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May 18, 2004 - 02:30 PM

Will Arnold Take The Punitive Damage Challenge?

by Jamie Court & Doug Heller
In principle, there's nothing wrong with a portion of punitive damages awards reverting back to the state, as Arnold has proposed. In fact, that's something consumer advocates have called for in the past. What's really wrong with Arnold Schwarzenegger's budget proposal -- in addition to the 75% size of the state's share and a fine print provision limiting makers of dangerous products to one punitive damage payout per killer product -- is the timing. There simply are not sizable punitive damages any more after a recent precedent setting ruling. So as a budget balancer, the Gov's proposal is a red herring.

One year and a half ago the US Supreme Court strictly capped every punitive damage verdict in the nation so that juries are no longer free to punish corporations' for malice and oppression, the standard for punitive damages. Punitive damages can now be no more than 9 times the amount of other compensatory losses, according to the Supreme Court's State Farm v. Campbell ruling. (Read more about the ruling's consequences at: That means if a consumer recovers $1 million in damages for their actual losses, punitive damages can never be more than $9 million. Taking 75% of that now-limited amount away from injured consumers would be punitive. Even more punitive is, as Arnold also proposes, stopping makers of exploding gas tanks and other dangerous products from having to pay punitive damages in every case. Arnold wants to have wrongdoers pay for their malice only in the first case, which would greatly help many of Arnold's corporate donors -- like Pfizer, which made the dangerous diabetes drug Rezulin.

Here's a real punitive damage challenge for Schwarzenegger, though. Will the Governor agree to return any campaign contribution from a contributor who has a punitive damage verdict against the company or the person? After-all, if innocent, injured individuals are to be asked to turn over to the state the lion's share of their punitive damages after sustaining serious injuries and undergoing the indignities of a trial, shouldn't the governor pitch in by returning easy money from big companies found guilty of malice and oppression? How much does the governor trust the integrity of his contributors? Stay tuned to see if the muscle man takes Arnold Watch's punitive damage challenge.

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