National Chamber Litigation Center Urges Review in Texas Punitive Damages Case

WASHINGTON, D.C. - The National Chamber Litigation Center (NCLC) filed an amicus brief urging the Fourteenth Court of Appeals for the State of Texas to overturn a lower court's ruling which upheld an $86 million punitive damages award.

"This is a classic business dispute where no reprehensible conduct has been proven," said NCLC Senior Vice President Robin Conrad. "Allowing punitive damages in this case opens the floodgates for such awards in garden-variety business litigation."

In Avco Corp., et al. v. Interstate Southwest, Ltd., the lower court upheld the jury's verdict that there was clear and convincing evidence of fraud or malice on the part of the defendant, over the cause of the failure of a mechanical component designed by the defendant but produced by the plaintiff. In its brief, NCLC argues that Texas law does not permit punitive damages awards in basic business litigation, unless truly reprehensible conduct is proven.

"Watering down the standard for punitive liability increases the risk defendants will be arbitrarily deprived of property," Conrad stated. "It also unfairly stigmatizes defendants who do not deserve it, reduces the efficacy of punitive damages as a deterrent, and discourages a significant amount of legitimate business behavior.

"Courts around the country have cautioned strongly against the overuse of punitive damages," according to Conrad.

NCLC, the public policy law firm of the U.S. Chamber of Commerce, is a membership organization that advocates fair treatment of business in the courts and before regulatory agencies. The U.S. Chamber of Commerce is the world's largest business federation representing more than 3 million businesses and organizations of every size, sector, and region.

www.uschamber.com

# # #

06-167