Punitive Damages in Ohio Now Carry the Cost of the Appeal, Too

Published November 10, 2022 · Ohio Supreme Court

Winning a jury verdict is not always the end of a case. A defendant who loses at trial can appeal, and an appeal can add a year or more of briefing, argument and waiting. For an injured person who has already spent years getting to trial, the appeal can feel like a second lawsuit, and it costs real money to defend.

On October 12, 2022, the Supreme Court of Ohio held that when a jury has awarded punitive damages and attorney fees, the defendant who appeals and loses can be made to pay the fees for the appeal as well. The case is Cruz v. English Nanny & Governess School, 169 Ohio St.3d 716, 2022-Ohio-3586, and it matters for anyone whose injury was caused by truly reckless or malicious conduct.

The background: Ohio's American rule and its punitive-damages exception

Under the "American rule," each side in a lawsuit usually pays its own lawyers, win or lose. There are three traditional exceptions: when a statute shifts the fees, when a contract does, and when the losing party acted with malice or bad faith that justifies punitive damages.

That third exception is old and well established in Ohio. When a jury finds that a defendant acted with malice and awards punitive damages, it may also award the plaintiff's reasonable attorney fees. Ohio's punitive-damages statute, R.C. 2315.21, sets the rules for punitive awards, requires clear and convincing proof of malice or aggravated fraud, and caps the amount. It also says that attorney fees awarded as a result of a punitive-damages claim do not count toward that cap, under R.C. 2315.21(D)(2)(c). I explained how this works in drunk-driving cases in July, in our post on punitive damages against drunk drivers.

The open question was whether the fee award stops at the trial or also covers the appeal.

The Cruz case

Cruz was not a crash case. Two women sued a nanny school, a related placement agency and two individuals on claims including intentional infliction of emotional distress, wrongful termination in violation of public policy and defamation. After a 26-day jury trial in Cuyahoga County, the jury found in their favor on several claims, awarded compensatory and punitive damages, and awarded reasonable attorney fees.

The defendants appealed more than once. When the trial court later awarded fees that included the plaintiffs' work defending the verdict on appeal, the Eighth District Court of Appeals struck that portion. It reasoned that Ohio law permits appellate attorney fees only in cases under remedial statutes, and these claims were not.

What the Supreme Court decided

The Supreme Court reversed in a 5-2 decision written by Justice Melody Stewart. The Court held that prevailing parties who were awarded reasonable attorney fees along with punitive damages may also recover the attorney fees they incur in successfully defending their judgment on appeal.

The Court's reasoning was straightforward:

• Nothing in the common law forbids it. Recovery of attorney fees has always been allowed when punitive damages are awarded, and nothing in that tradition stops at the courthouse steps after the verdict.
• Fees are part of making the victim whole. When a defendant has acted maliciously, the victim should not have to watch the value of the judgment drain away paying lawyers to defend it.
• Consistency. Ohio already allows appellate fees when a statute or a contract shifts fees. The Court saw no reason to treat the punitive-damages exception differently.
• The cap does not apply to the fees. The Court noted that this rule is not limited by the statutory caps on punitive damages.

Justice Kennedy, joined by Justice DeWine, dissented. The dissent argued that the common-law exception covers only trial fees, that the General Assembly would have to authorize appellate fees, and that the rule may discourage defendants from exercising their right to appeal.

Why this matters in injury cases

Punitive damages are not available in most crash and injury cases. They require proof of malice, which Ohio courts define to include a conscious disregard for the rights and safety of others that has a great probability of causing substantial harm. But when they are available, the cases tend to involve the worst conduct: impaired drivers, trucking companies that knowingly put dangerous drivers or equipment on the road, and caregivers who ignore obvious risks to vulnerable people.

Those are also the cases most likely to be appealed. A defendant facing punitive damages has every reason to fight, and an insurance company defending its insured may see an appeal as a way to wear down a family that has already waited years. Cruz changes that math. If the verdict holds up, the defendant pays for the fight it chose.

There is also an insurance angle. Under R.C. 3937.182(B), Ohio auto and liability policies cannot cover punitive damages themselves. But in Neal-Pettit v. Lahman, 125 Ohio St.3d 327, 2010-Ohio-1829, the Supreme Court held that attorney fees are distinct from punitive damages and that public policy does not prevent an insurer from covering a fee award, which I wrote about in our 2010 post on that case. Whether a particular policy covers a particular fee award depends on its language, but the fee portion of a judgment can be a collectible part of the recovery even when the punitive portion is not.

What this means for you

If you were hurt by conduct that went far beyond ordinary carelessness, the way your case is built from the beginning matters:

• Preserve the evidence of recklessness early. Bar receipts, driver logs, maintenance records, prior complaints and video are what prove malice by clear and convincing evidence. Our guide chapter on what your case is worth explains how punitive damages fit with compensatory damages and the caps.
• Plead punitive damages and fees when the facts support them. A claim that is never made cannot be awarded.
• Plan for the long game. Serious cases can take years, and an appeal can add more; our chapter on deadlines and the timeline of an Ohio injury case explains what to expect. Cruz means that time spent defending a punitive verdict need not come out of your recovery.

We handle these claims as part of our personal injury practice, and we prepare every case with punitive damages in mind when the facts warrant it.