Punitive Damages: The Sky's the Limit
WITH the end of the cold war and the superpowers' nuclear standoff, ``massive retaliation'' has dropped out of defense parlance. But massive retaliation - in which tit-for-tat is replaced by Armageddon-for-tat - is alive and well in American courtrooms.
Last month a jury in St. Louis put Domino's Pizza in its sights and pushed all the buttons. The payload: $78 million in punitive damages awarded to a woman who was seriously injured when a Domino's delivery driver ran a red light and hit her car. The fine was more than 100 times the $750,000 awarded the woman to pay her medical bills.
Talk about sending a message. Soon after the verdict, Domino's abandoned its longtime 30-minute delivery pledge. Some critics charged that the promise spurred delivery drivers to drive unsafely. Domino's denied the assertion, but acknowledged that for jurors, the charge stuck like mozzarella cheese.
Punitive damages - whose purpose is to punish the defendant in a lawsuit, not just compensate the plaintiff for harm or loss - have deep roots in common law, but for centuries they were used sparingly. Today, however, American jurors who encounter what they regard as wrongdoing by large organizations against ``the little guy'' are increasingly inclined to hand defendants a hefty bill.
Corporations and some legal scholars are up in arms over what they consider to be arbitrary and excessive punitive damages. In trying to punish past wrongs and deter future ones, they contend, jurors are usurping the job of the criminal-justice system, without the procedural safeguards. Criminal defendants can be convicted only on proof ``beyond a reasonable doubt,'' and statutory sentences generally are proportional to the crimes. But juries in civil cases may levy punitive damages on a lesser burden of proof and with few limits on their discretion.
Besides, the critics say, even if punitive damages are warranted in cases of intentional misconduct, why should they be a windfall for an individual plaintiff, rather than be applied to public purposes like a criminal or administrative fine?
But advocates for punitive damages (not least, trial lawyers - who sometimes get to keep up to 1/3 of the money awarded to clients) insist they are necessary. As a West Virginia lawyer put it to a jury that slapped an oil company with a $10.3-million judgment in a $1-million pollution case in 1990: ``The only way they're going to stop this behavior is if you hit them on the snoot enough.... It's going to cost them dearly in their corporate treasury.''
Some defendants socked with large punitive damages have sought relief from the United States Supreme Court, claiming that the awards were unconstitutional under the 8th Amendment's ``excessive fines'' clause or the 5th Amendment's ``due process'' clause. But these arguments have been unavailing.
In a 1991 case, the high court seemed ready to clamp limits on punitive damages: Although the justices upheld a punitive award that was four times the compensatory damages, the court wrote that the award ``may be close to the line'' of violating the due-process clause.
Corporate hopes were dashed last year, however, when the court upheld a $10-million punitive award against an oil company in a $19,000 fraud case - a 526-to-1 ratio. The decision appears to foreclose further constitutional argument.
Some state legislatures have enacted guidelines for juries in levying punitive damages, however, and some state-court judges have imposed restrictions. In fact the West Virginia Supreme Court tossed out the punitive damages in the ``hit them in the snoot'' case because of insufficient evidence of ``a specific intent to cause bodily harm or injury.''
A tort-reform bill wending its way through Congress includes rules on punitive damages (though no limits on amounts). Under the bill, juries could impose such damages on a defendant only when there is ``clear and convincing'' evidence of ``conscious, flagrant indifference'' to public safety.
The powerful trial-lawyers lobby has blocked tort-reform legislation for years, but supporters of the bill say they may have the votes to enact the legislation this term.
As with the death penalty, the deterrent effect of punitive damages is debated endlessly. But since such damages are here to stay, the real issue is: Are they imposed fairly?