As part of the effort to make it harder for accident victims to collect big money from companies they allege caused their injuries, some reformers have been urging lawmakers to put limits on punitive damages.
Punitive damages are the amounts juries award over and above money needed to compensate the victims -- amounts intended to punish companies that have been lax about safety and to deter others from being similarly negligent.
There is little doubt that plaintiffs have been winning more punitive damages awards.
A study by the Rand Corp. showed that total punitive damages awarded in Chicago in the four years ending in 1984 were more than six times the total of the previous 20 years.
At the end of last year, the Association for California Tort Reform reported that such awards had increased 178 percent in California since 1987.
"Lawyers, juries and judges have turned our adversarial system into a judicial sweepstakes, where astronomical amounts -- many times in excess of compensatory damages -- are sought and awarded as punitive damages," Bruce Fein and William Bradford Reynolds said last month in the newspaper Legal Times.
But one of the favorite solutions of the reformers just may not be constitutional.
That, at least, is the view of Judge J. Robert Elliott of the U.S. District Court in Macon, Ga., who in mid-April tossed out as unconstitutional punitive damage reforms adopted by the Georgia legislature.
Two favorite arguments of those arguing for change in the punitive damage laws were accepted by Georgia's lawmakers:
If punitive damages are really meant to punish a company for turning out faulty products, then a company should not be punished more than once for the same wrongdoing.
Multiple punishment for the same misdeed would be as unfair as punishing a child five times if five people heard him unleash a single string of expletives.
The Georgia statute bars multiple recoveries "from a defendant for any act or omission if the cause of action arises from product liability, regardless of the number of causes of action which may arise from such act or omission."
In other words, if a lawn mower maker is negligent in the design of an automatic cutoff switch, causing injuries to many customers, the first victim to finish a trial may win punitive damages, but everyone else hurt by the same defect can collect only compensation for his or her own injuries. The punishment already has been meted out.
If punitive damages are meant to be society's way of punishing a negligent company, the money should go to society as a whole, not a single victim.
Indiana this year considered a bill that would have the state get all punitive damages, and Wisconsin debated a measure that would split the punitive award equally between the plaintiff and a compensation pool for all accident victims.
The Georgia lawmakers took a middle course, letting the plaintiff keep one-quarter of the punitive award and funneling the remaining 75 percent to the state treasury.
Those solutions simply aren't fair to plaintiffs, Elliott ruled, thereby failing the constitutional test that all persons must get the equal protection of the law.
In the first place, he explained in the decision in McBride v. General Motors, the new rules are unfair to those injured by faulty products.
They must cope with the new limits on recovery in product liability cases, while people who suffer similar injuries not from product defects have free rein to convince a jury that punitive damages are appropriate -- and to keep all of the damages they win.
But even among product liability claimants, Elliott spotlighted the unacceptable discrimination: Accident victims who are first in line can collect punitive damages, while those hurt later -- or who file their suits in more slow-moving courts -- are put at a disadvantage.
Neither kind of discrimination can be condoned, Elliott said, because in supposedly "balancing" the interests of citizens to be reimbursed for injuries and of the economy in attracting business to the state, Georgia citizens got nothing for the rights they gave up.
There's not even any guarantee that the first punitive damage award will be big enough to have the intended effect of reforming the negligent company and scaring other manufacturers into paying more attention to safety.
In striking down the law, Elliott did not have to decide what an appropriate punitive damage award might be.
But the U.S. Court of Appeals in Chicago recently did have that task, in evaluating the legitimacy of an award that worked out to 8.29 percent of the defendant company's net worth.
The judges went back over the cases and decided that a typical punitive damage award is 1 percent of corporate net worth. But they decided that a jury should have leeway to go beyond that: The judges reduced the punitive damage award to about 4.5 percent of the company's worth. Daniel B. Moskowitz is a Washington editor for Business Week newsletters.