An act to amend and reenact sections 32-03.2-01 and 32-03.2-11 of the North Dakota Century Code, relating to when a court or jury may give exemplary damages., the official text

Sixty-ninth Legislative Assembly of North Dakota In Regular Session Commencing Tuesday, January 7, 2025
SENATE BILL NO. 2290 (Senators Dwyer, Sickler, Cleary) (Representatives Klemin, Heinert, Schneider)
AN ACT to amend and reenact sections 32-03.2-01 and 32-03.2-11 of the North Dakota Century Code, relating to when a court or jury may give exemplary damages.
BE IT ENACTED BY THE LEGISLATIVE ASSEMBLY OF NORTH DAKOTA: SECTION 1. AMENDMENT. Section 32-03.2-01 of the North Dakota Century Code is amended and
reenacted as follows: 32-03.2-01. Definition. As used in this chapter, "fault": 1. "Fault" includes acts or omissions that are in any measure negligent or reckless toward the person or property of the actor or others, or that subject a person to tort liability or dram shop liability. The term also includes strict liability for product defect, breach of warranty, negligence or assumption of risk, misuse of a product for which the defendant otherwise would be liable, and failure to exercise reasonable care to avoid an injury or to mitigate damages. Legal requirements of causal relation apply both to fault as the basis for liability and to contributory fault. 2. "Malice" means: a. A direct intention to injure another; or b. A reckless disregard of the rights of another and any consequences. SECTION 2. AMENDMENT. Section 32-03.2-11 of the North Dakota Century Code is amended and
reenacted as follows: 32-03.2-11. When court or jury may give exemplary damages. 1. In any action for the breach of an obligation not arising from contract, when the defendant has been guilty by clear and convincing evidence of oppression, fraud, or actual malice, the court or jury, in addition to the actual damages, may give damages for the sake of example and by way of punishing the defendant. Upon commencement of the action, the complaint may not seek exemplary damages. After filing the suit, a party may make a motion to amend the pleadings to claim exemplary damages. The motion must allege an applicable legal basis for awarding exemplary damages and must be accompanied by one or more affidavits or deposition testimony showing the factual basis for the claim. The party opposing the motion may respond with affidavit or deposition testimony. If the court finds, after considering all submitted evidence, that there is sufficient evidence to support a finding by the trier of fact that a preponderance of the evidence proves oppression, fraud, or actual malice, the court shall grant the moving party permission to amend the pleadings to claim exemplary damages. For purposes of tolling the statute of limitations, pleadings amended under this section relate back to the time the action was commenced. 2. If either party so elects, the trier of fact shall first determine whether compensatory damages are to be awarded before addressing any issues related to exemplary damages. Evidence relevant only to the claim for exemplary damages is not admissible in the proceeding on

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liability for compensatory damages. If an award of compensatory damages has been made, the trier of fact shall determine whether exemplary damages are to be awarded. 3. Evidence of a defendant's financial condition or net worth is not admissible in the proceeding on exemplary damages. 4. If the trier of fact determines that exemplary damages are to be awarded, the amount of exemplary damages may not exceed two times the amount of compensatory damages or two hundred fifty thousand dollars, whichever is greater; provided, however, that no award of exemplary damages may be made if the claimant is not entitled to compensatory damages. In a jury trial, the jury may not be informed of the limit on damages contained in this subsection. Any jury award in excess of this limit must be reduced by the court. 5. In order for a party to recover exemplary damages, the finder of fact shall find by clear and convincing evidence that the amount of exemplary damages awarded is consistent with the following principles and factors: a. Whether there is a reasonable relationship between the exemplary damage award
claimed and the harm likely to result from the defendant's conduct as well as the harm that actually has occurred; b. The degree of reprehensibility of the defendant's conduct and the duration of that conduct; and c. Any of the following factors as to which evidence is presented: (1) The defendant's awareness of and any concealment of the conduct; (2) The profitability to the defendant of the wrongful conduct and the desirability of
removing that profit and of having the defendant also sustain a loss; and (3) Criminal sanctions imposed on the defendant for the same conduct that is the basis
for the exemplary damage claim, these to be taken into account if offered in mitigation of the exemplary damage award. 6. Exemplary damages may not be awarded against a manufacturer or seller if the product's manufacture, design, formulation, inspection, testing, packaging, labeling, and warning complied with: a. Federal statutes existing at the time the product was produced; b. Administrative regulations existing at the time the product was produced that were adopted by an agency of the federal government which had responsibility to regulate the safety of the product or to establish safety standards for the product pursuant to a federal statute; or c. Premarket approval or certification by an agency of the federal government. 7. The defense in subsection 6 does not apply if the plaintiff proves by clear and convincing evidence that the product manufacturer or product seller: a. Knowingly and in violation of applicable agency regulations withheld or misrepresented information required to be submitted to the agency, which information was material and relevant to the harm in question; or b. Made an illegal payment to an official of the federal agency for the purpose of securing approval of the product.

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8. Exemplary damages may be awarded against a principal because of an act by an agent only if at least one of the following is proved by clear and convincing evidence to be true: a. The principal or a managerial agent authorized the doing and manner of the act; b. The agent was unfit and the principal or a managerial agent was reckless in employing or retaining the agent; c. The agent was employed in a managerial capacity and was acting in the scope of employment; or d. The principal or managerial agent ratified or approved the doing and manner of the act.
9. In a civil action involving a motor vehicle accident resulting in bodily injury, it is sufficient for the trier of fact to consider an award of exemplary damages against the driver under the motion procedures provided in subsection 1 if clear and convincing evidence indicates that the accident was caused by a driver who, within the five years immediately preceding the accident has been convicted for violation of section 39-08-01 and who was operating or in physical control of a motor vehicle: a. With an alcohol concentration of at least eight one-hundredths of one percent by weight; b. Under the influence of a controlled substance unless a drug that predominantly caused impairment was used only as directed or cautioned by a practitioner who legally prescribed or dispensed the drug to the driver; c. Under the influence of alcohol and refused to take a test required under chapter 39-20; or d. Under the influence of a volatile chemical as listed in section 19-03.1-22.1. At the trial in an action in which the trier of fact will consider an award of exemplary damages, evidence that the driver has been convicted of violating section 39-08-01 or an equivalent statute or ordinance is admissible into evidence.

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____________________________ President of the Senate

____________________________ Speaker of the House

____________________________ Secretary of the Senate

____________________________ Chief Clerk of the House

This certifies that the within bill originated in the Senate of the Sixty-ninth Legislative Assembly of North Dakota and is known on the records of that body as Senate Bill No. 2290.

Senate Vote: House Vote:

Yeas 45 Yeas 88

Nays 0 Nays 5

Absent 2 Absent 1

____________________________ Secretary of the Senate
Received by the Governor at ________M. on _____________________________________, 2025. Approved at ________M. on __________________________________________________, 2025.

____________________________ Governor
Filed in this office this ___________day of _______________________________________, 2025, at ________ o’clock ________M.

____________________________ Secretary of State