Update (March 30, 2015): Getting permission to make a claim for punitive damages is difficult under Minnesota law. In my opinion, it is too difficult.
If a buyer of expensive and sophisticated machinery makes clear to the seller that it requires Features A, B, C, D, if seller assures buyer that the expensive machine will have Features A, B, C, D, if seller delivers the product and it does not have Features A, B, C, D, and, finally, if there is sufficient evidence from which a jury could conclude that seller knowingly misstated the nature and quality of the product and knowingly sold the product without Features A, B, C, D, which seller knew that buyer felt were critical and material needs, in my view, seller should be financially punished. Such a narrative should, in my view, support a claim for punitive damages.
Plaintiff Alotech, Ltd. and its lawyers agree. Of course, defendant Northstar Imaging emphatically disagrees. In fact, Northstar Imaging argues that it provided exactly what it promised to provide so, Northstar argues, Alotech’s claim is simply and completely factually unsupported. U.S. Mag. Judge Tony Leung (D. Minn.) agreed last month with the Defendant’s opposition to the motion to amend.
Maybe Judge Leung properly applied the law. Let’s assume so. But if that is the law, I think it is wrong. Keep in mind that this is a threshold or preliminary issue, a request to make a punitive damages claim, not a request for a finding that punitive damages are warranted. Keep in mind that the legal standard is whether, looking at all of the evidence in favor of the movant (and not even looking at any evidence submitted by the non-movant) there is a “prima facie” case for punitive damages.
We are in a world these days where it seems many sellers over-promise. We are in a world where many sellers agree to provide a product with Features A, B, C, D and then provide paperwork in connection with the sale that describes a product WITHOUT Features A, B, C, D. When the disappointed buyer raises a ruckus, he is directed back to “the contract” with terms that are flat out inconsistent with the deal that buyer thought it was getting. In my view, our legal system should deter such conduct.
I understand and can identify with the defendants’ concern of the open-endedness of the threat of punitive damages. I understand that over-reaching plaintiffs will exploit the threat of punitive damages to extort higher settlements from innocent defendants. In other words, there are clearly arguments on both sides. But I think there are imbalances and unfairness in the law today and this is one example.