Bill to limit punitive damages gains in House

February 29, 1992|By David Conn | David Conn,Annapolis Bureau

ANNAPOLIS -- The House of Delegates gave a strong vote of confidence yesterday to a bill that would make it more difficult to win punitive damage awards from companies.

On a 90-27 vote, the House defeated a move to cut an important section from the bill, one that would protect companies from puni- tive damages if lower-level employees acted without the knowledge of supervisors and top management.

That vote -- much more lopsided than both sides had predicted -- and several other votes to defeat similar attacks sent House Bill 329 to almost certain passage in its third reading, or final vote, in the House next week.

"I expect it to go blasting out of here on third reader," said Del. D. Bruce Poole, D-Washington, one of the bill's co-sponsors.

The bill's fate in the Senate is unclear. Senate leaders have not expressed an opinion publicly on the bill.

House Bill 329 would place restrictions on how juries calculate the size of the awards, which are intended to punish and deter corporate wrongdoing. It also requires that awards be "reasonably related" to the actual cost of the harm inflicted. The bill is intended to bring fairness and predictability to the way punitive damages are awarded, supporters contend, so that businesses can better understand what kinds of behavior should be avoided.

But opponents, including the Maryland State Bar Association, labor groups and some consumer groups, have assailed it as an attempt by businesses to avoid punishment for such things as ignoring the dangers of asbestos and breast implants.

Punitive-damages legislation has become a flagship of the businesses' efforts toward what it terms "tort reform," a program of reducing the burden of lawsuits. Businesses argue that excessive jury awards have made U.S. companies less competitive than their foreign counterparts.

The most important section of the bill deals with the issue of "vicarious liability," or the responsibility of company owners and managers for the actions of their employees.

"This is the provision of the bill that says that corporate management can see no evil and hear no evil and avoid all responsibility for liability," said Del. James C. Rosapepe, D-Prince George's, who sponsored the amendment defeated yesterday to strike that provision.

"The amendment keeps responsibility where it belongs," he said. "The buck stops in the boss's office."

Del. John S. Arnick, D-Baltimore County, the lead sponsor of the bill, tried to allay fears that the makers of breast implants and asbestos products would escape punitive damages simply by turning a blind eye to safety warnings coming from within their companies. Plaintiffs' attorneys would simply have to work harder to win the awards, he said.

The bill protects an employer, for example, who has no reason to expect one of his truck drivers to get drunk and then run over his ex-wife, Mr. Arnick said.

The owner would still have to pay compensation, he explained, but he shouldn't be punished further.

"Nowhere else in the law can you be punished for doing no wrong," Mr. Arnick said.

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