Determining how much money someone should get out of a lawsuit in damages is a blurry area at best - but I think there could be some consensus that awarding $100,000 in damages for a severed finger isn’t unreasonable whereas awarding $100 million for a severed finger is pretty excessive.
At the same time that we want the victim to be adequately compensated, we also want to discourage society from being intentionally or frivolously litigious as a way of getting lottery-sized payouts.
And also, there seems to be massive lopsidedness in the way damages are awarded. Isn’t it true that some people get tens of millions of dollars for invasion of privacy, whereas some other people who suffer horrific injuries get only a small fraction of that amount? Why is invasion of privacy worth more damages than life-shattering physical injury?
At what point does a lawsuit’s damages become excessive?
Damages come in two categories. One to compensate the victim for their loss, whether that be medical care, rehab, future lost wages, future lost enjoyment, etc. These are relatively easy to calculate based upon an individuals age, their earning capacity, etc. (i.e. a 30 year old janitor’s future lost wages a very different from an 22 year old professional baseball player). The second category, is punitive damages. These are damages that are intended to serve as a punishment against the perpetrator (normally the defendant) for his actions, and also serve as a deterrent for them committing the action again, or as a deterrent to other possible defendants from committing the same acts. These are not as easily calculated and where you see much variation.
If by “some people” you mean FOX Sports sportscaster and television personality Erin Andrews who successfully sued Marriott for $55 mm for allowing another guest to stalk her, modify the peep hole to her room, film her naked and post said nakedness on the Internet, that is a special case. The high amount of the damages are largely due to the potential impact to her high profile and lucrative career, damage to her professional reputation and as a punitive measure against the hotel for not taking adequate security precautions.
Think of it this way. Let’s say you receive an injury that prevents you from working for the rest of your life. If you make $50k a year and are expected to have worked another 30 years, depending on how you account for inflation and future pay increases, that’s well over $1 million.
When you get into the area of punitive damages, where the award is supposed to serve as punishment and deterrent, part of the variation stems from the size of the party being punished and what sum is required to get its attention. An award that would be crippling for a small business might be only a rounding error to MegaCorp, and certainly insufficient to deter them in future.
I understand the rationale for assessing punitive damages against the defendant - but awarding those punitive damages to the plaintiff seems to provide an undue incentive for lawsuits. Punitive damages, once collected from a liable defendant, ought to go somewhere else.
Doesn’t the question just become “Where else?”. It would be nice if it funded a regulatory agency that could prevent these damages, but then you end up with the same issue as small town police departments mostly funded by speeding tickets. I suppose it could be a fund for related victims, but it’s hard to see who that would help when it’s a one-off event or if the punitive damages are quite small (if it’s a small business being sued). I suppose it could go into the general fund, but see the issue with small town PDs above.