In principle, there’s nothing
wrong with a portion of punitive damages awards reverting back to the
state, as Arnold has proposed. In fact, that’s something consumer
advocates have called for in the past. What’s really wrong with Arnold
Schwarzenegger’s budget proposal — in addition to the 75% size of the
state’s share and a fine print provision limiting makers of dangerous
products to one punitive damage payout per killer product — is the
timing. There simply are not sizable punitive damages any more after a
recent precedent setting ruling. So as a budget balancer, the Gov’s
proposal is a red herring.
One year and a half ago the US Supreme Court strictly capped every
punitive damage verdict in the nation so that juries are no longer free
to punish corporations’ for malice and oppression, the standard for
punitive damages. Punitive damages can now be no more than 9 times the
amount of other compensatory losses, according to the Supreme Court’s
State Farm v. Campbell ruling. (Read more about the ruling’s
consequences at: http://www.consumerwatchdog.org/corporate/nw/nw004085.php3)
That means if a consumer recovers $1 million in damages for their
actual losses, punitive damages can never be more than $9 million.
Taking 75% of that now-limited amount away from injured consumers would
be punitive. Even more punitive is, as Arnold also proposes, stopping
makers of exploding gas tanks and other dangerous products from having
to pay punitive damages in every case. Arnold wants to have wrongdoers
pay for their malice only in the first case, which would greatly help
many of Arnold’s corporate donors — like Pfizer, which made the
dangerous diabetes drug Rezulin.
Here’s a real punitive damage challenge for Schwarzenegger, though.
Will the Governor agree to return any campaign contribution from a
contributor who has a punitive damage verdict against the company or
the person? After-all, if innocent, injured individuals are to be asked
to turn over to the state the lion’s share of their punitive damages
after sustaining serious injuries and undergoing the indignities of a
trial, shouldn’t the governor pitch in by returning easy money from big
companies found guilty of malice and oppression? How much does the
governor trust the integrity of his contributors? Stay tuned to see if
the muscle man takes Arnold Watch’s punitive damage challenge.