancient conduct when the perpetrators may have long since left the company and the burden of the punitive damages will fall on shareholders who cannot in any sense be said to have profited from the misconduct. Allowing plaintiffs to seek punitive damages in these circumstances serves neither of the twin purposes of punitive damages—retribution and deterrence. Moreover, the same policies that...