Business Hails Supreme Court Punitive Damages Ruling

ByJohn S. McClenahen Not surprisingly, the Washington, D.C.-based National Association of Manufacturers (NAM) and U.S. Chamber of Commerce are pleased with this week's pro-business ruling in a closely watched punitive damages case. By a 6-to-3 margin, the court ruled that "few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process." In a case against State Farm Mutual Life Insurance Co., a Utah jury had awarded Curtis and Inez Campbell $145 million in punitive damages, 145 times the $1 million in compensatory damages assessed by a lower court judge. "The punitive award of $145 million . . . was neither reasonable nor proportionate to the wrong committed, and it was an irrational and arbitrary deprivation of the property of the defendant," wrote Justice Anthony Kennedy. "This decision shows the court has come down squarely behind reason and fairness -- punitive damages must be in line with actual damages," says Thomas J. Donohue, the U.S. Chamber's president and CEO. However, the court's decision is only one favorable step, contends Jan Amundson, the NAM's general counsel. "Of course, one favorable decision in the area of punitive damages does not solve all the problems facing manufacturers in the courts," she says "Class actions, expansive theories of liability, suits by foreign nationals in our courts and a variety of other tactics by trial lawyers that all work to undermine our competitiveness and destroy jobs still demand intervention by federal and state lawmakers." The NAM is leading a coalition for comprehensive legal reform.