Punitive Damages and the Like

Punitive damages are damages that exceed compensatory damages and are awarded in civil law cases in certain countries. The purpose is to punish the defendant and to prevent him from engaging in the same wrongful behavior in the future. They do have similarities with non-economic damages that are paid for pain and suffering in the sense that for these damages an exact award can’t be determined through the circumstances of a case alone as it could be when damages are paid for medical bills, unearned income, etc. They are both not meant to indemnify for losses. The awards in punitive damages and for pain and suffering are determined by the jury with no given method. Outrageously high awards in punitive damages or for pain and suffering have been ruled out quite often by a jury that only does what they think is best. Therefore, these kind of awards are considered controversial in law circles, and many suggestions of how to limit them have been made. I don’t want to look here at this topic so much from a legal point of view with yet another suggestion of how to deal with them in court. I’m more interested in what kind of thinking, what worldview, stands behind issuing these outrageously high awards.

High awards in punitive damages and for pain and suffering are usually issued against corporations or insurance companies because the jury thinks they are able to pay this. It is already questionable that the amount of an award is determined by the wealth of the defendant and not solely by what has happened to the plaintiff. More importantly this attitude reveals a view of a company that comes from the age of early industrialization where employees had little or no rights at all and child labor and exploitation of workers were quite common. Many people have the same view of corporations today, as being evil, even though labor laws and the status of workers in the industrialized countries have developed a great deal since then. They seem to think that companies are hiding their profit in gold bars somewhere and that the individual in the society has to take every chance to grasp a part of this profit like a modern Robin Hood. How could it have happened otherwise that punitive damages of $ 2.7 million were awarded by a jury in the USA to a woman who sued McDonald’s after spilling hot coffee over her lap? Or $ 4 million in punitive damages to a man who bought a new BMW and discovered later that the car has been repainted before he bought it? In different cases amounts of multiple billion dollars have been awarded both in punitive damages and damages for pain and suffering to individuals in recent years. Who is paying for these awards that are far out of relation to the actual loss that was caused? Do people really believe that corporations pay such high awards out of their petty cash? There is tough competition in many industries; if we look at one example – the aviation industry – we see that many private airlines, those not governmental subsidized, are struggling and regularly a big airline has to file for bankruptcy. Therefore, when companies are regularly forced to pay outrageously high awards of damages, it is most likely that they have to raise the price of their product. So a verdict that looks pro-customer turns out to be anti-customer, considering that only a single one (the plaintiff) is really benefiting from the high award while many others have to pay for it. What is meant to punish a company for a certain behavior is ultimately punishing the people in the society. It all comes down to how you view a company. Is it an entity that provides services or products for a need in the society and therefore contributes something positive to the society? Or is it an entity that exploits employees and customers and therefore needs to be hindered from doing so?

Another view that stands behind outrageously high awards for non-pecuniary losses is a humanistic worldview that is held by many people nowadays: They think that mankind can create an almost perfect world just by the power of will. The conclusion is that if everyone would try hard enough to make this world a paradise it can be achieved. So if an accident happens or a product is not the way it should be, the one who suffers from it has not only to be compensated for his economic losses but also for the time he spent “out of paradise.” The problem is that we are not living in a perfect world. And we never will no matter how hard we try. This world is a fallen world where every human being has to deal daily with imperfection, inadequacies, mistakes or sin. The standard is an imperfect world, not paradise. A worldview that thinks a perfect world can be achieved is overcritical towards others regarding imperfection. Whereas seeing this world and oneself as permanently imperfect gives a better balance how to deal with imperfection: There is a need in the society that certain wrongful, imperfect behavior is punished by the state as a crime or offense and that economic losses are compensated by the offender. But by having the imperfection of every individual in mind the society could avoid penalizing every imperfection. In the end the society as a whole is punishing itself through outrageously high awards in punitive damages and for pain and suffering because production costs and thus living costs overall are increasing and therefore making a living will become more difficult for many people.