Setting aside the merits, what happens when punitive damages awarded become so ridic… sizable that there’s no way the punished could hope to pay it? For example, in the case of that ass who watered down cancer drugs, one claimant was awarded a billion dollars. He’s not going to get a billion dollars in a million years (particularly being in jail for up to the next three decades), so what happens?
Do they just take what they can and throw away the difference (and if so, what about the damages in the rest of the cases)? Do they have an installment plan? Who manages the transaction, and if it’s the government, how much do they charge for performing it?
Are lawyer/court costs put at a higher precedence for payment than punitive damages, is it split evenly, or is it split proportionally? If he were out of jail, what precedence would normal taxes be given? What effect does bankrupcy have on punitive and compensatory damages?
If the awarded damages are extrapolated from a more complex agreement, who decides what the exact value of the damages is? For example, an installment plan’s value would vary hugely depending upon whether inflation is taken into account.
With none of these questions answered, I don’t see how anyone could form a real opinion on punitive damages; it could either be an irrelevant number, a real punishment, a perversion of law, or a combination thereof depending upon the answers.
Why would you say that punitive damages could be a perversion of the law just because the defendant can’t afford to pay it? What do you mean, “could form a real opinion about punitive damages”?
I think the concept of punitive damages is that it’s supposed to HURT the company being sued. A $10 million judgment against General Motors won’t cause them to bat an eyelash, they spend that much on toilet paper every week. But a $4.3 billion judgment will make them wince.
Still, it’s obvious that punitive damage settlements have gotten waaaayy out of hand. $24 billion for an individual smoker?? Get real. (And don’t even get me started on the McDonalds coffee-spilling incident…) It’s my opinion that punitive damages should NEVER be given to the plaintiff – donate them to charity, instead. That way the company still gets dinged, and the people who file specious and frivolous lawsuits in the hope of a quick payout will be more dissuaded to sue.
For KGS, read more here on the McDonalds case. (probably more than you’ll ever want to read)
Note that the judge DID reduce the damages to $480,000, which was NOT widely publicized in the media.
So the reductions do happen in real cases, as I am Sparticus mentioned.
And award of damages is (generally) an unsecured debt. If the judgment creditor seeks to enforce the award against someone who can’t afford it, and they can’t negotiate a compromise (reduction in the amount, payment by instalments, that kind of thing) then the bankruptcy of the judgment debtor will follow. The judgment creditor will take his place in the line along with all the other unsecured creditors.
In at least the jurisdictions of which I am aware, the defendant’s ability to pay is supposed to be taken into account by the jury setting the award, allowing them to sting the wrongdoer but not drive him in to bankruptcy.
As for the assertion that punitives have gotten out of hand, I’m simply not convinced it’s true – yes juries do occasionally give far-out awards, but these are actually pretty rare and, when they are given, they are very often reduced by the courts. Unfortunately, since the outrageous awards make good copy, they are widely reported in the media, while the reductions (or even the facts about the wrongdoer’s conduct which may justify them) are not widely reported.
Hope this is not too much of a highjack but …
I have often wondered why the claimant should receive the punative part of punative damages.
Clearly they deserve the damages caused to them, but the punative part does not seem to me to be owed to the claimant. Can not the Punative part be used to bring other cases to trial?
Would this not stop the ‘lottery win’ situation that tempts people to claim for unreasonable law suits.
Just a thought really.
Cheers, Keithy
At least part of the rationale for giving the punitive damages to the claimant is a recognition that it is difficult and expensive to bring a major lawsuit. An injured party with a legitimate grievance might not be able to find legal representation to vindicate his claim. The punitive damages system magnifies the possible recovery of such a suit, making it more likely that the plaintiff (who will probably have to pay his lawyers not in cash but rather with a % of anything he collects) will be able to secure representation.