- The Washington Times - Monday, October 13, 2003

By ruling that high punitive damages in two cases should be reviewed by lower courts, the Supreme Court is off to a promising start in its new term, underlining that it meant what it said in the last term about this issue and thereby putting a genuine obstacle in the path of gluttonous lawyers out to gobble our wallets’ contents.

The rulings are important. Outlandish punitive damages are part of what has converted our civil-court system into an unpredictable force said to wreck businesses, demolish jobs and cost each and every one of us hundreds of dollars. The decisions came with no yakety-yak allowed from the lawyers, showing the high court is dead-serious about making lower courts adhere to its limits on punitive awards.

Those limits were set in State Farm vs. Campbell. That’s a case in which a man claimed he had been cheated of what he was owed by his insurance company. A Utah jury gave him $2.6 million for his emotional disarray, and then went after the company to the tune of a $145 million punishment. But the award was a violation of the 14th Amendment’s assurance of due process, according to the Supreme Court, which then said punitive damages should never be greater than 1 to 9 times economic damages.

This term, the court confirmed it was sticking by that standard established in the previous term. It told lower courts in one of the cases to review the $79.5 million assessed as punitive damages against tobacco lord Philip Morris. The amount was 97 times higher than the economic damages given to the estate of a man killed by his three-pack-a-day Marlboro inhalation, a published report says. The other case, out of Kentucky, overturned a punitive-damages verdict against DaimlerChrysler Corp.

It is fair to wonder what all of this has to do with the 14th Amendment’s clause saying no state shall “deprive any person of life, liberty or property, without due process of law.” The answer is that it is often much harder to locate due process in punitive awards in civil cases than it is to locate the due process in economic awards in those cases or sentences in criminal cases.

The economic awards are based on actual calculations of monetary losses caused by someone’s misbegotten conduct. But the amounts of punitive damages are governed by very little, sometimes just the emotions of jurors in the hands of skillful trial lawyers. These damages are meant to punish people for their wrongdoing and deter future miscreants, but unlike criminal sentencing, they have often been levied with no reference to a pre-established understanding of what punishments are proportionate to the behavior. It’s spin the wheel, and see where the little ball lands. Translate the same arbitrariness to criminal law, and a jaywalker could end up spending a decade in prison.

If you think that last statement an exaggeration, think back to the 1993 case in which an Alabama jury hit BMW of North America with $4 million in punitive damages. The amount was to be paid to a physician who had purchased his BMW without being told it had been repainted.

Trial lawyers argue that the multimillion-dollar judgments are rare and often reduced on appeal. But these judgments are usually unjust and can be ruinous to some, and they breed disrespect for the system. They also breed fear, so that when lawyers file punitive-damages claims, as some are reported to do as a matter of course, defendants might figure high settlements their best route to safety.

Combine unrestricted punitive damages with other abuses and problems, such as frivolous lawsuits, stiff attorney fees and a litigiousness that races through stop signs, and what you get, analysts point out, is major growth in overall tort-system costs.

The tort system is needed and obviously does good, but is simultaneously “broken,” observes an economist who served in the first Bush administration. Bruce Bartlett, senior fellow with the National Center for Policy Analysis and a nationally syndicated columnist, wrote earlier this year for National Review Online about a study putting the system’s cost at more than $205 billion in 2001. That, he said, “is like a tax of 2 percent on everything in the American economy.”

While Congress needs to get into the act with a series of reforms, we can at least be grateful the Supreme Court is bringing the tort system nearer to sanity.

Jay Ambrose is chief editorial writer for Scripps Howard News Service.

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