NEW YORK — It’s not often that a lawyer gets the chance to leave $4.5 billion on the table. But when plaintiffs lawyer Brian Panish proposed to forgo most of the punitive damages his client had won in a suit against General Motors, he joined a small but significant trend: offering to trade big punitive damages for a corporate defendant’s promise to make changes that may prevent future injuries.
In addition to Panish’s clients, two plaintiffs in separate cases represented by a single Corpus Christi, Texas, firm have offered similar deals — to forgo millions rather than billions — in an auto crash case and a gas rig explosion.
All this adds up to plaintiffs lawyers behaving contrary to the image their adversaries often paint of them and giving up money to promote safety.
Scott Bice, dean of the University of Southern California Law School, says that trading punitive damages for safety is better than providing a huge windfall to a small number of plaintiffs and their lawyers. The approach is similar to that in some class actions, in which a portion of the damages are given to charity, he says.
Some defense lawyers approve of the trend, with a measure of caution.
“If there has been a true defect and it deserves correction, and if the company corrects it, and they do it at some substantial cost . . . I think the trade is worthwhile,” says Victor Schwartz, an expert on tort law who is counsel to the American Tort Reform Association. On the other hand, he says, juries sometimes find a defect where there really is none, in which case a useful product may be withdrawn needlessly from the marketplace.
Those more cynical than Schwartz, however, contend that plaintiffs lawyers know that most large damages awards are reduced on appeal, and thus most of what they’re offering to give up they never would have collected in the first place.
Regardless, not every case lends itself to trading punitives for safety.
“You need to have a case in which there is something reasonably specific that you can make a demand on the defendant to make the world safer,” says David Perry, one of the Texas lawyers who offered givebacks in two cases.
In Panish’s GM case, the idea to give back some of the huge award started with his clients, he says.
Panish, of Santa Monica, Calif.’s Greene, Broillet, Taylor, Wheeler & Panish, in July won the largest personal injury verdict in history — $4.9 billion — for Patricia Anderson, her four children and a family friend who were horribly burned when their 1979 Chevy Malibu exploded in flames after being rear-ended by a drunk driver on Christmas Eve 1993. On Aug. 20, Panish offered to cut the award by $4.5 billion if GM would recall the Malibu and other GM cars with the fuel tank design problem he blamed for his clients’ injuries. “[The clients] said, ‘How can we do something to help other people so they don’t have to go through what we did?'” he recalls.
However, GM turned down the offer, just a day before trial Judge Ernest Williams cut the punitive award to $1.09 billion while upholding a $107 million compensatory damages award. (Panish then reduced the amount of the proposed giveback correspondingly, to $700 million.)
GM, meanwhile, says that there is nothing wrong with the Malibu and is appealing both the verdict and the award.
In May, GM turned down another proposed giveback, in a Texas case involving GM trucks.
In that case, the family of Jerry Harper, a Fort Worth man left paralyzed after a head-on crash in his GM truck, won a $47.5 million verdict that included $31 million in punitive damages. (Harper died before the trial as a result of his injuries.) The family, represented by Perry and Rene Haas, of Corpus Christi’s Edwards, Perry & Haas, offered to forgo the punitive damages if GM would install head restraints on all GM trucks that lack them. The company rejected the offer, and the case is on appeal.
But in another case, Perry and Haas were able to negotiate safety improvements with a defendant in exchange for punitive damages awarded to their client, John Caballero.
Caballero, then a 42-year-old father of two, was working on a gas well owned by Esenjay Petroleum Corp. in 1995 when an explosion caused him permanent injuries, including brain damage.
A Texas jury awarded Caballero $12.3 million in compensatory damages and $30 million in punitives. (Based on a state law limiting punitive liability, the latter award was reduced to $6 million.)
Perry and Haas then got Esenjay to agree to a safety plan intended to prevent future accidents, in exchange for Caballero’s agreement to decline the punitive damages. Then, when Esenjay was sold to another oil company last year, Perry and Haas sued to ensure that the new company would put the safety plan in effect.
“It may be we kind of blazed a trail and other people will follow,” says Perry.
Some observers have suggested that, in the wake of last year’s $246 billion in settlements between the tobacco industry and state attorneys general, juries are less reluctant to respond with a large punitive damage award when plaintiffs lawyers urge them to send “messages” and deliver “wake-up calls.”
So, will offers to trade punitive damages for safety improvements become more common as the biggest awards become ever larger and ever more difficult to collect? Plaintiffs and defense lawyers say that it is too early to know. But Panish says that he has received a lot of calls from other lawyers who are interested in the punitives-for-safety exchange.
“People think it’s a great idea” he says.