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Rose v. Brown & Williamson Tobacco Corp.9/29/2005
such sum for exemplary damages as the case calls for; depending in great measure of course on the conduct of the defendant." The Court of Appeals set aside the verdict on the ground that that instruction had been insufficient as a matter of law. In reaching its determination, the court articulated the following rule:
For injuries by the negligence of the servant while engaged in the business of the master, within the scope of his employment, the latter is liable for compensatory damages; but for such negligence, however gross or culpable, he is not liable to be punished in punitive damages unless he is also chargeable with gross misconduct. Such misconduct may be established by showing that the act of the servant was authorized or ratified, or that the master employed or retained the servant, knowing that he was incompetent, or, from bad habits unfit for the position he occupied. Something more than ordinary negligence is requisite; it must be reckless and of a criminal nature, and clearly established.
(Id. at 47-48.) It is not clear from the language of the decision whether the court intended that proof on the question of punitive damages must be "clearly established" in all cases, or only when punitive damages are sought against an employer on a theory of respondeat superior.
The Court of Appeals for the Second Circuit and the Appellate Divisions of the First and Second Departments in New York have all cited Cleghorn to hold that the standard of proof in a punitive damages case must be met by clear and convincing evidence. (Roginsky v. Richardson-Merrell, 378 F2d 832, 851 [2nd Cir 1967]; Camillo, 185 AD2d at 194; Orange and Rockland Utilities, 292 AD2d at 581). However, as in Cleghorn, it is unclear whether these rulings apply to all punitive damages cases, or only those that involve imposing punitive damages where liability is based on respondeat superior. A central issue in each of the cases citing Cleghorn was whether punitive damages could be imposed on a corporation for the acts of its employees. In Roginsky, a products liability case concerning a cholesterol control drug that caused cataracts, the Court found that, while certain members of defendant's research department had falsified animal test results, there was no evidence that either of the two corporate officers with direct decision making authority in the matter, or anyone above them knew of the falsified results. (Roginsky 378 F2d at 844-845.) As such, the Court concluded there was no showing that directors or senior officers of the corporation, and consequently the corporation itself, acted in a reckless manner. (Id. at 846). Accordingly, the Court set aside a punitive damages award in that case. In Camillo, the issue before the Court was whether the defendant, a parent company of a corporation which assembled and distributed crane parts, was liable for punitive damages when it failed to sufficiently act upon a warning that certain elements of a crane manufactured by its subsidiary were shown to be defective. (Camillo 185 AD2d at 194-196.) The Court found that, prior to the event causing plaintiff's injuries, only two employees of defendant knew of the warning and neither had the requisite decision making authority to remedy the problem. (Id. at 196). As such, the Court concluded that their conduct could not support a punitive damages award against defendant. (Id.) In Orange and Rockland Utilities, while it did not set forth the specific facts underlying the claim, the Court stated clearly that the lower court had properly set aside the punitive damages award on defendant's counter claim against the corporate plaintiff where "the plaintiff's employees who testified during trial were not superior officers within the plai
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