Monthly Archive for August, 2011

When are Punitive Damages Considered Excessive?

It seems like our culture is no longer satisfied with things that are “normal”.  Everything has to be the wildest, the greatest, and the farthest beyond our stretch of imagination.  Take planking, for instance (already outdated, I know)- the more outlandish, off-the-top the stunt, the better.

Our obsession with the excessive can also be found in the legal world.  Specifically, we’ve almost gotten used to all the exorbitant punitive damages awards being granted- $8 billion for a random oil spill here, $3 million for a spilled cup of fast food coffee there- not to mention the billions of dollars being awarded in big tobacco lawsuits.

Scales of justice, where law outweighing moneyI’ve blogged about punitive damages before, but I wanted to delve a little bit more into the mystique surrounding these types of legal awards.  Just what are the standards that are used to calculate punitive damages?  And when are punitive damages considered excessive?

Regarding limits on excessive punitive damage awards, courts do apply a general standard.  Most Supreme Court cases agree that punitive damages should be applied in a ratio of 4:1, or four times the amount of compensatory damages.  For example, if a plaintiff suffered $50,000 in actual losses, an acceptable punitive damages award would be four times that amount, or $200,000.  Some jurisdictions allow a ratio as great as 9:1.

But why are we still seeing punitive damage awards in the amounts of millions and even billions?  A recent California Supreme Court case involving the tobacco company Philip Morris (yes, again) approved a 16:1 ratio for punitive damages!!  This came out to $13.8 million!   What’s going on here?  Isn’t this punitive damages award considered excessive?

Like many other lawsuits involving colossal punitive damage awards, the court in this California case applied the logic from the famous case, BMW vs. Gore.  In Gore, the court laid some factors for judges and juries to consider when calculating a punitive damages award.  These factors include:

  • The “degree of reprehensibility” of the person’s conduct;
  • The ratio of punitive damages to the compensatory damages (again, anywhere from 4:1 to 9:1 is considered Constitutional); and
  • The comparison of the punitive damages award with criminal or civil penalties for comparable conduct

Now, the main source of contention in most punitive damages awards are the first two factors- the nature of the defendant’s conduct, and the ratio of punitive vs. compensatory damages.  Naturally, the more “reprehensible” the defendant’s conduct is, the greater the chances will be that they will be slapped with a higher punitive damages award ratio.  In many other cases, courts use the word “egregious” when describing conduct that would result in a punitive damages award.

In the recent California Philip Morris case, the court found the company’s concealment of the dangers of tobacco products to be considerably reprehensible and egregious, which made them fair game for a punitive damages award.  Okay, I see that, but what about the mammoth 16:1 ratio?  Isn’t that punitive damages award too high?

Interestingly, the Gore opinion also stated that the factors mentioned above may be overridden if it is deemed “necessary to deter future conduct”.  And that’s exactly what happened in this recent Philip Morris case.  The court found the defendant’s conduct to be particularly non-triumphant, and, applying the logic in Gore, tossed the Gore framework out the window, as suggested by the Gore opinion itself.  The result?  A punitive damages award whopping enough to rival even the highest lottery winnings.

Wow, I just love it.  It’s like the Gore court said, “Here are some guidelines to work with to help you figure out if the case is bad enough for punitive damages.  But if you decide it’s really bad, feel free to disregard these guidelines…”

To make matters more confusing, different areas of law have different standards for punitive damages.  For example, in the area of employment, an employee sometimes does not have to prove “egregious” conduct to receive a punitive damages award from their employer.  The focus here is more on the employee’s mind state and awareness of discrimination laws rather than their actual conduct.  While we don’t normally see huge punitive damage awards in employment cases, this does make it much easier to require an employer to pay punitive damages.

As I mentioned before, I agree that punitive damages are effective, especially when it comes to protecting the general public from massive harm that might be done by large organizations.  On the other hand, I do think that there’s something very flimsy and wishy-washy about the current standards for punitive damages.

Now, I’ve heard many interesting words to describe questionable laws, such as “toothless”, “impotent”, or even “amorphous”.  But the body of laws surrounding punitive damages continues to evade description for me.  The closest thing I can think of is “disposable”, or something along those lines.

So what does this mean?  When are punitive damages considered excessive?  Well, if the conduct is “egregious” enough, it seems like…almost never!  And I thought this was a fad that was dying down.  I guess not.  So while planking is already doomed, it seems like the era of super-sized puni’s is going to be around for some time.

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Red-Light Cameras Do Not Violate the Constitution

I came across an article discussing something that most people dread—that little camera above the traffic light that tickets you!  Apparently a dozen cities and nine states have banned traffic cameras for financial and political reasons.  Although these little devices successfully catch more speeders and produce more tickets, which in turn brings in more revenue, they are expensive.  With the economy being the way it is, it is hard for many states to spend money on such devices.  Further, a lot of voters just hate the device.

