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Protecting Wrongdoers and Punitive Damages

     After a good weekend plus a Colts win, I usually stay away from negative. This time, I am getting something off my chest! 

     At the end of October, a group of distinguished lawyers, judges and law professors got together at the Homestead to discuss issues in the law. The group meeting is called the Boyd-Graves Conference.

     The background for the formation of this group is best said on it’s website:   “The Boyd-Graves Conference was created by the late Thomas V. Monahan, a former VBA president, who believed that civil practice in Virginia would be improved if lawyers with different types of practices, from all regions of the state, would meet and attempt to reach consensus about ways to improve the law.” It was formed in 1978 and has been very helpful in addressing question and needs of law and practice.

     This October meeting did make several significant recommendations. Then, the issue of Virginia’s laws regarding punitive damages immediately ran into a group obstacle.  

     Right now, Virginia has a state cap of punitive damages in the amount of $350,000. That means that if an entity, company or individual is found by a jury to have done or committed an act that is “willful and wanton”, which is worse than negligence. There are several legal terms for it, but basically it is willful and egregious conduct. It basically almost has to be intentional or just a disregard of doing what is right. I probably am not even describing the standard strict enough.

     Punitive damages are meant to punish the defendant; deter such future conduct by that defendant as well as others in the future;  and in doing so, protect the citizens of the state where the punitive damages are part of a verdict.

         I know I am getting too much legal stuff… but here comes the meat of my blog.

     The cap of $350,000 was enacted in 1988. If adjusted for inflation, the cap would now be approximately $677,000 without any real increase. Still, Boyd-Graves rejected any proposal to eliminate the cap or even raise it to a mere increase of $500,000.

     When you hear the term a “business-friendly” state, you assume that it is helpful to attract businesses to Virginia. In fact, it probably does. However, I really wonder if anyone really finds out what the state caps on punitive damages are, before relocating to that state. If they do, I don’t think that is really the kind of business that we should want to open up here. Instead, I would think that they are mainly looking for tax incentives. 

     I could get stirred up more about this. A business that generates billions in revenue can create a product that they know will kill Virginia citizens. Then, they know that they are only going to be punished in an amount of 350K maximum. It can be something added to their projected balance sheet.

     In past lawsuits, there have been many memos uncovered that showed businesses considering the expense of injury versus profit. Profitability… that doesn’t mean protection for Virginia citizens. To me, I don’t think that a business should be able to weigh its conduct against what the margin of expense per violation or lawsuit in punitive might be. Punishment should really be punishment. For most big businesses, 350K has no meaningful message.  I just thought that this is topical, with an election on Tuesday.

     For pic o’ day, I am posting one of my Dad on a recent vacation. It makes me smile. (Sorry Dad!!!!!)

Titanic Jury Damages

     With 100 years passing since the sinking of the Titanic, it has caused some to look back at the lives of those that survived, and those that perished on that doomed voyage.

     Time Magazine acknowledged Isidor Straus in this look back. German-born American Isidor Straus was one of the most privileged passengers on board. He was the co-founder with his brother Nathan, of R.H Macy Department Store. He had also served as a member of the US House of Representatives.

     He and his wife Ida were parents of seven children.  Their children reported that any time that they were apart, they would write to each other every day. 

     During the shipwreck and as people were scrambling about to board available life boats; 67-year-old Straus refused to board a life boat to safety. Instead, he insisted that his wife’s maid go with Ida. The officer of the life boat told him that he should board with his wife. Isidor felt that it would be wrong to board to safety, while younger men and women had to wait.

His wife then refused to board the half-boat. Instead, she turned and said, “I will not be separated from my husband. As we have lived, so we will die together.”

     Isidor and Ida were last seen on deck, sitting in deck chairs, holding hands. A memorial plaque to both of their memories can now be seen on the main floor of Macy’s Department Store in Manhattan.

     Today, if an insurance company were to contact their children in an attempt to resolve a pending wrongful death claim; the adjuster would probably try to focus attention on what their life expectancy should have been or what their earning capacity represented. They were a team. No computer can measure such emotion.

