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- <text id=91TT0556>
- <title>
- Mar. 18, 1991: A Blow To Big Business
- </title>
- <history>
- TIME--The Weekly Newsmagazine--1991
- Mar. 18, 1991 A Moment To Savor
- </history>
- <article>
- <source>Time Magazine</source>
- <hdr>
- LAW, Page 71
- A Blow to Big Business
- </hdr><body>
- <p>The Supreme Court upholds a punitive $1 million jury verdict
- </p>
- <p> On Jan. 23, 1982, Cleopatra Haslip was admitted to a
- hospital emergency room. While the diagnosis was disturbing--a kidney infection--Haslip rested more easily knowing that
- her insurance policy would cover her medical expenses. But she
- soon discovered that the insurance agent, Lemmie Ruffin, had
- pocketed her payments, leaving her with no protection. Haslip,
- a mother of five who made $8,800 a year as an employee of
- Roosevelt City, Ala., found herself stuck with $3,500 in
- medical bills. As a result, her credit rating was ruined and she
- was successfully sued by her doctor. Enraged, Haslip filed a
- lawsuit against Ruffin and his employer, Pacific Mutual Life
- Insurance Co. The jury was more than sympathetic: it found that
- Pacific Mutual had reason to suspect Ruffin's fraud, and
- awarded Haslip $1 million, including $840,000 in punitive
- damages.
- </p>
- <p> In a decision that business groups found crushing, the
- Supreme Court last week upheld Haslip's judgment. The court
- found by a 7-to-1 vote that the large punitive-damage award
- against the insurance company did not violate the 14th
- Amendment's due-process clause. Writing for the majority,
- Justice Harry Blackmun conceded that "unlimited jury discretion...in the fixing of punitive damages may invite extreme
- results that jar one's constitutional sensibilities." But,
- Blackmun concluded, "we need not, and indeed we cannot, draw a
- mathematical bright line between the constitutionally
- acceptable and the constitutionally unacceptable that would fit
- every case."
- </p>
- <p> Although business groups have met with failure in earlier
- attempts to seek relief from the court, they were heartened by
- indications that, given an appropriate case, the Justices might
- rule in their favor. Their disappointment last week was shared
- by Justice Sandra Day O'Connor. "Juries are permitted to target
- unpopular defendants, penalize unorthodox or controversial
- views, and redistribute wealth," she wrote in a dissenting
- opinion. "Multi-million-dollar losses are inflicted on a whim."
- </p>
- <p> The weight of the decision fell most heavily on Big Business
- and the insurance industry, which pays most punitive judgments.
- In all, 80 industry and professional organizations had filed
- 24 amicus briefs on behalf of Pacific Mutual, claiming that
- punitive awards have soared because of unbridled jury
- discretion. "It's become a form of legal lottery," says
- Washington attorney Theodore Olson. "Plaintiffs ask for huge
- awards, hoping they'll hit the jackpot."
- </p>
- <p> He has a point. Punitive damages are intended as a form of
- quasi-criminal retribution against wrongdoers in civil cases.
- They exist to deter future misdeeds. "Punitive damages are not
- intended to compensate the victim," says Edward Cooper, a
- professor at the University of Michigan law school. "Instead,
- they are meant to punish especially bad conduct." Such
- judgments are most often awarded in product-liability and
- personal-injury cases.
- </p>
- <p> Consumer advocates applauded the court's decision. Linda
- Lipsen, legislative counsel of the Consumers Union, suggested
- that insurance companies and others "should spend more time
- figuring out how to make their products safe and less time
- trying to escape their responsibilities under law." Another
- happy group: plaintiffs' lawyers, who often receive a hefty
- percentage of punitive damages in contingency-fee cases against
- wealthy defendants.
- </p>
- <p> In the wake of last week's decision, business groups are apt
- to step up pressure on state legislatures to limit the amounts
- of punitive damages. According to the American Tort Reform
- Association, 10 states have already set limits on punitive
- damages. But the only way to guarantee uniform rules would be
- through an act of Congress, which is highly unlikely.
- </p>
- <p>By Andrea Sachs. Reported by Jerome Cramer/Washington.
- </p>
-
- </body></article>
- </text>
-
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