What is interesting is that opponents of these small cameras have used the United States Constitution to substantiate their point.  Opponents claim that these cameras violate due process rights and invade one’s privacy.

After the mention of the due process violation, the article goes on to state that opponents feel there is a violation of due process because the cameras “don’t capture images of those who actually are behind the wheel.”  I completely disagree with this statement.  I have gotten a ticket in the mail before because I was caught speeding by a camera.  As I opened the envelope and took out my ticket, the next page displayed a large picture of me in the car, driving.  I was actually shocked to see how focused and clear the picture was.  My face was clearly shown and pictured from a very close angle.  This is why I do not believe the claim that the cameras do not capture the image of the driver.  The close angle and clarity at which those cameras take pictures leave no room for any mistakes as to who the driver is.

Even if the picture was not the best, does this camera really infringe upon our due process rights?  A violation of one’s due process rights would be when a person was deprived of life, liberty or property without going through some sort of legal proceeding.  In our situation, when a person receives a citation, they have the opportunity to go to court and contest it.  A citation by a camera is no different than a citation personally given by a cop on the side of the road.  Both allow individuals the opportunity to have their day in court.  Therefore, I see no violation of due process rights even if the picture was not completely clear.

Additionally, these cameras do not invade one’s privacy.  Now, for an invasion to occur, a person first needs to be in a place where they can reasonably expect privacy.  When you are on the road in your car, you are in a public area.  Photos taken of people in public areas are not seen as intruding upon people’s privacy because people are out and about, not isolated in a private area.

Now, opponents may argue that one has a reasonable expectation of privacy in their own car.  Sure, I can see that point.  However, our individual car is on a public road.  Our individual car has windows where people can see into them.  Our individual car is amongst many other cars.  Overall, our individual car does not constitute a small private world of our own.  Rather, we are just beings in our car, which is on a public road amongst other cars.  There is no privacy on the road.  Therefore, the claim that these cameras violate people’s privacy is without merit.

Even though I am not a fan of these cameras because I have been a victim to them, I do think they are a great idea.  They instill fear in people because people can get caught speeding even if a cop car is not nearby.  Whenever people see these cameras, they tend to slow down.  Drivers who drive cautiously are less likely to get into accidents.  Overall, the roads become safer.  The other side to this is to just implement small measures, like making the time for the yellow light longer so people slow down and have ample time control their speed.  This can have an adverse effect.  With longer yellow lights, more people can attempt to rush though the light by increasing their speed.  This is very risk and likely to result in an increase in accidents.  Rather than people using the extra time to slow down and stop, they will likely speed up and try to beat the light, overall endangering the lives of those around them.

With so many other issues in our world, such as our rising unemployment rates or increase in home foreclosures, I say we leave the little camera alone and let it do its job.  We, as citizens, can the focus on more important issues.

Divorce-Proof Your Business

If you are an entrepreneur, and have built a successful business from the ground up, you obviously want to do everything in your power to protect it. You probably have insurance against fire, crime, and other “predictable” calamities that can bring down any business. However, many business owners don’t consider one of the most common risks to the security and continued viability of a business: divorce.

It’s estimated that 40 to 50 percent of first marriages in the United States end in divorce. The vast majority of couples don’t get married expecting to get divorced at some point. So, it’s irrational to think that divorce is something that couldn’t happen to your marriage at some point in the future, and it’s even more irrational to refuse to prepare for the possibility.

In a significant number of marriages, a business started by one of the spouses prior to the marriage is by far the most valuable asset owned by either spouse. So, during a divorce, it should come as no surprise that ownership of a business is often one of the most contentious points.

This article in Entrepreneur Magazine provides a few basic steps that business owners can take, early in their marriage, to ensure that their business gets through a divorce unscathed. Many people are, for obvious reasons, pretty uncomfortable planning for a potential divorce before they’re even married. However, just because it’s unromantic, doesn’t mean it’s not the smart thing to do. Obviously, you’re going to do everything in your power to make sure your marriage works. And, if you’re marrying the right person, for the right reasons, it probably will. But that doesn’t mean you shouldn’t prepare for the possibility that it won’t.

First, and most obviously, you should create a prenuptial agreement, or “prenup.” A prenup is an agreement that’s entered between two spouses, before they get married. In a prenup, the spouses can agree on the status of various pieces of property, in the event of divorce. For example, you could write a prenup that makes clear that your business is solely your property, and that your spouse will not be entitled to any share of it upon divorce.

