Punitive damages, intended to punish willful and malicious wrongful acts, are not a part of most business lawsuits. Minnesota law prohibits plaintiffs from seeking punitive damages in a complaint at the outset of a lawsuit. Plaintiffs must instead obtain the permission of a judge to even assert such a claim by moving for leave to amend the complaint to add a punitive damages claim at a later time in the case. Such procedural hurdles and the elevated burden of proof – clear and convincing evidence – properly make punitive damages awards the exception to the rule.
Despite the hurdles, punitive damages are sometimes sought and awarded in business disputes. Successfully obtaining the right to go to trial on a punitive damages claim can significantly affect the outcome at trial, and will almost always alter the risk profile of a case that the parties must take into account while contemplating the potential of a settlement before throwing the dice on both compensatory damages and punitive damages before a judge or jury.
