What are treble damages?
When are they awarded by the court and how are they calculated?
What is the difference with punitive damages?
In this article, we will break down the notion of “treble damages” so you know all there is to know about it!
We will look at the meaning and legal definition of treble damages, when will the court award it, how is it calculated, what are its requirements, the plaintiff’s burden of proof, how it is enforced, how it is taxed, compare treble damages vs punitive damages, look at examples and more!
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What are treble damages
Treble damages or treble charges in the United States refers to a sum of money representing three times the value of the compensatory damages awarded by the court to a plaintiff.
To say “treble damages” is to say “triple damages”.
The primary purpose for multiple damages is to provide additional compensation to the victim rather than to punish the offender.
Treble damages are designed to encourage those who have suffered damages in a context that is prejudicial or adverse to society to take legal action against the defendant.
From the defendant’s point of view, treble damages are a form of punitive damage.
It is intended to deter individuals and organizations from violating the law by augmenting their legal exposure to damages.
Treble damages fall under the category of civil damages that civil courts can potentially award to the prevailing party.
In a civil lawsuit, a court can award compensatory damages, general damages or punitive damages.
Treble damage definition
According to Investopedia, treble damages are defined as:
Treble damages refer to financial compensation awarded by a court to a prevailing plaintiff that are up to three times the actual or compensatory damages.
According to Cornell Law School’s Legal Information Institute, the treble damages legal definition is as follows:
Certain statutes require that after the jury has determined the amount of the plaintiff’s actual damages, the court must award three times that amount.
As such, we can define treble damages as a recovery of three times the actual damages suffered by the plaintiff expressly authorized by law.
When are treble damages awarded
Depending on the applicable law and the type of lawsuit filed, treble damages may be awarded.
Here are some situations that you can expect a U.S. court to award triple damages:
- When the statute specifically authorizes the court to do so
- When the defendant’s actions were driven by malicious intent
Said differently, treble damages can be awarded by the court when:
- The statute grants the right to the court to condemn the defendant for an amount up to three times the proven damages
- The court finds that the wrongdoer acted willfully
- The court exercises its discretion to award treble damages in the circumstances
How are treble damages calculated
Typically, treble damages are calculated by taking the value of actual damages or compensatory damages and multiplying it by three.
Mary files a lawsuit against John.
She is awarded compensatory damages in the amount of $5,000.
If the court is authorized to grant treble damages, the court will take a multiplication of the compensatory damages to calculate treble damages.
In this example, the court will raise the $5,000 to $15,000.
In most states, treble damages are multiplicative representing a multiple of the actual damages, they are not in addition to the actual damages.
So instead of getting an award of the actual damages, the court will grant the plaintiff an amount equivalent to three times the actual damages in lieu of the proven actual damages.
If Mary is entitled to $5,000 in actual damages, the court will raise the sums awarded to $15,000 representing three times the initial award instead of $20,000 ($5,000 + $15,000) representing the initial award plus a three-time multiple of the actual damages.
In some jurisdictions, like California under Article 1719 of the California Civil Code, the law allows for additive treble damages.
In other words, the treble damages will be added to the actual damages.
It’s important to note that under the triple damages law, the court will calculate treble damages in consideration of the actual damages and will not triple the value of other damages like punitive damages.
Burden of proof
Obtaining an award of treble damages is not going to be easy.
Just like an award for punitive damages, the plaintiff must demonstrate that the defendant’s actions were so outrageous and unacceptable in our society.
The treble damages burden of proof will typically look like the following:
- The plaintiff suffered damages caused by the defendant
- Demonstrate that the plaintiff’s conduct was intentional, deliberate, malicious or willful
- The law expressly authorizes the judge to grant treble damages
- The plaintiff must specifically demand treble damages in his or her lawsuit
As it relates to the behavior or conduct of the defendant, the plaintiff must show that the wrongdoing went beyond ordinary negligence, ignorance of an oversight.
The plaintiff must demonstrate that the defendant’s actions, omissions, conduct or behavior was in willful disregard of the law, the plaintiff deliberately intended to cause damages or the actions were malicious and in bad faith.
Treble damage enforcement
Treble damages represent a multiple of the actual damages awarded by the court to a plaintiff.
In the United States, a judgment from any state is enforceable in any other state.
If you obtain treble damages judgment in New York, you will be able to enforce it against the defendant who may have assets in New Jersey.
However, the enforcement of treble damages outside of the United States may not be as straightforward.
Some foreign jurisdictions consider treble damages as “punitive” or “penal”.
As a result, some foreign legal systems do not recognize treble damages or the enforcement of penal judgments may violate their domestic public policy.
Treble damages vs punitive damages
When a person or company is ordered to pay treble damages, they are being asked to pay an amount of money over and above the actual damages they had caused to another.
In other words, they are being punished by law or by the court for violating the law.
Just like punitive damages, treble damages are a form of punitive damages.
The difference between punitive damages and treble damages is that treble damages are limited to a maximum of three times the compensatory damages awarded by the court.
Punitive damages are left to the discretion of the court although, in light of recent U.S. Supreme Court judgments, the total amount of punitive damages award should not exceed four times the value of the compensatory damages.
When the court finds that the defendant’s acts or omissions were so outrageous, harmful, or grossly negligent, the court may assess punitive damages to punish the defendant but also set an example for others.
