Punitive damages should go to the state, not the plaintiff

Great Debates
1

I considered putting this in GQ (“Why do punitive damages go to the plaintiff instead of the state?”) but thought I’d get more meaningful input by starting a debate and, hopefully, hearing a counterargument.

Most tort reform discussions that involve punitive damages (p.d.) (“exemplary damages” in the UK, apparently) usually prescribe some kind of cap. But ever since I first encountered the idea of p.d., the whole thing seemed counterintuitive: the plaintiff first gets compensatory damages. Thus is justice served for the wronged party. But then the defendant is made to pay p.d. to the plaintiff. I understand that sometimes compensatory damages are insufficient deterrent for whatever the defendant was doing wrong, and thus p.d. are justified. But why should the money go to the plaintiff? Wouldn’t the punishment and deterrent be equal if the money went to some disinterested third party, like the government?

Making p.d.s go to the gov’t would, IMHO, reduce the volume and degree of frivolous lawsuits.

I really don’t see any reason why plaintiffs (and their attorneys), after being duly compensated, should receive any more money. If I’m missing something huge and obvious here, please enlighten me.

2

Interesting question. ISTM that if they were to go to the state, they would be more along the lines of a fine, than damages.

Anyway, it was my impression that the state is intended to be an impartial referee in civil actions, rather than an advocate for one of the sides; having a stake in the outcome would not be a way of inspiring confidence in the state’s impartiality.

Incidentally, why are they (punitive assessments) called “damages” in the first place; is it just to complement the “compensatory damages”? Does the answer to why they go to the plaintiff instead of the state tie into the answer to that?

3

If a medical mistake (or something) kills your mom, why should you get a free house? Certainly you should be paid for damages (in whatever imperfect way we figure them out), why should you get extra?

4

I don’t disagree that there is no compelling reason to give the punitive damages to the defendant, but somehow i doubt that changing the law on punitives will deter someone from filing a frivolous lawsuit. Frivoulous lawsuits don’t even recover compensatory damages.

5

I would say that they are called punitive damages because the damage is done to society. Just because I never bought a Ford Pinto does not mean Ford never put me in danger. I was simply lucky enough to avoid injury. Punitives are a way to punish defendant for all the harm he does, not just the harm he gets away with.

6

I don’t think that because a judge is a member of the state government that he would be unable to remain disinterested when it comes to assessing punitives. They are called to hand out fines all the time and the fines usually go to the state without any untoward repercussions.

Not to hijack this thread but in a similar vein I have often wondered why society must be punished when a police officer or other state actor oversteps his authority in arresting, failing to properly mirandize or commits other constitutional error. Why can’t the perpetrator of the error be appropriately punished without allowing a guilty party to go free? I am not talking about a case where an officer beats a confession out of someone where the confession is the only evidence. I am talking about an error in judgment that leads to say, probable cause for a stop, folowed by discovery of evidence in plain sight, which is then thrown out because the stop was improper. In the same way that officers are currently interrogated on the stand to determine what they were thinking when making a stop etc. they could be interrogated as to whether the improper action was an accident or whether it was caused because the officer was out to get a particular defendant. If no egregious act by an officer occurred a guilty defendant could still be punished without doing harm to society.

7

When the government can profit from these law suits then they are no longer a disinterested third party. What will end up happening is the government will view this as another source of revenue and punative damages may go up or increase with frequency. It’s kind of like letting police departments get a cut of whatever property they seize. Bad idea.

I don’t really see a connection between punative damages and baseless law suits.

Marc

8

The judicial branch has little or no say in where the money goes. It’s one of the nifty things about our three-pronged government (in theory).

Well, again, in theory, the compensatory damages are equavalent to whatever damage the plaintiff did to the defendant. Let’s say a McDonalds customer spills coffee on herself. The coffee is negligently overheated, so causes some damage.

