SACRAMENTO, Calif. – Gov. Arnold Schwarzenegger, inviting a wrestling match with trial lawyers, wants taxpayers to get the lion’s share of any punitive damage awards from lawsuits in California.
In the revised $103 billion budget presented this week, the Republican governor proposed that the state take 75 percent of punitive damage awards. The idea is drawing criticism from trial lawyers, who say the money belongs to victims who win monetary damages by suing negligent companies.
The Republican governor argues that victims are compensated by separate awards for actual injury or loss. He wants the bulk of punitive awards to go into a Public Benefit Trust Fund.
“Punitive damages were never meant to be windfalls” for those who file lawsuits, Richard Costigan, the governor’s legislative affairs secretary, told the Los Angeles Times. “They are meant to punish the defendants. Society as a whole is impacted by those actions. How does it benefit everybody when one plaintiff gets $100 million?”
The administration projects the state could get $450 million from the lawsuits each year, based on a McGeorge School of Law tally of nearly $6.4 billion in punitive awards from 1991 to 2000 in California.
Theodore Eisenberg, a Cornell University law professor who is an expert on punitive damage awards, said the state would be fortunate to collect a quarter of that estimate, since the tally doesn’t take into account awards that are later reduced on appeal.
Alaska, Georgia, Illinois, Indiana, Iowa, Missouri, Oregon and Utah already collect up to 75 percent of punitive awards in their states. Though there is no such law in Ohio, judges there recently gave one-third of a $27.5 million punitive award to a public university’s cancer research fund.
Although trial lawyers oppose the proposal, California Assembly Budget Committee Chairman Darrell Steinberg said it is something to consider as California battles a massive budget deficit.
He and other Democrats are concerned, however, that Schwarzenegger’s proposal includes a ban against assessing punitive damages more than once for the same incident. If a corporation’s actions injure or kill dozens, that would limit punitive awards to a single victim.
Costigan said 11 other states have such prohibitions on multiple punitive awards.
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