That’s why in some cases, punitive damages are also referred to as exemplary damages.
The objective is to “punish” and “deter” future violators of the law.
Another aspect differentiating punitive damages and treble damages is that treble damages can only be awarded when the law expressly authorizes it whereas punitive damages can be awarded at the discretion of the court.
Typically, the courts will not grant treble damages and punitive damages simultaneously as it is considered as “double-dipping”.
The court will either grant treble damages or punitive damages, not both.
Treble damages taxation
In the United States, treble damages are taxed.
Further to the Commissioner v. Glenshaw Glass Co. case, the United States Supreme Court indicated that except for treble damage awards in personal injury cases, treble damages are subject to federal income tax.
Typically, legal awards for compensatory damages are not subject to income tax as they are not an “income”.
Rather, they are losses that you are merely recovering.
However, treble damages include an award that exceeds a plaintiff’s actual damages.
For that reason, the Internal Revenue Service (IRS) will impose taxes on the amount exceeding the actual damages.
Mary files a lawsuit against John and obtains $75,000 in treble damages where $25,000 represents her actual damages and $50,000 represents an amount she received over and above the same.
The IRS will consider that $25,000 is tax-free as it represents Mary’s actual damages (or money she had already paid taxes on) and $50,000 is taxable as it exceeds Mary’s actual damages.
Treble damages examples
Under the Clayton Antitrust Act, the court is authorized to order a defendant violating the law to pay treble damages.
Under the Racketeer Influenced and Corrupt Organizations Act (RICO), the court is authorized to order organizations to pay treble damages for racketeering or for acts of corruption.
In cases of willful counterfeiting, treble damages are typically awarded to deter the violator of the law to respect the patent and intellectual property rights of others in the future.
Under Title 35 of the U.S. Code, Section 284 (35 U.S.C. § 284), in patent infringement cases, the court is authorized to issue treble damages.
In Halo Electronics, Inc. v. Pulse Electronics, Inc., the U.S. Supreme Court clarified the legal test required to award treble damages.
Based on the Supreme Court’s guidance, when the plaintiff presents evidence, based on the preponderance of the evidence, that a defendant’s misconduct goes beyond typical infringement, the court may grant treble damages.
This legal test supersedes the two-part Seagate test where the plaintiff needed to show that the infringer’s actions were objectively reckless and then the infringement was subjectively willful.
In Halo, the Supreme Court also notes that Section 284 permits the courts to exercise their discretion for egregious cases typified by willful misconduct.
Although you will need to verify the applicable laws, in the context of a personal injury or intentional tort lawsuits, a plaintiff can demand treble damages in the following situation:
- When the statute based on which the personal injury lawsuit is filed expressly allows treble damages
- The plaintiff must demand treble damages from the court
- When the defendant acted willfully or with the intention to cause damages to the plaintiff
Under the Telecommunications Consumer Protection Act of 1991 (TCPA), treble damages may be awarded by the court to telemarketers violating the law.
Certain criminal violations allow the courts to condemn the defendant for treble damages such as breach of trust crimes or fraud.
Certain violations of real estate laws can lead to the award of treble damages.
Under the New Jersey Consumer Fraud Act, certain acts of misrepresentation can result in the court ordering the defendant to pay treble damages along with attorneys’ fees and costs.
Treble damages FAQ
What does treble damages mean
Treble damages is a financial recovery awarded by the court representing an amount equivalent to three times the value of the actual financial loss of the plaintiff paid in lieu of the actual losses.
John is condemned for patent infringement in Pennsylvania.
The actual damages suffered by the plaintiff is $30,000.
The court augments the $30,000 to $90,000 and condemns John to pay $90,000 instead of $30,000.
The treble damages of $90,000 represent an amount equivalent to three times the actual damages of $30,000 and it is paid in lieu of $30,000.
So what is treble damages?
It pretty much means that the court will take your proven financial losses and damages and give you up to triple that amount.
Are treble damages the same as punitive damages
Treble damages are similar to punitive damages but deserve to be nuanced.
Here is a quick summary of the comparison between treble damages and punitive damages:
- Treble damages are intended to augment the plaintiff’s recovery whereas punitive damages are intended to punish the defendant
- The award of treble damages must be grounded on statute whereas punitive damages can be awarded even if the law does not expressly state it
- Treble damages can be awarded up to a multiple of three times the actual damages whereas punitive damages technically do not have a limit although the U.S. Supreme Court indicated a multiple in excess of four times can be unreasonable
What are the requirements to treble damages
To obtain treble damages, you must ensure that the following requirements are observed:
- The law based on which you are suing the defendant authorizes you to ask for treble damages
- You must request treble damages in your petition or statement of claim when filing your lawsuit against the defendant
- The wrongdoer purposely acted to cause you harm
What are the 3 types of damages
In civil courts and in the context of civil lawsuits, there are generally three types of damages:
- Compensatory damages (this represents actual damages, financial losses, monetary losses or any form of economic loss)
- General damages (this represents non-monetary or non-economic damages like stress, inconvenience, mental anguish, anxiety etc)
- Punitive damages (this represents an amount of money awarded by the court exceeding the compensatory and general damages intended to punish the defendant)
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