South Carolina Senate Votes To Cap Punitive Damage Awards

The South Carolina Senate passed a corporate-supported bill on Tuesday to limit to amount of punitive damage awards in that state:

The bill would create a tiered system of damages based upon the degree of negligence or criminal behavior involved. Most lawsuits would cap punitive damages at $500,000, or three times actual costs, whichever is greater.

But that cap rises to $2 million, or four times actual damages, under several circumstances, including if an injury resulted because of an unreasonable profit-based decision or if the person or business that caused the injury was subject to a felony conviction.

The cap is lifted entirely if the person or business that caused the injury is convicted of a felony, intended to harm or was under the influence of drugs and alcohol.

Historically, punitive damages have been used to prevent situations where corporations inflate their profits through strategic lawbreaking. If a car company determines that it can save $100 million by making unsafe cars, but only pay out $50 million in damages due to wrongful death lawsuits, their executives will likely decide to sell the unsafe cars unless they face some extra consequence. Accordingly, punitive damages are intended to jack up the cost of lawbreaking until it no longer makes financial sense for big corporations to flout the law.

South Carolina’s bill would undermine this goal by capping the extent of those damages, and it is part of a much larger pattern of assaults on the judiciary’s power to ensure that corporations are held accountable for lawbreaking. Beginning in 1996, the Supreme Court started imposing constitutional limits on punitives.

This year, the Court also gave corporate America all the tools it needs to eliminate class action lawsuits by consumers — effectively enabling corporations to systematically scam thousands of consumers out of a few dollars at a time with complete and utter impunity. And a long series of Supreme Court cases endorsed an abusive practice known as “forced arbitration” that allows corporations to force their consumers, workers, and patients to sign away their right to sue the company in a fair and impartial court before the company will even do business with them.