Question

With a national debt in the trillions, people are desensitized to "mere" billions.  Stop for a moment and consider a billion dollars. If you had that sum, invested it conservatively, and got a 5% return, you could spend roughly a million dollars a week for the rest of your life without reducing your principal. 

This chapter described three lawsuits with jackpot punitive damages awards. The jury award was  $10 billion in Texaco v. Pennzoil, $5 billion in the Exxon Valdez case and $3 billion in Boeken v. Philip Morris. Is there any point at which the raw number of dollars awarded is just too large? Was the original jury award excessive in any of these cases? If so, which one(s)?

Answer 1

Punitive damages are awarded generally in a case of intended tort. The reasoning behind punitive damage is that sometime some behavior is so intolerable that humanity essentially create an example of it. Usually the punitive award should not be more than nine times the compensatory award.

 

The compensatory damages are decided by the courts in order to compensate the aggrieved party for the wrong done to them. The punitive damages on the other hand are awarded to the aggrieved party in order to set an example before the public in order to deter them in indulging in such activities in future.

 

In all the three cases the party that was fined for the damages have committed intentional torts. The torts by these parties have caused grave damages to other parties. In one of the cases a cigarette manufacturing company had intentionally targeted young boys in the age group of 10 to 18 years for the product.

 

The company also denied the various scientific findings that smoking cigarettes caused cancer and on other hand started campaigns that aimed at delinking the causes of lung cancer with smoking.

 

This showed capricious intention of the company and the court was right in awarding huge amount of compensatory as well as punitive damages so that the companies could mend their ways and there is an example laid that could deter such actions from companies in the future.

 

It could not be said that awards in the form of compensation and punitive damages were large as such companies have weekly or monthly profits in such ranges. Therefore, the companies are not that much affected by awarding of such damages.

 

Only, in one of the given cases where the damage award was $10 billion, it could be said that the awards given were unreasonable as the company was valued at less than $10 billion and in order to fight the case further, the company had to file bankruptcy.

 

Thus, it could be said that such awards are not unreasonable as they are given in rare cases and in order to deter people from indulging in such activities.

 

The economy of countries is not affected by such decisions as it is necessary for the courts to arrive at such decisions and uphold the principle of equity and justice, though court could take into account the economic impact of a decision which varies from case to case.

Thus, it could be said that such awards are not unreasonable as they are given in rare cases and in order to deter people from indulging in such activities.