Punitive Damages Against Corporation California

Punitive damages are awarded not to compensate a tort victim but to punish persons "guilty of recklessness or wickedness." (White v. Ultramar, Inc. (1999) 21 Cal. 4th 563, 569 88 Cal. Rptr. 2d 19, 981 P.2d 944, quoting Warner v. Southern Pacific Co. (1896) 113 Cal. 105, 112 45 P. 187.) Punitive damages are awarded only where there is malice, oppression, or fraud, defined (paraphrasing the standard instructions) to mean intent to injure or willful and conscious disregard of others' rights. Corporations are legal entities which do not have minds capable of recklessness, wickedness, or intent to injure or deceive. An award of punitive damages against a corporation therefore must rest on the malice of the corporation's employees. But the law does not impute every employee's malice to the corporation. Instead, the punitive damage statute requires proof of malice among corporate leaders: the "officers, directors, or managing agents." (Civ. Code, 3294, subd. (b).) This is the group whose intentions guide corporate conduct. By so confining liability, the statute avoids punishing the corporation for malice of low-level employees which does not reflect the corporate "state of mind" or the intentions of corporate leaders. This assures that punishment is imposed only if the corporation can be fairly be viewed as guilty of the evil intent sought to be punished. "To award punitive damages against the master for the criminality of the servant is to punish a man for that of which he is not guilty." (White v. Ultramar, Inc., supra, 21 Cal. 4th at 569, quoting Warner v. Southern Pacific Co., supra, 113 Cal. at p. 112.)