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Positive And Negative Outcomes Of Punitive Damages

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Everyone working in the legal or business field has heard about punitive damages at least once in their whole career, although it’s extremely possible that they hear the term a lot of times during their work time, because they are something that any kind of company has to be aware of if they don’t want to be sued for huge amounts of money. Punitive damages act like a sort of deter for big companies, they are basically a punishment so that they stop their wrong doings and fix their bad behavior in future activities. Punitive damages sound awful for companies because the punishment does involve them giving up big amounts of money, but they don’t exist just because. Usually, this kind of damages are used to reward someone that has suffered a lot because of a business’ negligence or ignorance and in this world, where some corporations hold a huge amount of influence over some countries (more than what their governments would dare to admit), it’s crucial to have a legal clause that acts as a voice for those who are not in privileged positions among the business world. There have been some famous cases involving punitive damages that might help us understand how they work and how it can affect both the victims in a positive way and the companies in a negative way and vice-versa.

We all probably know the “Hot Coffee” case involving Mrs. Liebeck and McDonalds, where she sued the company in 1992 because the fast-food restaurant had insanely hot coffee and she had gotten third degree burns after spilling it over her lap. Liebeck was requesting around $20, 000 dollars to cover her medical bills but at the end she was awarded with $2. 7 million dollars in punitive damages. At the end of the trial the amount of money was reduced to $480, 000 and later it was reduced a little more to an amount that Liebeck and McDonalds negotiated away from the public eye. Reducing punitive damages is a very common occurrence in this kind of trials, but the first announced amount was enough to shock the general public and to turn this into a “ridiculous frivolous lawsuit”. Stella Liebeck was later harassed by the media and several articles were released where the true story had been altered to favor McDonalds. Even though Liebeck was given a fair amount of money that certainly drew attention to the way McDonalds was grossly ignoring over 700 complaints of people that had also burned themselves with how hot the coffee was, it may seem like at the end the money she received was not really worth being accused by the media as someone that wanted to take advantage of the situation. 26 years later and some sources speculate that McDonalds hasn’t really stopped making their coffee extremely hot, but they do have warnings around the cup and the lid stating that the coffee is hot and that people should be careful. Now, if awarding punitive damages didn’t really deter this company from changing their behavior, what makes us think that it would work in other companies?

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The amount of money awarded as punitive damages when a company gets sued it’s probably nothing compared to the amount of money they make with their overall sales — for example the Liebeck vs. McDonalds suit, where the initial punitive damages were calculated by taking two days’ worth of coffee sales but considering that they didn’t have a big impact on the franchise’s finances because coffee is not the only product McDonalds offers. Now that we already stablished that money doesn’t really punish corporations enough in order to make them stop doing what they’re not supposed to be doing, we have to take in consideration something really important for companies that can be affected through punitive damages and that is their reputation. Even if the money is not a big problem for them, the kind of attention they received when the jury finds them guilty and are forced to pay punitive damages is not very favorable and we now have a powerful weapon against them: social media.

In June of 2018, DeWayne Johnson took the company Monsanto to trial, claiming that the chemicals used in their herbicide products had given him cancer and that the company already knew what kind of health consequences the product would bring to their consumers but had suppressed the evidence. According to their website, Monsanto is “a global modern agriculture company that believes innovation has the potential to bring humanity’s needs in balance with the resources of our planet. ” Johnson is a father of three that worked for a school as a groundkeeper with months to live. Since the accusations were released, the public sided with Johnson immediately. Everyone could now read the facts about the case freely online, and didn’t need to rely exclusively on what the media on TV was displaying, and people automatically sympathized with him. So far, Johnson has been awarded with $289 million in damages, $250 million of those being punitive damages. Since this trial, new 4000 lawsuits have been submitted against Monsanto and here is where we can see how punitive damages truly work.

It’s not always about the money (which in this case would actually really help the victim and his family) but more about giving people a voice to exercise their right to complain and the right to have people pay for their wrong doings, even if they are big corporations that we might think are invincible.


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