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View Diary: Valdez ruling is not about ExxonMobil (11 comments)

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  •  Exactly (6+ / 0-)

    The thing people fail to realize when discussing the deterrent effect of punitive damages is that the risk of corporations getting caught and held fully accountable for misdeeds is so low these days that punitive damages are the only way to make corporations act responsibly.  

    I used to be a corporate attorney and I sat in meetings at one of my client's plants where we evaluated the risks of tort and environmental lawsuits arising out of our behavior -- bahavior that bordered on criminal. We ultimately decided not to change our behavior because the company usually wasn't held accountable at all, and when it was it could settle for actual damages (or a portion thereof).  Punitive damages were the only scary thing for my client, but with them becoming more limited, we determined that the costs of being a responsible corporation outweighed the litigation risk and we had a duty to our shareholders to keep business as usual despite the collateral damage.  With the death of significant punitive damages, we will see further erosion of corporate responsibiity.

    The concept is no more complex than a speeding ticket.  The actual costs to society from any one driver going 10-15 miles an hour over the limit is probably about $1.  Yet the ticket is about $100.  Why?  People are caught so rarely that a $1 or even $10 ticket would be a joke.  You need $100 tickets to slow traffic down.

    Get ready for a world of $2 tickets.

    •  Simple spreadsheet matter (2+ / 0-)
      Recommended by:
      NoMoreLies, Cassandra Waites

      Yup, the corporate risk/reward ratio gets calculated in offices all over the world. Probabilities are assigned to the potential damages from a catastrophe, as well as smaller events, and the biggest part of the number just went way down.

      Getting that probability down is a big issue too. That's the real goal of all these conservative judges.

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