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Should more cases receive punitive damage awards?

Punitive damages are often described in terms that are inflammatory and hyperbolic. Critics suggest they encourage frivolous lawsuits or unnecessary lawsuits. Really? If you were the parents of two boys who died when their car went out of control, and you discovered that the crash occurred because of a defective part that the company knew about, would you need punitive damages as an incentive to sue?

A judge in Montana reduced a $240 million jury award of punitive damages against the car manufacturer Hyundai to $73 million, not because the judge felt the damages were excessive, but because she believes that is the largest number that could survive Hyundai's appeal. 

The family will receive $8.1 million in compensatory damages for the boy's deaths in the car accident. The punitive damages are designed to punish reckless wrongdoing. In this case, the punitive damages are as large as they are because of the size of Hyundai.

For a large corporation, $8 million is but a few minutes of their yearly revenue, and only large punitive damage awards are capable of really deterring such behavior.

The punitive damages were a result of Hyundai's disregard of the danger posed by their defective steering knuckle, which failed and caused the boy's vehicle to cross the centerline and strike another car, killing the driver of that vehicle also.

This extreme negligence was demonstrated by their failure to fix the problem in spite of more than a 100 warranty claims involving the knuckle over a decade.

Sadly, punitive damages are rarely awarded; with one report finding only three percent of cases receive this type of damage award. And Hyundai is planning on appealing this, as they claimed $10 million was too large.  

Bloomberg.com, "Hyundai Must Pay $73 Million Punitive Award, Judge Says," Margaret Cronin Fisk, September 22, 2014

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