U.S. Supreme Court Limits Punitive-Damage Awards

Bloomberg ^ | 4/7/3 | Greg Stohr and Laurie Asseo

[WaveThatFlag]

The U.S. Supreme Court put new limits on punitive damages, striking down a $145 million award State Farm Mutual Automobile Insurance Co. was told to pay a Utah couple in a dispute over an accident claim.

The 6-3 ruling said the U.S. Constitution in most cases limits punitive damages to 10 times the harm suffered by the plaintiff. The punitive award against State Farm was 145 times the $1 million the couple had won for mental anguish they suffered when the insurer wouldn't settle a claim against them.

[WaveThatFlag]

Yes, but is there now a cap on how much they can sue for. In the case of Ron Brown, if he was a waiter making $40m/year, is there now a maximum of, I don't know, $2mm?

[Kevin Curry]

Wonder what Scalia and Thomas were thinking when they dissented, though.

Simple. States' rights to regulate jury awards under the Tenth Amendment. This doesn't mean Scalia and Thomas favor the blood-drunk plaintiff's bar, only that they believe the Constitution leaves such matters to the states to decide.

[ContemptofCourt]

You people are ridiculous...trial lawyers have suffered a huge blow? Do you guys really believe this?

First, this case only reaffirms the law since 1996. It does not add anything.

Second, it only concerns punitive damages. Punitive damages are rarely awarded, and it is the even rarer case where they are awarded in an amount like 145 times compensatory damages. No plaintiff attorney goes into a case expecting to get rich on punitives. If anything, punitives are sought to use as a bargaining chip when the defendant appeals the verdict, or to effect a settlement prior to trial.

Third, ten times compensatory damages is still a good deal of money.

Trust me, to a great majority of lawyers and businesses, this case means little. Of course, I'm sure that State Farm is happy, as well as their lawyers that obviously screwed up the trial....

[ContemptofCourt]

Ahh, this case is even more benign than I thought.

There is no "limit" on punitive damages. This opinion basically tells the Utah Supreme Court that they are idiots and failed to follow the USSCt's Gore decision.

This case merely reaffirms Gore, and corrects the Utah Supreme Court's mishandling of the matter.

[GnL]

Interestingly, it was Ginsburg's dissent that really talked about states' rights: "In Gore, I stated why I resisted the Court's foray into punitive damages 'territory traditionally within the States' domain.' I adhere to those views, and note again that, unlike federal habeas corpus review of state court convictions...the Court 'work[s] at this business [of checking state courts] alone,' unaided by the participation of federal district courts and courts of appeals....I remain of the view that this Court has no warrant to reform state law governing awards of punitive damages."

[APBaer]

"It's the sound of Doctors being sucked back into black holes that had forced them out due to unmanageable malpractice insurance rates."

Punitive damages are so rarely awarded in malpractice cases that the rate is zero, or as close to 0% as you can get.

Medical malpractice rates are high because medicine has improved to the point that it is now possible for injured patients to survive for decades in situations of extreme expense, e.g., around the clock nursing care.

[Mamzelle]

re: Although State Farm eventually paid the entire amount, Campbell and his wife, Inez, sued, saying the insurer unnecessarily forced them to face the possible loss of their property. )))

You mean Campbell disables someone, has to endure a trial for his tort, then decides to take his anguish out of the insurers' hide? This is what was in dispute, that Campbell had to ***worry***?

[Chancellor Palpatine]

I thought that was a little odd. I assume that it had to do with some ridiculous coverage defense that will arise from time to time (that came up just because of the quota and not on a factual basis).

[Mamzelle]

So Campbell does the disabling to some third party, but Campbell and his lawyer get to walk away with millions because he WORRIED...poor worried Campbell...but the disabled person only gets the original $136K.

Now, there's the miscarriage. But the lawyers here only want to natter about procedures...

[Chancellor Palpatine]

Fraud is fraud, and you take your chances of losing a great deal when you engage in it, even when you are a white collar insurance exec. My guess is that the jury got really sick of listening to stories about the lies and the document shredding, and dropped the hammer.

[Mamzelle]

Gee, they paid the full amount ($136K) after the trial, though they were not obligated to do so that I can see from the facts presented here. And I don't understand the nature of the "fraud"--what I see is an outraged "disabler's" lawyer who managed to generate some anti-corporate sentiment.

Just how much is "worry" worth? Clearly, a lot more than a disabling injury. This is another caprice of the tort bar.

And everyone who pays State Farm premiums, along with every other insurance company, will be paying *more* for this nonsense. Is it State Farm that's abandoning a huge homeowner's market in Texas? Perhaps that's Allstate...1.2 million without home insurance. That's a lot fewer deep pockets.