Obviously, in order for a prenup to be legally binding, your spouse has to agree to it. However, if you trust one another, and the agreement is fair to your spouse (it has other mechanisms to provide for him or her in the event of a divorce, without giving them an ownership stake in the business), chances are you can come to an agreement.

It’s important to note that, in order for a prenup to be valid, each spouse must be represented by their own attorney in the negotiation of the agreement, and they usually must be given some time (usually a few days) between being presented with the final version of the agreement, and signing it. This is meant to ensure that they have plenty of time to think about it.

Obviously, you need to consider the laws of your state. There are two basic systems of marital property in the United States: community property and separate property.

In community property jurisdictions (which are a sizeable portion of U.S. states, but still a minority), all property that’s acquired by either spouse during their marriage (with a few exceptions) is the property of both spouses, with each spouse having an undivided 50% interest in the property.

This means that if you start a business after you’ve gotten married, your spouse automatically owns half of it. However, in every state, any piece of property can be turned into separate property by agreement of both spouses. If you live in a community property state, and want to retain your business, it’s essential that you and your spouse come to an agreement over the status of this piece of property, and commit it to writing.

Another thing you can do is minimize your spouse’s involvement in the business. If your spouse played an integral role in the development or operation of the business, a divorce court may well find that they are entitled to a share of the business as compensation for their efforts.

Finally, if you are getting divorced, and marital assets are in dispute, you should be prepared to give up some assets in exchange for keeping the business. These might include bank accounts, the family home, collectibles, etc. Obviously, it’s up to you to decide if keeping your business is worth giving up all these assets. However, in the event of a divorce, no matter how proactive you were, a court might still find that your spouse is legally entitled to a share of the business. If you really want to keep full control of your business, you may have no choice but to “buy out” your spouse’s share of the business.

Of course, this depends on whether or not your spouse is willing to give up his or her legal share of the business for a price that you can accept.

Obviously, there are many other legal and financial measures you can take in order to maximize the chances that your business will survive a divorce intact. All of these measures depend, however, on advance planning and communication between you and  your spouse.

The Challenges Mentally Ill People Face in Family Court

According to the child welfare authorities of some states, up to 1 in 5 of their cases involve a parent who suffers from a mental illness. This raises serious moral, emotional, ethical, and legal issues, none of which are simple.

If a parent is struggling to keep custody of his or her children, and suffers from a severe mental illness, this can make an already-difficult situation even more wrenching.

And while the stigma surrounding mental illness has diminished significantly in recent years, it still persists. This means that, once a person is diagnosed with virtually any mental illness, many people automatically assume that they are not fit to be parents, even if they know better than to publicly acknowledge this assumption. This is very unfortunate, because many mental illnesses, such as depression, bipolar disorder, and obsessive-compulsive disorder are often highly treatable. And while they present challenges for sufferers and their loved ones, they don’t automatically prevent a person from being a loving and competent parent.

Of course, I don’t deny that some very severe cases of mental illness can turn a person into a threat to themselves and others, and render them unfit parents. However, these cases are relatively rare.

This article (found at the Family Law Prof Blog) provides a very good overview of some of the legal challenges that parents and guardians have to deal with when facing mental illness, as well as some very poignant examples. It’s definitely worth a read.

It points to the fact that the social services system often automatically assumes that the mentally ill are unfit parents. To this day, society seems to view mental illness as something of a moral failing, or a choice, as opposed to what it is: an illness. The article even points to case workers openly mocking and laughing at behaviors that are a result of mental illness.

Furthermore, many case workers see mental illness when there is none: they might observe a parent behaving erratically, and displaying strong emotional swings. They will sometimes assume that this is a result of a mental illness, when it is actually a response to the trauma of having one’s child taken away.

I’ve written many times before that the law should (and generally does), first and foremost, consider the best interests of the child when making decisions. Everything else, such as the wishes of the individual parents, their convenience, etc. should come second (and a distant second, at that). I’ve also pointed out that the law assumes (correctly, I believe) that it is in a child’s best interests to be in the custody of at least one of their parents. This is a very, very strong assumption, and it can only be overridden if there is extremely compelling evidence that a parent is unfit to take care of a child, and that it is therefore in the child’s best interests to be removed from the custody of the parent.

But if local authorities in charge of child welfare don’t have a decent working knowledge of mental illness, and what it actually entails, it is impossible for them to make an accurate determination of what’s in a child’s best interest, in dealing with a mentally-ill parent.

This is especially problematic because some statistics suggest that as many as one in five parents who have direct contact with the child welfare system suffer from some form of mental illness. This should press upon you the importance of ensuring that child-welfare workers are adequately educated about mental illness. At the very least, it should be made perfectly clear to them that a diagnosis with a mental illness does not, in and of itself, make a parent abusive or neglectful.

