Having delivered its opinion on punitive damages last year, the Supreme Court surprised people by agreeing to decide yet another case on that issue. There's room for more guidance.
Advocates of civil law reform _ and not many people would exclude themselves from that class _ should be heartened by the Supreme Court's surprise decision Monday to review a rather strange jury decision from West Virginia. The case could be a vehicle for putting some limits on what many view as ``runaway' punitive damages.
``Actual damages' describes the money juries give victims to compensate their losses - medical bills, demolished cars, property value diminished by a new highway. ``Punitive damages' are intended to punish wrongdoing that goes beyond mere negligence. A synonym is ``exemplary damages' - designed to make an example of the bad guy.
Juries do sometimes get carried away with the power to transfer millions of dollars from one pocket to another. Sometimes the punishment seems way out of proportion to the harm. But what is an acceptable proportion?That is the question in the case accepted this week by the Supreme Court. In it, the jury found an oil company liable for bringing a frivolous lawsuit against another company. Actual damages were a comparatively modest $19,000. The jury tacked on $10 million in punitive damages.
Punitive damages more than 500 times the actual damages were not unreasonable in this instance, according to West Virginia Supreme Court Justice Richard Neely, because the oil company had been ``really mean.' Does this meet the general requirements for punitive damages set down by the high court in previous cases? And should there be further criteria for punitive damages to meet the requirements of constitutional due process?
Far better for the Supreme Court to grapple with these questions than for Congress or a legislature to try to write laws that tell juries when to award punitive damages, and how much. No legislature can do that reliably. But judges, with some guidance from above, can look at the outcome and know, using the yardstick of common sense, if the system has misfired.
Simply putting a cap on punitive damages, or even some sort of statutory ration to actual damages, is not the answer. Sometimes for punitive damages to accomplish their purpose, it's more important that they are proportionate to the wrongdoer's assets than to the actual harm done. If the purpose is to punish, the penalty assessed against a multibillion-dollar corporation has got to be large enough to hurt.
That said, there admittedly are marginal cases where the offense is not outrageous even if the pockets are deep. The judge on the scene is in the best position to make a subjective judgment about a jury's judgment. And the question should not be whether the amount is exactly right, but whether it is within the realm of reason.
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