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Editorial

Legally Speaking



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05/01/2011 - American law is, by international standards, a series of innovations and exceptions. This is the fourth in a series of articles this year that will examine commonplace aspects of the American justice system that are unique in the world.

Adam Liptak originally researched and published these articles in 2007 and 2008. With permission from The Wall Street Journal, Mr. Liptak's articles have been edited for space, and we will try to update his reports with recent statistics or rulings that may have changed the law since the articles were first published.

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AMERICAN EXCEPTION U.S. PUNITIVE DAMAGES

By Adam Liptak, The Wall Street Journal, March 26, 2008

In the late summer of 1985, 15-year-old Kurt Parrott was thrown from his motorcycle. The buckle of his helmet failed, and he died when his bare head hit the pavement. Mr. Parrott's mother, Judy Glebosky, sued the Italian company that made the helmet, and an Alabama court awarded her $1 million.

The helmet maker refused to pay. In 2007, when lawyers for the Parrott family tried to collect in Italy, they were blocked by the Italian Supreme Court. The court said that a peculiarity of American law — punitive damages — was so offensive to Italian notions of justice that it would not enforce the Alabama judgment.

The Italian court explained that private lawsuits brought by injured people should have only one goal compensation for a loss. Punishment, they say, should be meted out only by the criminal justice system, plaintiffs should not receive a windfall beyond what they have lost, and jury opinions are a poor substitute for the judgments of government safety regulators.

Punitive damages have deep roots in American and English common law, but their nature has changed here over time. Punitive damages used to compensate for intangible injuries like pain and suffering or emotional distress. These days, punitive damages are used to send messages to large corporations, to fill gaps in regulation, and to reward successful plaintiffs with multiples of what they have lost.

In 1992, the German Supreme Court did enforce the compensatory portion of a judgment from an American court against a defendant who had no assets in this country and refused to pay. The Italian court, by contrast, refused to enforce any of the $1 million award to Kurt Parrott's mother because the Alabama judge had not said how much of it was for compensation and how much for punishment.

American courts and legislatures are experimenting with ways to limit punitive damages, often in response to lobbying and litigation from business groups that say huge punitive awards are arbitrary, unfair and hurt the American economy.

Five states — Louisiana, Massachusetts, Nebraska, New Hampshire and Washington — ban or severely limit punitive damages. Others restrict the amounts awarded. Some states, responding to the criticism that the awards are a windfall for the plaintiffs, require that a part be turned over to the states.

The United States Supreme Court has in the last decade or so started to impose its own limits. In 1996, it ruled that a $2 million punitive award in an Alabama consumer fraud case involving a $4,000 compensatory award was disproportionate, far exceeded the maximum state punishment, and was excessive given that the harm was merely economic. In 2003, the court said that the ratio between punitive and compensatory awards must typically be in the single digits to be constitutional.

At the same time, courts in a few countries around the world are expanding the availability of punitive damages. The Tribunal Supremo in Spain, for instance, enforced a $1.3 million punitive award in a Texas trademark case in 2001. The Supreme Court of South Australia in 2005 indicated that it would consider enforcing American punitive awards where they involved "brazen and fraudulent conduct."

Perhaps most notably, the Canadian Supreme Court in 2003 upheld a $50,000 punitive award in a Florida land dispute. Justice Louis LeBel wrote, "It is simply a different policy choice, and it affords U.S. plaintiffs a level of protection of which they ought not necessarily to be deprived just because the defendant's assets are here."

Questions about punitive damages seemed academic, if not heartless, to Kurt Parrott's mother. "A million-dollar award is really nothing," Ms. Glebosky said. "It's really not enough to punish any large company in this day and age, and it certainly does not bring back Kurt."

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Nothing in this article should be construed as legal advice. You must consult with an attorney for the application of the law to your specific circumstances.

R. Michael Shickich is the founder of the Injury Law Firm located in Casper. The focus of his practice is personal injury and wrongful death cases.

The Wyoming State Bar does not certify any lawyer as a specialist or expert. Anyone considering a lawyer should independently investigate the lawyer's credentials and ability, and not rely upon advertisements or self-proclaimed expertise.

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