Monday, September 22, 2008

The Perfect Solution To Corporate Corruption--And "Punitive Damages" Claims

For those unfamiliar, punitive damages are money damages a jury can return to punish a defendant for reckless, intentional, or fraudulent bahavior. Simple example: a drunk driver hits you head on, injuring you. A jury tallies your "compensatory damages" (medical bills, lost wages, physical pain and suffering) at $20,000, and levies an equal amount of punitive damages against the driver for driving drunk. The result? His insurance company pays $20,000, and the drunk driver must pay the $20,000 punitive damages out of his own pocket, since almost all insurance policies exclude coverage for punitive damages.

I've been practicing personal injury litigation for twenty years. I have handled hundreds of lawsuits, and I have seen dozens of instances of egregious conduct where punitive damages were justified. Yet, I have NEVER had a jury return a verdict which included punitive damages. Almost all those cases settled shortly before trial, and the prospect of a possible punitive damages verdict was the main reason those cases settled. Punitive damages verdicts are as rare as an Anarctic coconut, and in many cases, they are awarded to one business defrauded by another business.

But big business and The Chamber Of Commerce HATES punitive damages, and both have fought for years to limit these damages or kill them outright. Here's what the StarChamber's "Institute For Legal Reform" said about them at a forum ginned up to create new strategies to curb "excessive" punitive damage awards:

"The huge amount of money pocketed by unscrupulous trial lawyers is destroying businesses, raising consumers' costs, and threatening the jobs of thousands of workers," said Lisa Rickard, president of ILR. "Last year's success calls for more work to solidify our victory, or we risk being undone by half-measures and misguided rulings."

(We got off easy with the "unscrupuolous" tag; usually the standard talking points slamming trial lawyers include "greedy" and/or "ambulance chasing" or some other perjorative term...)

Back to my point. Let's make the quantum leap with the Chamber that it's not outsourcing to China, lousy trade agreements, rising health care costs, and the 77 other valid reasons that affect job losses in this country, but rather "juries gone wild" punitive damages verdicts that are the real culprit.

I have a solution. And it can't come at a better time, when Wall Street financial conglomerates and their CEOs' greed and ineptitude have brought our economy to its knees. And, at the same time, my solution will solve the pesky "punitive damages" issue that seems to be holding our economy down, according to the StarChamber.

Let's get rid of punitive damages altogether. No more of us "pocketing huge amounts of money" with predatory lawsuits asking for punitive damages against poor, defenseless corporations.

What do we replace eliminating punitive damages with? Simple. Prison time. Hard time in the slammer for any CEO's, officers, or Boards of Directors who participate in, or ratify, any corporate behavior that recklessly injures others, or amounts to fraud.

So, if an engineer at a safety meeting warns that a product has not been properly tested or poses a safety risk to consumers, and the corporate officers ignore him or her in a rush to get a product on the market to gain market share, the corporation is free from paying punitive damages to the families maimed by the product. But whoever signed off on the safety shortcuts must go to prison if a jury finds that the corporation's conduct was reckless.

And if financial institutions knowingly push risky money making schemes on consumers in order to invest the profits in more complicated, unregulated shady deals, again, there's no punitive damages liability to the thousands of people defrauded. Just have the officers and CEO's head directly to prison if a jury finds the company committed fraud (no "Club Fed" prison either--rip off schemes that cost us billions should mean hard prison time--maybe 1 hour of exercise a day and NO TV!!!).

No money is paid to trial lawyers, no money is lost by the corporation, and no jobs are lost. I'd trade the right to being a claim for punitive damages in a heartbeat for CEO prison time.

What do you think would happen if we passed a law increasing criminal penalties for this behavior? My guess is that the last thing a CEO making $29 or $83 or $224 million a year wants to hear is the sound of a prison door slamming behind him.

The StarChamber is always moaning about a lack of personal responsibility and a "sue happy society" that we live in. Well, with my proposal, we get both personal accountability for corporate wrongdoers (prison time ), and corporations save money.

Somehow, I don't think the Chamber will run with this idea any time soon. "Personal responsibility" is only a one way street in their press releases and talking points.

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