Reining in Excessive Punitive Damages: The Post-State Farm Litigation Environment" remarks by U.S. Chamber of Commerce President and CEO Thomas J. Donohue

On: Reining in Excessive Punitive Damages: The Post-State Farm Litigation Environment
To:
From: Thomas J. Donohue
Date: April 28, 2004
 

Opening Remarks by Thomas J. Donohue

Briefing Center
8:30 a.m.
April 28, 2004

Thank you, Lisa, and thanks to all of you for joining us. Today we mark the one-year anniversary of the State Farm Supreme Court decision and examine its effect on what has become an epidemic of outrageous punitive damage awards over the last few decades.

These awards are destroying U.S. businesses, hitting the pocketbooks of American consumers, and threatening the jobs of thousands of hard-working men and women.

It is clear that despite last year's State Farm decision—which the Chamber played a significant role in shaping—there is still a lot of work to be done in this area.

For example, last year we saw the most expensive punitive damages award ever affirmed on appeal in the United States. A California court upheld an award of $290 million dollars against Ford Motor Company in a product liability case.

In Oregon, a plaintiff was awarded $79.4 million in punitive damages against Philip Morris based on the "loss of enjoyment of life" of a deceased person.

And, of course, there was the award that fueled the Supreme Court decision that has brought us here today — a $145 million punitive damages award against State Farm in a case in which they were found liable for only $1 million in compensatory damages.

Fortunately, the U.S. Supreme Court found that award to be grossly excessive and in violation of due process, and sent that case back to Utah for further review.

Last Friday, the Utah Supreme Court reduced the punitive award to approximately $9 million – but many believe that ruling still doesn't comply with last year's U.S. Supreme Court decision.

Last week's ruling shows that the U.S. Supreme Court decision will mean little if not properly enforced by the lower federal and state courts.

Obviously, the Chamber strongly endorses the U.S. Supreme Court's take on the matter, and we have participated in each of the cases I mentioned to challenge their excessive awards and to encourage fairness, rationality, and predictability in our civil justice system.

Placing procedural and substantive limits on arbitrary, unpredictable and excessive punitive damages is one of the central issues of legal reform.

The plaintiffs' bar defends consistently outrageous dollar figures as necessary to punish corporate wrongdoers and to deter them from repeating such wrongful acts.

But there are more than a few holes in their argument.

First of all, a large portion of these awards are going right into the bank accounts of the trial lawyers – and that means little or no money for the people who are truly injured and deserve fair compensation.

Keep in mind that the companies that aren't driven out of business by this outrageously expensive litigation are forced to raise their prices – and that means a higher cost of living for U.S. consumers.

Of course, that's okay for the handful of billionaire trial lawyers who can afford those higher prices.

Now, we all agree there needs to be a system in place to provide just compensation to those individuals who are truly injured. That is what America's civil justice system was created to do.

But unscrupulous trial lawyers are taking advantage of that system to use American employers and consumers as a personal ATM – fattening their wallets while the rest of America suffers.

They do it by demonizing American business. Let me just say that American businesses should not have to apologize for creating unprecedented wealth and prosperity in this country.

American businesses don't owe anybody an apology for developing life-saving drugs and medical techniques that have extended our life spans and improved our standards of living.

American businesses don't owe anybody an apology for supplying our troops, securing our homeland, putting safe and affordable food on our tables, and making this country the beacon of opportunity for the rest of the world.

No, American businesses don't owe an apology. But a select group of wealthy, billionaire trial lawyers owes America an apology for raising our prices, crippling our employers, destroying our jobs, decreasing shareholder value, and threatening the health and well-being of our families and children.

Today, we're going to discuss issues such as when punitive damages are warranted and the ability of juries to set those damages.

And we're going to look at which states are abiding by the Supreme Court decision – and which states need some, shall we say, convincing on the matter.

We've got an all-star cast of legal experts and scholars here to address these issues.

Thank you all for coming today. And thank you all for your commitment to joining us in the fight to make America's legal system simpler, fairer and faster for everyone.

And with that, I'll turn the microphone back over to Lisa Rickard…

Lisa…