L.A. Ranked High on Punitive Damages

Los Angeles County juries awarded punitive damages averaging nearly twice as much as those in Chicago courts and 3 1/2 times the average amount in San Francisco over a five-year period, according to a study by the Rand Corporation’s Institute for Civil Justice.

Researchers said a major reason for the higher frequency and amount of punitive damages in Los Angeles appeared to be the local court’s large number of high-stakes business cases and “bad faith” insurance cases in which insurers are sued for emotional damages caused when claims are not paid promptly and fully.

The new study, released Monday by the Santa Monica-based think tank, compared the three jurisdictions and some other California counties from 1980 to 1984. It updated and expanded a continuing study of Cook County and San Francisco County courts begun in 1960. The counties were selected for availability of jury reports and importance as urban areas. The statistics developed by Rand are used by court administrators and legal reformers across the country.

Added to Damages

Punitive damages, which are added to the compensatory damages that reimburse a victim’s losses, are assessed by juries in certain civil cases as a punishment to the defendant and--some believe--a deterrent against similar wrongs.

In 1980-84, Los Angeles County had 149 punitive damage awards averaging $1.3 million each. Cook County tallied 75 awards, averaging $729,000, and San Francisco listed 51 punitive awards, averaging $381,000.

In Los Angeles, punitive damages were awarded in one of every 10 trials in which plaintiffs won compensatory damages, and one of 25 trials in Chicago.

California, the study noted, pioneered legal doctrine which permitted recovery of punitive damages in cases involving bad faith. Those types of cases accounted for about one-quarter of all punitive damage verdicts and half the $194 million awarded in California during the five years, but only 10% of the punitive verdicts and 7% of the $55 million total awarded in Cook County.

Surprise to Many

To the surprise of many advocates of limiting damages in personal injury and product liability cases, researchers said punitive damages in those types of cases have remained relatively small since the study began in 1960.

“Punitive damages continued to be rarely assessed in personal injury cases, and most frequently assessed against defendants who were found to have intentionally harmed plaintiffs,” wrote researchers Mark Peterson, Syam Sarma and Michael Shanley. “In most of these cases the damages were modest.”

The average punitive award was $140,000 in Los Angeles; $372,000 in San Francisco, and $1.9 million (because of a few unusually large awards) in Chicago.

Researchers also noted that a post-verdict follow-up study showed that defendants pay the actual jury punitive damage award in about half of all types of cases. Others are reduced, usually by settlement between the parties during appeals.

Last year, the report showed, New Hampshire abolished punitive damages altogether, and eight other states restricted them.