Punitive damages are rare but critically important because they make sure a company’s products and practices don’t kill or injure people. Juries send signals this way, telling other potential wrongdoers that certain types of misconduct won’t be tolerated. But the signals only work if the damages have some impact on a company’s bottom line. That’s the whole point. Arbitrary limits -especially really low ones - don’t work.
Increasingly, business-friendly (and activist!) courts have also been getting into the anti-punitive damage act. In one of the grossest examples that we’ve seen in a while, Jurinko v. Medical Protective Co., the 3rd U.S. Circuit Court of Appeals drastically cut punitive damages in a bad faith case to an astounding 1:1 ratio compared to the victims’ compensatory damages. This is even though the judge agreed with the jury that the defendant’s conduct was “outrageous.”
Now, granted, the U.S. Supreme Court seems to be all over the place when it comes to punitive damages these days. We’re looking forward to its upcoming decision in the Williams case. But one thing they clearly haven’t done is set a 1:1 ratio for cases like this. (In fact, the only time they ever did this, in an extreme case of judicial activism, was in the Exxon Valdez case based on the Court’s weird interpretation of maritime law. But that’s another story...)
Mark W. Tanner, one of the attorneys in the 3rd Circuit case, said, “What we’re seeing here is a steady erosion of the deterrent effect that punitive damages can play in our society.” With corporate misconduct out of control in this country, seems like a really stupid thing to do.
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