Dean's Address

Former Vice President Dan Quayle, Chairman of the President's Cabinet‑level Council on Competitiveness claimed that "our current products liability system of 50 states' laws generates excessive litigation, inflates insurance costs and creates uncertainties for American business."²⁸ The Bush administration viewed the reform of punitive damages as top priority.²⁹ Much of the lawsuit crisis has been blamed on punitive damages which are said to be a drag on the economy. It has been suggested by Former Vice President Quayle and Former President Bush that punitive damages lessen the competitiveness of American businessmen.³⁰ Former Vice President Dan Quayle has questioned, "Does America really need 70 percent of the world's lawyers?"³¹ This is an astonishing statement for two reasons. In the first place the number is largely from the whole cloth and, secondly and more importantly, is there something sinister about being a lawyer?

The assertion is often made that medical malpractice awards are running out of control. Yet consider a recent article by Professor Neil Vidmar of Duke University relating to a study done in North Carolina. He stated that in malpractice cases plaintiffs won only one case in five and when they did the median award was only $35 '000.³² He also stated that out of a total of 1,917 medical malpractice cases in which punitive damages were requested, the jury awarded them in only 18 cases, a success rate of less than l%.³³

Professor Vidmar concluded that the empirical evidence from multiple sources does not support the claims that medical malpractice juries are constantly pro‑plaintiff, incompetent, or unjustifiably generous in determining awards.³⁴

It is suggested that one should look at the facts behind the rhetoric that there is a litigation crisis and that punitive damages are skyrocketing and this is the root of the evils of our present day legal system. It is generally assumed that product liability litigation accounts for the transgressions just described.

Yet federal court records from 1985 to 1990 show that personal injury product‑liability filings, with the exception of asbestos cases, decreased 40%."³⁵

What then are the facts about skyrocketing punitive damage awards? A major study was done by Professors Rustad and Koenig.³⁶ This study took two years to complete and it tracked punitive damage awards in product liability cases over a 25 year period between 1965 and 1990.³⁷ The study brought forth some very revealing facts. Only 355 punitive damage verdicts were returned by state and federal court juries during a quarter of a century, an astonishingly low number. One quarter of those awards involved a single product, asbestos.³⁸

In more than half of the 276 cases where complete post‑trial information was available, punitive damage awards were taken away or reduced by the trial judge or by an appeals court. Plaintiffs received no punitive damages in 111 cases (40.2%), reduced judgments in 39 cases (14. 1 and full jury awards in 126 cases (45.7%).³⁹  Contrary to the contention that punitive damage awards are skyrocketing, the study revealed the median punitive damage award for all products liability cases actually paid since 1965 was $625,000, slightly above the median compensatory damage award ‑ $500,100.  The aggravating factors leading to these awards were failure to take steps to remedy a known danger.⁴⁰

A federal study of product liability suits in five states conducted by the Government Accounting Office two years ago reached conclusions similar to those of Professors Rustad and Koenig. Plaintiffs won fewer than 50% of the cases. The sizes of jury awards were neither erratic nor excessive, and punitive damages were highly correlated to economic Loss.⁴¹

Controlling for asbestos cases the study of Rustad makes it clear that punitive damage awards in non‑asbestos products liability cases decreased between 1986 and 1990.⁴²

It is said that punitive damages stifle the ability of American manufacturers to compete with foreigners. Because of them we are losing our ability to compete on the world market.⁴³ It is submitted that these accusations are groundless for the following reasons:

1. Punitive damages only punish corporations that act with a wilful and wanton disregard for the rights of others and who recklessly and negligently make defective products. Should we expect less?

2. How can it be said that punitive damages make it impossible or difficult for U. S. manufacturers to compete with foreigners, when those very foreigners clamor to compete in this country and thereby subject themselves to the same punitive damages and our same legal system together with all of its so‑called shortcomings.

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