|
Do Punitive Damages Work?
-
“‘States with punitive damages exhibit no safer risk
performance than states without punitive damages’. There
were no overall differences with regard to safety and
environmental performance, and ‘there is no deterrence
benefit that justifies the chaos and economic disruption
inflicted by punitive damages’.”
(KRC:
Hantler, “Seven Myths…” p. 2, quoting W. Kip Viscusi,
The Social Costs of Punitive Damages Against Corporations,
87 Geo. L.J., pp. 297, 298. 1998)
-
“[W]hen companies weigh the costs of increased safety
against the costs of risks, the potential for punitive
damages adds to the costs of risks—making safety precautions
more attractive.”
(KRC:
Hantler, “Seven Myths…” p. 2)
-
“[T]here is no need to augment the safety incentives
provided by the market, government regulation, and
compensatory damages. Penalties that go beyond those needed
to create an efficient level of safety will produce
redundant levels of safety. These costs, in turn, will lead
to higher prices and other adverse economic effects.”
(KRC:
Hantler, “Seven Myths…” p. 3,
citing W. Kip Viscusi, Why There Is No Defense of
Punitive Damages, 87 Geo, L.J. 383, 1998)
-
“Juries award punitive damages in such a capricious manner
that there is no linkage between the expected punitive
damages and the firm’s risk actions. ‘[W]hen firms look
forward, the prospect of punitive damages is so uncertain
that there is no deterrent effect’.”
(KRC:
Hantler, “Seven Myths…” p. 3,
citing W. Kip Viscusi, Why There Is No Defense of
Punitive Damages, 87 Geo. L.J., 83, 1998)
-
“If punitive damages are essentially random, then they will
not provide proper incentives for risk mitigation. Instead,
they will operate purely as a ‘tax’ on firms – a cost with
no corresponding benefit.”
(KRC: Council
of Economic Advisors, "Who pays ...", p. 5)
|
U.S.
Supreme Court Acts To Limit Punitive Damages
From
www.instituteforlegalreform.com
Issues, Punitive Damages
-
“On April 7, 2003, the U.S. Supreme Court in
State Farm Mutual Automobile Insurance Company
v. Campbell invalidated a $145 million punitive
damage award in a case in which the defendant
was found liable for only $1 million in
compensatory damages.”
-
“The Supreme Court held that this punitive
damage award was excessive and in violation of
the Due Process Clause of the Fourteenth
Amendment, and sent the case back to the Utah
Supreme Court for further review.”
-
“The Supreme Court indicated that punitive
damages generally should not exceed a low
multiple of compensatory damages. The Court
said that in a case like State Farm, any ratio
higher than 1:1 would be excessive, and that
ratios above 4:1 would rarely pass
constitutional muster. Double-digit ratios
hardly ever would, except in those few cases
with small compensatory damages and highly
reprehensible conduct.”
-
Recently, “the Utah Supreme Court reduced the
punitive award to approximately $9 million in a
decision that many believe still does not comply
with the U.S. Supreme Court decision.”
-
“While the U.S. Supreme Court decision made
great strides in providing guidelines to rein in
excessive punitive damage awards, last week’s
ruling by the Utah Supreme Court shows that the
U.S. Supreme Court decision will mean little if
not properly enforced by the lower federal and
state courts.
-
“Many courts remain reluctant to reduce punitive
awards to the low multiples of compensatory
damages suggested by State Farm.”
-
“Despite the State Farm ruling, many business
defendants are forced to expend massive
resources fighting for due process in appellate
courts because trail courts have not uniformly
implemented the guidelines outlined in State
Farm.”
|
Punitive Damages Contents
|
Previous
Page |
Next Page |
