Recently proposed legislation could reduce the legal costs of New Jersey municipalities. Assembly Bill Number 2997 would eliminate awards of punitive damages against municipalities as well as employees of municipalities acting within the scope or under color of their office, employment, or agency. 
In a civil lawsuit, compensatory damages are intended to reimburse the plaintiff for losses caused by the defendant’s conduct. In contrast, punitive damages are designed to punish the defendant, with the goal of deterring the defendant or others from engaging in similar conduct. While punitive damages are only awarded in exceptional circumstances, they can be extremely costly.
According to the statement accompanying the bill, the goal is to “clarify the Legislature’s position of the issue of punitive damages against municipalities, and guide future court decisions when ruling on the availability of such awards.” In order to accomplish this aim, the bill would amend several existing New Jersey laws, including the Punitive Damages Act, the Conscientious Employee Protection Act, and the Law Against Discrimination, to prohibit any awards of punitive damages against municipalities, and against the officers, employees and servants of these public entities. Under the proposal, healthcare facilities that are operated by municipalities would be exempt as well.
As highlighted by the New Jersey League of Municipalities, “Municipalities are too often the focus of frivolous litigation asserted by plaintiffs hoping to recover very large punitive damage awards. This law would remove the possibility of such awards and, as a consequence, may lower the likelihood of frivolous litigation.”
The bill is currently pending before the Assembly Judiciary Committee. We will continue to track its status and provide updates as they become available.
For more information about the proposed bill or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Government Law Group.