The numbers grab your attention: almost $3 million in punitive damages for a spilled cup of McDonald’s coffee; $5 billion for the Exxon Valdez oil spill; $145 billion for a Florida tobacco class action. Years after they were awarded — and reduced or overturned on appeal — these startling dollar figures are still the oft-cited poster children for tort reform.
Twenty-one states have passed limits on punitive damages, according to the American Tort Reform Association. And in 2003 the U.S. Supreme Court ruled that few awards exceeding a single-digit ratio between punitive and compensatory damages will survive due process concerns. But punitive damages remain one of the most controversial aspects of the tort system. Are outsize jury awards signs that the system needs fixing, or are they aberrations that don’t matter much in the long run?
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