     Their grandson, Stuart, was also supposed to have been with them for the trip, but had caught a cold and stayed behind because of it. He later married actress Geraldine Fitzgerald.  

     It is uncontradicted that greed and arrogance of the business owners and the planners of this great ship, were the cause of this horrific loss of life. Choices were made that were reckless. More passengers were lodged on the ship at the expense of the appropriate number of life saving boats.

     If Virginia was the venue where lawsuits would be brought today, then business owners of this ilk would know that Virginia has a limit on punishing corporation greed. Politicians like to term it that such caps means that Virginia is great for business. Punitive damages are limited to an amount of 350 thousand dollars.

     If a company knows that it can make choices that will lead to greater profits greater than a resulting punishment of $350,000, would it surprise you to think that such consideration can go into the equation of the bottom line of a business?

     Every now and then, you will hear about a verdict where the regular damages are significant. Corporations quickly try to call large verdicts “Runaway Juries”. Politicians say that such verdicts are bad for business.

     Maybe, it’s a jury that understands that true loss is more than some number that can be plugged into a computer. Politicians should be required to make hard choices and not welcome a business that ignores the value of life. Maybe, true loss is measured in the connection between each other. Instead of allowing some Spin Doctor for some corporation to heap shame on a jury, for doing its job in trial; The jurors should be thanked for making hard decisions and holding wrongdoers accountable.

     And for pic o’ day, I thought this would just be a bit of real life (or maybe posed real life)

CNBC Says Virginia is #1

     A retail store manager hired me to represent her for injuries. She had been the first person to the store that morning. It was still dark. She entered the store and made her way to the light switch.

     Unbeknownst to her, the hired cleaning company had worked late and had just left the premises.  The newly waxed floor was still wet. My client couldn’t see the floor because it was between the door and the light switch.

     She fell, in the dark, on the slippery floor. Her fall was so severe that she ruptured two discs. Because the cleaning company was contracted by the store, we made a claim for her worker’s compensation benefits, as well as a 3rd party claim against the cleaning company.

     The Virginia Supreme Court ultimately ruled that my client’s sole claim was for a job injury under workers compensation. The cleaning company; while not employees of the store, was part of the “common enterprise” of the store. Thus, no third party personal injury claim.    

     If you are a business, then CNBC says that you want to be in Virginia. For 2011, Virginia was picked as being ranked number 1,  as the top state for business.

     Last year,Virgina was number 2. That’s got to be good because no one takes one of those big foam hands to football games, with two fingers sticking up.

     CNBC cites 10 categories that it considers, in arriving at it’s pronouncement for Best State for Business. Things like quality of life and technology; Access to capital and a workforce help make businesses successful.

     Two other important items of the ten include “business friendly” and “Cost of doing business”. Those can be broadly construed. 

     In most states, my client’s story above would have meant that the expense of her injuries would have been paid by the cleaning company. Her employer’s insurance company would have even been reimbursed.

     Instead, her recovery under workers compensation was limited; and the true responsible party was not “hit” with the business expense of paying for creating that dangerous condition, without warning. My client received very little for her injuries under workers compensation, because of the laws in Virginia.

     What is a cost of doing business. Well, if you do something that is reckless as a business, like hiring a driver without a license or someone who regularly does drugs, then you might be responsible for punishment damages.

     In many states, reckless and willful conduct is punishable by money damages, according to what will truly punish that business. Usually, something related to assets and profits are introduced to the jury, to determine what is real punishment, and to send a message.

        In Virginia, there is a limit on such punishment damages. Assets and ability to pay are not part of the equation in determining punishment/punitive damages.  Under Virginia Code 8.01-38.1, the maximum punishment is 350K. If a company is doing a billion in profit, you aren’t punishing them by a verdict or payment of 350K.

     As part of the “10” though, this is called “Cost of doing business”. A business can hire drunk drivers or multiple convicted felons who have previously caused injury by the same conduct, and the punishment damages are still only 350K.

     I think it’s great that Virginia is number one in business. Conversely, the basis for being number one could have adverse effects on the citizens. It might not simply mean we have more jobs or economic prosperity if we are rewarding bad actors in business.

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