Bringing corporations to justice

Arkansas Business, Feb 24, 2003 by Peter Miller

SINCE THE ARKANSAS Business editorial page has already stipulated that House Bill 1038, also referred to as "tort reform," will not lower doctors' medical malpractice premiums, won't attract a single additional job to Arkansas and does not freshen breath or whiten teeth, there's no need to debate those points.

I do feel, however, that the predication that limits on punitive damages would make our legal system fairer has not been thought all the way through. Limits on punitive damages will only serve to tilt the legal and economic playing fields further toward huge, multinational corporations.

Punitive damages represent the only means that American citizens can prod a corporation to change its behavior. Countless lives have been saved by law-suits forcing Ford to fix the Pinto, Firestone to fix its ATX tires and NH. Robins to take the Dalkon Shield off the market.

In the case of the infamous Ford Pinto, upper management quickly learned that the Pinto tended to explode on impact, even at low speeds. Engineers figured it would cost $11 to repair each cat It would have cost Ford $121 million to make 11 million Pintos safe for everyone. But Ford had a better idea: Its executives calculated that if they let, say, 2,000-plus accidents occru, the company could spend only $50 million to settle lawsuits for deaths and injuries. And if it hadn't been for those dang punitive damages, they would have gotten away with it.

When jurors learned that men in blue suits had concluded that a few Pinto customers could be efficiently sacrificed to the altar of Ford corporate profits, they got mad. They decided to send Ford a very clear message: Think twice before you trade human lives for dollar bills.

When someone dies as a result of a. dangerous product, unsafe treatment or negligent corporate behavior, we can't measure how much the deceased person meant to his family and friends. We can't figure out what kind of loss a community suffered. We certainly can't bring him back to life. What we do is estimate how much money he likely would have earned in the future. This method allows the children and spouse to replace the earning power of their loved one.

A person who dies in a nursing home as a result of abuse or neglect had already, by definition, ceased to be able to work and earn wages. Our method of valuing human life therefore assigns residents of nursing homes the lowest possible value. Since compensatory damages will be small in nursing home cases, a huge, impersonal nursing home chain may be tempted to place a very low value on the lives of our parents and grandparents. When a nursing home chain makes a strategic business decision to pay minimum wage to those who provide most of the patient care and is cited for more than 200 pages of deficiencies in its survey by state regulators, yet pays its top executives millions of dollars a year, punitive damages may be the only means available to get this corporation to change its behavior.

Why do juries have to use punitive damages to get through to corporate wrongdoers? Wouldn't a really strongly worded letter do just as much good? Get real. Money is the only language corporations understand. Limiting punitive damages limits our ability to rein in corporate abuse and favors those who are less bothered by conscience, less inclined to do the right thing.

Limits on punitive damages also favor enormous corporations over smaller ones. Historically, juries have not assessed large punitive damages against small businesses. Juries have always considered the size of the enterprise in calculating the size of the wakeup call. Punitive damages of $500,000 are nothing more than a nuisance to a multi-billion dollar corporation headquartered in Hartford, Houston, Tokyo, Bonn or Lisbon, or set up off-shore somewhere in the Cayman Islands.

Tort reform will not lower insurance premiums, spur business growth or make our justice system fairer. Tort reform will only give the largest corporations even more advantages than they already enjoy. Am I the only one who thinks that perhaps this isn't the best time to make the Enrons, Fords, Firestones and Dow Chemicals of the world less accountable for their actions?

Peter Miller is a trial lawyer practicing in Little Rock.