On July 27, 2022, Justice Crane of the New York County Commercial Division issued a decision in UBS Sec. LLC v. Highland Capital Mgt., L.P., 2022 NY Slip Op. 32573(U), refusing to award punitive damages because the defendant’s conduct was not directed at the public, explaining:
Punitive damages are awarded only in singularly rare cases such as cases involving an improper state of mind or malice or cases involving wrongdoing to the public, where the conduct was so outrageous as to evince a high degree of moral turpitude and showing such wanton dishonesty as to imply a criminal difference to civil obligations.
A private party seeking to recover punitive damages must not only demonstrate egregious tortious conduct by which he or she was aggrieved, but also that such conduct was part of a pattern of similar conduct directed at the public generally.
Punitive damages are permitted only when defendants’ actions were aimed at the public or evinced a high degree of moral turpitude and demonstrated such wanton dishonesty as to imply a criminal indifference to civil obligations. A request for punitive damages for a fraud claim requires that an allegation that the fraud was aimed at the public generally.
Here, while defendants’ actions are certainly reprehensible, they do not rise to the level of moral turpitude or criminal indifference that is required to support a punitive damages award. Even assuming defendants’ actions did rise to the requisite level, UBS has not established that the defendants’ conduct was part of a pattern directed at the public generally. Rather, defendants’ actions were, as UBS’ stated in its very own Damages Inquest Demonstrative, a systematic, willful, and calculated tortious scheme to dissipate and transfer assets to avoid payment to UBS. Accordingly, the court denies the request and declines to award UBS’ any punitive damages.
(Internal quotations and citations omitted) (emphasis added).