Wednesday, July 2, 2008

Supreme Court on Punitive Damages

This week the U.S. Supreme Court weighed in again on the issue of punitive damages. The case was Exxon v. Baker ( ). This is another in a string of decisions that establish that the justices of this court simply do not like the idea of juries setting punitive damages.

Of course, that shouldn't be surprising given their background. There isn't a plaintiff's lawyer amongst them. They all come from either the defense side or government.

In the Exxon case, they limited their holding to maritime cases rather than make it an across the board decision. They limited punitive damages to a 1:1 ratio with the compensatory. If you have $1 million in compensatory, you can get $1 million in punitives.

They reached this ratio after looking at jury verdicts in a number of cases in which punitive damages were awarded. They found that the vast majority of those cases imposed punitives in less than a 1:1 ratio. From this, they inferred a consensus among the people that punitives not exceed the 1:1 ratio.

Of course, there is another way to interpret the statistics - it seems that the system is working. There really are no runaway juries out there imposing massive amounts of punitive damages. And when they do, the judge can always remit. And if both judge and jury agree that the conduct being punished deserves a higher award isn't that just the way our legal system is supposed to work? There are always the courts of appeal waiting in the wings to knock down anything that judge and jury both get wrong.

But now we have a constitutional pronouncement from the Supreme Court that, at least in maritime cases, you can't award more in punitives than in compensatories.

What a country.


No comments: