Obtaining Financial Information for Punitive Damages

Must a party answer written discovery seeking information about its financial condition early in a case if punitive damages are requested in the complaint?  A prior post discussed how this is usually handled in state court, what about the federal court?



United States EEOC v. Pioneer Hotel, Inc. the EEOC’s RFP 60 asked the defendant “to identify and produce all documents that reflect, describe or relate to Defendant’s financial condition (including all assets and liabilities) for the period January 1, 2006, through the present, including but not limited to, financial statements, annual reports, balance sheets, asset and liability statements and profit and loss statements.”[1]  This purportedly related to the agency’s punitive damages request.

First, “a defendant’s financial condition is relevant to the pursuit of punitive damages.”  “Most courts do not require the plaintiff to make a prima facie showing of merit on its punitive damage claim before permitting discovery of a defendant’s net worth.”  While “only the defendant’s current financial condition is relevant to the issue of punitive damages, some retrospective discovery is permitted to accurately assess the defendant’s financial condition.”  This typically includes “information relating to defendant’s financial condition for the two or three most recent years.” Applied here, the court concluded RFP 60 was appropriate and ordered the documents be produced pursuant to a protective order to the extent the information was not already publicly available.

While I agree with the ultimate ruling in terms of the scope of discovery, I disagree with timing of the disclosure.  It is far too easy to request punitive damages in a form complaint.  This then would subject a party to financial disclosure requirements no matter the substantive merit of the request.  That situation extends the scope of discovery too far.

[1] No. 2:11-cv-01588, 2014 U.S. Dist. LEXIS 143894, 2014 WL 5045109 (D. Nev. Oct. 9, 2014).