Even more on punitive damages

The Internet has so substantially increased the amount of information that is available at the press of a button that I often feel overwhelmed.  I know I should be reading legal blogs and commenting on them more than I do, but life is short and I have a day job that requires my attention.  One blog that I enjoy is California Punitive Damages by Horvitz & Levy.  Even though the blog is written by an appellate firm that mostly handles defense appeals, it is always informative.  Recently the authors reported on a paper entitled "The Changing Landscape of Blockbuster Punitive Damage Awards."  You can check out the blog at http://calpunitives.blogspot.com/ or you can download the paper from http://ssrn.com/abstract_id=1516007.

When Exxon Shipping Co. v. Baker (2008) 128 S.Ct. 2605 was decided in 2008, the U.S. Supreme Court approved a 1:1 ratio between punitive and compensatory damages.  While some legal scholars maintained that this holding was limited to federal maritime cases, others took a more concerned approach that 1:1 would become the norm in all civil cases, especially where punitive damages were accompanied by substantial compensatory damage awards, which is often the case.

In Roby v. McKesson (2009) 2009 WL 4132480, which was recently decided, the California Supreme Court put its stamp of approval on a 1:1 ratio as the constitutional limit in an employment case.

Not surprisingly, California leads the states in terms of number of blockbuster cases and the highest total value of awards, i.e., $49.7 billion.  The authors describe blockbuster punitive damages as a "comparatively new phenomenon," noting the first award breaking the $100 million barrier was in 1985.  They note a "consistent downward trend in the total sale of blockbuster damages in recent years."  The authors also note that State Farm v. Campbell (2003) 538 U.S. 408, 123 S.Ct. 1513, 155 LEd.2d 585 has "dampened the total value of blockbuster punitive damages as well as reducing the number of blockbuster punitive damages in any year."

The authors identified the industries hardest hit by large punitive damages, starting with the cigarette industry, followed by energy and chemical, finance, investment, insurance, pharmaceutical, health care, and violent crime cases. Oddly enough, the automobile industry did not have a statistically significant premium.

In their conclusion, the authors opine that State Farm has indeed had a dampening effect on blockbuster punitive damage awards.  That dampening effect appears to continue with the publication of Exxon Shipping.  The authors also conclude that the levels of punitive damage awards are not driven by the level of compensatory damages, which one might expect to be high if behavior justifying punitive damages is present, but the type of industry involved.