Opponents of massive punitive damage awards get a boost from US Supreme Court decision

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Minnesota Public Radio – Marketplace AM Report

TESS VIGELAND, anchor: Opponents of massive punitive damage awards got a boost from the US Supreme Court yesterday. State Farm Insurance won’t have to pay $145 million for mishandling an auto accident claim. Nate DiMeo reports.

NATE DiMEO reporting: In a 6-to-3 vote, the high court ruled that the punitive damages in the State Farm case were, quote, “excessive,” 145 times the compensatory damages. The ruling effectively gives the green light to federal legislators pushing for caps on punitive damages. Some states already limit such awards. Harvey Rosenfield, from the Foundation for Taxpayer and Consumer Rights, says the court’s ruling undercuts the fundamental purpose of punitive damages.

Mr. HARVEY ROSENFIELD (Foundation for Taxpayer and Consumer Rights): This decision today says that you cannot penalize an insurance company where it hurts them the most, in the pocketbook, for refusing to pay claims properly. And that’s just going to be a license to steal.

DiMEO: The court stopped short of setting a formula to calculate how much higher punitive damages can be from compensatory damages. I’m Nate DiMeo for MARKETPLACE.

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