In Guieb v. Guieb, 571 P.3d 382 (Haw. 2025), the Supreme Court of Hawai’i adopted a new standard for recovering punitive damages based on draft § 39 of the Restatement of the Law Third, Torts: Remedies (Tentative Draft No. 3, 2024), as well as the definitions of “intent” and “recklessness” from Restatement of the Law Third, Torts: Liability for Physical and Emotional Harm §§ 1 and 2.
The case arose from a dispute between two brothers who formed a corporation to open and operate several muffler-repair shops. The elder brother sued the younger brother, accusing him of using the corporation for his sole benefit and of using his separate, personal companies to, among other things, “steal” the corporation’s trade name and its most profitable muffler shop. After the trial court granted the younger brother’s motion for judgment as a matter of law on the issue of punitive damages, the jury returned a verdict in favor of the elder brother and awarded him damages for fraudulent nondisclosure, unjust enrichment, and trade-name infringement. The court of appeals reversed the trial court’s grant of judgment as a matter of law, explaining that there was sufficient evidence to send the punitive-damages question to the jury.
The Supreme Court of Hawai’i affirmed in relevant part, adopting draft § 39 of the Restatement of the Law Third, Torts: Remedies § 39 (Tentative Draft No. 3, 2024), in holding that, in order to recover punitive damages, a plaintiff had to establish recoverable tort liability and to establish by clear and convincing evidence that the defendant intended to harm the plaintiff or others, recklessly disregarded a substantial risk of harm to the plaintiff or others, or otherwise acted in an outrageous or malicious manner. The court concluded that, under this standard, the elder brother presented sufficient evidence for the jury to decide whether the younger brother acted with the state of mind to justify punitive damages when he “stole” the corporation’s muffler shop, took employees from the corporation for his personal companies, reduced the elder brother’s salary, and made the corporation pay advertising costs that benefited his personal companies.
Noting that it had previously departed from Restatement of the Law Second, Torts § 908, which recommended that punitive damages be awarded only if the defendant’s conduct reflected an intent to harm or reckless indifference, in favor of permitting juries to award punitive damages in actions for negligence or strict liability based on a wrongdoer’s aggravated conduct, the court reasoned that draft § 39 of the Restatement of the Law Third, Torts: Remedies, sensibly evolved Hawai’i’s punitive-damages law by acknowledging the social loss caused by outrageous or malicious conduct, even if the tortfeasor did not act with intent or recklessness. The court explained that the new standard, which shed outdated mental-state concepts, complemented the revised definitions for “intent” and “recklessness” in Restatement of the Law Third, Torts: Liability for Physical and Emotional Harm §§ 1 and 2, and adopted those definitions as well.
The court concluded that the “Restatement of the Law Third, Torts: Remedies aligns with and enhances” Hawai’i’s case law, and “offers a streamlined approach and refines the complicated standard” that previously guided the state’s courts.