Posts tagged as:

punitive damages

The various member countries have very different traditions as to “collective redress” of legal claims, and while some have liberalized the procedures recently, none is anywhere near as liberal as the United States in permitting lawyers to assert class actions. That’s not going to change, according to Monique Goyens, director general of the European consumer organisation BEUC, which has pushed for new collective redress rules: “The key safeguards against exorbitant awards are in place. So we are not importing US class actions.” [Euractiv] More specifically:

The safeguards include swiftly ending unfounded cases and avoiding national systems where lawyers’ fees are calculated as a percentage of the compensation awarded, like current systems in the US and, to a lesser extent, in some European countries. The Commission also advises countries to avoid punitive measures, inflicted on top of actual damage and compensation for victims.

Maybe one of these days we could get some of those safeguards over here.

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Title VI of the Civil Rights Act of 1964, which prohibits discrimination by recipients of federal education spending and other programs, does not currently allow private litigants to sue demanding punitive (as distinct from compensatory) damages, nor do the courts entertain private suits complaining of “disparate impact” under it. Some trial lawyers and advocates of expansive discrimination law have long wanted to change that, and now Hans Bader of the Competitive Enterprise Institute is warning that there are efforts afoot to slip an expansion into law by attaching it to some “must-pass” piece of legislation. An effort by Democratic senators to attach it to the Defense Authorization Act appears to have fallen short, but it may be back as a rider on other bills, with serious courtroom consequences, Bader warns, for schools and colleges and also for doctors and hospitals.

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We’ve already mentioned this in the context of the Chrysler bankruptcy (criticized in some quarters for having divested the reorganized company of punitive damage exposure over pre-bankruptcy conduct) but here’s Drug and Device Law gathering up decisions from various states to confirm that, no, there is no vested or constitutional right to punitive damages:

Constitutional challenges have been rejected under due process, taking, jury trial, open courts and various other state constitutional provisions. It makes sense. While compensatory damages might present a closer question (depending on issues such as retroactivity), there’s simply no constitutional right for one private party to demand that another private party be punished.

Especially not when the putative purpose of the damages, to inflict financial distress on the target, has been obviated by an intervening bankruptcy.

April 11 roundup

by Walter Olson on April 11, 2012

  • “Public pool owners struggle to meet chair-lift deadline” [Springfield, Ill. Journal-Register, earlier]
  • Punitive damages aren’t vested entitlement/property, so why the surprise they’d be cut off in an administered Chrysler bankruptcy? [Adler]
  • More on how Violence Against Women Act (VAWA) reauthorization would chip away rights of accused [Bader, Heritage, earlier]
  • Defending sale of raw milk on libertarian principle shouldn’t mean overlooking its real risks [Greg Conko/CEI; Mark Perry on one of many heavy-handed enforcement actions against milk vendors]
  • More tributes to longtime Cato Institute chairman Bill Niskanen [Regulation magazine (PDF), earlier]
  • Asbestos lawyers wrangle about alleged swiping of client files [Above the Law]
  • “Nathan Chapman & Michael McConnell: Due Process as Separation of Powers” [SSRN via Rappaport, Liberty & Law]

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November 23 roundup

by Walter Olson on November 23, 2011

  • Big win for Ted Frank against cy pres slush funds [CCAF, Fisher, Zywicki, CL&P, @tedfrank ("Ninth Circuit rules in my favor ... but I still think I'm right".)]
  • “Can the Vatican Be Subject to ICC Prosecution?” [Ku/OJ]
  • “Tennessee: ATS Sues City Over Right Turn Ticket Money” [The Newspaper]
  • “Law firms dominating campaign contributions to Obama” [WaPo]
  • Does that mean it’s an entitlement? Punitive damage limits face constitutional challenges in Arkansas, Missouri [Cal Punitives]
  • Businessman sues to silence critical blogger, case is dismissed, now files suit #2 [Scott Greenfield]
  • Going Hollywood? “The Supreme Court should move to Los Angeles” [Conor Friedersdorf]

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The maker of Botox is hit with a $212 million jury award [Richmond Times-Dispatch]

March 24 roundup

by Walter Olson on March 24, 2011

  • “Woman suing Carnival: Ship sailed too fast, made me sick” [Gene Sloan, USA Today "Cruise Log"]
  • U.S. Department of Justice sues Illinois school district for denying Muslim teacher’s request for three-week Mecca-trip leave [WaPo]
  • “California Assembly Says Complying with Government Standards Not Enough to Avoid Punitive Damages” [Cal Civil Justice]
  • “Four Loko Suit Is an Example of Bogus Economic Loss Classes” [Russell Jackson]
  • New Benjamin Barton book on lawyer-judge bias reviewed by Larry Ribstein [TotM, earlier]
  • “Prolific Colorado Consumer Attorney Filed 2/3rds of State’s FDCPA Cases Since 2007″ [ABA Journal]
  • Different kind of false marking case? Judge says company knowingly claimed inapplicable patent [WSJ Law Blog]
  • “Extra-special education at public expense” [five years ago on Overlawyered]

