Punitive Damages Remain the Most Effective Deterrent to Corporate Malice
Posted by
Patrick DeBlaseNovember 02, 2006 4:51 PMThere's a lot of talk going on right now about the subject of punitive damages following an Oregon jury's verdict and the U.S. Supreme Court's pending review of a $79 million punitive damage award to the widow of a man who died of lung cancer caused by cigarette smoking. $79 million is a lot of money. At first blush it would seem like someone just one the litigation lottery. However, the plaintiff in the Oregon case, I'm sure, doesn't feel like she won the lottery. She lost her husband. And $79 million is not a lot of money to a company like Philip Morris. In fact, it's a drop in the bucket, not even a day's profits for a company that makes billions.
Do we really think that large corporations are going to listen and be deterred from wrongful conduct when the consequences of such conduct result in a slap on the wrist? Of course not. The corporate entity, as it has evolved, in America has no conscience, no soul and no emotion. In answering to the bottom line, economic analysis prevails. When a company can sit back, analyze the cost of the death and destruction it may wrought against the profits from such conduct, damages which only compensate a victim will never deter. In the Oregon case, the widow's compensation for the death of her husband was around $800,000. Philip Morris could pay this amount every day of the year and hardly see a reduction in its share price.
The California Supreme Court put it well in the seminal case of Grimshaw v. Ford - that's the famous Pinto case:
Through the results of the crash tests Ford knew that the Pinot's fuel tank and rear structure would expose consumers to serious injury or death in a 20- to 30-mile-per-hour collision. There was evidence that Ford could have corrected the hazardous design defects at minimal cost but decided to defer correction of the shortcomings by engaging in a cost-benefit analysis balancing human lives and limbs against corporate profits. Ford's institutional mentality was shown to be one of callous indifference to public safety. There was substantial evidence that Ford's conduct constituted "conscious disregard" of the probability of injury to members of the consuming public.
Those words were spoken in 1981 and still ring true today. Punitive damages remain as the most effective remedy for consumer protection against defectively designed mass produced articles and provide a motive for private individuals, like the widow in Oregon, to enforce rules of law.