Italian Supreme Court Affirms Position Against Punitive Damage Awards
The Italian Supreme Court, the highest court in Italy, and analogous to the United States Supreme Court, has historically found that punitive damage awards in civil matters are contrary to the Italian system of civil liability which seeks compensation rather than punishment. In the recent decision Soc Ruffinatti v. Oyola-Rosado, the “Corte Suprema di Cassazione” sentence n. 1781/2012 of February, 8, 2012, the Italian Supreme Court further underscored this position by finding that foreign judgments which award punitive damages are contrary to domestic public policy and unenforceable in Italy.
Soc Ruffinatti v. Oyola-Rosado
The original action, brought by an employee of Soc Ruffinatti in the State Supreme Court of Massachusetts, involved a workplace accident at the defendant’s U.S. subsidiary. The Middlesex Superior Court in Massachusetts, without referencing punitive damages or discussing the criteria used to quantify the award, ordered the defendant to pay $8 million to the plaintiff as a result of his personal injuries.
When the defendant refused to pay, the plaintiff sought to enforce the U.S. decision in Italy, and brought action in the Court of Appeal of Turin. The Court of Appeal compared the severity of the plaintiff’s injury with the reasonability and fairness of the U.S. award. The Court of Appeal determined that the U.S. award was enforceable as there was no mention of punitive damages in the U.S. decision, and the award justly compensated the injured plaintiff. The case was appealed to the Italian Supreme Court, in Rome.
In reviewing the lower court’s decision, the Supreme Court noted that the Court of Appeal’s reasoning failed to include an analysis of the criteria typically used by Italian courts when assessing compensatory damages. The Supreme Court overturned the Court of Appeal, and found that the $8 million award was unenforceable because it was punitive in nature, despite the fact that punitive damages were never discussed by the Massachusetts court. The Italian Supreme Court reiterated that such punitive awards were unenforceable in Italy because the Italian civil liability system is strictly compensatory, not punitive.
Parrott v. Soc Fimez
The Supreme Court’s decision parallels its prior holding in Parrott v. Soc Fimez, Italian Supreme Court “Corte Suprema di Cassazione” sentence n. 1183/2007, of January 19, 2007, and confirms the Italian court’s position that punitive damage awards are against public policy.
In Parrott v Soc Fimez, plaintiff brought a lawsuit against several defendants stemming from the death of her son in a motorcycle accident. Plaintiff entered into an undisclosed settlement with several defendants prior to trial. However, the Italian company accused of producing the defective helmet that allegedly contributed to the death of the plaintiff’s son refused to contribute to the settlement, and the matter went to trial. Ultimately, an Alabama federal district court entered an award against the Italian manufacturer in the amount of $1 million. Similar to the Massachusetts court, the Alabama District Court did not discuss an apportionment between compensatory and punitive damages.
When the manufacturer refused to pay, the plaintiff sought to enforce the U.S. judgment in Italy. The Venice Court of Appeal refused to enforce the judgment, and found that the entire award was punitive and therefore violated public policy. The Court of Appeal noted that the key factors to this determination were: (1) No Rationale; (2) Large Award; and (3) the involvement of the wrongdoer in the harm.
The Court of Appeal found that the U.S. decision failed to provide a criteria for the award, which made it impossible to identify compensatory losses. The Court also found that the award was significantly higher than the sum received by the plaintiff following settlement agreements with other defendants and found that these elements showed the award acted as a sanction against the defendant with an intent to punish and deter. Thus, it was contrary to public policy.
The decision was appealed to the Italian Supreme Court, which upheld the Court of Appeal’s decision. The Supreme Court held that the purpose of civil damages is solely to compensate the injured party, without exception, and held that punitive awards ran afoul of the purely compensatory Italian system of civil liability.
The Italian system of civil liability seeks compensation rather than punishment, and, therefore, the Italian Courts have deemed punitive damages to be contrary to public policy. Using this theory, the Italian Supreme Court refused to recognize the excessive U.S. awards in Soc Ruffinatti and Soc Fimez.
Both Soc Ruffinatti and Soc Fimez involved injured plaintiffs seeking compensation for their damages. In assessing just compensation, the Italian courts reviewed the damages incurred and recognized contributions from other tortfeasors. The Courts determined that the awards of $1 million and $8 million were excessive and meant to punish the defendants rather than fairly compensate the injured plaintiffs.
It is unclear whether the Italian courts would have reached similar results if the underlying U.S. decisions had distinguished between compensatory and punitive damages. Nonetheless, these decisions provide a measure of security against runaway verdicts that are not designed to fairly compensate injured consumers. Our research suggests that the posture of the Italian court towards punitive damages is one shared by most European courts.
An interesting side note, however, is the willingness of the Court of Appeal of Turin to uphold an $8.0 million verdict. A few short years ago, no Italian court would have upheld a verdict of this magnitude. This decision reflects the “Americanization” of judicial systems around the world and their growing willingness to hold corporations accountable for their “wrongful” acts, regardless of the cost.
Giuseppe F. Bonacci, of Rödl & Partner, Milano Italy, also contributed to this article.