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March 15 roundup

by Walter Olson on March 15, 2011

  • “A conversation with class action objector Ted Frank” [American Lawyer]
  • Reviews of new Lester Brickman book Lawyer Barons [Dan Fisher/Forbes, Russell Jackson] Plus: interview at TortsProf; comments from Columbia legal ethicist William Simon [Legal Ethics Forum]
  • “Collective Bargaining for States But Not for Uncle Sam” [Adler] Examples of how Wisconsin public-sector unionism has worked in practice [Perry] Wisconsin cop union: nice business you got there, shame if anything were to happen to it [Sykes, WTMJ] “Union ‘rights’ that aren’t” [Jeff Jacoby, Boston Globe]
  • “Minnesota House Considering Significant Consumer Class Action Reform Measures” [Karlsgodt]
  • 10,000 lawyers at DoD? Rumsfeld complains military overlawyered [Althouse via Instapundit]
  • “Are Meritless Claims More Prevalent in Copyright?” [Boyden, Prawfs]
  • Claim: availability of punitive damages reduces rate of truck accidents. Really? [Curt Cutting]
  • Now with improved federalism: “The Return of the Lawsuit Abuse Reduction Act” [Carter Wood, more, earlier here].

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A major law-book publisher seems to have gone ahead with an update under the authors’ names despite their unwillingness to cooperate. [Max Kennerly; Philadelphia Inquirer]

July 9 roundup

by Walter Olson on July 9, 2010

  • Many interesting reader comments on post about jury award against manufacturer over injury on bicycle motorized post-sale;
  • Reimbursed for money never paid: “Calif. Trial Lawyers Welcome Latest Ruling on Recovery of Medical Expenses” [The Recorder]
  • Update: Defamation suit against travel blogger Chris Elliott resolved successfully [Citizen Media Law, earlier]
  • Podcast: Northwestern lawprof Steven Calabresi on McDonald (Second Amendment incorporation) case [Federalist Society]
  • “Provost Umphrey claims banana picker reps siphoned clients, money” [SE Texas Record]
  • Lawprofs in a NYT flutter about deductibility of punitive damages [Walk, Drug & Device Law] On the merits, Carter at ShopFloor: “Changing Tax Laws to Punish Businesses — Unless They Settle”
  • Troubled Pacific Law Center to close in San Diego [ABA Journal, earlier]
  • New York high court rules Atlanta exec cannot invoke New York’s pro-plaintiff state or city laws to contest firing [NYLJ]

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Those of you who have attended my “Law of McDonald’s” talks in California and Florida may recall the case of the strip search hoax. A Florida man who was unusually persuasive would call dozens of fast food restaurants until he could find someone who would believe he was with the police and who would disrobe employees (or themselves) at his instructions; though there have been other lawsuits seeking to blame the fast food restaurants for this, courts have generally thrown them out. One exception was the case of Ogborn v. McDonald’s, where two targets of the hoax successfully sued for millions. On Friday, the Kentucky Court of Appeals largely affirmed the lower court judgment, though it reduced the punitive damages received by Donna Summers (who gave an Alford guilty plea for her role in the strip search) from $1 million to $400,000. McDonald’s hasn’t yet decided whether to appeal to the Kentucky Supreme Court. (Andrew Wolfson, “Appeals court upholds $6.1 million strip-search verdict against McDonald’s”, Kentucky Courier-Journal, Nov. 20, via ABA Journal).

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We’ve been following Buell-Wilson v. Ford for some time, including the U.S. Supreme Court remand. Curt Cutting’s blog has the latest in two April posts here and here. Cal Biz Lit also has good commentary.

I expressed skepticism this summer that the Exxon Shipping v. Baker decision was a positive sign for the Court’s punitive damages jurisprudence. After the replay of Philip Morris v. Williams and, now, the Court’s denial of certiorari in DaimlerChrysler v. Flax this week, I can say I was right.

As readers of Overlawyered know, the Tennessee Supreme Court reinstated $13.3 million of punitive damages over a good-faith dispute over a van’s seat back design (in an accident caused by a drunk driver), giving no credit to the fact that the design in question was safer than federal safety standards, or to Exxon Shipping’s suggestion that punitive damages greater than a 1:1 ratio were possibly constitutionally inappropriate where compensatory damages were substantial and the defendant’s actions were not intentional or done for profit. As I described the case back then:

In 2001, Louis Stockell, driving his pickup at 70 mph, twice the speed limit, rear-ended a Chrysler minivan. Physics being what they are, the front passenger seat in the van collapsed backwards and the passenger’s head struck and fatally injured 8-month old Joshua Flax. The rest of the family walked away from the horrific accident. Plaintiffs’ attorney Jim Butler argued that Chrysler, which already designed its seats above federal standards, should be punished for not making the seats stronger — never mind that a stronger and stiffer seat would result in more injuries from other kinds of crashes because it wouldn’t absorb any energy from the crash. (Rear-end collisions are responsible for only 3% of auto fatalities.) Apparently car companies are expected to anticipate which type of crash a particular vehicle will encounter, and design accordingly.

