Free Lance-Star (Fredericksburg, VA), March 27, 2008

The world hates U.S. punitive damages

BLUE IN THE FACE we have preached ourselves over the years arguing that punitive damages are a multifaceted disgrace. Lo, now comes an ally: the world.

Or at least most of it. Many European courts simply refuse to uphold punitive-damage judgments returned by U.S. juries against their nationals and companies, reports The New York Times. The main reason is the one often cited by U.S. critics of punitive damages: They are de facto criminal punishments of defendants, often ruinously large, without the due-process safeguards embedded in criminal law.

Punitive damages do exist in some other nations. In England, they are called "exemplary damages," conveying the notion that some civil defendants need to be taught a good lesson beyond paying compensation for the harm they've caused plaintiffs. But nowhere else save the lawyer-bountiful USA is the sky the limit on such awards.

That's why, reports the Times, the Italian Supreme Court recently blocked the collection of $1 million from an Italian maker of motorcycle helmets, one of which malfunctioned and contributed to the death of an Alabama teenager. Similarly, the German Supreme Court in 1992 upheld a compensatory judgment rendered by a California jury against a German child molester who fled back to his native country, but refused to honor a punitive judgment by the same jury. Under German law, the court said, individual plaintiffs cannot function as "private public prosecutor[s]." On the other side of the world, Japan expressly bans the enforcement of punitive-damage judgments obtained abroad.

By most reckonings, Virginia's punitive-damages regime is enlightened: The state caps such awards at $350,000. Indeed, a new study of state tort laws by the conservative Pacific Research Institute ranks the Old Dominion the fifth-best place in the United States to do business by that index. Yet the PRI places Virginia, along with eight other states, in its "Sucker" category--reserved for "states that have weak tort rules because they currently have relatively low monetary tort losses and/or few litigation risks and, therefore, foolishly believe that they are not vulnerable."

As the nation wades into inky economic waters, Virginia would do well to strengthen its tort laws, not least in the area of punitive damages. The top reform should be statutorily channeling such damages to state coffers, not the pockets of plaintiffs and their lawyers. The world would like that.