Businesses back punitive-damages changes House bill promises more predictability

January 24, 1992|By David Conn | David Conn,Annapolis Bureau of The Sun

ANNAPOLIS -- Maryland's business community came out in '' force yesterday to fight for legislation that it says would make punitive damages more predictable and solve one of the most serious threats to the state's economic competitiveness.

"We believe that the present law in Maryland puts our companies . . . in very real economic disadvantage compared to the atmosphere that exists for damages in other states, particularly Virginia, where we lose a lot of business," said Mathias J. DeVito, chairman of The Rouse Co., at a hearing yesterday before the House Judiciary Committee.

After a defendant is found liable for damages and ordered tcompensate the plaintiff, a jury may decide that the defendant's action was so egregious that a penalty is appropriate. Damages then may be added to punish the defendant and deter others from doing the same thing.

House Bill 329 concerns whether Maryland's law governing punitive damages provides enough constitutional protection to companies, which often must defend against lawsuits seeking punitive damages.

Business groups have lost similar battles in the past.

But both sides agreed that the bill being considered this year is milder than prior legislation. And this year, thanks to recent court rulings and the support of the business community, proponents of changes in the law concerning punitive damages are hopeful they will succeed.

The bill, co-sponsored by Del. John S. Arnick, D-Baltimore County, chairman of the Judiciary Committee, would not place a cap like Virginia's $350,000 limit on the amount of punitive damages a jury could award. But it would change Maryland's punitive damages law in four significant ways:

* Judges would instruct juries to use detailed criteria when deciding whether to award punitive damages and how large the award should be.

* Trials would be split, so that juries would first determine a defendant's liability, then consider evidence regarding punitive damages.

* Owners of companies could be better protected when the damages resulted from an employee's action.

* The current standard, using the "preponderance of the evidence" to support a punitive damages award, would be changed to a stricter standard of "clear and convincing evidence."

Opponents of the legislation said that punitive damages are rarely awarded. They said the bill would insulate companies from punishment for reckless and harmful behavior.

"One of the only companies I know of to be brought into bankruptcy due to punitive damages is A.H. Robins [the maker of the Dalkon Shield birth control device], and they sterilized women -- involuntarily," said Daniel Clements, secretary of the Maryland Trial Lawyers Association, which represents mostly plaintiffs' attorneys.

"This is an immunity act for corporations," he said.

A Suffolk University Law School study released this month found that 355 punitive damages awards have been levied in product-liability cases in the last 25 years.

"There is no crisis," said Patricia Kasputys, a Towson lawyer who represents asbestos victims. "There is no need to change something that is working."

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