Punitive damages curb gains House panel votes for bill to bolster business' shield.

February 19, 1992|By David Conn | David Conn,Annapolis Bureau

ANNAPOLIS -- A bill to give Maryland businesses more protection against lawsuits seeking punitive damages cleared its first major hurdle yesterday by surviving a vote in a House committee.

The House Judiciary Committee voted 12-10 in favor of House Bill 329, considered one of the most important pieces of business-related legislation this session.

The committee's approval sets the stage for what both sides expect to be a bitter and protracted battle as it comes up for a vote later this week in the full House of Delegates.

"You're going to see a very divided House," said Del. Robert L. Ehrlich Jr., R-Baltimore County, one of the chief sponsors of the bill. "You're going to see a classic labor-management battle."

The legislation would raise the standard of evidence needed to award punitive damages in a civil lawsuit. It would also protect companies whose top officers and managers were unaware of the allegedly reckless behavior of employees.

Punitive damages are awarded to punish companies for wrongdoing and to deter others from engaging in the same kinds of behavior. But business groups have argued that the unpredictable size of jury awards makes it more difficult for U.S. businesses to compete worldwide.

The bill also would require juries to use certain guidelines in deciding the size of a punitive damage award, including whether there is a reasonable relationship between the punitive award and the harm that the defendant caused; how reprehensible the defendant's actions were; how profitable the company is; and whether it profited from its behavior.

Gov. William Donald Schaefer, arguing that the bill would help entice new companies to Maryland, has come out in support of the measure.

But Del. Cornell N. Dypski, D-Baltimore, said, "What they are asking us to do is chip away at the rights" of victims. "I'm not going to be a party to that."

Del. Kenneth H. Masters, D-Baltimore County, said the provision protecting executives who could claim no knowledge of an employee's actions could provide an incentive for them "not to know what . . . employees are doing."

The Associated Press contributed to this article.

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