Punitive Damages Used to Deter Bad Behavior

Punitive DamagesWhen a child is disrespectful, his parents ground him.  When an adult steals a car, a judge sends her to prison.  Companies cannot be locked away and the threat of isolation cannot be used to deter them from behaving badly, so a different mechanism needed to be created to deal with them.  In the civil law, that mechanism is punitive damages.

Here we will explain the basics of how these damages work, but if you think you may have a case for punitive damages, you should speak with a licensed Oregon attorney.

Punitive versus Compensatory Damages

Reuters reports that Japanese drugmaker Takeda Pharmaceutical Co Ltd is contesting a judgment for $6 billion in punitive damages a jury recently leveled against it in federal court.  The jurors found that Takeda had concealed cancer risks associated with one of its drugs.  That large award was designed to punish the Takeda and to discourage other companies from similar bad behavior in the future.  Takeda is Japan’s largest drug manufacturer, a multi-billion dollar company.

A small punitive damage award of a few thousand dollars likely would not really impact the company enough to change future behavior.  Additionally, an entity that knows it has behaved badly may be willing to enter into a more favorable settlement agreement with the injured parties to avoid a trial and the possibility of punitive damages.

The compensatory damages awarded in the case only amounted to $1.475 million.  Those damages are not designed to punish the company for bad behavior.  Instead, they are designed to make the injured parties whole.  Compensatory damages compensate for things like medical bills, lost wages, and pain and suffering, amongst other losses.  So the jurors in the Takeda case decided that it would take just under $1.5 million to make the people hurt by Takeda whole, but that it would take an additional $6 billion judgment against Takeda to discourage future bad behavior.

Oregon Statutes and Punitive Damages

The Oregon Revised Statutes limit when and how punitive damages can be awarded in Oregon.  They cannot be recovered unless the injured party proves by “clear and convincing evidence” that the entity that harmed him “acted with malice or has shown a reckless and outrageous indifference to a highly unreasonable risk of harm and has acted with a conscious indifference to the health, safety, and welfare of others.”  In other words, the injured person needs really strong proof that the entity he is suing was malicious, or that it ignored a very high risk of hurting another’s health, safety, or welfare.  So punitive damages are not awarded in Oregon over simple mistakes.  They are punishing bad behavior.

There are also checks on the amount a jury can award.  After a jury awards punitive damages, the trial judge reviews the award to make sure it is within the range that a “rational juror” would award based on all of the evidence.  There is also a mechanism present in Oregon law that allows a judge to reduce a punitive damage award if the injury party shows it has taken reasonable remedial measures to fix the problem caused by its bad behavior.

In the media, punitive damage awards often times get a bad rap for being excessive or the result of greed, but that is simply not the case.  They serve a very important role in  both our legal and economic system, as do the attorneys who secure these awards.

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