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Punitive Damanges

07/24/08 7:55AM By Dick Mallary
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(HOST) Commentator Dick Mallary is a former U.S. congressman from Vermont. He has also served extensively in state government, and he thinks there may be a better way to assess punitive damages in legal actions - that would be in the interest of both fairness and the public good.  

(MALLARY) The time has come for this nation and its policymakers to think, talk and act seriously about punitive damages awarded by our courts.

In Vermont, we have read recently about a large punitive damage award against the Vermont Diocese of the Catholic Church because of the actions of a predatory priest. Nationally, we have just read of the U.S. Supreme Court’s reducing a punitive damage award against Exxon Mobil for damage to fisheries resulting from the Exxon Valdez oil spill.

It is certainly proper that injured individuals or groups of individuals should be able to go to the courts for redress of their damages. They should be able to seek and they should receive reasonable compensation for the damages done to them. We call these compensatory damages and, although determining the amount of the damages may be difficult, this part of our system seems to work reasonably well.

When, however, the damage was the result of serious negligence or intentional misconduct or criminal activity by the perpetrator, the person who was damaged may also seek punitive damages. These are supplementary awards given by the court to punish the defendant for his wrongful actions. In many cases juries have made awards that are many times higher than the compensatory award. It often depends on how sympathetic the injured person is to the jury and what state the case was brought in. There is no clear and uniform standard as to how large any punitive damage award should be. Should it correlate with the size of the compensatory award? the seriousness of the behavior? Or the assets of the defendant? And, should the defendant be subject to more than one punitive damage award for the same offense or behavior?

It is these very large punitive damage awards that raise serious issues of fairness in my mind. It is certainly right and proper that individuals or organizations should be held responsible for their actions. And it is reasonable that they should receive appropriate punishment for their negligent or malicious or criminal actions in order to dissuade them and others from such behavior. But, is it reasonable that the individual or group of individuals who brought the suit should receive a large financial windfall even after they have already been fully compensated for the damages? Shouldn’t the punitive damage awards be treated more like fines in criminal court and be devoted to a public purpose that benefits all citizens?

I would propose two simple steps that would go a long way toward addressing this problem.

First, our legislative bodies should establish reasonable and uniform standards for judges to use in imposing punitive damages.

Second, punitive damage payments as determined by the judge should be paid into a suitable governmental fund where they provide a benefit to all the public and where they can be used to address a related public issue.

This would make sense and provide some predictability in the imposition of such punitive damages and it would eliminate unwarranted windfalls to the injured plaintiffs and their attorneys.
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