The South Carolina Supreme Court recently decided Garrison v. Target Corporation in which it interpreted South Carolina’s statutory cap on punitive damages. The Court reversed the Court of Appeals of South Carolina, which held that a defendant must plead the statutory cap as an affirmative defense in its first responsive pleading or waive the cap’s protections. This Court of Appeals ruling had sent shockwaves throughout the defense bar, causing defense attorneys to rush to amend their answers to plead the statutory punitive damages cap as an affirmative defense to avoid waiving the cap. The Court has now overturned the Court of Appeals’ perplexing decision, finding that the statutory cap is not an affirmative defense and thus cannot be waived. Instead, the statutory cap provides a legislative limit on punitive damages under certain circumstances, which the trial court must evaluate on a case-by-case basis. Garrison v. Target Corporation illustrates the importance of the statutory cap to defendants facing an outsized punitive damages verdict.

Garrison v. Target Corporation

In Garrison v. Target Corporation, Denise Garrison and her eight-year-old daughter visited a Target in Anderson, South Carolina one evening in 2014. In the parking lot on their way into the store, her daughter picked up what appeared to be a hypodermic needle and showed it to her mother. Ms. Garrison instinctively swatted the syringe out of her daughter’s hand and, in the process of doing so, punctured the palm of her hand. She informed Target staff of the incident and thought that Target would pay for her medical bills. An infectious disease specialist prescribed medications to prevent HIV or hepatitis, and she periodically submitted to blood tests for the following year. Target declined to cover her medical bills and did not accept the $12,000 settlement offer she submitted after she filed an action against Target for negligence.

A jury awarded Ms. Garrison $100,000 in compensatory damages and $4.5 million in punitive damages (45-times larger than the compensatory damages award). Target moved for a reduction of the punitive damages award because it exceeded the statutory maximum, and the trial court granted this motion. On appeal, the Court of Appeals reinstated the punitive damages award, holding that Target had waived the statutory cap on punitive damages by failing to plead it as an affirmative defense.

In reversing this decision, the Court held that a defendant is not required to plead the statutory cap on punitive damages as an affirmative defense. The Court primarily analyzed the language of the statute, finding that the legislature unambiguously intended to require trial courts to reduce punitive damages that exceed the cap. It further found that the statutory cap is not an affirmative defense because it does not affect liability or require a new matter to be asserted but instead limits the amount of damages a plaintiff can recover. Also, unlike affirmative defenses, the burden does not shift to the defendant to prove the applicability of the statutory cap on punitive damages. The Court went on to hold that the statute requires the trial court to determine whether any exceptions to the general limit are applicable and does not create any issue for the jury to resolve. The Court thus remanded the case to the trial court to determine whether it must reduce the punitive damages award under the statute.

What You Need to Know

The Garrison Court provided an extensive analysis of South Carolina’s statutory cap on punitive damages and explained three important points:

1. A defendant is not required to plead the statutory cap on punitive damages as an affirmative defense to preserve its application;
2. The statutory cap is neither an affirmative defense nor an avoidance because it (a) does not affect liability or require new matter to be asserted but instead limits the amount of damages a plaintiff can recover, and (b) does not shift the burden of proof to the defendant; and
3. The statute requires the judge — rather than the jury — to determine whether, and to what extent, the cap applies to limit a punitive damages award.

Nelson Mullins continues to monitor developments related to this case and the statutory punitive damages cap. For questions or assistance, please contact the listed authors.