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Introduction
There are compelling arguments that the frequency and size of
punitive damages awards are on the rise; there are equally
compelling arguments that punitive damages are rarely awarded
and, when they are, the amounts are relatively modest, apart
from a few “headline grabbing” awards.
Several studies examining the frequency and size of punitive
damages awards have reached different conclusions. It is
extremely difficult to evaluate the claims on either side of
this debate as there is no systematic reporting of punitive
damages or comprehensive data base in which punitive damages
awards are maintained. And so the debate continues as it always
has, based almost exclusively on anecdotal evidence.
Fast Facts
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“Punitive damages were developed as a way to punish defendants
found to have acted maliciously. The punitive damage aspect of
an award therefore, represents a deterrent to future such
malicious or otherwise irresponsible and harmful actions.”
(www.namic.org
State Legislative and Regulatory Resources, Punitive Damage
Reform [search for "Punitive Damage Reform"])
-
“There is compelling evidence that punitive damage awards have
no significant deterrent effect on corporate behavior
whatsoever”. (KRC:
Hantler, “Seven Myths…” p. 2)
-
“States with punitive damages exhibit no safer risk performance
than states without punitive damages.”
(KRC:
Hantler, “Seven Myths…” p. 2, quoting W. Kip Viscusi, “The
Social Costs of Punitive Damages Against Corporations”, 87
Geo. L.J. 298, 297, 1998)
-
“Punitive damage awards have evolved to become an almost routine
aspect of most civil litigation. Perhaps, more troubling is the
fact that punitive damage awards have become so large that they
often not only dwarf, but also bear little relationship to
actual compensatory awards. Larger and larger punitive damage
awards have literally begun to distort the litigation process
and negatively impact settlement attempts.”
(www.namic.org State Legislative and Regulatory Resources, Punitive Damages
Reform)
-
“The United States Supreme Court has expressed serious concern
in recent years that punitive damages damages awards in this country have ‘run wild,’ jeopardizing fundamental constitutional
rights.” (www.atra.org ATRA Issues, Punitive Damages Reform)
-
“Reform is urgently needed to restore balance, fairness, and
predictability to punitive damages law. The civil justice
system should not be a ‘litigation lottery’ characterized by
excessiveness and arbitrariness.”
(www.atra.org ATRA Issues, Punitive Damages Reform)
-
“On
average, ninety-six percent of cases are settled out of court or
otherwise disposed of without trial. In many of these cases,
the threat of punitive damages may be abused as a ‘wild card’ to
force higher settlements.” (www.atra.org
ATRA Issues, Punitive Damages Reform)
-
“Many of these punitive damage awards would, as the plaintiffs’
attorneys insist, be reduced on appeal. However, each large
settlement also inspires other plaintiffs to seek similarly high
amounts. In this way, each eye-popping verdict has an unseen
but powerful effect on the greater mass of settlements.”
(KRC:
Hantler, “Seven Myths…” p. 12 )
-
“[Punitive damages] awards no longer generate much
astonishment. ‘The world of blockbuster awards…is almost
exclusively the province of juries, which account for 98 percent
of these awards’. That is why corporations tend to settle class
actions before they get to juries. To go to jury trial can make
a game of Russian roulette seem like a reasonable gamble.”
(KRC:
Hantler, “Seven Myths…” p.22, quoting W. Kip Viscusi)
-
ATRA issues
paper on
Punitive Damages Reform
Purpose of Punitive
Damages
-
“Punitive damages are intended to protect
society by punishing unlawful conduct or serious wrongs
and deterring their repetition. Usually legislatures
define such conduct and prescribe penalties. Where
punitive damages are concerned, however, this task has
been assigned to the judicial system, where juries
determine whether certain conduct warrants punishment
and if so, how much.”
(www.wlf.org
Advocacy Ads, Ellis J. Horvitz, Horvitz & Levy, LLP)
-
“Punitive damages are not normal civil or
tort law damages. They are not awarded to compensate
for a harm; that purpose is accomplished by compensatory
damages, which provide compensation for both economic
losses (e.g., lost wages, medical expenses, substitute
domestic services) and noneconomic losses (e.g., “pain
and suffering”). Punitive damages represent
quasi-criminal punishment. Like other forms of
punishment, they can have potentially devastating
ramifications on a civil defendant’s character,
reputation, business and good will.”
(www.atra.org
ATRA Issues, Punitive Damages Reform)
-
“One efficiency-based rationale for
punitive damages is that they serve an important
corrective role for torts that have a significant
probability of going undetected. Potential injurers who
expect to be held liable only one-third of the time will
not have efficient incentives to exercise care unless
they expect to pay treble damages on the occasions when
they are held responsible.” (KRC:
Congressional Budget Office, "The Economics
of U.S. Tort Liability...", Chapter 3, p. 4)
-
“In principle, punitive damages could
also improve efficiency by correcting for compensatory
awards that do not fully reflect the amount of harm
done. In practice, however, cases in which large
punitive damages are awarded also tend to involve large
compensatory awards.” (KRC:
Congressional Budget Office, "The Economics
of U.S. Tort Liability..." , Chapter 3, note
10, p. 7)
-
“It is a myth that punitive damages are
necessary to deter corporations from engaging in risky
behavior. This myth is undermined by [the findings of
noted Harvard scholar, Dr. Kip Viscusi] – punitive
damages in the United States are applied so capriciously
that they are regarded by companies as random
visitations of disaster, like tornadoes.”
(KRC:
Hantler, “Seven Myths…” p. 5)
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