Senate Votes to Limit Damages in Civil Suits

By the narrowest of margins, the Senate voted Wednesday to sharply limit the power of juries to punish manufacturers, insurers, cities, corporations and other civil-case defendants by imposing large money awards.

The amendment to a broader product-liability bill was sponsored by Majority Leader Bob Dole (R-Kan.) and would restrict punitive-damage awards in all civil cases to no more than twice the amount awarded for compensation.

For example, under current law, an insurance company that wrongly fails to pay a $5,000 claim can be sued in state court. Jurors can force the company to pay the $5,000 to compensate the plaintiff, but they are also empowered to tack on $1 million or more to punish the company for its callousness.

If the Senate bill becomes law, the punitive award in that case would be limited to $10,000.

In addition, the senators set an even lower limit for lawsuits against small businesses, partnerships, organizations or local governments that have fewer than 25 employees. The maximum punitive verdict in those cases would be $250,000, even if a defendant is shown to have caused millions of dollars in damages.

For the last 15 years, limiting punitive damages has been a top priority for the business community, and its leaders hailed Wednesday’s 51-49 vote as bringing them one large step closer to their goal.

The Republican-led House approved a similar across-the-board cap on punitive damages in March but set the limit at three times the amount of other compensation.

The Senate measure “recognizes that most small businesses are just one lawsuit away from bankruptcy,” officials of the U.S. Chamber of Commerce said. They noted that people who are injured or defrauded by a company can still win full compensation, not just for direct losses such as medical expenses or lost wages but for their “pain and suffering” or “emotional distress.”

But consumer advocates said that the Senate’s action is “an assault on law and order” because it prevents juries from thoroughly punishing corporate wrongdoers.

The cap on punitive damages applies to every manner of civil suit, from cases involving drunk drivers, police brutality or sexual assaults to major financial frauds or environmental disasters akin to Alaska’s Exxon Valdez oil spill in 1989.

“These people campaigned that they were tough on crime, but now they are wiping out the one way society can hold these wrongdoers accountable and to punish them for their acts,” Joe Belluck, a congressional advocate for Ralph Nader’s Public Citizen, said of the Senate’s Republican majority.

During the debate, Republicans said jury awards are “out of control” and threaten the health of American business.

But critics of the limits said punitive damages are needed in extreme cases to punish companies and protect consumers. For example, punitive awards against the makers of asbestos and silicon breast implants forced those dangerous products off the market, they said.

California’s two senators, Dianne Feinstein and Barbara Boxer, joined most Democrats in voting against the measure.

Republican leaders are expected to call the roll Thursday to see if they have the votes to invoke cloture and pass the overall product-liability legislation. It takes 60 votes to shut off debate in the Senate. If the GOP leaders cannot end the debate, they may be forced to jettison several provisions--including the cap on all punitive damages--to get the necessary margin.

Lawyers for the Clinton Administration have said they oppose the limits on punitive damages, but it is unclear whether Clinton will veto the measure over the issue.