Many states restrict punitive damages to situations in which the defendant either intended to injure the plaintiff or disregarded a substantial risk of injury.  Regrettably, courts often misapply the latter basis for punitive damages in a way that undermines its function of limiting punitive damages to cases of truly egregious misconduct.

In his opinion for the Seventh Circuit in Jentz v. ConAgra Foods, Inc., the ever-insightful Judge Easterbrook recently took a step to reverse the tide.

Grain Bins HzJentz involved an explosion of a grain storage bin.  After detecting a burning smell in that bin, the owner retained a company that specializes in remediating smoking bins.  About a week after coming on site, the contractor detected smoke coming from the bin.  The contractor’s foreman thereupon directed an employee of the contractor and an employee of an unrelated contractor to retrieve some tools from a tunnel leading to the bin in order to clear the way for firefighters who had been summoned to the scene.  While they were doing so, the bin exploded, injuring them and one other employee of the unrelated contactor.

The three employees sued both the owner of the facility and the contractor, alleging that the defendants negligently exposed them to the risk of injury.  A jury awarded compensatory and punitive damages against both defendants.

For reasons not relevant here, the Seventh Circuit reversed the judgment against the owner of the grain bin in its entirety.  Turning to the punitive damages imposed against the contractor, the court explained that in determining whether Illinois’ standard for liability for punitive damages had been satisfied, it was “important to know how likely and how imminent an explosion was, under the conditions [that the foreman for the contractor] knew about.”

The court then indicated that the record was devoid of evidence regarding “the probability that a smoking bin will explode, or break into open fire, within any given time.”  That was fatal to the claim for punitive damages, the court held, because “[w]ithout data, or at least a qualitative risk estimate * * *, the jury lacked support for a conclusion that [the foreman’s] conduct exposed the workers to a risk so great that his order [to remove the tools from the tunnel] marked a ‘gross deviation’ from the standard of care.”

In language that could apply equally well to product-liability cases, other personal-injury cases, and even non-intentional financial-injury cases, the court explained:

“Even a small risk will come to pass if events are repeated often enough, but Illinois has not announced a rule under which punitive damages are proper whenever small or remote risks occur and cause injury.  The verdict appears to be a consequence of hindsight bias—the human tendency to believe that whatever happened was bound to happen, and that everyone must have known it.  If [the foreman] believed that an explosion was imminent, then he is a monster; but of that there is no evidence. Hindsight bias is not enough to support a verdict.”

Would that more courts would recognize the siren song of hindsight bias and refuse to allow punitive damages to stand when they detect its presence.