Risk in Big Jury Awards
A California jury this week handed down a $4.8-billion punitive damage award against General Motors in an auto accident in which passengers were horribly burned. Obviously, and understandably, the jury acted both out of sympathy with the victims and outrage against the auto maker. But it is virtually certain that any award of this size will be drastically reduced by either the trial judge or on appeal.
In fact, public trust in product liability cases tried by juries might well be going down the drain with these excessive awards. Many legal experts believe that astronomical punitive damages ultimately will invite strict federal limits on awards.
Punitive damages exceeding $100 million are becoming more frequent. This week’s judgment, in Los Angeles Superior Court, went to survivors of a fiery crash that occurred when a 1979 Chevrolet Malibu was rear-ended by a drunk driver. The award tops all previous records for product liability cases by a wide margin.
What damned GM before this jury was an internal document showing that the company calculated it would come out better financially by paying for accident injuries than making the Malibu’s fuel system safer at a cost of $8.59 per car. The jury was outraged, and the punitive damages, more than 4,000% higher than the $100-million compensatory judgment, reflected the level of that anger.
Legal studies show that the level of jurors’ furor is the key factor in how they mete out punishment. And it is punitive damages like those in this tragic accident that make legal judgments look more like winning the lottery than a legal case. The untenable size of the award is further underscored by the virtual certainty that the judgment will be reduced, probably substantially. In a 1978 case eerily similar to this one, $125 million in punitive damages involving Ford’s Pinto was reduced to $3.5 million.
More than half the states are trying to grapple with the unpredictability of punitive damages in liability cases, either imposing limits on the size of the awards or restricting conditions under which they can be imposed. Defense lawyers have been pushing Congress for federal legislation restricting punitive damages and are nearer success with every effort. The latest case is certain to provide them with new ammunition.
The United States is unique in having a civil jury system and in allowing juries to impose punitive damages. But unpredictable decisions might prove to be the weakest point in the American system.
