Center for America

Speaker's Resource: 6. Punitive Damages, p 1

 

 

Speakers Home Page | Next Page

 

Key Reference Citations (KRC)

 

Chapter 6:

Punitive Damages

 

 

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

  • “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)

 

 

Punitive Damages Contents | Speakers Home Page | Next Page

 

 

Please Note:  The material presented in this Speaker's Resource has been collected from a wide variety of sources.  You are welcome to use this material for quotations and factual material in your speeches, presentations and articles.  To the best of our ability, we have provided original citations so that you can document the comments you use.  If you become aware that any of the citations or facts presented in this collection are inaccurate or outdated by newer information, please send an email to Speakers@lawexec.com to tell us so that we can update this material.  The materials cited are generally copyrighted by the original author and when you quote from their material, you should include the original attribution to acknowledge their role as authors.  Original material © 2005 American Justice Partnership.