Furthermore, there are no standards governing when a parent and/or child should be subject to a mental health evaluation. Case workers have broad discretion in ordering psychiatric examinations. And because they often know very little about mental illness, or psychology in general, they sometimes act on their prejudices, rather than objective facts.

This also means that parents can be subject to repeated psychological evaluations which deliver contradictory results.

All of these factors come together and lead to create a situation in which children are separated from their parents more often than necessary.

This ignorance about mental illness causes problems in all sectors of society – it stigmatizes people who just need help, and it can even tear families apart unnecessarily.

West Memphis 3 Release Should Lead to Judicial Reform

One of the most drawn-out and controversial criminal cases in recent American history may have finally come to a close. By the time this post goes live, the West Memphis 3 will have been released from prison, after serving nearly 2 decades in prison for the murders of 3 boys in West Memphis, Arkansas.

During their trial, the prosecution alleged that the killings were part of a satanic ritual. Throughout the 1980s and 1990s, the United States was gripped by a moral panic over rumors of so-called “Satanic ritual abuse,” claiming that satanic cults were kidnapping and torturing/killing innocent victims, usually children.

Of course, since then, absolutely no real evidence has surfaced pointing to the existence of such cults. Officials from the FBI have confirmed that they have never seen any evidence that satanic ritual abuse has taken place anywhere in the U.S., or that such cults exist, or have ever existed.

In fact, the hysteria over such abuse started because some therapists who engaged in “memory recovery” – a practice resting on the premise that memories can be repressed by traumatic events, and recovered by hypnosis – which has since been completely discredited, and is regarded by all reputable psychologists as pseudoscience.

Meanwhile, back in the world of reality, actual investigators were hard at work on the case of the West Memphis 3. Major advances in forensic science allowed biological samples from the crime scene to be tested for DNA, determining who they came from. As it turned out, there was no DNA from any of the defendants at the crime scene. However, they did find DNA from the stepfather of one of the victims.

Upon the revelation of this evidence, the 3 defendants went to a court asking to be released. The court allowed each of them to enter an “Alford plea,” which allows them to assert their innocence, while acknowledging that the prosecution nonetheless has enough evidence to convict them. They were sentenced to 10 years in prison, but the sentences were suspended, allowing them to go free.

In the intervening years, the case became a rallying point for many different causes, including prison reform, death penalty abolition, and sentencing reform. Because of the apparent high likelihood that the three defendants are innocent, and the seeming intransigence of the justice system in considering new evidence that pointed to their innocence, controversy surrounding the case continued to simmer for the last 18 years.

Personally, I think that the defendants are probably innocent. And even if they’re not, it doesn’t look like the prosecution had nearly enough evidence to prove their guilt beyond a reasonable doubt.

More importantly, however, I think this case has laid bare some serious flaws in our criminal justice system. I should make clear that I believe our justice system is, overall, very good. However, it’s not perfect, and we should constantly strive to identify and mitigate these imperfections.

For example, there is little standardization in how crime scenes are investigated at the local level. In this case, there was immediate and strong criticism directed at the local authorities’ handling of the crime scene, including allegations that a good deal of evidence was lost because the local police didn’t follow fairly basic forensic procedures. This was probably not due to malice. The small local police force simply had no experience dealing with crimes of this magnitude, and probably didn’t even know where to begin their investigation, and even if they did, they lacked most of the necessary resources.

While it might be costly at first, the federal government could play a role in assisting local police forces on this front. They could provide funding to local police departments, specifically for the purpose of improving their forensic science capabilities, in the form of training and equipment. This funding could then be conditioned on local police forces adhering to some minimum standards of competence, enforced via random audits.

Also, we could probably do with some moderate reforms to the jury system. The trial of the West Memphis Three showed that jurors are sometimes susceptible to prosecutorial arguments based on emotion, as well as sensational allegations (such as satanic cults) relating to their cases. Because the constitution guarantees criminal defendants a right to trial by jury, these reforms will necessarily be moderate.

However, I don’t think they need to be radical in order to make the jury system far more effective. While I don’t pretend to have a perfect solution, I think that a few simple reforms, such as placing an emphasis on intelligence and education in jury selection, as opposed to focusing on creating a demographic cross-section of the community, would go a long way.

Some people have proposed using panels of “professional jurors” in complex or high-profile cases. Supposedly, they would have more knowledge about how criminal investigations are conducted, and it would be far more difficult to sway their decisions by appealing to their emotions. While I think that this idea has potential, it also has its share of problems, including a greater possibility for corruption.

In the end, I’m glad that the West Memphis Three are free. Based on the evidence, it seems very likely that they are innocent. However, it’s a shame that it took our judicial system so long to acknowledge that fact. Hopefully, this case still has the potential to serve as a catalyst for reform.