Punitive damages and the media
The idea is wrong. It is a monstrous heresy. It is an unsightly and unhealthy excrescence, deforming the symmetry of the body of the law . . . . [Nevertheless] this pernicious doctrine has become so fixed in the law . . . that it may be difficult to get rid of it.
Punitive damages constitute the "monstrous heresy" denounced by a New Hampshire court in 1879. Many Supreme Court observers thought that the heresy might be stamped out this year, but the Supreme Court's decision in Pacific Mutual Life Insurance Co. v. Haslip again demonstrated the truth of the New Hampshire court's 19th-century prediction.
Despite high expectations to the contrary, the Supreme Court shocked many by strongly endorsing the concept. Punitive damages are proving powerfully difficult to get rid of, and the media, which are a special target of high punitive damages awards, need to rethink their strategy in light of the Supreme Court's disappointing decision.
Punitive damages, as the name suggests, are intended to punish the civil defendant for what it has done. Awards are generally pegged to a defendant's wealth on the theory that the punishment should be large enough to deter future wrongful conduct.
Those on the wrong side of punitive awards have long decried the concept, arguing that punitive damages are nothing more than an unfair wind-fall to plaintiffs. This has especially been the case in the past decade, as juries increasingly tended to award huge multimillion-dollar punitive damage verdicts against deep-pocket corporate defendants.
Those defendants were joined by the media, which have also been tagged by high-dollar punitive damages awards in cases where there was little or no evidence of actual loss.
As the trend worsened, losing defendants stepped up their campaign, mounting federal constitutional attacks on the validity of punitive awards.
The Supreme Court turned back the first attacks. In a 1989 decision, it held that punitive damages did not violate the Excessive Fines Clause of the Eighth Amendment. The decision gave a glimmer of hope, however, because several justices dropped a broad hint (some thought it an invitation) that on "another day" they might strike down punitive damages under a different constitutional theory: the Fourteenth Amendment's Due Process Clause.
Taking up the invitation, defendants renewed their challenge, arguing that standardless punitive damages awards leave juries too much discretion to punish in amounts disproportionate to any actual injury suffered.
Hopes were dashed when the Supreme Court announced the Pacific Mutual decision, the first to address directly whether punitive damages violate the Due Process Clause.
Despite the broad hints of previous decisions, all the justices, save Justice Sandra Day O'Connor, ringingly endorsed the concept of punitive damages, essentially agreeing that they were too integral a part of American law to be discarded. The justices left only a glimmer of hope that punitive damages, in some future egregious case, would violate due process.
Cleopatra Haslip rings the bell
Few cases, however, could provide a more egregious example of disproportionate damages than the Pacific Mutual case.
Cleopatra Haslip's predicament may invoke our sympathy, but few would agree that she suffered the kind of injury which could justify a million-dollar award.
An Alabama mother of five children and a librarian earning about $8,800 a year, Haslip bought a life-and-health insurance package sold by a single agent who represented two separate insurers.
Unbeknownst to Haslip, the agent pocketed her premiums, and her health insurance was canceled for non-payment. She did not learn this until she had been hospitalized.
Without coverage, she was unable to pay her $3,500 medical bill; her doctor reported her to a collection agency; the collection agency sued her; and her credit rating deteriorated. …