Let’s say you are immersed in bad faith litigation and the damages you seek include punitive damages – what kind of punishment-related discovery are you going to want?1 Well, some obvious starting points would be discovery pertaining to other claims involving similarly-situated insureds, the insurer’s net worth, and the bonus/incentive program(s) that the insurer has in place to reward personnel for lowering claim payouts. But do you get to have at that kind of discovery by simply including the phrase “punitive damages” in the WHEREFORE clause of your bad faith complaint? Most Florida courts these days will require you to first clear the hurdles set forth in Section 768.72 of the Florida Statutes; and proffer evidence supportive of your bad faith punitive damage claim before allowing you to conduct punishment-related discovery. This post highlights a decision that, in my opinion, got the punitive damage proffer analysis right – the Royal Marco decision out of the Middle District of Florida.2
The proffer of evidence standard is supposed to be relaxed in favor of the proffering party. Indeed, the Royal Marco court rejected QBE’s “suggestion that the evidence proffered by Royal Marco should be held to the same standards that apply to summary judgment motions,” holding, instead, that the “proffer should be evaluated by standards akin to those governing a motion to dismiss, where the truth of the plaintiff’s allegations are assumed.”
What kind of information, then, is the judge to analyze under this “motion to dismiss” standard? The Royal Marco court determined that it was neither “necessary nor appropriate for a court to make evidentiary rulings, weigh rebuttal evidence, or engage in credibility determinations in considering the sufficiency of the proffer.” Put differently, the court held that “a fact intensive investigation into the merits” of a proffer is unwarranted and that the only consideration is whether the “proffered evidence satisfies [the] preliminary burden of showing a reasonable basis for recovery of punitive damages so as to permit discovery on the issue.” The court added it is only appropriate to consider “assertions” of the non-proffering party that would show the “factual bases to be patently false or irrelevant,” not to consider the admissibility of the proffer evidence or that which is contained in a non-proffering party’s rebuttal proffer.
I bet you already know how the Royal Marco decision concluded based on the above holdings, but I will summarize it anyway: Royal Marco’s proffer was deemed sufficient and the court consequently permitted Royal Marco “to engage in other claims discovery as well as net worth, financial incentive, and money-flow discovery.” If you wish to obtain adequate punitive damage discovery (or any punitive damage discovery for that matter), I suggest that you make use of this dynamite proffer of evidence decision.
To read previous posts in my series on dynamite discovery decisions, click here.
1 Note that one very important aim of punishing an insurance company for its improper handling of a particular claim is to deter the carrier from repeating its behavior on prospective claims.
2 Royal Marco Point I Condo. Ass’n Inc. v. QBE Ins. Corp., No. 3:07 CV 16, 2010 WL 2609367 (M.D. Fla. June 30, 2010).