News

Supreme Court to Review Punitive Damages

CORPORATE NEWS: Supreme Court to Review Punitive Damages

"Lawyers for Philip Morris are asking the [Supreme Court] to strike down the punitive damage award as constitutionally excessive and fundamentally unfair," the Christian Science Monitor reports. "The case, Philip Morris v. Mayola Williams, is being closely watched to see whether a majority of justices are willing to issue strict guidelines to identify when a punitive damage award is unconstitutionally excessive."

The Cato Institute has filed an amicus brief in the Philip Morris case, which applies economic analysis to the punitive damages judgment. It is joined by noted economists A. Mitchell Polinsky of Stanford and Steven Shavell of Harvard, who have authored a number of influential academic studies of punitive damages.

"Trial lawyers often argue that the logic of deterrence requires large companies to pay more punitive damages than smaller companies," Cato legal scholar Mark Moller, a co-counsel for Cato in the case, explains. "Cato's brief demonstrates that punitive damages can't be justified based on a corporate defendant's wealth. Because companies make judgments based on profits, large companies and small companies generally have every incentive to take precautions necessary to avoid harm to others when damages are equal to the harm they cause. Adjusting the damages upward because a company is large or wealthy does little to deter, spawning excessive litigation and creating a tax on corporate success."
http://www.cato.org/view_ddispatch.php?viewdate=20061031