Juries in California awarded an astounding $6.4 billion in punitive damages during the 1990s, according to a study* supervised by Professor J. Clark Kelso, former acting state Insurance commissioner and newly-named Scholar-in-Residence of the Administrative Office of the Courts.

The size and total amount of punitive damage verdicts increased during the 1990s, averaging $13.1 million per case during the decade.

"These findings show the trend identified in the early Nineties is continuing. The alarms are sounding: It's time California grabbed this runaway monster by the horns," said John H. Sullivan, President of the Civil Justice Association of California (CJAC).

The Association is sponsoring legislation (AB 840 - Robert Pacheco) that would limit punitive damage awards against small businesses to three times the "actual" (economic plus pain and suffering) damages awarded at trial. For other defendants, the bill would allow full appellate court review of awards in excess of three times actual damages. The bill is set to be heard in the Assembly Judiciary Committee on April 24, 2001. It will provide needed protections for small businesses and reasonable procedural safeguards for all defendants.

"You have to remember that Professor Kelso's research could only assess verdicts that were voluntarily reported. It's only a slice of the pie and probably misses significant punitive damage awards all across the spectrum," Sullivan said.

The current system of determining punitive damages has been widely criticized. Juries are called upon to set the amount with none of the guidelines and protections applied to punishment in criminal law. As a result, wildly different and unpredictable verdicts are more the rule than the exception. The situation has brought criticism from prominent observers like the late U.S. Supreme Court Justice Lewis Powell who wrote that "The grant of standardless discretion to punish has no parallel in our system of justice....It is long past time to bring the law of punitive damages into conformity with our notions of just punishment, and with the tradition of other nations that also protect their citizens against arbitrary deprivations."

"The personal injury lawyers who make billions from these awards repeatedly say that punitive damage verdicts are rare. What they don't tell people is that jury verdicts of any kind are rare Ü the vast majority of cases are settled or otherwise ended before they ever get to a jury," Sullivan said.

The huge contingency fee potential from a punitive damage verdict has made punitive damage claims almost routine. A 1996 CJAC study in four major counties found that a third of all contract and tort cases involved demands for punitive damages.

There has been a steady movement among states to rein in punitive damage verdicts. At least 15 states now have a variety of caps on these damages. Seven states either do not allow punitive damages at all or greatly restrict their use, and several federal laws limit punitive sanctions to three times actual damages.

A Los Angeles jury's $4.8 billion punitive damage verdict in 1999 was described by the Washington Post, in an editorial entitled "Casino Justice," as "the latest example of the irrationality of our current litigation system." The verdict prompted the Los Angeles Times to editorialize that "public trust in product liability cases tried by juries might well be going down the drain with these excessive awards" and that "unpredictable decisions might also prove to be the weakest point in the American system."

* The entire study "An Analysis of Punitive Damages in California Courts, 1991-2000" is available at www.mcgeorge.edu/capitalcenter.htm. Scroll down to "Judicial Administration Bureau" and click on "Jury Reports."