Occasionally, someone does something so egregious that simply repaying the victim for his damages isn't sufficient. The American justice system recognizes this. Treble damages are a concept provided for by law in certain types of lawsuits. If you're the plaintiff and the court rules in your favor, it can go one step further and award you three times the amount of certain damages. Treble damages only apply in certain situations, however, and they might not be the windfall you imagine.
Treble damages are awarded at the discretion of the court, but the court needs grounds – a legally acceptable reason. The individual you've sued must not only be guilty of some wrongdoing, but he must have committed the act deliberately, knowing it was wrong. This is in contrast to negligence, which can occur out of ignorance or oversight. An order of treble damages is meant as punishment, not just to compensate you for money you lost because of the defendant's actions. Courts generally award treble damages in corporate lawsuits, such as antitrust matters or patent violations, but they can extend to personal injury lawsuits as well.
Courts generally award treble damages as a deterrent. The intention is to convince the defendant – or anyone else considering the same crime, for that matter – that he really doesn't want to commit the illegal act again because the repercussions might be far greater than he ever anticipated. Treble damages are typically awarded in situations where the defendant violated the public good, such as excessive or repeated drunk driving charges that finally result in a fatality.
Burden of Proof
Judges and juries don't award treble damages lightly. If you or your attorney believe that the defendant in your case acted with intentional malice, you must prove to the court that this is so, that a law exists that should have prohibited him from taking the action, and that he willfully disregarded the law. You have the burden of proof to establish these things, and you must usually establish the request when you begin your case, requesting such an award in your initial lawsuit.
Lawsuit damages typically fall into two categories: compensatory and punitive. Compensatory damages compensate you for some harm or damage, such as physical injury, lost wages, lost income, or interference with your business. They're also sometimes referred to as actual damages. Punitive damages act as punishment and are typically awarded in addition to compensatory damages. Because treble damages are also punitive in nature, you may not be able to request both these and punitive damages in your lawsuit – it's double-dipping in eyes of some courts. This can vary by state, however. When calculating treble damages, the court triples your compensatory award, not the punitive damages. You don’t get the original compensatory damages in addition to three times the amount – you receive three times the amount in lieu of the original compensatory award.
Although recoveries under tort lawsuits are not generally subject to federal income tax, the Internal Revenue Service taxes you on at least a portion of treble damages. Only the amount of your original award is exempt from taxation. You must claim the other two-thirds as income. For example, if you receive treble damages on a $500,000 compensatory award, the first $500,000 is tax-free, provided it meets IRS rules for tort lawsuits. Tort suits stem from a violation of law that causes harm to another. You'll have to pay taxes on the additional $1 million representative of your treble damages.
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