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That $23.6 Billion Florida Tobacco Verdict is Meaningless

Both the BBC and the German media (g) have reported on the $23.6 billion verdict a Florida jury handed down against R.J. Reynolds tobacco company for damages she suffered after her husband died of lung cancer. The jury found that R.J. Reynolds had purposely concealed the addictive and harmful nature of smoking. Most of the $26 billion is in punitive damages, which can be awarded in Florida if the jury finds that "[t]he defendant’s conduct was so reckless or wanting in care that it constituted a conscious disregard or indifference to the life, safety, or rights of persons exposed to such conduct."

These sorts of stories come out a few times a year, and are always covered by the German media. They serve an important function for the German journalistic class: they instruct obedient German news consumers that the American jury system is a crazy lottery in which ignorant, envious bumpkins are given free rein to milk large corporations on behalf of other ignorant, envious bumpkins.

By implication, therefore, these stories support the Panglossian narrative of German superiority. After all, am deutschen Wesen soll sich dereinst die Welt genesen -- the German way will heal the world. There are no juries in German civil trials, nor are there any punitive damages in the American sense. German judges award damages according to fixed schedules, and the amounts are smaller than American courts.

To apply the necessary corrective: No, the tobacco company will of course never have to pay the $23.6 billion verdict. An appeals court, following rules laid down by the American Supreme Court, will reduce it to a tiny fraction of that size. Punitive damages awards are extremely rare in American courts, and usually modest in size. A recent study sums up the situation:

Contrary to popular myth, punitive damages are rarely awarded.

  • In 2005, the most recent year studied by the U.S. Department of Justice (DOJ), punitive damages were awarded in only 5 percent of civil cases where plaintiffs prevailed at trial.

        ...

Most punitive damage awards are modest in amount.

  • In 2005, the median overall punitive damage amount awarded to plaintiff winners in civil cases was $64,000.15 The median punitive damage award for all tort cases was $55,000.16
  •  In 76 percent of the 632 civil trials with both punitive and compensatory awards, the ratio of punitive to compensatory damages was 3 to 1 or less.

...

Of the 45 states that allow punitive damages in this country, at least one-third have enacted some form of cap, or limit, on the ability of judges and juries to award punitive damages. Over 30 state legislatures have made it more difficult for injured consumers to prove punitive damages by raising the standard of proof required for awarding them. Several states order victims to pay a portion of punitive damages into state-designated funds. Other states require or permit bifurcated trials where the injured person is forced to essentially try a case twice, first proving liability and second, arguing the size of the award. And in some states, juries are prevented from deciding the amount of a punitive damages award -- only the judge is permitted do that.

That's been today's corrective to the German media.

Comments

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Zaungast

Sorry, I think you miss a lot about the motivation and understanding behind such news items - even though you start sneering at the right point:

  • "American jury system is a crazy lottery": This is actually close to what they're saying. But "lottery" would imply that you can win or lose, while the image conveyed here tells you there are *ALWAYS* big amounts to be paid.
  • I don't think German news link this very much to the jury system.
  • And it never occurred to me that this should be a sob-story for the poor corporations milked, I think the nature of the defendant doesn't matter here for the German audience. And btw, a tobacco giant doesn't make a good underdog for public sympathy even in Germany.
  • And you're not saying "am deutschen Wesen soll die Welt genesen" (no reflexive verb here) is the point the BBC is going to make, are you. As a matter of fact, German non-lawyers are not very likely to be proud of the German legal system - not because it has so bad a reputation, but because lawyers and jurisdiction are always somewhat toxic and strange to the man in the street. So the scheduled reaction is "Thank God they are not like this over here so far" rather than "we would have done better".
  • Yes, frequently the weirdness exotic nature of such giant sums is the main point of the news. And no, here it isn't: Tobacco industry is a specific topic, and it is an open question whether or how hard governments can or should tackle them for the sake of health protection. So this is also a showcase: Look what others are doing about it.


But now for the actual contents, since I'm eager to learn something about this.

"punitive damages are rarely awarded"/"Most punitive damage awards are modest in amount":
That's hardly relevant for this case since, you know, it was indeed awarded here.
The Spiegel article you linked to features the headline "Reynolds to pay xxx to widow" rather than "American corporations to pay another round of billion dollar verdicts this year". I haven't come across a single line in browsing the news about this case that implies that this is a normal case.

What's more important: Obviously, punitive damages can be awarded by American courts in astronomic amounts, theoretically and practically. Didn't that come across correctly?

As to the most important point:
"No, the tobacco company will of course never have to pay the $23.6 billion verdict. An appeals court, following rules laid down by the American Supreme Court, will reduce it to a tiny fraction of that size. "
So - what's the point in awarding it then in the first place?
Does that imply that you are actually forced to appeal to the Supreme Court, so that some verdicts aren't even supposed to be final?
That's news to me, and an interesting point (doesn't that defeat the whole concept of a 'verdict'?).
This actually may be the point of confusion that hardly anybody outside the US understands. And considering it, I see a large part of the fault for this confusion on the side of this weird system.

renke

Not sure if you believe in some "Bildungsauftrag" of your blog - but it worked for me.

I saw the "billions in compensation" headlines and thought of the explanation you gave about this part of US American jurisdiction in the past :)

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