Compensatory damages would cover the victim’s medical bills, lost wages, emotional damages, etc. Let’s say it adds up to $20,000. But that’s nothing to McDonalds. They’ll never change their ways just because of a measly 20 grand. So the court imposes an additional $50 million in damages. These are the punitive damages.

But for whatever reason, the $50 mil goes to the burned-lap lady and her lawyers. Actually, an often-ludicrous percentage goes to her lawyers. So there will always be lawyers sniffing around for these kinds of silly cases just on the off-chance they’ll win and get $10 mil each.

If the punitive damages went to the state instead, then McD would still get punished, and burned-lap lady would still get what was coming to her, but she wouldn’t suddenly be filthy rich, and neither would her lucky lawyers.

Agreed.

No, it would really be more like letting police departments send a cut of their seized property to a totally different branch of the government.

If you’re concerned that the judicial branch can’t be trusted to assign punitive damages fairly without any interest for itself, okay: have punitive damages go to charity or something. Just keep them away from the plaintiff and plaintiff’s lawyers.

If you take away the vast majority of the reward for them, they’ll stop, right?

9

I’ve thought this for a long time. If you don’t sue McDonalds for $50 million they’ll just laugh and shrug it off, but that $50 million shouldn’t go to the schmuck who burned themselves with coffee.

10

This is similar to something I’ve been thinking about for a long time, but my scheme has an extra wrinkle in it.

Punitive damages don’t go to the plaintiff, and they don’t go to the state. Instead it goes into a fund to compensate any winning plaintiff who, for whatever reason, isn’t going to be able to get their punitive damages from the responsible party.

So … say at the same time as your McDonalds coffee case there’s another Hot Coffee Incident at Joe’s Struggling Coffee Shop on the corner. Both plaintiffs win their cases and are awarded $20k compensation. But there’s no way in hell that Joe’s business can squeeze out $20k without going bankrupt, and Joe is contrite and promises to mend his ways - it’s really not fair to send him out of business over this (and that probably wouldn’t recover the 20k for the plaintiff anyway)

So … McDonalds pays their 50 million into the fund. Joe pays, say a thousand, which is quite enough to make him think about what he’s doing. Both plaintiffs get 20k out of the fund. The rest of the money stays in the fund for other potential suits against other (relatively) indigent parties.

There would have to be some adjustments made for the fact that the fund would doubtless never be exactly the right size to compensate all successful plaintiffs as they should be compensated. Say, if the fund’s getting low then people start getting compensated at 80% or 50% of what they were awarded, to be paid in full later when the fund is more flush. But that’s the general idea.

11

I think Joe is supposed to have insurance so putting him out of business might not be such a bad idea, but it does sound reasonable to create a fund for plaintiffs to recover from when the actual responsible party has nothing, but if you think you see a lot of frivolous lawsuits now just wait until a fund is created with millions of dollars of corporate money. What happens when the fund is empty? or insufficient? or there are too many claims at one time to fully compensate everyone as would be the case if an insurer or Enron went
bankrupt? It is clearly a better use of the money, but seems unworkable.

12

I like the idea of punitive damages going somewhere other than the plaintiff and plaintiff’s lawyer. The one change you will need to make, though, is in how the lawyer gets paid.

Name the lawyer that is going to take on McDonalds for a cut of $20,000, and can put competitive resources into the suit, when McDonalds has $50,020,000 at risk if they lose. McDonalds can make the suit a big money loser for the plaintiff’s lawyer, you’ll never get anyone to take the case.

Pay actual and reasonable costs to the lawyer, above and beyond the compensatory damages, and make those costs unrelated to the damage amount.

13

I think punitive damages should go into a general pool held by the government. Then in cases where somebody is injured but is unable to collect compensatory damages because the defendant has no assets, the damages would be paid out from the pool. This plan would even out all plaintiff awards to compensatory damages. And the government would have no incentive to raise punitive awards because the money would not be going into the general revenue pool.

