Earlier this month, the Pennsylvania Superior Court vacated a Philadelphia jury’s $38.5 million punitive damages verdict after concluding that the plaintiff’s claim for punitive damages was brought after the applicable statute of limitations. The Superior Court’s decision holding that a claim for punitive damages is a cause of action that must be pled prior to the expiration of the statute of limitations caught many practitioners by surprise, and for good reason. The ruling is at odds with long-standing precedent. It is also confusing, fundamental wrong and completely unworkable as a matter of practice. The good news is that the Wilson decision is likely to be short-lived, as it will almost certainly be reversed by the Pennsylvania Supreme Court. But until then, Pennsylvania law regarding what constitutes a cause of action susceptible to the statute of limitations has fundamentally changed and plaintiffs lawyers everywhere ought to be cautious.
The Wilson case arouse out of a shooting at the Kraft Food factory in Philadelphia a few years back. The plaintiff brought claims of negligence against multiple defendants, including a third-party commercial security company. The plaintiff alleged, among other things, that the company negligently allowed a disgruntled former employee to enter the factory and begin shooting. At the inception of the case, plaintiff’s original counsel included a request for punitive damages in the Complaint. As is typical, the defendant filed a preliminary objection seeking to strike the punitive damages claim. Often times when this happens, the parties will either agree to remove a claim for punitive damages from the Complaint without prejudice, or the Court will strike the claim without prejudice. In either case, the idea is that discovery should be taken before a defendant is subject to a potential verdict for punitive damages.
In Wilson, the plaintiff’s counsel agreed to remove the claim for punitive damages from the Complaint by way of stipulation. Counsel for both parties filed a stipulation to dismiss the claim for punitive damages, without prejudice. Consistent with the custom in Pennsylvania, both parties contemplated that the plaintiff would have the right to again request punitive damages after discovery, if the evidence warranted such a remedy. However in this case, the plaintiff did not include in the stipulation a provision barring the defendant from raising the statute of limitations as a defense if the pleading was subsequently amended to bring back the punitive claim.
Now, it was certainly an oversight for plaintiff’s counsel not to include this language regarding the statute of limitations. But it really shouldn’t have mattered, because as everyone knows, a claim for punitive damages is not a cause of action. It is not even a theory of liability (read more about the myth of “theories of liability” here https://jamesgoslee.com/2017/05/11/amending-a-civil-complaint-in-pennsylvania-after-the-statute-of-limitations-beware-of-the-new-theory-of-liability-myth/). It is simply an element of damages. And because it is not a cause of action, it can be added to a civil Complaint any time, regardless of the statute of limitations, right?
Unaccountably, and in defiance of all prior precedent, a panel of Superior Court judges ruled that a claim for punitive damages is in fact a cause of action and must be pled within the two-year statute of limitations. Notwithstanding the chaos this decision will now cause practitioners (plaintiffs must now plead punitive damages in all negligence cases, regardless of the facts, just to be safe and to avoid a future claim of malpractice), the decision cannot be squared with long-standing precedent or common experience. With respect to precedent, Pennsylvania is and always has been a notice pleading state. Plaintiffs do not need to include every potential theory of negligence in a Complaint, nor do they need to specifically enumerated all elements of damages. Rather, it has always been the law that a plaintiff need only plead sufficient facts to allow a defendant to prepare a defense against a cause of action. No court in Pennsylvania has ever held that a request for punitive damages is a stand alone cause of action. And this makes sense, because there is no independent cause of action for punitive damages. Punitive damages are simply a component of damages permitted in those rare cases where a defendant’s conduct is outrageous.
Given that the panel’s decision in Wilson represents a sea change that will fundamentally alter the practice of law for civil litigants in Pennsylvania (because if punitive damages are a “cause of action,” you better plead everything under the sun in a Complaint!), you would think that the court would have spent considerable time explaining its decision. You would also think it would have engage in a deep legal (and perhaps philosophical) analysis. But you would be wrong. After boiler plate citation to decisions that in no way support the panel’s holding, here is the entirety of the Superior Court’s analysis:
On independent review, we are constrained to conclude that the trial court’s decision to permit the addition of a claim for punitive damages in the middle of the first trial was legally incorrect. Quite plainly, and without factual dispute, the statute of limitations had expired.
“Quite plainly.” The Superior Court thought the issue so obvious it dismissed it in two words: “quite plainly.” The Superior Court threw out a $35 million verdict, and created a new and unworkable legal paradigm on the strength of two words.
With all respect to the Superior Court, which gets it right most of the time, it really missed the mark on this one. It is clear from the lack of analysis that the Court did not consider the implications of its decision. If an element of damages is now considered a “cause of action,” the legal definition and common understanding of “cause of action” has (without any principled explanation) expanded beyond reason and beyond measure. The upshot, unfortunately, is that plaintiffs’ counsel will now be forced to include a claim for punitive managers in every Complaint. More than that though, the Complaint should now be a compendium of every single fact and theory of liability known or conceivable to counsel. Because if nothing else, the Superior Court is now signaling that our state’s well established pleading conventions have been turned upside down.
James Goslee is a trial attorney in Philadelphia and can be reached at https://jamiegoslee.com/about/