Punitive damages 'crisis' is a myth, scholars say.

Claims that out-of-control juries regularly hand out huge and unmerited punitive damages awards are untrue, according to scholars meeting at a recent national conference at the University of Wisconsin Law School.

Researchers presenting papers at the October conference generally agreed that punitive damages awards in products liability and personal injury cases are rare and closely related to compensatory damages. The only noticeable increase in the size and number of these awards has occurred in business contract litigation, where economic losses have resulted from fraud or deceit.

"Tort horror stories and incomplete data create the [false] appearance of a punitive damages crisis," said Suffolk University law professor Michael Rustad, who presented his survey of nine punitive damages studies at the conference. Rustad said the studies consistently found that punitive awards are rare and vary appropriately depending on the conduct of the defendant.

Participants at the National Conference on the Future of Punitive Damages included prominent scholars in the field, plaintiffs, and defense lawyers, and representatives of the insurance Industry. Some "tort reform" advocates decided not to attend at the last minute at the urging of Aetna Life & Casualty, which had originally supported the conference.

Research presented at the meeting bolstered Rustad's conclusion that the punitive damages "crisis" is a myth:

* Theodore Eisenberg, a professor at Cornell Law School, determined how many punitive awards compiled in two databases would have to be reduced under the most commonly proposed punitive damages cap -- $300,000 or three times compensatory damages, whichever is greater. One database, compiled from state courts, included awards in the 45 largest urban counties in 1991 and 1992. The other, compiled by the Rand Institute for Civil Justice, included awards in California and Cook County, Illinois, over the past 25 years.

Of the 173 punitive damages awards from the urban counties in 1991 and 1992, only 10 exceeded the cap, and these came close to the line. Only four or five cases in Cook County in the 25-year sample exceeded the cap. The California sample produced similar results except in the middle range of compensatory awards, where more punitive awards exceeded the cap. Even so, Eisenberg said none of the awards was "off the charts."

He said the findings suggest that jurors across the board "are employing roughly the same mechanism to govern the relationship between compensatory and punitive awards."

* Steven Garber of the Rand Institute for Civil Justice reported that business fears about large punitive awards are fed by media coverage of these verdicts. Newspapers cover plaintiffs' victories in punitive damages cases nearly 20 times more often than defendants, wins, according to Garber's study. He added that newspapers also rarely report instances where punitive awards are reduced.

Stephen Daniels and Joanne Martin of the American Bar Foundation studied the political aspects of the punitive damages debate, asserting that business has an interest in characterizing jury behavior as a new crisis in the civil justice system.

"Given the lack of empirical verification," they wrote in their paper, "the reformers' claims about change are perhaps best seen as a part of the political effort by interested parties to get favored `solutions' on the public policy agenda. These claims, at best, have only a tenuous connection to what has actually been happening with punitive damage awards."

Former Attorney General Dick Thornburgh withdrew from the conference but sent his paper, which asserted that jury awards of punitive damages have "run wild."

Thornburgh advocated the adoption of a uniform national standard to hold these awards in check.

Another well-known tort "reformer," Yale law professor George Priest, submitted a paper on his study of punitive damages in three Alabama counties.

Priest acknowledged that the results were preliminary but said the study seemed to indicate that the Alabama counties may be unique in the frequency, and size of punitive awards. He said these results may be related to the way judges and juries in Alabama treat out-of-state defendants.

The conference was cosponsored by the Institute for Legal Studies at the University of Wisconsin Law School and the ABA Tort and Insurance Practice Section. Papers from the conference arc expected to be published as a law review symposium.