Jeff Rosen's New York Times Magazine article on the Supreme Court and business reports, among other things, on Ted Olson's work with getting the Court to review punitive damages awards. ("According to his peers in the elite Supreme Court bar, he more than anyone else is responsible for transforming the approach to one of the most important legal concerns of the American business community: punitive damages awarded to the victims of corporate negligence.") I'm a great admirer of Olson's generally. Olson did argue the first such recent case, Bankers Life & Cas. Co. v. Crenshaw (1988), though the Court there held that all the constitutional claims other than the equal protection had been waived below. And Olson has worked a great deal to promote the anti-punitive-damages claim in public debate.
Nonetheless, at the Supreme Court most of the punitive damages work has come from other lawyers — and, more than any other lawyer, from my Mayer Brown colleague Andrew Frey (I consult for Mayer on a part-part-part-time basis). Andrew argued four such cases: Browning-Ferris Industries v. Kelco Disposal (1989), Honda Motor Co., Ltd. v. Oberg (1994), BMW v. Gore (1996), and Philip Morris USA v. Williams (2007). The last three of these he won.
There were, of course, other cases argued by other lawyers -- besides Olson in Bankers Life, Bruce Beckman argued to limit punitive damages in Pacific Mutual Life Ins. v. Haslip (1991), Sidley's Carter Phillips argued TXO Production v. Alliance Resources (1993), Howrey Simon's William Bradford Reynolds argued Cooper Industries v. Leatherman Tool Group (2001), and Skadden's Sheila Birnbaum argued State Farm v. Campbell (2003). But Frey, I think, is the one who stands out in the sheer number of cases he has argued -- nearly half of all the Court's recent constitutional punitive damages cases -- as well as is the number of his victories. I've got to say that it's pretty cool to work with people like that (though it would surely be cool to work with Ted Olson, too!).
I also thought I'd note that, excellent as Solicitor General Rex Lee was, my colleague Stephen Shapiro -- in league with Paul Bator, one of Mayer's earliest academic affiliates -- was doing business law Supreme Court cases from 1983, the year he left his Deputy Solicitor General.
Disclosure (beyond the above): I worked a very little bit on the briefing in the Philip Morris case.
I'm not sure even a 100% rate would necessarily get rid of frivolous lawsuits claiming punitive damages though. The threat of such an award is an equally strong tool for extracting a settlement regardless of who might end up getting the award.
What a great idea! We should expand that principle to the criminal law, too, which, after all, is the primary tool society has for deterring harmful conduct. How about the death penalty for price fixing? Or forfeiture of all assets for each count of selling adulterated food products? Why not tarring and feathering for flogging penny stocks? If that's not enough of a deterrent, why not cut off their hands? Any surely spelling out the penalty in advance would be a mistake - that just lets the miscreatns calculate whether the gain is worth the pain. Keep them guessing, that's the ticket, "Gee, I could go to jail for three years or maybe they'll put my eyes out - who knows, it just depends on how mad the jury is?" I think you're on to something!
I'll heed the advice of xckd and avoid spending my evening arguing on the internet.
Punitive damage caps are generally a windfall to insurance companies. They have charged premiums to insure against jury verdicts for years, and then the rules are changed to their favor by capping punitives. This would be analogous to my paying homeowners insurance and then the government capping the amount that I can claim my bathroom is worth to $5000.
Not only that, punitive caps punish the most badly injured the most, since they are the ones who would have the actual damages to establish a basis for punitives. Everyone seems to agree that these numbers are related.
I have also read that punitive caps do not lower the average (or perhaps it was median) jury award because the jury is more likely to just award the cap. The cap become a de facto judicial suggestions of punitives.
And all this because trial lawyers give so much money to democrats.
Except for plaintiff being able to use the thresat of a jury awarding punitive damages to negotiate a higher setlement than is warranted by compensatory damages.
Were you paying enough in that case to make it worthwhile, the thing to do at that point would be to immediately call up your insurance company and renegotiate your premiums, under threat of changing companies. Presumably the sort of industries that need insurance against large punitive damage awards do just that. Hard as it is for most folk to believe, there are very few industries more ruthlessly competitive than insurance, and windfalls like you are describing swiftly get competed away.
So instead they invent a due process argument.
I have no doubt that the insurance premiums would go down in the future, if punitives really make up a significant portion of the insurance risk (I am not sure that this is true).
But do you think the insurance company is going to refund you the premiums you have already paid? I don't think so.
I agree that insurance in generally a competitive industry, but that makes such profits increases by legislation even more attractive. When you cannot compete your way to profits, why not just politic for some?
You are presuming that the FDA process ensures safety. It does not. It only requires a limited showing of safety and effectiveness. And there have been many instances where drugs and devices have been shown to be harmful after FDA approval.
If FDA approval carried with it a guarantee against liability, the drug companies could be even more reckless in marketing drugs than they are now.
I don't know why people continue to believe such nonsense. Insurance rates (except for payouts caused by large natural disasters) are most affected by the investment portfolios of the Insurance companies, not by their claims. Look at the stock and bond markets if you want to track insurance rates, not how much a company had to pay out in claims any one year.
There are many people out there who are injured by causes not of their own doing. We may not know what the causes are, but they glom on to companies with the money.
Perhaps we should just pay their medical bills (and everyone else's) and have the government (the ones paying the bills) go after those who caused the damage.