Printer Friendly

Supreme Court: punitive damage awards upheld.

For the second time in two years, the U.S. Supreme Court upheld a large punitive damage award. In reviewing a case in which punitive damages were 526 times the amount of compensatory damages, the Court rejected arguments that such awards violated the due process clause of the U.S. Constitution.

The Court stressed a punitive award's reasonableness should be considered in determining whether it violated the due process clause. Factors to consider include the amount of money potentially at stake, the bad faith of the party against which the award was assessed and that party's wealth.

Professionals (including CPAs) and business groups had hoped the Court would take this opportunity to establish objective guidelines to determine whether huge punitive awards are constitutionally permissible. But in its ruling, the Court dashed any hope lower courts would have such guidance.

Barring intervention by states on a statutory level, it is likely professionals will continue to see punitive damage awards that are grossly dissproportionate to the compensatory damages awarded a plaintiff. (TXO Production Corp. v. Alliance Resources Corp., U.S. Sup. Ct. no 92-479)
COPYRIGHT 1993 American Institute of CPA's
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:TXO Production Corp. v. Alliance Resources Corp.
Publication:Journal of Accountancy
Article Type:Brief Article
Date:Nov 1, 1993
Previous Article:GASB issues three new statements and sea proposal.
Next Article:Supreme Court: defendants may seek contribution in securities rule 10b-5 cases.

Related Articles
U.S. Supreme Court upholds punitive damage award.
Supreme Court to reconsider punitive damages - again.
TXO and the future of punitive damages.
Supreme Court strikes down punitive award; judicial review required.
Punitive damages and the Constitution.
Supreme Court to revisit punitive damages issue.
Wisconsin Supreme Court upholds Steven Sharp verdict.
Winning increased punitive awards after Cooper: Tort restrictionists may hail this Supreme Court decision as a victory, but in some cases it could...
High court caps awards; insurers likely to benefit.
High court rules on punitive damages.

Terms of use | Copyright © 2018 Farlex, Inc. | Feedback | For webmasters