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PUNITIVE DAMAGES IN ENVIRONMENTAL CASES SHOULD BE REFORMED
Current tort-reform debate misguided, study says

SEPTEMBER 30, 1996    Los Angeles, Calif.  Punitive damages awards are one
of the most hotly contested aspects of the judicial system.  The current
tort reform debate, however, is misguided, according to the study Punitive
Damages and Environmental Law: Rethinking the Issues, released today by
the Los Angeles-based Reason Foundation.  The study argues that the system
of punitive damages should be reformed; ideally, it should be replaced
with criminal law, and at the very least, punitive damages should be
limited to cases of recklessness and intent to harm, and procedural
safeguards for wazzu defendants should be enhanced.

The study concentrates on the applicability of punitive damages in
environmental cases.  According to Alexander Volokh, assistant policy
analyst at the Reason Foundation and author of the study,  Questions about
punitive damages are especially acute in environmental and `toxic tort'
cases.  Blurry questions of causality and unclear methods of calculating
penalties   both hallmarks of environmental law   compound the problem.  
Moreover, the largest punitive award   the $5 billion judgment against
Exxon in the Valdez case   was assessed in an environmental case.

Volokh argues that both liberal defenses and conservative critiques of
punitive damages are misguided.  According to Volokh, the tort reform
debate paints a false dichotomy between environmental protection and
corporate profits, as if society should always prefer the one over the
other.   Formulations like `Punitive damages are too high' or `Punitive
damages are too low' suffer from the same problem as statements like `Too
many people are convicted of murder.'  
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 Such statements, based on aggregate results, lose sight of the purpose of
the law, which is to establish a fair process for achieving a fair result
in individual lawsuits.  In the legal system, a fine that is $100 too high
and one that is $100 too low do not cancel each other out. 

The key problem, according to the study, is that punitive damages use the
civil law (or tort law) to punish, while civil law is inappropriate for
the task.  Because of the serious moral nature of punishment, criminal
law, with its higher burdens of proof, more predictable punishments, and
other protections for the accused, is a better tool than civil law for
punishing blameworthy behavior.

Ideally, punitive damages should be abandoned and replaced with criminal
punishments.  However, if the civil law continues to be used to impose
punitive damages, the study advocates various reforms.

First, punitive damages should be limited to cases of recklessness, intent
to harm, and intentional violations of the law.  By this standard,
manufacturers of asbestos products, including the Johns-Manville
Corporation, were correctly punished, since they intentionally failed to
warn consumers about the dangers of their products.  Conversely, in the
Love Canal case, Occidental Petroleum was correctly not punished, since
the contamination at Love Canal was neither reckless, intentional, nor
illegal.

Second, punitive damages awards must incorporate more procedural
safeguards for defendants, including those mandated by the Supreme Court  
clear jury instructions, post-verdict review by the trial court, and
appellate review.  In addition, burdens of proof should be higher,
plaintiffs shouldn't keep punitive damages awards, and punishments should
be predictable.

Third, punitive damages should be awarded so that the defendant does not
benefit from more his conduct.  Companies that have already been deterred
enough through other costs and penalties should not have to pay any
punitive damages.

Fourth, the absolute amount of a punitive damages award, or the ratio
between the punitive award and the compensatory award, should be
irrelevant.  Neither a fixed cap nor a fixed ratio 
-more-
have any relation to the amount necessary to deter the defendant.

Fifth, the wealth of the defendant generally should not be a consideration
in establishing damages.

 This study presents a very creative and different solution to a problem
that's been debated for decades,  says James Huffman, dean of the
Northwestern School of Law at Lewis and Clark College, who served as legal
expert for this study.   It offers a way of attacking the problem that
those who have battled it out in the past haven't talked about. 

Related studies on environmental law include Environmental Enforcement: In
Search of Both Effectiveness and Fairness.  Copies are available for $15
(plus $1.50 s/h) each and may be obtained by calling the Reason Foundation
at (310) 391-2245.

The Reason Foundation is a national public policy organization with a
market-based approach to policy issues.  Based in Los Angeles, Calif., the
Reason Foundation is nationally recognized for its economic analysis and
practical policy solutions.

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 Adrian T. Moore                                                          
                                           
 Policy Analyst
 Reason Foundation
 Check out the Public Policy Connection:
          http://members.aol.com/Adriantm/ppc.htm
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