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Schwarzenegger's Punitive Award Fund Part of Budget
quote.bloomberg.com ^ | july 29, 2004

Posted on 07/31/2004 11:54:16 AM PDT by MindFire

http://quote.bloomberg.com/apps/news?pid=10000103&sid=abP2bh88Jrgo&refer=us Schwarzenegger's Punitive Award Fund Part of Budget (Update1)

July 29 (Bloomberg) -- California Governor Arnold Schwarzenegger's proposal to take 75 percent of punitive damage awards made it into the state budget in a form that placated trial attorneys and disappointed supporters of tort reform.

Schwarzenegger estimates that the state may raise as much as $450 million from the punitive damages fund. That amount might be optimistic because the law applies only to suits filed after the budget is signed and judgments that are paid by June 2006. ``The courts would have to turn into a dry cleaners -- in by 10, out by 4'´ for the state to collect, said Christina Imre, a lawyer specializing in punitive damages and appeals at Sedgwick, Detert, Moran & Arnold LLP in Los Angeles.

Under the law, part of the state's $105 billion budget approved by the assembly last night, people who file lawsuits would collect 25 percent of the punitive damages -- meant to punish a defendant -- they are awarded by judges and juries. The rest of the money would go to a state fund intended for the public benefit.

Schwarzenegger's proposal was decried by plaintiffs' lawyers and supported by tort reform groups when he included it in his May budget revision. The groups flipped positions after various portions, including a provision that would have protected defendants from multiple punitive awards, were dropped. The revised plan also allows lawyers to take their fees from the state's 75 percent instead of their client's cut.

Consumer Attorneys

``Those were the kinds of provisions that we wanted to make sure that this fund wouldn´t give plaintiffs an incentive to seek higher punitive damages,´´ said John Sullivan, president of the Civil Justice Association of California, which describes itself as lobbying group opposed to lawsuit abuse.

The California Consumer Attorneys Association of California issued a statement that said the group ``is gratified that the governor and many members of the legislature have now publicly recognized and embraced the valuable function punitive damage awards play in punishing and deterring malicious or despicable corporate conduct.´´

The state's estimate of how much money the state will raise is based on a study by the University of the Pacific's McGeorge School of Law that found about $6.4 billion in punitive damages, or about $640 million a year, were awarded by California juries from 1991 to 2000.

Punitive damages are intended to punish or deter defendants who engage in wrongdoing. Compensatory damages, which remain untouched under the fund, pay plaintiffs for their loss or injuries. H.D. Palmer, a spokesman for Schwarzenegger's finance director, didn't return calls seeking comment. Jury Instructions

Eight other states, including Illinois, Iowa and Oregon, require a share of punitive damage awards go to the state.

The punitive damage proposal was part of a spending plan Schwarzenegger and legislative leaders agreed to late Monday, ending an impasse that held up passage of a budget 27 days into the fiscal year. Juries wouldn't be told that a portion of a punitive damage award would go to the state, and a verdict wouldn't be tossed if a juror independently knew of the fund. A juror's awareness of the fund creates a ``built-in psychological conflict´´ that might encourage them to give higher awards, Imre said. ``The default of a lot of jurors might be that if I just hit this particular defendant for a few million more, that money is going to go to the state,´´ Imre said. ``That´s not a consideration that should be applied´´ when determining punitive damages.

(Excerpt) Read more at quote.bloomberg.com ...


TOPICS: Business/Economy; Constitution/Conservatism; Government; News/Current Events; US: California
KEYWORDS: budget; collectivism; courtreform; forthecommongood; goodintentions; robinhood; schwarzenegger; theft
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see relatated FR posts on this issue: here

I thought this line was interesting:

"the group is gratified that the governor and many members of the legislature have now publicly recognized and embraced the valuable function punitive damage awards play in punishing and deterring malicious or despicable corporate conduct."´´

Are punitive damages only 'valuable' if papa govt gets to keep (steal) them from the plantiff?

hey, it's just a question. ;-)

1 posted on 07/31/2004 11:54:16 AM PDT by MindFire
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To: SpyGuy; LexBaird; Alberta's Child; .cnI redruM; <1/1,000,000th%; Wolfie; GaltMeister; ...

I thought you'd be interested in this


2 posted on 07/31/2004 12:18:54 PM PDT by MindFire
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To: MindFire
IF there are to be punitive damage awards (and I by no means support their widespread use), then I agree with the Governator that they should go to the benefit of all and not be a windfall to the plaintiff or the plaintiff's counsel. The point of the punitive portion is to punish the defendant after the plaintiff has been made whole by the damage award. You do need a way to deter a business that feels damage awards are simply a cost of doing business. The underlying principle is that we are all damaged in some way from the defendants egregious behavior so why shouldn't the punitive award go back to the people as a whole? The bad side of this approach is that if the government has a financial interest in these awards then the independence of the judiciary comes into question. Still, if there is to be a punishment for harm to the public, then the public should get the compensation, not the plaintiff and their counsel.
3 posted on 07/31/2004 12:35:47 PM PDT by NonValueAdded ("I actually was going to throw like a man before I threw like a girl." JFK 7/25/2004)
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To: MindFire; SierraWasp; Carry_Okie; calcowgirl; hedgetrimmer; FairOpinion; DoughtyOne; neverdem

John Edwards will be pleased. That right there should say something. So glad Arnold has that R.