(h/t Cutting)

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One can certainly see why ending tax deductions for punitive damages is a superficially appealing idea.

But the main effect will be to increase settlement pressure in cases where there are unjust punitive damages awards. Because settlements can be characterized as “compensatory” and tax-deductible while court-ordered judgments cannot, trial lawyers will be able to use the tax differential to discourage defendants from seeking appellate review. So one cannot expect very much tax revenue from this: “punitive damages” will drop precipitously, but money going to trial lawyers will go up. Moreover, appellate courts will have fewer opportunities to correct bad decisions by trial courts, creating more uncertainty in litigation, which raises litigation expenses because it will be harder to predict outcomes.

Note that taxpayers are not subsidizing punitive damages award deductions by businesses: the income “lost” because a defendant deducted the punitive damages award will be income realized by the plaintiff and his or her attorney. If the deduction is forbidden, the government will be, in effect, double-taxing the same money.

The Obama administration makes much of its claim of being pragmatic, rather than ideological, but this looks like an indirect giveaway to the trial bar rather than a source of government revenue. More: Walter at Point of Law; and my shining mug quoted at the Southeast Texas Record.

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Last year, Overlawyered was the first to report that Judge William Acker in the Northern District of Alabama had held the Fair and Accurate Credit Transactions Act (FACTA), which provides unlimited damages of $100-$1000 per violation for trivial technical violations of printing too many numbers on a credit card receipt, unconstitutional.  Other judges have refused to follow his lead, and last week the Eleventh Circuit reversed the decision, rejecting the facial challenge to the statute, but leaving open the possibility that the statute would be unconstitutional as applied in a particular case. (Harris v. Mexican Specialty Foods, No. 08-13510; h/t R.M.)

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April 7 roundup

by Walter Olson on April 7, 2009

  • Wisconsin lawyer pressing bill to allow punitive damages against home resellers over claimed defects [Wisconsin State Journal] More: Dad29.
  • Longer than her will? NY Times posts ten-page jury questionnaire in Brooke Astor inheritance case ["City Room"] “Supreme Court: No Constitutional Right to Peremptory Challenge” [Anne Reed]
  • Georgia’s sex offender law, like Illinois’s, covers persons who never committed a sex crime [Balko]
  • “The lawsuits over TVA’s coal ash spill have come from all over Roane County – except the spots closest to home.” [Knoxville News]
  • Bootleg soap: residents smuggle detergents after enactment of Spokane phosphate ban [AP/Yahoo]
  • UK: Elderly Hindu man in religious-accommodation bid for approval of open-air funeral pyre [Telegraph]
  • No DUI, no one hurt, but harsh consequences anyway when Connecticut 18 year old is caught buying six-pack of beer [Fountain]
  • Only one or two not covered previously at this site ["12 Most Ridiculous Lawsuits", Oddee]

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Inside Counsel magazine’s March 2009 issue quotes me (and mentions this blog) in a story about punitive damages and a Third Circuit ruling imposing a 1-to-1 limit on punitive damages in a bad-faith-failure-to-settle case, Jurinko v. Medical Protective Co. (albeit in a mysteriously unpublished decision). (Lauren Williamson, “Court Imposes 1-to-1 Punitive Damages Ratio”, Inside Counsel, March 2009; see also Shannon P. Duffy, “3rd Circuit Slashes Punitives, Imposes 1-1 Ratio”, Legal Intelligencer, Dec. 30.) I do take issue with the line “The decision continues a trend of appeals courts beginning to rein in punitive damage awards when there is no physical injury or ‘reprehensible’ behavior.” A 1-to-1 ratio isn’t “reining in” punitive damages awards in such cases, because just a generation ago, the ratio for such situations was zero-to-one, because punitive damages were to be limited to intentional or particularly reprehensible conduct. As I feared a few months ago, the 1-to-1 ratio “ceiling” the Supreme Court suggested in Exxon Shipping v. Baker has become a benchmark.

The magazine also has a short interview with Andrew Frey, the Mayer Brown litigator who has argued several Supreme Court punitive damages cases.

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A jury in Vermont has awarded a former altar boy $192,500 in compensatory damages, and $3.4 million in punitive damages, for suffering alleged molestation at the hands of a priest in 1977.  According to the Times Argus of Vermont, this is the third trial this year involving the same priest, who, amazingly, still retains his collar though he’s retired from active service.  As a result, the diocese of Vermont appears to be teetering on the edge of bankruptcy.  The diocese has announced it will appeal the verdict.

The ratio of punitive to compensatory damages appears to violate the  Supreme Court’s suggestion in Exxon Shipping v. Baker (an admiralty case decided on statutory grounds) that a punitive ratio in excess of single digits, or even 1:1, is unconstitutional.  But as Cal Punitives points out, is this the case with which to put that suggestion to the test?

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