Tort Reform I Could Live With – Cap Punitive Damages at CEO Compensation

Simply stated, I propose that if punitive damages must be capped, no punitive damage award should be reduced unless the amount exceeds a corporate defendant’s CEO salary..

A bit of background: Tort reform is almost always a bad idea – a review of tort reform proposals inevitably shows that “tort reform” is a well-organized, multi-faceted marketing effort by insurance companies to fatten their coffers at the expense of the victims of corporate malfeasance. Stupid people believe that some woman somewhere received too much money for a coffee burn, so juries of American citizens can no longer be trusted to administer justice except when they decide that darker-skinned people should be put to death.

But let’s give the devil his due – the insurance companies, their advertisers, and the idiot dupes who forward emails about fake “outrageous” lawsuits have made tort reform a fact of life. And one of the favorite forms of tort reform is caps on punitive damages – money awarded by juries in cases where corporate behavior shocks the conscience, and the jury believes that additional punishment should be imposed on a corporation beyond whatever damages make the plaintiff whole again. Corporations hate accountability, especially when it is administered by people they cannot lobby, so they have bribed legislators to impose limitations on the amount of punitive damages that citizen jurors can impose on them.

An article in the Star the other day shamefully trumpeted a $5 million punitive damage award in its headline, but buried the fact that tort reform reduced the award to $600,000. (Insurers advertise in the Star – victims of corporate terrorism do not – so the Star licks the hand that feeds it.)

The same page described Sprint’s failing CEO choosing not to accept $3.25 million of his compensation (~$12 million in 2011), for which the mistake-prone CEO was “applauded” as a “leader” making a “sacrifice”.

I’m calling bullshit on corporate America, and I hope that MATA is listening. No punitive damage award should be reduced unless the amount exceeds a corporate defendant’s CEO salary. Obviously, a corporation paying a CEO $12 million doesn’t think $12 million is an unreasonable amount of money for someone to receive, so let the corporations live with their decision. In AT&T’s case, their poorly-performing CEO was paid $22 million in 2011, more than four times than the Muslim woman that company harassed was awarded by a jury of her peers.

3 Responses to “Tort Reform I Could Live With – Cap Punitive Damages at CEO Compensation”

  1. les says:

    You’re right, the goal of tort reform is to prevent corporate persons from being discomfited. There is one change I’d like to see–punitive awards, intended to deter outrageous behavior, ought to go to all of us instead of being a lottery win for individual plaintiffs. Pay plaintiff’s costs, but use most of punitive awards to protect other potential victims–apply the money to oversight, regulation, improved delivery, whatever.

  2. craig says:

    Careful Dan, if you are even halfway serious about this you may have to consider yourself a moderate.

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