Punitive damages is hot topic Measure's backers, foes wage pitched battle

March 08, 1992|By David Conn | David Conn,Annapolis Bureau

Annapolis -- Lobbyists and lawmakers have a term for legislation they don't want others to pay much attention to: "technical bills."

Indeed, by the standards of most non-lawyers, House Bill 329 would seem to fit that category. It deals with such things as jury instructions, standards of evidence and something known as "vicarious liability."

But HB 329 is prompting enormous expenditures of time and money by supporters and opponents. Dozens of the biggest businesses in Maryland are paying thousands of dollars to nearly every top business lobbyist in town. Also on their side are the governor and the state attorney general.

Opponents include consumer groups, organized labor, the Maryland State Bar Association and the trial lawyers association.

More lobbyists are climbing on board every week to fight for or against the bill.

The issue behind House Bill 329 is punitive damages. "Punis," as they're sometimes called, are monetary damages usually awarded by a jury in civil cases.

Assessed in addition to the actual damage, they are designed to punish primarily corporate wrongdoing. If HB 329 becomes law, Maryland residents who sue companies and win will find it more difficult to win multi-million-dollar punitive awards.

HB 329 has become "the lobbyists full employment act," said Del. Robert L. Ehrlich Jr., R-Baltimore County, one of its co-sponsors. Or, as Albert "Buz" Winchester III of the state bar association said, "Every hired gun in town has been hired in this case."

The bill, which last week passed the House 83-43 after a one-vote victory in committee, has fueled some of the most heated debate this session. Some predict a filibuster in the Senate, where the battle now moves, at a time when lawmakers are struggling to complete a budget and tax plan.

The Senate Judicial Proceedings Committee will consider the bill first, and Senate leaders are at odds over whether it will pass.

Some backers, including Baltimore Gas and Electric Co.

Chairman George McGowan, say the threat of huge court awards hurts the ability of the state, and the nation, to compete with foreign countries that don't allow such large awards.

"HB 329 . . . is of vital importance to the economic development of Maryland," Mr. McGowan told the House Judiciary Committee in January.

Others argue that the unpredictability of awards amounts to a financial sword of Damocles over companies' heads.

"It has become sort of a jackpot," Rouse Co. Chairman Mathias J. DeVito told the House Judiciary Committee last month in a rare legislative appearance.

"There is no limit on what a jury can do in the way of punitive damages, and therefore a company has no way of gauging what the possible damages are."

Opponents of the bill, including plaintiffs' lawyers, organized labor and consumer groups, contend that limiting punitive damages will remove the financial whip that keeps companies in line.

"If it makes companies think about their actions and test their products more, then punitives have done the job they should be doing," said Janelle Cousino, executive director of the Maryland Trial Lawyers Association, the bill's chief opponent. "If they're not there," she added, "we're sitting ducks."

Potomac Electric Power Co., for instance, would have gone practically unpunished if the bill had been law when one of the company's power lines electrocuted a 15-year-old Forestville girl Sept. 20, 1986, said Steven M. Cooper.

Mr. Cooper, a Silver Spring attorney, helped the parents of Chrisianthia Lambert win a $7.5 million punitive award against PEPCO.

He showed that the company several years earlier restrung the line that electrocuted the teen-ager by tacking it up with a defective part that it didn't replace, and that workmen had failed to correct the problem even after several calls from nearby residents.

The often emotional debate has included charges that in cases like the Exxon Valdez Alaskan oil spill and the fatal train derailment in Chase -- two events blamed on impaired employees -- as well as the current controversy over breast implants -- corporations would escape justified punishment.

No data are available to detail the number and size of punitive awards in Maryland below $1 million. Of the 15 punitive awards exceeding $1 million since 1986, almost none ended up being paid in full. Some were settled, and most were reduced or struck down on appeal.

Plaintiffs' attorneys and consumer groups point to national studies that show punitive damage awards are few and far between.

A study by a Suffolk University Law School professor, funded partly by a trial lawyers group, showed that from 1965 to 1990, only 355 punitive damage verdicts were returned (more than a quarter in asbestos cases), and that more than half were reversed or reduced on appeal.

But those few cases have heightened fear and lead to higher settlements, said Paul Tiburzi, a Piper & Marbury lawyer who heads the lobbying team for a coalition of 21 large Maryland employers.

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