In the long term, this is a hurt to the injured...

[Chancellor Palpatine]

Lets see - your insurer receives an offer to settle within policy limits, but decides to roll the dice with yourassets, since it won't cost them any more. Yep, sounds like fraudulent conduct to me, since they didn't protect you, and since there were major gyrations which had to be endured to salvage the situation.

[Mamzelle]

They did protect...they forked over the $136K after making a snotty remark. Snotty remarks aren't tortious, at last review.

And how is going for a trial *fraud*? As it worked out, they hurt for doing so, but fraud has a criminal intent. Or so I seem to recall in my reading...and if it was fraud, what's it doing in a civil court? Oh, yeah...lower standard of evidence. Lower standard of everything.

By that reasoning, I know of a plaintiff who was offered a handsome settlement ($150K) for an injury. He got greedy, got millions on the brain, and a tort lawyer encouraged his fantasy. He rec'd $70K for his pains, and the lawyer took half, leaving him with 35K instead of 150. Now, did that plaintiff's lawyer commit *fraud*--he should have left well enough alone. He certainly intended to take a piece of the action, and letting the plaintiff accept the original offer would have left the lawyer out of the equation...more intent to defraud in my case than with State Farm. Barring the snotty remark, of course.

[Chancellor Palpatine]

You say it was a snotty remark - but the question is how many months did it take them to cover that which they recklessly exposed him to? I'm assuming he had to hire separate counsel as well - all so they could roll the dice with his money, then denied they had any kind of a quota policy, and then tried to destroy the documents.

It wasn't a case where the demand was greater than the policy - it was in policy bounds.

If you go into business claiming that you'll protect the assets and property of your customers, then subject them to losses due to a bonus program and try to destroy the records of it later, then yes, you have acted fraudulently.

As to your hypothetical, given the fact that your hyperbole is always over the top and is unreliable, I'd say theree is the high likelihood of malpractice, maybe even fraud.

[Mamzelle]

Actually, I was about to sell some pty to this fellow who expected the windfall, but watching the lesson in greed was entertaining enough to make up for losing a sale. The facts are as I stated, but I'd like to add that the offer of $150K was made before he engaged a lawyer. But, you know those ads on TV--"Don't accept any settlement without seeing a lawyer!! We at Jarndice and Jarndice are the Little Guy's Lawyer. " You see, he wouldn't have had to come across with a fee with that settlement. As soon as the lawyer had him, the lawyer knew that he'd get *something* and the lawyer would get a share of that something. It also became more worthwhile for the insurance company to put up a fight, because they had to deal with the plaintiff's lawyer. That's another little thing the--Don't just sit there, sue somebody!-- ads don't mention. Works both ways.

At least he had his day in court, as did State Farm. I believe a defendant is entitled to the same day in court as a plaintiff would be. And just because a settlement is within policy limits does not mean that it automatically is issued.

Just exactly how much increase in premiums is justified because someone **worried**? Every defendant has the same worries--every defendant knows that the plaintiffs have the advantage, and a defendant always loses. I need to sue somebody because I'm **worried** about my insurance premiums.

And why the heck did Campbell have such a low coverage?

[nomorecameljocks]

You would need to be a State Farm claimant to understand. State Farm adjusters invariably lie, low ball, delay, get the claimant between a rock and hard place and generally use every trick in the book to swindle unsophisticated claimants on the theory that while an occasional one will sue and collect big that most will just say "well I got screwed again by an insurance company" and go on down the road. This is thier corporate philosophy and their claim adjusters brag over coffee over how badly they screwed people. Read State Farms defenses again closely.

I have 20+ years insurance industry experience and am ashamed that such a company has been allowed to exist and prosper under the usual system of state regulation(State Farm is normally a big contributor to the state Commissioner). Don't read this as advocacy for Federal supervision, just more effective state regulation. I suppose I am naive to think that when a company's claim practices are grossly deceitful that the commissioner should step in to clean them up or issue a cease and desist regardless of how much they contributed to his campaign.

I am happy with the verdict but I wish there had been a different defendant. Fortunately, the State Farm claim people will one day all be burning in the hottest part of hell for the anquish they have caused.

[Chancellor Palpatine]

I am happy with the verdict but I wish there had been a different defendant.

Allstate - no question about it. The "Good Hands" people generally have their customers by the balls.

[lawgirl]

YYEEEEEEEEEEEHHHHHHHHHHHHAAAAAAAAAAWWWWWWWWWWWWW!!!!!!!!!!!!!!!!!!!!!!!