4 posted on 07/31/2004 12:39:21 PM PDT by farmfriend ( In Essentials, Unity...In Non-Essentials, Liberty...In All Things, Charity.)
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To: farmfriend

LOL, so Schwarzenegger thinks the state should benefit from the tragedies that befall it's citizens? This isn't a winner Arnold.

75%? I'd love to see the thought process that reached that number.


5 posted on 07/31/2004 12:44:36 PM PDT by DoughtyOne
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To: DoughtyOne
Arnold is starting to remind me of Clinton. Masterful politician. Same style anyway.
6 posted on 07/31/2004 12:46:40 PM PDT by farmfriend ( In Essentials, Unity...In Non-Essentials, Liberty...In All Things, Charity.)
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To: NonValueAdded
if a civil case is about *harm to the public*, wouldnt it (the case) be a class action lawsuit instead of an individual one?

you said: "we are all damaged in some way from the defendants egregious behavior so why shouldn*t the punitive award go back to the people as a whole?

How are *we* all **damaged in some way**? If you were somehow damaged by a company, wouldnt you take action on it and resolve the matter? and what does rewards going *back to the people as a whole* mean exactly?

for that matter how do you know, or why do you believe that the state is going to use their new *windfall* wisely, prudently, appropriately, or in a way that *you* approve of? (since you*re claiming that you*re somehow damaged by actions which resulted in a court case that you*ve not filed and most likely never heard of) .

i*m not trying to bicker or be disrepectful. i just dont understand the attempted rationale here.

if someone purposely damages ME, with malice or for whatever reason, and they should be punished, and I file a lawsuit and win, what entitles the STATE to steal that money?

7 posted on 07/31/2004 12:52:12 PM PDT by MindFire
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To: farmfriend

You and I agree on this issue, so it saddens me to see you compare Schwarzenegger to Clinton. You've been around long enough to know what Clinton was. Plase don't imply that Clinton was less that what he was, by comparing someone who may have a few of his traits, but is in no way comparable to what Clinton really was.

Dead Bodies
Installing spies in places of access
State secrets to China
Perjury
Obstruction
Witness Tampering
Philandering
Waco

I could go on. I know you don't like Scwarzenegger, but let's not give Clinton a pass for what he actually was.


8 posted on 07/31/2004 12:58:44 PM PDT by DoughtyOne
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To: DoughtyOne

thank you for understanding the bigger principle. this is collectivism at its finest. Altough someone in another post (linked above) claimed that McClintock supported this. If that is true, I would like to hear his rationale for supporting this.


I know this only applies to the punitive damages and doesnt take any compensatory damages from the plantiff. that still doesnt make it right. Bottom line is that the rights of the individual are taken away for the *greater good* of the *whole*.


remember in grade school when one kid did something wrong and the teacher kept the whole class inside for recess, as punishment?


this mentality is so inherently screwed up and wrong that i don*t see how any conservative supports this crap.


9 posted on 07/31/2004 12:59:30 PM PDT by MindFire
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To: MindFire

Well that's unbelievably stupid. If you knew that after June 2006 there'd be no levy, would you be in any hurry to get your suit over with?


10 posted on 07/31/2004 1:07:12 PM PDT by John Jorsett
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To: farmfriend
if someone is damaged , sues the responsible party and collects a judgement, I as an uninvolved individual who just happens to live in the same state, have NO RIGHT to that judgement; nor would i want any of it. this entitlement mentality of both schwarzenegger and the state and anyone who supports this type of ideology, is just bizzare to me.

furthermore, i don*t need or want a benevolent *papa govt* bestowing their idea of *benefits* on me, much less *benefits* that they*ve gained by stealing from an individual.

***get up... come get down with the sickness***

11 posted on 07/31/2004 1:08:58 PM PDT by MindFire
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To: John Jorsett

i assume he has to include this in every budget, if he wants to keep it on the books?


the date the provision expires is basically irrelevant, since once they buy into this stuff i doubt it will ever go away.
i disagree with this and i just think this is a great illustration of his mentality.


12 posted on 07/31/2004 1:12:56 PM PDT by MindFire
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To: MindFire
This will simply quadruple the amount being saught. It's simply another tax that business will pass along to individuals via increased prices, lower wages, or lower ROI.

Bad move...but maybe it's all they had. They're in a heap-o-sheeot.

It's like selling your last property in Monopoly in order to pay rent on someone else's property... maybe your only choice... likely one of your last.

