Civil courts use punitive damages in the same way extensive prison time is used in criminal court. It is saved as a punishment for the worst of the worst behavior and to deter future bad acts. Like common criminals, some big businesses decide that it is more cost effective to break the law than follow it. But unlike ordinary criminals, corporations cannot be sent to jail. Punitive damages are the only method the civil courts have to protect society from the most dangerous and deceptive business practices.

While the use of punitive damages is infrequent and highly targeted, corporations are waging an aggressive and sustained attack on our courts’ ability to use such legal punishments to protect society. Many powerful people would like to escape responsibility for their misdeeds. They spend money to spread misinformation. Big businesses and the insurance lobby paint a distorted picture of runaway juries and evil trial lawyers bankrupting harmless mom and pop operations for a few innocent mistakes. In fact, punitive damages are reserved for the most egregious cases of civil misconduct. When the truth is fully learned about the reprehensible conduct of a corporation or individual, both a jury and public at large understand the necessity of punitive damages as a punishment. Consider the following cases where large punitive damages were awarded:

• A hospital in Sacramento that repeatedly refused to reprimand surgeons for sexually harassing subordinate staff members.
• A big tobacco company that knowingly defrauded the public about the dangers of cigarette smoke.
• A oil-tanker captain who was drunk and missing from the bridge when the tanker ran aground causing the Exxon-Valdez oil spill, the largest in history at the time.

CAOC is committed to protecting the public’s safety by defending punitive damages – it starts with telling the truth about punitive damages:

Punitive damages are rare: One of the biggest myths about the civil justice system is that punitive damage awards are running rampant. This report from the United States Department of Justice (pdf) shows just how rare they are:

• Plaintiffs asked for punitive damages in only 12% of all contract and tort lawsuits in state courts across the country.
• In all trials where plaintiffs win, only 5% are awarded punitive damages.
• Of all plaintiffs who seek punitive damages and win their case, only 30% are actually awarded punitive damages.

Punitive damages awards are modest, and often reduced

• The median punitive damages award was only $64,000.
• Approximately half of all cases with punitive damage awards are subject to some form of judicial review, which often results in reduced punitive damage awards.

The runaway jury is a myth

• Only 13% of cases with punitive damages involve awards over $1 million.
• Under a quarter of all punitive damage awards exceed three times the amount needed to make the plaintiff whole – these cases typically involve a defendant who wantonly defied the law but was fortunate enough not to cause substantial harm, like a drunk driver who hits a light pole instead of a child.

Caps on punitive damages are unnecessary because several safeguards already exist

• California jury instructions tell every juror considering punitive damages to consider:
  • The reprehensibility of the conduct of the defendant.
  • The amount of punitive damages which will have a deterrent effect on the defendant in the light of defendant's financial condition.
  • That the punitive damages must bear a reasonable relation to the injury, harm, or damage [actually] suffered by the plaintiff.
• This means that the jury will assign an appropriate amount of punitive damages, based on the defendant’s financial situation, to deter the defendant and others from engaging in the same practices again.
• Judges may reduce punitive damage awards when it looks like juries have not followed instructions.

The inescapable truth is that punitive damages are a necessary part of our civil justice system to punish and deter the worst of the worst conduct. CAOC is committed to protecting the courts’ ability to punish corporate wrongdoers and protect consumers from unfair business practices.
 

For more information:
Background Brief