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ARTICLE · 14 OCTOBER 2014

Corporate Finances: Punitive Damages’ 800-Pound Gorilla

Mayer Brown
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It seems perfectly obvious, to this writer at least, that by far the most significant factor fueling the drive over the past several decades to ever larger punitive awards is evidence of corporate finances, and jury instructions and arguments that punitive damages should be set on the basis thereof.

United StatesLitigation, Mediation & Arbitration
Andrew Frey
Andrew Frey
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It seems perfectly obvious, to this writer at least, that by far the most significant factor fueling the drive over the past several decades to ever larger punitive awards is evidence of corporate finances, and jury instructions and arguments that punitive damages should be set on the basis thereof.

This post will explore the following elements of the issue: (1) Why is financial evidence such a dominating factor in many juries' punitive damages calculus?  (2)  When and why did this reliance on wealth in setting punishments arise?  (3) What are the economic and legal fallacies that undermine the validity of this practice? and (4) Do the Supreme Court's decisions in BMW and State Farm provide a viable basis for arguing against the prevailing judicial tolerance of the misuse of such evidence and argument?

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