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One point that needs to be remembered when debating limits on punitive damages is that there are different types of damages that are available in a civil suit. Most people focus on the huge punitive awards that are given out without considering what is really happening in theses cases.

The first award that is considered is the Compensatory award. This award is designed to compensate the victim for their loss. The consideration for the award is to make the injured party "whole." That means putting them in the financial position they were in before wrong took place. This doesn't just mean recovering the cost of bills and expenses, but it also takes into consideration loss of income, and in the case of the death or injury of an income earner, loss of future income.

punitive damages are designed to punish he wrong doer, and to reward the victim. The question becomes, what is reasonable. One famous case involved the awarding of $2.9 Million to a woman in New Mexico that spilled a cup of McDonald's coffee in her lap. While evidence did show that McDonald's bore some responsibility in the case, the award was extremely high for a case of pain and discomfort. On appeal the award was reduced to $480,000.

While there is much merit in awarding punitive damages, the huge amounts that are sometimes awarded encourage people, and lawyers, to file suits naming every person that is even remotely involved in the case. The legal system gets bogged down with ridiculous law suits, and companies and individuals are fined far beyond their ability to pay.

One solution would be to set a reasonable cap on the amount of punitive damages that can be awarded. A standardized formula could be applied based on the merits of the case, and amount of the awards are decided by the legal system, not by individual juries making decisions based on emotion.

Learn more about this author, Jim Smoot.
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