California Punitive Damages

Assemblyman revives proposal to eliminate tax deduction for punitive damages

2012-01-26T14:14:00.000-08:00

Last year we blogged about Assemblyman Mike Feuer's proposal to prevent California taxpayers from taking a tax deduction for payments of punitive damages. The bill, Assembly Bill 1276, got through the appropriations committee by a vote of 12-5, but failed in a floor vote and was moved to the "inactive" file last June. The issue appeared to be dead, but it has recently come back to life.

At Feuer's request, the bill was removed from the inactive file and will come up for another vote on the floor. Feuer is trying to drum up support for the bill on Twitter:

When courts punish corporations for egregious misconduct, we expect they’ll pay. But a tax loophole lets them to [sic] deduct punitive damages!

My AB 1276 prevents corporations from writing off punitive damages as “business expenses.” Contact your member and urge support today.

The bill needs a 2/3 vote to pass. Our sources in Sacramento tell us there's no chance of that happening.

"Economic Analysis of Punitive Damages"

2012-01-25T11:30:00.000-08:00

Prof. Catherine M. Sharkey at NYU Law has posted a chapter entitled Economic Analysis of Punitive Damages: Theory, Empirics, and Doctrine, from the forthcoming Research Handbook on the Economics of Torts. Here's the abstract:

This chapter — to be included in Research Handbook on the Economics of Torts (Arlen ed., Kluwer, forthcoming 2012) — assesses economic rationales for punitive damages in light of contemporary empirics and doctrine. The primary economic rationale for supra-compensatory damages is optimal deterrence (or loss internalization): when compensatory damages alone will not induce an actor to take cost-justified safety precautions, then supra-compensatory damages are necessary to force the actor to internalize the full scope of the harms caused by his actions. Alternative economic rationales — disgorgement of ill-gotten gains and enforcement of property rights — have been proposed to align the theory with the historical and conventional focus of punitive damages on intentionally wrongful behavior.

Notwithstanding its academic prominence, the economic deterrence rationale has not dominated doctrine. In fact, the U.S. Supreme Court has all but rejected economic deterrence, by instead placing increasing emphasis on a competing retributive punishment rationale. But, since punitive damages lie squarely within the purview of state law, state legislatures and courts possess a degree of freedom to articulate state-based goals of punitive damages — such as economic deterrence — even in the face of heavy-handed federal constitutional review imposed by the U.S. Supreme Court.

Hat tip: TortsProf Blog.

Garth Brooks wins $500,000 punitive damages award

2012-01-25T11:22:00.000-08:00

According to this report, a jury in Oklahoma has awarded Garth Brooks $500,000 in compensatory damages and $500,000 in punitive damages, in a lawsuit against a hospital that accepted a donation from Brooks and then reneged on its promise to name a women's clinic after his late mother.