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Should there be a limit on punitive damage awards?

WHAT ARE PUNITIVE DAMAGES AND WHY SHOULD ANYONE HAVE TO PAY THEM?

Our civil justice system requires individuals and corporations to be accountable for their conduct. Generally, if a party accidentally injures another person or damages property, the only compensation that they are required to pay are those amounts that will compensate the injured person for the losses he or she sustained. “If you break it, you fix it.” However, on rare occasions when the conduct is not just an accident, an individual or corporation may be required to pay “punitive damages.”

Punitive damages are intended not to compensate the victim but to PUNISH the other party’s wrongful behavior. The purpose is to deter the wrong behavior of the defendant and others like him from engaging in that type of behavior again.

There have been people and news outlets that suggest that punitive damages have gotten out of hand. But in fact, our lawyers have observed that punitive damages are rarely allowed by the courts. In Minnesota, for example, a lawyer cannot even ask for punitive damages in the initial case (complaint) against the at-fault individual or company. Instead, it is only later in the case that a judge decides if the jury can even consider punitive damages. First, the judge must be convinced that the evidence is sufficient to permit the jury to conclude that it is “highly probable” that the defendant acted with deliberate disregard for the rights or safety of others. If the judge is not convinced that such evidence is there, then the jury is not even asked to consider punitive damages. In fact, there are few cases where a judge even allows a jury to consider punitive damages. Basically, the defendant’s conduct has to be very intentional and very serious before punitive damages will even be considered.

Punitive damages have a place in our civil justice system. Jurors determine the amount of punitives and assign them only when the behavior was so reckless or harmful that individuals or corporate executives clearly need a strong incentive not to commit the same offense twice. Without these penalties, for example, a corporation might find it more cost-effective to continue their misconduct and risk paying limited compensation to those they have harmed, rather than make safety the most important issue.

Consider the punitive damages awarded recently in a Vioxx drug case in Texas. Merck executives KNEW the drug was deadly, but sold it anyway – making $12 billion in sales – while the drug killed as many as 55,000 people from heart attacks and strokes. The jury awarded $229 million in punitive damages because that was how much money Merck estimated it would make by delaying a change in Vioxx’s warning label.

Unfortunately, Texas state law puts an arbitrary cap on punitive damages, so in the Vioxx case the punitives were automatically reduced to $1.6 million – a mere drop in the bucket for Merck and not likely to change their future behavior.

In Minnesota, punitive damages are often allowed in drunk driving cases. Drunk driving is completely inexcusable and the harm caused by a drunk driver can be very serious. Therefore, MN has a strong incentive to punish the drunk driver financially as well as criminally.  If you have been injured by a person or business that engaged in egregious conduct and you have a question about punitive damages, call our office and speak with a personal injury lawyer for a free consultation.