A decision from the U.S. Supreme Court handed down last week should help restore a sense of reasonableness to how juries award punitive damages in civil lawsuits.
In a 6-3 opinion, the court overturned a Utah ruling that awarded $145 million in punitive damages to a couple that had sued State Farm over the company’s handling of an auto accident. The justices, writing in their majority opinion, suggested that the 145:1 ratio of punitive to compensatory damages was unconstitutional.
Many law scholars and corporate analysts believe that the ruling will help business and industry deal with the rising costs of litigation by establishing something on the order of a 1:1 ratio of punitive to compensatory damages. Trial lawyers have voiced concern about the ruling, but that happens when the easy pickings of jackpot justice might be limited.
The simple truth is that lawsuit abuse has become a national problem, not only in an economic sense, but to our society as a whole. Reform, whether it comes from state legislatures or the Supreme Court of the United States, should be welcomed by corporation and citizen alike.
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