Money speaks, but does it speak well?

Like most people I know, I've never really thought much about punitive damages (at least, I assume that's the case - you never know what people like to ponder in their free time), but an article in the NY Times last week (Foreign Courts Wary of U.S. Punitive Damages) got me thinking: What is the point of awarding large sums of money - beyond the actual damages suffered - to plaintiffs in civil lawsuits?

While Americans are used to hearing about large punitive damage awards (despite the active movement to limit punitive damages in the United States, they are a fairly settled point in our legal system), they're relatively uncommon in other countries. English law severely restricts the circumstances in which they can be awarded, while Japanese law prohibits the enforcement of any punitive damages awarded by foreign courts.

In the case outline in the Times article, Judy Glebosky, an Alabama woman had sued an Italian manufacturer after the buckle on one of their motorcycle helmets failed in an accident, killing her son. The Alabama court awarded the woman $1 million in punitive damages, but the company refused to pay. Last year, the Italian Supreme Court sided with the company, blocking Glebosky's efforts to collect because they found the notion of punitive damages to be offensive to Italian ideas of justice.

Now, I've always been vaguely in favor of courts awarding punitive damages, especially when there's clear evidence of sleaziness, if not direct proof of wrongdoing, on the part of big corporations. Exxon Mobil, tobacco companies, I'm looking at you. Corporations may legally qualify as individuals, but it's damn hard to throw those 'individuals' in jail, even if you do manage to get a conviction, which is enough of a challenge in itself. How do you punish a corporation for breaking the law?

Sometimes it's enough to simply make them compensate the plaintiff(s) for the actual provable harm caused by corporate malfeasance. But if the point of the punishment is also to deter future crime, you have to decide whether having to shell out for compensatory damages really is enough to stop a company from committing the same irresponsible and/or illegal action in the future. Maybe they'll get caught again, but the cost of settling the cases that do come up is usually outweighed by the savings that made the irresponsible and/or illegal action seem like a good idea in the beginning - it's incredibly unlikely that they'll have to pay out in every case. In the end, money speaks, and because punitive damages involve larger sums, they speak louder than compensatory damages.

At this point, punitive damages - governed by state laws - are pretty standard practice in this country. It is an understatement to say that there has been a fairly vocal movement to limit punitive damages - opponents have been screaming for limits, or outright prohibition, at the tops of their lungs. But despite all that, the large awards that you hear about are rare within the system - the median award is closer to $40,000, and punitive damages are only actually awarded in around 2% of the civil cases that do end up in trial. While efforts to cap punitive damages have failed to pass constitutional muster, most punitive awards larger than 4 times the compensatory damages are questioned for the same reason. We all remember last year, when the Supreme Court overturned $80 million in punitive damages against Phillip Morris awarded to the widow of a smoker in Oregon. I know I was pissed when that happened.

Which is why I was kind of surprised when I didn't feel that bad for Glebosky. Not that I suddenly discovered that punitive damages were a bad thing, but I did wonder why she needed the money - as she said, it's not going to bring her son back. I know I felt more certain about rulings against the tobacco companies because that money was going to go to anti-smoking education.

I don't have any clear conclusion to these musings, but I guess I just wish there were a better way of punishing corporate malfeasance than just throwing money at the problem. Maybe having to pay large sums does provide the proverbial slap in the face for corporations who would otherwise cut corners (or outright lie to consumers) in order to raise profits, but is it really enough? And with punitive damages going directly to plaintiffs, you get the impression that they're being excessively rewarded for their victimhood, which really only helps corporations in their fight against responsibility. On the other hand, who else do you give them to?