[ OUR OPINION ]
Court ruling should
limit punitive damagesIN the absence of state or federal legislation to bring rancorous lawyers and gullible juries under control, the U.S. Supreme Court has established its own guidelines for how much companies can be punished for their negligence. The court has overturned judgments against cigarette maker Philip Morris, State Farm Insurance Co. and Chrysler Corp., suggesting in the State Farm case that punitive damages awards 10 or more times the amount of compensatory damages are excessive in most cases.
THE ISSUE
The U.S. Supreme Court has overturned three verdicts because the punitive damages awards were too large.
Trial lawyers have been successful in persuading Congress and the Hawaii Legislature to impose limits on punitive damages, which are intended to punish negligent behavior. The Supreme Court's rulings provide a reasonable cap that should bring an end to ridiculous awards and may let Congress and legislatures off the hook.
In the Philip Morris case, an Oregon jury awarded $800,000 in compensatory damages and $79.5 million in punitive damages to the family of a three-packs-a-day Marlboro smoker who died of lung cancer at the age of 42. A Utah jury ordered State Farm to pay $145 million in punitive damages atop $1 million in compensatory for the way it handled claims in a car accident. A Kentucky jury awarded $3 million, with punitive damages 13 times the amount of compensatory, to the widow of a man killed in a car accident.
Justice Anthony M. Kennedy wrote in the 6-3 majority opinion in the Utah case that the high court declined to "impose a bright-line ratio" of punitive to compensatory damages. However, he added that, "in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process." That, in practicality, is indeed a bright-line ratio to which lower courts should adhere in all but the most heinous cases.
The Hawaii Legislature considered a bill four years ago that would have limited punitive damages to triple the amount of compensatory damages. The proposal passed the House Judiciary Committee but died in the Senate from pressure by plaintiffs' attorneys. Congress for years has considered legislation to limit punitive damages to twice that of compensatory, but that, too, has languished.
Juries sometimes arrive at the belief that only a huge punitive award will gain the attention of a large corporation guilty of negligence and cause it to take remedial action in its future behavior. However, as Kennedy concluded, "In sum, courts must ensure that the measure of punishment is both reasonable and proportionate to the amount of harm to the plaintiff and to the general damages recovered." That court-ordered consideration may eliminate the need for statutory caps.