13 posted on 07/31/2004 1:18:04 PM PDT by Principled
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To: Principled
maybe it*s all they had, to what exactly?


this is being touted by its supporters as some kind of *necessary reform*. in reality it is wholly unnecessary and a bunch of nonsense.
14 posted on 07/31/2004 1:22:58 PM PDT by MindFire
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To: MindFire

Maybe it's the only choice they had... I'm not defending it at all - it's bad, really bad. That's why I'm trying to grasp at straws to figger out why they'd have done it...


15 posted on 07/31/2004 1:24:56 PM PDT by Principled
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To: MindFire

"this mentality is so inherently screwed up and wrong that i don*t see how any conservative supports this crap."

Oh, I dunno.....maybe because punitive damages are no more than a lottery where lawyers twist the law so that they get money from companies that they don't deserve?

I look at it as somewhat of a pyrrhic victory. The gov't shouldn't allow outrageous punitive damage awards.....but since the trial lawyers hold sway, especially in California, this is probably the best way, given the landscape, to reduce (maybe) the level of frivolous lawsuits.

Hey, maybe it will work, maybe not - like one poster said, it may just quadruple the damages sought, but until the wheels fall all the way off the tort machine - it won't get any better. It would be far preferable to directly address the staggering costs on business that frivolous lawsuits cause

I am sure there quite a few unintended consequenses - I suspect the lawyers will rue the day they signed up for this.....




16 posted on 07/31/2004 1:32:44 PM PDT by RFEngineer
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To: RFEngineer
I am sure there quite a few unintended consequences

Like a sudden quadrupling of punitive damages? That way the attorneys can sill get 'their' 16 oz pound of flesh...

17 posted on 07/31/2004 1:39:32 PM PDT by null and void (Freedom is written with blood on the streets, not with ink in congress.)
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To: Principled
i realize you don't support it,.. my point is, when you say it's the 'only choice they had', you seem to imply that it was required they do this.

Perhaps since it was included in the budget and was sort of a side issue, they indeed didnt have a choice in the matter. Besides, those with a liberal ideology probably loved this anyway and fully supported it. (senator Dunn praised this idea a few months ago).

my point is simply this. this awful provision empowers & encourages bigger govt, involves the state in matters it has no business in, (civil lawsuits), and takes away rights from the individual. All for the 'common good', of course.

As to the reason arnold wanted this type of thing included in his budget (snuck in on page 91 and barely known about or mentioned by anyone in any media), i think it's obvious. it illustrates his inherent liberalism.

people during the recall kept screaming "but we need arnie! we can't let cruz win! we need to win! we need to win!' my point is, what exactly have you 'won' when you vote for someone like this. personally he does not represent my ideology and beliefs, so i will not vote for him- simple as that. this applies to any election. i don't vote for candidates based on what 'the popular crowd at the moment' votes for, or because of 'hypothetical disasterous alternatives' that could possibly occur if i don't compromise and vote for the 'popular candidate'. this subject of collectivism being shoved into the court system is just one small, yet great example of why i didnt support such a candidate.

18 posted on 07/31/2004 1:47:20 PM PDT by MindFire
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To: MindFire
Let's try this example: Company "A" sells baby food. Their quality control process determines that many lots are contaminated with a bacteria that is tolerated by most people but can cause life-threatening dehydration in 1 out of every 100,000 babies. Three deaths occur and the company settles the first two with a non-disclosure clause. The third family goes to trial and discovers a series of memos noting the settlements but judging that the likelihood of future settlements vs the cost of recall made it worth the risk of leaving the product on the market.

Aside from the fact that criminal charges should be filed, the company would be liable for punitive damages meaning that the jury can arrive at a figure that will penalize the company for this bad behavior. It is the way that the law disincentivises the dollars and cents calculus that made the company take the risk of leaving the product on the market.

If you buy that premise for a punitive award serving the public purpose as a deterrent, then we're left with who should get the money. All people that bought the baby food would be a potential class but that is very hard to qualify. What if the problem affected all of the food products but only babies faced death and the rest of us get mild symptoms? We all have fractional harm but you are stuck with $1.07 checks to each of us (remember the opti-grab)? If we didn't face politicians spending every cent they get, giving that money back to "the people" via the general fund is one way to do it without incurring large administrative costs identifying and paying large classes of individuals where the harm is small.

I'd rather see the legislature get the punitive amount than the trial lawyers.

19 posted on 07/31/2004 1:51:00 PM PDT by NonValueAdded ("I actually was going to throw like a man before I threw like a girl." JFK 7/25/2004)
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To: null and void

This is revolting. So the state gets 75%, the attorney gets 25% as his fee, and plaitniff gets nothing. Bear in mind that in the compensatory damages part the attorney already got 30-40% of that award so that defendant is, if the compensatory damages part is rational, far from whole.


20 posted on 07/31/2004 1:51:50 PM PDT by AndyJackson
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