Where have all the punitive damages gone?

Contesting punitive damages provides fertile ground for appellate practitioners. The challenges could be based on federal constitutional grounds, state grounds, such as an awards based on passion or prejudice, or, as often happens in California, the failure of a plaintiff to present evidence of defendant's financial condition.

At a time when people are becoming more reluctant to serve on juries, particularly dealing with long trials, their dissatisfaction increases when an appellate court takes away an award that they reached after weeks of hearing the evidence. Jurors don't like being accused of reaching their decisions based on passion and prejudice. Then, if the reviewing court steps in to fashion a different (and often lower) remedy, the jurors wonder why they were required to serve at all.

In an article in today's Houston Chronicle, it was reported that a federal judge in Houston reduced a $100 million verdict against British Petroleum (BP) for negligence in connection with the chemical release at its Texas City refinery that sent more than 100 works to the hospital.

The federal judge found that the plaintiffs had failed to show "clear and convincing" evidence of gross negligence, setting aside $100 million in punitive damages. Well, obviously, the evidence was "convincing" to the jury. I am sure the jurors might even argue that they felt the evidence was "clear." This standard allows for some wiggle room because what is clear to one person might only satisfy the preponderance of the evidence standard. And that allows the court to step in and wipe away a victory for plaintiffs and evoke a huge sigh of relief by BP.

This decision sets the stage for the next round of litigation because this first case only dealt with 10 workers. Interestingly enough, this incident in 2007 followed a March 2005 explosion that killed 15 workers and injured many more. BP paid millions to plaintiffs, and a $50 million fine, as well as pleading guilty to a felony violation of the Clean Air Act.

The article also notes that in October, U.S. OSHA proposed $87 million in fines against BP for failing to make safety upgrades required under a settlement agreement with the agency following the 2005 blast. A plaintiff in one action said that BP failed to maintain equipment and provide adequate safety controls. But the judge felt the evidence was still not "clear and convincing."

Some will celebrate this reduction as a victory for companies. Those who do so may believe that individual plaintiffs should not be entitled to punitive damages at all or that the award just seems like a lot of money. Others will despair, as this case is just one of many where judges have reduced punitive damages - ignoring the jury's verdict - until they do nothing to punish wrongdoers. As stated by plaintiff's attorney, the decision gives BP a "free pass" to continue hurting its workers.

I think the Terminator movies had it all wrong, probably for political reasons . . . it's not the rise of the machines that we have to be fearful of; it's the rise of the corporations.