Punitive damges: constitutional only if they don’t really punish

Talking Points Memo | Court cuts judgment in Exxon Valdez disaster

The Supreme Court on Wednesday cut the $2.5 billion punitive damages award in the 1989 Exxon Valdez disaster to $500 million.

Justice David Souter wrote for the court that punitive damages may not exceed what the company already paid to compensate victims for economic losses, about $500 million compensation.

A jury decided Exxon should pay $5 billion in punitive damages. A federal appeals court cut that verdict in half.

2007 profits for Exxon: $40 billion. So that punitive damage bill is a little more than 1 percent of profits. I’m sure it will make the company ever so much more environmentally sensitive.

(And the thing is, I don’t love punitive damages because piling more money on the plaintiff is not necessarily the best way to make them more whole, but the Supremes’ ongoing insistence that the constitution bars courts from socking egregious tortfeasors for much more than provable economic damage to one plaintiff is just pernicious. The last case that went by said that more than 9x regular damages was suspect; now it appears that even-steven could be the rule. That’s not punitive, that’s just a cost of doing business. And to put it in even clearer counterpoint, it means that a company will pay less of a punitive addition to the damage bill for injuring people than for infringing a patent, which is triple damages.)

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