14

This is an intriguing proposal, and Aspidistra’s wrinkle makes it even more interesting. I could really get behind it. Reminds me a little of the fund that Ohio (and many other states) has for people bilked by their lawyers. Every lawyer pays a portion of his or her bar registration fees into the fund, which is disbursed to wronged clients (most often when the lawyer him- or herself has empty pockets).

Politically speaking, though, I doubt such a proposal is likely to ever pass. The personal injury plaintiffs’ bar is extremely well-organized and politically active in most states, and they would fight it tooth and nail, as you might expect.

15

Nitpick: I think you mean “compensatory” rather than the underlined “punitive.” (My underlining, obviously.)

But I like the idea. I’ve long thought that while punitive damages, as currently constituted, are needed to discourage similar defendants from abusing the system, there’s no reason why a particular plaintiff should be the beneficiary of that particular bit of good fortune.

We want plaintiffs to be made whole where their cause is just, and it makes sense to use punitive damages to ensure that more plaintiffs are made whole, rather than give some of them an extra jackpot on top of that.

16

The problem I foresee is this: what incentive does the Plaintiff have for bringing a suit for damages he or she will not get?

17

I have two objections to this idea.

First, who holds the money? This isn’t some arbitrary money closet where we stash it until we need it–liquid cash earns interest, and if we’re talking 50 million dollars that’s a LOT of interest going to a government that didn’t earn it.

Second, were a system such as this to get out of control, as I assure you it most definitely would, there would be no way of ensuring it gets pruned. Have you ever known legislators to decrease their revenue any other way than tax breaks?

18

Well, they’ll still get comps. In fact, you could even allow for the plaintiff to receive punitives equal to or twice their comps. But you wouldn’t have a situation where a named plaintiff gets huge punitives just because he (or his lawyer) won the race to the courthouse.

I’m no expert in jury awards. I’m not sure what percentage of them are punitive, as opposed to (arguably inflated) comps. I believe the majority of huge awards are imposed by juries, rather than judges.

This article discusses some aspects of punitive damages.

And you’ve got the odd situation where your liability is dependent upon who you injure. Lets say I’m driving recklessly, and I kill a pedestrian. I’m far better off if I hit and kill a kid, a homemaker mom, or an old person, than if I kill a young, male, sole breadwinner for a family. Or, in many cases I’ll be better off killing my victim, than injuring him, since injuries can result in pain and suffering, expensive care, etc. Just seems a mite odd.

Class action suits - and the lawyers who pursue them - are a species unto themselves. As I recall, there is a county somewhere down in Alabama that has a rep for inflated awards. I believe there is a legendary case where some guy bought a new BMW that had been repainted. He sued for what he considered a loss of value. Maybe a couple of thousand comps, but IIRC a multi-million class action award was given, resulting in HUGE fees to the lawyer. (That case is referred to in the article I linked.)

If the punitives are paid to an entity other than the named Plaintiff, do the lawyers still get their cut? Because if they don’t, there will be less of an incentive to pursue such actions. And since governments are often unwilling or unable to pursue this type of action, that will allow companies to shift their costs to consumers. Remember, greedy private lawyers, rather than governments, were instrumental in getting the ball rolling in all of the cigarette lawsuits.

Just a few thoughts, no answers.

19

So burned lap lady and her lawyers have no incentive to seek punitive damages at all. Instead, they threaten McDonald’s with punitive damages payable to the state, and settle with them for twice compensatory damages, payable to the plaintiff. McDonald’s pays a pittance and gets off the hook for the $50 million in punitives they should have to pay. No money at all goes to the state, and no successive defendant has any reason to pay punitive damages ever again.

20

I don’t know the full etymological history, but in legal jargon, “damages” means any money that the liable party is made to pay. And it always means money as opposed to, say, equitable relief. The reason for the award of damages is referred to as the “harm” suffered by the plaintiff.